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VICTREX PLC
ANNUAL REPORT 2024
ENABLING
ENVIRONMENTAL
& SOCIETAL
BENEFITS
VICTREX PLC ANNUAL REPORT 2024
WE BRING TRANSFORMATIONAL
& SUSTAINABLE SOLUTIONS THAT
ADDRESS WORLD MATERIAL
CHALLENGES EVERY DAY
Victrex is an innovative world leader
in high performance polymer solutions,
focused on the strategic markets of
Automotive, Aerospace, Energy &
Industrial, Electronics and Medical. Every
day, millions of people rely on sustainable
products and applications which contain
our polymers and materials, from
smartphones, aeroplanes and
cars to energy production and
medical devices.
With over 40 years’ experience, we
develop world leading solutions in PEEK
and PAEK based polymers and selected
semi-finished and finished parts which
shape future performance for our
customers and markets, enable
environmental and societal benefits
and drive value for our shareholders.
Cover image courtesy of Airbus’ Clean Sky 2 programme (please see page 11).
About us
Strategicreport
1 Highlights
2 Victrex at a glance
6 Chair’s statement
8 Our investment case
12 Our markets and megatrends
14 Our business model
16 Our strategy
18 Overview of strategy
20 Strategy and key performance
indicators
22 Stakeholder engagement
26 Financial review
31 Operating review
36 Risk
43 Going concern and viability statement
46 Sustainability report
Corporategovernance
77 Introduction from the Chair
80 Board of Directors
82 Statement of corporate governance
96 Nominations Committee report
100 Audit Committee report
108 Corporate Responsibility
Committeereport
111 Directors’ remuneration report
134 Directors’ report – other
statutoryinformation
138 Statement of Directors’
responsibilities in respect of the
Annual Report and the financial
statements
139 Independent auditors’ report to
themembers of Victrex plc
Financial statements
146 Consolidated income statement
147 Consolidated statement
ofcomprehensiveincome
148 Balance sheets
149 Cash flow statements
150 Consolidated statement
ofchangesinequity
151 Company statement
ofchangesinequity
152 Notes to the financial statements
Shareholder information
199 Five-year financial summary and
Cautionary note regarding
forward-looking statements
200 Financial calendar and Advisors
First 1,000 tonne quarter since FY 2022; FY volumes up 4%
u
Q4 2024 Group volumes of 1,015 tonnes: up 3% vs Q3 and up 21% vs Q4 2023
u
FY 2024 Group volumes up 4% vs prior year after a soft H1:
u
Transport volumes up 8% (Aero +15%, Automotive +5%)
u
VAR volumes +14%; Electronics -12% and Energy & Industrial -5%
u
FY 2024 Group revenue down 5%, reflecting Medical destocking & FX
u
Medical revenues down 19% at £53.0m (flat H2 2024 vs H1 2024)
u
Robust like-for-like pricing with ASP at £78/kg, offset by sales mix & FX
Underlying PBT impacted by Medical, mix & lower asset utilisation;
strongcostcontrol
u
FY 2024 underlying PBT down 26% at £59.1m, driven by Medical sales and lower
assetutilisation as inventories reduced
u
FY 2024 reported PBT £23.4m after £35.7m in exceptional items, including Bond 3D
impairment of investment in associate and fair value loss on loans
u
FY 2024 gross margin 46.2% (FY 2023: 53.0%), recovery opportunity as asset
utilisationimproves
u
Self-help & Project Vista: support future profitability through Go to Market & sales
improvements
Strong cash conversion driven by lower capex & inventory unwind
u
FY 2024 net debt £21.1m, including cash of £29.3m (FY 2023: net debt of £16.7m
including cash & other financial assets of £33.5m) with RCF repaid
u
New China manufacturing facilities operational, concluding major capital
investmentphase
u
Good progress on inventory reduction: £19.4m YoY movement (FY 2024: £115.1m),
& further opportunity in FY 2025
u
Improved underlying operating cash conversion
1
of 114% (FY 2023: 18%)
u
Final dividend maintained at 46.14p/share
Key mega-programme milestones delivered, supporting mid-term growth targets
u
Aerospace Composites: further revenue growth
u
E-mobility: new customer collaborations
u
Knee: regulatory submission for approval in India & US clinical trial approved
u
Magma: continuing technical & commercial collaboration with TechnipFMC
&Petrobras
u
Trauma plates: strong revenue growth & broader customer base
u
Mid-term growth targets of 5–7% revenue CAGR
2
, with upside of 8–10%
CAGRasmega-programme contribution increases
1 Alternative performance measures are defined in note 25.
2 Revenue CAGR in five-year period. Targets communicated in December 2023.
FY VOLUMES UP 4%; SOLID START TO FY 2025
& FOCUSED ON GROWTH
Contents
Group sales volume
tonnes
3,731 +4%
Group revenue
£m
291.0 -5%
Underlying profit
before tax
1
£m
59.1 -26%
23
23
23
23
23
23
22
22
22
22
22
22
24
24
24
24
24
24
3,731
23.4
291.0
19.8
59.1
59.56
Dividend per share p
(regular)
59.56 (flat)
Reported earnings
pershare p
19.8 -72%
Reported profit
beforetax £m
23.4 -68%
72.5
87.7
70.9
87.6
59.56
59.56
3,598
4,727
307.0
341.0
80.0
95.6
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 1
OUR PURPOSE
To bring transformational
and sustainable
solutionsthat address
world material
challengesevery day
OUR VALUES
u
Passion
u
Innovation
u
Performance
A SUSTAINABLE BUSINESS
People
Support ourlocal
communities and inspire
STEM based careers.
Support our DE&I agenda.
Planet
Minimise our use
ofresources across
thevalue chain (carbon,
water & waste) and
support Biodiversity.
Products
Offer sustainable
productswhich provide
clear environmental
andsocietal benefits.
OUR CULTURE
Safety, sustainability
& accountability
Innovation Service for
customers
Delivering
withspeed
STRATEGIC IMPERATIVES
Drive
u Technical service & quality
u Cost efficiency & self-help
u Sustainability & productivity
Differentiate
u Application development
u How we serve our customers
u Innovation pipeline
Create and deliver
future value
u Increase revenue from product
forms, parts & mega-programmes
u Expand portfolio in composites
andMedical
Underpin
u Safety, quality, health & wellbeing
u Sustainability & talent
u Strong financial position
OUR STRATEGIC ROADMAP
Our strategic imperatives are based on how we Drive our core business; Differentiate through how we
serve our customers and utilise our application development expertise; and Create and deliver value for
our customers and stakeholders. We Underpin all of our strategic imperatives through a relentless focus
on safety, quality, health and wellbeing, through having a clear purpose as a sustainable business with
sustainable products, and through developing our talent, whilst maintaining a strong financial position.
OUR BEHAVIOURS
u
Driving results
u
Working together
u
Doing the right thing
u
Continuously
improving
u
Focusing on our
customers
Victrex at a glance
Sustainability report
Pages46 to 75
Sustainability report
Pages46 to 75
Read more on page 92
Sustainability report
Pages46 to 75
Read more on
pages16to21
2 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION2 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
1,100+
employees globally
100%
of our global electricity
fromrenewable sources
###
(where the market exists, see
page 66)
30–40%
average weight saving
usingVictrex
TM
PEEK
vs metal
52%
of revenues from
sustainable products
#
40+
countries served
Note: Source data available on request.
# Sustainable products are defined as those which offer quantifiable environmental or societal benefit. These are primarily in Automotive, Aerospace
(supporting CO
2
reduction) and Medical (supporting improved patient outcomes). Some applications are also in Energy & Industrial (e.g. wind and
renewable energy applications) and Electronics (supporting energy efficiency, e.g. home appliances). Volumes from Oil & Gas are excluded, as are
ValueAdded Resellers volumes currently, due to the lack of full clarity on exact end market destinations. Sustainable products represented 52%
ofGrouprevenues in FY 2024 (FY 2023: 55%).
## The Group targets 5–6% of Group revenues to be spent on R&D expenditure, being a leading indicator of the Group’s ability to innovate into new
applications, supporting future growth.
### For all countries where the market exists via either retail supply contracts or offset by certificated EACs. This applies to all future references to 100%
electricity from renewable sources throughout this report.
c.5%–6%
of sales invested
inR&D
##
BRINGING TRANSFORMATIONAL
&SUSTAINABLE SOLUTIONS
Our purpose is to bring transformational and sustainable solutions which address the world’s material
challenges. Through ourMedical and Sustainable Solutions business areas, we have a strong core
business based on PEEK polymer, which has formed Victrex’s business since 1993. Our products typically
replace metal with alighter, durable and more sustainable alternative. This in turn supports the
opportunity to underpin CO
2
reduction, enhance energy efficiency and provide clinical benefit in
applications which use our materials. Through a developing and differentiated portfolio of product
forms and parts (Polymer & Parts), we seek to grow new revenue streams, enabling environmental
andsocietal benefit for our customers.
OUR SOLUTIONS OUR BUSINESS
Aerospace
20,000+
aircraft flying with Victrexsolutions
Energy & Industrial
75m+
VICTREX™ PEEK seal rings in use today
100m+
machines operate using Victrex solutions
Automotive
500m+
VICTREX™ PEEK based applications in use
Electronics
4bn+
mobile devices using Aptiv™ film
Medical
15m+
implanted medical devices using
VICTREX™PEEK to date
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 3STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 3
Victrex plc | Annual Report 2024
OUR BUSINESS TODAY
Our products support a diverse range of applications andend markets (Groupvolume and revenue split
based on FY 2024).
Victrex at a glance continued
Transport
28% of Group volume
In Automotive we underpin applications
including ABS braking systems, powertrain,
bearings, fuel filter systems, transmission
and EV battery applications. In Aerospace,
we support mission-critical applications
likethermal acoustic blankets, brackets
&fasteners, as well as newer applications
incomposite parts.
Medical
4% of Group volume
Core applications include spinal fusion,
arthroscopy, dental, trauma, drug delivery,
cardio, CMF and active implantables, with
Knee and Trauma as our Medical mega-
programmes. Medical revenues are 60:40
Non-Spine and Spine.
Electronics
12% of Group volume
Electronics has long-standing applications
inSemiconductor, including CMP rings and
in the chip manufacturing process; whilst
insmart devices, Victrex has APTIV
TM
film
business supporting smart device speakers.
We also serve household appliances
including hairdryers and vacuumcleaners.
Spine
Energy & Industrial
16% of Group volume
In Energy, Victrex
TM
PEEK serves applications
in deep sea exploration equipment, as well
aspumps and valves. We have growing
business in wind & renewable energy.
Ourmaterials are also used in industrial
machinery, food & beverage processing
andeyeware.
Value Added Resellers (‘VAR’)
40% of Group volume
Our VAR customers process Victrex
TM
PEEK
to support a range of industries, typically
processing or compounding high volumes
ofour materials to support tier 1 and tier 2
customers, or OEMs.
V
Sustainable Solutions
82%
of revenues
Medical
18%
of revenues
4 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION4 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
HOW OUR PRODUCTS
ENABLEENVIRONMENTAL
ANDSOCIETALBENEFITS
Supporting CO
2
reduction, improving energy efficiency and better patient
outcomes arejustsome of the benefits our products bring, with over half
ofourrevenues nowcoming from sustainable products (FY 2024 data).
* Based on European annual mileage for passenger cars using selected applications including vacuum pumps.
** Based on 10kg of PEEK replacing metal: IATA carbon reduction & climate change 2018.
***
25% improved brain function using PEEK-OPTIMA
TM
Natural vs 11% in metal, based onpaperby Zhang Q, Yuan Y, Li X, et al, World Neurosurgeon 2018.
Automotive
80,000 tonnes
annual CO
2
saving in Europe
for selectedapplications*
Electronics
30–40%
PEEK is 30–40% lighter than some metals
and supports improved energy efficiency
inhomeappliance devices
Aerospace
c.3x CO
2
savings
annual sales to Aerospace customers
supportCO
2
savings approximately 3x Victrex’s
annualScope 1&2 emissions**
Medical
25%
improved brain function using
PEEK-OPTIMA™ Natural in CMF
skullplatesvsmetal***
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 5
Dr Vivienne Cox DBE
Chair
Overview
Despite a particularly tough period in several
of our end markets, driven by a substantial
inventory correction in the chemical industry,
we have stayed the course, which sets us up
well for the upturn. Our resilient workforce,
innovative culture and investments in
capability and assets have kept Victrex
wellpositioned through the recent
challenging macro-economic conditions,
which have impacted performance and
chemical industry valuations. Although the
outlook remains mixed, we are focused on
growth for theGroup in FY 2025.
Our purpose: aligned to growingglobal
megatrends
Victrex has a clear purpose to bring
transformational and sustainable solutions
to the performance challenges faced by our
customers. All of our products come with
environmental, technical or medical
benefits, across Aerospace and Automotive
industries, with lighter, more durable and
faster to process materials supporting CO
2
reduction; in Electronics and Energy &
Industrial to support energy efficiency; or
inMedical, supporting patient outcomes.
We play a keypart in supply chains, with
ourmaterials supporting ‘mission-critical’
applications today and being part of the
innovation programmes of tomorrow, across
several keyindustries. This alignment
supports our target to drive strong revenue
and profit growth over the medium to long
term. Further information is in the CEO’s
Review of Strategy on pages 18 and 19.
Safety: a Zero Accidents & Incidentsculture
We have a Zero Accidents, Zero Incidents
goal across our entire business. During the
year, we built on our strong safety record,
with our recordable injury frequency
rate(‘RIFR’) slightly improving to 0.18
(FY2023:0.22) and better than the OSHA
industry average (1.3). Beyond our main UK
manufacturing facilities and warehousing,
our global operations include polymer
manufacturing in China and some
downstream parts manufacturing in the
US.It is imperative for our employees, for
our culture and for the way we serve our
customers that we further build on our
safety performance over the coming years.
Self-help to drive Go to Market
effectiveness (Project Vista)
Our strategy is to be a world leader in
driving value creation through PEEK and
PAEK materials across our two business
areas of Sustainable Solutions and Medical.
Whilst our Polymer & Parts strategy remains
key, we are adapting through self-help
toensure that we have an even better
GotoMarket approach with customers,
supporting future profitability.
Firstly, we will enhance sales and R&D
effectiveness, as well as smarter
procurement, thereby creating sustainable
value for our customers. This will include a
more regional approach to how we focus
our Sales teams, rather than purely by end
market. Secondly, we will enhance the
speed and value creation of our business
development and technical service
processes, including greater digital solutions
to support customers. Balancing resources
across our Engine 1 (core business) and
Engine 2 (more differentiated business
including our mega-programmes) means we
will apply our resources and capability
where we can drive the greatestreturn.
Increasing our differentiation
With an addressable market for PEEK at
least five times current levels, it is imperative
that Victrex can further increase its
differentiation. Polymer & Parts already
differentiates usfrom competitors, who
largely focus onaportfolio of materials
other than PEEK. However, through a
rebalancing of resources, and our market
and application development know-how,
we will seek to drive a greater proportion
ofhigher value business.
Differentiation also comes in the form
ofourtechnical service for customers, and
ourunique manufacturing process, with
backward integration into key raw materials.
Our innovation strength has been built up
over many years and includes know-how or
patents. Investing around 5–6% of sales
every year to support R&D will keep
uswellplaced to continue innovating and
supporting the needs of our customers.
Delivering revenue & profit growth
Last year we set out our growth targets
through to FY 2028, with 5–7% revenue
CAGR and an opportunity of 8–10% CAGRas
our mega-programmes further commercialise.
The Board remains confident in delivering
against these targets once the challenging
macro-economic conditionssubside.
Our five large game-changing
mega-programmes of Aerospace
Composites, E-mobility, Knee, Magma
(composite pipe for the energy industry)
andTrauma continue to deliver key
milestones and increase commercialisation.
We have line ofsight towards £10m annual
revenues for some programmes, with
further detail shown onpage 27.
Sustainability & ESG: People,
Planet&Products
The environmental & societal benefits
ofVictrex™ PEEK products will continue to
increase in importance, as the need for CO
2
reduction, energy efficiency or improved
patient outcomes becomes more critical in
the coming years.
STAYING THE COURSE:
READY FOR THE UPTURN
Chair’s statement
6 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION6 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
The Board is also pleased to report that
wegained successful validation for our
decarbonisation targets this year, as part of
the Science Based Targets initiative (‘SBTi’).
We now move to the delivery phase,
withoptions to utilise alternative fuels or
processes available. Further detail is set
outin the Sustainability report on page 46.
Our People, Planet & Products pillars are
recognised by customers and investors and
have helped us gain strong accreditations
Victrex’s close alignment with
growing and powerful global
megatrends such ascarbon
reduction and improving
patient outcomes positions
uswell for the yearsahead.
Our purpose isto supply our
customers with products
which enable environmental
or societal benefits. Despite
atough period in several of
our end markets, we have
continued to invest in our
people, our assets and our
innovation strengths. We are
focused on growth for the
Group in FY 2025.
Dr Vivienne Cox DBE
Chair
Our
purpose
Bringing transformational &
sustainable solutions which
address world material challenges
every day
5–7%
revenue growth
(target for revenue CAGR
throughto FY 2028)
from a number of ESG rating agencies.
Ialsowant to thank the dedication of
ouremployees across our People agenda,
where we actively engage with communities
wherever we operate, including in Science,
Technology, Engineering & Maths (‘STEM’)
programmes and Biodiversity. Inspiring and
supporting the talent of the future is
embedded in Victrex’s culture.
Results
The challenging macro-economic
environment continued through FY 2024.
Underlying financial performance was in line
with expectations but was materially weaker
year on year, driven by trading, Medical
destocking and lower asset utilisation. This
resulted in underlying PBT of £59.1m (FY
2023: £80.0m), with reported PBT of £23.4m
(FY 2023: £72.5m), reflecting exceptional
items of £35.7m. We saw more encouraging
end market and macro-economic indicators
through the second half year, which supports
the opportunity of growth into FY2025,
though trading conditions remain mixed.
Further detail is set out in the Financial review
on pages 26 to 35.
Robust balance sheet
With a small net debt position, after
aperiod of high investment and weak
tradingconditions, we have the opportunity to
improve cash generation as trading improves
and investment moderates. Our highly
cash-generative business model enables us to
invest in our growth, as well asoffer attractive
shareholder returns. With completion of our
China manufacturing andUK asset upgrade,
capital expenditure will reduce to
approximately 8–10% ofrevenues.
Delivering for our shareholders
The Board is mindful that this has been
achallenging period for shareholders.
However, our clear strategy and enhanced
Go to Market approach – alongside a
macro-economic recovery – support the
opportunity of strong growth. Our asset
base is well invested and operating leverage
will start to improve from FY 2025 onwards.
With investment moderating, this offers the
opportunity for incremental shareholder
returns as cash flows improve. Share
buybacks and special dividends are options
we will consider to return cash. Further
details on our capital allocation policy can
be found onpage 28.
Governance & the Board
The Group continues to place a strong
emphasis on governance, as well as ensuring
the Board has the skills and experience to
support delivery of our strategy. During
theyear we were pleased to welcome
UrmiPrasad Richardson to the Board
asaNon-executive Director. Urmi brings
awealth of experience in innovation-led
businesses, including at Thermo Fisher
Scientific. Biographies of each Board
member can be found on pages 80 and 81.
Diversity, Equity & Inclusion
The Group continues to make good progress
in our Diversity, Equity & Inclusion (‘DE&I’)
journey. We now have 25% of our
leadership group comprising females, as
part of our females in leadership target of
40% by 2030. We also established further
employee resource groups (‘ERGs’) to reflect
the increasingly international nature of our
operations. Our Race, Ethnicity and Cultural
Heritage (‘REACH’) group was formed this
year, sponsored by a Victrex Management
Team (‘VMT’) leader, bringing a greater
diversity ofemployees together.
People, stakeholders, values & culture
The challenging macro-economic
environment over the past two years has
tested us all and it is important that we
recognise and thank each and every one of
Victrex’s employees for their resilience and
contribution. Training, flexible working and
supportive policies are areas we have
invested in to ensure that we continue
todevelop our employees.
I am pleased to report that our biannual
Employee Engagement Survey showed
animprovement, with engagement up 4%
to 73% compared to the last full survey.
Wewere also included in The Sunday Times
Best Places to Work for the first time.
Our Workforce Engagement Non-executive
Director, Brendan Connolly, has continued
to engage with employees across our global
locations and a summary of this is shown on
page 94. Overall, it is very clear to me that
through positive times and challenging
times, our values of Passion, Innovation and
Performance, and our culture of innovation,
remain firmly embedded across Victrex.
Outlook
The Group has seen a solid start to FY 2025
– ahead of the prior year – despite mixed
trading conditions. Our expectations for
profit growth are based on robust demand
continuing across the end markets of
Sustainable Solutions, together with Medical
improvement as we progress through 2025.
The timing of the upturn in Medical will be a
key factor in the scale of Group profit
growth, with cost control, self-help
measures, higher asset utilisation and lower
raw material costs helping to underpin profit
improvement.
Dr Vivienne Cox DBE
Chair
3 December 2024
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 7
OUR LONG-TERM
GROWTHCREDENTIALS
Through our core strengths of hunting for and developing new applications where
Victrex
TM
PEEK can play, we are able to catalyse new revenue streams and enable
environmental & societal benefits for our customers. Our products are aligned to
global megatrends, with a broad portfolio across our core business and our
mega-programmes. Our addressable market is estimated at 5x current levels –
underpinned by a robust financial position and an improving cash profile.
Our investment case
An innovative world leader:
buildingthe PEEK/PAEK market
No.1
PEEK expert
Sustainable product goals
>70%
Group revenue from sustainable products
with environmental and societal benefits
by2030 (from 52% today)
Proportion of project-based R&D
investment indedicated sustainable
products orprogrammes
88%
of project based R&D expenditure
supporting sustainable products or
programmes (as a proportion ofthe
Group’sallocated R&D expenditure
2
)
Strong pipeline of medium to
long-termgrowth opportunities
5
mega-programmes offering potentially
game-changing solutions for customers
Sector leading returns
16%
five-year average return on invested
capital(‘ROIC’)
1
Highly cash-generative
businessmodel
114%
underlying operating cash conversion
1
1 Alternative performance measures are defined in note 25.
2 Total R&D investment in sustainable products or programmes was 37% (FY 2023: 40%).
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Victrex plc | Annual Report 2024
AN INNOVATIVE CULTURE:
CHANGE-MAKERS
&MARKET-MAKERS
Victrex
TM
PEEK & PAEK polymers: technology with a unique combination of properties
As the pioneer of PEEK, Victrex has
astrongheritage. Our polymers and
materials are found in many ‘mission-critical’
applications and our track record over
several decades has been in ‘hunting’
fornew application uses, ensuring that
wecan demonstrate a performance
advantage over metal or other materials.
These include in aerospace applications
40,000 feet up, energy applications 10,000
feet below the sea or,increasingly, in a more
diverse range of medical devices: spine,
arthroscopy and cardio applications, with
orthopaedic applications like trauma seeing
revenue growth.
With differentiation through our Polymer
&Parts strategy, our unique manufacturing
processes and backward integration into
keyraw materials, and our ability to ‘make
markets’ and develop new applications,
Victrex is exposed to favourable megatrends
like CO
2
reduction, energy efficiency and
clinical outcomes.
Our leading position in application
development – protected through
know-how or patents – has helped enable
environmental, technical or societal benefits
for our customers over many years.
Our focus is to drive increased
differentiation through growing our
corebusiness, as well as delivering more
specialised grades, productforms or
parts,including our mega-programmes.
Growth targets
Revenue CAGR
5–7%
medium term
Potential for revenue CAGR
8–10%
medium term, with
greatercommercialisation of
ourmega-programmes
Mega-programme revenue goal
>£25m
by end of FY 2025
to 10,000
feet below
40,000
feet above the sea…
Victrex’s high performance
polymersarefound across
anumber ofend markets
&applications
Medical revenues
Double
by FY 2028 (from FY 2023 baseline)
Overall, the future success of Victrex willbebuilt on by
applying our unique technology to a focused and broader
portfolio of applications, supported by ourculture of
innovation, capability and wellinvested assets.
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Victrex plc | Annual Report 2024
Our investment case continued
Sustainability report on page 46
ALIGNED TO
GLOBALMEGATRENDS
u
PRODUCT GOALS: Within our own assessment of how our products bring a quantifiable
environmental and societal benefit, our target is to exceed 50% of revenues by 2025
and70%ofrevenues by 2030.
u
SUSTAINABLE PRODUCT REVENUES: In FY 2024, our sustainable products made up 52%
ofourrevenues (FY 2023: 55%).
* Data on file.
** IATA carbon reduction and climate change 2018, based on replacing 10kg
of metal with PEEK and associated CO
2
reduction.
Aerospace
30–40%
lighter (vs metals)
Applications using Victrex
TM
PEEK polymer typically
offer 30–40% weight
reduction compared to
metal used in Aerospace*
Our annual PEEK sales to
Aerospace alone help
support annual CO
2
savings
c.3x our own annual CO
2
footprint (based on Scope
1 & 2 emissions)**
Automotive
>200g
PEEK in EVs
Victrex
TM
PEEK has
along-standing history
inABS braking systems,
transmission and
otherapplications. Our
penetration in electric
vehicles (‘EVs’) is growing,
with the opportunity of
>200g per car (currently
~11g average for
existingICE cars)
Electronics
30–40%
lighter (vs metals)
Home appliances, smart
devices, Artificial Intelligence
applications and
semiconductors demand
greater energy efficiency,
supported by lightweight
and durable Victrex
TM
PEEK.
Atypical 40% weight saving
vs metals used in Electronics
supports the opportunity of
improved energyefficiency*
Energy & Industrial
Less
metal
Metal replacement in
energy applications,
including growing revenues
in renewable energy,
withopportunities in
hydrogen applications
Medical
Improved
patient outcomes
Higher union rates and
improved patient outcomes
have been achieved using
Victrex
TM
PEEK composite
Trauma plates, compared
to metal solutions*
Automotive
Aerospace
Electronics
Medical
Energy &
Industrial
CO
2
reduction
Clinical
benefit
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Victrex plc | Annual Report 2024
Mega-programme
Magma (composite pipe
for the energy industry)
E-mobility (electric
vehicleapplications)
Trauma plates
(compositetrauma plates
forpatient fractures)
Aerospace Composites &
Structures (the aeroplanes
of tomorrow)
PEEK Knee (alternative to
metal knee replacement)
1. Revenue phase Commercial c£1m Commercial c£5m Commercial >£1m Commercial c£3m Development <£1m
2. Annual
milestones
Supporting
finalisation of
qualification for
Brazil opportunity
New business or
platform build for
800V motors
Broader customer
wins & strong
revenue growth
>£1m
Finalisation of
qualification
programmes
Regulatory submission
(India); 57 patient
implants, 20past 2-year
clinical phase
3. Next milestones Petrobras bid
outcomes (via
TechnipFMC)
New 800V
platforms;
broader battery
applications
Revenue build &
additional customer
launches
Qualifications and
use cases for key
PEEK composite
applications
Potential for a
commercial PEEK Knee
in 2025/26 (subject to
regulatory pathway); US
clinical trial starting
4. Investment
requirements
Limited –
TechnipFMC
investing
Limited – Victrex
XPI
TM
patented
grade established
Modest – incremental
product development
investment
Limited – investment
through supply chain
Modest – further
development &
industrialisation scale-up
5. Timeline to
£10mrevenue
2
~3 years ~2 years 2–3 years ~2 years >3 years (based
onappropriate
regulatory pathway)
FOCUS ON: AEROSPACE COMPOSITES
Our Aerospace Composites mega-programme offers
the potential of up to 10x the PEEK content per plane
compared to today. Prior to new aerospace platforms
being delivered, we are now seeing composite based
parts being prepared for use cases in components like
engine housings, nacelles and other parts. The
rationale for these increasingly larger composite parts
is to drive lightweighting and CO
2
reduction, as well
as faster processing, which our materials support.
We also have significant intellectual property (‘IP’)
and know-how in this area, including in hybrid
moulding. Overall, to reduce plane order backlogs
and produce more aircraft per year, the trend is
verysupportive towards high performance materials
like Victrex™ PEEK or LMPAEK™ where we are
qualifying, or have already qualified, for a number
ofaerospaceprogrammes.
FOCUSED ON INCREASING
COMMERCIALISATION
INOURMEGA-PROGRAMMES
Our five game-changing mega-programmes
1
offer the potential of at least £50m revenue in their peak sales
year, with some (e.g. Knee) assessed as significantly more and with a revenue potential at least as large as
Victrex’s Group revenue today
2
. Revenue from our mega-programme portfolio is currently more than £10m,
with an opportunity to deliver significant growth over the next 12 months.
Mega-programmes aim to deliver new revenue streams and further differentiate Victrex, typically aligned
toeither supporting CO
2
reduction or improving clinical outcomes.
After a period of development, incubation and ‘push’ for our mega-programmes, we now have increasing ‘pull’
from major customers and OEMs like Airbus, TechnipFMC and key medical device customers, compared to recent
years. Milestones towards greater commercialisation are increasing, with major customers also investing their
money to support delivery of these mega-programmes (for example in regulatory submissions for PEEK Knee or
new manufacturing facilities for Magma or Aerospace Composites) and to solve their performance challenges.
1 Mega-programmes defined as offering at least £50m of revenue in peak sales year.
2 Estimated.
Airbus’ multi-functional fuselage demonstrator is a showcase for Victrex LMPAEK™ based composites, with a fuselage structure being
manufactured based on our materials (image courtesy of Airbus).
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Victrex plc | Annual Report 2024
SIZEABLE AND SUSTAINABLE
GROWTHOPPORTUNITIES
With long-term megatrends in our favour and sustainable products, we have a strong
anddiverse mix of growth opportunities across our key markets.
End markets Market opportunity Megatrends Increasing penetration of PEEK
SUSTAINABLE SOLUTIONS
Aerospace
42,000
new passenger and freight aircraft by 2043
Source: Airbus
Fly lighter
u
Lighter weight and CO
2
reduction trends
withmore efficient manufacturing using
PEEK, PAEK and composites mean fuel
saving– a strategic imperative for the
Aerospace industry.
u
Opportunities to support reduction
ofOEM backlogs through more
efficientprocessing.
10x PEEK & PAEK content opportunity
u
Commercialisation of lighter structural composite parts (wing and fuselage structures).
u
Part of Airbus Clean Sky 2 programme & other customer programmes.
u
Opportunity to move from c.500kg to >5 tonnes of PEEK per plane.
Automotive
>200g
potential PEEK/car on EV platforms (increase
from current 11g average over long term, based
on 800V electric vehicle)
CO
2
reduction, durability
andelectrification
u
Fuel efficiency, CO
2
reduction, safety
andreliability improvements resulting
from consumer and regulatory trends.
Transition from internal combustion
engines (‘ICE’) to electric vehicles (‘EVs’)
as electrification is mandated in
manyregions.
Increase PEEK content per vehicle in EVs
u
Moving from 11g average PEEK content in ICE cars to potential of >200g
per car (long-termopportunity, based on EV with dual motors).
u
Multiple opportunities in electric cars, bikes and green transport, with increasing
businesswins.
u
Majority of existing ICE applications translate across EVs
(braking, powertrain and gears).
Electronics
32bn+
connected devicesby2030
Source: Statista
Thinner, smaller, smarter
u
The need for instant access to
communication and information onthe
move is driving trends for mobile devices.
Energy efficiency and thermal management
u
Broadening range of applications: semiconductors, mobile devices and home appliances.
u
Artificial Intelligence (‘AI’) opportunities.
u
Strong capability of PEEK in durability andthermalmanagement.
u
Metal replacement supporting energy efficiency of devices and applications.
Energy & Industrial
28%
increase in global energy use by 2040
Source: IEA
Energy transition
u
Increasing demand for and depletion
ofexisting resources drive exploration
into extreme environments, as well as
the energytransition, increase
inrenewable energy and electric
vehicles/greater electrification.
u
More efficient manufacturing processes
create more data and connectivity
requirements in Industrial end markets.
Performance in traditional and new energy applications
u
Increasing penetration in renewable energy (e.g. wind applications)
and hydrogenopportunity.
u
Metal replacement in traditional energy; Magma composite pipe.
u
Drive new application areas in Industrial, including food, robotics
and opportunity forPEEK following PFAS regulations.
MEDICAL
Medical
7% CAGR
forecast for medical device industry revenue growth
2024–2029 (6.99% CAGR forecast by Mordor Intelligence)
Ageing global population
u
People are living longer and have a
strong desire to maintain their quality
oflife and activity levelsin their later
years, requiring better patient outcomes.
u
Greater demand for alternative and
non-metal solutions.
Supporting improved patient outcomes
u
Significant growth in Non-Spine, e.g. Trauma, CMF, Cardio and Knee.
u
Leveraging clinical data and component manufacturing capability
to drive PEEK adoption.
u
3D printed Porous PEEK approved to support greater bone in-growth.
Our markets and megatrends
12 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
End markets Market opportunity Megatrends Increasing penetration of PEEK
SUSTAINABLE SOLUTIONS
Aerospace
42,000
new passenger and freight aircraft by 2043
Source: Airbus
Fly lighter
u
Lighter weight and CO
2
reduction trends
withmore efficient manufacturing using
PEEK, PAEK and composites mean fuel
saving– a strategic imperative for the
Aerospace industry.
u
Opportunities to support reduction
ofOEM backlogs through more
efficientprocessing.
10x PEEK & PAEK content opportunity
u
Commercialisation of lighter structural composite parts (wing and fuselage structures).
u
Part of Airbus Clean Sky 2 programme & other customer programmes.
u
Opportunity to move from c.500kg to >5 tonnes of PEEK per plane.
Automotive
>200g
potential PEEK/car on EV platforms (increase
from current 11g average over long term, based
on 800V electric vehicle)
CO
2
reduction, durability
andelectrification
u
Fuel efficiency, CO
2
reduction, safety
andreliability improvements resulting
from consumer and regulatory trends.
Transition from internal combustion
engines (‘ICE’) to electric vehicles (‘EVs’)
as electrification is mandated in
manyregions.
Increase PEEK content per vehicle in EVs
u
Moving from 11g average PEEK content in ICE cars to potential of >200g
per car (long-termopportunity, based on EV with dual motors).
u
Multiple opportunities in electric cars, bikes and green transport, with increasing
businesswins.
u
Majority of existing ICE applications translate across EVs
(braking, powertrain and gears).
Electronics
32bn+
connected devicesby2030
Source: Statista
Thinner, smaller, smarter
u
The need for instant access to
communication and information onthe
move is driving trends for mobile devices.
Energy efficiency and thermal management
u
Broadening range of applications: semiconductors, mobile devices and home appliances.
u
Artificial Intelligence (‘AI’) opportunities.
u
Strong capability of PEEK in durability andthermalmanagement.
u
Metal replacement supporting energy efficiency of devices and applications.
Energy & Industrial
28%
increase in global energy use by 2040
Source: IEA
Energy transition
u
Increasing demand for and depletion
ofexisting resources drive exploration
into extreme environments, as well as
the energytransition, increase
inrenewable energy and electric
vehicles/greater electrification.
u
More efficient manufacturing processes
create more data and connectivity
requirements in Industrial end markets.
Performance in traditional and new energy applications
u
Increasing penetration in renewable energy (e.g. wind applications)
and hydrogenopportunity.
u
Metal replacement in traditional energy; Magma composite pipe.
u
Drive new application areas in Industrial, including food, robotics
and opportunity forPEEK following PFAS regulations.
MEDICAL
Medical
7% CAGR
forecast for medical device industry revenue growth
2024–2029 (6.99% CAGR forecast by Mordor Intelligence)
Ageing global population
u
People are living longer and have a
strong desire to maintain their quality
oflife and activity levelsin their later
years, requiring better patient outcomes.
u
Greater demand for alternative and
non-metal solutions.
Supporting improved patient outcomes
u
Significant growth in Non-Spine, e.g. Trauma, CMF, Cardio and Knee.
u
Leveraging clinical data and component manufacturing capability
to drive PEEK adoption.
u
3D printed Porous PEEK approved to support greater bone in-growth.
Visit
www.victrexplc.comto
seehow we are shaping
future performance in
ourmarkets
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 13
What we do
1. A sustainable business model
We enable environmental & societal benefits for our customers
andtheplanet. Oursustainable products offer a unique combination
ofproperties, supporting CO
2
reduction in Aerospace & Automotive
through lightweighting and faster processing, and with over 15 million
PEEK implants to date in medical devices, we also support improved
patient outcomes. With our People, Planet & Product based ESG pillars
and decarbonisation goals, weseek to minimise our use of resources,
with the opportunity to change our process or use alternative fuels
tosupport alignment to Net Zero emissions by 2050 (aligned to and
validated by SBTi), with an interim target by 2032.
2. Align to global megatrends
We identify megatrends such as CO
2
reduction or improved
patient outcomes, where our polymers can offer a performance
advantage vs metal or incumbent materials. We identify
andunderstand customer needs, targeting industries
andapplications with opportunities for significant growth
andattractive returns.
3. Innovation
Our culture is built on continual innovation, with a focus
solely onPEEK/PAEK and the high performance materials
area,beyondsimply manufacturing polymers. We have a high level
oftechnical capability, with investment in Research & Development
representingc.5–6% of revenue. We work withpartners to bring
newand enhanced products toour customers and ourend markets.
UN Sustainable Development Goals (‘SDGs’)
Our business model and sustainability strategy are aligned to the UN’s
Sustainable Development Goals 2030, including alignment to the Science
Based Targets initiative (‘SBTi’).
Key to strategy
Drive core business
Differentiate through innovation
Create and deliver futurevalue
Underpin through safety,
sustainability andcapability
Who we are
Victrex was formed in 1993 following a
management buy-out from ICI, with our main
PEEK & PAEK polymers having their roots in
the1970s when the product was developed.
Today, we partner with customers in 40 countries,
with a culture of innovation being part of
everything we do. Every day, millions of people
rely on applications which contain our sustainable
products and materials, from smartphones,
aeroplanes and cars to energy production
andmedical devices.
Shaping future performance
Our Polymer & Parts strategy sees usdevelop
andmanufacture a range of high performance
PAEK & PEEK polymers which offer sustainable
performance benefits, typically replacing metal in
applications, many of which are ‘mission critical’.
Our sustainable products offer benefits such as
lightweighting, recyclability, durability, chemical
resistance, faster processing and enhanced clinical
outcomes, with a focus on bringing environmental
& societal benefits in everything we do.
A SUSTAINABLE BUSINESS
WITHSUSTAINABLE PRODUCTS
Our business model
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Victrex plc | Annual Report 2024
What we do
5. Capital, cost and cash generation
Our strong financial profile enables us to invest
(capex or M&A) in support of our strategy.
Costefficiency and productivity are key, as we
focus on operating efficiency, supporting margin
and returns. With high value products, weseek to
retain a strong financial position. After a period of
high investment, we expect to see improving cash
generation, underpinningshareholder returns.
4. Manufacturing differentiation
Our Polymer & Parts strategy and unique
manufacturing process (Type 1 PEEK) differentiate
us from competitors, with >250 patents in place or
pending, and know-how helping us to manufacture
the widest range of PEEK grades, including Type 2
PEEK (UK & new China facilities). Safety is our highest
priority, with efficient and well invested assets.
We have invested in downstream manufacturing
capability, to make selected ‘parts’ within
Automotive, Aerospace, Energy & Industrial and
Medical, underpinning the opportunity for our
‘mega-programmes’, each of which offers the
potential of >£50m peak revenue opportunity.
Our people &capability
Over 1,100 talented
employees wake up every
day focusing on PEEK and
partnering with customers
to bring environmental
&societal benefits through
our sustainable products.
Our suppliers
& partners
We are the only PEEK
manufacturer with
upstream integration
intokey raw materials,
supporting security
of supply for customers.
Supported by How we create value
6. Sales, marketing and technical excellence
Our Sales & Technical Service teams ensure we can
support customers with validation and certification
in critical applications. We have strong regulatory
&quality teams, partnering with customers or
processors in development of new applications,
helping to drive PEEK adoption. Our Growth+ and
enhanced Go to Market approach includes regional
sales teams and increasing digital solutions.
For customers
By partnering with customers in the
development of new applications, we
bring superior products that deliver
long-term performance benefits vs
incumbent materials.
Read more on pages 22 and 23
For employees
Investing in skills, apprenticeships and
training brings significant opportunity
for development as part of our Polymer
& Parts strategy. Performance based
reward drives ahigh retention rate.
Read more on pages 22 and 23
For investors
Continued innovation and
deliveringperformance benefits for our
customers drive strong returns and
cash generation to invest and support
shareholder returns.
Read more on pages 22 and 23
For communities
Engagement with our local
communities enables us to partner on a
wide range of social responsibility and
environmental programmes.
Read more on pages 22 and 23
For society & the planet
Our purpose is to bring
transformational & sustainable
solutions, with products which
cansupport environmental
orsocietalbenefits.
Read more on pages 22 and 23
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Victrex plc | Annual Report 2024
HOW WE CREATE VALUE THROUGH
OURPOLYMER & PARTS STRATEGY
Underpin
u
Safety, health and
wellbeing, quality,
andself-help
u
Sustainable business
with sustainable
products
u
Talent strategy
u
Strong financial
position
Energy &
Industrial
Automotive Electronics Aerospace Medical
Drive core business
u
Focused on PEEK & PAEK:
technical service, quality,
Goto Market strategy
u
No.1 manufacturing capacity
ofc.8,000 tonnes (UK
nameplatecapacity)
u
Cost efficiency
u
Sustainability & productivity
Differentiate through innovation
u
Commercialise application
development pipeline
u
Develop newpolymer grades,
forms & parts
u
Increasedifferentiation
through mega-programme
commercialisation
Create and deliver…
u
Increase revenue from
product forms & parts
(semi-finished & finished)
u
Downstream manufacturing
u
Expand portfolio in
composites and Medical
…future value
u
Increase mega-programme
milestones and revenues
u
Drive adoption with OEMs
and Key Opinion Leaders
(Medical)
u
Increase Medical contribution
Our strategy
16 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION16 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
4
3
2
Strategic highlights in FY 2024
u
Sales volumes up 4%
u
First 1,000 tonne quarter since FY 2022 (Q4 FY 2024)
u
New China facility commercially operational (ramp-up in FY 2025)
u
52% of Group revenue from sustainable products which enable environmental
&societal benefits
Strategic highlights in FY 2024
u
6% of sales invested in R&D including 88% of project based R&D spend supporting
sustainable products & programmes
u
Supporting advanced qualification for TechnipFMC and scale-up in Brazil for
‘Magma’composite pipe programme
u
PEEK Knee regulatory submission (India), supporting commercial pathway
Strategic highlights in FY 2024
u
Growth in Trauma plate programme; >£1m revenue delivered
u
Qualification programmes advanced for Aerospace Composites with 10x PEEK
content opportunity per plane
u
US FDA approval for 3D printed Porous PEEK spinal cage (Medical)
Strategic highlights in FY 2024
u
Strong safety performance: OSHA recordable injury rate of 0.18, 86% lower than
OSHA industry average of 1.3
u
4,423 employee hours supporting local communities including STEM & Biodiversity
u
25% of females in leadership roles and enhanced DE&I agenda
u
100% renewable electricity for all Victrex’s global locations (where the market exists)
STRATEGIC PROGRESS
Drive
Core business
Differentiate
Through innovation
Create & deliver
Future value
Underpin
Through safety, sustainability andcapability
1
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Victrex plc | Annual Report 2024
Growth targets
Drive core business growth
Core growth of at least
5–7%CAGR over the mid term
(revenue CAGR in five-year period)
Mega-programme upside
Upside opportunity to 8–10%
CAGR driven by increasing
mega-programme revenues
Mega-programme portfolio
Goal for total mega-
programmerevenues to
be>£25m inFY2025
Increase Medical revenues
Further broaden Medical revenues
to be >30% of Group revenues
by2032
Overview of strategy
Jakob Sigurdsson
Chief Executive Officer
Dear shareholder,
A strong foundation
After investing through this challenging
period – in people, assets and capability –
we have a strong foundation for the future,
once global macro-economic conditions start
to improve on a more sustainable basis. We
are focused on growth in FY 2025 following
a particularly challenging period in FY 2023
and FY 2024. This includes a significant step
up in our mega-programmes. Milestones
include the opportunity for a commercial
PEEK Knee in the market, visibility for
Magma’s prospects in Brazil and a growing
number of Automotive platforms for our
E-mobility programme, supporting
electricvehicles.
For the medium to long term, global
megatrends support an increasing range
ofapplications for our products. We also
anticipate more content for Victrex
TM
PEEK
inplanes, cars, energy infrastructure and
medical devices, with Medical set to become
a bigger part of the Group over the years
ahead, helping to offset the impact of more
cyclical industries on our business.
Our three steps to recovery
After staying the course through some of
the most challenging times for our business
and the chemical industry, we have three
key focus areas which will support an upturn
in our financial performance:
1. Core business recovery: macro-economic
indicators, whilst mixed, point to more
encouraging signals for the Group in
some end-markets. Victrex’s clear
strengths in innovation and application
development enable us to broaden
where Victrex
TM
PEEK can deliver a
performance benefit for our customers.
Overall, we are focusing on growth
within our core business, aided by our
new manufacturing facilities and
customer support in China.
2. Transitional year for mega-
programmes: after a period of
development and incubation, we
nowhave increasing ‘pull’ from major
customers and OEMs like Airbus,
TechnipFMC and key medical device
customers. These customers have
increased their own investment in each
of these areas to solve performance
challenges, supporting all five mega-
programmes and their delivery against
key milestones. The road to adoption
and commercialisation is becoming
clearer, with progress in each programme
and substantial upside for Victrex
TM
PEEK
content, although timing on Magma and
regulatory pathways may hamper overall
progress. Examples include in E-mobility,
with a 20x content increase potential per
car, Aerospace Composites, with a 10x
content opportunity per plane, and the
Magma programme, where preparation
for deploying this game-changing
composite pipe solution to solve deep
sea energy challenges has moved closer.
Our Medical mega-programmes –
Trauma and Knee – are also moving
beyond development stage revenues,
with Trauma commercial revenue now
building and a regulatory submission
offering near-term prospects of a
commercial PEEK Knee in the market.
3. Improving cash flow: our major
investments in people, assets and
capability over recent years are now
complete, providing us with the strong
footing and foundations to deliver a
return on those investments.
A STRONG FOUNDATION:
READY FOR THE UPTURN
This in turn – with capital expenditure and
inventories reducing – will support improved
cash flow, with the opportunity for
enhanced returns to our shareholders, both
buybacks and special dividends (for further
details on our capital allocation policy, see
page 28).
18 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION18 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Self-help: supporting future
profitability
As a product leader through Polymer &
Parts, we have enjoyed great success over
many years, with strong application
development skills, through new polymer
grades, product forms or semi-finished
parts. Our culture of innovation enables us
to work with major customers and major
brands to meet the performance challenges
of today andtomorrow.
Being a product leader is no longer enough.
After adapting our organisational structure
last year, we are focusing on how we
become more effective at serving our
customers (how we Go to Market and our
Project Vista programme) and being smarter
in procurement and operational excellence:
1. We will accelerate the growth engine:
u
enhancing our sales and R&D
effectiveness, including greater
digitalisation; and
u
operating a more regional approach
forour Resources and Sales teams.
2. We will enhance the speed and value
creation of business development
&technical service:
u
balancing customer facing resources
across our Engine 1 (core business) and
Engine 2 (more specialised business
including our mega-programmes); and
u
focusing our people and resources where
we can drive the greatest return.
Cost efficiency
Alongside our enhanced Go to Market
approach, we will maintain a rigorous
focuson cost discipline. With investments in
capability – for example increased know-how
in finished medical devices – largely
complete, we expect limited operating
overhead increases over the coming years.
Increased digitalisation drives greater
efficiency through the entire organisation,
offering further flexibility for our costbase.
Differentiation
Differentiation is driven by our unique
strategy, our differentiated manufacturing
process – with a unique Type 1 PEEK,
complemented by a broader range of
polymer grades such as Type 2 product – as
well as our security and availability of supply,
consistent quality and backward integration
into key monomers, and our application
development skills and technical service for
customers. As we see recovery in our core
business and an increasing contribution
from our mega-programmes, we expect to
further increase our differentiation against
competitors. This enables us to deliver a
premium value to reflect our offering and
long-term investment in application
development and R&D.
Underpin through safety, quality,
sustainability and capability
Safety
Fundamental to our success is the safety,
health and wellbeing of our employees.
Thisremains our highest priority. Wherever
employees are in our business, be it
manufacturing, R&D, warehousing or
support functions, or in our commercial
functions delivering for our customers, our
goal is for a Zero Accidents and Zero
Incidents culture.
Supporting our focus on SHE are our values
of Passion, Innovation and Performance.
Oursafety performance over the last four
years has seen a significant reduction in our
recordable injury frequency rate (‘RIFR’) to
0.18 in FY2024 (industry average 1.3 based
on US OSHA average).
Quality & sustainability
Further improving our quality culture across
the organisation is key, for example in Right
First Time and manufacturing effectiveness.
Sustainability remains at the heart of our
business model and a clear differentiator,
with lighter, faster to process materials
thatcan offer environmental or societal
benefits, for example supporting CO
2
reduction in Transport markets, energy
efficient devices, or supporting better
patient outcomes in Medical.
With Victrex™ PEEK having a lower global
warming potential than the industry average
(details shown on page 72), our drive to
further differentiate in this area includes our
decarbonisation commitment through SBTi.
People & capability
Investment in new capability over recent
years will support how we can deliver
withspeed and a sense of urgency for our
customers. Our culture of innovation remains
strong and is illustrated by Victrex being listed
in The Sunday Times Best Places to Work
2024. Diversity, Equity & Inclusion (‘DE&I’) is
also a key focus for us, with long-term goals
across this area and forums to ensure we
listen to and support employees. Driving
behaviours supports how we drive
performance and I want to thank the
resilience of our global team over the past
two years and know they remain engaged
and eager to accelerate our progress.
Summary – self-help & evolution to
realise ourpotential
Overall, through self-help and evolving our
strategy as a product leader, we seek to
develop and supply market leading products
which enable environmental, technical,
performance or societal benefits for our
customers. Through self-help, a macro-
economic recovery and a step up in our
mega-programmes, we can drive sustainable
growth, catalyse adoption and create value
through Polymer & Parts.
Moving beyond the challenges of the past
isimperative. Although trading conditions
remain mixed, with our strong foundations,
we are focusing on FY 2025 being a
transitional year towards our mid-term growth
targets and an attractive upward trajectory.
Jakob Sigurdsson
Chief Executive Officer
3 December 2024
As we move beyond a
challenging period for
Victrexand the wider
chemical industry, our clear
purpose, alignment to global
megatrends and investments
in people, assets and
innovation position us
wellfor the upturn, as we
look todeliver the significant
growth opportunities across
our portfolio.
Through self-help – both
costefficiency and how we
serve our customers – we are
evolving our Polymer & Parts
strategy to ensure that we
further differentiate and
adapt how we Go to Market.
Jakob Sigurdsson
Chief Executive Officer
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 19
How we performed in FY 2024
u
Sales volumes up 4%
u
Revenue growth down 5% reflecting
Medical destocking impact
u
Improved underlying operating cash
conversion of 114%
u
New China facility operational
Focus for FY 2025
u
Return to growth (revenue & PBT)
u
Ready for upturn and global recovery
u
Ramp-up of new China PEEKfacilities
u
Improved gross margin supported
bybetter asset utilisation
Link to risks
3
7
8
How we performed in FY 2024
u
Strong R&D investment at 6% of
revenue
u
Regulatory submission for PEEK
Knee(India), supporting
commercialpathway
Focus for FY 2025
u
Key milestones towards mega-
progamme commercialisation
u
Support US clinical trial for PEEK Knee
u
Prepare for TechnipFMC bid
outcomes for Brazil (Magma
programme) and commercialisation
Link to risks
6
7
Revenue change %
-5%
Underlying operating
cash conversion %
114%
R&D spend £m
£17.5m
6% of Group revenue
Definition
The year-on-year percentage change
in total revenue for the Group, in
reported currency.
Why it’s important
Revenue growth is the measure
chosen to reflect the structural growth
opportunities for PEEK across our
markets, with above-market growth
being the medium-term focus.
Definition
Underlying operating cash conversion
isunderlying operating cash flow as
apercentage of underlying operating
profit. Underlying operating cash flow
is underlying operating profit before
depreciation, amortisation and loss on
disposal, less capital expenditure,
adjusted for working capital movements.
Why it’s important
Used to assess the business’ ability
toconvert operating profit into cash
effectively. From FY 2025 underlying
operating cash conversion is a
metricwhich partly determines
bonusoutcomes.
Definition
The total Research & Development
spend that the Group has incurred.
Why it’s important
Research & Development spend
at5–6% of sales underpins ourability
to innovate into new applications,
supporting our futuregrowth.
Mega-programme
revenue £m
£10.2m
Definition
Value of Group sales generated
fromour five mega-programmes.
Why it’s important
Mega-programme revenue is a
measure of the adoption of our five
mega-programmes, after a period of
investment, development and initial
market adoption / commercialisation.
Drive core business
Differentiate through innovation
20
15
21
11
(10)
(5)
22 23 24
(10)
1 Alternative performance measures are defined in note 25.
Strategy and key performance indicators
15.5
15.7
18.6
17.5
16.7
20 21 22 23 24
6.3
11.1
10.2
22 23 24
100
49
114
101
20 21 22 23 24
18
20 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Linked to Long Term Incentive
Plan (’LTIP’) objectives
How we performed in FY 2024
u
Advanced qualification for key
Aerospace Composites programme
u
Strong progress in Medical mega-
programmes (Trauma and Knee)
u
Earnings per share (reported)
down72%
Focus for FY 2025
u
Further grow E-mobility revenues
u
Broader customer and product base
in Trauma; accelerate revenues
u
Opportunity for first commercial
PEEKKnee
u
Grow earnings per share
Link to risks
7
8
How we performed in FY 2024
u
Lower recordable injury frequency
at0.18 (lower than OSHA industry
average of 1.3 and FY 2023 0.22)
u
100% of electricity sourced from
renewables for all Victrex’s sites
u
Validated decarbonisation targets
(SBTi)
Focus for FY 2025
u
Zero Accidents and Zero Incidents
culture, building on existing progress
u
Preferred options for SBTi
decarbonisation plan across all scopes
u
Continue to grow sustainable product
revenues (target 70% by 2030 vs
52% in FY 2024)
Link to risks
1
2
4
5
6
OSHA recordable
injuryrate
0.18
Definition
The US Occupational Safety and Health
Administration (‘OSHA’) is the industry
standard for recordable injuries. This is
basedon total number of recordable
injuriesx 200,000/total number of
hours worked (employee & contractor).
Why it’s important
A safe and sustainable business is the
highest priority for Victrex. Victrex
continues to be better than the industry
standard after adopting OSHA
reporting inFY 2019.
Return on invested
capital %
10%
Reported earnings
per share p
19.8p
Hours worked in
the community
4,423
Definition
ROIC is defined as profit after tax adjusted to
exclude exceptional items net of tax, finance
costs and finance income/average adjusted
netassets. Adjusted net assets is total equity
attributable to the shareholders atthe year
end excluding cash and cash equivalents,
other financial assets, retirement benefit asset,
retirement benefit obligations and borrowings.
Average adjusted net assets is adjusted net
assets at the start of the year plus adjusted net
assets at the end of the year, divided by two.
Why it’s important
Return on capital invested (‘ROIC’) measures
thereturn generated on capital invested by the
Group and provides a metric for long-term value
creation. The five-year average ROIC is 16%.
Definition
Profit after tax divided by the
basicweighted average number
ofshares. This includes the impact
ofexceptional items.
Why it’s important
Earnings per share measures the
overallprofitability of the Group
anddemonstrates how we convert
ourtop-line revenue opportunities into
profitable growth forourshareholders.
Definition
Total number of hours that Victrex
employees have volunteered in
community activities.
Why it’s important
Our People pillar within our ESG
strategy is keyto supporting the
communities where we operate (for
example in Biodiversity activities), and
supporting our talent strategy in
recruiting the employees of tomorrow
(for example through STEM activities).
Create & deliver future value
Underpin through safety, sustainability and capability
Key to KPIs
Financial KPI Non-financial KPI
Remuneration
Linked to bonus
objectives
Principal risks
Pages38to42
20
18
21
20
14
10
22 23
17
24
84.3
87.6
70.9
19.8
62.6
20 21 22 23 24
2,570
4,784
3,559
3,895
4,423
20 21 22 23 24
0.7
0.2
0.2
0.2
1.3
20 21 22 23 24
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 21
Stakeholder Focus areas How we engage Engagement outcomes
Employees
u
Safety focus
u
Innovative culture
u
Sustainability embedded in our businessmodel
u
Highly motivated and talented employees
u
High retention rate and appropriatereward
u
High level of share ownership
u
Diversity, Equity & Inclusion (‘DE&I’) agenda
u
Company performance
u
Zero Accidents & Zero Incidents safety campaigns
andemployee survey
u
Global staff briefings (quarterly), CEO Awards and
DE&Igroups, e.g. Gender Engagement Network
u
‘Ask Jakob’ and other intranet forums
u
Development and succession planning
u
Performance-based reward
u
All Employee Bonus and Share Ownership Schemes
u
Employee ‘voice’ through Workforce
EngagementDirector
u
Improving safety performance since FY 2019, 86% lower RIFR rate
u
20 Professional Development Awards & 70 CEO Awards; 48 employees
on Victrex apprenticeships
u
Further progress on DE&I with additional employee resource groups
established including new Race, Ethnicity and Cultural Heritage group
u
Annual Organisational Capability Review (‘OCR’) for talent
u
Wage inflation, bonus scheme and meeting Minimum and National
LivingWage in the UK
u
Employee Engagement Survey, with increase in engagement score to 73%
u
Awareness of Company performance, including external and macro-
economic factors impacting this
Customers
u
Solutions-driven culture
u
Enhanced Go to Market approach (Project Vista)
u
Sustainable products supporting CO
2
reduction
u
Quality and regulatory support
u
Technical service offering
u
Collaboration across the supply chain
u
China manufacturing to underpin new revenues
u
Sustainable Solutions and Medical commercial
structures
u
Enhanced Go to Market structure with increased
regional and digital solutions
u
Quality and Regulatory teams
u
Supply and development contracts
u
Through Sales teams and at VMT level asappropriate
u
Clear milestones in core business & mega-programme delivery
u
Enhanced solutions for customers
u
Strong development collaborations in Automotive, Aerospace and
Medical (Transport volumes +8% in FY 2024)
u
New China manufacturing facility ramping up to underpin future growth
u
Robust Average Selling Prices
Investors
u
Polymer &Parts strategy & delivery
u
ESG agenda and long-termgoals
u
Alignment with shareholder interests
u
Capital allocation policy and understanding
ofdividend/buyback preferences
u
Improvement in earnings and returns
u
Financial calendar events
u
Proactive investor relations function
u
ESG strategy feedback and enhanced materials
u
Global roadshows
u
AGM, site visits and conferences
u
Investor website
u
Face-to-face investor roadshows, 200+ meetings hosted (virtualand
faceto face)
u
Access to investors in the UK, the US, Canada and Europe
u
Engagement through major investor conferences or site visits
u
Diversification of investor base: North American shareholding now ~25%
u
Growth in ethical investment funds (ESG) and greater ESG dialogue
withshareholders
Suppliers
u
Security of supply
u
ESG and Scope 3 emissions
u
Global supply chain
u
Shorter lead times
u
Compliance and quality
u
Reliability and flexibility
u
Supply chain risk management
u
Regular supplier engagement programme (annually)
u
Handbook of standards and ethical audits
u
Business continuity planning
u
Payment on time, typically c.30 days
u
Increased oversight by Audit Committee for supplier
risk including human rights
u
Dual sourcing progressed
u
Improved performance of third-party manufacturers
u
Long-term agreements on raw materials
u
Agreed charter on supplier management framework
u
Robust risk management of critical suppliers
u
Increasing engagement and networking on decarbonisation opportunities
Communities
andenvironment
u
Sustainability agenda and focus areas
u
People: social responsibility
u
Planet: resource efficiency
u
Products: sustainable solutions
u
Positive dialogue toaddress sustainability in the
supply chain
u
Engagement with ESG and environmental analysts
u
Lifecycle Analysis and engagement with customers
u
Biodiversity partnerships
u
STEM Ambassadors, schools and colleges
u
Local employment & Business in the Community
u
100% of electricity from renewable sources (including our own solar
generation) across all global sites
u
Maintained positive scoring across ESG benchmarks, e.g. EcoVadis Silver,
MSCI ‘A’rating, FTSERussell Green Revenues Index & Apple Clean
EnergySupplierprogramme
u
Validation of SBTi target aligned to Net Zero across all scopes of emissions
u
Global volunteering including 4,423 employee hourscommitted
Regulators and
government
u
Safety agenda
u
Employee welfare & wellbeing
u
Product quality
u
Innovation
u
Sustainability agenda
u
Via industry regulators, e.g. HSE
u
Public health organisations, e.g. Environment Agency
u
Certified bodies and trade organisations
u
Cross-industry collaborations
u
NGOs and industry bodies
u
Further improved strong SHE performance including OSHA recordable
injuryrate at 0.18 (industry average 1.3)
u
New polymer grades and materials assessed through collaboration with
academia
u
3D printing alliances and government funded projects
u
Network with MPs and industry bodies to support decarbonisation
andother programmes
Why we engage
We place and consider the needs of all our
stakeholders – internal and external – high
on our daily agenda, listening to and
understanding the interests and concerns of
all our global stakeholder groups, as wellas
seeking todeliver sustainable value for them.
With sustainable products, we enable
environmental & societal benefits for our
stakeholders. This includes through the
technical or performance benefits of our
polymers and minimising resources through
our own operations. Our commitment to
stakeholders is reflectedin our Net Zero
aspiration by 2050 across all emission
scopes, aligned to SBTi, with an interim
target by 2032. As a sustainable business,
our purpose is to bring transformational
andsustainable solutions that address
worldmaterial challenges.
Stakeholder engagement is assessed every
year by the Board. This covers employees,
customers, investors, suppliers, regulators
and government, and our communities.
Forinvestors, we have a proactive annual
plan of engagement, through our financial
calendar activity, investor roadshows, our
Annual General Meeting, site visits or
investor conferences. Reflecting our
increasingly diverse shareholder base (with
over one quarter ofour shareholding in
North America), weactively engage with
investors in the UK,Europe, theUS and
Canada. We continue to be collaborative
with all stakeholder groups including
customers, investors, employees, suppliers
and regulators, listening to feedback and
being open tochange.
OURKEYSTAKEHOLDERS
Stakeholder engagement
22 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Stakeholder Focus areas How we engage Engagement outcomes
Employees
u
Safety focus
u
Innovative culture
u
Sustainability embedded in our businessmodel
u
Highly motivated and talented employees
u
High retention rate and appropriatereward
u
High level of share ownership
u
Diversity, Equity & Inclusion (‘DE&I’) agenda
u
Company performance
u
Zero Accidents & Zero Incidents safety campaigns
andemployee survey
u
Global staff briefings (quarterly), CEO Awards and
DE&Igroups, e.g. Gender Engagement Network
u
‘Ask Jakob’ and other intranet forums
u
Development and succession planning
u
Performance-based reward
u
All Employee Bonus and Share Ownership Schemes
u
Employee ‘voice’ through Workforce
EngagementDirector
u
Improving safety performance since FY 2019, 86% lower RIFR rate
u
20 Professional Development Awards & 70 CEO Awards; 48 employees
on Victrex apprenticeships
u
Further progress on DE&I with additional employee resource groups
established including new Race, Ethnicity and Cultural Heritage group
u
Annual Organisational Capability Review (‘OCR’) for talent
u
Wage inflation, bonus scheme and meeting Minimum and National
LivingWage in the UK
u
Employee Engagement Survey, with increase in engagement score to 73%
u
Awareness of Company performance, including external and macro-
economic factors impacting this
Customers
u
Solutions-driven culture
u
Enhanced Go to Market approach (Project Vista)
u
Sustainable products supporting CO
2
reduction
u
Quality and regulatory support
u
Technical service offering
u
Collaboration across the supply chain
u
China manufacturing to underpin new revenues
u
Sustainable Solutions and Medical commercial
structures
u
Enhanced Go to Market structure with increased
regional and digital solutions
u
Quality and Regulatory teams
u
Supply and development contracts
u
Through Sales teams and at VMT level asappropriate
u
Clear milestones in core business & mega-programme delivery
u
Enhanced solutions for customers
u
Strong development collaborations in Automotive, Aerospace and
Medical (Transport volumes +8% in FY 2024)
u
New China manufacturing facility ramping up to underpin future growth
u
Robust Average Selling Prices
Investors
u
Polymer &Parts strategy & delivery
u
ESG agenda and long-termgoals
u
Alignment with shareholder interests
u
Capital allocation policy and understanding
ofdividend/buyback preferences
u
Improvement in earnings and returns
u
Financial calendar events
u
Proactive investor relations function
u
ESG strategy feedback and enhanced materials
u
Global roadshows
u
AGM, site visits and conferences
u
Investor website
u
Face-to-face investor roadshows, 200+ meetings hosted (virtualand
faceto face)
u
Access to investors in the UK, the US, Canada and Europe
u
Engagement through major investor conferences or site visits
u
Diversification of investor base: North American shareholding now ~25%
u
Growth in ethical investment funds (ESG) and greater ESG dialogue
withshareholders
Suppliers
u
Security of supply
u
ESG and Scope 3 emissions
u
Global supply chain
u
Shorter lead times
u
Compliance and quality
u
Reliability and flexibility
u
Supply chain risk management
u
Regular supplier engagement programme (annually)
u
Handbook of standards and ethical audits
u
Business continuity planning
u
Payment on time, typically c.30 days
u
Increased oversight by Audit Committee for supplier
risk including human rights
u
Dual sourcing progressed
u
Improved performance of third-party manufacturers
u
Long-term agreements on raw materials
u
Agreed charter on supplier management framework
u
Robust risk management of critical suppliers
u
Increasing engagement and networking on decarbonisation opportunities
Communities
andenvironment
u
Sustainability agenda and focus areas
u
People: social responsibility
u
Planet: resource efficiency
u
Products: sustainable solutions
u
Positive dialogue toaddress sustainability in the
supply chain
u
Engagement with ESG and environmental analysts
u
Lifecycle Analysis and engagement with customers
u
Biodiversity partnerships
u
STEM Ambassadors, schools and colleges
u
Local employment & Business in the Community
u
100% of electricity from renewable sources (including our own solar
generation) across all global sites
u
Maintained positive scoring across ESG benchmarks, e.g. EcoVadis Silver,
MSCI ‘A’rating, FTSERussell Green Revenues Index & Apple Clean
EnergySupplierprogramme
u
Validation of SBTi target aligned to Net Zero across all scopes of emissions
u
Global volunteering including 4,423 employee hourscommitted
Regulators and
government
u
Safety agenda
u
Employee welfare & wellbeing
u
Product quality
u
Innovation
u
Sustainability agenda
u
Via industry regulators, e.g. HSE
u
Public health organisations, e.g. Environment Agency
u
Certified bodies and trade organisations
u
Cross-industry collaborations
u
NGOs and industry bodies
u
Further improved strong SHE performance including OSHA recordable
injuryrate at 0.18 (industry average 1.3)
u
New polymer grades and materials assessed through collaboration with
academia
u
3D printing alliances and government funded projects
u
Network with MPs and industry bodies to support decarbonisation
andother programmes
Strategy and KPIs
Pages20 and 21
Key to strategy
Drive core business
Differentiate
through innovation
Create and deliver
futurevalue
Underpin through
safety, sustainability
andcapability
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 23
Statement by the Directors in
performance of their statutory duties
inaccordance with Section 172(1) of
theCompanies Act 2006
During the year ended 30 September 2024,
the Board of Victrex plc believes, as individuals
and collectively, that it has acted in a way it
considers, in good faith, would most likely
promote the success of the Company for
thebenefit of its stakeholders as a whole,
having regard, among other matters, to the:
u
likely long-term consequences of
anydecision, including financial &
reputational (further detail is shown
onpages 82 to 93);
u
interests of the Company’s employees:
monitoring how we engage with
employees is part of our Workforce
Engagement Non-executive Director role
(further detail is shown on pages 94
and95);
u
need to foster the Company’s
relationships with its customers, suppliers
and others;
u
impact of the Company’s operations on
the community and the environment
(engagement with local communities and
our focus on the environment are shown
in the Sustainability report starting on
page 46);
u
desirability of the Company maintaining
its reputation for high standards of
business conduct; and
u
need to act fairly as between members
of the Company.
The Board considers the interests of a range
of stakeholders impacted by our business
and recognises that valuable stakeholder
engagement underpins our ability to achieve
our purpose and strategic aims.
Key stakeholder relationships are regularly
reviewed, including how we engage with
them and whether any improvements can
be made. Further detail is on page 93 of the
Corporate governance report. The relevance
of each stakeholder group will depend on
the particular matter requiring Board
decision. All decisions we make may
unfortunately not always benefit all
stakeholders; by taking a consistent
approach and being guided by our purpose
and our strategic aims, we hope that our
decisions are understandable.
For details on how the Board operates and
makes decisions, please see pages 82 to 86
of the Corporate governance report. The
matters we have discussed and debated
during the year are set out on pages 89
and90 of the Corporate governance report.
To provide shareholders with a better
understanding of how we engage with
stakeholders, we provide selected examples
of how the Directors have had regard to the
interests of stakeholders and the matters set
out in Section 172(1) of the Companies Act
2006 in their decision making.
BOARD ENGAGEMENT & HOW WE
ENGAGE WITHOUR STAKEHOLDERS
Capital allocation – maximising our cash flow
following a period of high investment
Through a challenging period in the global chemical industry
–driven by ‘destocking’ and inventory correction as supply chains
normalised after the COVID-19 period – Victrex has continued to
invest in assets, in people and in capability. This ensures that
weare ready not only for a sustainable recovery in several end
markets, but in the more differentiated projects, to serve
ourcustomers.
Following capital investment in new manufacturing facilities
inChina, in an upgrade to our UK manufacturing, and in
capability atour New Product Development Centre in Leeds, UK
(serving medical device customers), we have concluded a period
of high investment. Throughout this period, we have, at the
same time, been pleased to maintain our dividend and add share
buybacks to our options for returning cash to shareholders,
alongside special dividends.
With capital expenditure now set to reduce from historic highs,
as well as cash inflow as we reduce our inventory position,
theopportunity for enhanced shareholder returns is clear over
the coming years.
Board consideration of our capital allocation includes:
u
assessing the Company’s liquidity position, monitoring
trading performance and trends and the cash requirement
based on certain scenarios;
u
assessment of our cash flow requirements through the five-year
strategy period, particularly in support of maintaining an
effective supply chain, ESG related capital expenditure
requirements or M&A opportunities to underpin growth;
u
with several end markets showing more encouraging
indicators, scenarios of enhanced shareholder returns have
been modelled, once an appropriate level of cash is available
totheGroup;
u
consideration of all stakeholders has been key, in particular
ensuring that we have flexibility to invest in support of
specific mega-programmes or other major growth projects
for customers (organic or M&A); and
u
consideration of our investors and the ability to support
enhanced returns, whether through increasing the regular
dividend (once dividend cover reaches 2x), share buybacks
orspecial dividends.
The Board also took account of the Group’s income fund
investors, who require an appropriate dividend yield to maintain
their shareholding.
A summary of our capital allocation policy can be found on
page28.
Stakeholder engagement continuedStakeholder engagement continued
24 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION24 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Evolving our
strategy
How we Go to Market
Following a new organisational structure
implemented for FY 2024, with two distinct
Managing Director roles for Sustainable Solutions
and Medical, we took the opportunity during our
annual strategy review process to consider any
enhancements for how we Go to Market and
serve our customers (Project Vista).
Our product leadership strategy, through
Polymer& Parts, is a clear differentiator for
Victrex. We have long-standing experience and
excellence inapplication development – applying
our knowledge, innovation expertise and first
mover advantage on where PEEK can play and
where it has a right to win in the end markets
which we serve. This means ‘hunting’ for and
developing new opportunities where PEEK can
replace metal orother materials, bringing a
performance advantage for customers. Driving
value creation for our customers ultimately drives
value for our shareholders as we deliver the
significant growth opportunities that we
haveidentified.
The Board considered how we can further
enhance how we Go to Market and serve our
customers, as well as being operationally
excellent, including smarter procurement.
Board consideration included:
u
how we can accelerate the growth engine
through sales and R&D effectiveness;
u
our ability to enhance the speed and value
creation of business development and
technical service (including digitalisation
and a more regional sales structure);
u
consideration of key stakeholders, not just
customers in how we Go to Market, but the
opportunities and development of our
employees in delivering our strategy;
u
consideration of the expectations of our
investors, including delivery of our growth
opportunities, enhancing profitability and
theresources required to do so;
u
balancing our resources, including
howwemaximise our resources across
ourcore and more differentiated business
areas, to drive the greatest return; and
u
operational excellence, considering smarter
procurement to support our cost to serve.
Overall, an evolution of how we Go to Market
and balancing the customer facing resources and
inherent innovation strengths we have, together
with recovery in several of the end markets which
we serve, will support theopportunity for
delivering our strategy more effectively in the
years ahead.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 25
Victrex plc
| Annual Report 2024
Ian Melling
Chief Financial Officer
Financial review
Operating review
FY volumes up 4%, with sequential
volume & revenue improvement in Q4
Full year Group sales volume of 3,731tonnes
was 4% up on the prior year (FY2023:
3,598 tonnes), with an improvement during
the second half year driven by Sustainable
Solutions and the end markets of Electronics
and Value Added Resellers (‘VAR’).
Aerospace continued to see good growth.
Q4 Group sales volume of 1,015 tonnes was
3% up on Q3 and 21% up on the prior year
(Q4 2023: 839 tonnes). Q4 Group revenue of
£77.7m was 7% up on the prior year (Q42023:
£72.6m), despite Medical remaining soft.
Revenue down 5% reflecting softer
Medical performance and currency
Although the Group saw some improvement
in the second half year, our high margin
Medical business remained soft as customer
inventory corrections continued. This resulted
in full year revenue of £291.0m, a5% decline
compared to the prior year (FY2023: £307.0m).
H2 2024 revenue of £151.7m was 9% up on
H1 2024 (H1 2024: £139.3m).
Divisional performance
Full year revenue in Sustainable Solutions
was down 2% at £238.0m (FY2023:
£241.8m). With a softer start to the year,
Sustainable Solutions saw some
improvement during the second half.
H22024 revenue was up 11% compared to
the first half year, and up 12% compared to
the prior year (H2 2023 revenue: £112.1m).
After a record year in FY 2023, Medical
revenues continued to be impacted by
industry destocking. Most of the major
medical device customers reported high
inventory levels, despite growth in clinical
procedures. Medical revenues of £53.0m
were 19% down on the record performance
in the prior year (FY 2023: £65.2m), with
H2revenues being similar to H1.
Across our core Medical applications of
Spine, Arthroscopy and Cranio Maxillo-Facial
(‘CMF’), we continue to see good growth
opportunities once destocking headwinds
clear, with support from increasing
penetration in Cardio, Orthopaedics and
Drug Delivery. Full year revenues in Medical
were 40% Spine and 60% Non-Spine (FY
2023: 46% Spine and 54% Non-Spine), with
Spine more heavily impacted by destocking.
ASP in line with guidance; sales mix
driven by Medical softness
Average selling price (‘ASP’) was broadly in
line with our guidance at £78/kg, down 9%
on the prior year due to the impact of sales
mix, with weaker Medical and currency
moving adversely during the year. Like-for-
like pricing was robust across our end
markets, with the 5% reduction in constant
currency ASP driven by sales mix.
For FY 2025, at prevailing exchange rates,
and with Sustainable Solutions expected
toshow continuing improvement, average
selling prices are expected to be in the
£75/kg–£80/kg range. Upside from these
levels is dependent on the shape of a
Medical recovery.
Revenue from sustainable products
With strong megatrends like CO
2
reduction,
energy efficiency and clinical innovation
supporting the use of Victrex™ PEEK, our
materials support a range of applications
which are enabling environmental and
societal benefit for our customers. These
typically focus on Aerospace, Automotive
and Medical, with some applications in
Electronics (energy efficiency) also being
part of our measure of sustainable product
revenues. In FY 2024, 52% of our revenues
were based on sustainable products
(FY2023: 55%), with the growth in
Aerospace and Automotive being offset
bylower Medical revenues.
Revenue from sustainable products currently
excludes VAR, where the disparate nature of
end markets is challenging to track. Our
long-term goal is to increase sustainable
product revenues to over 70% of Group
revenues by the end of FY 2030.
Strong application development
capabilities
A core strength of Victrex, supporting our
product leadership based strategy, is in
application development, through working
with customers and partners to broaden the
use of PEEK. This is typically driven by its
lightweighting, durability, chemical and heat
resistance, or other properties. The success of
Victrex since its inception has been innovating
to bring new cases where Victrex™ PEEK can
replace metal or other materials, in turn
bringing a performance benefit to customers.
Whilst Group innovation targets are
primarily focused on our mega-programme
revenue goals, rather than sales from new
products as previously reported, we
continue to track our total business pipeline,
including our mega-programmes. Mature
Annualised Revenue (‘MAR’) is one of our
pipeline measures for the health of our
portfolio, with MAR at £352m (FY 2023:
£300m), driven by application opportunities
in Aerospace and Medical. This number
assumes all targets are converted.
Mega-programmes: significant step up
expected inFY 2025
In FY 2024, mega-programme revenues
totalled £10.2m (FY 2023: £11.1m), partly
reflecting a longer qualification phase for
the Magma programme in Brazil, and a
slight decline in E-mobility revenues. Despite
similar year-on-year revenues, the Group
delivered strong milestones including a
regulatory submission for PEEK Knee,
advancing qualifications for Aerospace
Composites and Trauma commercial
revenues growing strongly, beyond £1m.
CHALLENGING FY 2024 NAVIGATED:
SOLID START TO FY 2025 & FOCUSED
ON GROWTH
26 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION26 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
For FY 2025, all of our mega-programmes
are expected to see a significant step up
towards our portfolio revenue target of
£25m. However, the timing of Magma’s
opportunity in Brazil, together with the
normal regulatory pathway in Medical,
mayhamper our overall progress.
Strong progress in mega-programme
milestones; commercial progress
advancing
Our mega-programmes are defined as
potential game-changing projects in the end
markets we serve. Each mega-programme
offers revenue potential of at least (and in
some cases significantly more than) £50m
per year. Our PEEK Knee programme, for
example, is modelled as offering revenues
atleast the same size as the Group today.
The Group has prioritised investment in five
mega-programmes to enhance strategic
progress. This also ensures that we measure
appropriate investment (including R&D),
resource and capability in order to maximise
return on investment.
Key milestones in our mega-programme
portfolio include:
Aerospace Composites is a programme
combining applications in smaller composite
parts, larger structural parts and interior
applications. With some final qualifications
completed with OEMs for our LMPAEK™
grade, we expect to see increasing ‘use
cases’ supporting much larger applications
within future aircraft. An increasing
opportunity is in retrofit or ‘running
changes’ as existing models take advantage
of selected thermoplastic composite parts
todrive fuel efficiency and manufacturing
efficiency, for example in engine housings,
interior structures or other applications.
Major structural parts include for wings
andfuselage, with Victrex part of the Airbus
Clean Sky 2 and other programmes, which
seek to utilise PEEK and composite
structures to save weight and speed up
manufacturing time. The potential PEEK
content per plane is at least 10 times current
levels, with large-scale demonstrator parts
being exhibited prior to adoption. In both
structural and smaller composite based
parts, our AE™250 polymer and composite
The Group has seen a solid
start to FY 2025, despite
mixed trading conditions, and
we are focused on growth.
Ian Melling
Chief Financial Officer
tape is integral to these opportunities.
Revenue for this programme in FY 2024
increased to over £3m. We anticipate
further growth in FY 2025 as other
qualification programmes advance.
Within E-mobility, our materials are
seeking to address the higher performance
requirements from next generation batteries
(800V) used in electric vehicles. These
requirements include insulative properties,
heat and chemical resistance and mechanical
strength. A primary application is in wire
coatings where our Victrex XPI™ polymer
grades can replace enamels used in coatings,
avoiding harsh solvents and offering
performance benefits and efficiency. Victrex
XPI™ is extruded onto the copper and
requires less energy in the process,
compared to enamel, supporting customers
and their sustainability goals. With penetration
in battery applications and elsewhere in
electric vehicles, we assess the future potential
PEEK content per electric vehicle as over
200g (average content in existing internal
combustion engine car approximately 11g
today). This programme delivered revenue of
just over £5m in FY 2024, a slightly lower
level to the prior year as EV adoption faced
some headwinds during the year. With
additional business opportunities for FY
2025, we are anticipating a transitional year
for this programme, with milestones across
a range of Automotive brands, including
those in China, and opportunities in Europe
and the US.
Magma is our composite pipe programme
for the energy industry, offering a potential
game-changing solution, with lightweighting,
durability, a reduced carbon footprint for
installation and ease of manufacturing being
key parts of the proposition. Our materials
– Victrex™ PEEK polymer, composite tape
and pipe extrusion know-how – are
supporting the final qualification programme
and bid process by TechnipFMC in Brazil.
The focus is to deliver a performance benefit
and remedy existing steel based flexible pipe
issues in pre-salt deep water fields in the
offshore Brazil region.
Milestones during the year include final
testing and technical and commercial
preparation at our UK facilities. Victrex™
PEEK based Hybrid Flexible Pipe (‘HFP’) is
seen by TechnipFMC as the most cost
effective riser solution, with TechnipFMC
targeting scale-up from 2026 onwards.
Anumber of technical and commercial
meetings took place between Victrex,
TechnipFMC and Petrobras during the year.
Annual revenues in the Magma programme
remain around the £1m level currently,
reflecting the qualification phase. With 1km
of pipe containing approximately 8 tonnes
of PEEK, and an annual opportunity of
>100km of pipe, this remains a sizeable
opportunity for the Group.
In Trauma, revenue grew strongly in this
programme during FY 2024 to over £1m.
Victrex manufactures the PEEK composite
based Trauma plates in house, or via our
partner. With our product portfolio, we are
supporting a growing global customer base,
including the US and Asia. Beyond CONMED
(In2Bones), our main existing customer, we
have also added new customers in Asia.
Victrex’s PEEK composite Trauma plates
support fracture fixation, including in foot
and ankle plates. Studies show an enhanced
union rate using PEEK composites compared
to titanium based plates.
In our PEEK Knee programme, the
opportunity of a first commercial PEEK Knee
in the market is moving closer. Following a
regulatory submission in India, we await the
potential of moving into the commercial
phase during FY 2025. This follows strong
progress in the clinical trials in India and
Europe, with 57 patients being implanted
with a PEEK Knee, including 20 post the
two-year clinical phase. Maxx Orthopaedics
is our partner in the clinical trial across
Belgium, India and Italy. We are also
collaborating with Aesculap (part of B
Braun), a top five global knee company.
Interest has been growing in the progress
ofPEEK Knee from other top five players
and broader market participants, with
potential new collaborations.
Beyond regulatory submission, approval
bythe US Food & Drug Administration
(‘FDA’) was secured for a US clinical trial
tocommence in FY 2025, covering 120
patients. PEEK Knee would be an alternative
to existing implants, which primarily use
metal (cobalt chrome), with a proportion
ofcustomers impacted by metal intolerance
ordiscomfort. Our ability to leverage clinical
data with a broader range of customers also
supports the opportunity. Subject to a
positive approval in India, attention would
focus on regulatory submissions in Europe,
followed by the US.
Innovation investment
With our strategic goal to increase the
proportion of Medical revenues in our
portfolio – to reduce cyclicality and enhance
earnings stability – the focus of our
innovation investment over recent years
hasbeen in our Medical Acceleration
programme. Our New Product Development
(‘NPD’) Centre in Leeds, UK, saw some
limited incremental investment during the
year, with new roles and capability to
support customer scale-up in Trauma and
Knee. We expect to see continued modest
investment in this area during FY 2025.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 27
Financial review continued
Operating review continued
Innovation investment continued
Group R&D investment represented 6% of
revenues in FY 2024, at £17.5m (FY 2023:
£18.6m), with 37% (FY 2023: 40%) of our
total innovation spend being prioritised
towards programmes which are based on
sustainable products – primarily those in
Automotive, Aerospace and Medical. Project
based R&D investment to support sustainable
programmes represented 88% of project
based total R&D spend (FY 2023: 92%).
Financial review
Gross profit down 17%
Gross profit was down 17% at £134.3m
(FY2023: £162.6m), primarily driven by
lower revenues and the impact of much
lower production rates in our manufacturing
assets. The adverse year-on-year impact
from under-absorbed fixed costs was
approximately £10m for FY 2024 (including
China impact), driven by nearly 1,000 tonnes
of lower production, as we unwound
inventory closer to target levels.
For FY 2025, we anticipate a year-on-year
improvement from higher production levels
and a benefit from lower material costs,
supporting an overall lower cost of
manufacture, despite the impact of China
start-up (including depreciation) and
continued inventory unwind.
Gross margin lower on sales mix and
reduced asset utilisation
Full year Group gross margin of 46.2% was
680 basis points (‘bps’) lower than last year
(FY 2023: 53.0%), as a continuing softer
medical performance impacted sales mix,
alongside lower asset utilisation. Second half
gross margin of 44.5% (H2 2023: 52.4%)
was impacted by Medical, after a strong
year in FY 2023, with some improvement
inSustainable Solutions. The strengthening
of Sterling in the second half also impacted
our margin.
We remain focused on a mid to high 50%
gross margin level over the medium term,
whilst noting that sales mix, asset utilisation
and the expected increase in parts
contribution to revenue will play a key role
over the coming years. For FY 2025, Group
gross margin is expected to improve to
around 50% as the final stage of our
inventory unwind is offset by improved
assetutilisation and some raw material
costbenefit. Gross margin progression is
expected to be weighted to the second half.
Gains & losses on foreign currency
nethedging
Fair value gains and losses on foreign
currency contracts in FY 2024 were a gain
of£5.2m (FY 2023: loss of £7.6m), arising
from contracts where the deal rate obtained
in advance was favourable to the average
exchange rate prevailing at the date of the
related hedged transactions. We continue
tohedge the net currency exposure, which
reflects the diversity of our customer base
across regions.
Currency adverse for FY 2025
With the strengthening of Sterling during
H2 2024, FY 2025 now sees a modest
currency headwind of approximately
£7m–£8m at PBT level, based on spot rates
and currency contracts in place at the date
of this report. Unhedged currencies –
predominantly in Asia – are also set to
increase in importance as we see growth
inChina and other parts of Asia over the
coming years. Recent devaluation in these
currencies has contributed to the spot rate
headwind in FY 2024 and the implied
headwind for FY 2025.
Our hedging policy is kept under review,
forthe duration of hedging, level of cover
and currencies covered. It requires that at
least 80% of our US Dollar and Euro forecast
cash flow exposure is hedged for the first six
months, then at least 75% for the second six
months of any rolling twelve-month period.
Underlying operating overheads
1
down
10%
Underlying operating overheads, which
exclude exceptional items of £14.5m,
decreased by 10% to £74.0m (FY 2023:
£81.9m) despite targeted innovation
investment and wage inflation. We
continued to deliver tight cost control,
including deferral of certain recruitment,
travel, and reductions in discretionary spend.
With the profit threshold to trigger
performance based reward as part of our
AllEmployee Bonus Scheme not being met,
no bonus was paid. Wage inflation reflected
our employee salaries increasing by an
average of 4.5%.
For FY 2025 and thereafter, our intention is
to ensure investment remains targeted and
to deliver an appropriate return. Underlying
operating overheads are therefore expected
to show only limited increases, excluding the
effect of wage inflation and bonus accrual.
This offers the opportunity for revenue and
PBT growth to be ahead of overhead
growth. For FY 2025, we have introduced
arevised All Employee Bonus Scheme –
tosupport retention and based on personal
and strategic objectives, profit before tax
and cash conversion measures – which no
longer requires a minimum level of profit to
trigger the non-profit measures. In FY 2025
we expect to accrue for bonus, based on
market expectations showing profit growth.
Net interest expense
With interest payments for our China loan
now expensed (rather than capitalised) and
RCF interest incurred, the netinterest
expense was £1.2m in FY 2024 (FY 2023:
net interest income of £0.6m). This is
expected tobe an expense of approximately
£2m inFY 2025, based on currently
prevailing interest rates.
Our capital allocation priorities
Capex
u Normalised capex
c.8–10% of sales
u Periodic capacity
investment
M&A/investment
u Investment to support
mega-programmes
u Investment to enhance
capability & IP
Regular dividends
u Progressive dividend
u Maintain cover around
c.2x EPS over the cycle
Special dividends
u Optionality to
returncash if no
additional investment
opportunities
u 50p/share minimum
Share buybacks
u Existing approval to
buyback 10% of shares
u Flexible buyback options
EXCESS CAPITAL
DISTRIBUTION OPTIONS
28 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Underlying PBT down on Medical
&lower fixed cost recovery
Underlying PBT of £59.1m was down 26%
(FY 2023: £80.0m). This was driven by the
impact of Medical destocking and a much
higher impact from under-recovery of fixed
costs (approximately £10m higher in FY
2024 vs FY 2023), as our assets saw
materially lower production levels. The driver
for reduced asset utilisation was to unwind
inventory built during FY 2023 to support
our UK Asset Improvement programme
– which was completed in H1 2024. The UK
Asset Improvement programme provides us
with incremental capacity to support
large-scale volume programmes like
Aerospace Composites, E-mobility and
Magma, boosting UK nameplate capacity
toapproximately 8,000 tonnes.
Reported PBT & exceptional items
Reported PBT reduced by 68% to £23.4m
(FY2023: £72.5m). This reflects exceptional
items of £35.7m in total (FY 2023: £7.5m).
Thisincludes a non-cash impairment of
investment in associate (Bond 3D - supporting
3D printing capabilities in Spine (Medical)) of
£9.1m, fair value loss on loans due from Bond
3D of £11.9m and associated legal fees of
£0.2m, the cost of our business improvement
project, incorporating a new ERP software
system implementation (go live in H1 FY 2025)
of £9.9m, and an impairment relating to the
asset value of our downstream manufacturing
facilities in theUS, totalling £4.6m.
As previously communicated, in relation
toBond 3D, the new financial investment
required to complete the development
through to cash breakeven was not raised.
With no other options available, Bond 3D’s
trade and assets were sold for a nominal
value, leaving all amounts owed to Victrex
still outstanding. Accordingly, an exceptional
charge of £21.2m, included within Result of
associate in the income statement, has been
recognised, comprising the full impairment
of investment in associate of £9.1m,
reduction in fair value to £nil of the
convertible loan notes and bridging loan
(£11.9m) and associated legal fees of £0.2m.
The terms of sale include a clause entitling
certain existing Bond debt holders, including
Victrex, to participate in any upside of a
subsequent sale of the business within the
next five years. Due to the high level of
uncertainty around any future sale, no value
has been attributed to this provision.
Subsequent to the year end Bond 3D has
been liquidated.
Pleasingly, US FDA approval for the first
3Dprinted Porous PEEK spinal cage was
received in September 2024. This
development – which was one of the key
milestones from our original investment in
Bond 3D – furthers the opportunity of
bringing together PEEK-OPTIMA™ as a
material of choice in spinal fusion with the
processing benefits of 3D printing. This
milestone will enable us to collaborate with
the new owners of the Bond 3D technology.
For FY 2025, the majority of the final costs
of implementing our ERP system, and
associated business improvements, will be
incurred during the first half. These include
our Project Vista programme, to drive sales
excellence, improve our Go to Market
approach and increase digitalisation. These
costs, including final ERP costs, will be
treated as an exceptional item, with total
costs, including consultancy, expected to
bebetween £5m–£10m in the year.
Earnings per share down 72%
Basic earnings per share (‘EPS’) of 19.8p
was72% down on the prior year (FY 2023:
70.9p per share), reflecting the decline in
reported PBT, including the adverse effect of
exceptional items. Underlying EPS was down
33% at 51.7p (FY 2023: 77.7p).
Taxation
The total tax charge, incorporating deferred
tax, was £7.6m (FY 2023: £11.5m) giving an
effective tax rate of 32.5% (FY 2023: 15.9%),
with a current tax charge on profits for the
year of £2.0m (FY 2023: £8.0m). The effective
tax rate was materially higher than the prior
year and the mid-term guidance range due
to the impact of exceptional items, with the
impairment of associate investment (Bond
3D) and the impairment of downstream
manufacturing facilities in the US both being
non-tax deductible. Excluding the impact of
exceptional items, the underlying effective
tax rate was 22.2% (FY 2023: 16.5%) driven
by the increase in the UK corporation tax
rate, losses associated with the start-up of
our China facilities (where a deferred tax
asset has not been recognised), and a lower
proportion of profits being eligible for the
patent box rate.
Taxation paid during FY 2024 was £4.3m
(FY 2023: £2.0m) in relation to profit based
taxes, which were higher than the corporation
tax charge reflecting payments made on
account for the UK prior to the fair value
losses recognised in relation to the loans
due from Bond 3D.
Patent box incentivises innovation and
consequently highly skilled Research &
Development jobs within the UK. The
reduced tax rate on profits taxed under the
UK government’s Patent Box scheme
remains available to Victrex; however, the
profits which benefit from the lower Patent
Box rate are reduced at lower profit levels
and vice versa. Our mid-term guidance for
an effective tax rate is marginally higher
than previously communicated, at
approximately 14–18% (previously 13–17%).
In the FY 2025 period, the effective rate
may exceed the top end of the range, with
China and the proportion of UK profits
available for Patent Box being the key
drivers. We continue to monitor global
taxation developments and their impact on
the effective rate.
Robust balance sheet
Victrex values a strong balance sheet, as do
our global customers, providing us with the
ability to invest and support security
of supply.
Net assets at 30 September 2024 totalled
£461.6m (FY 2023: £501.0m).
ROIC
1
Return on Invested Capital (ROIC) is one
ofour strategic KPIs. We continue to enjoy
strong returns compared to the broader
Chemical sector, with our 5 year average
ROIC at 16%. However, ROIC fell in FY 2024
to 10% (FY 2023: 14%) reflecting the
weaker underlying PBT performance against
a strong balance sheet. With our investment
phase in assets and capability concluded, we
expect to see good mid-term improvement.
Good progress on inventory unwind;
ontrack for FY 2025 target
Following the pandemic, rebuilding raw
material inventories to safety stock levels
tosupport security of supply for customers
was a priority. This, combined with a build of
finished goods and work in progress during FY
2023 – to reflect inventory required for our UK
Asset Improvement programme and preparing
for an upturn in demand – resulted in an
inventory of £134.5m at 30 September 2023.
We commenced the unwind of this inventory
in FY 2024. Total closing inventory was
£115.1m, a reduction of £19.4m, reflecting
good progress towards our target of
approximately £100m by the end of FY 2025.
Whilst this goal of approximately £100m is
higher than historical levels, it reflects the
broader business and geographic portfolio,
including an increased range of polymer
grades, product forms and parts to serve
awider customer base. Despite further
inventory unwind in FY 2025, our planned
production levels will be higher, supporting
operating efficiency and gross margin.
1 Alternative performance measures are defined in note 25.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 29
Financial review continued
Financial review continued
China facilities: commercial production
Our Victrex Panjin facilities commenced
commercial production towards the end of
FY 2024 and will gradually ramp up during
FY 2025. These facilities - which will supply
the domestic China region - will enable us
tobroaden our portfolio of PEEK grades,
including a new elementary type 2 PEEK
polymer grade. Group sales volumes in China
currently represent approximately 15% of
our portfolio, with Automotive, Electronics
and VAR end markets offering attractive
long-term opportunities, with both existing
and new customers. Close collaboration
with customers continues, in support of
their own growth plans in China. Alongside
our polymer manufacturing capabilities, we
also invested in compounding and additional
commercial capability in China. Operating
efficiency in these assets will improve over
the coming years, despite being a modest
headwind initially. In FY 2025 we are
expecting to see production levels of
100–200 tonnes within the Panjin facility.
Investment phase concluded;
capitalexpenditure reducing
After a period of major investment to ensure
we have the appropriate level of production
capacity to support core business growth
and high volume opportunities in our
mega-programmes, cash capital expenditure
during the year reduced to £32.6m (FY2023:
£38.5m). A significant proportion of this
investment was to support completion of
our China manufacturing assets and UK
Asset Improvement programme. A large
proportion of the China investment was
funded through utilisation of the Group’s
China banking facilities, with interest being
capitalised in H1 2024 and expensed in
H22024 as the facility became commercially
operational. In total since FY 2020, our
capacity investments in China have been
over £60m.
Following conclusion of these investments,
we see a very limited need for sizeable
polymer capacity for several years. Over
thecoming years, investment will include
increased ESG related capital spend in
ourmanufacturing facilities to support
decarbonisation. Current ESG related capital
expenditure remains relatively small and is
primarily for our Continuous Improvement
(‘CI’) activities. We may also see smaller-
scale capital investment in Medical, as key
programmes like Trauma and Knee scale up.
Overall capital expenditure guidance remains
atapproximately 8–10% of revenues.
Cash flow
Cash generated from operations was
significantly ahead of the prior year, at
£88.7m (FY 2023: £42.9m), reflecting the
improved working capital position. This
resulted in underlying operating cash
conversion
1
of 114% (FY 2023: 18%). With
ahighly cash-generative business model, we
expect to see a continuing improvement in
absolute cashgeneration. In June 2024 we
paid the 2024 interim dividend of 13.42p/
share at a value of £11.7m. Net debt at
30September 2024 was £21.1m (FY 2023:
£16.7m), including cash of £29.3m (FY 2023:
£33.5m, including other financial assets).
The Group utilised its UK RCF and China
bank facility borrowings – put in place for
the investment in new China manufacturing
assets – during the year. Borrowings including
lease liabilities at 30September 2024 were
£50.4m (FY 2023: £50.2m) with the RCF
fully repaid.
Repayment of RCF
The Group’s UK banking facilities were
undrawn at the end of FY 2024, following
aperiod of utilisation during the financial
year. These facilities comprise £60m (£40m
committed and £20m accordion), expiring
inOctober 2027.
Dividends
The Board has proposed to maintain the
final dividend at 46.14p/share (FY 2023:
46.14p/share), which reflects the anticipation
of better prospects in FY 2025. We intend
togrow the regular dividend in line with
earnings growth once underlying dividend
cover returns closer to 2.0x (FY 2024 underlying
dividend cover
1
: 0.9x (FY 2023: 1.3x)).
Capital allocation policy
Growth investment remains the focus forthe
Group. Share buybacks remain an option for
future shareholder returns, alongside special
dividends, within our capital allocation policy.
The prospects arepositive for improving cash
flows, and reducing net debt, as trading
improves, capital expenditure reduces
andinventory levels come down.
Culture of innovation and recognition
for Victrex in The Sunday Times Best
Places to Work 2024
Despite the challenging trading environment
over the past two years, the Group has
continued to invest in people, assets and
capability. As a reflection of our motivated,
innovative and engaged workforce, Victrex
was pleased to be recognised in The Sunday
Times Best Places to Work 2024 list, following
on from its Employee Engagement Survey.
Self-help: Go to Market & Project Vista
to support profitability
Through a challenging period for the
chemical industry, Victrex has sought to
ensure that ‘self-help’ measures remain
strong, including cost control. After adapting
our organisational structure last year, we
launched our Project Vista programme in
FY2024, underpinned by ournew ERP
system, to further enhance how we Go to
Market and serve our customers, thereby
supporting and enhancing profitability in
FY2025 andbeyond.
We are enhancing our sales mechanisms,
including operating a more regional approach
for our sales teams. This also includes the
opportunity for greater digitalisation.
Overall, we will seek to enhance the speed
and value creation of business development
and technical service – one of Victrex’s key
strengths and points of difference – as well
as focusing on smarter procurement.
Balancing customer facing resources across
our core business and more specialised
business (including our mega-programmes)
will mean that we can allocate our resources
where we can drive the greatest return.
Outlook – solid start despite mixed
trading conditions; focused on growth
The Group has seen a solid start to FY 2025
– ahead of the prior year – despite mixed
trading conditions. Our expectations for
profit growth are based on robust demand
continuing across the end markets of
Sustainable Solutions, together with Medical
improvement as we progress through 2025.
The timing of the upturn in Medical will be a
key factor in the scale of Group profit growth,
with cost control, self-help measures, higher
asset utilisation and lower raw material costs
helping to underpin profit improvement.
If current demand levels remain on track,
with some seasonality in our Q1, a run-rate
across the rest of the year similar to the FY
2024 exit rate – of around 1,000 tonnes per
quarter – offers the potential for at least
mid-single digit volume growth.
In summary, we have the opportunity to
deliver underlying PBT growth ahead of
volume growth, after the impact of currency,
which is now a £7m-£8m headwind to PBT
in FY 2025. For the medium to long term,
the Board’s confidence in delivering our
growth opportunities remains strong. We
have a diversified core business, increasing
mega-programme commercialisation, well
invested assets and the opportunity for
cashflow improvement.
Ian Melling
Chief Financial Officer
3 December 2024
1 Alternative performance measures are defined in note 25.
30 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
A BALANCED PORTFOLIO, ALIGNED TO
GLOBAL MEGATRENDS
Sustainable Solutions revenue
£238.0m
-2% vs FY 2023, +2%* vs FY 2023
Sustainable Solutions gross profit
£90.3m
-18% vs FY 2023, -18%* vs FY 2023
* Constant currency.
The Group reports divisional performance
through Victrex Sustainable Solutions and
Medical. An end market based summary of
our performance and growth opportunities
continues to be provided. Within Sustainable
Solutions end markets, we have Electronics,
Energy & Industrial, Transport (Automotive &
Aerospace) and Value Added Resellers (‘VAR’).
Summaries of the Group’s mega-programmes
and key milestones are covered earlier in
thisreport.
in this end market), Electronics sales volumes
grew 19% during the second half (vs H2
2023) and were also up 39% vs H1 2024.
However, after a soft first half, total Electronics
volumes for the full year were down 12% at
454 tonnes (FY 2023: 514 tonnes). The latest
industry forecasts continue to suggest an
improvement for Semiconductor, with WSTS
forecasting Semiconductor demand to
increase by 12.5% in 2025.
Within Electronics, core applications include
CMP rings (for Semiconductor), as well as
newer applications utilising PEEK, including
for Semiconductor, 5G, cloud computing and
other extended application areas. The
increased level of data usage in society, AI
and cloud-based services is supportive to
long-term growth in this end market, though
we are mindful of the short-term demand
cycle. Within our APTIV
TM
film business,
which supports small space acoustic
applications including in speaker diaphragms
and related components, we continue to see
good growth and opportunities to further
differentiate. These include much thinner
film, which we have developed through
ourcapability and know-how.
Victrex™ PEEK’s lighter materials and
enhanced durability have strong credentials
to continue supporting improved energy
efficiency in a range of Electronics
applications. Other key applications include
a range of home appliances, and areas
where energy efficiency, lightweighting
andmechanical strength are all key
requirements. Innovation in smart devices,
including flexible devices, is seeing increased
underpinning from Victrex™ PEEKsolutions.
Year
ended
30 September
2024
£m
Year
ended
30 September
2023
£m
%
change
(reported)
%
change
(constant
currency)
Revenue 238.0 241.8 -2% +2%
Gross profit 90.3 110.5 -18% -18%
SUSTAINABLE SOLUTIONS
Operating review
Improvement in H2 2024
After a soft start to the year, revenue in
Sustainable Solutions improved during the
second half, with H2 2024 revenue up 12%
at £125.1m (H2 2023: £112.1m). This was
supported by improvement in Electronics,
Energy & Industrial and VAR during the
second half (vs both H2 FY 2023 and H1 FY
2024), with continuing growth in Aerospace.
Automotive saw a softer second half year,
compared to some restocking benefit in the
first half.
Full year revenue was down 2% at £238.0m
(FY 2023: £241.8m), impacted by the soft
first half performance. Revenue in constant
currency was up 2%. Pricing remained
robust, although we saw the adverse impact
of VAR volumes influencing sales mix
through the year, particularly in the second
half. The impact of reduced asset utilisation
resulted in gross margin declining by 780bps
to 37.9% (FY 2023: 45.7%).
Electronics
With some improvement through the year
inthe Global Semiconductor market and
Consumer Electronics (which together make
up approximately two thirds of our exposure
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 31STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 31
Victrex plc | Annual Report 2024
Energy & Industrial (‘E&I’)
Energy & Industrial is built on Victrex™
PEEK’s long-standing track record of
durability and performance benefit in many
demanding Oil & Gas applications, where
lightweighting, durability and performance
are key. The trend of metal replacement in
demanding applications remains a key trend.
In recent years, E&I has also been
developing broader business across energy
applications. These include in wind energy
and some opportunities in hydrogen. We
now have a small but growing proportion
ofrevenue coming from wind and
renewable based applications. Sales volume
of 604 tonnes was down 5% on the prior
year (FY 2023: 639 tonnes), reflecting the
continuing weakness across General
Industrial (which makes up more than half
of this segment). Recent market indicators
(‘PMIs’) in Europe have remained below 50
during H2 2024 (source: Trading Economics),
with a slightly better picture in the US.
Other applications within this end market
include food processing equipment, where
Victrex™ PEEK’s inert properties prove
beneficial in metal replacement. We have
also commenced marketing Victrex™ PEEK
as a PFAS (Per- and Polyfluoroalkyl
chemicals) alternative. The safety concern
around PFAS has sparked global action.
Regulators across the UK, the EU and the US
are proposing to ban or restrict PFAS to only
a few critical uses. Manufacturers using
these products are looking to find safer
alternative materials, without compromising
product performance, with Victrex™ PEEK
well placed.
Transport (Automotive & Aerospace)
Victrex has a strong record of enabling
environmental and societal benefit through
its products. ‘Avoided emissions’ and CO
2
emissions reduction is a key megatrend,
with our materials offering lightweighting,
durability, dielectric properties and heat
resistance. A combination of legacy
applications and innovation into delivering
new requirements for our customers
positions us well for the coming years.
Wealso continue to make good progress in
our Transport related mega-programmes of
E-mobility and Aerospace Composites.
Overall Transport sales volume was up 8%
to 1,022 tonnes (FY 2023: 950 tonnes),
withAerospace up 15% and Automotive up
5%. This performance reflects continuing
increases in plane build as the Aerospace
industry recovers post-pandemic.
Automotive saw some restocking benefit in
the first half, with a softer performance in
H2 2024 as industry demand weakened.
Automotive
Victrex remains strong in core applications
like braking systems, bushings & bearings
and transmission equipment, the majority
ofwhich will transition between internal
combustion engine (‘ICE’) platforms and
electric vehicles (‘EVs’). Overall, translation
across ICE to EVs remains a net benefit
opportunity, with current PEEK content
averaging around 11g per car. Our
assessment of the EV opportunity is for a
long-term potential of over 200g per electric
vehicle, with several application areas.
Our E-mobility mega-programme was stable
this year, with FY 2025 set to see an uptick
in new platforms utilising PEEK, particularly
around larger and higher voltage batteries.
Applications include wire coatings, slot liners
and rotor sleeves, where the insulative
properties of Victrex™ PEEK suit the more
demanding performance requirements.
Opportunities are growing in both Europe
and Asia, with China a particular focus area.
PEEK Gears saw further growth, following a
positive performance in FY 2023. This reflects
growing business in both cars and e-bikes.
Victrex owns the know-how for manufacture
and is able to manufacture at facilities in the
US, or licence the manufacture within the
supply chain. With PEEK Gears now being
adopted, supply chain manufacturing is likely
to be the primary route for sales of this
application, following Victrex successfully
seeding the market.
Aerospace
Aerospace volumes were up 15%, reflecting
the benefit of plane build continuing to
increase. The latest indicators for long-term
plane build forecast 42,000 new or
replacement aircrafts by 2043 (source:
Airbus). With manufacturing speed and
efficiency a key driver, Victrex™ PEEK’s
offering to support faster cycle times in part
manufacture positions us well. We continue
to enjoy good application growth in Aptiv™
film and also our LMPAEK™ grade (and use
as composite tape).
In our mega-programmes, Aerospace
Composites supports both smaller and larger
structural parts for Airbus, Boeing and tier
companies, with qualifications well advanced,
and existing parts on planes and larger
demonstrator parts being exhibited by major
customers, ahead of commercial adoption.
Retrofit and ‘running change’ opportunities
for existing aircraft are supporting increased
activity in this area, beyond the potential
from future aircraft programmes.
This year we saw increased volumes with
COMAC in China, noting the planned
ramp-up of production for the C919 model
over the coming years. Victrex™ PEEK
supports a broad range of aircraft platforms,
with one of the highest production models
being the Boeing 737 MAX. Victrex™ PEEK
content here is over 100kg per plane and we
note the continuing industry focus,
following the FAA’s ruling on a production
cap. The potential of a small headwind in FY
2025 remains if the FAA’s ruling remains in
place. However, we also anticipate
incremental revenue from composite
development programmes, as well as the
COMAC business in China, which continues
to ramp up.
Overall, the mid-term outlook for Aerospace
remains positive. With our materials
supporting lightweighting, safety and
durability – as well as faster cycle times –
thePEEK content opportunity in composites
could be 10x current levels, with use cases
for larger structural parts set to become
clearer. Our collaborations include a range
of OEMs and tier manufacturers, including
on Airbus’ Clean Sky 2 programme, focused
on the wings and fuselage of tomorrow.
Operating review continued
After a soft start to the year,
revenue in Sustainable
Solutions improved during
the second half.
Pricing remained robust,
although the impact of
salesmix and lower asset
utilisation led to gross margin
declining during the year.
32 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Value Added Resellers (‘VAR’)
VAR are long-standing business for Victrex,
where VAR process PEEK into stock shapes
or compounds, for onward sale into multiple
supply chains. End market alignment, whilst
difficult to fully track, supports a similar
alignment to our Sustainable Solutions end
markets, with the exception of Aerospace,
where sales volumes are largely direct to
OEMs or tier suppliers. VAR are often a
good barometer of the general health of the
supply chain and economic recovery, with
VAR customers processing high volumes
ofPEEK.
During the second half, we saw continued
progress in VAR demand, with H2 volumes
up 25% vs H1 2024. This resulted in full
yearVAR volumes increasing by 14% to
1,488tonnes (FY 2023: 1,304 tonnes).
Whilst visibility remains low for FY 2025,
wecontinue to be well placed for a
sustainable recovery.
Regional trends
At a regional level, the Group’s regional
performance in North America was most
adversely affected vs the prior year, driven
by continued softness in Energy & Industrial.
Europe saw the most improvement as VAR
drove a better H2 2024, with Asia-Pacific
slightly ahead.
Europe was up 8%, at 2,062 tonnes
(FY2023: 1,903 tonnes), driven by VAR
primarily. North America was down 6% at
612 tonnes (FY 2023: 650 tonnes), reflecting
Energy & Industrial, with Asia-Pacific up 1%
at 1,057 tonnes (FY 2023: 1,045tonnes).
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 33STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 33
Victrex plc | Annual Report 2024
Operating review continued
SUPPORTING CLINICAL
OUTCOMES FOR PATIENTS
Medical revenue
£53.0m
-19% vs FY 2023, -16%* vs FY 2023
Medical gross profit
£44.0m
-16% vs FY 2023, -17%* vs FY 2023
* Constant currency.
Medical strategy
Our Medical business is focused on further
broadening the applications we serve,
building on the strong track record for
PEEK-OPTIMA™ over more than 20 years.
To date, over 15 million patients have
PEEK-OPTIMA™ based implanted devices.
Anumber of key milestones were delivered
during the year that support our emerging
parts businesses, as well as our core
materials business. These include US FDA
approval for a 3D printed PEEK-OPTIMA™
based spinal cage.
Our Invibio brand is focused on material
sales and a broader range of solutions,
supported by our Polymer & Parts strategy,
through manufacturing Medical
components in the application areas of
Trauma and Knee. Our goal is to increase
the proportion of Medical revenues for the
Group, above 30% of revenues by 2032 (FY
2024 had Medical share of Group revenue
at 18%). As a high value segment, this end
market is seeing a broader range of
opportunities to meet patient and surgeon
requirements, as PEEK’s performance
supports improved patient outcomes.
To support these goals, recent targeted
investment in Medical has helped support
new customers in Trauma, as well as Knee.
Our New Product Development Centre in
Leeds is supporting customer scale-up in
Trauma and Knee, aligned to major medical
device companies, as well as working closely
with academia. This facility is dedicated
to‘parts’ programmes – the know-how,
intellectual property and associated
clinicaldata which underpin our expansion
in Medical.
Performance
Following a record performance in FY 2023,
our Medical business saw major customers
starting to reduce their inventories from
historically high levels. This has continued
through the second half, with Medical
revenues flat H2 2024 vs H1 2024, resulting
in a softer year-on-year performance.
Volume based procurement (‘VBP’) in China
also resulted in softer revenues within the
Asia-Pacific region. Full year revenue of
£53.0m was down 19% on the prior year
(FY2023: £65.2m). The Group expects to
see some improvement and a gradual easing
of destocking – given procedural growth
Year
ended
30 September
2024
£m
Year
ended
30 September
2023
£m
%
change
(reported)
%
change
(constant
currency)
Revenue 53.0 65.2 -19% -16%
Gross profit 44.0 52.1 -16% -17%
MEDICAL
Our PEEK composite Trauma plates demonstrate strong clinical evidence.
Our goal is to increase the
proportion of Medical
revenues to above 30% of
Group revenues by 2032.
Despite the destocking impact
within the medical device
industry this year, growth
opportunities remain strong,
with a number of key
milestones delivered as we
further diversify into new
application areas.
34 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION34 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
remains healthy – during 2025, based
onongoing dialogue with customers.
Gross profit was £44.0m (FY 2023: £52.1m)
and gross margin was stable at 83.0% (FY
2023: 79.9%) primarily reflecting sales mix.
Geographically, Asia-Pacific revenues were
down 27% year on year, with Medical
revenues in the US down 18% and Europe
down 10%.
Progress on the Medical mega-programmes
is covered on page 27.
Spine and non-Spine
Non-Spine has seen good growth over recent
years and now forms 60% of our revenues
inthis division. Application areas include
Arthroscopy and Cranio Maxillo-Facial
(‘CMF’). CMF also offers us an opportunity
through 3D printed parts and saw continued
growth of 7% in FY 2024, driven by its
‘bespoke’ made to order nature.
Elsewhere, recent and growing application
areas include Cardio. PEEK-OPTIMA™ is
now used in heart pumps, as well as active
implantable devices and drug delivery
systems. PEEK’s strong track record and inert
nature support the broader range of
application uses.
With porous titanium taking some share
from PEEK over recent years, we have been
working on the opportunities in 3D printed
spinal cages. Next generation Spine
products will be key in maintaining PEEK’s
position in this segment and potentially
regaining share over time.
In September 2024, the US FDA approved
thefirst 3D printed Porous PEEK device in
themarket. The combination of Porous
PEEK-OPTIMA™ structures allows for
potential bone in-growth to achieve fixation,
while maintaining the inherent benefits of
PEEK-OPTIMA™ for imaging and bone-like
modulus. Whilst we continue to innovate and
develop new products for Spine, usage of 3D
printed titanium cages continues, largely in
the US. PEEK within spinal fusion remains
strong in Asia and Europe, where these
regions have seen less of an impact
fromtitanium.
Our New Product Development Centre in Leeds supports scale-up with customers for our
Trauma and Knee mega-programmes.
Application development across our Sustainable Solutions and Medical businesses remains
strong. Pictured: our Trauma plates recorded good growth to >£1m of revenue this year.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 35STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 35
Victrex plc | Annual Report 2024
RISK MANAGEMENT
Risk management is embedded in Victrex’s culture, ensuring that we
assess risks as part of delivering our strategy.
1
Risk agenda
Why do we undertake riskmanagement?
Risk objectives
Victrex undertakes risk management with the objective of
facilitating better decision making, resilience and sustainability
inorder to continually improve the performance of our business.
Thisisparticularly important as the business continues to move
intosemi-finished and finished products and further expands
geographically, building demand for our new products, alongside
growing the core business. The risk management framework
ensures risks are identified across the business, owned and
appropriately managed, and linked to principal risks so that impacts
on delivery of our strategy can be identified and managed.
The Board is responsible for reviewing the design and effectiveness
of the risk management systems, and for determining the
Company’s risk appetite in delivering Victrex’s strategy, which is set
out on pages 16 and 17. We have an established framework for risk
appetite classification which guides our approach to managing
principal risks. For example, our ‘very low’ appetite for risk in areas
such as Safety, Health and Environment (SHE), legal compliance and
cyber security means that the avoidance of risk and uncertainty is
akey objective, and when faced with multiple options, we will take
the lowest risk option. This is in contrast to our ‘open’ appetite
torisk in strategic growth aspects, meaning that we will consider
awider set of delivery options that balance the merits of both risk
and reward. We do not have a ‘high’ appetite for any of the
principal business risks.
We believe that Victrex is well placed to meet the demands of the
increasingly prominent ESG agenda but must also consider the risks
and costs associated with stricter emissions targets, lifecycle impacts
and other requirements.
Risk strategy
The Board is responsible for ensuring the effective operation of the
Group’s risk management framework and for ensuring risk management
activities are embedded in Victrex’s processes. The Board is also
responsible for ensuring that appropriate and proportionate
resources are allocated to risk management activities.
2
Risk assessment
How do we assess and record risks?
When assessing risk, management considers in detail:
u
external factors, including legal, regulatory and environmental,
social and governance (‘ESG’) factors arising from the
environment in which we operate; and
u
internal factors arising from the nature of our business, internal
controls and processes.
Analysis and recording of risks
Our business unit and functional team leaders are responsible for
the day to day management and reporting of risks. They identify
risks, including new and emerging issues, map these to the principal
risks, escalating where required, and ensure risks are managed
appropriately. The causes and potential consequences of each risk
are identified and documented. Each risk is evaluated based on its
likelihood of occurrence and severity of impact on strategy, profit,
regulatory compliance, reputation and/or people at both a gross and
net (after mitigation) level. An Enterprise Risk Management System
is operated across the business for the capture and reporting of risk,
to ensure consistency of approach in the identification and
evaluation of risks, current mitigations and any further activities
required to bring the risk to a tolerable level.
We operate a three lines of defence risk assurance model:
1st line of defence: The day to day operational risk management,
including the systems and processes established to ensure internal
controls are in place and effective.
2nd line of defence: Monitoring and compliance activities which
advise and oversee first-line controls and risk management
processes, primarily through Group functions that are at least one
step removed from first-line management.
3rd line of defence: Independent business assurance provided
byboth third parties and the Group Internal Audit team over the
first and second lines of defence.
2. Risk assessment 3. Risk response 4. Risk governance
1. Risk agenda
Risk
36 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION36 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
3
Risk response
The risk registers and profiles are regularly reviewed to keep them
up to date and relevant to our strategy.
For each risk, we decide whether to eliminate the exposure, mitigate
it through appropriate controls or mitigating actions, transfer it
(e.g.through insurance) or tolerate any residual risk.
We continually challenge the efficiency and effectiveness of existing
internal controls and seek to continually improve our risk management
framework. The risk process ensures that risks are owned and risk
reduction activity is captured and managed through action plans
which aim to ensure risk taking remains within appetite. Oversight is
provided by the specialist Risk and Compliance team which has regular
reviews with management across the business. The risk management
framework was independently assessed by KPMG during 2024
against an established maturity matrix, with opportunities for
improvement captured in aContinuous Improvement Plan.
When a significant new risk arises where a response is required in
atimely manner, a dedicated working group is established to ensure
that robust oversight and management is applied and appropriate
mitigations implemented.
We use insurance as a mitigation tool in our response to several risks
and potential financial impacts that can result. We regularly review
and update the types and limits of our insurance coverage, ensuring that
they are aligned to external obligations, insurance product developments
and changes to our corporate risk profile. The insurance programme
and levels of cover are reviewed annually by the Board.
4
Risk governance
How do we evaluate and provide assurance
overour management of risks?
The following processes are in place to provide effective risk governance:
u
the Board is responsible for approving the risk management
policy and determining the nature and extent of the risks it is
willing to take in achieving its strategic objectives. The Board
considers the continued effectiveness of risk management
processes, controls and culture, changes to principal risks and
their management, and the quality of our public reporting
process. Twice yearly, the Board carries out a comprehensive
review of the principal risks;
u
the Audit Committee responsibilities include reviewing the Company’s
risk management systems to provide assurance of operational
effectiveness, compliance with laws, regulations and contracts;
u
the Risk & Compliance function supports the Audit Committee
inits review of the effectiveness of the system of internal control,
as do the external auditors on matters identified during the
course of their statutory audit work;
u
the Group’s Internal Audit function provides independent and
objective 3rd line assurance to the Victrex plc Audit Committee
on the adequacy and effectiveness of our risk management and key
internal control frameworks within the business. A comprehensive
‘audit universe’ assessment defines the range of potential audit
activities, including risk ratings based on current and historic
activity, and is maintained by the Audit function. The internal
audit plan provides the schedule of audit work that covers specific
risks, core processes (cyclical), key programmes and geographic
regions, which is approved annually by the Audit Committee;
u
the Executive Risk Committee, chaired by the Chief Financial
Officer, reviews the corporate risk register at least half yearly to
ensure it remains appropriate and effective. During the year
feedback from these reviews is provided directly to the Audit
Committee and the Board by the Director ofAudit & Risk. The
Executive Risk Committee comprises: the Executive Directors (CEO
and CFO), Managing Directors of the Medical and Sustainable
Solutions businesses, Group HR Director, General Counsel &
Company Secretary and Director of Audit & Risk. Risk management
subcommittees provide further governance for specific business
areas (such as Medical) or programmes (forexample the ERP system
replacement) where they are deemed necessary due to current
business activity. These meetings and associated risks feed into both
bi-monthly VMT Risk and Compliance meetings and the Executive
Risk Committee (at least half yearly) via their respective Chairs,
who are Executive Risk Committee members;
u
the Victrex bi-monthly Risk and Compliance review meeting
provides oversight for the risks, controls and assurance activity
across the business including Legal, Regulatory, SHE, Quality,
Security (including cyber) and Internal Audit. Membership comprises
the CEO, CFO, Managing Directors, Group HR Director and the
General Counsel & Company Secretary alongside a number of other
senior leaders from 2nd line risk management functions;
u
as appropriate, significant incidents, issues and new risks are
reported to the Board via the relevant Executive Director; and
u
risk management is an integral aspect of Group functional
governance, including through the SHE steering committee (which
meets quarterly), Quality product review meetings (monthly) and
the ESG steering group (which meets twice a year).
Emerging risks
The Board has identified and assessed emerging risks or areas of
increased focus as part of the established risk management and strategic
planning processes. The key emerging risk areas identified were:
u
further geo-political and macro-economic instability, including:
u
impacts on supply chains and end markets resulting from
increased tension and conflict in the Middle East; and
u
ongoing geo-political tensions, including those between
theUS and China, and associated import/export controls
andsanctions;
u
raw materials – including potential longer-term issues with their
continued availability, for example through climate-related
impacts or potential toxicity – have been evaluated as an area to
be closely monitored;
u
business resilience, which is increasingly a factor in external and
customer audits and which Victrex has given particular focus in
the last year;
u
new legal and regulatory aspects – resulting from the changing
business footprint, complex and evolving regulatory
environment, as well as a different focus from the new UK
government; and
u
future of end markets – redirecting focus and resources to
sustainable end markets and products with environmental &
societal benefits in line with global megatrends.
These emerging risks have been recorded and will be continually
monitored through the ongoing Corporate Risk Management
process so that their potential impact can be further understood
and mitigated. They will also be considered as an integral part of the
strategic planning process, aligned with Victrex’s risk appetite.
Climate-related risks and opportunities
We have further developed our climate-related risks and opportunities
(see pages 58 and 59), monitoring changes in regulation and legislation.
A focused risk assessment covering ESG risks is in place, with clear links
to existing principal risks such as Supply Chain and Strategy Execution
with oversight from the Corporate Responsibility Committee.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 37
MANAGING OUR RISKS
The Group’s strategic objectives can only be achieved if certain risks are taken
andmanaged effectively. We have listed below the most significant risks that may
affect our business, although there are other risks that may occur and impact the
Group’s performance.
Key to strategy
Drive
Differentiate
Create and deliver value
Underpin
Risk heatmap
1. Safety, Health and Environment
2. Recruitment and retention of the right people
3. Supply chain
4. Network and IT systems & cyber security
5. Product liability
6. Legal and regulatory compliance, ethics
andcontracts
7. Strategy execution
8. Geo-political and macro-economic environment
Impact
Likelihood
2
1
3
5
6
84 7
Low
Low
High
High
Safety, Health andEnvironment
Primary link to strategy Link to climate change
Risk area and description
Delivery of our strategy is dependent on us conducting our business
safely. Given the nature of our various manufacturing facilities, a
significant operational disruption could adversely affect the safety
ofpeople on or close to our sites. Disruption could also impact our
ability to make and supply products.
The environment in which Victrex operates is subject to numerous
legislative and regulatory requirements. A failure to comply could
adversely impact the local environment, our employees, our
manufacturing capability, or the attractiveness of our business
orproducts to various stakeholders.
In addition, climate change poses a number of risks to the business.
Minimising our environmental impact and ensuring future business
sustainability as we transition to a low carbon economy are
fundamental objectives.
Mitigation
SHE remains our number one priority. We have policies and
procedures to manage our operations, protect the safety and
healthof our employees, contractors and visitors, and manage our
environmental responsibility by reducing emissions to continually
improve our resource efficiency.
During FY 2024 the SHE function has seen new leadership and has
been restructured to ensure adequate and specific focus on both
process safety management and occupational health and hygiene.
Our safety ‘Golden Rules’ continue to receive emphasis, and risk
assessment training has been refreshed.
Significant focus is placed on process safety hazards and control
procedures and we partner with external leaders to provide
additional independent assessment and assurance of relevant
plantsand processes. Any events or near misses that do occur
areinvestigated to determine root causes and appropriate actions
are taken to prevent reoccurrence.
SHE management software is in place across all global assets to
further support this and we have SHE improvement plans and KPIs
that are monitored and reviewed monthly, alongside a SHE steering
committee which provides oversight and governance. Additional
detail of SHE performance and progress made in the year is
contained in the Sustainability report on page 71.
Change
No change
Viability statement links
Risk considered
Risk modelled in sensitivity analysis
1
Risk continued
38 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION38 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Recruitment and retention
of the right people
Supply chain
Primary link to strategy Link to climate change Primary link to strategy Link to climate change
Risk area and description
Our success depends on our ability to recruit and retain the right
people. Victrex relies on the skills, knowledge, experience and
competence of our people in order to drive business growth
andsuccessfully execute our downstream strategy.
Due to the nature of our business, there is an inherent requirement
for highly skilled employees (for example in areas of polymer
chemistry, R&D and process engineering) and the specific end market
related competencies needed (for example in Medical and Aerospace
parts manufacturing).
Our ability to recruit and retain talent is affected by numerous factors
including: pay and benefits, culture, sustainability credentials, the
nature of the working environment, regional employment levels and
changing workforce behaviours. In the current recruitment market,
there is a far greater expectation for flexible working arrangements
and less dependency on location-based roles.
Risk area and description
Failure to maintain a secure supply of high quality products to our
customers globally could lead to loss of earnings and damage to
reputation. This could be caused by, for example, incapacity of our
production facilities, quality failure or restricted access to raw
material supplies or transport links potentially leading to insufficient
levels of inventory and/or manufacturing capacity.
Climate change poses several specific supply related risks to Victrex
and our suppliers, including potential asset or production disruptions
due to rising sea levels and increasingly harsh weather events or cost
impacts due to changes in carbon taxation and increased energy costs.
Mitigation
Enhancing workforce planning has been a key area of development,
alongside ensuring a fair and attractive benefits package.
Digitalisation of recruitment and applying a future-skills perspective
have been key focuses of activity in FY 2024. We have targeted
priority learning and development programmes across all levels and
improved our skills and competency frameworks, investing in people
as an attraction and retention tool.
We have succession plans in place for key roles and develop our
future leaders so that we are able to promote internally as a
retention lever, as well as bringing in new talent from the outside
where required.
We have enhanced our Diversity and Inclusion and our flexible
working policies over the last year and have responded to the voice
of our employee resource groups in making changes to ensure equity
for all. We regard this as a commitment to make full use of the
talents and resources available.
We have gained Disability Confident Level 2 accreditation which
recognises our fair approach in recruitment and talent management
practices, and continue to evolve and improve accessibility at all sites.
Mitigation
Our policy is to keep capacity ahead of demand by continually
investing in our supply chain so that our customers can be confident
that we can meet their requirements today and in the future.
We have a robust, Class A standard Integrated Business Planning
(‘IBP’) process in place through which changes in demand are
anticipated and consistent supply is maintained.
Strategic supplier sourcing, development and performance
management are our key mitigations for the quality and security
ofsupply of key raw materials. We have continued to focus on the
breadth and resilience of our supplier base in response to the current
and future uncertainties. In FY 2024, this has included a further
strategic increase in the number of suppliers of key materials, and
focused supplier assessments and audits.
We also consider alignment with our Modern Slavery policy and
human rights policies within our supplier review process.
In our own operations, we have reviewed the possible contingencies
for energy interruptions affecting our manufacturing sites, including
the use of alternative fuel sources.
Our UK manufacturing improvement plans have continued and will
be delivered over the coming years which will strengthen the security
of supply to our customers.
During FY 2024, we have focused on reviewing our business
resilience and response plans to ensure security and continuity
ofsupply.
Change
No change
Change
No change
Viability statement links
Risk considered
Viability statement links
Risk considered
Risk modelled in sensitivity analysis
2 3
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 39
Risk continued
Network and IT systems & cyber security Product liability
Primary link to strategy Link to climate change Primary link to strategy Link to climate change
Risk area and description
Targeted cyber attacks could result in the theft, manipulation or
destruction of confidential and sensitive information and severely
disrupt business operations.
Significant failure of, or interruption to our IT systems or services
could lead to business process disruption.
The adoption of AI technologies, if used inappropriately, could
exacerbate risks around data creation and management including
accountability for data integrity, data protection and privacy, and
lossof IP.
The level of homeworking could lead to an increased risk of breach
or loss of key services.
Risk area and description
Selling into highly demanding end use applications and regulated
markets such as Medical and Aerospace means a failure to supply
inaccordance with the agreed specification has the potential to lead
to consumer harm or a potential product liability claim.
This could result in fines or damages being payable and could in turn
lead to a loss of business and reputational damage.
Mitigation
Victrex operates a Global Information Security Management System,
aligned to ISO 27001 and National Institute of Science and
Technology (‘NIST’) standards, to provide a multi-layered approach
tosecurity and control.
We have continued to make enhancements to the control framework
and layers of defence, including: using best of breed Extended
Detection and Response (‘XDR’) and Security Incident and Event
Management (‘SIEM’) technologies, along with next generation
firewalls and Network Access Control (‘NAC’), and a global software
defined LAN and WAN for our core network.
Independent external experts are regularly engaged to conduct
assessments, including penetration testing, cyber health and
awareness and ongoing certification to Cyber Essentials Plus.
DuringFY 2024 we gained Trusted Information Security Assessment
Exchange (‘TISAX’) accreditation. We have a global incident response
plan, supported by third-party experts, for crisis response within
both IT and OT networks.
Our internal Security Operations Centre and team provide round the
clock detection and response capabilities.
We continuously review the latest threats and trends in cyber and IT
security to ensure our protection is current and effective. To support
this we have enhanced cyber security awareness across the business
through mandatory training and a culture monitoring platform, which
are applicable to all users, and have conducted exercises to test our
resilience covering both our defences and response capabilities.
Mitigation
Robust regulatory standards and accredited quality management
systems are in place relevant to our markets, including Medical
Devices, Automotive and Aerospace.
As the business continues to move downstream into semi-finished
and finished products, we are dealing with increasingly onerous
andcomplex liabilities. As a result, we have established Risk and
Warranty Committees which provide additional governance over
ourkey programme activity in the Automotive and Aerospace sectors.
We continue to utilise external experts to support with complex
contract matters, where required. We use supply contract terms and
conditions to limit exposure, which include agreed specifications and
manufacturing to defined standards and processes. In addition, the
Group maintains appropriate levels of product liability insurance.
Quality performance is key to mitigating this risk and during FY 2024
specific focus has been given to our Quality teams, including a
restructuring to integrate the Quality Assurance function with the
Regulatory and Product Stewardship (‘RAPS’) team. The quality and
supplier 2nd line assurance programmes have been refreshed.
We have robust management of change processes inplace which
ensure that supply and quality are consistent and any change to our
systems or processes is appropriately validated.
Change
No change
Change
No change
Viability statement links
Risk considered
Viability statement links
Risk considered
Risk modelled in sensitivity analysis
54
40 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Legal and regulatory compliance,
ethicsand contracts
Strategy execution
Primary link to strategy Link to climate change Primary link to strategy Link to climate change
Risk area and description
We are required to adhere to all applicable laws, regulations and
ethical standards including those covering:
u
anti-bribery and corruption;
u
exports and sanctions;
u
competition;
u
data protection; and
u
human rights, modern slavery and labour.
Increasingly, geo-political factors pose additional complexities to
navigate in several areas including export controls and sanctions.
Any failure to comply with contractual commitments and ethical and
regulatory compliance standards has the potential to result in loss
ofearnings, civil or criminal legal exposure, or reputational damage,
and could affect our ability to achieve the business strategy.
Our future opportunities in a number of markets and activity in
newgeographies bring new regulatory challenges and contractual
requirements to meet.
Risk area and description
Our future business growth is dependent on the effective
implementation of our strategy.
This risk considers the potential failure to execute the strategy
effectively and generate value from our investment in the mega-
programmes. Key elements include: maintaining the health of our
core business, generating innovation based growth by driving
adoption of parts and forms in addition to polymer, driving growth
in China through our new assets, and protecting and managing
intellectual property.
Successfully managing the climate-related risks and opportunities
summarised in the TCFD section (pages 54 to 60) remains
fundamental to the successful execution of the business strategy.
Mitigation
Compliance policies, procedures and training are in place for key
regulatory compliance risks.
Our Code of Conduct is in place, which is regularly reviewed, and
mandatory training is provided. Over the last year these areas have
been reviewed and refreshed. Compliance is monitored and reported
to the Victrex bi-monthly compliance meeting.
We continue to use internal and external subject matter experts to
support risk identification, set standards and policies, and provide
advice and training. We seek external specialist support as needed,
and our Internal Audit team has embedded legal and regulatory
compliance into all audits to provide ongoing assurance.
Commercial contracts and our pricing strategy are reviewed by our
Legal and Product Management teams.
As our business activities continue to expand, appropriate policies
and procedures are put in place to manage the associated regulatory
requirements and ensure understanding and compliance across all
territories in which we operate.
We have a dedicated Regulatory and Product Stewardship team
inplace covering all markets in which we operate, and which now
incorporates our Quality Assurance team.
Mitigation
The Group has a well established and clear business strategy which is
subject to a robust annual Board review process to ensure its continued
effectiveness. The Board monitors progress in implementing the
strategy at each Board meeting and is given updates from specific
programmes and business units throughout the year.
Investment choices in both our mega-programmes and in third
parties are reviewed regularly by the Board to ensure these continue
to add value and align with our strategy, with adjustments where
appropriate such as the decision to cease providing funding to
Bond3D during FY 2024.
Annual objectives, which are linked to our strategic imperatives,
arecascaded throughout all levels of the business.
As we enter FY 2025 a new organisational structure has been
designed and implemented to focus on programme delivery and
todrive forward our innovation strategy, targeting key programmes
while ensuring appropriate focus on our core business.
We continue to offer a strong value proposition as a solutions
company: unique chemistry, specification of products with end users,
quality and technical service, the performance and sustainability
benefits of our products and the ability to develop new applications.
We monitor technological changes to materials and potential
challenges for PEEK and PAEK polymers by developing new grades
with differing properties, as well as creating new markets for PEEK/
PAEK polymers.
As our intellectual property (‘IP’) is critical to the delivery of our
strategy, robust protective controls are in place, supported by our
dedicated IP team.
Change
No change
Change
No change
Viability statement links
Risk considered
Risk modelled in sensitivity analysis
Viability statement links
Risk considered
Risk modelled in sensitivity analysis
6 7
Key to strategy Drive
Differentiate
Create and
deliver
Underpin
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 41
Risk continued
Geo-political and
macro-economic environment
Primary link to strategy Link to climate change
Risk area and description
We serve over 40 countries globally, operating in numerous
geographies across a range of markets which can be affected by
political and/or economic changes or uncertainties.
Risks related to the geo-political and macro-economic conditions
have increased over the year, primarily as a result of the ongoing
warin Ukraine, China’s economic outlook and escalating conflict
inthe Middle East.
International tensions and the imposition of barriers to international
trade, such as tariffs, may create additional challenges in doing
business across territories.
While inflation has steadied, uncertainty in the global economic outlook
including potential changes in carbon taxation, energy prices and
impacts on interest rates and exchange rates have the potential to affect
our profitability. This is compounded when considering end-customer
demand, cost pressures, competitive dynamics and other factors.
This external environment has the potential to impact a number
ofother principal risks and the delivery of our strategic objectives.
Mitigation
The Board has received updates from independent experts to provide
valuable context to this area of risk.
A key mitigation is close monitoring of the geo-political and
macro-economic conditions and reacting accordingly through the
business strategy process.
Our range of markets and geographic spread help to mitigate the
impacts of political and economic change.
Development of PEEK production capability in China has continued,
with the first product shipped following continued commissioning
activity during FY 2024. Production volumes and sales are projected
toincrease through FY 2025.
Uncertainty in supply chains is being addressed by accelerating
supply resilience activity around dual/multiple sourcing of key raw
materials, where good progress has been made in the last year.
Maintaining our UK production of key raw materials ensures we
arenot solely reliant on international routes.
Reducing the impact of potential regional changes to carbon based
taxation is being mitigated through the business carbon reduction
plan, which includes transitioning to greener energy and targeting
manufacturing efficiency to reduce absolute energy usage.
We use foreign exchange hedging to delay the impact of changes
inexchange rates and manage short-term volatility.
We conduct horizon scanning and scenario response planning when
considering the longer-term challenges and options to address
geo-political and macro-economic factors as part of the strategic
review process.
Change
No change
Viability statement links
Risk considered
Risk modelled in sensitivity analysis
8
Key to strategy
Drive
Differentiate
Create and deliver value
Underpin
42 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Going concern and viability statement
Going concern
The Directors have performed a robust
going concern assessment including a
detailed review of the business’ 24-month
rolling forecast and consideration of the
principal risks faced by the Group and the
Company, as detailed on pages 36 to 42.
This assessment has paid particular attention
to current trading results and the impact of
the ongoing global economic challenges on
the aforementioned forecasts.
The Company maintains a strong balance
sheet providing assurance to key
stakeholders, including customers, suppliers
and employees. The Group had net debt of
£21.1m at 30 September 2024, a reduction
of £28.7m from 31 March 2024, and an
increase of £4.4m from 30 September 2023.
The increase in net debt during the year
largely relates to the payment of the regular
dividends in February 2024, £40.1m, and
June 2024, £11.7m, with ongoing capital
expenditure and soft trading reducing the
cash generation in the short term.
Underlying operating cash conversion
improved to 114% for the year ended
September 2024 from 18% for the year
ended September 2023, supported by the
partial unwind of the inventory position built
during FY 2023. The Group drew on its UK
Revolving Credit Facility during the period,
with a maximum drawn down of £26m,
before fully repaying the facility by the end
of the year from operating cash flows.
Ofthe gross debt position of £50.4m,
£9.2m is due within one year. The Group
maintains a cash balance sufficient to
manage short-term liquidity and provide
headroom against ongoing trading volatility.
Thecash balance at 30 September 2024 was
£29.3m. Approximately 50% is held in the
UK, on instant access, where the Company
incurs the majority of its expenditure. At the
date of this report, the Group has drawn
debt of c.£40m in its Chinese subsidiaries
(with a total facility of c.£43m available until
December 2026) and has unutilised UK
banking facilities of £60m through to
October 2027, of which £40m is committed
and immediately available and £20m is
available subject to lender approval.
The 24-month forecast is derived from the
Company’s Integrated Business Planning
(‘IBP’) process which runs monthly. Each
area of the business provides forecasts
which consider a number of external data
sources, triangulating with customer
conversations, trends in market and country
indices as well as forward-looking industry
forecasts: for example, forecast aircraft build
rates from the two major manufacturers for
Aerospace, rig count and purchasing
manager indices for E&I, World
Semiconductor Trade Statistics
semiconductor market forecasts for
Electronics and Needham and IQVIA
forecasts for Medical procedures.
The assessment of going concern included
conducting scenario analysis on the
aforementioned forecast. Whilst Sustainable
Solutions has seen a partial recovery in sales
volumes during calendar year 2024
compared to the suppressed levels seen
in2023, Medical continues to experience
lower demand with destocking remaining a
challenge as the industry carefully manages
its inventory down from the elevated levels
seen during 2022 and 2023. With economic
forecasts remaining mixed and supply chains
continuing to be cautious in both segments,
the scenario analysis performed by
management focuses on the Group’s ability
to sustain a further period of suppressed
demand. In assessing the severity of the
scenario analysis, the scale and longevity of
the impact experienced during previous
economic downturns have been considered,
including the differing impacts on Sustainable
Solutions versus Medical segments.
Using the IBP data and the reference points
from previous economic cycles, management
has created two scenarios to model the
impact of a reversal of the partial recovery
seen in Sustainable Solutions during 2024
and the continuing effect of destocking
within Medical at a regional/market level
and aggregated levels on the Group’s profits
and cash generation through to January
2026 with consideration also given to the
sixmonths beyond this. The impact of
climate change and the Group’s goal of
NetZero across all Scopes by 2050 are
considered as part of the aforementioned
IBP process, from both a revenue and cost
perspective, with the anticipated impact
(assessed as insignificant over the shorter-
term going concern period) incorporated
inthe forecasts. As a result, the scenario
testing noted below does not incorporate
any additional sensitivity specific to
climatechange.
The Directors have modelled the
followingscenarios:
Scenario 1 – Sustainable Solutions demand
reduces back to the levels seen during
H2FY2023 from January 2025 for six
months, before recovering to the levels
seenin H2 FY2024 for the remainder of
thegoing concern period. Medical revenue
remains in line with the softer level
experienced during FY 2024 through to
June2025 before recovery commences
atarate of 10% per annum through the
remainder of the going concern period.
Inventory is reduced in line withsales.
Scenario 2 – in line with scenario 1 through
to June 2025 but with the lower demand
continuing throughout 2025, i.e. throughout
the going concern period, taking the total
period of lower demand, which for
Sustainable Solutions started in early
FY2023, to three years, well above the
duration of any previous downturn
experienced by the Company. This would
give an annualised volume below c.3,300
tonnes, a level not seen since 2013. In this
scenario, destocking would continue to
impact Medical revenue which would
remain at an annualised revenue comparable
to FY 2024. With the period of prolonged
lower demand, a more aggressive unwind
ofthe inventory balance has been assumed.
The Directors consider scenario 2 to be a
severe but plausible scenario.
Commercial sales from the new PEEK
manufacturing facility in China commenced
during H2 FY 2024; however, with volumes
building over time the entity will require
additional funding to see it through to net
cash generation. In concluding on the going
concern position, it has been assumed that
Victrex will provide the additional funds in
full, which the Board considers to be the
worst case scenario.
Before any mitigating actions the sensitised
cash flows show the Company has
significantly reduced cash headroom,
whichwould require continued use of the
committed facility during the going concern
period. The level of facility drawn down is
higher in scenario 2 but in neither scenario
isthe committed facility fully drawn, nor
drawn for the whole year. With cash levels
lower than has historically been the case
forVictrex, the Company has identified a
number of mitigating actions which are
readily available to increase the headroom.
These include:
u
use of committed facility – the
committed facility could be drawn at
short notice. Conversations with our
banking partners indicate that the £20m
uncommitted accordion could also be
readily accessed. The covenants of the
facility have been successfully tested
under each of the scenarios;
u
deferral of capital expenditure – the base
case capital investment over the next
12months is lower than recent years
with major projects now completed in
China and the UK. This could be reduced
significantly by limiting expenditure to
essential projects and deferring all other
projects later into 2025 or beyond;
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 43
Going concern and viability statement continued
Going concern continued
Scenario 2 continued
u
reduction in discretionary overheads
– costs would be limited to prioritise and
support customer related activity;
u
reduction in inventory levels – the
elevated inventory level seen at the end
of FY 2023 has already been partially
unwound and is forecast to continue to
unwind during FY 2025. The scenarios
noted above include an acceleration
ofthe inventory unwind but a more
aggressive approach could be taken to
provide additional cash resources; and
u
deferral/cancellation of dividends –
theBoard considers the cash position
and interests of all stakeholders before
recommending payment of a dividend.
Adividend has been proposed for
payment in February 2025 of c.£40m
and in the past an interim dividend of
c.£12m has been paid in June, giving a
combined annual outflow of c.£52m.
Reverse stress testing was performed to
identify the level that sales would need to
drop by in order for the Group to be unable
to meet its liabilities as they fall due by the
end of the going concern assessment period.
Sales volumes would need to consistently
drop materially below the low point in
scenario 2, which is not considered plausible.
As a result of this detailed assessment and
with reference to the Company’s strong
balance sheet, existing committed facilities
and the cash preserving levers at the
Company’s disposal, but also acknowledging
the current economic uncertainty with
anumber of global economies remaining in
or close to recession and the wars in Ukraine
and the Middle East continuing, the Board
has concluded that the Company has
sufficient liquidity to meet its obligations
when they fall due for a period of at least
12months after the date of this report.
Forthis reason, it continues to adopt the
going concern basis for preparing the
financialstatements.
Viability statement
1. Assessment of prospects
The Directors have assessed the Group’s
longer-term prospects, primarily with
reference to the results of the Board-
approved five-year strategic plan. This is
driven by the Group’s business model
(detailed on pages 14 and 15) and strategy
(detailed on pages 16 and 17), which are
fundamental to understanding the future
direction of the business, while factoring in
the Group’s principal risks (detailed on pages
36 to 42) and the potential opportunities
and risks of climate change (detailed on
pages 58 and 59). The Directors continue
toconsider the ongoing challenges to the
global economy, including the impact on
each market and geography which the
Group serves, and the uncertainty this
creates, particularly in the early years of
thestrategic plan. The Directors have also
considered the Group’s ability to generate
cash and maintain a strong financial position
throughout the economic cycle, including
the level of cash and overall net debt at
30September 2024.
The strategic planning process is undertaken
annually, and includes analyses of profit
performance (including core business and new
product pipeline and ‘mega-programmes’),
cash flow, investment programmes (including
manufacturing capacity increases and our
acquisition pipeline) and returns to
shareholders. Completion of the strategic plan
is a Group-wide process engaging employees
throughout the business, including all senior
management in their respective areas. The
strategy was reviewed and approved by the
board in March 2024 (covering the five years
to September 2029). The strategy is built
market by market, geography by geography
recognising the differing dynamics in each
whilst also considering the longer-term impact
of the company achieving our goal of net zero
across all scopes by 2050 combined with the
wider global ambition to reduce carbon usage.
The company also operates ashorter-term
rolling 24 month forecast, predicated on the
IBP process, which forms the basis for the
2025 budget and key operational decisions
over this shorter timeframe. The first year of
the strategy has been realigned to the 2025
budget, taking account of changes to the
economic outlook since the strategy was
finalised, with subsequent years reviewed and
updated where the revisions to the first two
years areexpected to have a consequential
impact, either positive or negative. The
realigned strategy was approved by the board
alongside the 2025 budget in October 2024
and has also been used for the annual
impairment review detailed on page 165.
2. Viability period
The Directors have assessed the viability of
the Group over the five-year period to
September 2029, being the period covered by
the Group’s Board-approved strategic plan.
The board considers five years to be an
appropriate time horizon for the strategic
plan, being the period over which the Group
actively focuses on its development pipeline
and resulting capital investment programme.
As part of the longer-term considerations, to
support capacity planning and assessment of
projects which will take longer to reach
meaningful revenue, the group does prepare
forecasts for a period of more than five years,
however, a period greater than five years is
considered too long for the strategic plan
given the inherent uncertainties involved.
3. Assessment of viability
To make their assessment of viability, the
Directors have tested a number of additional
scenarios on the base case position of the
five-year strategic plan. These scenarios
encompass key trading assumptions
combined with the potential impact of
crystallisation of one or more of the principal
risks over the five-year period. Whilst each
of the principal risks has a potential impact,
the scenario analysis has been focused on
those considered to have the most
significant financial impact, primarily to the
revenue growth of the Group. The risks have
been assessed for their potential impact on
the Group’s business model, future trading
and funding structure.
The mega-programmes are forecast to have
a material impact on the company’s revenue
over the strategic period. Progress continues
to be made across the mega-programmes
with milestones being achieved as outlined
in the Strategic report on page 11. Timing
offuture milestone achievement and the
resulting impact on revenue growth remains
the key variable which the directorshave
incorporated into scenario 3described below.
The impact on the strategy of both the
company achieving its goal of net zero
across all scopes by 2050 and the wider
economy achieving net zero carbon over a
long period continues to be understood and
assessed. The physical risks and transitional
opportunities and risks have been
considered in detail as described in the
Sustainability report on pages 58 and 59.
Thephysical risks presented by climate
change are not expected to have a material
impact on the company’s ability to
manufacture product over the strategy
period and therefore no sensitivity has been
performed. At the revenue level the
transitional opportunities are considered to
outweigh the risks over both the short and
longer time horizons, supporting continued
growth in company revenues, albeit the
impact of this is only likely to be material
outside of the five-year strategy window.
The primary transitional risk relates to
carbon pricing and the likely levers used by
regulators and governments to drive down
use of carbon – taxation and levies.
44 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
The company’s manufacturing and supply chain does use significant gas, electricity and water whilst also generating hazardous waste.
Work is ongoing to reduce the carbon usage in the manufacturing process, both through using green sources but also redesigning
thechemical process to reduce the overall energy requirement and waste generation. Acknowledging the risk to the decarbonisation
ofthemanufacturing process, primarily in respect of timing, an increased cost of operation from taxation and levies has been assumed
inscenario5. The company would seek to recover this cost from customers but for the purpose of the scenario analysis a worst case
position of no recovery has been assumed.
The scenarios tested were carefully considered by the Directors, factoring in the potential impact, probability of occurrence and the
effectiveness of the mitigating actions. In addition, whilst considered implausible, a combined scenario (scenario 6) was also tested, which
contained an aggregation of all scenarios considered. Consistent with Going Concern, it has been assumed in all scenarios that the future
funding needs, including the repayment of external debt when it becomes due, of the PEEK manufacturing facility in China are met by the
Company, which the board consider to be the worst case scenario.
The downside scenarios applied to the strategic plan are as follows:
Scenario modelled Link to principal risk
1. General competitive pressure in the marketplace resulting in a decrease of Sustainable Solutions
and Medical revenue for both core and mega-programmes. Annual volume reduction between
5% and 18% in each year of the strategy.
Geo-political and
macro-economicenvironment
Strategy execution
2. Mega-programmes not achieving all milestones set or investment/adoption is delayed, for
example by economic conditions or regulatory approval, therefore delaying the time to
meaningful revenue. An average of two years delay to revenue growth versus the base case.
Geo-political and
macro-economicenvironment
Strategy execution
3. An extended period of economic contraction (in line with scenario 2 for going concern)
resulting in lower sales in 2025 and 2026 before returning to strategy growth rates thereafter.
Annual volume reduction of c.17% in each year of the strategy.
Geo-political and
macro-economicenvironment
Strategy execution
4. A natural or other event impairing key manufacturing assets resulting in supply disruption for
c.2 years, with associated reputational damage. Annual volume reduction from FY 2027 of 25%
for two years followed by 10%.
Supply chain
5. Increase to direct cost base potentially arising from:
a. additional regulatory compliance, environmental or otherwise;
b. increase in duty and tariffs;
c. product liability issues;
d. increased cost of manufacturing in a lower carbon way;
e. the transitional risks of moving to a lower carbon economy – increases in tax/levies on utility
or waste usage; or
f. increase in raw material and/or other input prices.
Operating costs increased by 10–15% per annum across the strategy period from FY 2026
onwards which incorporates the additional costs for carbon taxes and levies detailed on page 60.
Legal and Regulatory Compliance,
Ethics and Contracts
Safety, Health & Environment
Product liability
6. All of the above*, with an associated reduction in the overhead cost base and capital
expenditure. Annual volume reduction between 5% and 30% in each year of the strategy
(averaging 17% over the five years).
* Where two or more scenarios impact the same revenue stream in the same period the lower outcome is taken.
The key mitigating actions available to the Directors are consistent with those outlined above in Going Concern, incorporating the Group’s
ability to manage its cost base, reduce working capital, raise new finance and the possibility of delaying capital programmes and/or
restricting shareholder returns, all of which could be applied over the longer viability period. In addition to these specific mitigation plans,
the Group’s two distinct segments, both with diverse geographic markets, assist in reducing the risk of regional economic challenges and
sector specific issues. Further, the strategy of partnering closely with customers to develop the right applications and our existing and
growing list of specified products are also important mitigants.
The results of this stress testing showed that the Group would be able to remain solvent and maintain liquidity over the assessment period.
The Group is profitable under all scenarios, including scenario 6. The lowest cash balance was in scenario 6, in which the cash balance
remains positive albeit at a level where partial use of the RCF facility is required until mid-FY 2027. The RCF facility is available until October
2027 and the Directors anticipate refinancing would take place before this date, although no refinancing has been assumed in performing
the viability assessment. Covenant compliance has been successfully tested under scenario 6 throughout the period to October 2027. Due to
the severity and implausibility of scenario 6, an outcome that requires use of the RCF facility, this is considered akin to a reverse stress test.
4. Viability statement
Based on the results of this detailed analysis the Directors have a reasonable expectation, that the Group will be able to continue in
operation and meet its liabilities as they fall due over the five-year period to September 2029. This is predicated on the assumption that
anunforeseen event outside of the Group’s control (for example, an event of nature or terror) does not inhibit the company’s ability to
manufacture for a sustained period.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 45
SUSTAINABILITY
REPORT
With a clear sustainability strategy in place through
our People, Planet & Products pillars, we are able to
support our employees, nature and local communities
where we operate; minimise our use of resources;
and demonstrate to our customers how our products
enable environmental and societal benefits.
Our products have a long history of being aligned to
global megatrends. Consequently, we can demonstrate
how our materials and solutions support CO
2
reduction
and avoided emissions in Aerospace and Automotive,
energy efficiency in Electronics and Energy &
Industrial and the delivery of clinical benefits in
theMedical industry. Victrex also offers PEEK with
alower global warming potential (‘GWP’) than the
material benchmark within the GaBi database, which
enables our customers to support their own
sustainability journeys.
Our sustainability & ESG strategy seeks to build on
this platform, for our employees, for our customers
and for our wider stakeholders, with clear long-term
targets (see page 65).
Contents
47 Decarbonisation roadmap
48 Bringing environmental and societal benefits
to our customers
49 Our sustainability progress
50 Our sustainability vision and goals
52 Sustainability Q&A
53 Our achievements and accreditations
inFY2024
54 Task Force on Climate-related Financial
Disclosures (‘TCFD’)
61 People (social responsibility)
65 Planet (resource efficiency)
71 Safety, health and environment
72 Products (sustainable solutions)
74 Our Code of Conduct & Ethics – doing the
right thing
75 Non-financial and sustainability
informationstatement
46 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
46 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
DECARBONISATION ROADMAP
Our decarbonisation roadmap is aligned to the Science Based Targets initiative (‘SBTi’), witha Net Zero
goal by 2050 across Scope 1, 2 & 3 emissions andan interim goal by 2032. Our SBTi targets were validated
during FY 2024, with options available as part of our roadmap. All options require delivery of the UK
government’s targets for a decarbonised electricity grid, sufficient electrical grid capacity to deliver
against targets and available technology.
Targets and
options to Net
Zero by 2050
2022
tCO
2
e
30,000
25,000
20,000
15,000
10,000
5,000
0.0
2050
SBTi interim target
(2032)
Progress to date
34%
Reduction in Scope 3 emissions compared to
FY 2023 (reflecting significant decrease in
category 1 - purchased goods & services)
SBTI interim targets
50.4%
Interim target for Scope 1 & 2 emissions
reduction by 2032 (Scope 3 interim target
30% reduction) from our FY 2022 baseline
Future goals
Net Zero 2050
Across Scopes 1, 2 & 3
Decarbonisation options (Scope 1 & market-based scope 2) & illustrative route to Net Zero
Priority solutions
u
Electrification of steam boilers
(subject to available technology
and electricity grid capacity)
u
Continuous Improvement (‘CI’)
programme
u
Continue assessing alternative
processes or sustainable
chemistry
Sustainability report
Pages65to 70
NET ZERO
-50.4%
BY2032
Decarbonisation
options
u
Electrification of
steam boilers
(gas to renewable
electricity)
u
Waste to energy
u
Hydrogen
options
u
Power offtake
(offshore wind)
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 47STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 47
Victrex plc | Annual Report 2024
Jakob Sigurdsson
Chief Executive Officer
BRINGING ENVIRONMENTAL
ANDSOCIETAL BENEFITS
TOOURCUSTOMERS
With sustainability being embedded in our
purpose – to bring transformational &
sustainable solutions for our customers –
ourjourney has come a long way since our
original goals back in FY 2013.
Today, we not only demonstrate how we
support the next generation of talent through
our Science, Technology, Engineering & Maths
(‘STEM’) or community activities, or how our
products enable CO
2
reduction or patient
benefits for our customers, but we can bring
clear evidence of our decarbonisation journey,
with FY 2024 being a milestone year as we
received validation of our goals. The SBTi
validated both our interim (2032) and
long-term (2050) decarbonisation targets
thisyear. Over the coming years, we will be
investing in our assets to further reduce our
carbon footprint, as well as how we reduce
ourimpact in the supplychain.
Whilst this journey is not without challenges,
itwill support Victrex’s leadership position,
building on our differentiated strategy and
how our products can enable environmental
and societal benefit for our customers.
Oversight of our goals is provided by the
Board’s Corporate Responsibility Committee
(‘CRC’), with further detail on the Committee’s
work shown on pages 108 to 110 and progress
against our targets shown on page 49.
Importantly, all of our People, Planet &
Products pillars are aligned to the UN
Sustainable Development Goals 2030, and we
continue to gain positive accreditations for our
sustainability strategy and the progress we are
making. These are shown on pages 50 and 51.
People (social responsibility): As our highest
priority, safety, health and wellbeing goals
come at the top of our agenda. Our target is to
achieve a culture with Zero Accidents and Zero
Incidents. Our mid-term progress on recordable
injury frequency rates is strong, with an 86%
reduction in the last five years. More details are
available on pages 61 to 64.
Our other key priorities in our People pillar are
supporting local communities and our Diversity,
Equity & Inclusion (‘DE&I’) agenda. Victrex has
a long-standing history of supporting the next
generation of talent in local communities via
STEM learning in UK schools and colleges. We
continue to increasingly internationalise this
programme, with STEM ambassadors in the UK,
and now China, totalling 55. After successfully
establishing a UK Biodiversity partnership
lastyear, close to our global headquarters,
wehave started to broaden out this work,
withpartnership options around our other UK
sites, helping to support nature where we
operate. Aligned to STEM, our long-standing
apprenticeship programmes continue to go
from strength to strength, with 48 apprentices
in our business currently. This year, we will start
reporting both our employee hours spent in the
community, but also the social value created,
using an approved formula from UK STEM.
Thanks to the efforts of our global team, we
committed 4,423 hours to local communities in
FY 2024, another strongachievement.
In our DE&I agenda, we increased our
employee resource groups this year, including
our Race, Ethnicity & Cultural Heritage (‘REACH’)
group. At Board level, the addition of Urmi
Prasad Richardson enables us to meet the
Parker Review recommendation of having at
least one Non-executive Director with a
non-white ethnic background on the Board by
the end of 2024. We have a clear target of
40% offemales in leadership roles by 2030,
with FY2024 increasing to 25%, and an
expectation ofa gradual upward increase over
the comingyears.
Planet (resource efficiency): We were
pleased to see validation of our goals by the
Science Based Targets initiative (‘SBTi’), where
Victrex seeks to align to Net Zero by 2050, with
an interim target by 2032, compared to a
baseline year of FY 2022. We will retain
optionality to deliver these targets, which also
rely on the commitments (within the UK) for
adecarbonised and enhanced electricity grid
system. Capital investment to support
alternative fuels or processes is already built
into our ESG capital plans, which will step up
over the coming years. Options available are
shown on page 47. Victrex also continues to
work with academia and invests a small
proportion of its R&D budget in sustainable
chemistry. Whilst some of our metrics will be
adverse over the short term – particularly as
our China facility ramps up – we expect to see
our Continuous Improvement programme
delivering some benefits.
Most metrics – including Scope 1 & 2 absolute
emissions, energy usage and water usage
– were favourable this year, though intensity
metrics were adverse, as we produced
significantly lower volumes. Our Scope 1 & 2
carbon emissions reduced by 4% and energy
usage was 5% lower. Our new China facilities
impacted our progress, though we did see good
progress in Scope 3 emissions, with areduction
of 34%. This was largely driven by areduction
in our inventories as we produced less. Iam
pleased to also report that we have now
achieved 100% renewable electricity across all
our global locations (where marketsexist).
Products (sustainable solutions): Our
sustainable product revenues were 52%
(FY2023: 55%) due to the impact of a weaker
medical performance this year. Sustainable
product revenues include not only Aerospace
and Automotive – supporting the CO
2
reduction trend – but some applications in
Electronics for energy efficiency and of course
medical, where we can demonstrate improved
clinical outcomes. This includes over 15 million
implanted devices, to date, using PEEK-
OPTIMA™ as a replacement for metal, offering
clinical benefit in a broader range of
applications. During FY 2024 we also
progressed our circularity plans and how we
seek to facilitate greater recycling rates in the
supply chain. More detail on the environmental
and societal benefits our products can bring
isshown on pages 72 and 73. Following our
recent favourable Lifecycle Analysis (‘LCA’)
forour main product grade, we have now
completed Lifecycle Analysis assessments for
approximately 40% of our product portfolio.
Our target is to complete LCAs for products
covering 80% of our revenues by FY 2026.
Keeping sustainability embedded
inourpurpose
Overall, with a sustainability strategy aligned
toour purpose and clear long-term targets,
wehave a strong platform to build on. I am
pleased to see further progress this year across
People, Planet & Products pillars, which help
not only as a responsible employer, but in
differentiating Victrex with our customers
andwider stakeholders. We continue to enjoy
a broad range of accreditations including
EcoVadis, an A rating from MSCI and an
improved B rating within the Carbon
DisclosureProject (‘CDP’).
As Chief Executive Officer, it is also important to
thank each of our employees for their support
in our sustainability strategy. Their passion
forhow we can make a difference to our
customers and to society is hugely rewarding
and we look forward to delivering further
progress over the comingyears.
Jakob Sigurdsson
Chief Executive Officer
3 December 2024
Sustainability report continued
48 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION48 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
OUR SUSTAINABILITY
PROGRESS
Our People, Planet & Products strategy continues to yield good results,
withsustained progress made with our external targets.
PEOPLE
Social
responsibility
STEM
55
global STEM ambassadors
Community
4,423
employee volunteering hours in
FY 2024
Diversity
25%
of females in leadership roles
(target of 40% by 2030)
PLANET
Resource
efficiency
Energy
100%
renewable electricity across all
Victrex global locations
Waste
38%
reduction in hazardous waste
disposed to landfill (after
treatment) vs FY 2023
Emissions
4%
reduction in Scope 1 & 2 CO
2
emissions vs FY 2023
PRODUCTS
Sustainable
solutions
Sustainable product revenues
52%
of revenues coming from
sustainable products
Lifecycle Analysis (‘LCA’)
40%
of product portfolio LCAs
completed to plan, with
VICTREX™PEEK LCA favourable
compared toSphera Life
Cycle for experts benchmark
PEEKdata
Circularity
Victrex circularity options developed
to differentiate Victrex and further support our customers
inreducing their CO
2
footprint
Victrex plc
| Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 49
OUR SUSTAINABILITY
VISIONAND GOALS
Our sustainability vision is aligned to both the SBTi and the UN Sustainable Development Goals
(‘SDGs’), which are shown below. The majority of our goals are focused on a 2030 timeline, with
our decarbonisation roadmap aligned to the SBTi near-term (2032) and Net Zero targets,
following confirmation of the approval of our plan by SBTi in May 2024.
SDGs Sustainability pillars
PEOPLE
Social responsibility
Further inspire our employees
andcommunities to positively
impactsustainability
Read more from page61
PLANET
Resource efficiency
Decarbonisation and focus on minimising
resources (energy, waste and water)
Read more from page65
PRODUCTS
Sustainable solutions
Our sustainable products support CO
2
reduction and clinical benefit in Medical,
as well as offering recyclability potential
Read more from page72
Sustainability report continued
50 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION50 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
u
Increase % of revenue
from sustainable products
(driving CO
2
reduction &
patient outcomes)
u
Increase recycling rates
of PEEK/PAEK in the
supplychain
u
Exceed 70% of Group
revenue from sustainable
products with environmental
and societal benefits by 2030
(and exceed 50% by 2025)
u
Establish Victrex’s role in
supporting circularity
u
Revenues from our
sustainable products with
positive environmental and
societal benefits at 52%
(FY2023: 55%)
u
Developed circularity
options to differentiate
Victrex and further support
our customers in reducing
their CO
2
footprint
u
Deliver Zero Accidents
andZero Incidents culture
u
Grow global
STEMprogramme
u
Increase community
activity across our
globallocations
u
Focus on supporting
genderDE&I
u
Improved safety metrics,
based on the OSHA
reporting standard
u
STEM ambassadors in
every region by 2030
u
Commit >500 employee
hours to global community
activity annually by 2030
u
Embed DE&I globally;
females in leadership roles at
40% by 2030
u
Further reduction in
recordableinjury rate
of0.18 (FY2023:0.22)
u
Number of global STEM
ambassadors at 55
(FY2023: 58)
u
4,423 employee
volunteering hours; first
Biodiversity partnership
u
25% of females in
leadership roles
u
Decarbonisation plan
(absolute carbon Net
Zero for Scope 1, 2 & 3
emissions) in line with the
SBTi 1.5°C and well below
2°C emissions scenarios
1
u
Sustained reduction
in resources through
improved productivity
and asset efficiency:
carbon intensity, waste
&water intensity
u
Victrex using 100%
renewable electricity
by2024
u
Commitment to a
science-based target
u
100% renewable
electricityglobally
u
SBTi targets and plans
approved across all Scopes
u
Decarbonisation roadmap
and options prepared for
primary manufacturing
facilities (dependent on
access and availability
of alternative fuels
andtechnologies)
1 Scope 1, 2 & 3 emissions and science-based target. Goal based on 2022 manufacturing footprint and data.
Our key imperatives:
u
Net Zero (Scope 1, 2 & 3) emissions in line with 1.5°C emissions scenarios of SBTi
by2050
u
Increase revenues from our sustainable products which bring environmental and
societal benefits
u
Minimise resources (energy, waste and water) used in our own operations
u
Enhance our DE&I agenda
Goals 2024 progressMilestone targets
Read more on pages61to73
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 51STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 51
Victrex plc | Annual Report 2024
Sustainability report continued
SUSTAINABILITY Q&A
How our actions support our customers and society.
Material
sustainability issues Key questions How is Victrex taking action?
How do Victrex actions benefit
customers and society?
Greenhouse gas
emissions
What specific strategies
and metrics does Victrex
have on decarbonisation?
u
Alignment to SBTi across all scopes
(interim target by 2032; 50.4%
reduction in Scope 1 & 2 emissions
from FY 2022 baseline; 30% reduction
in Scope 3 emissions) with ~£50m
capex in scope for decarbonisation
to2032.
u
CI activities.
u
Favourable Lifecycle Analysis for
Victrex™ PEEK Global Warming
Potential(‘GWP’) vs Sphera Life Cycle
forExperts database benchmark*
supporting our intent for lower
carbonofferings.
Energy management
How is Victrex reducing
energy use and carbon
emissions?
u
Achieved our FY 2024 target for
100%renewable electricity across
alllocations.
u
CI activities to reduce energy usage
atsource.
u
Reduction in energy use resulting in
lower carbon emissions and supporting
global targets.
Waste
How is Victrex reducing
waste at source and
seeking new applications
for waste PEEK material
(circularity)?
u
Production process improvements to
reduce waste in our operations, building
on 55% reduction in hazardous waste
to landfill in FY 2013to FY 2023.
u
Increased options for recycling as part
of our circularity strategy.
u
Reducing the amount of waste produced
to landfill and incineration.
u
Reduced carbon footprint for customers.
Water
How is Victrex managing
water to ensure water
security?
u
CI activities and production process
improvements.
u
Options for reducing water use
(internalopportunity for ~3–5%
CAGRreduction).
u
Improves water security and availability
in our production locations.
Regulatory
environment
How is Victrex
addressingthe
regulatoryenvironment?
u
Third-party assurance.
u
Industry collaboration to assess
forthcoming regulatory and reporting
requirements: e.g. CSRD, transition
planning, CBAM.
u
Protects and promotes both the
environment and Biodiversity within
each operational location.
u
Ensures our disclosures fully reflect
actions being taken for all stakeholders.
Product impact
How do Victrex products
impact society?
u
Investing 88% of our R&D project
based investment on sustainable
products or programmes.
u
Seeking to increase revenue from
sustainable products (2030 target 70%
of revenue vs 52% in FY 2024).
u
Victrex’s products enable environmental
and societal benefit for our customers,
through supporting CO
2
reduction
through lightweighting, energy
efficiency or clinical outcomes
(seepage72).
* Note: The reference to the data within the Sphera Life Cycle for Experts database refers to the Life Cycle Analysis completed for PEEK used as the
GWPbenchmark within the system.
52 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION52 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
OUR ACHIEVEMENTS AND
ACCREDITATIONS IN FY 2024
FTSE Russell – Part of FTSE Russell Green Revenues Index –
over 30% of Victrex revenues defined as coming from
sustainable products.
EcoVadis – EcoVadis is one of the leading organisations
assessing the sustainability strategies of global companies.
InFY 2024, Victrex was awarded a silver rating, meaning
weare in the top 15% of companies assessed, out of more
than 4,000 companies.
Sedex Member – Committed to an ethical and sustainable
supply chain.
MSCI – MSCI is one of the leading organisations ranking listed
companies for their sustainability performance. We maintained
our A rating in 2024.
Community focus – Victrex has long-standing partnerships
with the Science Industry Partnership, supporting the engineers
and scientists of tomorrow; STEM learning, as part of our global
STEM programme, supporting careers in Science, Technology,
Engineering & Maths; and Business in the Community, where we
support a range of local activities in theUK, with 4,423
employee hours committed to volunteering in FY 2024 alone.
The Sunday Times Best Places to Work – Victrex was
recognised in The Sunday Times Best Places toWork list 2024.
This was our first year of entry.
CDP – Victrex has seen consistent improvement fromCDP, with
an increase inourranking to B
1
, which is our highest rating
since commencingreporting.
Apple Clean Energy Supplier
programme – We have been accredited
by Apple on its Clean Energy Supplier
programme, with 100% renewable
electricity supplied globally.
1 Victrex plc received a B which
isin the management band.
Thisis the same as the Europe
regional average of B, and the
same as the Chemicals sector
average of B.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 53STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 53
Victrex plc | Annual Report 2024
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES (‘TCFD’)
Overview
The TCFD continues to provide a useful framework for the Company
to assess its climate change approach against and supports a full
breadth of consideration which has been supplemented by external
support with the appropriate expertise to challenge and provide
guidance in evolving the strategy and approach to climate change.
In line with our products’ credentials to enable positive
environmental and societal benefits, Victrex also recognises the
impact we have from our use of resources, i.e. energy, waste and
water. Sustainability is firmly embedded in Victrex’s purpose –
bringing transformational & sustainable solutions which address
theworld’s material challenges. Our products seek to bring technical
orenvironmental benefits, for example supporting CO
2
reduction
inAerospace & Automotive, or improving energy efficiency in
Electronics and Energy & Industrial end markets. This is underpinned
by targeting our innovation investment in Research & Development.
Progress in FY 2024
Victrex developed an SBTi decarbonisation roadmap and targets,
with options covering reductions to Scopes 1, 2 & 3 in line with its
1.5°C emissions reduction scenarios and we received confirmation
of approval from SBTi in April 2024. VICTREX™ PEEK already has
afavourable GWP compared with the available GABi industry data
for PEEK manufacture (see page 72) and we continue to explore
opportunities to reduce our carbon footprint further through
process optimisation and our Continuous Improvement activities.
A further review of the SBTi plans was completed during the year
with costs remaining broadly in line with the projected capital
investment of up to £50m over the period to 2032, in support of
decarbonisation. This amount, which is captured by existing capital
allocation across the Group’s financial planning processes,
principally relates to reducing our reliance on fossil-based fuel
byswitching to low carbon alternatives.
In addition, our LCA completion plans remain on target, covering 80%
of volumes and revenue, with 24 in total being completed this year.
Completion of this work enables Victrex to identify opportunities to
further reduce carbon within its manufacturing processes. As a result,
our LCA roadmap is approximately 40% complete (representing 71%
of current sales volume).
Targets
As outlined on page 65, our Net Zero target includes a reduction in all
Scopes by 2050 in line with the 1.5°C and well below 2°C emissions
scenarios of SBTi. They also recognises the environmental impact of
our manufacturing processes which create CO
2
emissions, usewater
and generate waste. Our near and long-term SBTi targets, approved
by SBTi in May 2024, are based upon data from the SBTi target setting
tool and form the basis for our Net Zero targets. Our CO
2
metrics are
included on pages 66 to 69 with our path to lower emissions included
on page 72. We continue to research new technology aimed
atminimising use of resources and significantly reducing our own
operational carbon footprint.
We seek to exceed 50% of Group revenue from products with
positive environmental and societal benefits by 2025 and exceed
70%by 2030 (FY 2024: 52% which reflects lower Medical revenues).
Our commitment is clear to support a lower carbon economy and
provide greater societal benefits to an increasing proportion of the
population (through our materials supplied into medical applications).
In delivering our targets, we are collaborating closely with customers
and collaborating with companies that share our ambitions and goals.
As plans to deliver our Net Zero target continue to evolve,
management receives regular input from multiple stakeholders,
aswe keep our approach under review, supported by the Corporate
Responsibility Committee. Engagement in our climate change
strategy has been particularly strong amongst our employees with
aseries of communications and workshops completed explaining
our SBTi targets and improvement plans completed. This not only
shows a commitment to supporting current workstreams but also
increasing levels of idea generation coming from all areas of the
business, including energy saving, recycling and waste reduction.
Statement on TCFD
We set out below our climate-related financial disclosures.
Thesecomply with UKLR 6.6.6 (8) by incorporating climate-related
financial disclosures consistent with the TCFD recommendations,
specifically under the four TCFD pillars and eleven recommendations.
Whilst consistent with the recommendations, we note that the level
of granularity increased during FY 2024 following the SBTi approval
as the Company further matures and embeds its climate change
processes, approach and KPIs, to track progress against targets.
Thiswill include an indication of the financial investment required,
insupport of the decarbonisation roadmap aligned to SBTi.
The table on page 55 is presented to demonstrate consistency and
signpost where the specific disclosures are included in the Annual
Report where they are not within this section. It also sets out the
progress made during the year and future actions the Company is
taking which will support more detailed disclosure in future years.
In making the above statement of compliance, the Board has
considered materiality and whether the incorporated disclosures
provide sufficient detail to enable stakeholders to assess the Group’s
exposure to and approach to addressing climate-related issues. This
includes an assessment of the level of exposure the Group has to
climate-related risks and opportunities considering our products and
manufacturing processes. Specifically on the financial disclosures
incorporated in the financial statements (see note 1 for details)
amateriality level consistent with that used for other financial
statement disclosures, and with the level used by the external
auditors, has been used, which for the current year is £3.9m.
The Board has considered the TCFD additional guidance (‘2021
TCFDAnnex’) in preparing the disclosures, including the sector
specific guidance for Materials and Buildings, which is the sector
relevant to the Company, as a chemical manufacturer. The Company
has included the sector specific disclosures, principally the potential
impacts of stricter constraints on emissions and the related impact
oncosts as well as the opportunities for its products to reduce carbon
emissions, with a specific metric (and target) included to measure this.
The emphasis of the additional guidance is to provide more granular
and explicit disclosures which, as stated above, is aligned with the
Company’s objectives for future years. Victrex is amember of the
Chemical Industries Association and awaits further industry guidance
on SBTi and climate change targets. Onceapproved and issued, this
guidance will be incorporated into the Group’s targets, aiding
consistency and comparability across thesector.
The Board is supported by the Audit Committee in assessing the
level of consistency of disclosure with the requirements of TCFD.
Further details on the role of the Audit Committee are included
onpage 100.
Sustainability report continued
54 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION54 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Oversight and governance of ESG risks & opportunities (including TCFD & climate change)
The Board reviews and approves the Group’s ESG and SBTi goals and has oversight of how these will be
embeddedandreported,whilstensuringsustainability remains at the core of our purpose and strategy
Victrex Board
The CRC oversees the Group’s conduct regarding its corporate societal obligations and commitments. This includes overseeing
andreviewingthedevelopment and execution of the ESG and sustainability strategy and commitments including progress towards
targets.Furtherdetails ontheactivities of the CRC are included on pages 108 to 110
Corporate Responsibility Committee (‘CRC’)
Head of Sustainability & ESG
1. People 2. Planet 3. Products 4. ESG governance
Sustainability workstreams
The VMT embeds sustainability strategy target reviews into the regular performance reviews they undertake with their respective teams
Victrex Management Team (‘VMT’)
Summary of key focus areas
Recommendation Consistency and 2024 actions Future actions
Further details
(where relevant)
Governance
a. Describe the
Board’soversight of
climate-related risks
andopportunities
The Victrex Board is responsible for reviewing and guiding
strategy, with sustainability embedded into our purpose
and our Polymer & Parts strategy. The Group has
maintained Board oversight of climate-related risks and
opportunities through the CRC.
The Chair of the CRC provides the Board with an update
after each CRC Board meeting.
The Board and the CRC will
continue to challenge how the
proposed ESG and sustainability
goals and plans are embedded,
whilst ensuring sustainability
remains at the core of our
purpose,values and strategy.
The key performance
indicators and
milestone targets
areshown on
page51.
b. Describe management’s
role in assessing
andmanaging
climate-related risks
andopportunities
The VMT (chaired by the CEO) is responsible for reviewing
and guiding major plans of action to achieve the
sustainability strategy, including required capital
investment and investment in R&D supporting
sustainableproducts.
During FY 2024, the VMT has embedded ESG and
sustainability strategy target reviews into the regular
performance reviews they undertake with their
respectiveteams.
The VMT will review and propose
appropriate actions to support
our ESG and sustainability
strategy, for example providing
guidance and support to achieve
our SBTi Net Zero targets,
including introduction of
alternative, low carbon fuels and
processes (whilst noting access
toand availability of alternative
technologies are required).
Strategy
a. Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium
andlongterm
Climate change related risks and opportunities have been
identified and regularly reviewed throughout FY 2024.
These risks and opportunities include those involving our
products and solutions benefiting society (for example in
quantified weight saving and CO
2
reduction in Aerospace
& Automotive), the cost of carbon intensity through
taxation from our operations and the potential increase in
the cost of energy. Victrex has used the TCFD framework
to identify material risks and opportunities along with
related examples to support the identification process, of
which five risks and five opportunities are considered to
be most impactful and are disclosed below.
Continue to monitor and review
climate-related risks, controls
and updated action plans
through the Corporate Risk
Management process.
Locations with a much lower
impact on current and
medium-term revenue growth
will be assessed for physical risks
when their revenue becomes
material, with updates made to
existing climate-related risk
assessments and mitigation
plans as information and climate
change scenario modelling
becomes more sophisticated.
Risks and
opportunities,
bothphysical and
transitional, are
presented on pages
58 and 59.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 55
Sustainability report continued
Summary of key focus areas continued
Recommendation Consistency and 2024 actions Future actions
Further details
(where relevant)
Strategy continued
b. Describe the impact
ofclimate-related risks
and opportunities on
the organisation’s
businesses, strategy
andfinancial planning
The potential climate-related benefits that our products offer
present a strong business opportunity, which is considered
to outweigh the climate-related risks from markets which
will be adversely impacted by climate change. The benefits
that our products bring are detailed on page 5. Climate-
related risks, both physical and transitional, are primarily
assessed in the context of our own manufacturing
operations.
External assurance to the ISAE 3000 standard was gained
on Victrex Scopes 1, 2 & 3 emissions for FY 2024 on a
limited assurance basis.
The Group’s financial planning processes, which comprise the
budget and the five-year plan, include revenues and margin
that result from climate-related risks as well as that element of
the previously mentioned £50m capital expenditure that is
expected to be incurred in the planning period. Increased
operating expenses from, for example, carbon taxes and
increased energy costs haven’t been included in the underlying
planning but rather have been assessed as an overlaid sensitivity
until such time as the effects are known in enough detail.
The impact assessment of
theidentified risks and
opportunities has been
refreshed as part of the regular
annual strategy review this
year and we will continue this
process each financial year
with the aim of maturing our
modelscontinuously.
External assurance across
allthree Scopes was completed
and we continue to work
towards internal carbon
budgeting.
The impact of risks
andopportunities
ispresented on
pages58 to 60.
Examples of the
benefits our products
bring in reducing
CO
2
emissions and
therefore supporting
the mitigation of
climate change
riskare included
onpage 5.
Emissions reporting
isdetailed in the
Resource efficiency
section on pages
65to 70.
c. Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including in a
1.5°C, 2°C or 3°C
scenarios.
The Group believes that its strategy isresilient in a 1.5°C, 2°C or
3°C scenario, primarilythrough:
u
the Group’s existing products, along with its
mega-programmes, support applications aimed at
reducing carbon dioxide emissions and therefore assist
current and future customers meeting their own
requirements to reduce emissions in a 1.5°C, 2°C or 3°C
scenario; and
u
the strategy of the Group includes a clear goal to
decarbonise the manufacturing process as part of
achieving Net Zero in line with SBTi targets (noting
reliance on available technology). This will mitigate the
impact ofthe Group’s manufacturing processes on
climate change and mitigate against the tightening of
regulatory/government restrictions and taxes to drive
down the use of carbon emitting processes.
Progress Continuous
Improvement opportunities
and work with academia to
lower the overall energy and
water usage and reduce waste
generation from the
manufacturing process.
Continue assessing options
toreplace fossil-based fuel
sources, e.g. solar, wind,
energy from waste, and low
carbon fuels. Complete a study
into electrification of key
manufacturing assets at our
main UK manufacturing site.
See pages 65 to70.
Risk management
a. Describe the
organisation’s
processesfor
identifying
andassessing
climate-related risks
During 2022 we conducted an initial climate-related
riskassessment using external specialist support.
Thisincluded a risk assessment workshop comprising
seniormanagement from across the business to review
climate-related risks over the short, medium and long-term
horizons. This exercise considered both the climate-related
physical and transition risks under three climate scenarios
and the actions that could be taken to mitigate them. A
summary of the most significant climate-related risks is
included on pages 58 and 59.
Climate risks have been part of our overall Corporate Risk
Management process during 2024 and will continue to be
going forward. Each risk is thoroughly evaluated based on
the likelihood of occurrence and severity of impact.
Continue to monitor and
review climate-related risks,
controls and updated action
plans through the Corporate
Risk Management process.
Oversight of action plans and
progress continues to be
reviewed by the CRC.
The risk management
process is described
from pages 36 to 42.
b. Describe the
& organisation’s processes
c. for managing
climate-related risks,
and how these are
integrated into the
organisation’s overall
risk management
The CRC oversees sustainability workstreams, which include
climate-related risks. Climate-related risks are integrated into
and managed alongside our corporate risk processes and
principal risk profile. Each risk has a designated risk owner
who is responsible for reviewing and monitoring the risk and
providing the necessary oversight for the implementation
and maintenance of appropriate mitigations.
Our corporate risk framework (page 36) provides details
ofthe processes used to assess and manage all risk types,
including climate-related risks. We have a well established
risk impact rating methodology which we have used to
complete qualitative assessments of our transitional and
physical climate-related risks.
Continuously improve the
response plans for each
significant climate-related risk
and assess its interaction with
the options to achieve Net Zero
with progress monitored by
the CRC.
Continue to monitor and
review climate-related risks,
controls and updated action
plans through the Corporate
Risk Management process.
The building blocks
to Net Zero are
included on page 65.
See pages 58 to 60
for the strategic
response and
resilience against
thespecifically
identifiedrisks.
56 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Recommendation Consistency and 2024 actions Future actions
Further details
(where relevant)
Metrics & targets
a. Disclose the metrics
used by the
organisation to assess
climate-related risks and
opportunities inline
with its strategyandrisk
managementprocess
The climate-related metrics are proposed by
managementand agreed by the CRC. These include
theapproved milestone targets on the path to Net Zero
(Scope 1, 2 & 3 emissions aligned to SBTi) and have been
extended to include energy and water usage and
wasteproduced.
Continuous improvement in data
collection to support metrics.
Setting and review of interim
milestone targets to monitor
progress towards reductions to
Scopes 1, 2 & 3 in line with SBTi
1.5°C emissions scenarios.
Victrex metrics are
setout on page 65.
Targets for these
metrics are approved
in line with our
approved SBTi
targets.
b. Disclose Scope 1,
Scope2 & Scope 3
greenhouse gas (‘GHG’)
emissions and the
related risks
We calculate and track Scope 1, 2 & 3 (Scope 3 categories
where relevant – see page 70) GHG emissions, including
our absolute carbon emissions, and measures of carbon
intensity in line with GHG Protocol CorporateStandards.
Our SBTi plans were approved in May 2024 with targets
covering reductions to Scopes 1, 2 & 3 in line with their
1.5°C emissions scenarios.
Continue assessing options to
replace fossil-based fuel sources,
e.g. solar, wind, energy from
waste, and low carbon fuels.
Engage with suppliers to support
decarbonisation in line with our
Scope 3 reduction target.
Emissions disclosed
on pages 54, 65
to70.
c. Describe the
targetsused by the
organisation to manage
climate-related risks
andopportunities
andperformance
against targets
We have established longer-term goals with associated
near-term milestone targets related to climate change,
which include our aspiration of Net Zero aligned to SBTi.
Interim goals include our target of increasing our
sustainable products to over 70% of revenues by 2030
(from 52% in FY 2024).
As set out in the Directors’ remuneration report,
aproportion of executive remuneration will be assessed
against challenging Scope 1 and Scope 2 carbon
reduction targets.
Continue sustainable product
reviews and engagement with
key customers to meet our
2023target.
Assess options to replace
fossil-based fuel sources, e.g.
solar, wind, energy from waste,
and low carbon fuels and
engage with suppliers to support
decarbonisation.
Climate-related
metrics and targets
are set out on page
65 for emissions.
The initial revenue
metric is included on
page 1.
Executive targets
detailed are set out
on pages 111 to 133.
Climate-related risks and opportunities
As noted above, the Group has been through a detailed process to identify climate-related risks and opportunities. As required by TCFD,
this has included the two major climate-related risk categories and their six sub-categories along with the five major categories of opportunity.
Analysis has been undertaken of all material risks against each of the sub-categories to identify the key risk/opportunity relevant to the
Group, the financial impact of that and the likelihood of them arising across a range of timelines and transition climate scenarios. The time
horizons and climate scenarios used for the transitional risk assessment are detailed below with those used for physical risks included on
pages 58 and 59. Different climate scenarios and time horizons have been used to best represent the different drivers behind transitional
and physical risks and opportunities.
Time horizons: (In line with corporate risk policy) They have also been assessed through multiple transition climate scenarios:
Short
term
Longer
term
Medium
term
Considered
upto3 years
Between 3
and10 years
More than
10years
Global Net Zero target
achieved by 2050 in
linewiththe aim of the
ParisAgreement. This
wouldrequire swift and
decisiveaction regarding
bothgovernments
andbusinesses.
Achieve global Net
Zeroby 2080, requiring
aprogressive ramp in
policy interventions
compared with today.
Global Net Zero not
achieved by 2100,
reflecting lack of
co-ordinated global
commitments with limited
policy interventions.
1
Accelerated Net
Zero 2050 scenario
(aligned to 1.5°C)
3
Current
policiesscenario
(alignedto3°C)
2
Mid case scenario
(aligned to 2°C)
The analysis is split into transitional and physical risks and opportunities and detailed on pages 58 and 59.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 57
Sustainability report continued
Materiality matrix Key risks
1. Extreme weather events
2. Increased cost of carbon
3. Increasing raw material, supply chain or logistics costs
4. Innovation based growth
5. Low carbon products
Low risk
Medium risk
High risk
Impact
Likelihood
2
1
3
5
4
Low
Low
High
High
TCFD risk materiality matrix description
Risk title Risk category Risk description Risk rating rationale Impact time
Extreme
weather
events
Geo-political/
macro-
economic
change
Victrex could experience an
extremeweather event including rain,
extreme temperature variability, high
winds, cyclones or hurricanes as a
result of increased global warming
which could lead to sea level rise/
coastal flooding and flash flooding.
Our new production facility in Panjin, China, and the Rhode
Island and Grantsburg manufacturing facilities in the USA
were determined to be ata particularly elevated risk with
extreme temperature waves expected to increase in
frequency and severity under both 3°C and 1.5°C
temperature scenarios.
Water stress due to climate change could disrupt production
at Victrex’s new manufacturing site in Panjin, China.
Many of our manufacturing sites are located on or near
coastal regions and could be vulnerable to sea level rise
associated extreme weather events and coastal flooding.
Medium to
long term
Increased cost
of carbon
Strategy
execution
Victrex may experience an increase in
costs which may not be offset by the
customer as a result of carbon price
fluctuations on Victrex’s operational
costs brought on by regulatory
intervention and supply and demand
of low carbon energy.
Victrex’s operational sites across global jurisdictions are at
riskofexisting and emerging regulations to address industrial
GHGemissions.
Carbon pricing is expected to increase in the future,
including the cost of offsets, and carbon-related taxes on
products within Victrex’s value chain. Availability of low cost
offsets is projected to decrease if GHG emissions reduction
targets are to be achieved.
Short
term
Increasing raw
material,
supply chain
or logistics
costs
Strategy
execution
Victrex may be unable to source raw
materials in line with quoted carbon
reduction targets as a result of
increased raw material, supply chain or
logistics costs driven by climate change.
Rising sea levels, extreme weather, geo-political instability,
and increased regulation all have the potential to impact
Victrex’s suppliers and logistics providers under both 3°C
and 1.5°C temperature scenarios, resulting in increased
operational costs that will be passed to Victrex.
Medium
term
Innovation
based growth
Strategy
execution
Victrex could fail to deliver the
forecasted innovation based growth
due to poor understanding of
customer need, inability to develop
solutions at an appropriate price in
the desired time or inaccurate data
and forecasting, as a result of
changing customer demands for low
carbon products.
Victrex offers sustainable and low carbon products in line
with megatrends, but is also exploring the application of
existing PEEK products for green industry use (e.g. recycled
grades). Failure to appropriately balance these two
approaches could lead to loss of market share and decreased
profits.
Victrex has established circularity plans to meet changing
market and customer demands.
Completion of product LCAs will help toprovide clarity.
Medium to
long term
Low carbon
products
Legal and
regulatory
compliance,
ethics and
contracts
Failure to react to changing
government, consumer or investor
requirements regarding low carbon
products which could ultimately lead to
damaged reputation or loss of revenue.
Victrex has committed to its Net Zero objective being aligned
with SBTi targets for Scopes 1, 2 and 3 by 2050. Sphera Life
Cycle for expert software and generation of LCAs enable us
to provide product sustainability data to customers and
suppliers.
Short to
medium
Physical and Transition-related risks and opportunities
The team has completed a review of the transition risks and those considered to have the largest impact are included in the
materiality matrix and description below. Opportunities are included in the table on page 59.
58 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
TCFD opportunities
A review of the transition opportunities considered to have the greatest materiality impact is included in the table below.
TCFD definition of opportunity Victrex rationale Impact time
New Products and new Applications
The development and/or expansion of Automotive internal
combustion engine (‘ICE’) low emission materials is expected
to result in increased revenues (from higher content per
vehicle) for Victrex products and services over the medium
term resulting in a positive impact on our financial position.
The drive to reduce CO
2
in the Automotive ICE sector
underpinned by environmental legislation and based on
increased fuel efficiency remains the dominant trend within
the industry. Automotive OEMs are looking at fuel economy
incombustion engines through new materials and car design
for lightweighting as key drivers to reduce CO
2
emissions and
fuel efficiency.
Short to
medium
New Products and new Applications
The development and/or expansion of electric vehicles is
expected to result in increased revenues from increased
demand (and content per vehicle based on our materials
supporting specific battery applications) for Victrex products
over the medium term resulting in a positive impact on our
financial position.
The Electric Vehicles Initiative (‘EVI’) is a multi-government
global policy forum established under the Clean Energy
Ministerial (‘CEM’), dedicated to accelerating the introduction
and adoption of electric vehicles worldwide. The CEM has
announced a campaign to speed up the deployment of electric
vehicles and target at least 30% new electric vehicle sales by
2030, including passenger cars, LCVs (light commercial vans),
buses and trucks.
Short to
medium
New Products and new Applications
The development and/or expansion of Aerospace low
emission materials is expected to result in increased revenues
(from higher content per aircraft based on PEEK being used
in larger components such as wing structures or engine
housings) for Victrex products over the medium term,
resulting in a positive impact on our financial position.
Aerospace manufacturers are striving for weight reductions to
directly improve fuel efficiency and reduce CO
2
emissions.
VICTREX™ PEEK and PAEK composites and components offer
weight reductions compared to traditional metal alloy parts.
For structural parts, they can replace aluminium and reduce
the weight by upto60%.
Lightweighting is integral to our composites activities;
advanced materials are integral to our long-term programmes
in R&D and new business development andadoption of our
thermoplastic solutions by the Aerospace supply chain
isongoing.
Short to
medium
Resource Efficiency
Increased use of greener, lower emission energy sources,
used to provide energy for our manufacturing assets, could
result in lower carbon emissions and reduced carbon
footprint of our products. This could support increased
demand for Victrex products over the medium term resulting
in a positive impact on our financial position.
Reducing current reliance on fossil fuel energy sources and the
introduction ofnew low carbon technologies could result in
greater energy efficiency and lower carbon emissions.
Achieving Net Zero by 2050, in line with SBTi targets, presents
an attractive proposition for key stakeholders, including
customers, investors and employees. Increasing interest from
ESG funds may provide greater access to capital, with financial
institutions also providing more attractive access to capital for
companies with greener credentials.
Medium
tolong
Resource Efficiency
Increased use of recycled materials and reducing fossil-based
raw materials within selected PEEK products could result in a
lower global warming potential. This could support increased
demand for Victrex products over the medium to long term,
resulting in apositive impact on our financial position.
Customers are increasingly looking for materials with a lower
carbon footprint and are starting to make purchasing decisions
based upon a material’s sustainability benefits as well as cost,
availability and security of supply.
Short to
medium
Impact time key: Short term (up to 3 years) Medium term (between 3 and 10 years) Long term (more than 10 years)
The development of lightweight and durable applications for automotive (including electric vehicles) and aerospace represent the greatest
opportunities to Victrex in the short to medium term as governments place increasing decarbonisation challenges on industry. In addition,
we believe there will also be an increased demand from our customers for lower carbon and recycled products and these areas will see the
greatest opportunities over the same time period.
To enable us to meet these demands, our planned use of greener, low carbon energy sources will enable us to produce lower carbon,
lightweight products that help our customers meet their own decarbonisation targets.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 59
Transition-related risks
andopportunities
The overall financial impact of the risks
andopportunities in this section has been
assessed. From a revenue perspective it
hasbeen concluded that climate change
presents a net positive opportunity for the
Company, with PEEK and its current and
future applications playing strongly across
several end markets where reduction in
carbon emissions is a key driver for
innovation. For financial planning and
scenario modelling, a cautious revenue
neutral position has been assumed.
Operating costs associated with climate-
related risks continue to be evaluated as
plans for decarbonisation mature and more
detailed analysis can be performed, at which
point they will be included in the detailed
financial budget and strategy models. In
order to reflect the potential future impact,
the Group includes a sensitivity in its
financial planning models of £10m in 2026
and £20m in 2027 (growing by inflation
thereafter), which principally covers the
impact of potential carbon taxes used by
governments to drive decarbonisation and
the increased cost of generating/using
renewable energy: both operating and
assetrelated costs. This assumes that the
additional costs cannot be passed onto
customers through product pricing.
The Group’s primary operational
manufacturing assets are in the UK, with
additional capacity in China. Our China
facilities were operational towards the end
of FY 2024. The Group has a network of
regional warehouses, all of which are leased,
which affords the flexibility of being able to
readily relocate these within a short time
frame where elevated risks exist or emerge
over time.
The Company’s ability to supply its
customers has been, and remains, a key
business priority. A key mitigation of this risk
is the level of inventory, with targeted levels
of three to four months’ cover at each
warehouse. This level is kept under review
depending on the risks to global supply
chains and the phasing of extended plant
maintenance shutdowns at any point in time
as well as the volatility in demand profiles.
The risk to supply from climate change is
incorporated into this consideration. Our
current target levels of inventory would
provide some mitigation if, due to extreme
weather events, a temporary loss of
production occurred enabling us to
continueto supply customers.
Physical risk climate scenario
analysismodelling
Climate scenario analysis (‘CSA’) was
completed within FY 2022 on the Group’s
primary operational manufacturing sites,
defined as those critical to the sustainability
of our current revenue streams and those
which will deliver most of the growth over
our strategic planning horizon of five years.
Three sites met the criteria for inclusion
inthe initial assessment, all based in the
United Kingdom. The information assisted
our understanding of the potential impact
of climate change on the future of our
business which in turn will support the
evolution of our strategy.
The CSA was conducted using a standard
methodology in line with TCFD guidance by
third-party advisors to assess the exposure
to the physical risk noted above. In total,
nine hazard types were assessed, including
flood, wind, precipitation and drought, up
to 2100 in 10-year increments. The
modelling has been based on three IPCC
climate change scenarios with a baseline of
2020. The scenarios are based on Shared
Socio-environment Pathways (‘SSP’) ranging
from SSP 1–2.6 to SSP 5–8.5.
The conclusion from the analysis of the sites
is that there was no material financial
impact from the physical risks arising from
climate change through the short-term time
horizon (present to 2040), mid-term time
horizon (2041–2060) nor well into the
long-term time horizon (2061 and beyond),
under any of the temperature scenarios,
neither directly in the working conditions
forour employees nor the operational cost
of the business nor the cost of insuring the
Group’s key assets. The analysis highlights
several factors for the Group to consider in
expanding, replacing and protecting its
assets and providing a safe working
environment for its employees at these sites.
The incorporation of these into the future
plans of the business will be monitored by
the CRC. The hazard types and levels remain
consistent with those disclosed in the
FY2023 Annual Report.
An updated analysis, based on the 2024
strategy update confirmed that the sites
identified remain the most impactful over
the next five years. Further work is
scheduled to widen the scope of this
analysis to other manufacturing sites, as
they become more significant, and through
the supply chain to our strategic suppliers,
focusing on suppliers in markets with
limitedparticipants.
Financial statement impact
The impact on the financial statements for
the year ended 30 September 2024 of the
aforementioned risks and opportunities
from climate change has been detailed in
the notes to the financial statements (see
note 1 for further details).
Sustainability report continued
60 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Safety, Health and Wellbeing
The safety, health and wellbeing of our
employees, along with contractors and
visitors to our sites, remain the highest
priority and are fundamental to everything
we do at Victrex.
We continue to run quarterly Focus on SHE
sessions, allowing allocated time for our
colleagues to spend on SHE related activities
including Health and Wellbeing. We
continue to offer a wide range of resources
to support the education and development
of our colleagues around all areas of Safety,
Health and Wellbeing, for example, this year
we launched our Accident Investigation
training to support the capability
development of those who undertake
investigations to prevent reoccurrence.
As an example, our team in Shanghai,
China, was able to celebrate 500 days free
from a Recordable Incident or Accident.
This is an excellent demonstration of how
everyone working together with a focus on
safety can deliver on our Zero Incidents &
Accidents ambition. Our Chair, Vivienne
Cox, was able to share in the celebrations
with the team.
Employee Assistance Programme
We continue to provide occupational health,
private medical and employee assistance
programme (‘EAP’) services to all our
employees. We are committed to improving
employee wellbeing and engagement with
ahealthier and more inclusive culture and
aim to continue to ensure improvement
inthe safety, health and wellbeing of all
ouremployees.
Diversity, Equity & Inclusion (and new
Ethnicity target)
Our focus continues to be on driving
towards our goal of 40% of women in
leadership by 2030. In addition, this year
saw us introducing a Victrex ethnicity target
in our senior leadership population of 12%
by 2027.
Our enhanced talent review process has
enabled us to identify diverse talent and
target opportunities to actively support
those individuals.
PEOPLE (SOCIAL RESPONSIBILITY)
Our social responsibility pillar focuses on inspiring our employees and communities
topositively impact on our three priority areas:
u
Safety, Health and Wellbeing;
u
Diversity, Equity & Inclusion; and
u
Community and employee volunteering.
This year we used the opportunity of
ourEmployee Engagement Survey to ask
questions on diversity data. With a 91%
response rate,this has given us the clearest
picture yet on the diversity makeup of the
organisation. This has enabled us to focus
our targetedwork on those areas which
areunder-represented.
We continue to enhance our recruitment
process, building on our applicant tracking
software, gender decoding, diverse job
boards and we now, in addition, have a
focused email address specifically aimed at
supporting people who may require more
support through the application process.
The introduction of anonymised CVs has
become a central part of our drive towards
developing a more diverseworkforce.
For disabled persons employed by
Victrex, be that upon commencement
or who become disabled during their
employment, Victrex is committed to
ensuring equality of opportunity for
training, career development and
promotion opportunities.
This year we achieved the UK Government
Level 2 Disability Confident Employer award
and continue to apply the concepts globally.
In addition, we also guarantee interviews for
all disabled applicants who meet the
minimum criteria for the job.
Employee Resource Groups
Our employee resource groups continue
togrow in numbers with 148 employees
involved with the Gender Engagement
Networks (‘GEN’) and 45 with ENABLE
(Disability Network). This year we launched
our newly branded REACH – Race, Ethnicity
and Cultural Heritage group (formerly
known as Race4equality group). There are
now 85 employees actively engaged with
this group. The introduction of senior
sponsors for each of the employee
resourcing groups has been well received
and has strengthened the signal across the
Group that diversitymatters.
The employee resourcing groups are actively
driving the inclusion agenda and have led on
several initiatives. International men’s month
had a focus on mental health with events
including bowling, football matches andraising
money for linked charities. International
Women’s Day included a senior women’s
panel discussion with 123participating and
raising money for linked charities. Other
events have included celebrating LGBTQI+
month, cultural food sharing sessions and
sharing different personal culture stories.
We also ran our first global employee
resourcing groups session, bringing GEN,
ENABLE and REACH colleagues together
tofocus on navigating behaviours in
theworkplace.
Giving back to our communities - wherever we operate globally - is important to us.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 61STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 61
Victrex plc | Annual Report 2024
Inspiring the next generation of employees through STEM activities.
Employee Resource Groups continued
As part of our key focus on disability this
year we have also provided sponsorship
toDarren Edwards, a disabled adventurer,
soldier and avid mountaineer as part of his
South Pole Challenge. Darren has previously
been a guest speaker at one of our employee
events which focused onresilience.
Employee breakdown
At the end of FY 2024:
u
44% of our Board were male
and56%were female;
u
40% of our senior managers
werefemale*;
u
In the grouping of senior managers and
their direct reports**, 59% were male
and 41% were female; and
u
Of the rest of our employees 75% were
male and 25% were female.
As at 30 September 2024:
Male Female
Grand
total
Board of Directors 4 5 9
Senior managers* 3 2 5
Senior managers
anddirect reports** 26 18 44
Rest of employees 815 272 1,087
Grand total
permanent
employees (incl.
Executive Directors) 841 290 1,131
* VMT members excluding the Executive Directors.
VMT members are listed on page91.
** VMT members including Executive Directors
and direct reports.
Learning & development
Digitalisation remains at the cornerstone
ofour learning strategy. The enhancement
of our learning infrastructure this year is a
key enabler to support this approach. Our
Management for Success programme has
continued to roll out with further
enhancements to the self-led learning tools.
In FY 2024 we had 47 employees (41M:6F)
on apprenticeship programmes including 5
employees (1M:4F) completing their
qualifications. 6 employees (4M:2F) started
professional qualifications in FY2024 and
13employees (4M:9F) completed
professional qualifications.
Recognition
Our recognition programmes continue to be
well received by our colleagues, celebrating
the achievements of our employees through
our ‘instant’ Above & Beyond Awards,
Functional Excellence Awards, our annual
CEO Awards which recognise the global
talent and innovation across Victrex and
ourProfessional Development Awards,
celebrating those employees completing
further education to gain a qualification.
In FY 2024, there were 428 Above & Beyond
Awards, 133 Functional Excellence Awards,
70 CEO Awards and 20 Professional
Development Awards.
Permanent employees (as at year end)
IN 1993
60
IN 2024
1,131
Average number of people employed
during theyear, bycategory
FY 2023 TOTAL: 1,117
IN 2023
Make 654
Develop, market andsell 249
Support 214
FY 2024 TOTAL: 1,115
IN 2024
Make 658
Develop, market andsell 283
Support 174*
* Change in numbers mainly due to
functionalrealignment.
Sustainability report continued
PEOPLE (SOCIAL RESPONSIBILITY)
CONTINUED
62 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
areas for improvement as well as areas to
celebrate. As a result of our high score,
Victrex was included in The Sunday
Times Best Places to Work 2024 list.
u
Our quarterly regional Employee Forums
continue to give our employees an
opportunity to feedback on broader
employee experience and provide an
employee view to planned business
initiatives and projects.
Gender Pay in Victrex
For Victrex, DE&I is central to our 2030
sustainability strategy. We have set targets
with specific focus on measuring the
effectiveness of interventions to support
female progression within our organisation.
Our Corporate Responsibility Committee
ensures we focus on, and strive for, impact
across our DE&I initiatives.
Our people make Victrex successful. We
continue to build a more diverse workforce
by empowering our employees to be their
authentic selves at work. This enables them
to share a wealth of skills, experiences and
talent and encourages collaboration across
teams as together we strive for continuous
innovation and deliver our strategy and
Company priorities.
For gender pay gap reporting purposes, we
took our ‘snapshot’ of Victrex Manufacturing
Limited at 5 April 2024 and have outlined
the headline statistics and analysis in this
section. We have then set out a summary of
the key improvement actions we have been
taking and the positive trends emerging
since we started our reporting in 2017.
At Victrex, we have inclusive pay and bonus
policies and plans globally, and our practices
are fair, equitable and reviewed regularly,
irrespective of gender.
The full Gender Pay gap report is available on
our Victrex plc website at www.victrexplc.com.
Snapshot headlines for 2024
u
There were 698 relevant people
employed on full pay (in Victrex
Manufacturing Limited).
u
77% were male and 23% were female.
u
The percentage of female employees
overall has increased from 17% in 2017
to 23% in 2024.
u
The percentage of female employees in
the upper middle quartile increased from
6.15% in 2017 to 19.40% in 2024, an
annual increase of 2.40% (17.00%
in2023).
u
The percentage of female employees in
the upper quartile has increased from
17.83% in 2017 to 25.30% in 2024,
anannual increase of 2.90% (22.40%
in2023).
u
The median gender pay gap has reduced
from 13.49% in 2017 to 4.20% in 2024,
an annual decrease of 2.20% (6.40%
in2023).
u
16.90% of males were paid a form of
bonus (e.g. retention bonus), compared
with 17.90% of females (note: our all
Company bonus did not trigger within
the period).
u
The proportion of male vs female
employees in each of our pay bands was
split as follows:
u
Lower quartile – 64.4% male vs
35.6% female.
u
Lower middle quartile – 86.3% male
vs 13.7% female.
u
Upper middle quartile – 80.6% male
vs 19.4% female.
u
Upper quartile – 74.7% male vs
25.3% female.
Summary
At Victrex, we are committed to taking
sustainable actions to close the gender
paygap and to support the progression of
women through focused interventions.
Our2024 report shows that we continue to
see positive trends in progression, through
formal programmes such as apprenticeships,
increases in the percentages of women in
STEM roles, internal promotions and
attraction of new female talent across all
levels in our organisation.
To promote gender diversity, and indeed
diversity in general at Victrex, we need to
keep our focus and think carefully about our
actions across the Company, at all levels,
and at every stage of our colleagues’ career
journeys. We have made progress in the
areas of gender pay and progression, but we
are clear about what we still need to do, in
multiple domains, to develop a truly diverse
organisation successfully.
Participation in employee
shareschemes
2024 2023 2022 2021 2020
83% 85% 77% 89% 90%
Note: Based on eligible employee population.
8%
Voluntary employee turnover
2024 2023 2022 2021 2020
8% 9% 8% 7% 4%
83%
Involvement
u
We continue to ensure that our
colleagues remain informed of business
updates and are able to take part in
two-way discussions. We do this through
a variety of communication channels,
both formal and informal.
u
Our quarterly Global Staff Briefings allow
our employees to ‘stay in touch’ with our
leadership team and hear about business
updates and also gives them the
opportunity to ask questions.
u
Brendan Connolly, our Non-executive
Director for Workforce Engagement,
hasbeen meeting with our employees
globally to listen to employee voice,
explore views and drive employee
engagement. His fifth annual report
canbe found on pages 94 and 95.
u
This year we conducted our 2024
Employee Engagement Survey and
achieved a 91% response rate and a
73% engagement score, which was an
increase of 4% against the last full survey
in 2022. Across the ‘six steps to
workplace happiness’ we achieved a
good score of above 70% in all. We
continue to be focused on reviewing the
results and creating and delivering action
plans to drive improvements and have
carried out many face-to-face sessions
this year with our teams to highlight
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 63
Community & employee volunteering
Victrex seeks to inspire the next generation
of talent, with a growing Science, Technology,
Engineering & Maths (‘STEM’) programme
and community partnerships, in both the
UKand globally. We now have 55 STEM
ambassadors globally. For the first time we
were able to measure the social value of our
UK-based STEM activities, using the STEM.
org formula, which equates to
approximately £2.3m for FY 2024.
Volunteering in the community
For the second year, Victrex Korea
employees volunteered at the Gangnam
Support Centre for Families with Disabilities,
assisting elementary students with
developmental disabilities in various
programmes, including music and health
activities. The team requested a donation
tothe centre from the Victrex community
donation fund, further supporting these
students’ and their family’s development
and happiness.
Biodiversity
Biodiversity continues to be a key focus
forus, as we strengthen our partnerships
inthe UK (The Wildlife Trust for Lancashire,
Manchester and North Merseyside), close
toour global headquarters. This year, our
employees participated in several impactful
activities, including planting Christmas trees
to reduce coastal erosion and volunteering.
We also invited the Trust on-site to help us
improve our green space practices,
reinforcing our commitment to harmonising
industry and nature. Other Biodiversity
partnerships around other UK sites are
beingexplored.
Girls in Engineering Work Experience
Pilot Programme
Victrex launched a pioneering work
experience programme aimed at inspiring
young women to pursue careers in
engineering. Recognising the low number
offemale applicants for engineering
apprenticeships, the team collaborated
witha local high school to engage female
students with an interest in STEM. Over
aweek, participants explored various
engineering disciplines, including Electrical,
Mechanical, and Process Safety, through
hands-on activities and professional
shadowing. The programme culminated in
ahazard perception session and career talks
from management. As a result, participants
expressed a newfound interest in
engineering, directly supporting Victrex’s
DE&I objectives and helping to build
apipeline of future female engineers.
Teacher Encounters
This year, alongside our global STEM
programme aimed at inspiring young
people, we partnered with organisations,
including Lancashire Careers Hub and IOM3,
in external programmes designed to provide
teachers with valuable industry insights.
These experiences enable educators to pass
on real-world knowledge to their students,
enhancing the relevance of STEM education
and inspiring the next generation of
engineers and scientists.
Charitable donations
Our global, employee-led charity and
community teams have continued to
support the local communities where we
operate throughout FY 2024. Our key focus
has been via STEM and Biodiversity, social
mobility, global donation drives and a wide
range of other community-led initiatives
aimed at givingback.
Victrex has supported a range of charitable
donations totalling £69,072 (FY 2023:
£82,331).
Responsible taxation policy
The Group is committed to managing its
taxaffairs in a responsible and transparent
manner, as outlined in our Tax Strategy
(www.victrexplc.com), with the Group
acknowledging its corporate responsibility
inthis area. The profit-based corporation tax
charge for the year was £2.1m (FY 2023:
£8.0m), with a total tax charge,
incorporating deferred tax, of £7.6m (FY
2023: £11.5m) giving an effective tax rate
of32.5% (FY 2023: 15.9%). Taxation paid
during FY 2024 was £4.3m (FY 2023:
£2.0m), in relation to profit-based taxes,
which was higher than the corporation
taxcharge reflecting payments made
onaccount.
The Group’s mid-term guidance for the
effective tax rate is 14%–18% compared to
the current UK corporation tax rate of 25%
and the global minimum rate of 15% due to
take effect for applicable multinational
enterprise groups from FY 2025 (albeit the
Group currently does not meet the group
revenue threshold of €750m). The discount
to the standard UK rate is due to the specific
UK government reliefs, including enhanced
capital allowances and specific innovation
incentives (e.g. Patent Box) which are
available to UK companies which invest
heavily in Research & Development, create
highly skilled innovation jobs and develop
unique value-generating intellectual
property (‘IP’). Victrex’s strategy of investing
in, and patenting the output of, innovative
and sustainable products and processes
allows us to benefit from these reliefs.
The Group currently manufactures the
majority of finished goods in the UK, which
are then sold to Group companies in other
jurisdictions which serve their respective
customers. The prices levied between Group
companies, and resulting profits in each
jurisdiction, are governed by the Group’s
global transfer pricing policy, which is based
on the arm’s length principle and set in
compliance with OECD principles with
regular benchmarking undertaken using
external advisors.
It is noted that the total tax contribution
forthe Group is significantly higher than
theprofit-related taxes alone. The total tax
contribution for the Group includes
employee-based taxes, customs duties, and
elements of unrecoverable VAT, in addition
to taxes collected on behalf of the
government, including VAT and taxes borne
by the Group’s employees.
Group policies
Victrex annually reviews its key employment
policies, several of which are shown on
www.victrexplc.com. The Group, through its
Code of Conduct programme, also targets a
100% completion rate by employee training
covering SHE training, the Code of Conduct
(Ethics), IT Acceptable Use and other linked
topics. A list of the key policies relating to
our employees can be found on page 75.
Sustainability report continued
PEOPLE (SOCIAL RESPONSIBILITY)
CONTINUED
64 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Resource efficiency
Beyond our products playing a role in
society, or having recyclability potential in
applications, we also have clear goals to
improve our resource efficiency, including
reductions in energy, waste and water
usage. Most absolute metrics were
favourable this year. This includes a 4%
reduction in Scope 1 & 2 carbon emissions
at our facilities, reflecting lower production
levels. Whilst overall our absolute Scope 1
&2 emissions decreased, intensity metrics
worsened as a result of lower efficiency in
our assets and the impact of our new China
facility. Our total carbon intensity (Scope 1
&2 emissions/tonne of PEEK manufactured)
has shown a 27% increase compared to FY
2023, and our our carbon intensity
(excluding China) increased by 8%.
Pleasingly, we didsee good progress in
Scope 3 with a 34% reduction compared
toFY 2023.
Energy and water usage will continue, in
theshort term, to be driven by production
volumes, with lower year-on-year
production in FY 2024 compared to the
prior year. Our priorities remain the efficient
use of energy and water and waste
minimisation. Overall, the immediate short
term is likely to see absolute emissions
increase – driven by our new China
manufacturing facilities – prior to the impact
of our major decarbonisation projects. CI
programmes will help offset some of this
near-term increase, through smaller
programmes targeting manufacturing
efficiency, waste and water.
SBTi and external accreditations
Our decarbonisation and emissions
reduction plans were approved by the SBTi
in May 2024. We also have long-standing
participation in the CDP, which benchmarks
global companies and has recognised our
efforts in this area with FY 2024 being our
highest scoring year to date. MSCI, one of
the leading ESG rating agencies (A rated),
FTSE Russell and EcoVadis are other
organisations that assess our performance
(see page 53).
SBTi & our decarbonisation roadmap
Victrex developed an SBTi
decarbonisation roadmap and
targets, with options covering
absolute reductions to Scopes 1, 2
& 3 in line with its 1.5°C emissions
reduction scenarios. In September
FY 2023, following Victrex Board
approval, our plans were submitted
and we received confirmation that
they were approved by the SBTi in
April2024. VICTREX™ PEEK already
has a favourable GWP compared
with the available GABi industry
data for PEEK manufacture, and a
decarbonisation roadmap, with
options, underpins our commitment.
Our SBTi approved targets are
asfollows:
u
Near-term targets: Reduce
absolute Scope 1 and 2 GHG
emissions by 50.4% by 2032
from a2022 base year and
reduce absolute Scope 3 GHG
emissions by 30% within the
sametimeframe.
u
Long-term targets: Reduce
absolute Scope 1 and 2 GHG
emissions by 90% by 2050 from
a2022 base year. Victrex
alsocommits to reduce absolute
Scope 3 GHG emissions by 90%
within the same timeframe.
SBTi targets underpin our aspiration to have
a clear differentiator in our products –
asevidenced by our favourable Lifecycle
Analysis data when using UK manufactured
BDF in our processes – and in decarbonising
our operations over the coming years.
Weretain options in how we deliver our
decarbonisation, whilst also having reliance
on governmental directives (e.g. electrical
grid capacity and available renewable
energy) or technology (alternative fuel
availability and sustainable chemistry)
toachieve this goal.
Capital investment to
supportdecarbonisation
The capital required in our capital
expenditure plans to support alternative fuel
use or process technology (whilst noting the
increased operating expense of alternative
fuels) is now built into mid-term capex
guidance at 8–10% of revenue per year.
Specific SBTi related capital expenditure is
anticipated to be up to £50m by 2032. We
have also assessed the potential carbon tax
implications for a non-decarbonisedscenario.
Continuous Improvement (‘CI’)
programmes & productivity
Alongside our long-term decarbonisation
plans, we have a strong programme of CI
activities. These include in recycling, energy
usage, waste and water. Several
improvement programmes have already
delivered ongoing benefits, helping to save
CO
2
during FY2024 by:
u
extending batch cycle time improvement
across all powder production plants;
u
improving throughput at our fibre
manufacturing plant; and
u
extending recycling of materials to
include granules and fibres.
The CI team has a balanced portfolio of
projects to reduce energy and water usage,
carbon emissions and waste produced. Our
future programmes include improvements
toother parts of the polymer manufacturing
process to yield further CO
2
reductions and
between 3–5% water usage reduction
perannum.
In FY 2026 we plan to implement
improvements to equipment cooling on
selected plants, significantly reducing our
process water usage, in line with our 3–5%
internal target.
PLANET (RESOURCE EFFICIENCY)
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 65STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 65
Victrex plc | Annual Report 2024
SBTi and external accreditations
continued
Circularity
In FY 2024, Victrex established a circularity
steering group to develop our circularity
options. Multiple options were assessed
andprioritised with 10 identified as viable
options. Further analysis, and a review by
the Corporate Responsibility Committee,
resulted in three key areas being prioritised
by the steering group. These are:
u
Recycled products – Potential to
increase recycling rates and offer lower
carbon solutions to customers.
u
Recycling collaborations –
Collaboration with industry partners,
sharing best practice and expertise to
provide recycling support to customers.
u
Waste management – To seek
alternative uses for waste material
andsupport reduction in PEEK waste
tolandfill.
Our plans are designed to differentiate
Victrex and further support our
customers in reducing their CO
2
footprint
and from FY2025, the circularity steering
group will continue to drive the strategy
with oversight provided by the Corporate
ResponsibilityCommittee.
Total energy consumption
We are pleased to report that Victrex
has met its FY 2024 target to use
100% renewable electricity across all
locations (where themarketexists).
Our energy consumption relates to the
total amount of gas, electricity and steam
used across all Victrex locations with
usage data based on meter readings and/
orinvoices. Although the Group saw
materially lower production volumes vs
FY2023, energy consumption and energy
consumption per tonne (PEEK) produced
increased due to improved reporting and
our China operations which became
operational within FY 2024. Polymer
production in FY 2024 was nearly 1,000
tonnes lower than the prior year as we
reduced our inventories.
Excluding China, energy consumption
was14% lower vs FY 2023. In FY 2025,
production levels are expected to increase,
with a related increase in resource usage.
Energy consumption
MWh
Energy consumption per tonne
(PEEK) produced
MWh/tonne
2024
2023
2022
2021
2020
156,448
164,717
170,085
140,843
131,954
2024
2023
2022
2021
2020
49.40
39.52
36.88
40.22
47.45
Reduce
Recycle
Reuse
F
O
R
M
S
P
A
R
T
S
P
R
O
C
E
S
S
I
N
G
C
U
S
T
O
M
E
R
M
O
N
O
M
E
R
A
N
D
P
O
L
Y
M
E
R
O
E
M
/
E
N
D
U
S
E
R
Future
circularity
position
Sustainability report continued
PLANET (RESOURCE EFFICIENCY) CONTINUED
Principal environmental impacts
The Group’s main environmental impacts
are set out in the charts on pages 66 and 67
and are different from the Group’s overall
GHG emissions (on pages 68 to 70).
We are reporting our FY 2024 data per
tonne of PEEK produced to best align our
indicators with our Polymer & Parts strategy.
This reflects how we move downstream into
more specialised manufacturing with a
varied product mix, along with absolute
data to demonstrate our total impact. Our
reporting this year reflects the variations in
our inventories, with FY 2024 being a year
of lower asset utilisation as we unwind
inventories which were built up to cover
theUK Asset Improvement programme.
Our GHG report (in line with UK GOV
Energy and Carbon Reporting (‘SECR’))
includes our corporate CO
2
emissions by
emission type (Scope 1 emissions generated
by the direct combustion of gas; Scope 2
emissions from purchased electricity and
steam; total energy used; and Scope 3
emissions indirect from other sources).
Absolute emissions data is reported along
with Scope 1 & 2 emissions per tonne of
PEEK produced. Our control approach is
based upon financial control and we report
on 100% of all applicable GHG emissions.
66 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Waste
Victrex has made good progress in waste
management over recent years and works
closely with licensed waste service
providers to ensure that waste is recycled,
or otherwise reused, or disposed of with
minimal environmental impact. This year
we have reported that hazardous waste
produced has reduced by 14% compared
to FY 2023.
Our manufacturing assets, used to produce
PEEK, provide us and our customers with
security of supply; however, using our own
ingredients and raw materials means that
we do produce some hazardous waste
due to the nature of our processes. This is
primarily in our monomer production assets
within the UK (Rotherham and Seal Sands).
We are currently assessing options that
could reduce this type of waste within our
process, including exploring sustainable
chemistry, and have committed a
proportion of our Research & Development
investment towards this, noting the
long-term nature of such assessments.
During FY 2024, waste disposed to landfill
decreased by 38% due to materially lower
production volumes and working with our
waste suppliers to identify areas of
continuous improvement.
Hazardous waste produced
Tonnes
Hazardous waste produced
pertonne (PEEK) produced
Tonnes waste/tonnes PEEK
Hazardous waste disposed
tolandfill (after treatment)
Tonnes
Hazardous waste disposed to landfill
(after treatment) per tonne (PEEK)
produced Tonnes waste/tonnes PEEK
2024
2024
2023
2023
2022
2022
2021
2021
2020
2020
25,506
8.05
29,562
7.06
27,678
6.00
11,914
3.40
27,430
9.86
2024
2024
2023
2023
2022
2022
2021
2021
2020
2020
13
0.0041
21
0.0050
15
0.0033
1
0.00029
12
0.0043
Water
All of our current main manufacturing
assets within the UK and US are located
within areas of low or very low water
stress***. In FY 2024 we completed the
CDP climate and water combined
disclosure and note that, despite
commencing production in our China
operations, our total water usage reduced
compared to FY 2023. This was principally
due to materially lower production
volumes vs FY 2023, operational
improvements to our processes and a
focus on water and resource efficiency.
During FY 2024, water usage per unit of
PEEK produced increased 14% solely due
to reduced production and increased
water usage within our China operations.
Water (UK assets) is taken in primarily
from mains sources and returned via utility
providers or as effluent, with cooling and
process water being the main uses.
OurContinuous Improvement programme
is identifying projects to reduce water
usage further by reducing the amount
ofwater used to produce material and
recycling process water in our operations.
We expect to assess the opportunities
forincreased reuse of water, noting that
water intensity has reduced over the
medium term.
*** UK Environment Agency Flood Risk
Assessment; Rhode Island Statewide
Planning and Grantsburg Site 2021
Insurance Risk Assessment.
Water usage
Thousands m
3
Water usage per tonne
(PEEK)produced
Thousands m
3
/tonne
2024
2023
2022
2021
2020
503
606
607
467
396
2024
2023
2022
2021
2020
0.16
0.14
0.13
0.13
0.14
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 67
Victrex’s GHG emissions based on FY 2024
Tonnes of CO
2
e FY 2024 from PEEK manufacture and downstream products.
Greenhouse gas (‘GHG’) emissions
Our GHG report has been completed
following guidance within the UK
government regulations on SECR
policyguidance.
Emissions have been calculated based
onthe GHG Protocol Corporate Standard
with all emissions reported being within
FY2024. We include emissions from global
assets (owned and leased), which
includeour manufacturing plants,
technical centres and offices. No material
Scope 1 or Scope 2 emissions are omitted,
and national and regional emissions
conversion factors have been used.
Our operations in China – ready to
supportsales as we ramp up the facility
through FY2025 – are included within
ourGHG emissions reporting data. We are
working to assess China’s decarbonisation
options, as the facilities ramp up.
In FY 2024 we conducted a thorough
analysis of the following indirect value
chain emissions (Scope 3) identified as
relevant to Victrex globally:
Category 1. Purchased goods and services.
Category 2. Capital goods.
Category 3. Fuel and energy-related
activities.
Category 4. Upstream transportation
anddistribution.
Category 5. Waste generated in operations.
Category 6. Business travel.
Category 7. Employee commuting.
Category 12. End of life.
Category 15. Investments.
The remaining six Scope 3 categories are
either not applicable or not material.
Note: Victrex produces and sells an intermediate
product with many potential downstream
applications, each of which has a different
GHGemissions profile, and is hence unable to
reasonably estimate the downstream emissions
associated with the various end uses. This is in
line with section 6.4 of the Scope 3 GHG
Protocol standard.
Our GHG emissions are calculated
primarily fromgas combustion, electricity
and steam useacross all of our global
locations. Emissions from downstream
manufacturing facilities in the US and
theUK are included but are relatively
immaterial, as are the emissions from our
overseas technical facilities and offices,
compared to production activities.
Despite substantial progress on our
long-term carbon intensity measurement
vs FY 2013, which is based on Scope 1 & 2
location-based emissions/tonnes of PEEK
manufactured, the FY 2024 intensity
increased by 27% vs FY 2023, despite lower
production volumes. This reflects increasing
energy use in our new China facilities
during the commissioning phase. This
impacted our Scope 2 emissions as China
currently operates primarily using non-
renewable electricity and district steam.
Scope 1 emissions were lower, driven by
plant shutdowns as part of the UK Asset
Improvementprogramme and lower
production overall.
Excluding our new China facilities, our
carbon intensity was 8% higher than
FY2023.
SCOPE 2
Indirect emissions resulting from
electricity and steam purchased
(location-based method) Tonnes CO
2
e
INTENSITY MEASUREMENT
SCOPE 1 & 2 (location based)
Tonnes CO
2
e/tonnes of
PEEKmanufactured
SCOPE 1
Direct emissions resulting from
combustion of fuels Tonnes CO
2
e
SCOPE 3
Other indirect emissions across nine
categories as listed above Tonnes CO
2
e
Scope 1: 20%
Scope 2: 18%
Scope 3: 62%
2024
2023
2022
2021
2020
18,085
20,958
24,374
20,161
18,241
2024
2023
2022
2021
2020
57,527
87,128*
67,994*
2024
2023
2022
2021
2020
16,265
14,712
10,015
8,293
9,212
2024
2023
2022
2021
2020
10.85
8.52
7.46
8.13
9.87
Previously disclosed (limited categories)
Previously disclosed (limited categories)
Scope 1
Scope 3
Scope 2
PLANET (RESOURCE EFFICIENCY) CONTINUED
Sustainability report continued
* Note: FY 2022 and FY 2023 data amended
to reflect additional reporting categories
and improved data collection.
68 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Global GHG emissions and energy use data
FY 2024 FY 2023
Scope 1/tCO
2
e
Global 18,085 20,958
UK 16,768 20,654
Global (excluding UK) 1,317 304
Scope 2 (location based)/tCO
2
e
Global 16,265 14,712
UK 7,328 8,691
Global (excluding UK) 8,937 6,021
Scope 2 (market based)/tCO
2
e
Global 3,172 5,772
UK 435 801
Global (excluding UK) 2,737 4,971
Gross Scope 1 & Scope 2
(locationbased)/tCO
2
e
Global 34,350 35,670
UK 24,096 29,345
Global (excluding UK) 10,254 6,325
Energy consumption/MWh
Global 156,448 164,717
UK 123,291 147,569
Global (excluding UK) 33,157 17,148
Intensity ratio/tCO
2
e
Gross Scope 1 & Scope 2/tonnes
ofPEEKmanufactured
Global – Scope 2 (location based) 10.85 8.52
Global – Scope 2 (market based) 6.70 6.39
Methodology
Based on GHG Protocol Corporate Standard
NOx (oxides of nitrogen reporting)
Our manufacturing operations emit well below our environmental
permit’s threshold levels of 100 tonnes per annum.
In FY 2024, 8.5 tonnes of NOx (expressed as NO
2
) were generated
from our principal manufacturing sites directly in the manufacture
ofPEEK. This was lower than the prior year (FY 2023: 9 tonnes) and
is calculated using monitoring data and assumptions around plant
availability and actual operational periods.
Sustainability & ESG compliance
Collaborating with global regulatory authorities, we make sure that
the best available techniques (‘BAT’) to protect the environment are
adopted. Our UK chemical production plants are regulated under
Environmental Permitting Regulations and, as such, are subject to
regulatory review by the UK Environment Agency. We conduct
extensive routine monitoring in line with our environmental permits,
to proactively ensure our plants are well controlled. However, four
reportable incidents occurred across two of Victrex’s UK sites.
Whilereportable, none resulted in enforcement action and corrective
measures were taken, or are underway, to avoid recurrence.
During the year we successfully retained our ISO 14001:2015
certification for the environmental management system on all our
UK polymer manufacturing plants, melt filtration, compounding,
film, tape, pipe, dispersion and innovation plants, validating our
high level of commitment to environmental improvement. Victrex
has an effective system for reporting and investigating incidents
andnear misses with zero reportable environmental incidents within
theperiod.
Victrex is continuing to monitor future regulatory development
requirements, e.g. the Taskforce on Nature-related Financial
Disclosures (‘TNFD’), the Corporate Sustainability Reporting Directive
(‘CSRD’) and the Carbon Border Adjustment Mechanism (‘CBAM’)
toassess both impact and opportunities.
UK Emissions Trading Scheme (‘UK ETS’)
The combustion of permitted fuels at our main UK Hillhouse
production site is enabled through our Greenhouse Gas Permit
under the UK ETS scheme. Verification of emissions was undertaken
via a registered third party and a submission made to the
Competent Authority (UK Environment Agency) in April 2024.
Victrex plans to reduce its costs under UK ETS by improving the
efficiency of its boiler plant equipment. Once approved, an
application for free allowances under the New Entrants Reserve
(‘NER’) element of the scheme will be submitted. These allowances
will be backdated to the point at which the Company joined the
scheme in August 2021. As part of our decarbonisation roadmap,
we have also fully assessed the option to electrify our boilers,
supporting our reduction in emissions over the coming years,
subject to sufficient electrical grid capacity in the UK. We continue
to lobby at local and national level in the UK to ensure the available
infrastructure can support our decarbonisation plans.
SLR has undertaken limited assurance of Victrex’s
greenhouse gas (GHG) emissions (Scope 1, 2 and 3) for the
FY 2024 reporting year (1 October 2023 – 30September
2024) against the WRI/WBCSD ‘GHG Protocol Corporate
Accounting and Reporting Standard’, 2015 revised edition,
and the GHG Protocol ‘Corporate Value Chain (Scope 3)
Accounting and Reporting Standard’. SLR has also
undertaken assurance of Energy, Water and Waste
against the UK Government Environmental Reporting
Guidelines. (See pages 66 and 67).
This engagement was performed in accordance with the
International Standard on Assurance Engagement
(‘ISAE’) 3000 (Assurance Engagements other than Audits
or Reviews of Historical Financial Information) and the
relevant subject-matter specific ISAE for GHG data
(ISAE3410, Assurance Engagements on Greenhouse
GasStatements).
SLR has complied with the requirements for independence,
professional ethics and quality control as stipulated by
ISAE 3000 (2020) Requirements 3a and 3b.
Based on the scope of the work and assurance
procedures performed, nothing has come to our
attention that causes us to believe that the Scope 1, 2
and 3 categories 1–7, 12 and 15 GHG emissions, energy,
waste generated and water consumed calculations for
financial year 2024 were not prepared, in all material
respects, in accordance with the WRI/WBCSD GHG
Protocol Corporate Accounting and Reporting Standard
2015 revised edition.
Carbon offsetting
Whilst Victrex will consider future opportunities from carbon
offsetting, we currently view this as a very small part (<10%) of
achieving our net Zero targets with goals.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 69
Scope 3 emissions and goals
In FY 2024, we completed a Scope 3
assessment across nine categories
identified as relevant to Victrex, with a
34% reduction compared to FY 2023.
These nine categories follow on from our
original full Scope 3 baseline work
completed in FY 2022 with the support
ofKPMG.
Our Scope 3 emissions are the result of
activities from assets not owned or
controlled by the reporting organisation,
but that the organisation indirectly impacts
in its value chain. These include all sources
not within an organisation’s Scope 1 & 2
boundary, with Victrex’s Scope 3 emissions
representing 62% of our total emissions.
The result of this assessment identified
ourFY 2024 Scope 3 of 57,527 tCO
2
e,
giving atotal FY 2024 carbon footprint
figure, Scopes 1, 2 & 3, of 91,877 tCO
2
e
(FY 2023: 122,798 tCO
2
e).
Scope 3 opportunities
As part of our recent SBTi approval,
wenow have a near-term Scope 3 target
toreduce absolute Scope 3 GHG emissions
by 30% by 2032 from a FY 2022 base year
and a long-term target to reduce absolute
Scope 3 GHG emissions by 90% by 2050
from an FY 2022 base year.
Our purchased goods and supplies
decreased in FY 2024 due to lower spend
as a result of our UK Asset Improvement
programme and plant shutdowns. We also
note business travel and employee
commuting have increased, reflecting the
resumption of natural business activity
compared to recent years.
Our primary areas of focus are to reduce
our SBTi emission targets by:
u
supporting our supply chain
decarbonisation;
u
identifying continuous
improvementopportunities to
reducewasteproduced;
u
introducing an employee electric
carscheme;
u
increasing the use of lower carbon
impact upstream transportation; and
u
encouraging greener methods of
employee business travel.
SCOPE 3 EMISSIONS BASED ON FY 2024:
Category 1: 67% – purchased goods
andservices.
Other categories: 33% – capital goods, fuel
&energy (not in Scope 1 & 2), upstream
transportation, waste generation, business
travel, employee commuting, end of life
andinvestments.
REACH
Victrex Manufacturing Ltd remains fully
compliant to REACH and iscommitted to
ensuring compliance for all its current and
future products. UK REACH (S.I. 2020 No.
1577) is a regulatory requirement for the
chemical industry and was refined post the
Brexit agreement. Victrex has registered all
required substances manufactured in (or
which it imports into) the UK and
collaborates closely with suppliers to ensure
key materials that support its supply chain
are registered. Victrex continues to
collaborate with suppliers to ensure all raw
materials will be supported and Victrex’s
manufacturing processes are not affected,
which is essential both for Victrex and for
our customers who are focusing on
long-termdemand.
If any chemicals used by Victrex to
manufacture its products become ‘chemicals
of concern’, i.e. are officially listed within the
UKREACH regulation under ‘Substances of
Very High Concern’ (‘SVHC’), or listed in UK
REACH Annex XVII ‘The Restricted List’,
orlisted in UK REACH Annex XIV ‘The
Authorisation List’, and accompanying
conditions are met, Victrex would seek to
phase outaffected products in line with
sunset clauses or reformulate toensure we
maintain our compliance with UK REACH.
PFAS and PFOA materials
Victrex notes the current regulatory
environment for PFAS and PFOA materials.
Victrex does not manufacture these
materials and we have started to position
Victrex™ PEEK as a safe alternative to PFAS
in several applications or industries including
cookware, electronics and industrial
applications.
Supply chain and energy sourcing
The impact of challenges in the global
supply chain remained centre stage in FY
2024, with ocean freight disruption in the
Red Sea and destocking in several industries.
Victrex continually seeks to ensure it has
robust security of supply for customers and
invests accordingly.
Historically, the vast majority of BDF – one
of the key monomers used to manufacture
PEEK – has been manufactured in our own
operations within the UK. Non-UK sourcing
is set to be a higher proportion than
historically during FY 2025 (through several
contractual sources in Asia). Victrex has
strong security of supply for all other raw
materials used in the production of PEEK.
Currently, our raw material sourcing other
than BDF is primarily from Europe, with
Asiaand the US also hosting our
strategicsuppliers.
For energy supply, most of our production
isin the UK, so we procure energy on
UK-based contracts (primarily gas and
electricity used in our heating processes)
with some energy hedging also applied.
Weare also assessing opportunities – linked
to our SBTi commitments – to procure
directly from offshore wind into our main
UK manufacturing facilities.
Sustainable procurement and Scope 3
Key initiatives driving sustainable
procurement include enhancing the
suppliermanagement platform to collect
comprehensive emissions data (Scope 1, 2
and 3) from suppliers, with a strategic focus
on the top 20 partners.
We also communicated our commitment to
the SBTi to key suppliers, ensuring alignment
with global standards.
We are now actively aligning our strategic
supply base with decarbonisation objectives,
laying the groundwork for future supplier
incentivisation. Looking ahead, we plan to
introduce development plans and
incentivised contracts to encourage supplier
participation in our sustainability journey.
Sustainable sourcing criteria will be
increasingly embedded into the sourcing
and tender evaluation process, reinforcing
Victrex’s commitment to responsible
procurement. These efforts reflect Victrex’s
dedication to integrating sustainability into
procurement practices, ensuring the supply
chain supports long-term environmental
goals while maintaining strong, collaborative
relationships with suppliers.
Other
categories
Category 1
Sustainability report continued
PLANET (RESOURCE EFFICIENCY) CONTINUED
70 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
SAFETY, HEALTH AND ENVIRONMENT
RIFR = total number of recordable injuries x 200,000/total number of hours worked
(employee and contractor).
Note: As of FY 2024 we are now stating the RIFR to two decimal places, including the prior
year comparative.
RIFR FY 2021 FY 2022 FY 2023 FY 2024
Total number of recordable injuries 6 4 3 3
Total hours (employee andcontractor) 1,690,374 3,854,016 2,996,604 3,266,391
Frequency rate 0.7 0.2 0.22 0.18
OSHA benchmark 1.9 1.4 1.3 1.3
LTFR = total number of lost time injuries x 200,000/total number of hours worked (employee
and contractor).
LTFR FY 2021 FY 2022 FY 2023 FY 2024
Total number of lost time injuries 4 2 2 1
Total hours (employee andcontractor) 1,690,374 3,854,016 2,996,604 3,266,391
Frequency rate 0.5 0.1 0.1 0.07
OSHA benchmark 0.6 0.8 0.5 0.5
China
Our China manufacturing subsidiary in Panjin has recorded over 2 million hours since the
project commenced, with no recordable injuries in FY 2024 as we move from commissioning
to ramping up commercial production. Data on performance during final completion and
commissioning is shown below:
Panjin – Employees FY 2023 FY 2024
Hours worked 199,352 189,833
Recordable
injuries — —
Total RIFR — —
Reportable
environmental — —
High potential
incidents 1 1
Panjin – Contractors FY 2023 FY 2024
Hours worked 47,804 44,824
Recordable
injuries — —
Total RIFR — —
Reportable
environmental — —
High potential
incidents — —
Occupational Safety, Health
andEnvironment (‘SHE’)
Victrex is committed to continuously
improving its environmental performance
and to providing positive contributions that
reduce our environmental impact, ensuring
that our business and other activities meet
the principles of sustainable development.
Wellbeing remains a key focus area for us
too, with further detail on our activities
shown on page 61.
The start of this year saw three recordable
accidents taking place leading to one lost time
accident. This pushed up our lagging indicator
of reportable injury rate, which has seen a
steady reduction since, and now stands at a
rate of 0.18 reportable injuries per 200,000
hours worked. The past five years have
shown an 86% reduction in our recordable
injury frequency rate (FY 2021: 1.3).
Work has continued throughout the year
toupdate the safety management system
which provides guidance and the levels of
expectations of the minimum Victrex standards.
Tier 1 and 2 audit programmes continued
throughout the year to help drive
continuous improvement in SHE.
Senior leadership engagement
Across both our manufacturing and other
locations, engagement visits have continued
across the business, being a vital component
in any values-led organisation. Retaining
trust is a major priority for Victrex with
leadership engagement key to its success.
Our quarterly SHE focus campaigns have
continued, covering topics across Safety,
Health, Environment and process safety.
Thedelivery of these is a hybrid between
self-guided and line manager briefing and
encouraged discussions. Information is
provided in a variety of forms, to engage
employees via presentations, toolbox talks,
videos and leaflets.
FY 2024 saw the continuation of our Zero
Incidents and Zero Accidents SHE culture
improvement programme and we have:
u
Continued encouragement in the
reporting of leading indicators with
safety observations and near miss
reporting being a focus. This has led
toa44% increase in the number of
safety observations being raised.
u
Rolled out incident investigation
refresher training.
u
Continued drive and focus has been
onoverdue action reduction and
thecompletion of actions on time,
supporting the prevention of repetition
ofsimilar events.
u
Reviewed occupational health and
industrial hygiene practices to ensure
compliance and drive improvements to
reduce the risk of employee exposure to
health-related hazards in the workplace.
u
Commenced an update of the Victrex
SHE events reporting system making the
process more user friendly to drive the
continued improvement in SHE
culturalmaturity.
SHE KPIs
Our FY 2024 performance continued to
show a reduction in both our Recordable
Injury Frequency Rate (‘RIFR’) and our Lost
Time Frequency Rate (‘LTFR’). At 0.18, we
remain well below the OSHA industry
standard RIFR (1.3) and LTFR (0.5).
The success of our Zero Incidents, Zero
Accidents ambition relies on the commitment
of us all behaving in the right way and doing
the right things regardless of our role. This
enables us to continue to grow a productive,
successful and environmentally responsible
business where we can all ensure that
everyone each day can work safely and go
home safely and free from harm or injury.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 71STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 71
Victrex plc | Annual Report 2024
Lifecycle Analysis
Lifecycle Analysis (‘LCA’) is the process of
measuring the environmental impact of a
product or service throughout its lifecycle
– from cradle to gate. We have successfully
implemented the Sphera GaBi LCA software
and lifecycle assessment tool to enable us
todevelop a standard approach for the
collation of LCA data and complete LCAs
internally to ISO 14040/44 standards. In the
next 12 months, Victrex is to commence
external assurance on LCA data to
ISOstandards.
Victrex created its internal LCA completion
plan in 2023. We have identified materials
that account for 80% of sales and volume
and created a plan to complete LCAs on
them by the end of FY 2026, ensuring that
our wider portfolio products are covered. In
FY 2024, we have made substantial progress
and have completed 24 LCAs to plan. This
represents 40% of the total LCAs, covering
products that deliver 71% of current sales
volume and 54% of revenue.
PRODUCTS (SUSTAINABLESOLUTIONS)
Sustainability report continued
Favourable Lifecycle Analysis
Overall, VICTREX™ PEEK remains
favourable compared to the GABi
PEEK LCA benchmark data based on
usage of Victrex (UK) manufactured
BDF monomers. Our internal
assessment and that validated by
KPMG suggest VICTREX™ PEEK,
with its own upstream UKintegrated
monomers and thefact we are using
100% global renewable electricity in
our own operations, shows a
favourable sustainability profile
against the GaBi materials data
benchmark for PEEK production.
We have also provided GWP and
environmental data to customers
providing confidence in our low
carbon offerings. At the date of this
Annual Report, VICTREX™ PEEK
450G, our main polymer grade, had
a GWP some 5% below the GaBi
standard for PEEK.
Completed Lifecycle Analysis on
grades in FY 2024 include LMPAEK™
(low melt PEEK), supporting
lightweighting initiatives for the
Aerospace industry, and our
VICTREX XPI™ range ofproducts
supporting electric vehicle
manufacturing for the Automotive
sector. Both of these grades support
mega-programmes in Aerospace
andAutomotive.
The process involves measuring the
impacts of each part of the process
such as energy used in production
oradditional processing and in
inbound logistics. This helps us
compare between products,
materials and methods used,
providing useful information
bywhich to make decisions that
could help the environment and an
understanding of our total carbon
footprint for us and the carbon
footprint of our products for
ourcustomers.
Overall, the LCA enables us to
consider future opportunities
forfurther environmental
improvement, including:
u
reducing supplier impacts – gather
suppliers’ LCA data and identify
suppliers with lower impacts;
u
recycling raw materials – explore
increased recycling options;
u
exploring alternative materials –
use LCA data to identify high
impact materials for replacement;
and
u
targeting CO
2
reductions – reduce
natural gas usage and waste
streams.
72 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION72 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Sustainable Solutions:
increasing VICTREX™ PEEK
content in electric
vehicles(‘EVs’)
Driving environmental benefits
Victrex has a clear target to grow revenues
from sustainable products to 70% by 2030,
from approximately 52% now. As we
increase the proportion of products which
have clear environmental and societal
benefits – particularly in Aerospace,
Automotive and Medical – we will also
seean increased level of VICTREX™ PEEK
content in many applications.
Automotive is a key industry for Victrex,
with long-standing applications in ABS
braking systems, transmission and bearings.
Often ‘mission critical’, our materials help
support performance benefits including
lightweighting, durability and
reducedfriction.
Performance, reliability and safety
Future mobility requires new approaches
indesign and sustainable material selection,
driven by the need to increase vehicle range,
reduce cost and enhance driving and
charging experience – all without
compromising on reliability and safety.
VICTREX™ PEEK based e-motor solutions
can outperform traditional materials such as
enamels or other polymers in higher voltage
(800 Volt) motors and support sustainability
goals, with the potential for >200g of
content per vehicle, compared to an average
of ~11g today. As the industry focuses on
longer range and faster charging times
forelectric vehicles, Victrex has a key role
toplay. Already we have major programmes
in place and commercialised with global
automotive companies and wire coating
manufacturers, who use our materials
tosupport performance. These include
supporting European, US and Asian car
brands, with China in particular a key
regionfor us.
A new grade: VICTREX XPI™
The new VICTREX XPI™ polymer grades
aredesigned to meet all extrusion wire
manufacturing processing needs and
offeracombination of excellent electrical,
mechanical, high temperature and chemical
resistance performance for e-motor magnet
wire to enable reliable insulation.
Performance benefits include:
u
Chemical resistance – outstanding
resistance to chemical attack from a wide
range of materials even in 800V vehicle
voltage systems, supporting
reliableperformance.
u
Electrical properties – proven
dielectricproperties.
u
Temperature resistance – excellent
thermal endurance and stable operation
from -40°C up to 260°C.
u
Mechanical strength – excellent strength,
stiffness and ductility properties to meet
the requirements in high power
densitye-machines.
u
Recyclability – VICTREX XPI™ PEEK
polymer is REACH compliant, recyclable
and solvent-free, eliminating the need for
hazardous solvents used in enamelled
magnet wires.
u
Thermal conductivity – VICTREX XPI™
PEEK polymer has around two times the
thermal conductivity of other super
engineering polymers like polyimide.
Our E-mobility mega-programme has line
ofsight towards £10m annual revenues
aselectric vehicle adoption is projected
toincrease in the coming years. According
to Bloomberg NEF, passenger EV sales are
expected to exceed 30 million in 2027 and
grow to 73 million per year in 2040,
contributing 33% and 73% to global car
sales in those years, respectively*. Whilst
some near-term headwinds in electric
vehicle adoption have been seen this year,
most indicators point to a more rapid
adoption, meaning that materials like
VICTREX XPI™ will have a key role to play
inthe battery and automotive materials
oftomorrow.
* Bloomberg NEF Long-term electric vehicle
outlook, June 2024.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 73
Our values of Passion, Innovation and
Performance underpin the way we do business
and treat one another. Our Code of Conduct
sets the foundation for how we act personally,
with others and in our communities. Our
continued success as a business rests on
maintaining these principles and ensuring
we strive to always do the right thing. You
can read more about our Code of Conduct
on our website atwww.victrexplc.com.
All our employees and Board members are
responsible for following our Code of Conduct
and its supporting policies. All employees
are required to complete Code of Conduct
e-learning on commencement of employment
and thereafter annually. We have transitioned
our learning portal to a new platform and
for this reason have extended the date for
completion of this mandatory e-learning this
year. As at the end of October 2024 the
completion rate is 93% on a rolling annual
basis and is progressively increasing.
We encourage employees and our
stakeholders to speak up if they have concerns
that our Code of Conduct or its supporting
policies are not being followed and our
Global Whistleblowing Policy sets out how
to do this. During October 2024 our Global
Whistleblowing Policy has been refreshed
and now includes an anonymous
whistleblowing hotline facility.
Sustainability at the heart
Whilst our products enable environmental and
societal benefits, we also recognise that some
of our operations can impact on the safety
and wellbeing of our people and those in the
communities around us. This is reflected in a
principal risk on page 38. Our Safety, Health
and Environment (‘SHE’) Policy promotes our
continuous improvement in this area.
Our employees
Our employees are a valued asset to us and
we continue to seek to retain and develop
our teams as well as recruiting talent when
opportunities arise, and this too is reflected
as a principal risk on page 39. Ensuring we
recognise the positive contribution of a diverse
workforce and hold ourselves to account for
delivering it is paramount. Our policies and
procedures are reviewed from time to time
to ensure they remain fit for purpose and
continue to enhance our employee experience,
whilst also serving to support recruitment
processes to ensure we attract the highest
quality talent possible.
Our employees can easily access employment
policies and key work related information
through our HR intranet site, including our
Group Diversity, Inclusion & Equal
Opportunities Policy and our Global Flexible
Working Policy.
Our Gender pay gap report was published
thisyear, details of which can be found on
www.victrexplc.com. In cases where the
National Minimum Wage or National Living
Wage applies either globally or within the
UK, the Company complies in full with its
obligations and meets both conditions.
Respect for human rights &
businessethics
We recognise the importance of treating
thepeople around us, and those we may
impact, with respect but also acknowledge
there are practices globally that seek to
threaten human rights. Victrex does not
tolerate these practices.
In relation to our supply chain activities, we
have focused policies on Modern Slavery,
Conflict Minerals and Anti-bribery &
Corruption. Before any vendor can become
an approved supplier to Victrex, they must
pass through our due diligence process
which involves:
u
site-specific audits where appropriate;
u
detailed responses to a robust onboarding
process that examines all relevant areas
of the business operation, with special
focus on issues pertinent to legislation
and CSR factors; and
u
acknowledgement and acceptance of the
Victrex Supplier Standards Handbook.
The process is cyclical to ensure the
appropriate focus is maintained on those
vendors deemed as strategically important
or as high risk to Victrex.
Our Modern slavery statement is available
on www.victrexplc.com, reaffirming our
policy commitment and our ongoing actions
in this area.
Compliance
Our Code of Conduct includes our
commitment to being open and honest and
following all relevant laws and regulations.
This is supported by policies and processes
including Anti-bribery & Corruption (‘ABC’),
Financial Crime, Fraud, Gifts & Hospitality,
Share Dealing (Market Abuse), Data
Protection, Conflicts of Interest, Data
Retention & Disposal, Competition Law,
Sponsorship & Donations and Export Controls
& Sanction Compliance (together, Key
Compliance Policies), as reflected in our
principal risks on page 41. Key Compliance
Policies are published on the Company’s
intranet on a dedicated Code of Conduct
page. Our focus on doing the right thing
extends beyond the letter of the law to
ensure we act ethically and openly, treating
others fairly and how we would want to be
treated. The desired outcome of our Code of
Conduct and Key Compliance Policies is to
ensure we act responsibly in all our dealings
and foster a sustainable business.
Victrex has a zero-tolerance position on
bribery, made explicit through our ABC
Policy and gifts and hospitality, sponsorship
and donations, and interactions with
politically exposed persons and healthcare
professionals policies and procedures. We
maintain a manual for managing ABC risk,
including a three lines of defence controls
assessment. Our Key Compliance Policies
and training are regularly reviewed and
updated as required, including a full refresh
in FY 2024. Compliance with Key
Compliance Policies is included in our risk
management processes and regularly
reviewed by the business. Bribery and
corruption risk is considered a key aspect
ofthe ethics and regulatory compliance
principal risk on page 41 and several
mitigations are in place (reviewed annually).
Victrex conducts enhanced due diligence on
individuals or organisations where there is a
perceived or actual increased risk of bribery
(for example, where engaging with a
politically exposed person), or where
conducting due diligence for a potential
joint venture or acquisition. Our mandatory
Code of Conduct training includes sections
on ABC risks which are expanded on in Key
Compliance Policy e-learning training. We
keep training materials under regular review
and supplement e-learning with face-to-face
or virtual training as required. Completion of
required training is regularly monitored. We
ensure appropriate ABC clauses are included
in relevant contracts. Victrex maintains a
register of employee interests (actual or
possible conflicts of interest) and a record of
gifts and hospitality given and received
above certain thresholds in a giving &
receiving register. A review of Victrex’s Key
Compliance Policies features on the Board’s
programme of business and the internal
audit review programme includes a periodic
review of theadequacy of these policies.
Our Global Data Protection Policy (with
ancillary procedures and arrangements)
supports compliance with applicable data
protection legislation in the regions where
we do business. These (with mandatory
training) were refreshed and expanded
inFY2024.
OUR CODE OF CONDUCT & ETHICS –
DOING THE RIGHT THING
Sustainability report continued
74 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION74 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
This section of the Strategic report constitutes Victrex plc’s Non-financial and sustainability information statement, produced to comply
withthe Companies Act 2006. The below table, and information it refers to, is intended to help stakeholders understand our position on
key non-financial matters, and where the relevant information is located in this report.
Reporting requirement Material policies and standards that govern our approach
Key risks relating to these matters
(pages 36 to 42)
Read more
Sustainability &
environmental
u
Safety, Health and Environment (‘SHE’)
Policy
u
Environmental Policy (ISO system)
u
Sustainability Policy
u
Code of Conduct*
u
Safety, Health
andEnvironment
u
Legal and regulatory
compliance, ethics
andcontracts
u
Task Force on Climate-related Financial
Disclosures and Companies Act 2006
s414CB2A(A–H) ‘climate-related financial
disclosures’, pages 54 to 60
u
Sustainability report – resource efficiency,
pages 65 to 70 and Safety, Health &
Environment, page 71
u
Corporate Responsibility Committee
report, pages 108 to 110
Employees
u
Group Diversity, Inclusion & Equal
Opportunities Policy
u
Disciplinary Policy & Procedure
u
Grievance Policy & Procedure
u
Global Flexible Working Policy
u
Employee Handbook
u
Global Whistleblowing Policy
u
Share Dealing Code
u
Code of Conduct
u
Prevention of Bullying & Harassment Policy
u
Recruitment and
retention of the
rightpeople
u
Legal and regulatory
compliance, ethics
andcontracts
u
Sustainability report – Our Code of
Conduct, page 74
u
Sustainability report – People (social
responsibility), pages 61 to 64
u
Gender pay in Victrex, page 63
Respect for human
rights
u
Modern Slavery & Human Trafficking Policy
u
Modern slavery statement*
u
Conflict minerals statement*
u
Global Data Protection Policy
u
Global Document Retention &DisposalPolicy
u
Code of Conduct*
u
Legal and regulatory
compliance, ethics
andcontracts
u
Sustainability report – Our Code
ofConduct, page 74
u
Modern slavery, human trafficking,
andconflict minerals statements –
seewww.victrexplc.com
Social matters
u
Sustainability Policy
u
Code of Conduct*
u
Recruitment and
retention of the
rightpeople
u
Our sustainability vision & goals,
pages50and 51
u
Sustainability report – People (social
responsibility), pages 61 to 64
u
Our stakeholders, pages 22 and 23
Anti-corruption
and anti-bribery
u
Anti-bribery & Corruption Policy
u
Fraud Policy
u
Conflict of Interests Policy
u
Gifts & Hospitality Policy
u
Sponsorship & Donations Policy
u
Financial Crime Policy
u
Policy on Interaction with
HealthcareProfessionals
u
Procedure on Interaction with Politically
Exposed People
u
Export Controls & Sanctions Policy
u
Competition & Anti-trust Policy
u
Code of Conduct*
u
Legal and regulatory
compliance, ethics
andcontracts
u
Sustainability report – Our Code
ofConduct, page 74
Description of the
business model
u
All principal risks
u
Business model, pages 14 and 15
Non-financial key
performance
indicators
u
All principal risks
u
Non-financial key performance indicators,
pages 20 and 21
* These policies are published on www.victrexplc.com, along with being available to employees via the Group intranet. All other policies listed are available
to employees via the Group intranet.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 75
CORPORATE
GOVERNANCE
Contents
77 Introduction from the Chair
80 Board of Directors
82 Statement of corporate governance
96 Nominations Committee report
100 Audit Committee report
108 Corporate Responsibility Committee report
111 Directors’ remuneration report
134 Directors’ report – other statutory information
138 Statement of Directors’ responsibilities in respect
oftheAnnual Report and the financial statements
139 Independent auditors’ report to the members of Victrex plc
Victrex plc | Annual Report 2024
76 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Introduction from the Chair
A ROBUST GOVERNANCE
FRAMEWORK
FY 2024 highlights
u
Overseeing the embedding of
organisational changes following
theestablishment of our Sustainable
Solutions and Medical business areas
u
Monitoring progress of our strategy
including mega-programmes and
investments in China
u
Successful validation of our
SBTitargets
FY 2025 focus areas
u
Accelerate growth through enhancing
sales effectiveness
u
Continuing focus on
commercialisation of our
mega-programmes
u
Delivering on our decarbonisation
agenda
u
Monitoring progress in our Diversity,
Equity & Inclusion programme
Dear shareholders,
Despite facing the continued challenging
conditions in our end markets, I am highly
encouraged by the collaborative efforts of
our Company, Board and employees in
navigating the tough macro-economic
environment. This positions us well to
execute our strategy as we turn our focus
toenhancing our Go to Market approach
tobetter serve our customers and to better
prospects in FY 2025. Our innovative
culture, our purpose of delivering
transformational and sustainable solutions
that address world material challenges
everyday, and our Polymer & Parts strategy
puts us in a strong position to deliver our
strategy, supported by long-term
megatrends across the industries we serve.
An overview of our results can be
found on pages 26 to 35
Strategy and KPIs
Pages 20 and 21
Dr Vivienne Cox DBE
Chair
Stakeholders
Stakeholder interests are at the centre of our
decision making as we strive to meet our
purpose and strategic aims. Our Section 172(1)
statement is set out on pages 22 to 25.
Details of the Group’s stakeholders and
Board engagement channels can be found
on page 93. The annual report from our
Non-executive Director for Workforce
Engagement, Brendan Connolly, can be
found on pages 94 and 95. In FY 2024 the
Board conducted a ‘virtual’ visit to the APAC
region and several employees participated
incustomer and supplier meetings alongside
members of our Board. In October 2024,
theBoard visited our operations in China
inperson and this provided the Board with
greater local insight and engagement
withemployees.
Victrex’s culture is built on innovation.
TheBoard routinely monitors culture and
ensures that it is aligned to the Group’s
purpose, values and strategy. The Board
received insights from the Employee
Engagement Survey which was conducted
during the year. More information can be
located on page 63.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 77
Introduction from the Chair continued
Sustainability
Our employees can take great pride in the
fact our products come with environmental,
technical and/or medical benefits. As such,
we are aligned to strong megatrends to
support our future growth. Victrex plays a key
role to enable environmental and societal
benefits in the industries we serve, which
will drive value for all of our stakeholders.
Our sustainability & ESG strategy focuses
onthree pillars: People, Planet & Products.
We made good progress across a number
ofour sustainability & ESG goals this year.
We delivered our FY 2024 target for 100%
renewable electricity across our global
operations and made good progress in our
employee volunteering and STEM activities,
supporting Biodiversity programmes around
our locations. Further detail can be found
on pages 48 to 51.
We are delighted that we gained successful
validation of our decarbonisation targets
bythe SBTi this year and we now look to
thedelivery of our decarbonisation agenda.
Further detail is set out in the Sustainability
report on page 47.
Diversity
Victrex supports diversity in its widest sense.
Our Corporate Responsibility Committee
monitors progress against our Diversity,
Equity & Inclusion (‘DE&I’) goals at an
enterprise level as well as supporting
initiatives, and this is an area where the
Board continues to support and challenge.
Details on our progress in meeting our
gender and ethnicity targets are included in
our report from the Nominations Committee
on page 99.
Succession planning remains a key focus for
the Nominations Committee and the Board.
Our Board Diversity & Inclusion Policy can be
found on page 98. Appointments to our
Board and Committees are made on merit
with regard to skills, background and
experience and overall Board balance and
composition, with diversity being an
important consideration. Please see the
report from our Nominations Committee
onpage 97.
Board developments
During FY, 2024 we were delighted to
announce the appointment of an additional
Non-executive Director, Urmi Prasad
Richardson, who joined the Board in May
2024. More is provided on this appointment
in the report from the Nominations
Committee on page 96.
At the conclusion of the 2025 AGM, Jane
Toogood will step down from the Board,
having served for nine years since her
appointment in September 2015. The Board
are immensely grateful for her contributions.
Jane’s retirement leaves a vacancy for Chair
of the Corporate Responsibility Committee,
and the nominations committee have
proposed that I should take over the Chair
role, which I am pleased to do given the
importance of the agenda. I look forward
toworking with my fellow Committee
members and stakeholders as we continue
to further progress our sustainability
agenda. More is provided on this
appointment in our report from the
Nominations Committee on page96.
Board performance review
This year, an internal Board and Committee
performance review was conducted in the
summer of 2024, and this provided valuable
insights on the operation of our Board and
Committees and what the Board does well,
as well as identifying areas for focus going
forward. More information on the
performance review process and outcomes,
as well as progress on the focus areas
identified in FY 2023, can be found on
pages 91 and 92.
Annual General Meeting
During the year I met with a number of our
major shareholders to focus on how we
enhance our performance and deliver the
significant growth opportunities over the
coming years. We look forward to
welcoming our broader shareholders at
ourAnnual General Meeting (‘AGM’) in
February 2025. Whether or not you propose
to attend the AGM in person, you are
encouraged to vote on each of the
resolutions set out in the Notice of Annual
General Meeting by appointing a proxy
toact on your behalf.
Victrex plays a key role
toenable environmental
andsocietal benefits in
theindustries we serve,
whichwill drive value for
allof ourstakeholders.
78 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
You are strongly encouraged to appoint the
Chair of the meeting as your proxy. This will
ensure that your vote will be counted if you
(or any other proxy you may otherwise
choose to appoint) are not able to attend
the AGM for any reason. If you appoint the
Chair of the meeting as proxy, the Chair will
vote in accordance with your instructions.
Ifthe Chair is given discretion as to how to
vote, they will vote in favour of each of the
resolutions in the Notice of Annual General
Meeting. All proposed resolutions in the
Notice of Annual General Meeting will be
put to the vote on a poll.
If you have any questions for the Board on
the business of the AGM, please send them
in advance of the AGM to ir@victrex.com.
We will aim to respond to all questions as
quickly as possible. A summary and key
themes of the questions and answers will be
posted on our website, www.victrexplc.com,
on the morning of the AGM.
We hope the information in this report will
help you to understand how your Board
runs the Company, manages risks and
monitors internal controls and how decisions
taken over the year have been made.
Dr Vivienne Cox DBE
Chair
3 December 2024
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 79
Board of Directors
OUR BOARD
All Directors listed below were Directors throughout FY 2024 except Urmi Prasad Richardson, who was
appointed inMay 2024.
Dr Vivienne Cox DBE
Chair
N
Qualifications: MA (Hons)
Nationality: British
Appointed to the Board:
December2021, Chair February 2022
Independent on appointment: Yes
Skills and experience: Vivienne has a
wealth of experience in executive and
non-executive roles over more than
40years, with a particular focus on
sustainability, innovation and alternative
energy. Vivienne was appointed
Commander of the Order of the British
Empire (‘CBE’) in 2016 for services to the
economy and sustainability and was
madea Dame Commander of the Order
of the British Empire (‘DBE’) in the 2022
New Year Honours List for services to
sustainability, diversity and inclusion in
business. Vivienne holds anMA (Honours)
in chemistry from Oxford University,
anMBA from INSEAD and honorary
doctorates fromthe University of Hull
andthe University of Hertfordshire.
Previous roles: Vivienne’s previous
non-executive roles include serving on the
boards of Eurotunnel plc, BG Group plc and
Rio Tinto plc, as senior independent director
of Pearson plc, aschair of Vallourec SA
and as the lead non-executive director
forthe UK Department for International
Development. She also chaired
ClimateChange Capital, a private asset
management and advisory group
developing solutions for climate change and
resource depletion. She has also previously
served as a non-executive director of GSK,
as well as GSK’s workforce engagement
director, and Stena AB in Sweden.
Other significant appointments:
Vivienne is currently a non-executive
director of Haleon plc and a member
ofits Audit and Risk, Remuneration and
Environmental & Social Sustainability
Committees. She is a non-executive
director of Venterra Group plc (a
non-listed company), chair of the Rosalind
Franklin Institute and deputy chair of the
Saïd Business School in Oxford.
Specific contribution to the
Company’s long-term success:
Vivienne’s extensive board,
corporate governance and sector
experience, as well as her leadership
in and passion for sustainability and
diversity matters, enables strong
leadership of the Board.
Dr Ros Rivaz
Senior Independent Director
A
N
R
C
Qualifications: BSc (Hons), Honorary DSc
Nationality: British
Appointed to the Board: May 2020
Independent: Yes
Skills and experience: Ros holds a
Bachelor of Science (Honours) degree
inchemistry and an honorary doctorate
from Southampton University, and has
deep international experience in the
areas of supply chain management,
logistics, manufacturing, IT,
procurement and systems in the
engineering, manufacturing and
chemicals industries.
Previous roles: Ros’ executive career
spans nearly 30 years. She held senior
executive roles at Exxon, Tate & Lyle,
ICI, Diageo and Premier Foods. Ros
served as global chief operating officer
for Smith & Nephew from 2011 to
2014. She was non-executive director
at ConvaTec plc, RPC Group plc,
Boparan Holdings Limited, Rexam plc
and CEVA Logistics AG and has also
previously served as chair of the
Nuclear Decommissioning Authority
and as a non-executive director of the
Ministry of Defence Equipment and
Support board and until September
2024 was senior independent director,
employee engagement director and
chair of the remuneration committee
ofComputacenter plc.
Other significant appointments:
Rosis the lead independent director of
Aperam SA and chair at privately
owned Anglian Water.
Specific contribution to the
Company’s long-term success:
Ros’ strong track record as both
anon-executive and executive
across a range of listed companies,
particularly in the medical industry,
is instrumental in driving growth
and supporting the Chair in her role
as Senior Independent Director.
Jakob Sigurdsson
Executive Director –
ChiefExecutive Officer
Ian Melling
Executive Director –
ChiefFinancial Officer
Qualifications: BSc, MBA
Nationality: Icelandic
Appointed to the Board:
October2017
Independent: No
Skills and experience: Jakob holds a
BSc in chemistry from the University of
Iceland and an MBA from Northwestern
University in the US. His executive
responsibilities have spanned
marketing, supply chain, business
development, strategy and M&A, with
particular emphasis on growth in new
or developing markets.
Previous roles: Jakob has more
than25 years’ experience in large
multinational companies, both listed
and private, in speciality chemicals,
plastics manufacturing and bio-tech,
including nine years with Rohm & Haas
(now part of Dow Chemical) in the US.
He was chief executive at Alfesca,
Promens and VIS. He has also served on
the boards of the University of Iceland
and the Technology Development Fund
of Iceland.
Other significant appointments:
Non-executive director of Coats
Groupplc.
Specific contribution to the
Company’s long-term success:
Jakob brings his diverse and
international background in
chemicals coupled with wider
business, executive and
non-executive experience to inspire
and lead the Group.
Qualifications: MChem FCA
Nationality: British
Appointed to the Board: July 2022
Independent: No
Skills and experience: Ian is a
Chartered Accountant and holds a first
class Master’s degree in chemistry from
Oxford University.
Previous roles: Most recently Ian
heldthe role of senior vice president,
corporate finance and R&D for Smith
&Nephew plc, the medical technology
company, having served as interim chief
financial officer during 2020. Ian has
worked in a number of senior finance
roles in the UK and internationally for
Smith & Nephew, including those with
divisional and functional responsibility,
having joined the group in 2006. He
was senior vice president, group finance
for five years until October 2021. Ian
started his career and qualified as a
Chartered Accountant at Deloitte LLP.
Other significant appointments:
Ianis a member of the UK Endorsement
Board Preparer Advisory Group.
Specific contribution to the
Company’s long-term success:
Ian contributes his significant
financial experience as well as his
background in the medical device
sector which is relevant to the
Company’s growth plans.
80 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Key to Committees
A
Audit
N
Nominations
R
Remuneration
C
Corporate Responsibility Committee Chair
Jane Brisley
General Counsel &
Company Secretary
Jane Toogood OBE
Non-executive Director
A
N
R
C
Janet Ashdown
Non-executive Director
A
N
R
C
David Thomas
Non-executive Director
A
N
R
C
Brendan Connolly
Non-executive Director
A
N
R
Urmi Prasad
Richardson
Non-executive Director
Qualifications: MA (Hons)
Nationality: British
Appointed to the Board:
September2015
Independent: Yes
Skills and experience: A
senior executive in the energy
transition space, Jane has a
wealth of experience across a
number of business
management, senior
commercial and business
development roles within the
global chemicals industry and
with a focus on sustainable
solutions. Jane holds an MA
innatural sciences (chemistry)
from Oxford University and is
aFellow of the Royal Society
ofChemistry.
Previous roles: Jane was the
chief executive of Catalyst
Technologies at Johnson
Matthey plc, having previously
led the precious metals
division. Jane has held senior
roles at Borealis, ICI and
Uniqema and as a non-
executive director for the
NHS.Jane served as the UK
Hydrogen Champion and her
report to the UK government
was published in March 2023.
Other significant
appointments: Jane is a
non-executive director at
Norsk Hydro ASA and co-chair
of the UK Hydrogen
DeliveryCouncil.
Specific contribution to
the Company’s long-term
success: Jane brings
strategic and industry
expertise and insights
drawing on her extensive
international experience
across multiple sectors,
embracing technologies,
materials, chemistry and
sustainability. Jane has led
significant business
transformation and growth
programmes to meet
future market demands
including decarbonisation,
the energy transition and
deployment of hydrogen
and circularity.
Qualifications: BSc (Hons)
Nationality: British
Appointed to the Board:
February2018
Independent: Yes
Skills and experience: Janet
has over 30 years’ experience
in the international energy
sector working across the value
chain from customer facing
through to manufacturing in
increasingly senior roles with
an additional 10+ years as a
non-executive director.
Previous roles: Janet had a
distinguished career working
for bp plc for 30 years where
her last role was head of the
UK Fuels Business Unit. She
was CEO of Harvest Energy,
aninternational private equity
backed business, from 2010
to2012. She was previously
non-executive director at SIG
plc, Coventry Building Society
and Marshalls plc.
Other significant
appointments: Janet is a
non-executive director, chair
ofthe remuneration
committee and chair of the
corporate sustainability
committee of RHI Magnesita
NV, senior independent
director and chair of the
environment, health & safety,
security & cyber committee of
the Nuclear Decommissioning
Authority and non-executive
director of Stolt-Nielsen
Norway AS.
Specific contribution to
the Company’s long-term
success: Janet has extensive
international executive and
non-executive experience.
She has experience of
chairing remuneration
committees across different
sectors for over six years
and has now been chairing
sustainability committees
for three to four years.
Qualifications: MA FCA
Nationality: British
Appointed to the Board:
May 2018
Independent: Yes
Skills and experience: David
is a member of the Institute
ofChartered Accountants of
England and Wales and has
deep experience in a broad
range of finance activities
within listed companies as
both a senior executive and
anaudit professional.
Previous roles: David was
CFO at Invensys plc from 2011
until his retirement in 2014,
having held senior roles across
the business since 2002. Prior
to joining Invensys, he was a
senior partner at Ernst & Young
specialising in long-term
industrial contracting
businesses and was a member
of the Auditing Standards
Board. Until May 2023 he was
interim chair of Dialight plc as
well as chair of the nomination
committee, having previously
served as senior independent
director and chair of the
auditcommittee.
Other significant
appointments: None.
Specific contribution to
the Company’s long-term
success: David contributes
his expertise in finance and
his understanding of the
investment community and
regulators as both a Board
member and Chair of the
Audit Committee, as well as
his industry knowledge to
enhance the risk lens for
Board decision making.
Qualifications: BSc
Nationality: British
Appointed to the Board:
February2018
Independent: Yes
Skills and expertise: Brendan
has over 35 years’ experience
in the international oil and gas
industry serving in a number
ofsenior executive roles.
Previous roles: Until 2013,
Brendan was a senior executive
at Intertek Group plc and had
previously been CEO of Moody
International (acquired by
Intertek in 2011). Prior to
Moody, Brendan was
managing director of Atos
Origin UK, senior independent
director and chair of the
remuneration committee of
Synthomer plc and until June
2024 an independent director
on the board of Applus
Services SA.
Other significant
appointments: Brendan is
anon-executive director of
Pepco Group N.V. and on one
private equity board.
Specific contribution to
the Company’s long-term
success: With extensive
executive and non-executive
experience, Brendan brings
operational, commercial
and strategic expertise and
insights; his role as the
designated Non-executive
Director for Workforce
Engagement enhances the
Board’s understanding of
the views of employees
and the culture of
theCompany.
Qualifications: MSc MBA
Nationality: American
Appointed to the Board:
May2024
Independent: Yes
Skills and expertise: Urmi
has a wealth of global
experience in executive and
non-executive roles over
a25-year period. She has
aparticular focus on life
sciences, biotechnology,
medical and innovation
basedbusiness.
Previous roles: Urmi started
her career with G.D. Searle
(aPfizer company) and has
worked throughout Europe,
the US, and Asia-Pacific. Her
executive career includes roles
at the Linde Group, where she
was global head of healthcare,
at Novartis Vaccines &
Diagnostics, and at Foundation
Medicine (a Roche company).
Other significant
appointments: Urmi is
president EMEA of Thermo
Fisher Scientific.
Specific contribution to
the Company’s long-term
success: Urmi has extensive
global experience in
strategy, business
development, commercial
operations and product
commercialisation in Europe,
the Middle East and Africa,
Asia and the Americas.
Herwealth of relevant
experience in medical and
science-based innovation
will be valuable as Victrex
unlocks the true potential
ofits Medical business.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 81
This section contains details of how we have applied the principles of the 2018 UK Corporate Governance Code (the ‘Code’). The Code
canbe found on www.frc.org.uk. For the year ended 30 September 2024, we are pleased to report that we have applied the principles
andcomplied with all provisions of the Code. Regarding provision 10, although Jane Toogood did not meet the independence criteria for
the period 1 September 2024 to 30 September 2024 due to her tenure exceeding nine years, the Board continues to consider Jane as
independent. Jane continues to demonstrate objective judgement and provides constructive challenge in the Board and Committee meetings.
She is free of any business or relationship that might compromise her independent judgement. Following her annual performance review,
the Chair is satisfied that Jane continues to perform effectively and demonstrates commitment to her role. Therefore, to ensure a smooth
handover of the chairship of the Corporate Responsibility Committee, the Board considers it appropriate for Jane to continue in office
untilthe conclusion of the 2025 Annual General Meeting and not stand for re-election.
1. Board leadership and Company purpose
A. Role of the Board
The Board performs its role to promote the long-term sustainable success of the Company and is
considered to be effective in its approach. An explanation of how the Board operates can be found
on pages 87 to 90.
For a description of the business
model and strategy, please see
pages 14 to 17.
B. Purpose, values, strategy and culture
The Board endorses the Company’s purpose which informs our strategy, our values and our culture
and inspires our people. The Board reviews workforce culture and employee engagement through
arange of touchpoints throughout the year. We have developed and maintain a dashboard of
cultural indicators which is reviewed formally by the Board twice each year, with any actions to
address any areas of concern being monitored more frequently. The Audit Committee reviews the
results of internal audits which provide insights into the culture of the Group and individual areas
ofthe business. Following a detailed review of culture which included consideration of the Group’s
values, the behavioural framework and employee insights from our Non-executive Director with
designated responsibility for Workforce Engagement, in conjunction with the annual review of
purpose and strategy undertaken, the Board confirmed the alignment across purpose, strategy,
values and desired culture.
For more information on our
purpose, strategy, values and
culture, please see page 2.
C. Resources andcontrols
The Board ensures that the necessary resources are in place for the Company to meet its objectives
and measures performance against them. The Board has a framework of controls which enables
risk to be assessed and managed. The Executive Risk Management Meeting manages risks and
establishes and monitors controls in place.
For more information about the
risks faced by the Company and
the associated governance
framework, see pages 36 to 42.
See the Audit Committee report
on pages 106 and 107 for
information about controls.
D. Engagement with shareholders and stakeholders
Victrex has multiple stakeholders who are all important to our business. We are aware that our
actions and decisions impact our stakeholders and the communities in which we operate. The
Board regularly reviews and considers our key stakeholder relationships, including how we engage
with them and whether any enhancements can be made. The Board maintains regular direct and
indirect engagement with shareholders and other key stakeholders. Where engagement is not
direct, it takes place via feedback from individual Directors and members of management.
The relevance of each stakeholder group will depend on the particular matter requiring Board
decision; we also have regard to any other key factors including the interests or requirements of
applicable regulators. All decisions we make will unfortunately not benefit all stakeholders; by
taking a consistent approach to decision making and being guided by our purpose and our strategic
aims, we hope that our decisions are understandable.
The matters we have discussed and debated during the year are set out on pages 89 and 90.
For more information about
shareholder engagement, please
seepage 93 of this section and
page113 of the Remuneration
Committee report.
For more information about
engagement with other stakeholders
including the annual report from
ourNon-executive Director with
designated responsibility for
Workforce Engagement, please see
pages 94 and 95. Our Section 172(1)
statement is contained on pages 22
to 25 of the Strategic report.
Statement of corporate governance
82 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
E. Workforce policies and practices
Our Code of Conduct sets out the standards of behaviour we expect from everyone at Victrex and
those who work with us. We encourage people to raise any matters of concern through our Global
Whistleblowing Policy, where genuine concerns may be reported and investigated without reprisals
for whistleblowers.
During the year, the Group operated an independently provided telephone helpline for employees
to seek advice onraising matters of concern. An independent reporting hotline is being launched
for FY 2025. Aninternal process was in place for confidential reporting for employees. Employees
can remain anonymous if they wish. All concerns are investigated fully, regardless of how they
areraised.
During the year, the Board was kept fully apprised of the number of cases. The Board was also
informed about how cases were being investigated and remedial actions taken. Relevant employees
undertake periodic specialist training in order to conduct investigations of cases of whistleblowing.
The Group operates an Anti-bribery & Corruption Policy to prevent bribery being committed on
itsbehalf. All employees must follow it and there are processes in place to monitor compliance.
Aspart of the programme, employees are required to comply with the Group’s Gifts & Hospitality
Policy. This permits employees to give and accept proportionate and reasonable hospitality for
legitimate business purposes only. Our suppliers must comply with our Supplier Code of Conduct
which explains we will not tolerate corruption, bribery or anti-competitive actions and expect
suppliers to comply with applicable laws.
A copy of the Group’s Anti-bribery & Corruption Policy is available on request.
For more information about this
and our approach to ethics and
compliance, please see page 74.
Conflicts of interest
The Board has a formal system in place to declare an actual or potential conflict of interest.
Astatement of Directors’ interests in Company shares is set out on page 128.
Please see page 135 for further
information.
2. Division of responsibilities
F. Role of the Chair
Our Senior Independent Director, Ros Rivaz, led the annual performance review of our Chair,
Vivienne Cox. The outcome of that process found Vivienne to be an effective Chair.
For more information, see pages
91 and 92.
G. Composition andresponsibilities
As at 30 September 2024, our Board comprised nine members: the Chair, six independent
Non-executive Directors (one of whom is Senior Independent Director) and two Executive Directors.
Our Chair was independent on appointment. Save for Jane Toogood, all Non-executive Directors
have less than nine years’ service.
Details of the distinct roles and responsibilities of the Chair, the Senior Independent Director and
the Chief Executive Officer are summarised on page 87, with full details set out on our website.
Information about our individual
Directors is set out on pages 80 and
81. Details about our Board and its
Committees are set out on page 87.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 83
2. Division of responsibilities continued
H. Role of the Non-executive Director
The role of the Non-executive Director is to provide constructive challenge and strategic guidance,
offer specialist advice and hold management to account. The results of the externally facilitated
Board and Committee performance review supported this. At the end of most Board meetings,
theChair holds a meeting without the Executive Directors present to provide feedback on papers
presented, and consider and discuss any matters that have arisen during the meeting. The Chairs
ofthe Audit and Remuneration Committees also hold regular meetings without the Executive
Directors and management present.
Independence of Non-executive Directors is reviewed against the circumstances which are likely to
impair, or could appear to impair, a Non-executive Director’s independence as set out in the Code.
Following assessment, all of the Company’s Non-executive Directors are considered independent.
The Chair was considered independent on appointment. A chart showing the independence of the
Non-executive Directors is contained on page 88.
It is vital that Directors have sufficient time to devote to and fulfil their duties. Non-executive
Directors are expected to devote the time needed to fulfil their roles and manage their diaries
accordingly although the Company’s historical practice has been to specify an expected time
commitment range in their letter of appointment. The Board is satisfied that none of its Directors
are overcommitted and unable to fulfil their duties to Victrex. Each individual’s circumstances are
different, as is their ability to take on the responsibilities of a Non-executive Director role. If a
Director was unable to attend meetings on a regular basis, or was not preparing for or contributing
appropriately to Board discussions, the Chair would be responsible for discussing the matter with
them and agreeing a course of action. The Nominations Committee also reviewed the time required
from each Non-executive Director and any other significant commitments of the Chair. The 2024
review found the Non-executive Directors’ time commitments to be sufficient to discharge their
responsibilities effectively.
Prior to the Board approving a Board member taking on any new external appointment or
significant commitment, the Board member is required to confirm sufficient time remains available
to discharge their responsibilities to Victrex.
A summary of the roles and
responsibilities of the Chair and the
Non-executive Directors (including
that of the Senior Independent
Director) is contained on page 87.
Other significant appointments of
each individual Director are
included in the Board biographies
on pages 80 and 81.
For more information on meeting
attendance in FY 2024, please see
page 88.
I. Effective and efficient Board function
The General Counsel & Company Secretary supports the Board to ensure that it has the policies,
processes, information, time and resources it needs in order to function effectively and efficiently.
All Directors have access to the advice of the General Counsel & Company Secretary, as well as
independent advice at the Company’s expense.
Appropriate levels of insurance cover are obtained for all Directors and Officers of the Company.
Further information on Directors’
indemnities and insurance cover is
given in the Directors’ report on
page 135.
3. Composition, succession and evaluation
J. Board succession planning
The Nominations Committee leads the process for Board appointments and ensures plans are in
place for orderly succession to both the Board and senior management positions. It also oversees
the development of a diverse pipeline for succession. The Committee also recommends candidates
for appointment. It operates a formal, rigorous and transparent procedure which focuses on finding
the right candidate having regard to the strategic aims of the Company, desired skills and
experience, with due regard for promoting diversity. There are written succession plans in place for
the Executive Directors, Non-executive Directors and senior management which are reviewed by
the Committee. The Board maintains a Diversity & Inclusion Policy. Each Director seeks re-election
on an annual basis at the Annual General Meeting.
The activities of the Nominations
Committee are set out in the
report on pages 96 to 99. The
Board’s Diversity & Inclusion Policy
is set out on page 98 and on
ourwebsite.
Details of the specific reasons why
the contribution of each individual
Director is and continues to be
important to the Company’s
long-term sustainable success are
set out in the Director biographies
on pages 80 and 81, as well as in
the notes accompanying the
resolutions to re-elect each
Director.
Statement of corporate governance continued
84 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
K. Skills, experience, knowledge and refreshment
Using a Board skills matrix, the Nominations Committee ensures that the combination of skills,
experience and knowledge on the Board and its Committees is relevant to assisting the Company
indelivering its purpose and strategic aims, as well as sufficient to discharge their governance and
oversight responsibilities.
For more details on the skills and
experience of the Board, see the
individual Director biographies on
pages 80 and 81 and page 97 of the
Nominations Committee report.
L. Board performance review
In FY 2024 an internal Board and Committee performance review took place. Details of the process,
outcomes and focus areas for FY 2025, together with progress on actions identified in FY 2023, are
set out on pages 91 and 92.
For more information on the Board
and Committee evaluation, please
see pages 91 and 92.
Induction and Board development
The Group has in place a comprehensive induction programme for newly appointed Directors
which is capable of being personalised according to that individual’s proposed role, skills and
experience. The induction programme was reviewed and updated during the year.
Board Directors regularly receive updates to improve their knowledge and understanding about the
business and are encouraged to identify any knowledge or skills gaps they would like to address.
During the year, the Board has received legal and governance briefings from the General Counsel &
Company Secretary, Addleshaw Goddard LLP (update on corporate governance and listed company
regulations), Korn Ferry (remuneration) and PwC (corporate reporting update), as well as briefings
on geo-political matters and investor perspectives on ESG from external speakers.
During FY 2024 the Board conducted a ‘virtual’ visit to the APAC region which included several
customer and supplier meetings and interactions with employees, providing the Board with
valuable direct stakeholder interactions.
See page 98 for a description of the
induction programme.
4. Audit, risk and internal control
M. Independence and effectiveness of internal and external audit
The Audit Committee meets composition requirements set out in the Code as it comprises five
Non-executive Directors, the Chair is not a member, at least one member has recent and relevant
financial experience and the Committee as a whole has competence relevant to the sector in
which the Company operates. The Audit Committee assesses and assures the Board of the
independence and effectiveness of the Group’s internal audit function and the external auditors,
PwC. The Audit Committee operates a policy for non-audit services which PwC is permitted
toconduct.
An explanation of how the Audit
Committee has assessed the
effectiveness of the external audit
process can be found on page 105.
Further information on the work of
the Audit Committee, internal audit
and the external auditors, PwC, is
set out on pages 100 to 107.
N. Fair, balanced and understandable assessment
The Audit Committee reviews financial and narrative statements set out in the Group’s annual and
half year results, reports its findings and makes recommendations to the Board. The entire Board
considers the recommendations of the Audit Committee, representations made by management
and the views of internal audit and the external auditors. This process is applied so that the Board
can satisfy itself on the integrity of financial and narrative statements and to determine whether,
when taken together, they represent a fair, balanced and understandable assessment of the
Company’s position and performance, business model and strategy.
See page 102 to 104 or a description
of the significant issues that the
Audit Committee considered in
relation to the financial statements
and how these were addressed,
having regard to the matters
communicated to it by the external
audit team.
Please see page 138 for the
statement that the Directors
consider that the Annual Report and
Accounts, taken as a whole, is fair,
balanced and understandable and
provides information necessary
forshareholders to assess the
Company’s financial position
andperformance.
The going concern statement is
setout on page 43 and 44.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 85
4. Audit, risk and internal control continued
O. Risk management and internal controls
The Audit Committee monitors the internal control framework and receives regular reports on its
effectiveness, reporting its findings to the Board. At least twice in each year, the Board reviews the
principal and emerging risks which apply to the Group to ensure that they remain up to date. The
Board also reviews the controls and mitigations in place (including financial, operational and
compliance controls) to manage those risks to ensure that they are aligned to the risk appetite
determined appropriate by the Board to achieve the long-term strategic aims of the Group.
For further information, see the risk
descriptions on pages 38 to 42 and
the Audit Committee report on page
106.
5. Remuneration
P. Remuneration policy and practices
The Remuneration Committee is responsible for determining remuneration policies and practices
which support the strategy and promote the long-term sustainable success of the Company.
When setting executive pay, the Committee takes into account workforce remuneration and related
policies as well as the alignment of incentives and rewards with culture. The Remuneration
Committee meets composition requirements set out in the Code as it comprises five Non-executive
Directors, the Chair is not a member and the Committee Chair has served on a remuneration
committee for longer than 12 months. The remuneration of Non-executive Directors is determined
by the Board, reflecting the time commitment and responsibilities of the individual roles.
The Company’s remuneration advisor is Korn Ferry. Details of the engagement are contained on
page 122.
The work of the Remuneration
Committee is summarised on pages
111 and 112.
Please see pages 114 to 121 for
details of the remuneration policy.
Q. Executive remuneration
The executive remuneration policy was renewed at the 2023 AGM. The Remuneration Committee
considered that the remuneration policy continues to align with corporate governance best practice
which enables the attraction and retention of executive talent to achieve the Group’s strategic aims
and to promote the delivery of the long-term sustainable strategy. No Director is involved in
deciding their own remuneration outcome.
Future policy table and notes,
performance scenario charts and
remuneration obligations in service
contracts are set out on pages 114
and 121.
Please see the Directors’
remuneration report for policy
implementation (pages 112 and 122
to 133), remuneration paid to service
advisors (page 122), single total
figure tables (page 123), Chief
Executive Officer total remuneration
(page 130), CEO pay ratio (page
131), alignment of Directors’
remuneration (including pension
contributions) with the workforce’s
(pages 112 and 113) and relative
importance of spend on pay (page
131). Please see the Remuneration
Committee report for Directors’
shareholdings (page 128) and
variable pay awarded in the year
(page 126).
R. Judgement and discretion
The Remuneration Committee determines remuneration outcomes for Directors and senior
management and in doing so exercises independent judgement and discretion when authorising
remuneration outcomes, taking account of Company and individual performance, as well as wider
circumstances. Details of the Committee’s discretionary powers, specifically relating to malus and
clawback, bonuses and LTIPs, can be found in the remuneration policy from page 118. The
Committee did not use discretion in relation to adjusting incentive outcomes for FY 2024.
For more information on
remuneration outcomes, please
see the Directors’ remuneration
report from page 123.
Statement of corporate governance continued
86 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Leadership – our governance framework as at 30 September 2024
Key responsibilities:
u
Day to day running of the Group
u
Recommending to the Board and implementing agreed strategy
u
Executing Board decisions
Matters not reserved for Board decision are delegated to the CEO
Key responsibilities:
u
Leading the Board
u
Creating the right Board dynamic
u
Ensuring Board effectiveness, including contribution
andchallenge from all Directors
u
Ensuring effective engagement with shareholders
Chief Executive Officer: Jakob Sigurdsson Chair: Vivienne Cox
Key responsibilities:
u
Acting as secretary to the Board and its Committees
u
Keeping the Board up to date on all legislative, regulatory
andgovernance matters
u
Reviewing the efficacy of and compliance with Board procedures
u
Facilitating information flows between management and
theBoard
Key responsibilities:
u
Acting as a sounding board to the Chair
u
Serving as an intermediary for other Directors when necessary
u
Being available to meet with shareholders should they have
anyconcerns, where contact through the normal channels may
be inappropriate
u
Leading the review of the Chair’s performance
u
Deputising for the Chair if the Chair is unable to fulfil her duties
General Counsel & Company Secretary: Jane Brisley Senior Independent Director: Ros Rivaz
Key responsibilities:
u
Performing designated executive responsibilities
u
Discharging duties in respect of the Group as a whole
Key responsibilities:
u
Exercising independent and objective judgement in decision making
u
Scrutinising and constructively challenging senior management
Executive Directors: Jakob Sigurdsson, Ian Melling
Independent Non-executive Directors: Janet Ashdown,
Brendan Connolly, Urmi Prasad Richardson, Ros Rivaz,
David Thomas, Jane Toogood
Key responsibilities:
u
Providing entrepreneurial leadership
u
Setting the Company’s purpose and strategic aims
u
Being collectively responsible and accountable to shareholders
for the long-term sustainable success of the Group and for
theresponsible operation of the Group in delivering its
strategicobjectives
u
Ensuring the interests of all stakeholders are taken into account
u
Ensuring that the necessary financial and human resources
areinplace for the Company to meet its objectives
u
Ensuring a sound system of risk management and internal
controls which enables risk to be assessed and managed is
inplace
u
Reviewing management performance and the operating and
financial performance of the Group
u
Setting the Company’s culture, values and behaviours
u
Ensuring good corporate governance
How the Company generates value for shareholders and other
stakeholders and contributes to wider society is set out on pages 6
to 19
Board: one Chair (independent on appointment), six independent Non-executive Directors, two Executive Directors
Role:
u
Assisting the Board in its oversight of financial reporting, internal
controls and risk management
u
Managing the relationship with the Group’s external auditors
See the Audit Committee report from page 100 for more information
Role:
u
Setting remuneration policy for Executive Directors, senior
management and the Chair
u
Determining the application of remuneration policy
See the Directors’ remuneration report from page 111 for
moreinformation
Role:
u
Overseeing the Company’s conduct with regard to its corporate
societal obligations and commitments
u
Overseeing and reviewing the development and execution of
theCompany’s sustainability strategy and commitments including
progress towards targets
Role:
u
Reviewing Board structure, size, composition and succession planning
u
Overseeing senior management succession
See the Nominations Committee report from page 96 for
moreinformation
Role:
u
Ensuring timely and accurate disclosure of information to comply
with applicable laws and regulations where it is impractical for the
Board (or any other Board Committee with delegated responsibility)
u
Making disclosures on behalf of the Board
u
Taking advice from the Company’s broker, external auditors and legal
advisors on the form and content of any disclosure under consideration
Chair: Vivienne Cox, David Thomas or Jakob Sigurdsson (in that order)
Quorum: Two of Vivienne Cox, David Thomas, Jakob Sigurdsson and
Ian Melling
Remuneration Committee members:
fiveindependentNon-executive Directors
Corporate Responsibility Committee members:
aminimumofthree Non-executive Directors
Disclosure Committee members:
wholeBoard
Audit Committee members:
fiveindependent Non-executive Directors
Nominations Committee members:
Board Chair and five independent Non-executive Directors
Board Committees
Victrex plc
| Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 87
Statement of corporate governance continued
Attendance at meetings
The Directors’ attendance record at the Annual General Meeting (‘AGM’) and scheduled Board and Committee meetings for the year
ended 30 September 2024 is set out below. Attendance is shown as the number of scheduled meetings attended out of the number
that each Director was eligible to attend. Only in exceptional circumstances would a Director not attend a Board or Committee meeting.
AGM Board
Audit
Committee
Remuneration
Committee
Nominations
Committee
Corporate
Responsibility
Committee
Number of meetings 1 7 5 5 4 4
Chair
V Cox 7/7 — — 4/4 —
Executive Directors
J O Sigurdsson 7/7 — — — —
I C Melling 7/7 — — — —
Non-executive Directors
J E Ashdown 7/7 5/5 5/5 4/4 4/4
B W D Connolly
2
7/7 5/5 4/5 4/4 —
U Prasad Richardson
1
— 2/3 — — — —
D Thomas 7/7 5/5 5/5 4/4 4/4
J E Toogood 7/7 5/5 5/5 4/4 4/4
R Rivaz
3
X 7/7 5/5 5/5 3/4 4/4
1 Urmi Prasad Richardson was appointed to the Board on 1 May 2024. She attended the scheduled Board meetings in May and July but not in
September due to a pre-existing commitment. Urmi is not a member of any Committee but is invited to attend meetings at the invitation of the
Committee Chair.
2 Brendan Connolly was unable to attend one Remuneration Committee meeting due to an urgent external matter arising at short notice.
3 Ros Rivaz was unable to attend the AGM and one Nominations Committee meeting that were held on the same day due to a family emergency.
Executive Directors, and Non-executive Directors who are not members, may be invited to attend Committee meetings – please see
the Committee reports for further information.
A summary of Board activity in FY 2024 and strategic outcomes is on pages 89 and 90. In undertaking these activities, the Board
considers its legal duties and the interests of principal impacted stakeholders. The Section 172(1) statement is located on pages 22 to 25.
Diversity
Our Board believes that diversity is
important for Board effectiveness and
recognises the value of diversity in its widest
sense. Broadening the diversity of the Board
and senior management will continue to be
a focus area. Female representation on the
Board was 56% as at the end of FY 2024.
The current ethnic composition of our Board
is 89% White, with a breakdown of
nationalities provided above.
Further details, including the mandatory
FCA UK Listing Rules disclosures in relation
to gender and ethnic representation and our
Board Diversity & Inclusion Policy, can be
found in the Nominations Committee report
on pages 96 to 99. Details of the Group’s
Diversity, Inclusion & Equal Opportunities
Policy can be found on page 74.
As at the date of this Annual Report
Roles and gender
Female Chair 1
Female Senior Independent Director 1
Male Executive Directors 2
Male Non-executive Directors 2
Other female Non-executive Directors 3
Nationality
Icelandic 1
British 7
American 1
Chair and Non-executive
Directortenure
Up to 3 years
29%
3–6 years
14%
6–9 years
43%
9+ years
14%
Independence
Chair
1
Independent
NEDs
6
88 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
SUMMARY OF BOARD ACTIVITY IN FY 2024 STRATEGIC OUTCOMES
Strategy
u
Held the annual strategy review at which the Group’s strategy was reviewed in detail
u
Reviewed and approved the Group’s purpose and strategy
u
Reviewed performance against strategy
u
Reviewed the Group’s innovation portfolio
u
Reviewed corporate development activities
u
Conducted deep dives into strategic business unit and key functional strategies
u
The Board received a further presentation from TechnipFMC, to further develop the
relationship as it progresses its industrialisation and scale-up in Brazil
u
Reviewed and approved changes in the organisational structure
u
Reviewed and approved key contracts
u
Received regular updates on progress of establishment of manufacturing capability in China
u
Reviewed sustainability agenda
u
Continued oversight of Sustainable
Solutions and Medical business areas
u
Approved customer and other
third-party contracts to support
progression of the Group’s strategy
u
Further development of key customer
relationships and understanding of
customer priorities
Financial, operations and risk
u
Reviewed operational performance
u
Approved the budget and monitored financial performance
u
Reviewed and approved the half and full year results and associated announcements
u
Reviewed and approved the going concern and viability statement
u
Reviewed and approved the Group’s 2024/25 UK tax strategy
u
Reviewed and approved the Group’s treasury policies
u
Reviewed and debated the risk profile of the Group, and in particular the principal risks
and risk appetite agreed programme of periodic risk deep dives
u
Received updates on significant IT project (a new ERP system)
u
Reviewed the effectiveness of the risk management and internal control systems including
bribery prevention arrangements and Group whistleblowing policies and processes
u
Reviewed annual insurance arrangements and received a briefing from the Group’s
insurance brokers
u
Conducted risk related deep dives
u
Received external briefing on geo-political matters
u
Ongoing monitoring of operational
andfinancial performance
u
Reviewed principal risks and agreed
aprogramme of risk deep dives
u
Approval of the interim and final
dividend
Shareholder relations
u
Received regular updates and discussed feedback from roadshows, presentations and
meetings between the Chief Executive Officer, the Chief Financial Officer and/or the
Director of Investor Relations, Corporate Communications & ESG and other engagement
with large investors, prospective investors and analysts
u
Enhanced engagement and clear
understanding of investor views
Leadership and employees
u
Reviewed health and safety activities, considered health and safety incidents impacting
employees and contractors and maintained focus on embedding an enhanced health
andsafety culture
u
Reviewed and discussed Executive Director and senior management succession plans and
monitored progress on key aspects of talent and development plans, identifying general
management and functional leadership potential, and developing our employee value
proposition and aspiration for a diverse workforce
u
Approved Parker Review target for ethnic diversity in senior management population
u
Considered outcomes of the 2024 Employee Engagement Survey
u
Reviewed the Board Diversity & Inclusion Policy
u
Considered reports on workforce engagement from Brendan Connolly as the
Non-executive Director with designated responsibility for Workforce Engagement
u
Reviewed dashboard of workforce composition and conditions
u
Interacted with members of senior management through Board presentations, dinners
and site tours
u
Monitored culture using a combination of formal and informal methods including a
dashboard of cultural indicators
u
Reviewed whistleblowing arrangements
u
Conducted annual review of stakeholder engagement arrangements
u
Continued prioritisation of health and
safety matters
u
Monitoring alignment of culture with
ourpurpose, values and strategy
u
Enhanced insight into employee
engagement, views of our employees
and related actions
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 89
SUMMARY OF BOARD ACTIVITY IN FY 2024 STRATEGIC OUTCOMES
Governance
u
Reviewed the governance framework and the Terms of
Reference for each Board Committee and received post-meeting
reports from the Chairs of each Committee summarising
discussions, decisions and actions
u
Reviewed periodic updates on developments in corporate
governance and best practice
u
Received training on listed company regulations
u
Implemented actions from the FY 2023 performance review
ofthe Board and agreed the approach for the FY 2024 internal
performance review
u
Determined independence of the Non-executive Directors
u
Reviewed the performance of the external auditors and
recommendation for re-appointment
u
Reviewed the Modern Slavery Policy and approved the FY 2024
Modern slavery and human trafficking statement
u
Reviewed and approved updates to key compliance policies
u
Strengthened the overall governance structure by ensuring that
the Terms of Reference for each Board Committee are up to
date and aligned with best practices
u
FY 2025 action plan agreed following the internal performance
review which sets a clear path for continuous improvement
u
Determining the independence of Non-executive Directors has
reinforced the Board’s objectivity and impartiality, fostering
aculture of unbiased decision making
u
Reviewing the performance of external auditors and
recommending their re-appointment has ensured high
standards of audit quality and accountability, contributing to
transparent and reliable financial reporting
u
Reviewing and approving the Modern Slavery Policy and the
FY2024 Modern Slavery and Human Trafficking Statement has
demonstrated the our commitment to ethical practices and
social responsibility
u
Key compliance policies have been reviewed and updated to
underpin compliance with relevant laws and regulations,
mitigating risks and promoting a culture of compliance
Below Board support for the Chief
Executive Officer to discharge his
responsibilities
The Victrex Management Team (‘VMT’)
Representing all business functions,
individual members of the VMT advise
theChief Executive Officer and the Chief
Financial Officer of the interests of all the
Group’s principal stakeholders and how they
are likely to be impacted by how Victrex
operates. They do this during VMT meetings
which are chaired by the Chief Executive
Officer and typically held at least once a
month or when they participate in other
management meetings or Committees
which have been established to assist the
Chief Executive Officer in the operational
management of the business – more
information is set out below. The VMT
works to nurture the culture, maximise
employee engagement, support the
business in delivering profitable growth,
ensure consistent and appropriate
communications both internally and
externally, and drive faster execution of
business and functional activities and plans
which rely on cross-functional
dependencies. More details on the members
of the VMT and their individual roles and
responsibilities are set out on page 91.
A number of meetings are in operation to
support the Chief Executive Officer to run
the business of the Group on a day to day
basis. Key meetings are described below.
Victrex Performance Day: Each month,
the Chief Financial Officer chairs the
Performance Day which reviews operational
business performance covering supply,
demand, financial and business
performance. This meeting is attended by
the Chief Executive Officer, the MD,
Sustainable Solutions and the MD, Medical,
with other VMT members and senior leaders
attending relevant sessions based on their
area ofresponsibility.
Executive Risk Management Meeting:
At least twice each year, the Chief Financial
Officer chairs the Executive Risk
Management Meeting which reviews the
Group’s corporate and emerging risks and
associated mitigations and controls. This
meeting is attended by the Chief Executive
Officer, the MD, Sustainable Solutions, the
MD, Medical, the General Counsel &
Company Secretary, the Group HR Director
and the Director of Audit & Risk.
VMT Risk & Compliance Meeting:
Meeting six times each year, the Chief
Financial Officer chairs the VMT Risk &
Compliance Meeting which reviews legal
compliance matters, internal audit matters,
IT security matters, and performance in SHE,
quality and regulatory matters. This meeting
is attended by the VMT and the Director of
Audit & Risk. The Global SHE Leader, Head
of Internal Audit, Head of Regulatory Affairs
and Product Stewardship, Director of IT and
Security and Head of Cyber Security
Operations participate in relevant sessions.
Industry-based risk committees meet at least
twice a year.
SHE Steering Committee: Meets quarterly
and is chaired by the Global SHE Leader. A
description of how risk management is
conducted by the Group can be found in the
Strategic report on pages 36 and 37.
Currency Committee: The Board has
ultimate responsibility for the annual
approval of the Treasury and Cash
Management Policy and continues to be
supported in its work by the management-
led Currency Committee. The Currency
Committee is chaired by the Chief Financial
Officer and meets monthly to manage the
application of the policy. Attendees include
the Chief Executive Officer. Further details
on this policy and the activities of the
Currency Committee are included in note 16
to the financial statements.
Innovation Portfolio Review Meeting:
Convening quarterly and chaired by the
Marketing Director, the Innovation Portfolio
Review Meeting reviews and manages the
balance of the innovation portfolio, as well
as ensuring the appropriate and effective
allocation of resources to projects. This
meeting is attended by the Executive
Directors, the MD, Sustainable Solutions,
the MD, Medical and those in senior
positions in R&D and marketing with
othersubject matter experts attending
asnecessary.
IP Committee: The IP Committee meets
quarterly and manages the Group’s IP
portfolio. It is chaired by the Intellectual
Property Director and attended by the
Marketing Director, the R&D Director, the
Chief Financial Officer, the Chief Scientist
and the Group’s Intellectual Property team,
as well as those in senior positions in R&D.
Statement of corporate governance continued
90 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
VMT MEMBERS (AS AT THE DATE OF THIS ANNUAL REPORT), ROLES AND RESPONSIBILITIES
Jakob Sigurdsson
1
Chief Executive Officer
(see page 87)
Ian Melling
1
Chief Financial Officer
u
Responsible for financial control
u
Leads the Finance, IT and IP teams
Andrew Hanson
1
Director of Investor Relations, Corporate
Communications & ESG
u
Investor relations, internal
communications and corporate
communications
u
Leads the Communications and ESG teams
Michael Koch
1
MD, Sustainable Solutions
u
Responsible for performance of
Sustainable Solutions business area
John Devine
1
MD, Medical
u
Responsible for performance of Medical
business area
Jilly Atherton
2
Group HR Director
u
People strategy
u
Leads the Human Resources and
Business Administration teams
Jane Brisley
2
General Counsel & Company Secretary
u
Legal, governance and Company
secretarial matters
u
Leads the Legal, Company Secretariat
and Executive Support teams
Chief Operations Officer
3
u
Responsible for areas including
Manufacturing and SHE
u
Leads the Procurement, SHE and Supply
Chain teams
1 Male.
2 Female.
3 Role under recruitment and accordingly is not taken into account in calculating senior management for Code purposes for FY 2024.
The VMT is treated as senior management for the purposes of the Code. The VMT (excluding the Executive Directors) is treated as senior managers
for the purposes of Section 414C(8) of the Companies Act 2006. Only the Executive Directors are treated as key management personnel for the
purposes of IAS 24.
Board performance review
Following on from the externally facilitated
Board performance review by EquityCulture
Ltd in 2023, the 2024 performance review was
undertaken internally and led by the Senior
Independent Director (‘SID’) through a series of
one-to-one conversations with each Director
and anchored in a set of questions shared with
the Directors in advance. The one-to-ones
were conducted in a free format style to allow
organic discussion and to provide opportunity
for the Directors to raise matters of
importance. Discussion areas included matters
that are relevant to Victrex plc as well as those
items laid down in the Code.
The interviews were confidential, open
andhonest. Results were compiled on an
unattributed basis and reported to the
Board by the SID. The outcome of the
performance review is that the Board
operates effectively. It was found to be
wellchaired and comprised of high quality
Non-executive Directors who provide
appropriate, constructive challenge and
support to the Executive Directors and the
management team. Key findings included:
u
Directors are engaged and diligent, with a
broad range of relevant business experience
enhanced by the addition of the newly
appointed Non-executive Director. The
Board further acknowledged the strength
and diversity of contributions made by all.
u
Board meetings and discussions are
considered focused and relevant. The Board
as a whole is considered to be collegial and
respectful, with an open dialogue, while
providing the appropriate amount of
challenge and support to management.
u
The Board spends an appropriate amount
of time focused on strategic, operational,
financial and governance matters.
u
The Board is appreciative of the continued
efforts by management to deliver focused,
succinct meeting papers and materials but
further work in specific business areas is
required to facilitate a more substantive
debate.
u
The Board agrees that there is sufficient
time allocated to agenda topics and that
the flow and time management are done
well (and improved on previous years).
TheNEDs are, however, supportive of
amore flexible approach to agenda items
being brought to meetings to ensure their
attention is prioritised more effectively.
u
The Board would welcome the opportunity
to increase in-person employee
engagement events to its calendar which
involve the full Board and recognise the
continued need to focus on ensuring an
engaged workforce and healthy culture
generally. The Board recognises the
importance of understanding how people
feel and to get a sense of how leadership
isperceived throughout the organisation.
u
Positive feedback was noted on the
performance and effectiveness of all
oftheCommittees and of the Workforce
Engagement Director. The significant
progress made by the CRC during the year
was particularly noteworthy, but most
agree there is more to be done in this area.
Recycling is a focus for FY 2025.
Following the Board’s discussion of the outcome of the FY 2024 Board performance review, an action plan was agreed with actions in the following areas:
Topic Action/recommendation
Deep dive on China Undertake additional deep dive on China.
Strategy Conduct strategic investment appraisals.
Insightful Board discussions Extend attendance of the MDs, Sustainable Solutions and Medical at Board meetings where
appropriate and increase employee engagement to further understand strengths and potential.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 91
Board performance review continued
During the year, the Board has also reviewed progress made in relation to the actions identified from the external Board performance
review conducted in FY 2023.
Topic Action/recommendation Progress
Non-executive
Director succession
planning
Ensure smooth transition plan for refreshing the Board
inlight of future departures of Non-executive Directors,
particularly given three Non-executive Directors were
appointed during the same calendar year.
A new Non-executive Director was appointed on 1 May 2024.
Plans for an orderly succession for NED colleagues are an area
of focus.
Board papers and
presentations
Build on the improvements to papers and presentations
made to date to drive additional improvements.
New guidance has been issued to support the business in the
preparation of papers. The continuing focus on content and
structure of papers will further contribute to efficiencies.
Board and
Committee
resources
Factoring in the size of the Group and focus on operational
efficiencies, consider opportunities for targeted
enhancements to the level of management resource,
forexample in support of the Corporate Responsibility
Committee which was established in FY 2022.
Head of Reward joined in November 2023. Deputy
Company Secretary joined in July 2024. Opportunities
fortargeted enhancements to the level of management
resource in relevant areas will be kept under review by
theExecutive recognising ongoing careful cost control.
Review of the Chair’s performance
Dr Ros Rivaz, as the Senior Independent
Director and in discussion with the other
Non-executive Directors, led the appraisal
ofthe Chair’s performance which took into
consideration both the Executive and
Non-executive Directors’ views. Further,
during FY 2024 the Non-executives met
without the Chair present. There was
unanimous agreement that the Chair leads
the Board in an effective manner, fulfilling
Principle F of the Code. The Directors agree
that she demonstrates thoughtful and
objective judgement, promotes a culture
ofinclusiveness, openness and debate, and
facilitates constructive Board relations and
the effective contribution of all Non-
executive Directors. This, in turn, supports
Non-executive Directors in fulfilling the
requirements of Principle H of the Code
inproviding constructive challenge and
strategic guidance, offering specialist advice
and holding management to account.
Review of the individual
Directors’performance
The Chair reviewed the individual
performance and effectiveness of each
Director. Each of the Directors was found
tobe effective in discharging their
responsibilities and to be making a valuable
and effective contribution to the Board.
Inaddition to the formal evaluation, the
Non-executive members of the Board met
atvarious times during the year without
theExecutive Directors present.
All Directors, with the exception of Jane
Toogood who is stepping down at the
conclusion of the AGM in February 2025, will
be subject to annual re-election. The Board
recommends that shareholders vote in favour
of those standing at the forthcoming AGM, as
they will be doing in respect of their individual
shareholdings. The papers accompanying the
resolutions to elect each Director contain the
specific reasons why their contribution is, and
continues to be, important to the Company’s
long-term sustainable success.
Company purpose, values, strategy
andculture
The Board has established the Company’s
purpose, values and strategy and monitors
Company culture to ensure that these
arealigned.
Culture
Values Behaviours
Strategy
Purpose
u
Our purpose is to bring transformational
and sustainable solutions that address
world material challenges every day.
u
Our strategy is to drive core business and
create and deliver future value through
Polymer & Parts. We will do this by
innovating in high performance polymer
solutions to focus on our key strategic
markets of Automotive, Aerospace,
Energy & Industrial, Electronics and
Medical. This is with the aim of shaping
future performance for our customers
and creating long-term value for our
shareholders, enabled by differentiation
through innovation and underpinned by
safety, sustainability and capability.
u
Our long-term values of Passion,
Innovation and Performance shape our
culture and drive responsible business
conduct in line with our Code of
Conduct. You can find more on our
Codeof Conduct on page 74.
u
Our entire workforce (including our
Executive Directors) is reviewed against
our core behaviours of driving results,
working together, doing the right thing,
continuously improving and focusing
onour customers.
u
Through its annual programme of
business, receiving reports from Brendan
Connolly, our Non-executive Director
responsible for Workforce Engagement,
and meeting with employees, the Board
gains insight into the culture of Victrex.
Aformal review of corporate culture is
conducted by the Board twice a year
using the dashboard of cultural indicators
which has been developed.
Our cultural dashboard has a behavioural
focus tracking cultural insights in the
following areas:
Safety
Employee engagement,
inclusion anddiversity
Doing the right thing Service for customers
Innovation
Sustainable
businesspractices
The Board retains the power to take decisions
which affect the future developments and
business prospects of the Group and the
authority and responsibility for planning,
directing and controlling the activities of
theGroup. Where the matter has not been
reserved for Board decision, it is delegated
tothe Chief Executive Officer. The Group
operates a Group Authorities Manual &
Matrix which sets out the delegation of
operational decision making authorities
forcertain management roles operating
atdifferent levels of the organisation.
The operational management of our
business is delegated by the Board to the
Chief Executive Officer who uses several
teams, meetings and below Board
committees to assist him in this
responsibility. Further details are set
outonpage 90.
Statement of corporate governance continued
92 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Stakeholder engagement
It is important to the Board that we develop strong and positive relationships with our employees, customers, suppliers and investors,
aswell as government and regulators. We also strive to make a positive contribution to the environment and local communities in which
weoperate. A summary of how we engage is set out on pages 22 and 23. The Board conducts a formal review of the Group’s stakeholder
engagement programme annually, considering other touchpoints throughout the year. Details of how the Board is informed about stakeholder
engagement are outlined below. Our Section 172(1) statement is set out on pages 22 to 25 and outlines examples ofhow the Board has
considered the interests of stakeholders in decision making during the year.
Employees Attracting and retaining a skilled, talented, experienced and engaged workforce is key to supporting the Group in
achieving its strategy. The Board promotes effective engagement with the Group’s workforce and this is supported by
arange of direct and indirect engagement activities. The Board programme of business typically schedules visits to one
or more of the Group’s sites. In FY 2024 the Board conducted a ‘virtual’ visit to the APAC region and several employees
participated in customer and supplier meetings alongside members of our Board. An in-person Board visit to China took
place in October 2024 and included engagement with employees. Board dinners with senior management have taken
place periodically. During FY 2024, our Chair, Chief Executive Officer and Chief Financial Officer met with our employees
in China, the Chief Executive Officer also visited our Japan and Korea offices, the Chief Financial Officer visited all of our
US and UK sites, our Audit Committee Chair visited Stonehouse, our Gloucestershire site in the UK, and our Senior
independent Director visited our Leeds site. The Board reviews the results of engagement surveys and receives regular
‘people’ updates throughout the year. The Group has operated a range of measures to facilitate workforce engagement
including works councils, employee forums, staff briefings, regular communications from the Chief Executive Officer and
anonymous communication channels. The Board has continued to enhance its engagement with the workforce through
the role of Brendan Connolly as the Non-executive Director with designated responsibility for Workforce Engagement.
Brendan’s fifth annual report in this capacity is set out on pages 94 and 95.
Customers The Board engages with customers indirectly through the Executive Directors who provide information about key
customer relationships. The Board receives information on key customer interactions and regularly reviews information on
how the Group is performing for its customers including delivery ‘on time in full’ metrics and product quality statistics.
During the year, Board members met with a number of key customers and received a presentation from TechnipFMC for
the third consecutive year to further develop the relationship as it progresses its industrialisation and scale-up plans in
Brazil. Material customer contracts are reviewed and approved.
Suppliers Information about key suppliers is provided to the Board by the Executive Directors when relevant to Board deliberations.
The Board is committed to fair treatment and payment of suppliers and the Company is a signatory to the Government’s
Prompt Payment Code. The Board reviews proposed updates to the Group’s Modern Slavery & Human Trafficking Policy
as well as approving the Group’s Modern slavery and human trafficking statement, which can be found on our website,
www.victrexplc.com. From time to time material supplier contracts are also reviewed and approved.
Investors The Board receives monthly reports on investor engagement and sentiment, prepared by the Company’s Investor Relations
team which frequently interacts with key analysts and investors and prospective investors. The Chief Executive Officer, the
Chief Financial Officer and the Director of Investor Relations, Corporate Communications & ESG regularly meet shareholders,
prospective shareholders and analysts. This year, over 190 virtual meetings or calls were hosted with institutional investors
or prospective investors. Two major UK roadshows were held and there was one major US and Canadian roadshow and
one virtual roadshow in Europe. A number of site visits were also hosted, to enable a clearer understanding of the Group’s
strategy and growth prospects. The Chair hosted engagements with six major shareholders as well as meeting other
shareholders through the Annual General Meeting and financial results presentations. Both the Chair and Senior
Independent Director remain available for engagement with shareholders. The Board receives reports from sector analysts
and institutional feedback following roadshows to ensure that it maintains an understanding of investor themes and
feedback. The Board attends the Annual General Meeting so as to be available to answer any questions that may arise
from investors. The Board believes that appropriate steps have been taken during the year so that all members of the
Board and, in particular, the Non-executive Directors, have an understanding of the views of major shareholders.
Communities
and
environment
The Board recognises its impact on local communities and its responsibility to the environment and society as a whole.
The Group has a busy engagement programme with local communities which is described on page 64. The Board
receives information on key community activities. The Corporate Responsibility Committee enables enhanced focus on
ESG matters including monitoring of the Company’s standing with key stakeholder groups. See page 108 for the
Corporate Responsibility Committee report for more information.
Government
and
regulators
The Board engages directly and indirectly with a wide range of government bodies and regulators. The Health and Safety
Executive and the Environment Agency monitor compliance by the Group’s UK sites with environmental, health and safety
legislation. The Board receives regular updates on safety, health and environmental performance and material interaction
with regulators. Board engagement is primarily through our Global SHE Lead to reflect our SHE focus, environmental
reporting and activities aligned to our sustainability agenda. Governmental and NGO interactions occur typically through
the Chemical Industry Association (of which we are an active member) via the Chief Executive Officer, with relevant
functions taking the lead in responding to UK government consultations and submissions of relevant data. From time to
time the Group receives some government funding associated with its innovation and Research & Development agenda.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 93
Statement of corporate governance continued
Workforce engagement report –
hearing the employee voice
Highlights during FY 2024
This year, activities of the Workforce
Engagement NED were focused on the
outcomes of the Engagement Survey, with
arenewed approach to engage with teams
with lower scores and to support managers
in developing actions plans in those areas,
with initial feedback from these teams being
positive. More information on our Employee
Engagement Survey can be found on page 63.
In addition to the work above, the
Workforce Engagement NED engaged in
dialogue with the workforce through a
variety of means, including face-to-face
meetings and site visits. Other Non-executive
Directors have also been involved in
engagement activities including an informal
walk around the head office where the
Board members engaged with employees,
avisit by our Senior Independent Director to
our site in Leeds, a visit by our Audit Committee
Chair to our site in Gloucestershire and our
Board Chair visiting our operations in Panjin,
China. The Workforce Engagement NED also
held one-to-one meetings with senior
managers across a range of functions and
afollow up with the CEO to look over the
actions from 2021 to present.
In FY 2024, the Workforce Engagement
NEDheld two ‘An Audience with Brendan
Connolly’ events in person at our UK head
office with virtual attendance from other
locations, covering topics such as executive
remuneration and receiving feedback and
questions from all employees which
included topics such as bonus plans and
share plans, wellbeing and strategy. Over
200 employees attended this event.
In summary, no major negative themes
arose during the year and there were
manypositives including the approach to
supporting teams with lower scores from
the Employee Engagement Survey, which
included feedback sessions attended by a
member of the Victrex Management Team.
It was widely commented by employees that
they felt their voices were being heard. The
employee forums are now well established
and continue to progress their agendas
intheir respective areas.
Key focus areas for FY 2025 include
continuing to involve other Non-executive
Directors in employee engagement
initiatives where practical, scheduling follow
up sessions with teams with lower Employee
Engagement scores to ensure progress,
scheduling a Non-executive Director ‘drop
in’ session open to all employees at the head
office and continuing to attend a cross-section
of employee forums and bodies to gather
feedback and to build on the understanding
of the topics which are important to
ouremployees.
The Workforce Engagement NED reports to
the Board on matters raised by employees.
Relevant Board papers contain a workforce
impact statement to ensure that the
interests of our employees are a central
consideration in Board decision making.
Objectives and role
The Workforce Engagement NED
isresponsible for the following matters
tosupport the Directors’ collective
responsibility to consider a wide range
ofstakeholder perspectives when arriving
atBoard decisions:
u
understand the concerns of the
workforce and articulate those views
andconcerns in Board meetings on
anongoing basis;
u
ensure that the Board, and particularly
the Executive Directors, take appropriate
steps to evaluate the impact of proposals
and developments on the workforce;
u
where relevant and appropriate, provide
feedback to the workforce on Board
decisions and direction during the
engagement process;
u
primarily use existing engagement
mechanisms, including the employee
survey, quarterly staff briefings, works
council meetings, union meetings,
regional forums and Q&A sessions,
togather the relevant feedback from
theworkforce;
u
ensure that feedback is obtained from all
levels of the workforce in multiple locations;
u
organise bespoke events for additional
feedback where required; and
u
solicit employee views about executive
remuneration and share feedback obtained
with the Remuneration Committee.
The Workforce Engagement NED is not
expected to take on responsibilities that
arethose of an Executive Director or of the
HR team or act as a proxy for those teams.
Brendan Connolly
Workforce Engagement NED
WORKFORCE
ENGAGEMENTREPORT
Further information can be found on
www.victrexplc.com
94 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Relations with shareholders
Annual General Meetings
The Annual General Meeting (‘AGM’) is an
important part of effective communication
with shareholders. The forthcoming AGM
will be held at 11 am on 7 February 2025.
All shareholders are welcome at the
Company’s AGM where they will have the
opportunity to meet the Board and to ask
questions. TheChairs of the Audit,
Nominations, Remuneration and Corporate
Responsibility Committees will be available
to answer questions at that meeting. The
details of the 2025 AGM are summarised
inthe Chair’s introduction on page 78 and
79 and in the Notice of Annual General
Meeting which is on the corporate website
(www.victrexplc.com). Ifthere are any
queries, please contact cosec@victrex.com.
An explanation of the resolutions to be
considered is set out in the Notice of Annual
General Meeting. Proxy votes lodged on
each resolution will be announced at the
AGM, published on the Company’s website
and announced via the Regulatory
Information Service.
Outcome of the February 2024
AnnualGeneral Meeting
At our 2024 AGM, votes were cast in
relation to approximately 88.6% of the
issued share capital. All 19 resolutions were
passed by the required majority. There were
no significant votes cast against any of the
resolutions. All Directors are subject to
annual re-election by shareholders. Votes
cast in favour of the re-appointment of the
Board Directors at the 2024 AGM were
asfollows:
Director Votes for
Vivienne Cox 90.30%
Jane Toogood 98.95%
Janet Ashdown 98.95%
Brendan Connolly 98.95%
David Thomas 98.76%
Ros Rivaz 92.95%
Jakob Sigurdsson 99.90%
Ian Melling 98.41%
Share capital
Details of the Company’s share capital,
including the rights and obligations attached
to the shares, are set out in the Directors’
report on page 136.
This is my fifth year as the designated
Non-executive Director for Workforce
Engagement and our commitment to
workforce engagement remains rooted
in theunderstanding that a motivated
and engaged workforce drives
innovation, productivity and overall
organisational success. To that end,
theintention is to feed back to the
Executive Directors and the Board
boththe positives and improvement
areas noted during our varied
interactions.
This year, we have continued to
prioritise initiatives that give us insight
into the various layers of the Company
using engagement surveys, group, and
one-on-one meetings to elicit feedback
and ultimately compare the output to
the culture we are trying to foster.
Weultimately strive for a positive work
environment. We value the constructive
feedback from our employees globally
and are pleased to see the continued
progress we make in this area. I would
like to thank everyone for their
continued engagement.
Brendan Connolly
Workforce Engagement NED
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 95
Nominations Committee report
Dr Vivienne Cox DBE
Chair
NOMINATIONS
COMMITTEEREPORT
Main responsibilities ofCommittee
u
Leading the process for Board
appointments and making
recommendations to the Board about
proposed appointments to the Board,
including the General Counsel
&Company Secretary
u
Evaluating the skills, experience and
knowledge of the Board
u
Overseeing the development of a
diverse pipeline for succession to Board
and senior management positions
Committee meetings in FY 2024
The Committee held four scheduled
meetings during FY 2024 and has a
programme of business reflecting its Terms
of Reference. Committee meeting
attendance is set out on page 88. The
composition of the Committee is also
detailed on pages 80 and 81.
Other attendees:
u
the Chief Executive Officer is not a
member of the Committee but is
invited to attend;
u
the Group HR Director regularly attends
meetings; and
u
the General Counsel & Company
Secretary.
u
All members of the Committee are
independent, thus fulfilling the
Corporate Governance Code
requirement that a majority of
members of the Nominations
Committee should be independent
Non-executive Directors.
The Chair would not chair or otherwise
participate in the Committee when it is
dealing with the appointment of her
successor. No Director would participate in
the Committee when it is dealing with the
appointment of his or her successor.
The Chair’s other significant commitments
are set out in her biography on page 80.
Terms of Reference for the Nominations
Committee can be found on
www.victrexplc.com
FY 2024
highlights
u
Continued focus on Diversity & Inclusion at Board and senior management level
u
Reviewing succession planning and overseeing changes in the composition of the Victrex Management Team (‘VMT’),
including the appointment of the new Chief Operations Officer
u
Leading the process for the appointment of an additional Non-executive Director
u
Undertaking the annual Board and Committee performance review exercise
FY 2025
focusareas
u
Ensure smooth transition plan for refreshment of the Board in light of future departures of Non-executive Directors,
particularly given three Non-executive Directors were appointed during the same calendar year
Board performance 17%
Board & Committee
composition 35%
Executive succession 26%
Governance 22%
Allocation of time
96 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
The Committee’s agenda in FY 2024
The Committee’s principal activities during the year, and up to the date of approval of
this Annual Report, were as follows:
u
Board and senior management composition;
u
overseeing changes to senior management. Details of the composition of the VMT
are set out on page 91;
u
Board and senior management succession planning;
u
overseeing process for appointment of an additional Non-executive Director;
u
talent management framework and pipeline development;
u
approval of the Nominations Committee report in the Annual Report and
FinancialStatements;
u
reviewing the refreshed Director induction policy;
u
reviewing the Board skills matrix;
u
reviewing the Board Diversity & Inclusion Policy for approval by the Board; and
u
reviewing the Committee Terms of Reference and the Committee’s annual
programme of business.
Dear shareholders,
On behalf of the Nominations Committee,
Iam pleased to present its report for the
year ended 30 September 2024.
I am delighted that Urmi Prasad Richardson
joined the Board in May 2024, bringing
awealth of relevant experience across
anumber of global companies, with
anemphasis on medical, science-based
innovation, clinical scalability and healthcare.
During the year the Committee has
reviewed succession planning at Board and
senior management level and has overseen
changes to the senior team.
The Committee has reviewed the framework
for talent planning, including the talent
matrix, and reviewed the changes in
organisational structure with the
establishment of our Medical and
Sustainable Solutions business areas.
Victrex is committed to diversity in the
workforce, inclusive practices and equality
of opportunity for all employees. In
compliance with the FCA UK Listing Rules,
please see page 99 for information on Board
and executive management gender and
ethnicity. The Board meets, and exceeds, the
FCA target of having at least 40% female
representation on the Board and having at
least one of the senior Board positions held
by a woman. The Board also meets the
Parker Review target of having atleast one
Director from a minority ethnicbackground.
While the Nominations Committee looks
atdiversity within the Board and approves
the Board Diversity & Inclusion Policy, which
can be found on page 98, our Corporate
Responsibility (‘CR’) Committee oversees the
focus on Diversity, Equity & Inclusion (‘DE&I’)
in the wider workforce. This includes how
we are performing against our targets. You
can read more about DE&I on page 61.
The FY 2024 Board and Committee
performance review was internally facilitated
by our Senior Independent Director, Dr Ros
Rivaz, and I am pleased to say this was a very
positive exercise with strong engagement
from our Board members. Further details
can be found on page 91 and 92.
The Nominations Committee approved this
report on its work.
Dr Vivienne Cox DBE
Chair of the Nominations Committee
3 December 2024
Succession planning
During the year, the Committee reviewed
the succession plans for the Board and
senior management over the short and
medium term, as well as contingency plans
for emergency situations. The Committee
aims to ensure that the Board and senior
management have the appropriate balance
of skills and experience to support the
Group’s strategic objectives.
The Board uses a succession planning toolkit
which includes consideration of diversity and
skills to help assess the Board’s composition
and identify any opportunities for
enhancement. Our skills matrix was further
evolved in FY 2024 to add a geography lens
and supports there being a broad balance
ofskills, experience and knowledge on the
Board and across geographies, with
particular strength in chemicals, strategic
direction setting, M&A, risk management
and compliance, and balanced experience
across functional disciplines. Each Director
completes a self-assessment questionnaire
to evaluate their own skills and experience
by reference to the focus areas in the matrix.
The results feed into the matrix which is
then kept under review by the Committee.
The Committee holds regular Board
succession planning discussions, to ensure
that we balance skills, experience,
knowledge, diversity and independence and
take into account Directors’ tenure and the
evolving needs of the business. The tenure
of Non-executive Directors is set out on
page 88. Succession planning for our
Non-executive Directors will continue to
bea particular focus area for FY 2025.
Board appointments including
theappointment of a new
Non-executiveDirector
The succession planning process allows us to
assess the need to refresh the Board. During
FY 2024, and in anticipation of planned
transitions within the Board, the Committee
undertook a thorough review of the Board
composition, its skills matrix and its future
strategic needs. As such, the Committee
concluded that the appointment of a new
Non-executive Director would further
strengthen the capabilities of the Board as a
whole and position the Board well for future
challenges in meeting its long-term growth
strategy. The Committee developed a
candidate profile for the new Non-executive
Director and engaged Korn Ferry, a
professional search agency. A separate team
in Korn Ferry advises the Remuneration
Committee on remuneration matters. There
is no personal connection between Korn
Ferry and any individual Director. Potential
candidates were interviewed by Committee
members and the candidates were assessed
against the agreed candidate profile which
included the desired experience and skills
forthe role. After careful consideration and
having regard to diversity in its broadest
sense, and to the skills, experience and
personal attributes of the candidates, the
Committee made a recommendation to the
Board to appoint Urmi Prasad Richardson.
This recommendation was accepted by the
Board and Urmi Prasad Richardson was
appointed in May 2024. Any new Directors
appointed by the Board must be elected
atthe next AGM to continue in office.
Allexisting Directors retire by rotation
everyyear.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 97
Nominations Committee report continued
Board Diversity & InclusionPolicy
The Company acknowledges the value of
diversity in its widest sense (age, gender,
ethnicity, sexual orientation, disability and
socio-economic background as well as
educational and professional
backgrounds) and its contribution towards
effective Board and Committee
operations and decisions.
The Group operates a Group Diversity,
Inclusion & Equal Opportunities Policy
which is reviewed each year and
providesthe framework for productive
working relationships.
Taking account of its changing strategic
needs, the Board will ensure:
1. it and its Committees have the
appropriate balance, composition and
mix of skills, experience, independence
and knowledge to ensure their
continued effectiveness, having regard
to regulatory diversity targets and
external guidance on diversity;
2. a pipeline is maintained promoting
diversity for succession to the Board
and senior management positions;
3. only executive search consultants
which have signed up to the voluntary
code of conduct for executive search
firms on gender diversity on corporate
boards are engaged when seeking
appointments to the Board so that
theselection processes provide access
to a diverse range of candidates;
4. appointments to the Board are made
onthe basis of merit, with regard for
suitability for the role, Board balance and
composition and the required mix of
skills, background and experience – with
diversity in its widest sense as described
above being an important consideration;
5. policies adopted by the Group promote
diversity in the broadest sense;
6. adequate and appropriate disclosure of:
a. this policy and diversity initiatives the
Group has in place and the steps it is
taking to promote diversity at Board
level and across the Company including
a description of progress made;
b. the composition and structure
ofthe Board and its Committees;
c. whether the Company has met
regulatory diversity targets on a comply
or explain basis, and the Board’s
approach to such data collection;
d. external reporting requirements
including: (i) the ethnic background
and gender identity or sex of the
Board and executive management;
and (ii) the gender balance of those
in senior management and their
direct reports; and
e. the process for appointments to
theBoard; and
7. this policy is reviewed from time to
time to monitor progress being made
to assess its effectiveness.
Board diversity – gender
(as at 30 September 2024)
Female 56%
Male 44%
Chair, Corporate Responsibility
Committee
Since the year end, the Committee has
considered the succession of the Chair of
the Corporate Responsibility Committee
(‘CRC’) given Jane Toogood’s retirement
from the Board at the conclusion of the
2025 AGM. In considering the skills
required, the Senior Independent Director
proposed that Vivienne Cox, given her
strong experience in this area, recognised
externally through being appointed DBE in
2022 for services to sustainability, and to
diversity and inclusion in business, made
hera compelling candidate for this role.
TheCommittee carefully considered the
implications of the appointment on
Vivienne’s time management and continued
effectiveness. As Board Chair, Vivienne
already attends Committee meetings at the
invitation of the CRC Chair, and she has
acomprehensive understanding of the
strategy and operations. Consequently,
theCommittee considered Vivienne’s
appointment would have little impact on her
time management and concluded the role
would further enhance Board accountability
and leadership in this area. TheCommittee
unanimously agreed to recommend her
appointment as Chair oftheCRC to the
Board with effect from the conclusion of
the2025 AGM and this recommendation
was accepted.
Board induction, development and
business engagement
A formal induction programme is in place
for new Board members and is tailored as
appropriate depending on role, skills and
experience. This has been reviewed and
updated during FY 2024. Our induction
programme allows new Directors to meet
members of senior management, business
and functional leaders, and high potential
talent as well as external auditors, brokers
and advisors. New Directors also visit
operations and sites to understand the
manufacturing and production process and
meet operations staff. They have access to
Board and Committee papers, undertake
relevant training, and receive briefings on
pertinent matters.
All Directors are encouraged to keep up
todate with relevant legal and governance
matters, best practice and evolving areas of
risk. The Board receives training and updates
on relevant topics as appropriate and
Directors are supported to undertake any
other professional development identified
asnecessary or desirable.
VMT members, other senior leaders and
those designated as talent are invited, as
appropriate, to deliver presentations at
Board meetings on their areas of
responsibility. It is the Company’s usual
policy for all Directors to attend the AGM.
Board diversity
Fostering an inclusive and forward-thinking
organisational culture is essential for our
business and to our success. Diversity on
theBoard is key to driving well-rounded
decision making for the benefit of all our
stakeholders. Our Board Diversity &
Inclusion Policy is set out in the box on this
page. The Board and the Committee seek to
encourage applications from a diverse range
of candidates, subject to the selection
criteria being met.
The Board has not set express gender,
ethnicor other related diversity quotas
ormeasurable objectives for the Board’s
composition. The Board will continue to
consider the various diversity factors set out
in the UK Corporate Governance Code, the
FCA UK Listing Rules, and the
recommendations of the FTSE Women
Leaders Review and the Parker Review.
The current ethnic composition of our Board
and a breakdown of nationalities is provided
on page 99.
The Board strives to broaden the diversity of
the Board and senior management pipelines.
As at 30 September 2024, we have five
women on our Board, representing 56%
(FY2023: 44%). For the purposes of the
UKCorporate Governance Code, as at
30September 2024 two members of senior
management are women (representing
29%) and 41% of senior management and
their direct reports are women (26 men, 18
women). Senior management is defined as
the VMT; please see page 91 for a list of
members of the VMT.
For further details on diversity and inclusion
across Victrex, including our Group Diversity,
Inclusion & Equal Opportunities Policy, see
pages 61 and 74.
98 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Board and executive management diversity data disclosures
As required by FCA UK Listing Rule 6.6.6R(9), below is the Company’s compliance statement regarding Board diversity targets as at
30September 2024, being the selected reference date used for the purposes of FCA UK Listing Rule 6.6.6R(9)(a).
Target Position as at 30 September 2024
At least 40% of the individuals on the Board are women Victrex is compliant with this target as 56% of the Board are women.
At least one of the senior Board positions
1
is held by a woman Victrex is compliant with this target as both the Chair and Senior
Independent Director positions are held by women.
At least one individual on the Board of Directors is from a minority
ethnic background
2
Victrex is compliant with this target.
In accordance with FCA UK Listing Rule 6.6.6R(10), set out below is the data on the gender identity and ethnic background of the Board
and the VMT (including the Executive Directors and the General Counsel & Company Secretary) which is the cohort designated by the
Company as executive management for the purposes of the FCA UK Listing Rules.
Gender identity or sex as at 30 September 2024
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
1
Number in
executive
management
Percentage of
executive
management
Men 4 44% 2 5 71%
Women 5 56% 2 2 29%
Not specified/prefer not to say — — — — —
Ethnicity representation as at 30 September 2024
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board
1
Number in
executive
management
Percentage of
executive
management
White British or other White (including minority White
groups)
8 89% 4 7 100%
Mixed/multiple ethnic groups — — — — —
Asian/Asian British 1 11% — — —
Black/African/Caribbean/Black British — — — — —
Other ethnic group, including Arab — — — — —
Not specified/prefer not to say — — — — —
1 Senior Board positions are the Chief Executive Officer, Chief Financial Officer, Senior Independent Director and Chair.
2 Minority ethnic background is defined as from one of the following categories:
u
Asian/Asian British;
u
Black/African/Caribbean/Black British;
u
mixed/multiple ethnic groups; and
u
other ethnic groups, including Arab.
Data for the above disclosures has been collected by questionnaire and/or directly from the relevant individuals.
Board, Committee and individual Director effectiveness
The Board and its Committees carry out a formal performance review of effectiveness each year. An internal performance review was
conducted in FY 2024 led by our Senior Independent Director, Dr Ros Rivaz. Details of process, outcomes and focus areas for FY 2025,
together with progress on actions identified in FY 2023, are set out on pages 91 and 92.
The reviews of the Audit, Nominations, Remuneration and Corporate Responsibility Committees confirmed that these Committees continue
to provide effective support to the Board.
Each Director receives a formal performance review process. The Chair led the review of each Non-executive Director. The annual
performance review of the Chair was led by the Senior Independent Director, Dr Ros Rivaz. The Nominations Committee reviewed the
performance of the Executive Directors. These reviews confirmed that each Director continues to make a valuable personal contribution
tothe Board. Individual contributions are summarised in the biographies on pages 80 and 81. All Non-executive Directors are considered
tohave sufficient time to perform their duties at the Company. Where an Executive Director has an external appointment, the time
commitment involved is kept under review and the Board is satisfied the Executive Directors devote sufficient time to discharging their
responsibilities to the Company. Details of individual Executive Director appointments are included in the biographies on page 80.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 99
Audit Committee report
David Thomas
Chair
AUDIT OVERVIEW
Main responsibilities ofCommittee
u
Financial reporting – reviewing the
integrity of the financial statements
and announcements relating to the
financial performance of the Company,
including reporting to the Board on
thesignificant issues considered by the
Committee in relation to the financial
statements, how these were addressed,
and whether the financial statements
are fair, balanced and understandable
u
External auditors – reviewing and
challenging matters associated with
theappointment, terms, remuneration,
independence, objectivity and
effectiveness of the external audit
process and reviewing the scope and
results of the external audit
u
Risk management, internal control and
internal audit – reviewing the scope,
remit and effectiveness of the internal
audit function and the Group’s internal
control and risk management systems
u
Governance and other matters –
reporting to the Board on how
theCommittee has discharged
itsresponsibilities and overseeing
compliance with applicable significant
legal and regulatory requirements
Committee meetings in FY 2024
The Committee met five times during FY
2024 and has a programme of business
reflecting the Committee’s Terms of
Reference. Committee meeting attendance
is set out on page 88. The composition of
the Committee is also detailed on pages
80 and 81.
The following other attendees regularly
attend meetings:
u
the Chair and Executive Directors;
u
the Director of Audit & Risk (previously
Director of Risk and Compliance);
u
the Commercial Finance Director;
u
the Group Financial Controller;
u
the General Counsel & Company
Secretary; and
u
representatives from the external
auditors, PwC.
Other members of the management team
may also be asked to attend meetings for
discussion on specific issues. The
Committee also meets with the external
auditors at least twice each year without
management being present.
The Chair meets with members of
theexecutive and management teams
andPwC outside of formal Committee
meetings to discuss matters which
fallwithin the Committee’s Terms of
Reference. These have included meetings
with the aforementioned other attendees
as part of reviewing relevant matters and
forward planning on the business of
theCommittee.
The Committee is authorised to seek
outside legal or other independent
professional advice as it sees fit but
hasnot done so during the year.
The qualifications of Committee members,
including the Chair, are outlined in the
Directors’ biographies on pages 80 and 81.
The members of the Committee are all
independent Non-executive Directors. The
Board is satisfied that the Committee as a
whole has competence relevant to the
sectors in which the Group operates and
its members have an appropriate level of
experience in corporate and financial
matters and are financially literate. The
effectiveness of the Committee in fulfilling
its remit was considered as part of the
most recent performance review which
was internally facilitated by the Senior
Independent Director in summer 2024
andsubsequently reported to the Board.
The Board is satisfied that the Committee
Chair has recent and relevant financial
experience as required by the UK
Corporate Governance Code (the ‘Code’).
Terms of Reference for the Audit
Committee can be found on
www.victrexplc.com
Financial reporting 42%
Internal audit, risk
managementand
internalcontrol 23%
External auditors 21%
Governance and
other matters 14%
Allocation of time
100 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
The Committee’s agenda in FY 2024
The Committee’s principal activities during the year, in addition to those noted in the FY 2024 highlights, and up to the date
ofapproval of this Annual Report, were asfollows:
Financial reporting:
u
reviewed the FY 2024 Annual Report
and recommended to the Board that it
complied with the Code principle to be
‘fair, balanced and understandable’;
u
reviewed other market disclosures made,
including the Interim Report andquarterly
Interim Management Statements to
ensure they met the ‘fair,balanced and
understandable’ principle;
u
reviewed the basis of preparation
ofthe financial statements as a going
concern and reviewed the longer-term
viability statement (prior to making
arecommendation to the Board) as
setout in the accounting policies;
u
reviewed and discussed reports on
thefinancial statements and considered
management’s significant accounting
judgements and key areas of estimation
uncertainty (as noted below) and the
policies being applied, and how the
statutory audit contributed to the
integrity of the financial reporting; and
u
reviewed new and upcoming
accounting standards, FRC publications
made during the year, including
Thematic Reviews, and management’s
assessment of their impact on the
Annual Report.
External auditors:
u
negotiated and agreed PwC’s engagement
letter and the statutoryaudit fee for the
year ended30 September 2024;
u
reviewed the results of the Committee’s
assessment of the effectiveness of
theFY 2023 external audit;
u
reviewed PwC’s proposed audit
strategy and plan for the FY 2024
statutory audit, including the level
ofmateriality applied by PwC and the
final audit report from PwC on the
financial statements detailing its key
findings from the FY 2024 audit; and
u
confirmed the independence of the
external auditors and recommended
tothe Board the re-appointment of
PwC as the external auditors at the
upcoming AGM.
Risk management, internal control
and internal audit:
u
approved the strategic internal audit
planning approach and reviewed
reports on the work of the internal
audit function from the Director of
Audit & Risk;
u
considered the findings brought to the
Committee’s attention by internal audit
and satisfied itself that management has
resolved or is in the process of resolving
any outstanding issues orconcerns;
u
reviewed and approved the internal
audit plan and approach for FY 2025;
u
reviewed the effectiveness of the risk
management and internal control
systems prior to making a
recommendation to the Board;
u
reviewed the Group’s linkage between
the identification of risk and the control
environment, including the formal
evaluation of the lines of defence
conducted by the business and the
processes for testing the second line
ofdefence; and
u
supported the recruitment and
endorsed the appointment of the
newDirector of Audit & Risk.
Governance and other matters:
u
reviewed cyber security risks
andmitigations;
u
reviewed the conclusions of the
Committee’s annual performance
review. It was concluded that
theCommittee continued to be
effective; and
u
reviewed the Committee’s Terms of
Reference and programme of business.
FY 2024
highlights
u
Detailed review of the work performed by management and reporting from PwC in assessing the carrying value
ofassets in Bond 3D High Performance Technology BV (‘Bond’) during the period with specific reference to the
chronology of events relative to key reporting dates to ensure the timing of changes made to the carrying value
wasappropriate
u
Continued focus on inventory valuation as input costs remain volatile which, combined with the continued elevated
level of inventory held, increases the sensitivity of judgements and estimates made in this area and the sensitivity
towhich this is presented when describing financial performance between reporting periods
u
Maintaining focus on robustness of implementation planning for the ERP system project and reviewing PwC’s
approach to the audit of the cutover and subsequent opportunities for enhanced audit quality and efficiency along
with increased utilisation ofthe new system to underpin the overall control environment
u
Supporting the recruitment of the new Director of Audit & Risk and subsequent transition
u
Monitoring legislative and governance developments including changes to the UK Corporate Governance Code and the
implementation of the Economic Crime and Corporate Transparency Act
u
Supporting the Corporate Responsibility Committee in assessing the external and internal assurance procedures
performed on the climate change related disclosures
FY 2025
focusareas
u
With the Company’s new ERP system due to go live during FY 2025, supporting the implementation and reviewing
management’s plan for testing, training and cutover to ensure robust financial records are maintained along with
anappropriate audit trail
u
Continued monitoring of the financial reporting and audit of the critical judgements and key sources
ofestimationuncertainty
u
Preparing for reporting in line with upcoming regulatory changes, including the 2024 Corporate Governance Code
with effect from FY 2026, and assessing the impact of relevant sustainability reporting standards and management
plans for compliance
u
Continued support of the Corporate Responsibility Committee in the assessment of assurance required over
non-financial information
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 101
Dear shareholders,
I am pleased to present the report
oftheAudit Committee for the year
ended30September 2024. The Directors’
responsibility statement in respect of the
Annual Report can be found on page 138.
The Committee has received regular reports
from management covering the key areas of
estimation and judgement underpinning the
financial statements. During FY 2024 this
specifically included the carrying value of
Bond assets and the treatment of certain
costs as exceptional items. The Committee’s
role is to ensure that management’s
disclosures reflect the supporting
information or challenge them toexplain
and justify their interpretation. The
Committee is supported in this role by
theexternal auditors, in the course of
thestatutory audit. The external auditors
present their findings to the shareholders
and their report is set out in the Independent
auditors’ report. It was noted there were
nosignificant differences between
management and the external auditors.
TheCommittee reports its findings
andmakes recommendations to the
Boardaccordingly. The Committee is
satisfied that there was an appropriate
levelof challenge on the critical judgements
made in the process of applying the
accounting policies.
The focus of the internal audit and
assurance activities during the year has
beenacross key strategic and emerging
risks, core financial and operational
controlsand regional compliance and
control frameworks. Group internal audit
(‘GIA’) methodologies have been enhanced
in FY 2024 in order to improve the planning
processes and better capture the overall
level of assurance provided and
management responses and action plans.
During the year, the Committee oversaw
theappointment of a new Director of Audit
& Risk (formerly the Company’s Head of
Internal Audit), including review of role
scope following the departure of the former
Director of Risk andCompliance.
The Committee remains satisfied that the
principles concerning internal audit are
reflected in the responsibilities and activity
of the GIA function. In addition, all actions
from the External Quality Assessment
conducted in FY 2023 covering GIA have
been completed, which provides further
reassurances over the maturity of the
processes and practices in place.
As the Company prepares for ERP system
implementation, scheduled for go live
during the first half of 2025, the Committee
has supported management in ensuring the
appropriate governance is in place around
the project and advantage is taken of the
opportunity to automate and improve the
control environment.
The Committee supports the Board in
its‘fair, balanced and understandable’
assessment by performing an independent
review of the Annual Report, holding
discussions with management, including
assessment of alternative performance
measures (‘APM’) against the regulatory
guidance, consideration of FRC Thematic
Review findings and reporting from PwC.
Aswell as the Annual Report, the
Committee also considers other market
disclosures to support the Board in providing
fair, balanced and understandable reporting.
In the current year the Committee
specifically considered the changes made
tothe APMs, including removal of available
cash and introduction of underlying
effective tax rate asdetailed in note 25.
Having reviewed PwC’s tenure, independence
and objectivity and the audit quality and
effectiveness, as outlined in the Audit
Committee report below, the Committee
recommended totheBoard that PwC be
proposed for re-appointment at the
forthcoming AGM inFebruary 2025.
In relation to audit tendering the Committee
are expected to complete the next
competitive audit tender in FY 2026 for
audit services to commence 1 October 2027.
We continue to be committed to providing
meaningful disclosure of the Committee’s
activities as well as ensuring the
Committee’s agenda is kept under review
and that we maintain an awareness of
relevant developments. Details of the
annualperformance review process and
theCommittee’s performance can be found
in the Corporate governance report.
The Committee has considered the
recommendations of the FRC’s Audit
Committees and the External Audit:
Minimum Standard and has concluded it
remains compliant with the provisions.
The Audit Committee approved this report
on its work.
I will be available to answer any questions
inrelation to this Audit Committee report
before the Annual General Meeting. Please
email your queries to ir@victrex.com.
David Thomas
Chair of the Audit Committee
3 December 2024
Financial reporting
Review of financial statements
The primary role of the Committee in
relation to financial reporting is to review
with both management and the external
auditors, and report to the Board the
integrity and appropriateness of, the annual
andinterim financial statements, considering
amongst other matters:
u
clarity of the disclosures, assessment
ofwhether suitable accounting policies
have been applied in compliance with
financial reporting standards and
relevant financial and governance
reporting requirements;
u
areas in which significant judgements
and estimation have been applied,
including discussions on such matters
undertaken with the external auditors
toensure that robust challenges,
professional scepticism and audit
procedures had been performed on
these judgements during the audit;
u
whether the Annual Report, taken
asawhole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess the Company’s performance,
business model and strategy. The
statement incorporating the conclusion
of this assessment is included on page
138; and
u
any correspondence from regulators
inrelation to our financial reporting.
To assist this review the Audit Committee
considered detailed reports prepared by
management which outlined the basis
oftheGroup’s accounting policies, APMs
andkey areas of judgement and estimation.
Inrelation to judgements and estimation,
management referenced both quantitative
and qualitative judgement factors across each
significant account balance, assessing the
impact on the user of the financial statements.
Significant issues considered by
theCommittee in relation to the
financial statements and how these
were addressed
The following table sets out the
significantissues reviewed and discussed
bythe Committee throughout the year,
being those requiring management to
exercise thehighest level of judgement or
estimation. These were also all discussed
and addressed with our external auditors,
PwC, and included in their reporting.
Audit Committee report continued
102 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Area of focus Committee considerations and outcomes
Carrying value
ofinvestment in
associate in Bond
andfair value of
convertible loan
notesdue from
Bond(Bond assets)
FY 2024
—
FY 2023
The Committee reviewed and challenged management’s assessment of the carrying value of the Bond assets especially in
the first three Audit Committee meetings (November 2023, February 2024 and May 2024) when the level of judgement
and estimation uncertainty was assessed to be at its highest.
The Committee reviewed papers prepared by management, which considered the progress that had been made at each
reporting date against the key milestones of Bond (as outlined in note 11), to verify that the assessment of the carrying
value was appropriate.
The Committee agreed with management’s assessment that with no external funding raised, and current funding (2023
CLN) fully drawn, there was objective evidence of a loss event, which triggered an impairment review for the investment in
associate. Concurrently the fair value of the loans due from Bond was reassessed as these same factors identified a change
in value. This resulted in a full write down (comprising full impairment of investment in associate and reduction in fair value
of loans to £nil) of the Bond assets held at 31 March 2024.
The Committee asked PwC to specifically look at the carrying value of Bond, including the timing of evidence received by
the Company which impacted the assessment of the carrying value. PwC was present at all Audit Committee meetings
where the carrying value was discussed, with PwC updating the Audit Committee on the work performed and areas where
professional scepticism was demonstrated, including where it had challenged management, to support its opinion. PwC
supported the Committee’s conclusion that a full write down was appropriate in the first half of FY 2024.
Following the sale of the Bond assets, the Committee agreed with management’s assessment that this ceases to be an area
requiring critical judgement and use of estimation uncertainty at 30 September 2024.
The Committee considered the disclosures surrounding the full write down for the Interim Report and also within note 11
of the Annual Report concluding that the level of disclosures at each reporting date was appropriate.
The presentation and disclosures in the Annual Report have also been reviewed by PwC as part of their audit procedures
tosupport its fair, balanced and understandable assessment.
Valuation of
inventory
FY 2024
FY 2023
The Committee reviewed and challenged the valuation of inventory including both the basis for valuing gross inventory
andthe level of provisioning where there is uncertainty over the net realisable value of the gross inventory value.
The Committee reviewed the level and nature of costs absorbed intoinventory and the level of production over which
these costs areabsorbed. Where variances are absorbed into inventory, to betterreflect the actual cost of production, the
Committee assessed these for reasonableness against the analysis of performance presented to the Committee throughout
the year. Increased focus isgiven to the areas of critical judgement and estimation which are the level of production over
which costs are absorbed and the basis for and level of provisioning, including for aged, obsolete and
non-conformingproduct.
In the current year the level at which overheads are absorbed into inventory is more sensitive, with production levels
acrossall key assets significantly lower than in FY 2023 due to the planned inventory unwind following the inventory build
in FY2023. The resulting production levels across the key assets were below the level of production considered normal,
resulting in a proportion of manufacturing overheads being directly expensed rather than capitalised into inventory.
Asaresult, the level used as normal was more sensitive with it having a direct bearing on the valuation of inventory at
30September 2024. With the higher sensitivity of normal production levels, the Committee reviewed management’s
detailed papers on this area, including the sensitivity analysis on the level of normal used, along with consideration of the
consistency of the level deemed normal versus previous periods, with the assessment of the conclusions further supported
by the professional scepticism, testing and reporting provided by PwC.
The Committee concluded that, after discussion with management, and review of reporting from PwC, the valuation of inventory
and level of provisioning were reasonable. The impact of changes in the key areas of estimation on inventory isincluded in note 13.
UK Defined Benefit
Pension Scheme
accounting
FY 2024
FY 2023
The Committee considered the key assumptions used in calculating the UK Defined Benefit Pension Scheme asset value,
with a number of these being inherently judgemental or requiring a high level of estimation. These have been based on
reports received from management and the Group’s actuarial advisors. The Committee also noted that PwC found the
assumptions used by management in the valuation of the UK Defined Benefit Pension Scheme to be within an acceptable
range in the reporting received.
The Committee concluded that the valuation of the assets and assumptions made about the discount rate, Consumer
PriceIndex, Retail Price Index and mortality were reasonable and the disclosures in the Annual Report were appropriate.
The sensitivity of the scheme valuation to interest rate and inflation assumptions is disclosed in note 17.
Exceptional items
FY 2024
FY 2023
—
The application of the accounting policy for exceptional items is inherently judgemental and one where the Audit
Committee also supportstheRemuneration Committee in making an assessment of the treatment of exceptional costs for
executive remunerationpurposes.
Exceptional items have significantly increased in FY 2024 to £35.7m from £7.5m in FY 2023. Exceptional items, asoutlined
in note 3, include the following new items:
1) Impairment of investment in associate and fair value loss on loans due from Bond of £21.2m in aggregate (as above
and note 11); and
2) Impairment of property, plant and equipment relating to gear manufacturing of £4.6m.
In addition, costs in relation to the new ERP system continue to be recognised in FY 2024 of £9.9m compared to £7.5m
inFY 2023, with the implementation due H1 2025.
The Committee was provided with papers setting out management’s rationale for classifying the aforementioned items as
exceptional and considered and challenged whether the presentation as exceptional items was appropriate, also factoring
in the reporting received from PwC. With all three items material in size and one-off in nature the Committee concurred
that the treatment as exceptional was appropriate, and not disclosing as exceptional would adversely impact the reporting
of underlying trends.
Key
Critical judgement and key sources of estimation uncertainty in the notes to the financial statements pages 152 to 198
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 103
Financial reporting continued
Going concern and viability statement
The Committee supports the Board in
completing its assessment of the adoption
of the going concern basis of preparing the
financial statements. In addition, as part of
the Committee’s responsibility to provide
advice to the Board on the long-term
viability statement, the Committee
performed a robust review of the process
and underlying assessment of the Group’s
longer-term prospects made by
management, including:
u
the review period and its alignment with
the Group’s five-year strategic plan;
u
the assessment of the prospects of the
Group after consideration of the Group’s
principal risks, current financial position,
available banking facilities, and ability to
generate cash and to repay its external
banking facilities as they fall due;
u
the modelling of the financial impact
ofadditional key scenarios which
encompass the potential impact of
crystallisation of one or more of the
principal risks;
u
the consideration of the impact of
climate change on the Group’s strategic
plan; and
u
ensuring transparent disclosures
intheAnnual Report as to why the
viabilityperiod selected was appropriate,
including what the key scenarios tested
were and how the analysis was performed.
As a result of that review, the Committee
recommended to the Board the preparation
of the financial statements on a going
concern basis and was satisfied that the
approach adopted to assess the longer-term
prospects was appropriate. The viability
statement for the FY 2024 financial year
wasprepared on a consistent basis with
thatreported in previous years and is on
pages 44 to 45, with the going concern
assessment on pages 43 to 44.
Climate change
The impact of climate change has been
considered as part of impairment testing
ofgoodwill and intangible assets, and the
going concern and viability assessment. The
Committee has considered the disclosures
on climate change and considers them to
beappropriate. The Committee reviewed
the limited assurance obtained over the
GHG emissions metrics presented in the
sustainability report in conjunction with
theCorporate Responsibility Committee.
External auditors
External auditors’ independence
andobjectivity
To assess the external auditors’ independence
theCommittee considered the following:
u
Written assurances were received from
the external auditors that all partners
and staff involved with the audit are
independent of any links to Victrex.
u
PwC confirmed all partners and
staffcomplied with its ethics and
independence policies and procedures
which are fully consistent with the
FRC’sEthical Standard.
u
PwC is required to disclose at
theplanning stage of the audit any
significant relationships and matters
thatmay reasonably be thought to
havean impact on its objectivity
andindependence and that of the
leadpartner and audit team – no such
matters were disclosed.
u
The tenure of the lead audit partner and
other senior team members is reviewed.
PwC operates a policy requiring the
change in lead audit partner every five
years, with other senior audit staff
rotating at regular intervals. FY 2024
represents Graham Parsons’ second
yearas lead audit partner. The transition
of other senior audit staff has been
completed during FY 2024.
Taking into account the above, in addition to
the level of value of non-audit fees provided,
as detailed below, the Committee is satisfied
that PwC meets the required standard of
independence and is free from conflicting
interests with the Company.
Non-audit fees paid to the
externalauditors
Non-audit services to be provided by the
external auditors are considered and where
appropriate authorised by the Committee
inaccordance with its non-audit services
policy. The policy is outlined in an appendix
to the Committee’s Terms of Reference,
which are published on our investor website
– www.victrexplc.com. When awarding
non-audit work to PwC, the Committee is
also cognisant of the FRC Revised Ethical
Standard 2019, paragraph 4.15, including the
limit on non-audit fees of 70% of the audit
fee based on a rolling three-year average.
Non-audit fees for the year ended
30September 2024 were £nil representing
0% of the audit fee (FY 2023: £nil representing
0% of the audit fee). The level of non-audit
fees provided over a three-year rolling
period has also been £nil.
Fair, balanced and understandable
The Committee concluded that the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to assess
the Company’s financial position and performance, business model and strategy.
In reaching this conclusion the Committee made this assessment by:
u
reviewing key messages proposed for the Annual Report to ensure reporting meets
the requirement to be fair, balanced and understandable;
u
reviewing the Annual Report at various stages during the drafting process to ensure
the key messages were being followed and were aligned with the Company’s
position, performance and strategy being pursued and that the narrative sections
ofthe Annual Report were consistent with the financial statements. Section owners
were also challenged to ensure the writing style was concise and specific to the
business avoiding boilerplate language;
u
ensuring that all key events and issues which had been reported to the Board in
theexecutive Board reports during the year had been appropriately referenced
orreflected within the Annual Report;
u
reviewing how APMs were used in the Annual Report, ensuring completeness and
accuracy of definitions, consistency of use, relevance to users of the Annual Report
and balance of disclosure with statutory metrics;
u
considering management’s paper assessing ‘fair, balanced and understandable’
andhow the aforementioned areas have been specifically demonstrated in the
Annual Report; and
u
considering feedback from the external auditors, which reviewed the
AnnualReport, and incorporating recommendations made as appropriate.
Audit Committee report continued
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Victrex plc | Annual Report 2024
Effectiveness and quality of the external audit
The Committee actively considers the effectiveness and quality of the external audit process on an ongoing basis. Following the
process outlined below, the Committee assessed the effectiveness of the external audit and concluded that the external audit process
and services provided by PwC were satisfactory and effective.
The Committee discussed and agreed at the planning stage the draft list of specific risks to audit effectiveness,
efficiency and quality (specific audit quality risks).
PwC provided the Committee with its audit plan for the FY 2024 audit in July 2024 following the completion
oftheaudit planning, giving the Committee the opportunity to comment and input. The Committee assessed the
audit plan to verify that the specific audit quality risks identified were being considered and ensured that matters
ofkeyinterest (including those listed as significant issues above) received the appropriate level of challenge and
professional scepticism.
PwC reported against audit scope at subsequent meetings providing the Committee with an opportunity to monitor
progress and raise questions.
The Committee assessed the final audit work and reporting along with the overall conclusion reached regarding
specific audit quality risks and the significant audit issues (as outlined above).
PwC presented key findings from the FRC’s Audit Quality Inspection Report for PwC and planned actions.
Private meetings were held at most Audit Committee meetings between the Committee and representatives from the
external auditors without management being present in order to encourage open and transparent feedback by
bothparties.
The Committee discussed both internally and with PwC the extent to which PwC has demonstrated professional scepticism
and challenged management’s assumptions through the audit process, particularly in areas of estimation andjudgement.
The Committee assesses final audit work and reporting along with the overall conclusion reached
regardingspecificaudit quality risks and the significant audit issues (as outlined above).
All Committee members, key members of management and those who regularly provide input into the Audit Committee or
have regular feedback with the external auditors are asked for feedback on how well PwC performed the year-end audit.
Feedback and conclusions are discussed, along with the conclusion and transparency of reporting regarding specific
audit risks and issues, with an overall conclusion on audit effectiveness and quality reached. Any opportunities for
improvement are brought to the attention of the external auditors.
Following the publication of the FRC’s Audit Quality Inspection Reports in July 2024, it is pleasing to see PwC continue to obtain
strong results across its FTSE 350 audits. The Committee challenged PwC on its response to weaknesses identified by the FRC in
general, but particularly those relevant to the Company’s audit. In the current year, this included the three key findings noted in
the report, being the audit of inventory, impairment assessments and the audit of the carrying value of investments in subsidiary
undertakings, all being relevant. The Committee sought evidence in the final audit report of the work performed by PwC on
those areas, probing the audit team on the level of professional scepticism it has demonstrated and the level of challenge it has
given management. It is noted, due to the time lag between the FRC issuing findings to PwC for response and the publication
ofthe report, that evidence of PwC’s revised approach has been seen across the recent audit.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 105
Audit Committee report continued
External auditors continued
Audit fees paid to the external auditors
The increases in the PwC audit fee have
continued into FY 2024 with a fee of
£790,000 agreed, an increase of 9%
from£723,000 in FY 2023 (excluding
theadditional costs of £70,000 billed in
FY2023 relating to the FY 2022 audit).
Thisincrease reflects the second year impact
of atwo-year phased increase, in addition
tocurrent year inflation.
The phased increase was a result of the
changing regulatory environment and new
auditing standards, increasing audit testing
across all areas of the audit. The Company
continues to explore ways of mitigating
elements of the increase through audit
efficiency and smarter audit scoping.
With the new ERP system implementation
inFY 2025 the external audit fee for
FY2025 will include one-off audit fees
covering the audit of the data migration/
cutover, along with impact of additional
time required by the auditors in building
their knowledge base on new or updated
business processesand the resulting
changes tothecontrol environment.
External auditors’ rotation
andre-appointment
Following a formal tender process, PwC
commenced its appointment and presented
its first report to shareholders for the year
ended 30 September 2018. Following
rotation in the prior year, Graham Parsons
has completed his second year as lead
auditpartner.
The Committee will conduct an audit
services tender at least every ten years,
inline with current regulations. As such it
iscurrently expected that the next tender
process will take place in FY 2026 for audit
services to begin in FY 2028. This timing
aligns with PwC completing 10 years as the
external auditors in FY 2027 and coincides
with when Graham Parsons is required to
rotate off the audit. The Committee has
currently determined that a tender in
advance of the proposed tender date would
not be in the company nor its shareholders
best interests, considering a range of factors
including auditor effectiveness and timing of
the new ERP system implementation. The
Committee currently believes that it is in the
best interests of the shareholders to conduct
the competitive tender process in FY 2026,
before the start of the cooling in period,
toensure that it has the fairest choice of
suitable external auditors at the next tender.
The Committee confirms its compliance with
the provisions of The Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee
Responsibilities) Order 2014 for FY 2024.
There are no contractual obligations that
restrict the Committee’s choice of external
auditors, the recommendation is free from
third-party influence and no auditors liability
agreement, in accordance with Sections
534–538 of the Companies Act 2006,
hasbeen entered into.
Risk management, internal
controls and internal audit
The main features of the Group’s internal
controls and risk management systems are
summarised below:
Risk management
The Audit Committee has responsibility
forreviewing the risk management systems
and effectiveness of these systems. The
responsibilities and processes in respect of
risk management are described separately
on pages 36 to 42 and page 86. The
Committee receives updates and reports
from the Director of Audit & Risk on key
activities relating to the Group’s risk
management systems and processes at
every meeting. These are then reported
tothe Board, as appropriate. The Group
designs its risk management activities in
order to eliminate risk wherever possible,
mitigating residual risk where practicable
towithin tolerance, to achieve its strategic
objectives. During FY 2024 an external
maturity assessment was undertaken by
KPMG of the risk management processes,
which provides further reassurances over the
maturity of the risk management processes
and practices in place. Improvement
opportunities identified have been included
in a functional development plan.
The Chief Financial Officer has executive
responsibility for risk management and is
supported in this role by the Director of
Audit & Risk and her team. The Director
ofAudit & Risk manages a series of
riskmanagement committees across the
business which feed into the Executive
RiskCommittee formed by the Executive
Directors, the Managing Director of Medical,
the Managing Director of Sustainable
Solutions, the Group HR Director, the
General Counsel & Company Secretary
andthe Director of Audit & Risk.
They meet biannually and review the
principal risks of the Company, emerging
risks, the governance processes and their
effectiveness. This review then feeds into
the information and assurance processes
ofthe Audit Committee and into the Board’s
assessment of risk exposures and the
strategies to manage these risks. Details of
the Group’s principal risks, the procedures
inplace to identify emerging risks and an
explanation as to how they are being
managed and mitigated including how
theBoard conducts its assessment of the
robustness of risk management are
contained on pages 36 to 42.
Over the last year, the Committee has
overseen the development of climate-related
risks and opportunities, ensuring that they
are aligned to the requirements of TCFD and
considered in the context of the principal
business risks. Members of the Audit
Committee liaise with the Corporate
Responsibility Committee (‘CRC’) members
to support consistency between climate-
related and financial disclosures and
discussion on the level of assurance
obtained over climate-related reporting.
During FY 2024 the Committee continued
toreview the Group’s linkage between
theidentification of risk and the control
environment, including the formal
evaluation of the lines of defence
conductedby the business and the
processes for testing the second line
ofdefence.
Internal controls
The Committee also reviews the
Group’sinternal control systems and their
effectiveness and receives updates on the
findings of internal audit’s investigations
atevery meeting, prior to reporting any
significant matters to the Board. Internal
control systems are part of our business as
usual activities and are documented in the
Group Authorities Manual and operational
framework process documents, which cover
financial, operational and compliance
controls, processes and levels of authority.
The financial Risk and Controls Matrix
(‘RACM’) is designed to identify risks to the
integrity of financial reporting and identifies
those controls that are key to mitigating this
risk. Internal audit tests these controls on
acyclical basis. Internal control systems
arethe responsibility of the Chief
FinancialOfficer.
Confirmation that the controls and processes
are being adhered to throughout the
business is the responsibility of managers but
is continually tested by the work of the
internal audit team as part of its annual plan
of work which the Committee approves each
year as well as aspects being tested byother
internal and external assurance providers.
The internal audit function
The internal audit function is a key element
of the Group’s corporate governance
framework. The purpose of internal audit
isto enhance and protect organisational
value by providing risk-based and objective
assurance, advice and insight to the Audit
Committee, the Board and management.
Inaddition to reviewing the design and
operational effectiveness of controls in
managing risks, the internal audit function
also considers, where relevant, the risk and
control culture/environment, efficiency of
106 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
controls, compliance with law/regulations,
internal policies and also controls to support
the safeguarding of Company assets.
The Director of Audit & Risk reports
functionally to the Chief Financial Officer.
The Director of Audit & Risk attends all
scheduled meetings of the Audit Committee
and has the opportunity to raise any matters
with the members of the Committee
without the presence of management, as
well as being in regular contact with the
Chair of the Committee outside of the
Committee meetings.
Theinternal audit function monitors the
implementation of agreed audit actions to
verify their completion and routinely reports
the status at each Audit Committee meeting.
A three to five-year audit planning approach
has been applied that has identified key areas
requiring periodic assurance which isfocused
around financial controls and compliance with
key policies. In addition, anaudit planning
assessment exercise is undertaken annually
that identifies further areas requiring
assurance that are aligned to strategic risks
and/or projects. This approach results in the
development of a risk-based annual internal
audit plan that is endorsed, managed and
approved by the Audit Committee.
The purpose, scope and authority of internal
audit are defined within its charter which is
approved annually by the Audit Committee.
The in-house team is supplemented by
additional resource and skills sourced from
external providers, based on specialism
orworkload. The Committee keeps the
relationship with external providers under
review to ensure the independence of
theinternal audit function is maintained.
Assessing the effectiveness of the
internal audit function
The annual internal audit plan for the
internal audit function is considered and
approved each year by the Committee.
Inreviewing the proposed plan, the
Committee gives consideration to the
Group’s strategic priorities and specific
initiatives which are being undertaken
whichcould impact the business and also
the findings and actions arising from the
assessment of the Group’s risk register.
Thereafter, together with findings from
audits which are presented at each meeting,
the Committee considers the
appropriateness of the internal audit plan
and the resourcing of the function to enable
it to deliver it. Where appropriate to the
nature of the work being undertaken,
reviews are supported by other independent
assurance providers.
The Director of Audit & Risk has
responsibility for internal audit and
independently reports to the Chair of the
Audit Committee in relation to internal
control matters. In addition to attendance
by invitation at meetings of the Committee,
the Director of Audit & Risk has met with
the Chair of the Audit Committee on a
number of occasions to consider findings
from internal audit and other matters
relating to the internal audit function.
The effectiveness of the internal audit
function’s work is continually monitored:
u
ongoing audit reports are received;
u
scopes of audits are received by the
Chairof the Audit Committee;
u
regular interaction on key topics with
theDirector of Audit & Risk;
u
progress against the internal audit plan
isreviewed at each meeting; and
u
External Quality Assessments are
performed on a five-yearly basis, in line
with the requirements of the profession’s
audit standards, with the results reviewed
and discussed by the Committee, including
the monitoring ofthe implementation of
recommended improvements.
In combination the above provides
assurance to the Audit Committee that the
internal audit function and the internal
controls are effective, and that actions are
being taken to further strengthen the
control framework.
Cyber security
The Committee and the Board received
regular updates from the Director of IT and
Security and considered that its defences are
robust and effective to withstand an attack.
The Committee is mindful that the threat
landscape continues to evolve and is
monitored as a priority to protect our
Company and stakeholders.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 107
Jane Toogood OBE
Chair
CORPORATE RESPONSIBILITY
COMMITTEEREPORT
Main responsibilities ofthe Committee
u
Oversee the Company’s conduct
withregard to its commitments
andcorporate societal obligations
u
Support and challenge the
development and execution of the
Company’s sustainability strategy
andcommitments including progress
towards targets
Committee meetings in FY 2024
The Committee held four scheduled
meetings during FY 2024 and has
aprogramme of business reflecting
itsTerms of Reference. Committee
meeting attendance is set out on page 88.
The composition of the Committee is also
detailed on pages 80 and 81.
Other attendees:
u
the Company Chair, CEO, CFO and
Workforce Engagement NED are not
members of the Committee but are
invited to attend; and
u
the Director of Investor Relations,
Corporate Communications & ESG
andGroup HR Director regularly
attendmeetings. Other employees,
based on the programme of business,
may be invitedto attend.
Full Terms of Reference can be found
at www.victrexplc.com
Corporate Responsibility Committee report
Dear shareholders,
Overview
On behalf of the Corporate Responsibility
Committee, I am pleased to present the report
for the year ended 30September2024.
Sustainability has been embedded in
Victrex’s proposition since the formation
ofthe Company, through our lightweighting
agenda and supporting clinical outcomes.
Itremains a key part of our offering over
theyears ahead. After a great start, the
Committee made further progress during
FY2024, building on our sustainability
programme across our three pillars of
People, Planet & Products.
Whilst Victrex has long-standing
sustainability credentials, for example
through applications underpinning CO
2
reduction or energy efficiency, the
Committee believes an effective
sustainability strategy is one which is
sufficiently broad, but with clear focus
andtargets. The Corporate Responsibility
Committee’s purpose is to monitor progress
in achieving our goals and targets (set out
on pages 50 and 51) and ensure appropriate
levels of governance. This includes assurance
being in place for a number of key metrics,
including the Group’s greenhouse gas
(‘GHG’) emissions, and monitoring
regulatory or disclosure requirements.
Thisoversight ensures that climate change,
decarbonisation and our actions to reduce
our use of resources are embedded in
theBoard’s agenda.
People
Social responsibility
Victrex’s Diversity, Equity & Inclusion goals
and activities were a focus area for the
Committee during the year. As Victrex has
increasingly grown internationally, including
new manufacturing facilities in China, we
have seen a positive influence on the
diversity of the organisation. Victrex has a
target goal for 40% of females in leadership
roles by 2030, which currently sits at 25%
(FY 2023: 19%). The Committee actively
considered the Parker Review’s call for
companies to set a target for ethnic minority
representation in senior management
(‘excoand exco-1’ level) and a voluntary
target of 12% has been set. An additional
employee resource group was added during
FY 2024, covering Race, Ethnicity & Cultural
Heritage (‘REACH’), which includes a VMT
sponsor. The Committee met with
representatives from each of the three
employee resource groups during the year
to further understand the impact of the
Group’s proactive approach in this area and
sentiment amongst our global employee
base. These groups now include REACH, our
Gender Engagement Network (‘GEN’) and
our Strategic Inclusion Group. This group
has made a good start, with global activities
as outlined on page 61.
Victrex has a long-standing track record
ofsupporting local communities wherever
we operate. These activities are primarily
focused on supporting the next generation
of talent, through Science, Technology,
Engineering and Maths (‘STEM’). Employee
volunteering hours continue to be reported,
with a target of at least 1,000 employee
hours per year. The Committee reviewed
108 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
People 38%
Planet 18%
Products 9%
Governance 35%
Allocation of time
The Committee’s agenda in FY 2024
The Committee’s principal activities, up to the date of approval of the Annual Report,
were as follows:
u
oversight of progress towards our sustainability & ESG goals;
u
reviewing our environmental performance and ongoing measures;
u
preparation and awareness of alignment with key disclosure requirements,
particularly TCFD and future disclosures;
u
ensuring appropriate governance across our People, Planet & Products pillars,
including implementing assurance for our Scope 1, 2 and 3 emissions;
u
consideration of our SBTi validation, including focusing on the delivery stage of our
costed decarbonisation roadmap;
u
supporting the development of our circularity plans for customers;
u
overseeing progress against DE&I goals and activities to positively influence
diversity;and
u
reviewing the Committee’s Terms of Reference and annual programme of business.
current targets in this area during the year
and we are also now able to show the
socialvalue created, based on STEM.org’s
calculator of the impact of this work
(furtherdetails are shown on page 64).
TheCommittee encouraged a greater focus
on Biodiversity ensuring that industry and
nature operate in harmony and also prepare
us for future disclosures, such as the
Taskforce on Nature-related Financial
Disclosures (‘TNFD’).
Following a positive Employee Engagement
Survey and a 4% increase from the previous
survey in FY 2022 to 73%, the Committee
assessed the focus on wellbeing, with new
metrics adopted. All Victrex employees are
required to participate in annual training on
DE&I principles contained in the Code of
Conduct, a summary of which is shown
onpage 74.
Planet
Resource efficiency
A highlight of FY 2024 was the Group’s
decarbonisation targets being validated by
the Science Based Targets initiative (‘SBTi’).
These are set out on page 47. Attention
nowturns to the delivery phase and the
Committee was able to review the
optionality for these plans during the year.
These include electrification of steam boilers,
options for alternative fuels or processes,
and new technology such as waste to
energy. The Committee continues to have
aparticular focus on timing, ensuring that
capital spending required is visible and being
considered in the Board strategic discussions
and also ensuring that assessments of new
technology are considered (noting that
delivery of the SBTi targets depends on
technology availability and a decarbonised
electricity grid). The Group has a clear
opportunity to further differentiate and
build on its sustainability credentials with
avariety of stakeholders through SBTi,
FY 2024
highlights
u
Successful validation of the Group’s decarbonisation and Net Zero targets by SBTi (across Scope 1, 2 & 3)
u
Further progress in our Lifecycle Analysis (‘LCA’) roadmap, with over 40% of our portfolio assessed – representing
71% of current volumes – andmaintained our favourable LCA compared to the industry average
u
Advancement of our circularity plans to support our customers
u
Constructively challenging progress in our Diversity, Equity & Inclusion (‘DE&I’) agenda
u
Further strengthening our portfolio of sustainable products and proposition, as these help to drive future
growthand support our customers
FY 2025
focusareas
u
Focus on delivery phase for SBTi commitments, including Continuous Improvement (‘CI’) pipeline
u
Focus on our talent pipeline to further underpin our DE&I agenda
u
Finalise our circularity offering focused on lower carbon options to support our customers
u
Preparation for forthcoming disclosure requirements including TNFD and other reporting guidelines
particularly reflecting our favourable
Lifecycle Analysis compared to the industry
average. A decarbonised electricity grid is a
key factor in meeting SBTi targets and the
Committee has supported how the Group
builds a stronger collaboration of companies
and organisations in support of this goal.
The Committee also challenged how
decarbonisation opportunities in China can
start being delivered once our new
manufacturing facilities ramp up.
Environmental performance is monitored at
each Committee meeting, with a particular
focus on energy, water, waste and carbon
intensity. These metrics are shown on
pages65 to 70. Carbon remains the key area
of focus for the Committee and our
stakeholders. With additional manufacturing
facilities like China coming online, absolute
near-term metrics in this area will be
adverse, prior to commencement of the
larger decarbonisation projects from FY2026
onwards. Scope 1 & 2 emissions reduced
by4% this year, primarily reflecting lower
production levels. We have also been able
todeliver against our FY 2024 goal of 100%
of our global electricity coming from
renewable sources, including China, which
includes renewable certificates and some
solar PV in our assets.
Good progress has been made on long-term
waste management since our original
sustainability goals set out in 2013. Water
has also been an area of increasing focus
forthe Committee. Whilst water usage
correlates to production volumes,
engineering work projected for our
manufacturing assets provides an
opportunity to deliver reductions in water
intensity of between 3 and 5% annually
over the coming years.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 109
Corporate Responsibility Committee report continued
Products
Sustainable solutions
Enabling environmental or societal benefits
through our products is a key part of
supporting customers with their
performance challenges. The Group
measures its revenues from sustainable
products and following a revised assessment
of these products in FY 2023, the
Committee was pleased to see sustainable
product revenues at 52% for FY 2024. This
is ahead of our interim target of 50% by
FY2025, with a long-term target to reach
70% of revenues from sustainable products
by 2030. The Group has also made initial
strides to assess sustainable revenues from
the VAR segment, where we have limited
insight on end market destination.
Circularity was a key topic during FY 2024.
Victrex seeks to have clear low carbon
offerings for customers and play its part in
increasing recycling rates in the supply
chain. Further details of our work are set out
on page 66.
Building on the Group’s favourable LCA
assessment from FY 2022, theCommittee
was pleased to see good progress on our
roadmap of LCAs. Over 40% of the Group’s
portfolio of polymer grades or forms have
now been completed (representing 71% of
volume), with a targeted conclusion in FY
2026. LCAs have included newer products
such as LMPAEK™ or Victrex XPI™ which
are supporting mega-programmes for
Aerospace and E-mobility (Automotive)
respectively. These assessments are very
supportive for our customers, providing
confidence in the lower global warming
potential (‘GWP’) of Victrex™ PEEK
compared to the GaBi industry standard.
Further details are set out on page 72.
Governance
Assurance on the Group’s GHG emissions
for Scope 1 & 2 has been in place since
FY2023. On Scope 3, assurance is provided
on a limited basis, noting this is in line with
current practice. The Committee supported
the approach by management of engaging
athird-party provider, SLR Consulting.
Whilst the Committee reviews best practice
and peer group reporting, it supported
management’s approach not to seek
external assurance on other matters in the
Sustainability report, such as number of
volunteering hours and number of STEM
ambassadors. This ensures a pragmatic
position for less material items and that our
reporting is not overburdened. This will be
kept underreview.
The Committee was within the scope of
theinternal performance review exercise
conducted in FY 2024 by the Senior
Independent Director, Ros Rivaz. The overall
conclusion was that the Committee
continues to be effective.
Summary
The Group’s sustainability programme across
the three pillars of People, Planet & Products
remains appropriate and with clear goals
and deliverables. Governance and assurance
also remain strong in this area. As the
Committee progresses its work, it ensures
that the oversight by the Board on this key
area, for all of our stakeholders, remains
atthe very heart of our agenda.
Looking forward
At the conclusion of the 2025 AGM, I will
step down from the Board and as Chair of
the Corporate Responsibility Committee.
The Board has appointed Vivienne Cox as
my successor. I am confident that Vivienne’s
strong experience in this area will drive
Victrex’s sustainability agenda and I look
forward to a smooth handover of my
Chairresponsibilities.
Jane Toogood
Chair of the Corporate
ResponsibilityCommittee
3 December 2024
110 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Directors’ remuneration report
Janet Ashdown
Chair
DIRECTORS’ REMUNERATION REPORT
Main responsibilities ofCommittee
u
Designing and determining the
remuneration for the Company Chair,
Executive Directors and senior
management
u
Reviewing workforce remuneration
andrelated policies
u
Exercising judgement when
determining remuneration awards
Committee meetings in FY 2024
The Committee met five times during FY
2024 and has a programme of business
reflecting the Committee’s Terms of
Reference. Committee meeting attendance
is set out on page 88. The composition of
the Committee is detailed on pages 80
and 81.
Other attendees:
u
the Company Chair and the CEO are
not members of the Committee but
areinvited to attend;
u
the Group HR Director regularly attends
meetings;
u
representatives from the Committee’s
remuneration advisors, Korn Ferry,
regularly attend meetings;
u
the Director of Investor Relations,
Corporate Communications & ESG is
anoccasional attendee based on
engagement matters with shareholders;
u
the CFO is an occasional attendee to
represent financial matters such as
target setting; and
u
the General Counsel & Company
Secretary.
No attendee participates in the Committee
when it deals with their own remuneration.
Terms of Reference for the
Remuneration Committee can be
found on www.victrexplc.com
Dear shareholders,
On behalf of the Remuneration Committee
(the ‘Committee’), I am pleased to introduce
the Directors’ remuneration report for the
year ended 30 September 2024. This report
is divided into three sections: my statement,
a summary of the Directors’ remuneration
policy put to shareholders at the 2023
Annual General Meeting and our annual
report on remuneration for the year ended
30 September 2024.
Background
It has been a challenging year for the
Chemical sector. Profitability and margins
continued to be impacted by the high
inventory levels and recent industry
destocking amongst Medical device
customers. As a result, the Group saw
declines against most of its performance
metrics. Despite this, our ‘mega-
programmes’ continue to deliver key
technical and commercial milestones
thatposition Victrex well to benefit from
future growth. For example, in Aerospace
Composites, beyond the mid-term
opportunity from new plane models and
larger PEEK parts, we are seeing greater
opportunities within retrofit projects and
running changes. Within medical, our PEEK
composite Trauma plates saw good revenue
growth to over £1m during the year, and our
potentially game-changing PEEK Knee
programme completed a regulatory
submission in India during 2024 that
supports the commercial pathway. With
these solid fundamentals for future growth
in place, and the opportunity to see good
mid-term cash flow improvement with our
capital expenditure set to reduce as our UK
and China asset investments conclude,
Victrex is well positioned for better
prospects moving into 2025.
2024 remuneration outcomes
Annual bonus
The FY 2024 annual bonus was based on
PBIT pre-exceptional items (60%), strategic
(30%) and personal (10%) objectives. If the
threshold PBIT target was not met, then
nopayment would be made under any
element. The Committee retained the ability
to adjust the outcome if it did not reflect the
wider performance of the business.
As detailed in the Strategic report, FY 2024
was a demanding year and profitability
levels were impacted by industry destocking.
As a result, we did not achieve the threshold
level of profitability above which bonuses
are payable and so no bonuses are payable
for the year under review. This was
notwithstanding making strong strategic
progress against our non-financial
milestones within our ‘mega-programmes’.
Review of wider workforce
remuneration 35%
Governance & other matters 23%
Remuneration policy 7%
Remuneration of Executive
Directors and the Victrex
Management Team 35%
Allocation of time
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 111
The Committee’s agenda in FY 2024
Our principal activities during the year, and up to the date of approval of this Annual
Report, were as follows:
u
ensuring the successful implementation of the Directors’ remuneration policy;
u
reviewing the structure and cascade of incentives below the Board;
u
assessing FY 2024 bonus and FY 2022 LTIP outturns;
u
agreeing the Executive Directors’ and senior management’s FY 2025 remuneration
packages; and
u
preparing the Directors’ remuneration report.
2024 remuneration outcomes continued
LTIP
The FY 2022 long-term incentive awards
areeligible to vest based on performance
from 1 October 2021 to 30 September
2024. Performance was based on cumulative
EPS (70%), TSR performance vs FTSE 250
excluding investment trusts (20%) and
reduction in Scope 1 and 2 greenhouse
gasemission intensity (10%). Due to the
challenging market over the last few years,
neither the EPS nor the relative TSR element
are due to vest. A greenhouse gas emission
intensity reduction of 13.2% was achieved,
equating to a pay-out of 5.7% out
ofamaximum 10%. The target was set
based on the operations of the business at
the time of grant, and was tested on a
consistent basis in line with the original
intent of the condition, to measure like for
like greenhouse gas intensity reduction
After reviewing the relationship between
performance and reward for FY 2024, the
Committee did not consider it appropriate
to use any discretion in relation to adjusting
the formulaic incentive outcomes.
The Committee is comfortable that actions
taken on pay during the year across the
Company were appropriate and balanced
the interests of all stakeholders and that the
remuneration policy operated as intended.
Board changes
In FY 2024 Urmi Prasad Richardson was
appointed as a Non-executive Director
ofthe Board on 1 May 2024. Fees were
pro-rated for the period of appointment.
Implementation of policy in 2025
The Committee considered how
remuneration should be implemented for
FY2025. Part of this process was reviewing
current practice against both market and
best practice, pay ratios, reward principles
and alignment of remuneration across the
Group. As a result of the review, we have
made amendments to the performance
metrics included in our incentives. Further
details and other key decisions during the
year are set out below.
FY 2024
highlights
u
Oversaw the implementation of the remuneration policy
u
Engaged with the wider workforce on the alignment between executive pay and the wider workforce
u
Reviewed formulaic incentive outcomes and considered whether they were aligned to Company performance over
the short and long term
u
Oversaw the review of the operation of incentives and share plans across the Company
u
Reviewed and approved salaries for the Executive Directors and the senior leadership team
u
Considered and approved the Directors’ remuneration report
FY 2025
priorities
u
Reviewing the Directors’ remuneration policy
u
Overseeing the implementation of the policy
u
Set incentive plan performance targets for the upcoming year
Base salary: During the year the Committee
reviewed the salary increases for the wider
workforce, which ranged from 3.6% to
4.0%. With regard to the Executive Directors,
having considered both market positioning
and theincrease for the wider workforce,
theCommittee approved an increase of
3.6%with effect from 1 October 2024.
Pension: Executive Directors are eligible
fora pension contribution of 14% of salary
(in line with the UK employee population).
Annual bonus: In line with FY 2024, the
maximum annual bonus opportunity will
be150% of salary for the CEO and 125%
for the CFO.
During the year, the Remuneration
Committee undertook a review of the
performance metrics used in the annual
bonus. With the Company’s focus remaining
on delivering profitable growth through its
core business and the commercialisation of
its ‘mega-programmes’, at the same time as
targeting improved cash flows as our capex
reduces, the Committee has reworked the
annual bonus structure to better align with
the Board’s FY 2025 priorities. For FY 2025,
the bonus will have a higher weighting on
financial performance, including both profit
and cash as primary performance metrics.
While strategic targets will continue to be
included, these will be more targeted, well
structured, and at a lower weighting than in
prior years. The FY 2025 bonus will be based
80% on structured financial targets (from
60% in FY2024) and 20% on structured
strategic targets (from 30% in FY 2024).
Personal targets (10% in FY 2024) have been
removed from the bonus for FY 2025.
As a result of the significantly higher
weighting on financial targets, and the
simplified structured nature of the strategic
targets to apply in FY 2025, the binary
financial underpin that has previously applied
to bonus payments has been removed from
FY 2025. Instead, the payment of any bonus
will remain subject to the Committee being
satisfied that it is a fair reflection of the
overall performance of the Company after
having had regard to the stakeholder
experience during the year.
This broader assessment is considered more
appropriate given the reduced weighting on
non-financial performance included in the
overall bonus and the structured nature of
those targets that remain.
The change of approach is consistent with
the best practice recommendation in the UK
Corporate Governance Code, which expects
committees to use discretion to override
formula-based outcomes where there is
aperceived disconnect with the broader
stakeholder experience and reward outcomes.
With regard to the specific metrics to apply in
FY 2025, the majority of bonus will continue
to be determined based on challenging profit
targets (60%). Reflecting the increased focus
on cash in FY 2025, 20% of the bonus will
bebased on underlying operating cash
conversion, which is intended to align with
improved efficiencies in the way we operate,
for example, in how we manage working
Directors’ remuneration report continued
112 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
capital. Finally, the 20% that will be subject to
strategic objectives will be based on our core
strategic objectives as well as achievements
against our mega-programmes.
In line with the policy, half of any executive
bonus paid will be deferred into shares for
three years.
Long-term incentives: The Committee
intends to make awards at the normal policy
levels at 175% of salary for the Chief
Executive Officer and 150% of salary for the
Chief Financial Officer. The Committee will
undertake a final review of the targets and
quantum prior to grant, and will include a
provision in the awards that enables the
Committee to reduce vesting based on the
formulaic outcomes if it considers there to
have been a perceived windfall gain and/or a
perceived disconnect between performance
and reward.
At the same time as reviewing the operation
of the annual bonus during FY 2024, the
Committee also undertook a review of the
metrics used in the Long Term Incentive
Plan. The review concluded that, while the
existing performance measures (TSR, EPS,
and ESG) remain appropriate, a Return on
Invested Capital (ROIC) measure should be
added to the FY 2025 LTIP awards, to better
align with efforts to enhance operational
efficiency and promote shareholder value
creation. The measures have been
rebalanced to reflect the introduction of the
additional metric. As a result, the metrics
and their weightings for the FY 2025 awards
will be EPS growth (30% from 60% in FY
2024), ROIC (30% as a new measure),
relative TSR (25% from 30% in FY 2024 and
measured against the FTSE 250 excluding
investment trusts), and reduction in Scope 1
and 2 greenhouse gas emission intensity per
tonne of PEEK produced (15%).
The Committee will retain the discretion to
restate the carbon reduction targets in the
event of a change to the Group’s current
manufacturing strategy (e.g. to internalise
oroutsource part of the current production
processes). Any restatement would be
madeon the basis that it did not materially
increase or reduce the inherent stretch
inthe targets.
The Committee retains the ability to adjust
the formulaic LTIP outcomes in the event
that there is a perceived disconnect between
performance and reward.
Non-executive Board fees: An increase of
4.5% to the NED base fee was approved by
the Board. This increase is slightly higher
than the increase for the wider workforce,
inrecognition the current responsibilities,
time commitment, and market rates
required for these roles. The Remuneration
Committee anticipated an increase of 3.6%
for the Chair, but as with FY 2024, the Chair
waived the increase.
Other considerations during the year
Wider workforce context
During the year, the Committee had
oversight of a wide-reaching review of
remuneration throughout Victrex. The
Company has a clear reward philosophy that
is for all employees to be paid competitively
and in a way which enables all employees to
have the opportunity to share in the
Company’s success at the same time as
encouraging and recognising individual
contribution. To align with this philosophy,
all employees are eligible to participate in
the Company-wide annual bonus scheme,
with high achievers eligible to receive
additional awards for excellence and joiners
eligible to be offered an award of share
options. The current Long Term Incentive
Plan has, to date, cascaded below the PLC
Board to the most senior executives albeit
with lower quantum that is set proportionate
to the roles being undertaken.
While the review concluded that the overall
remuneration philosophy remained appropriate
for Victrex, a number of refinements were
made to how remuneration will be structured
from FY 2025. The drivers of the changes
included: (i) the need to compete for talent
on an international basis at the most senior
executive level (e.g. 29% of the VMT were
recruited outside of the UK); (ii) the ability to
recognise individual businesses performance
as distinct from the Group and (iii) the
different needs of our well-defined core
business and ‘mega-programmes’, with the
latter each having different business cycles,
investment needs and periods to maturity. In
light of these factors, we have adapted both
the type of long-term incentives operated
below the Board and the cascade of the
annual bonus plan which has historically been
weighted towards Group performance for all.
To address the differential nature of our core
business and our ‘mega-programmes’, we
have introduced a blend of restricted shares
and performance shares below the PLC
Board level (i.e. we have introduced a hybrid
structure). This enables a balance to be
achieved between aligning with the
progression in our strong core business as
well as our ‘mega-programmes’. Our
‘mega-programmes’ have investment needs
that typically run over multiple years and the
timing for revenue and profit recognition
from our investments will sometimes be
impacted by factors not directly within our
control (e.g. the timing of regulatory
approvals in medical). This means forward
financial forecasting for these investments
can be challenging and so there is a risk as
we see increasing commercialisation that we
may over or under reward depending on the
timing of these in the market. In this
context, operating a hybrid structure
supports our business strategy (a balance of
performance related long-term pay and
reduced leverage with more certainty
provided through restricted stock).
In addition, within the annual bonus for
allemployees, we have included both
Company-wide and operating business
financial performance for part of their
bonus(where appropriate) to ensure that
employees remuneration is linked to their
direct sphere of influence.
Both of the above changes align with our
overall reward principles of ensuring that
weare able to pay competitively, as well as
recognising individual contribution and
enabling all employees to share in the
success of the Company.
Wider workforce engagement
Brendan Connolly, who is the designated
Non-executive Director for Workforce
Engagement and is a member of the
Committee, enables employees to provide
feedback on remuneration during the
various engagement mechanisms he
undertakes, which includes attendance
atseveral forums. Brendan shares our
approach to executive remuneration and
how it aligns with wider workforce and
Company strategy and invites comments
and questions. The views he receives on
remuneration (including executive and wider
employee remuneration) are then fed back
to the Committee and the wider Board as
part of his membership of the Committee
and his wider workforce engagement role.
The executive remuneration policy and its
implementation were not raised as material
issues during the year.
Shareholder engagement
The Committee consults with the Company’s
larger shareholders on executive pay matters,
where considered appropriate. As the
operation of the policy is broadly in line with
previous years, it was not necessary to consult
with investors during the year. On behalf of
the Committee, I am always happy to make
myself available to shareholders to discuss
any concerns or feedback they may have.
The whole Directors’ remuneration report
(excluding policy) is subject to the advisory
vote. I hope it is clear from the way we are
proposing to apply policy in FY 2025 that
we continue to take account of the feedback
of our shareholders and we look forward
toreceiving your support for the Directors’
remuneration report at the upcoming
Annual General Meeting. I will be available
to answer any questions before the Annual
General Meeting. Please email your queries
to ir@victrex.com.
Janet Ashdown
Chair of the Remuneration Committee
3 December 2024
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 113
Directors’ remuneration report continued
Directors’ remuneration policy
This part of the Directors’ remuneration report sets out a summary of the remuneration policy approved by shareholders at our 2023 AGM
and effective from 9 February 2023. The full remuneration policy is available in the 2022 Annual Report on our website.
When implementing the remuneration policy, the Remuneration Committee considered the six factors listed under Provision 40 of the UK
Corporate Governance Code:
Clarity – the remuneration policy is transparent and the implementation of the policy is disclosed in straightforward, concise terms
toshareholders.
Simplicity – remuneration structures are simple and market typical, whilst at the same time incorporating the necessary structural features
to ensure a strong alignment to performance and strategy and minimising the risk of rewarding failure.
Risk – the remuneration policy has been shaped to discourage inappropriate risk taking as remuneration is focused on long-term success
through the LTIP and the Deferred Bonus Scheme (‘DBS’). Awards under the remuneration policy are subject to malus and clawback
provisions. The performance conditions are reviewed annually to ensure that they remain suitable and do not incentivise risk taking.
Toavoid conflicts of interest, Committee members are required to disclose any conflicts or potential conflicts ahead of Committee
meetings. No Executive Director or other member of management is present when their own remuneration is under discussion.
Predictability – examples of the caps under the remuneration policy are illustrated in the scenario charts.
Proportionality – the link between each element of policy and Company strategy is noted in the table below. Variable pay is subject to
acombination of financial and non-financial measures that are linked to Company strategy.
Alignment to culture – the Remuneration Committee reviews workforce composition and remuneration across the Group every year and
takes them into account when reviewing the implementation of the policy. Where possible, in support of our performance culture, we align
remuneration across the Group; for example, all permanent employees are eligible for an annual bonus and receive new joiner share options
after successful probation.
Directors’ remuneration policy table
The table below and the accompanying notes describe the remuneration policy for Executive Directors.
Element of
remuneration
Purpose and link
to strategy Operation Maximum Performance target
Base salary To provide
competitive and
fixed remuneration.
To attract and retain
executives of the
calibre required to
deliver the
Company’s strategy
and enhance
earnings over the
long term.
The basic salary for each Executive
Director is normally reviewed
annually (effective 1 October),
taking into account individual
performance and the Group’s
financial circumstances, as well as
pay for all employees in the Group
and the external market.
Increases in salary above those of
the general workforce should only
take place infrequently, for example
where there has been a material
increase in role responsibility, size of
the Company or movement in the
external market.
On recruitment or promotion to
Executive Director, the Committee
will take into account previous
remuneration and pay levels for
comparable companies which may
lead to salary being set at a higher
or lower level than for the
previousincumbent.
Executive Directors will
normally receive a salary
increase (expressed as a
percentage of salary) up
to the level of increase
awarded to the general
workforce. There is no
prescribed maximum.
Where the Committee
has set the salary of a
new Executive Director at
a discount to the market
level initially, a series of
planned increases may be
implemented over the
following few years to
bring the salary to the
appropriate market
position, subject to
individual performance.
Current salary levels are
shown in the annual
report on remuneration
on page 132.
None.
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Victrex plc | Annual Report 2024
Element of
remuneration
Purpose and link
to strategy Operation Maximum Performance target
Benefits To provide market-
consistent benefits,
including insured
benefits to support
the individual and
their family during
periods of ill health,
or in the event of
accidents or death.
This is consistent
with a culture of
safety, sustainability
and capability.
Car allowances to
facilitate effective
travel.
Benefit provision includes the
following benefits and allowances:
u
health benefits;
u
car allowance;
u
relocation assistance;
u
life assurance;
u
group income protection;
u
all-employee share schemes
(e.g.opportunity to join the SIP
or SAYE);
u
travel;
u
communication costs; and
u
any reasonable business related
expenses can be reimbursed (and
any tax thereon met if determined
to be a taxable benefit).
Executive Directors will be eligible
for any other benefits or allowances
which are introduced for the wider
workforce on broadly similar terms
and additional benefits or allowances
might be provided from time to time
if the Committee decides payment
of such benefits is appropriate and
in line with market practice.
There is no defined
maximum as the costs of
benefits can vary year on
year.
Not applicable.
Pension To attract and retain
high calibre
Executive Directors.
To provide a level of
benefits that allows
for personal
retirement planning.
Executive Directors are offered the
choice of:
u
a Company contribution into
adefined contribution
pensionscheme;
u
a cash allowance in lieu of
pension; or
u
a combination of a Company
contribution into a defined
contribution pension scheme
and a cash allowance.
The maximum Company
pension contribution for
an Executive Director will
be limited to that available
to the wider workforce
which is currently 14% of
base salary.
Not applicable.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 115
Directors’ remuneration report continued
Directors’ remuneration policy continued
Directors’ remuneration policy table continued
Element of
remuneration
Purpose and link
to strategy Operation Maximum Performance target
Bonus To incentivise
performance
against personal
objectives and
selected financial
and operational
KPIs which are
directly linked to
business strategy.
Deferral of part of
bonus into shares
aligns the interests
of Executive
Directors and
shareholders.
A maximum of 50% of bonus paid
in cash with 50% of the bonus
deferred into Company shares
under the Deferred Bonus Scheme
(‘DBS’) for a period of at least
threeyears. With regard to the
treatment of awards on cessation
of employment, details are on
page 120.
DBS shares accrue dividend
equivalents.
Not pensionable.
Bonus and DBS awards are subject
to ‘malus’ and/or ‘clawback’
provisions (for up to two years
following: (i) the payment of a cash
bonus; or (ii) in the case of a DBS
award, the end of the relevant
deferral period) in exceptional
circumstances, including material
misstatement of the Company’s
audited financial results; an error in
the relevant financial information
that led to the bonus or DBS award
being greater than it otherwise
would have been; personal
misconduct; serious reputational
damage; insolvency; or a failure of
risk management.
Maximum award of up to
150% of salary for the
CEO and 125% for other
Executive Directors.
At least 50% of the bonus will
be based on financial and
operational performance. The
remainder of the bonus will be
based on the achievement of
other non-financial objectives
such as personal objectives.
Targets and weightings are set
by reference to the Company’s
financial and operating plans
and the current targets and
weightings are shown on
page124.
Bonus outcomes are subject to
the Committee being satisfied
that the Company’s performance
on the measures is consistent
with underlying business
performance and individual
contribution. The Committee
will exercise discretion on bonus
outcomes if it deems necessary.
Where financial targets are set,
up to 20% of the relevant part
of the bonus becomes payable
at the threshold performance
level rising on a graduated scale
to the maximum performance
level where 100% of the relevant
part of the bonus becomes
payable. Where non-financial
targets are set (e.g. strategic
and/or personal targets) it may
not be practicable to set a
pre-set percentage of the
relevant part of the bonus that
becomes payable at the threshold
performance level (i.e. the testing
of non-financial targets may be
binary for the relevant part of
the bonus).
116 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Element of
remuneration
Purpose and link
to strategy Operation Maximum Performance target
Victrex Long
Term Incentive
Plan 2019
(‘LTIP’)
Designed to align
the strategic
objective of
delivering sustainable
earnings growth
over the longer term
with the interests
ofshareholders.
Awards under the LTIP are rights to
receive Company shares, subject to
certain performance conditions.
Each award is measured over at
least a three-year performance period.
An additional holding period
applies after the end of the
three-year vesting period so that
the total vesting and holding
period is at least five years.
Shares subject to awards may
accrue dividend equivalents.
LTIP awards are subject to ‘malus’
and/or ‘clawback’ provisions (for
up to a year following the end of
the relevant holding period) in
exceptional circumstances,
including material misstatement of
the Company’s audited financial
results; an error in the relevant
financial information that led to
the award being greater than it
otherwise would have been;
personal misconduct; serious
reputational damage; insolvency;
or a failure of risk management.
The normal maximum
award level will be up to
175% of salary p.a. in
respect of the CEO
and150% for other
Executive Directors.
The overall policy limit is
200% of salary. It is not
anticipated that awards
above the normal level
will be made to current
Executive Directors and
any such increase on an
ongoing basis will be
subject to prior consultation
with major shareholders.
Awards will be subject
toacombination of long-term
measures which are aligned to
the shareholder experience and
may include financial metrics
(such as EPS), shareholder value
metrics (such as TSR) and ESG
or strategic measures. At least
half of the award will be subject
to financial and/or shareholder
return measures. The Committee
will have discretion to set
different measures and weightings
for awards in future years to
best support the strategy of the
business at that time.
Normally, below threshold
performance, 0% will vest.
Where practicable, no more
than 25% of maximum will
vestat threshold performance,
increasing pro-rata to 100%
vesting for maximum performance
.
Any vesting is also subject to
the Committee being satisfied
that the Company’s performance
on the measures is consistent
with underlying business
performance and individual
contribution. The Committee
will exercise discretion on LTIP
outcomes if it deems necessary.
Share
ownership
guidelines
To increase
alignment between
Executive Directors
and shareholders
including for a
period post-
employment.
Awards made under the DBS on
anet of tax basis shall count
towards the share ownership
guideline and Executive Directors
are required to retain 50% of the
net of tax vested LTIP shares until
the guideline is met.
The requirement to hold shares
fora period post-employment
shallbe implemented by
contractual means.
Minimum of 200%
ofsalary.
Executive Directors will
also be required to retain
shares equivalent to the
lower of 200% of salary
or their actual shareholding
at the time employment
ceases. The shares must
be held for two years
with the Committee
having discretion to allow
half of the shares to be
released after one year.
Not applicable.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 117
Directors’ remuneration report continued
Directors’ remuneration policy continued
Directors’ remuneration policy table continued
Element of
remuneration
Purpose and link
to strategy Operation Maximum Performance target
Non-executive
Directors’ fees
and benefits
(Determined by
the Board)
To attract Non-
executive Directors
with a broad range
of experience and
skills to oversee the
development and
implementation of
our strategy.
Reflects anticipated
time commitments
and responsibilities
of each role.
Reflects fees paid
and benefits
provided by
comparator
companies.
The remuneration policy for the
Non-executive Directors (with the
exception of the Chair) is set by a
separate Committee of the Board.
The policy for the Chair is
determined by the Committee (of
which the Chair is not a member).
Fees are paid in cash and are
reviewed annually considering the
salary increase for the general
workforce and the Executive
Directors, and the level of fees paid
by companies of a similar size and
complexity. Any changes are
normally effective from 1 October.
Additional fees are paid in relation
to extra responsibilities undertaken,
such as chairing certain Board
subcommittees, and to the Senior
Independent Non-executive Director
and the Non-executive Director
withdesignated responsibility for
Workforce Engagement.
Non-executive Directors may be
eligible for such cash and non-cash
benefits as the Company deems
appropriate from time to time.
In exceptional circumstances, if
there is a temporary yet material
increase in the time commitments
for Non-executive Directors, the
Board may pay extra fees on
apro-rata basis to recognise
theadditional workload.
No eligibility for bonuses, Long Term
Incentive Plans (‘LTIPs’), pension
schemes, healthcare arrangements
or employee share schemes.
The Company pays any reasonable
expenses that a Non-executive
Director incurs in carrying out their
duties as a Director, including travel,
hospitality related and other modest
benefits and any tax liabilities thereon,
and the provision of advice relating
to any such tax liabilities, if appropriate.
There is no prescribed
maximum other than the
Company’s Articles of
Association containing
alimit on the fees that can
be paid to Non-executive
Directors.
The Board is guided by the
general increase in the
market for Non-executive
Director roles and for the
broader employee
population but on
occasion may need to
recognise, for example, an
increase in the scale, scope
or responsibility of the role.
Current fee levels are set
out on page 133.
Not applicable.
Non-executive Directors do not
participate in variable pay
arrangements and do not
receive retirement benefits.
Additional notes to the policytable
Annual bonus and long-term incentives
The Committee will operate the Company’s
incentive plans according to their respective
rules as approved by shareholders and
consistent with normal market practice,
theListing Rules and the HMRC rules where
relevant. These include making awards
andsetting performance criteria each year,
dealing with leavers and adjustments to
awards and performance criteria following
acquisitions, disposals and changes in share
capital and taking account of the impact of
other merger and acquisition activity.
With regards to performance measures
forvariable pay, these are set with reference
to Victrex’s strategy and align the senior
executives’ interests with those of
shareholders. The annual bonus plan
performance metrics include a mix of
financial targets and non-financial
objectives, reflecting the key annual
priorities of the Company. The financial
metrics determine at least half the bonus
and typically include a measure of
profitability (e.g. PBIT) alongside a
combination of key strategic targets
(e.g.progress with our mega-programmes).
118 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
For FY 2025 the performance measures
are60% PBIT (pre-exceptional items),
20%operating cash conversion and 20%
strategic targets. The Long Term Incentive
Plan performance metrics relate to creating
long-term sustainable returns and typically
include measures of long-term profitable
growth (e.g. EPS) and shareholder returns
(e.g. TSR), along with sustainability and/or
strategic targets (e.g. carbon reduction).
ForFY 2025, the performance measures are
30% EPS growth, 30% Return on Invested
Capital, 25% TSR and 15% ESG targets
(setas a measure of greenhouse gas
emission intensity).
The Committee retains discretion within
policy to set different performance criteria
and/or alter weightings for the annual bonus
plan and long-term incentives in line with the
Company’s strategic priorities, pay dividend
equivalents on vested shares under the
long-term incentives up to the date those
shares can first reasonably be exercised and,
in exceptional circumstances, under the rules
of the LTIPs adjust performance conditions
to ensure that the awards fulfil their original
purposes (for example, if a measure is no
longer available). Performance targets are
set based on a range of expected outcomes,
taking into account both internal and
external expectations of performance.
Targets are set to be challenging yet realistic.
All assessments of performance are ultimately
subject to the Committee’s judgement.
Anydiscretion exercised, and the rationale,
will be disclosed in the annual report
onremuneration.
Legacy scheme and awards
All historical awards that were granted
under any current or previous share schemes
operated by the Company and remain
outstanding remain eligible to vest based on
their original award terms.
Recovery provisions
As outlined in the policy table, the
Committee has the power to operate
‘malus’ and/or ‘clawback’ provisions in
exceptional circumstances, including
material misstatement of the Company’s
audited financial results; an error in the
relevant financial information that led to a
bonus, DBS or LTIP award being greater than
it otherwise would have been; personal
misconduct; serious reputational damage;
afailure of risk management; or insolvency.
Discretion
The Remuneration Committee can exercise
discretion in a number of areas when
operating the Company’s incentive schemes,
in line with the relevant rules of the schemes.
These include (but are not limited to):
u
the choice of participants;
u
the size of awards in any year (subject
tothe limits set out in the Directors’
remuneration policy table);
u
the extent of payments or vesting in
lightof the achievement of the relevant
performance conditions;
u
the determination of good or bad leavers
and the treatment of outstanding awards
(subject to the provisions of the scheme
rules and the remuneration policy
provisions); and
u
the treatment of outstanding awards
inthe event of a change of control.
In addition, if events occur which cause the
Remuneration Committee to conclude that
any performance condition is no longer
appropriate, that condition may be
substituted, varied or waived as is
considered reasonable in the circumstances
in order to produce a fairer measure of
performance that is not materially less
difficult to satisfy.
Notes on the scenario methodology:
u
The above charts give an illustrative value of the remuneration package for each of the Executive Directors in the upcoming year.
u
Minimum is the base salary and pension contribution for FY 2025 plus the value of benefits as disclosed in the FY 2024 single figure table.
u
On target is the aforementioned minimum plus an assumed 50% pay-out of the annual bonus opportunity and 50% vesting of LTIP awards to be made
inFY 2025.
u
Maximum is the aforementioned minimum with an assumed 100% pay-out of the annual bonus opportunity and full vesting of LTIP awards to be made
inFY 2025.
u
Maximum + share price assumption shows maximum plus 50% share price appreciation on the shares subject to vested LTIP awards to be made in FY 2025.
Illustrations of the application of remuneration policy
Total remuneration (£000)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Chief Executive Officer Chief Financial Officer
100%
31%
26%
43%
39%
33%
28%
16%
33%
28%
23%
100%
29%
24%
47%
38%
31%
31%
16%
32%
26%
26%
£851k
£1,965k
Below target Target Maximum
£3,080k
£506k
£1,079k
£1,651k
£3,680k
£1,964k
Max. + 50% share
price appreciation
Below target Target Maximum Max. + 50% share
price appreciation
Fixed pay
LTIP + 50% share price appreciation
LTIP
Annual bonus
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 119
Directors’ remuneration report continued
Directors’ remuneration policy continued
External directorships
The Company accepts that its Executive Directors may be invited to become non-executive directors of other companies outside the
Company and exposure to such non-executive duties can broaden experience and knowledge, which would be of benefit to the Company.
Any external appointments are subject to Board approval (which would not be given if the proposed appointment was with a competing
company, would lead to a material conflict of interest or could have a detrimental effect on a Director’s performance). Whether any related
fees are retained by the individual or are remitted to the Company will be considered on a case-by-case basis.
Service contracts and letters of appointment
Each of the Executive Directors’ service contracts are terminable by either the employing company or the Director on 12 months’ notice.
The Chair and other Non-executive Directors have letters of appointment rather than service contracts. Their appointments may be
terminated without compensation at any time, subject to a three-month notice period. All Non-executive Directors are subject to
re-election at each Annual General Meeting.
The table below summarises the notice periods for each Director as well as the date of appointment and current contract/letter of appointment.
Date of
appointment
Date of current
contract/letter
of appointment
Notice from
the Company
Notice from
the individual
Unexpired period
of service contract/
letter of appointment
Executive Directors
J O Sigurdsson 01/10/2017 19/04/2017 12 months 12 months Rolling contract
I C Melling 29/06/2022 04/04/2022 12 months 12 months Rolling contract
Non-executive Directors
V Cox 01/12/2021 17/09/2021 3 months 3 months Rolling contract
J E Ashdown 09/02/2018 18/12/2017 3 months 3 months Rolling contract
B W D Connolly 09/02/2018 18/12/2017 3 months 3 months Rolling contract
D Thomas 14/05/2018 11/05/ 2018 3 months 3 months Rolling contract
J E Toogood 01/09/2015 30/07/2015 3 months 3 months Rolling contract
R Rivaz 01/05/2020 24/03/2020 3 months 3 months Rolling contract
U Prasad Richardson
1
01/05/2024 14/03/2024 3 months 3 months Rolling contract
1 Appointed on 1 May 2024.
Copies of Executive Directors’ service contracts and Non-executive Directors’ letters of appointment are available for inspection on request;
please contact the General Counsel & Company Secretary on cosec@victrex.com.
Policy on payment for loss of office
The circumstances of termination, the relevant individual’s performance and an individual’s duty and opportunity to mitigate losses are
considered in every case. Our policy is to stop or reduce compensatory payments to former Executive Directors to the extent that they
receive remuneration from other employment during the compensation period. A robust line on reducing compensation is applied and
payments to departing employees may be phased to mitigate loss. Our policy is shown in the table below:
Provision Summary terms
Compensation
for loss of office
u
An Executive Director’s service contract may be terminated without notice and without any further payment or
compensation, except for sums earned up to the date of termination, on the occurrence of certain contractually
specified events such as gross misconduct.
u
No termination payment if full notice is worked.
u
Otherwise, a payment in respect of the period of notice not worked of basic salary, plus pension and benefits for that period.
u
The termination payment will be paid in monthly instalments over what would have been the period of notice not worked.
Thiswill be reduced by the value of any salary, pension contribution and benefits earned in new paid employment in that period.
Treatment of
annual bonus
ontermination
u
A time pro-rated bonus may be payable for the period of active service; however, there is no automatic entitlement
topayments under the bonus scheme. Any payment (e.g. for a good leaver) is at the discretion of the Committee and
issubject to recovery and withholding provisions as detailed in the policy table.
u
Performance targets would apply in all circumstances.
120 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Provision Summary terms
Treatment of
deferred bonus
ontermination
u
Determined based on the DBS rules. Full details are available on request.
u
Deferred bonuses are subject to recovery and withholding provisions as detailed in the policy table.
u
The default treatment for good leavers is that any unvested awards will vest with no time pro-rating applying. Awards
will normally vest at the normal vesting date unless the Committee decides they will vest on cessation of employment.
Awards to ‘bad leavers’ lapse on cessation of employment.
Treatment of
unvested
long-term
incentives on
termination
u
Determined based on the relevant plan rules. Full details are available on request.
u
Normally, any unvested awards will lapse on date of cessation of employment (if that occurs during the performance
period) unless, in certain prescribed circumstances such as death, disability, mutually agreed retirement or other
circumstances at the discretion of the Committee, ‘good leaver’ status is applied. In these circumstances, awards vest
ona time pro-rated basis subject to the satisfaction of relevant performance criteria, with the balance of awards lapsing.
The Committee retains the discretion not to time pro-rate if it is inappropriate to do so in particular circumstances.
TheCommittee will consider the individual’s performance and the reasons for their departure when determining whether
‘good leaver’ status can be applied. Awards will normally vest at the normal vesting date unless the Committee decides
that they will vest on the date of cessation of employment.
Approach to recruitment remuneration
The remuneration package for a new Executive Director will be set in accordance with the terms of the Company’s approved remuneration
policy in force at the time of appointment and the Committee shall seek to recruit within the parameters of approved policy and on the
principle that recruitment remuneration shall be no more than is necessary to secure the services of a preferred candidate.
Base salary
Base salary levels for new Executive Directors will be set in accordance with the policy, considering the experience of the individual recruited. Where
appropriate, the Committee has the flexibility to set the salary of a new appointee at a discount to the market level initially, with a series of planned
increases implemented over the following years to bring the salary to the appropriate market position, subject to individual performance in the role.
Maximum level of variable pay
The maximum level of variable pay which may be awarded to a new Executive Director will be 350% of salary (i.e. 150% annual bonus plus
200% LTIP award). These limits will be separate to the value of any buy-out arrangement which may be necessary to secure the services
ofa preferred candidate.
In the case of an internal appointment, any variable pay element awarded in respect of the prior role would be allowed to pay out
according to its terms, underlying as relevant to take into account the appointment. In addition, any other previously awarded entitlements
would continue, and be disclosed in the next annual report on remuneration.
Annual bonus performance conditions
Where a new Director is appointed part way through a financial year, the Committee may set different annual bonus measures and targets
for the new Executive Director from those used for other Executive Directors (for the initial part year only).
Buy-out awards
The Committee may offer additional cash and/or share-based elements (on a one-time basis or ongoing) when it considers these to be in
the best interests of the Company (and therefore shareholders). Any such payments would be limited to a reasonable estimate of value of
remuneration lost when leaving the former employer and would reflect the delivery mechanism (i.e. cash and/or share based), time horizons
and whether performance requirements are attached to that remuneration.
Relocation and incidental expenses
The Committee may agree that the Company will meet certain relocation and/or incidental expenses as may be necessary to recruit
apreferred candidate and as deemed appropriate by the Committee.
Appointment of Non-executive Directors
For the appointment of a new Chair or Non-executive Director, the fee arrangement would be set in accordance with the approved remuneration
policy in force at that time. Non-executive Directors’ fees are set by a separate Committee of the Board; the Chair’s fees are set by the Committee.
Outplacement services, reimbursement of legal costs and any other incidental expenses may be provided where appropriate. Any statutory
entitlements or compromise claims in connection with a termination of employment would be paid as necessary. Outstanding savings/
shares under all-employee share plans would be transferred in accordance with the terms of the plans as approved by HMRC.
Change of control
On a change of control, Executive Directors’ incentive awards will be treated in accordance with the rules of the relevant plans. In summary:
u
bonus payments will consider the extent to which the performance measures have been satisfied between the start of the performance
period and the date of the change of control, and the value will normally be pro-rated to reflect the same period;
u
deferred bonuses will generally vest on the date of a change of control, unless the Committee permits (or requires) awards to roll over
into equivalent shares in the acquirer; and
u
LTIP awards will generally vest on the date of a change of control, taking into account the extent to which any performance condition
has been satisfied at that point. Time pro-rating will normally apply unless the Committee determines otherwise.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 121
Directors’ remuneration report continued
Annual report on remuneration
Members of the Committee during the year
The role of the Committee is to determine and recommend to the Board a fair and responsible remuneration framework for the Company’s
Chair and Executive Directors. The members of the Committee (all of whom were independent Non-executive Directors) during the year
under review were as follows:
u
Janet Ashdown (Remuneration Committee Chair);
u
Ros Rivaz;
u
Jane Toogood;
u
Brendan Connolly; and
u
David Thomas.
Biographical information on the Committee members, details of attendance at the Committee’s meetings and activities during the year
areset out on pages 80, 81 and 88. The purpose, roles and responsibilities are thereby included in this section of the report by reference.
External advisor
Korn Ferry provided independent advice to the Committee during FY 2024 having been appointed by the Committee following a
competitive tender process in 2020.
Korn Ferry provided advice on market practice updates and benchmarking and supported management with undertakings such as
producing the Directors’ remuneration report to the extent this did not impact the independence of its advice. The fees paid to Korn Ferry
for providing advice to the Committee in relation to Directors’ remuneration were £45,000, which included fixed fees for planned
undertakings and ad hoc support on a time and expense basis. Korn Ferry provided other human capital related services during the year to
a separate part of the business, but these services were carried out by a team separate to the remuneration advisory team. As a result, the
Committee is satisfied that the advice received was objective and independent. Korn Ferry is a member of the Remuneration Consultants
Group and abides by the voluntary Code of Conduct of that body, which is designed to ensure objective and independent advice is given
toremuneration committees.
Annual General Meeting voting outcomes
The following table summarises the details of votes cast for and against the Directors’ remuneration policy at the 2023 AGM and the
Directors’ remuneration report at the 2024 AGM, along with the number of votes withheld. The Committee will continue to consider the
views of, and feedback from, shareholders when determining and reporting on remuneration arrangements.
Voting outcome Votes for Votes against Votes withheld
Directors’ remuneration report 2024 AGM 76,304,945 (98.97%) 793,146 (1.03%) 4,571
Directors’ remuneration policy 2023 AGM 70,116,683 (95.55%) 3,268,026 (4.45%) 439,303
122 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Implementation of the Directors’ remuneration policy for the year ended 30 September 2024
A summary of how the Directors’ remuneration policy was applied for the year ended 30 September 2024 is set out below.
Remuneration received by Directors for the year ended 30 September 2024 (audited)
Salary
and fees
1
£
Taxable
benefits
2
£
Pension
3
£
Total
fixed pay
£
Annual
bonus
4
£
Long-term
incentives
5
£
Total
variable pay
£
Total
£
J O Sigurdsson
2024 661,990 69,069 89,544 820,603 — 31,525 — 852,128
2023 639,600 69,060 89,544 798,204 — — — 798,204
I C Melling
2024 402,000 31,069 49,980 483,049 — — — 483,049
2023 357,000 31,062 49,980 438,042 — — — 438,042
V Cox
2024 280,000 — — 280,000 — — — 280,000
2023 280,000 — — 280,000 — — — 280,000
J E Ashdown
2024 67,470 — — 67,470 — — — 67,470
2023 64,560 — — 64,560 — — — 64,560
B W D Connolly
2024 65,470 — — 65,470 — — — 65,470
2023 62,560 — — 62,560 — — — 62,560
D Thomas
2024 67,470 — — 67,470 — — — 67,470
2023 64,560 — — 64,560 — — — 64,560
J E Toogood
2024 67,470 — — 67,470 — — — 67,470
2023 64,560 — — 64,560 — — — 64,560
R Rivaz
2024 66,470 — — 66,470 — — — 66,470
2023 63,060 — — 63,060 — — — 63,060
U Prasad Richardson
2024 23,321 — — 23,321 — — — 23,321
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 123
Directors’ remuneration report continued
Annual report on remuneration continued
Implementation of the Directors’ remuneration policy for the year ended 30 September 2024 continued
Notes and additional information (audited)
1. Salary and fees
In FY 2024, Urmi Prasad Richardson was appointed as a Non-executive Director of the Board on 1 May 2024. Fees were pro-rated for
theperiod ofappointment.
2. Taxable benefits
Both Executive Directors are eligible for a company car allowance up to £21,000, membership to a private medical scheme covering
themselves and their immediate families and an allowance of up to £22,000 in relation to tax services, communication and other benefits.
The Chief Executive Officer also continues to receive a location allowance that is limited to £25,000.
3. Pensions
Executive Directors participate in a defined contribution pension scheme in line with HMRC limits. Both the CEO and the CFO receive
£6,667 as a Company contribution. They receive the balance between this amount and and the maximum Company contribution of 14%,
which is aligned to the wider workforce, as a cash supplement (CEO £82,877, CFO £43,313). Allsupplements are subject to statutory
deductions as appropriate.
Both Directors accrued pension benefits during the year under defined contribution schemes (FY 2023: three). Neither of the Directors
isaccruing pension benefits under defined benefit schemes (FY 2023: none).
4. Annual bonus payments
The FY 2024 annual bonus was subject to a stretching Group underlying profit before interest and tax (‘PBIT’) target (60% weighting),
performance against shared strategic (30% weighting) and individual personal (10% weighting) performance objectives. No payment
ismade on any element of bonus (including strategic and personal) if the underlying PBIT threshold is not met.
The maximum annual bonus opportunity for the CEO is 150% of salary and 125% for the CFO.
The performance against measures to 30 September 2024 is set out in the tables below.
Threshold Target Stretch Outcome (% of maximum)
Measure Weighting
20% of
maximum
50% of
maximum
100% of
maximum
Actual result
1
J O Sigurdsson I C Melling
Financial
Underlying PBIT 60% £79.4m £87.7m £96.0m £60.3m — —
Strategic and personal objectives
Strategic objectives 30% See below — —
Personal objectives 10% See below — —
Total — —
1 See APM 10, note 25 for Underlying PBIT calculation.
124 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Executive Directors were set a number of stretching strategic and personal performance objectives for FY 2024, which account for 40%
oftotal annual bonus opportunity. The Committee assesses performance against those objectives using a combination of quantitative
andqualitative information. A summary of the strategic objectives for the Executive Directors collectively and of the personal objectives
along with key performance highlights is shown below.
Strategic objectives Weighting Overview Performance target and assessment by the Committee
Achievement
(% of max.)
Drive core business 12.5% Deliver core
revenue
performance in
line with market
recovery
Continued
Medical growth
Target: Core revenue of at least £209.6m.
Performance: Core revenue of £208.9m.
Target: Medical performance of at least £71.6m.
Performance: Revenue of £53.0m.
Outcome: Below threshold.
0%
12.5% Deliver
productivity
goals and cost of
manufacturing
Target: Productivity and process improvements of at least £8.7m.
Performance: Outstanding Continuous Improvement performance of £13.7m
and PEEK cost of manufacture (COM) above threshold performance.
Outcome: Between target and maximum performance.
63%
Differentiate through
innovation
25% Commercial
traction in
mega-
programmes
milestones to
deliver forecast
Target: Deliver forecasted revenue of at least £13.7m and progress against
milestone delivery.
Performance: Revenue of £10.2m and overall milestone delivery of 76%.
Outcome: Between threshold and target performance.
20%
Create and deliver
future value
25% Implement
Elementary PEEK
strategy
Target: Deliver fixed costs and overhead budget of £6.5m and sales target for
Elementary PEEK.
Performance: Fixed costs and overhead under budget. Polymer sales below
budget.
Outcome: Between threshold and target performance.
25%
Safety, sustainability
and capability
25% Prioritise safety
and deliver ESG
sustainability
milestones
Target: Recordable injury frequency rate (RIFR) below 0.3 and initial delivery
of circularity strategy.
Performance: RIFR rate of 0.18. Circularity strategy shared with CRC.
Outcome: Between target and maximum performance.
68%
Total 100%
36%
Personal objectives Weighting Performance target and assessment by the Committee
Achievement
(% of max.)
Jakob Sigurdsson
Drive core business 25% Target: (i) Improve customer experience and so reduce complaints by at least 20%; and
(ii)deliver sales growth in China.
Performance: 50% reduction in key complaint sources.
Outcome: Between threshold and maximum performance.
60%
25% Target: Drive and deliver against key milestones, such as delivering budgeted Trauma plate and
wire revenue.
Performance: Delivery on several milestones but others not achieved.
Outcome: Between threshold and target performance.
35%
Create and deliver
futurevalue
Ensure completion and
financial contribution from
foundation investments
25% Target: At least two of six foundation investments completed and fully operational.
Performance: Four of six completed or fully operational.
Outcome: Between target and maximum performance.
75%
Safety,sustainability
andcapability
Drive safety culture, DE&I,
organisational change and
succession planning
25% Target: RIFR of less than 0.3, progress against DE&I initiatives and complete organisation
redesign.
Performance: RIFR of 0.18 and diversity targets exceeded.
Outcome: Between target and maximum performance.
80%
Total 100%
63%
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 125
Directors’ remuneration report continued
Annual report on remuneration continued
Implementation of the Directors’ remuneration policy for the year ended 30 September 2024 continued
Notes and additional information (audited) continued
4. Annual bonus payments continued
Personal objectives Weighting Performance target and assessment by the Committee
Achievement
(% of max.)
Ian Melling
Drive core business
Delivering improved cash
flow performance and
restructuring
25% Target: Operating cash flow in line with budget and complete restructuring.
Performance: Cash conversion ahead of budget at 114%, Finance Team successfully
reconfigured, new P&L structures approved for implementation in FY 25 with cash flow
below budget.
Outcome: Between target and maximum performance.
75%
Differentiate
throughinnovation
Organisational development
25% Target: Progress D365 implementation and drive the plan to deliver benefits from digital
strategy.
Performance: Tracking to revised cost estimate in line with Q1 FY 2024 forecast. Go live H1
2025 targeted.
Outcome: Target performance.
50%
Create and deliver
futurevalue
Improve underutilised assets
25% Target: Income statement benefit of at least £0.5m.
Performance: £1.4m trading benefit.
Outcome: Target performance.
50%
Safety,sustainability
andcapability
Drive developments in ESG
25% Target: Develop resource efficiency roadmap, delivery against the roadmap and increase
sustainable revenues.
Performance: Progress in identifying sustainable revenue streams within VARS. Resource
efficiency roadmaps presented to CRC Q2 FY 2024.
Outcome: Target performance.
50%
Total 100%
56%
The above reflects a full summary of the targets set and achievements delivered within the bounds of commercial confidentiality.
Based on performance to 30 September 2024, with the underlying PBIT threshold not having been met, and so no bonus eligible to be paid
under the strategic or personal elements of the bonus, the outcome for Executive Directors during the year is shown below.
Measure
Annual bonus outcome
% of maximum % of salary
Bonus outcome
(£)
J O Sigurdsson 0% 0% —
I C Melling 0% 0% —
126 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
5. Vesting of LTIP awards
The LTIP awards granted on 10 December 2021 were based on performance to the year ended 30 September 2024. The performance
targets for these awards and actual performance against those targets were as follows:
Metric Weighting
Payment at
threshold
Threshold
target Maximum Actual % vesting
EPS (compound annual growth over three years) 70% 20% 7% p.a. 15.5% p.a. -14.75% 0%
TSR vs. FTSE 250 (excluding investment trusts) 20% 25% Median Upper quartile Below median 0%
Reduction in Scope 1 & Scope 2 emissions (per
tonne PEEK produced)
10% 20% -2.5% p.a. -7.2% p.a. -4.6%
1
5.7%
Total 100% Total vesting 5.7%
1 The greenhouse gas emission intensity reduction target was set based on the operations of the business at the time of grant and was tested on a
consistent basis in line with the original intent of the condition to measure like for like reduction.
The Committee is comfortable that the formulaic outcome of the FY 2022 award is appropriate, considering overall business performance
and wider market share price volatility.
The vesting details for the Executive Directors are therefore as follows:
Executive Grant date Vest date
Number
of shares
at gra nt *
Number
of shares
to vest
Number
of shares
to lapse
Dividend
equivalent
on shares
to vest
£
Estimated
val ue **
£
J O Sigurdsson 10 December 2021 10 December 2024 43,702 2,491 41,211 £5,696 £31,525
* The share price at grant was £24.63. As this is higher than the estimated share price at vesting, none of the value of LTIP vesting is attributable to share
price growth.
** The estimated value is calculated applying a share price based on an average over the three-month period ended September 2024 (£10.37).
Long-term incentives granted during the year (audited)
On 11 December 2023, the following LTIPs were granted to Executive Directors:
Executive Type of award Basis of award
Average share
price used
at grant
1
Number of shares
over which award
was granted
Face value
of award
% of face value
that would vest
at threshold
performance
Vesting
determined by
performance over
J O Sigurdsson Nil-cost option 175% of salary £14.44 80,198 £1,158,324 21.5% Three financial
years to
30 September
2026I C Melling Nil-cost option 150% of salary £14.44 41,749 £602,993 21.5%
1 The grant share price is the mid-market price quoted over a three-day average on 6, 7 and 8 December 2023 in accordance with the plan rules.
An additional holding period applies after the end of the three-year performance period so that the total vesting and holding period is at
least five years.
The LTIP was awarded as nil-cost options with an exercise price of £nil. There is no change in the approach to the exercise price or date.
The award is subject to the performance conditions set out below:
Performance measure Weighting
Payment at
threshold Threshold Maximum
Underlying EPS (compound annual growth over three years) 60% 20% 8% p.a. 15% p.a.
Relative TSR vs FTSE 250 (excluding investment trusts) 30% 25% Median Upper quartile
Reduction in market-based Scope 1 & 2 emissions
(per tonne PEEK produced) 10% 20% -5.3% p.a. -11.2% p.a.
Payments for loss of office and to past Directors (audited)
Martin Court stepped down from the Board on 30 September 2023. He remained with the Company until 31 December 2023 to ensure a
smooth transition. Full details of the payments made in connection with Martin Court stepping down from the Board were included in the
2023 Directors’ remuneration report. No further payments were made to past Directors.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 127
Directors’ remuneration report continued
Annual report on remuneration continued
Statement of Directors’ shareholdings and share interests (audited)
During employment, Executive Directors are required to build and maintain a shareholding equivalent to 200% of their base salary.
Executive Directors are required to retain 50% of the net of tax value of any vested LTIP shares until the guideline is met. The table below
summarises each Director’s current shareholding, and share awards subject to performance conditions, and whether or not the
shareholding requirement has been met.
Director
Beneficially
owned at
30 September
2023
1
Beneficially
owned at
30 September
2024
1
Nil-cost options
Total
Total for
shareholding
guidelines
Shareholding
as a % of
salary at
30 September
2024
2
With performance
condition Without performance condition
Unvested
(LTIP)
Vested but
unexercised
(LTIP)
Unvested (DBS/
SAYE)
Vested but
unexercised
(DBS/SAYE)
J O Sigurdsson 38,844 65,844 193,035 2,366 35,897 — 297,142 85,705 125%
I C Melling 2,000 5,000 74,824 — 3,248 — 83,072 6,076 15%
V Cox 1,304 4,207 — — — — — n/a n/a
B W D Connolly 850 850 — — — — — n/a n/a
J E Ashdown 1,039 3,142 — — — — — n/a n/a
D Thomas — — — — — — — n/a n/a
J E Toogood 500 1,008 — — — — — n/a n/a
R Rivaz — 1,950 — — — — — n/a n/a
U Prasad Richardson
3
n/a — — — — — — n/a n/a
1 The table above includes the holdings of persons connected with each of the Directors. The holdings stated represent shares beneficially held.
2 The shareholding as a percentage shown above is based on the average share price during September 2024 of £9.639.
3 U Prasad Richardson was appointed on 1 May 2024 and did not have a shareholding as at 30 September 2024.
There are no unvested scheme interests in the form of shares.
There have been no other changes in the Directors’ shareholdings and share interests up to the date of this report.
LTIP awards are nil-cost options. Vested but unexercised LTIPs are not subject to performance conditions as they are out of the performance
period. The unvested LTIPs are subject to EPS, TSR and ESG performance conditions. Outstanding deferred bonus share awards are nil-cost
options which are not subject to performance conditions. Outstanding share awards under all-employee share plans relate to the options
issued under the Save As You Earn Scheme; none of this type of option are subject to performance conditions. The details of outstanding
scheme interests are included in the table above.
The Directors did not exercise any options during the year.
128 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Details of outstanding scheme interest (audited)
The table below sets out details of outstanding share awards held by Executive Directors. The table shows changes in the options
heldbyeach Director, taking into account grants made, options which have lapsed and any options exercised. The closing position
at30September 2024 is shown in bold.
Plan Grant date
Exercise
price
No. of share
awards at
1 October
2023
Granted
during
the year
Vested
during
the year
Exercised
during
the year
Lapsed/
cancelled
during
the year
No. of share
awards at
30September
2024
End of
performance
period
Date
from which
exercisable Expiry date
J O Sigurdsson
LTIP
11/12 /2019 £nil 1,972 — — — — 1,972 30/09/2022 11/12 / 2024 11/12 / 2029
12/02/2020 £nil 394 — — — — 394 30/09/2022 12/02/2025 12/02/2030
14/12/2020 £nil 45,792 — — — 45,792 — 30/09/2023 14/12/2025 14/12/2030
10/12/2021 £nil 43,702 — — — — 43,702 30/09/2024 10/12/2026 10/12/2031
12/12/2022 £nil 69,135 — — — — 69,135 30/09/2025 12/12/2027 12/12/2032
11/12 /2023 £nil — 80,198 — — — 80,198 30/09/2026 11/12/2028 11/12/2033
Total — 160,995 80,198 — — 45,792 195,401
SAYE 01/04/2023 £13.94 2,152 — — — — 2 ,152 n/a 01/04/2028 30/09/2028
Total — 2,152 — — — — 2,152
Deferred
shares
10/12/2021 £nil 15,841
— — — — 15,841 n/a 10/12/2024 10/12/2029
12/12/2022 £nil 17,904 — — — — 17,904 n/a 12/12/2025 12/12/2030
Total — 33,745 — — — — 33,745
I C Melling
LTIP
12/12/2022 £nil 33,075 — — — — 33,075 30/09/2025 12/12/2027 12/12/2032
11/12 /2023 £nil — 41,749 — — — 41,749 30/09/2026 11/12/2028 11/12/2033
Total — 33,075 41,749 — — — 74,824
SAYE 01/04/2023 £13.94 1,291 — — — — 1,291 n/a 01/04/2026 30/09/2026
Total — 1,291 — — — — 1,291
Deferred
shares 12/12/2022 £nil 1,957 — — — — 1,957 n/a 12/12/2025 12/12/2030
Total — 1,957 — — — — 1,957
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 129
Directors’ remuneration report continued
Annual report on remuneration continued
Total shareholder return graph
The following graph shows the cumulative total shareholder return of the Company over the last 10 financial years relative to the FTSE 250
Index. The FTSE 250 Index has been selected for consistency as it is the Index against which the Company’s total shareholder return is
measured for the purposes of the LTIP. In addition, the Company is a constituent of the Index. TSR is a measure of the returns that a
company has provided for its shareholders, reflecting share price movements and assuming reinvestment of dividends. Data is averaged
over three months at the end of each financial year.
£0
£50
£100
£150
£200
£250
30
September
2024
30
September
2014
30
September
2015
30
September
2016
30
September
2017
30
September
2018
30
September
2019
30
September
2020
30
September
2021
30
September
2022
30
September
2023
Value of hypothetical £100 investment
Victrex
FTSE 250
£175
£91
Source: DataStream Return Index.
CEO total remuneration
The total remuneration figures for the Chief Executive Officer during each of the last 10 financial years are shown in the table below. The
total remuneration figure includes the annual bonus based on that year’s performance and LTIP awards based on three-year performance
periods ending in the relevant year. The annual bonus pay-out and LTIP vesting level as a percentage of the maximum opportunity are also
shown for each of these years.
Year ended
30September 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Name J O
Sigurdsson
J O
Sigurdsson
J O
Sigurdsson
J O
Sigurdsson
J O
Sigurdsson
J O
Sigurdsson
J O
Sigurdsson
D R
Hummel
D R
Hummel
D R
Hummel
Total
remuneration £852,128 £798,204 £1,437,246 £1,526,756 £888,780 £763,672
£1,071,351
£1,462,274 £668,211 £735,103
Annual bonus
(% of
maximum) 0% 0% 62.9% 93.3% 0% 0% 65% 77.6% 0% 22.5%
LTIP vesting
(% of
maximum) 5.7% 0% 6.7% 0% 19.8% n/a
1
n /a
1
22.1% 0% 0%
1 Jakob Sigurdsson was appointed as CEO on 1 October 2017. His first tranche of LTIPs was eligible to vest in 2020.
130 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Annual percentage change in Director and employee remuneration
The table below shows the percentage change in the Directors’ salary, benefits and annual bonus over the last five financial years,
compared to employee average.
Average percentage
change 2023–2024
Average percentage change
2022–2023
Average percentage change
2021–2022
Average percentage change
2020–2021
Average percentage change
2019–2020
1
Salary
Taxable
benefits
Annual
bonus Salary
Taxable
benefits
Annual
bonus Salary
Taxable
benefits
Annual
bonus Salary
Taxable
benefits
Annual
bonus Salary
Taxable
benefits
Annual
bonus
J O Sigurdsson 3.50% 0.01% 0.00% 4.00% 1.60% (100.0)% 10.30% (5.40)% (25.70)% 0.00% (24.50)% 100.00% 2.30% (8.10)% 0.00%
I C Melling 12.60% 0.02% 0.00% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
V Cox 0.00% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
J E Ashdown 4.50% n/a n/a 3.30% n/a n/a 4.20% n/a n/a 0.00% n/a n/a 3.40% n/a n/a
B W D Connolly 4.65% n/a n/a 3.40% n/a n/a 4.30% n/a n/a 0.00% n/a n/a 20.80% n/a n/a
D Thomas 4.50% n/a n/a 3.30% n/a n/a 4.20% n/a n/a 0.00% n/a n/a 3.40% n/a n/a
J E Toogood
4.50% n/a n/a 15.10% n/a n/a 12.20% n/a n/a 0.00% n/a n/a 4.20% n/a n/a
R Rivaz 5.41% n/a n/a 3.40% n/a n/a 4.30% n/a n/a 140.00% n/a n/a n/a n/a n/a
Employee
average (4.31)% (7.39)% 0.00% 3.66% (5.00)% (100.0)% (0.40)% (11.04)% (43.10)% (2.93)% (2.02)% 100.00% 1.78% 7.56% 0.00%
1 Explanations for large increases in prior years are provided in the previous Annual Reports.
2 As U Prasad Richardson was appointed during the year, no year-on-year comparison can be made and so she has been excluded from the tables.
As the Parent Company does not have any employees, the employee average is based on global employees. The year-on-year decreases for
employee average figures were due principally to exchange rate movements and to changes in the composition of the workforce globally.
Relative importance of spend on pay
The following table shows the Company’s actual spend on pay (for all employees) relative to dividends:
2024
£m
2023
£m % change
Staff costs 80.1 78.4 2%
Dividends
1
51.8 51.8 0%
1 FY 2024 includes a proposed final regular dividend of 46.14p.
The dividend figures relate to amounts payable in respect of the relevant financial years.
CEO pay ratio
Below we have calculated our UK CEO pay ratio comparing the CEO single total figure of remuneration to the equivalent pay for the lower,
median and upper quartile UK employees (calculated on a full-time equivalent basis). The ratios have been calculated in accordance with
theCompanies (Miscellaneous Reporting) Regulations 2018 which first formally applied to Victrex from the financial year beginning
1October 2019.
CEO pay ratio
Financial year Calculation methodology 25th percentile pay ratio 50th percentile (median) pay ratio 75th percentile pay ratio
2024 Option A 19:1 16:1 13:1
2023 Option A 17:1 15:1 12:1
2022 Option A 32:1 27:1 22:1
2021 Option A 33:1 28:1 23:1
2020 Option A 20:1 18:1 14:1
2019 Option A 18:1 16:1 13:1
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 131
Directors’ remuneration report continued
Annual report on remuneration continued
CEO pay ratio continued
Victrex reports against Option A as this option is considered to be the most statistically robust. The ratios are based on total pay and
benefits as well as short-term and long-term incentives applicable for the financial year 1 October 2023 to 30 September 2024. The
reference employees at the 25th, 50th and 75th percentile have been determined by reference to the last day of the financial year,
30September 2024, and all items of remuneration for employees have been calculated on the same basis as the single figure for the CEO.
The regulations require the total pay and benefits and the salary component of total pay and benefits to be set out as follows:
Base salary
Total pay
and benefits
CEO remuneration £661,990 £852,128
25th percentile employee £38,850 £44,289
50th percentile employee £46,848 £53,111
75th percentile employee £57,947 £65,480
Our principles for pay setting and progression in our wider workforce are the same as for our executives – total reward being sufficiently
competitive to attract and retain high calibre individuals without overpaying and providing the opportunity for individual development and
career progression. The pay ratios reflect how remuneration arrangements differ as accountability increases for more senior roles within
theorganisation. In particular, the ratios reflect the weighting towards long-term value creation and alignment with shareholder interests
for the CEO.
The pay ratio has increased for each of the percentile calculations since FY 2023. We believe a reduction in senior employee headcount
during the year has impacted calculations.
We are satisfied that the median pay ratio reported this year is consistent with our wider pay, reward and progression policies for
employees. The median reference employee has the opportunity for annual pay increases, annual performance payments, career
progression and development opportunities.
Implementation of policy in FY 2025
The section below sets out the implementation of the remuneration policy in FY 2025. During the year, the Remuneration Committee
reviewed incentives across the workforce. The performance measures have been adjusted following the outcome of the review. Further
details are set out in the Chair’s statement on pages 111 to 113.
Salaries and fees
Executive Directors
During the year the Committee reviewed the salary increases for the wider workforce, which ranged from 3.6% to 4%. With regard to the
Executive Directors, having considered both market positioning and the increase for the wider workforce, the Committee approved an
increase of 3.6% with effect from 1 October 2024.
2025 2024 % increase
J O Sigurdsson £685,830 £661,990 3.6%
I C Melling £416,480 £402,000 3.6%
Non-executive Directors
The Company’s approach to Non-executive Directors’ remuneration is set by the Board, with account taken of the time and responsibility
involved in each role, including, where applicable, the chairing of Board Committees.
An increase of 4.5% to the NED base fee was approved by the Board, to align better with their responsibilities and market rates.
TheRemuneration Committee anticipated an increase of 3.6% for the Chair, in line with the increases for the Executive Directors;
however,the Chair waived their increase again, as in FY 2024.
The additional fees payable to the Senior Independent Director and Committee Chairs were adjusted to better reflect current
responsibilities, time commitment, and market rates of the roles.
132 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
The table below shows the fees for the Board with effect from 1 October 2024.
Position 2025 2024 % increase
Chair
1
£280,000 £280,000 0%
Base fee £58,500 £55,970 4.5%
Senior Independent Director £10,900 £10,500 3.8%
Workforce Engagement Director £9,500 £9,500 0%
Audit Committee Chair £12,000 £11,500 4.3%
Remuneration Committee Chair £12,000 £11,500 4.3%
Corporate Responsibility Committee Chair £12,000 £11,500 4.3%
1 V Cox waived her proposed fee increase of 3.6% (£10,080) for FY 2025.
Annual bonus
For FY 2025, the maximum annual bonus will be 150% of salary for the Chief Executive Officer and 125% of basic salary for the Chief
Financial Officer. Half of any bonus earned will be deferred into shares for three years.
As set out in the Chair’s statement, the annual bonus will be subject to Group profit (weighted at 60%), underlying operating cash
conversion (20%) and Group strategic objectives (20%). Profit targets for FY 2025 will be based on PBIT (pre-exceptional items) with the
Committee retaining discretion to determine the impact of any exceptional items on the testing of the targets, to ensure performance
outcomes are a fair reflection of underlying business performance. Underlying operating cash conversion will be assessed post capital
expenditure, and strategic objectives will be based on on our core strategic objectives as well as achievements against our mega-programmes.
The Committee will ensure that the Group strategic objectives are measurable, robust and aligned with overall Group-wide objectives.
The Committee considers certain aspects of the performance targets for the annual bonus to be commercially sensitive and, as such, they
will be disclosed either at the end of the performance period or when they are no longer commercially sensitive.
The Committee will have the discretion to amend the formulaic outcome under the bonus to ensure it reflects wider business performance
during the year.
Long-term incentives
The Committee intends to make LTIP awards at 175% of salary for the CEO and 150% of salary for the CFO.
The extent to which the LTIP awards will vest will be determined by the performance measures listed below.
Targets
Performance measure Weighting Payment at threshold Threshold Maximum
EPS (compound annual growth over three years) 30% 20% 15.0% p.a. 27.0% p.a.
Relative TSR vs FTSE 250 (excluding investment trusts) 25% 25% Median Upper quartile
FY 2027 ROIC 30% 20% 15.0% 18.4%
Reduction in market-based Scope 1 & 2 emissions (per tonne PEEK
produced) 15% 20% -5.3% p.a. -11.2% p.a.
The Committee retains discretion to adjust vesting outcomes (e.g. if TSR vesting is not considered aligned with the underlying financial
performance of the Company or EPS vesting outcomes are impacted by relevant events such as material acquisitions or divestments or
material changes in corporation tax rates). Any such discretion would be used to ensure that the performance targets fulfil their original
intent and were not more or less challenging than intended when set but for the relevant events in the performance period. Furthermore,
as set out in the Directors’ remuneration policy, awards are granted subject to malus and clawback provisions.
The Committee will undertake a final review of the targets and quantum prior to grant and will include a provision in the awards that
enables the Committee to reduce vesting based on the formulaic outcomes if it considers there to have been a perceived windfall gain
and/or a perceived disconnect between performance and reward.
This Directors’ remuneration report was approved by the Board on 3 December 2024 and is signed on its behalf by:
Janet Ashdown
Chair of the Remuneration Committee
3 December 2024
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 133
Directors’ report – other statutory information
The Directors’ report required under the Companies Act 2006 comprises this Directors’ report (pages 134 to 137), the Corporate
governance report (pages 76 to 144) and the Sustainability report set out in the Strategic report (pages 46 to 75). The management report
required under Disclosure Guidance and Transparency Rule 4.1.8R comprises the Strategic report (pages 1 to 75) and this Directors’ report.
This Directors’ report meets the requirements of the corporate governance statement required under Disclosure Guidance and Transparency
Rule 7.2. As permitted by legislation, some of the matters required to be included in the Directors’ report have been included in the
Strategic report by cross-reference.
Annual General
Meeting
The Annual General Meeting of the Company (‘AGM’) will be held on Friday 7 February 2025 at 11 am at the offices
of J.P. Morgan Cazenove, 1 John Carpenter Street, London EC4Y 0JP. The Notice of AGM, which sets out the
resolutions to be proposed and their explanatory notes, is contained in a separate circular and is enclosed with this
Annual Report.
Results and dividends Group profit before tax for the year was £23.4m (FY 2023: £72.5m).
The Directors recommend the payment of a final dividend of 46.14p per ordinary share that, subject to shareholder
approval at the AGM on 7 February 2025, will be paid on 21 February 2025 to all shareholders on the register of
members as at 6 pm on 24 January 2025. Together with the interim dividend paid in July 2024, this makes a total
regular dividend of 59.56p per ordinary share for the year (FY 2023: 59.56p per ordinary share).
The Company has established Employee Benefit Trusts (‘EBTs’) in connection with the obligation to satisfy future
share awards under certain employee share incentive schemes. The trustees of the EBTs have waived their rights to
receive dividends on those ordinary shares of the Company held in the EBTs. Such waivers represent less than 1% of
the total dividend payable on the Company’s ordinary shares. There are no other arrangements in place under which
a shareholder has waived or agreed to waive any dividends.
Important events since
30 September 2024
There have been no important events affecting the Company or any member of the Group since 30 September 2024.
Financial instruments Information on the Group’s financial risk management objectives and policies and its exposure to credit risk, liquidity
risk, interest rate risk and foreign currency risk can be found in note 16 to the financial statements. Such information
is incorporated into this Directors’ report by reference and is deemed to form part of this Directors’ report.
Directors The Directors of the Company and their biographical details are set out on pages 80 and 81.
Directors’ interests in
the Company’s shares
A full list of all Directors and their biographies serving at the date of this Annual Report are shown on pages 80
and81. We are delighted to announce the appointment of Urmi Prasad Richardson as an additional Non-executive
Director effective 1 May 2024. The interests of the Directors of the Company and their connected persons at
30September 2024 in the issued share capital of the Company (or other financial instruments) which have been
notified to the Company in accordance with the Market Abuse Regulation are set out in the Directors’ remuneration
report on page 128.
Major interests
inshares
The following information has been disclosed to the Company on request pursuant to the Financial Conduct
Authority’s Disclosure Guidance and Transparency Rules and is published on a Regulatory Information Service and on
the Company’s website. The following has been received, in accordance with DTR 5, from holders of notifiable
interests in the Company’s issued share capital as at 21 November 2024:
Holding %
Ameriprise/Threadneedle 8,711,866 10.01
FIL Limited 8,633,272 9.92
BlackRock Inc 7,571,396 8.70
M&G plc 6,928,088 7.96
Norges Bank Investment Management 4,961,349 5.70
The Vanguard Group Inc 4,615,468 5.30
Brown Capital Management Inc (US) 4,233,280 4.86
Franklin Resources Inc 3,098,500 3.56
Janus Henderson Investors 3,068,539 3.53
Schroders Plc 2,989,054 3.43
Evenlode Investment Management Ltd (UK) 2,956,283 3.40
Citigroup Global Markets Limited (UK) 2,859,335 3.29
The positions stated above represent the holdings in shares either in their own right or on behalf of third parties
andmay not represent the total voting rights (or authority to vote) as at 21 November 2024. The information
provided above was correct at the date of notification. However, these holdings may have changed since the
Company was notified.
134 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Appointment
andreplacement
ofDirectors
The Company’s Articles of Association (the ‘Articles’) provide that the Company may by ordinary resolution at a
general meeting appoint any person to act as a Director, provided that notice is given of the resolution identifying
theproposed person by name and, if he or she has not been recommended by the Board, that the Company receives
written confirmation (within the time frame specified in the Articles) of that person’s willingness to act as Director.
The Articles also empower the Board to appoint as a Director any person who is willing to act as such.
The maximum possible number of Directors under the Articles is 12, unless the Company decides otherwise by
ordinary resolution. The Articles provide that the Company may by special resolution, or by ordinary resolution of
which special notice is given, remove any Director before the expiration of his or her period of office. The Articles
alsoset out specific circumstances in which a Director shall vacate office.
The Articles require that at each Annual General Meeting any Director who was appointed after the previous Annual
General Meeting must be proposed for election by the shareholders. Additionally, any other Director who has not
been elected or re-elected at one of the previous two Annual General Meetings must be proposed for re-election by
the shareholders. The Articles also allow the Board to select any other Director to be proposed for re-election. In each
case, the rules apply to Directors who were acting as Directors on a specific date selected by the Board. This is a date
not more than 14 days before and no later than the date of the Notice of AGM. Notwithstanding the provisions of
the Articles, it is the Company’s current practice that all Directors stand for election or re-election on an annual basis
in compliance with the provisions of the UK Corporate Governance Code.
The Articles are available on the Company’s website (www.victrexplc.com).
Directors’ indemnities
and insurance
The Company has in place qualifying third-party indemnities in favour of all of its Directors under Deeds of Indemnity
(‘Deeds’). The Deeds were in force during the year ended 30September 2024 and remain in force as at the date of
approval of the financial statements. The Deeds are available for inspection during normal business hours on Monday
to Friday (excluding public holidays) at the Company’s registered office. An appointment can be made with the
General Counsel & Company Secretary to review the Deeds. Please contact cosec@victrex.com. The Company has
appropriate directors’ and officers’ liability insurance cover in place in respect of legal action brought against the
Directors. Neither the Deeds nor the insurance provides cover in the event of dishonesty or fraud. No amount has
been paid under the Deeds or insurance during the year.
Conflict of interest
duties
Procedures are in place to ensure compliance with the Directors’ conflict of interest duties set out in the Companies
Act 2006. The Company has complied with these procedures during the year and the Board believes that these
procedures operate effectively. During the year, details of any new conflicts or potential conflict matters were
submitted to the Board for consideration and, where appropriate, these were approved. Authorised conflict or
potential conflict matters will continue to be reviewed by the Board at least on an annual basis.
Principal activity The Company is a public limited company, incorporated in England, registration number 2793780. The principal
activity of the Company is that of a holding company. The principal activity of the Group is the manufacture and sale
of high performance polymers.
Branches The Company does not have any branches outside the UK. Victrex Manufacturing Limited is a subsidiary of the
Company and has a branch in Korea. Victrex Europa GmbH is a subsidiary of the Company and has a branch in France.
Information set out in
the Strategic report
Certain information required to be included in the Directors’ report has been set out in the Strategic report. The
Strategic report required by the Companies Act 2006 can be found on pages 1 to 75. The report sets out the
business model (pages 14 and 15), strategy (pages 16 and 17) and likely future developments (pages 1 to 75). It
contains a review of the business and describes the development and performance of the Group’s business during
the financial year and the position at the end of the financial year. It also contains a description of the principal risks
and uncertainties facing the Group (pages 36 to 42). Such information is incorporated into this report by reference
and is deemed to form part of this Directors’ report.
Employee and
otherstakeholder
engagement
Details of the Company’s arrangements for engaging with employees and actions taken during the year can be found on
pages 61 to 64 of the Strategic report and page 93 of the Corporate governance report. Details of the arrangements in
place under which employees can raise any matter of concern are set out on page 74. Disclosures relating to the
Group’s human rights and anti-bribery policies are contained on page 74. The Group’s Non-financial and sustainability
information statement is set out on page 75. Details of employee involvement in Company performance through
share scheme participation can be found on page 63. Details of how the Directors have engaged with employees and
how the Directors have had regard to employee interests and the effect of that regard on the principal decisions
taken by the Company during the financial year can be found in the Section172(1)statement on pages 22 to 25.
These are deemed to form part of this Directors’ report.
A summary of how the Company has engaged with suppliers, customers and other third parties can be found on
pages 20 to 25 and 93. Details of how the Directors have had regard to the need to foster the Company’s business
relationships with suppliers, customers and others, and the effect of that regard on the principal decisions taken by
the Company during the financial year, are contained in the Section 172(1) statement on pages 22 to 25. Further
information on our payment practices with suppliers can be found on the Government’s reporting portal. In addition,
during the year, we have continued to be a signatory to the Prompt Payment Code for suppliers. Further details can
be found on page 93. These are deemed to form part of this Directors’ report.
Political donations No contributions were made to political parties during the year ended 30 September 2024 (FY 2023: £nil).
Employment policies The Group’s policies as regards the employment of disabled persons including those who have become disabled
during their employment with the Group, and a description of actions the Group has taken to encourage greater
employee involvement in the business, are set out on pages 61 to 64. Such information is incorporated into this
Directors’ report by reference and is deemed to form part of this Directors’ report. Read more about the Group’s
diversity on pages 61 and 62.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 135
Directors’ report – other statutory information continued
Environmental matters Information on our greenhouse gas emissions, energy consumption and energy efficiency actions required to be
disclosed by the Companies Act 2006 (Strategic report and Directors’ report) Regulations 2013, Schedule 7 of the
Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008/410 and our TCFD
reporting are set out in the Sustainability report on pages 54 to 60. Such information is incorporated into this report
by reference and is deemed to form part of this Directors’ report.
Research &
Development
Our innovative culture is reflected in high Research & Development investment (of approximately 5-6% of revenue),
with the majority of this being on development, as we seek to move our programmes faster towards greater
commercialisation. The Group’s spend on Research & Development is disclosed in note 10 to the financial statements.
Such information is incorporated into this report by reference and is deemed to form part of this Directors’ report.
Share capital The Company has a single class of shares in the form of ordinary shares with a nominal value of 1p per share which
are listed on the London Stock Exchange and trade as part of the FTSE 250 Index under the symbol VCT. Details of
the Company’s share capital and reserves for own shares are given in note 22 to the financial statements. During the
year 16,526 shares were issued in respect of options exercised under employee share schemes. Details of these
schemes are summarised in note 21 to the financial statements. The information in notes 21 and 22 to the financial
statements is incorporated into this Directors’ report by reference and is deemed to form part of this Directors’
report.
Rights and obligations
attaching to shares
The rights and obligations attaching to shares are set out in full in the Company’s Articles of Association which are
available on the Company’s website (www.victrexplc.com). The holders of ordinary shares are entitled to receive
dividends when declared, to receive the Company’s Annual Report, to attend and speak at general meetings of
theCompany, to appoint proxies and to exercise voting rights.
There are no restrictions on transfer or limitations on the holding of ordinary shares and no requirements to obtain
prior approval to any transfer except where the Company has exercised its right to suspend their voting rights,
withhold a dividend or prohibit their transfer following failure by the member or any other person appearing to be
interested in the shares to provide the Company with information requested under Section 793 of the Companies
Act 2006. The Directors may, in certain limited circumstances, also refuse to register the transfer of a share in
certified form. This includes where the instrument of transfer does not comply with the specific requirements of the
Articles of Association, where the shares are not fully paid up or where the transfer is in favour of more than four
joint transferees. The Directors may also refuse to register the transfer of an uncertificated share if it is in favour of
more than four persons jointly or if any other circumstances apply in respect of which refusal to register a share
transfer is permitted or required by the Uncertificated Securities Regulations 2001. No shares carry any special rights
with regard to control of the Company and there are no restrictions on voting rights except that a shareholder has no
right to vote in respect of a share unless all sums due in respect of that share are fully paid and except also where the
Company suspends voting rights as referred to above in the event of non-disclosure of an interest as permitted by
the Articles of Association. There are no known agreements between holders of securities that may result in
restrictions on the transfer of securities or on voting rights and no known arrangements under which financial rights
are held by a person other than the holder of the shares.
Shares acquired by employees under employee share schemes rank equally with the other shares in issue and have
nospecial rights.
Own shares held As at the date of this Annual Report, the Company does not hold any shares as treasury shares. Details of the
Company’s share capital are given in note 22 to the financial statements.
The Directors’ authorities relating to market purchases are determined by UK legislation and the Articles of
Association. As part of routine resolutions which are proposed to shareholders at the AGM, the Directors will be
seeking to renew the authority allowing the Company to purchase its own shares, which is set out in resolution 21 of
the Notice of AGM. No market purchases of the Company’s own shares were made during the year ended 30
September 2024 or from 1 October 2024 up to the date on which this Annual Report was approved.
A total of 75,874 ordinary shares are held by the Employee Benefit Trusts in order to satisfy share awards vesting. No
shares were purchased by the Employee Benefit Trusts in the financial year to 30 September 2024. The Directors and
certain participating employees are beneficiaries of the Employee Benefit Trusts.
Related party
transactions
During the year ended 30 September 2024, the Company did not have any material transactions or transactions of
anunusual nature with, and did not make loans to, related parties in which any Director has or had a material interest.
Details of related party transactions are given in note 23 to the financial statements.
Nominees, financial
assistance and liens
During the year ended 30 September 2024, no shares in the Company were acquired by the Company’s nominee or
by a person with financial assistance from the Company, in either case where the Company has a beneficial interest
in the shares (and no person acquired shares in the Company in any previous financial year in its capacity as the
Company’s nominee or with financial assistance from the Company). Furthermore, the Company did not obtain
orhold a lien or other charge over its own shares.
136 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Change of control There are no significant agreements that take effect, alter or terminate on change of control of the Company
following a takeover. None of the Directors’ or employees’ service contracts contain provisions providing for
compensation for loss of office or employment that occurs because of a takeover bid. The rules of the Company’s
employee share plans set out the consequences of a change in control of the Company on participants’ rights under
the plans.
Generally, such rights will vest and become exercisable on a change of control subject to a separate determination
asto the satisfaction of performance conditions.
Amendment of Articles
of Association
The Company’s Articles of Association may only be amended by special resolution of the Company at a general
meeting of its shareholders.
Powers of the Directors The powers of the Directors are determined by the Company’s Articles of Association and UK legislation including
the Companies Act 2006. This includes the ability, subject to shareholder approval at the AGM each year, to exercise
authority to allot or purchase the Company’s shares.
Notice required for
shareholder meetings
On the basis of a resolution passed at the 2024 Annual General Meeting, the Company is currently able to call
general meetings (other than an Annual General Meeting) on at least 14 days’ notice. The Company would like to
preserve this ability and resolution 22 seeks approval to do so. The approval will be effective until the Company’s
next Annual General Meeting, when it is intended that a similar resolution will be proposed. The Company will offer
an electronic voting facility for a general meeting called on 14 days’ notice.
Information required by
UKLR 6.6.1R
Listing Rule statement Detail Page number
(11) Shareholder waiver of dividends 134
(4) (5) Waiver of emoluments by a director 132
Disclosure of
information to auditors
The Directors in office at the date of approval of this report each confirm that, so far as they are aware, there is no
relevant audit information of which the Company’s auditors are unaware and that they have taken all the steps that
they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish
that the Company’s auditors are aware of that information.
Auditors An ordinary resolution will be put before the 2025 Annual General Meeting to re-appoint
PricewaterhouseCoopersLLP as external auditors for the 2025 financial year.
The Directors’ report was approved by the Board and signed on its behalf by:
Ian Melling
Chief Financial Officer
3 December 2024
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 137
Statement of Directors’ responsibilities in respect
of the Annual Report and the financial statements
The Directors are responsible for preparing
the Annual Report 2024 and the financial
statements in accordance with applicable
law and regulation.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have prepared
the Group and the Company financial
statements in accordance with UK-adopted
International Accounting Standards.
Under company law, Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group
andCompany and of the profit or loss of
theGroup for that period. In preparing the
financial statements, the Directors are
required to:
u
select suitable accounting policies and
then apply them consistently;
u
state whether applicable UK-adopted
International Accounting Standards have
been followed, subject to any material
departures disclosed and explained in the
financial statements;
u
make judgements and accounting
estimates that are reasonable and
prudent; and
u
prepare the financial statements on
thegoing concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business.
The Directors are responsible for
safeguarding the assets of the Group and
Company and hence for taking reasonable
steps for the prevention and detection
offraud and other irregularities.
The Directors are also responsible for
keeping adequate accounting records that
are sufficient to show and explain the
Group’s and Company’s transactions and
disclose with reasonable accuracy at any
time the financial position of the Group and
Company and enable them to ensure that
the financial statements and the Directors’
remuneration report comply with the
Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual
Report and Financial Statements, taken as a
whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Group’s and
Company’s position and performance,
business model and strategy.
Each of the Directors, whose names and
functions are listed below:
u
Vivienne Cox, Chair;
u
Jakob Sigurdsson, Chief Executive
Officer;
u
Ian Melling, Chief Financial Officer;
u
Janet Ashdown, Non-executive Director;
u
Brendan Connolly, Non-executive
Director;
u
Ros Rivaz, Non-executive Director;
u
David Thomas, Non-executive Director;
u
Jane Toogood, Non-executive Director;
and
u
Urmi Prasad Richardson, Non-executive
Director,
confirm that, to the best of their knowledge:
u
the Group and Company financial
statements, which have been prepared
inaccordance with UK-adopted
International Accounting Standards,
givea true and fair view of the assets,
liabilities and financial position of the
Group and Company, and of the profit
ofthe Group; and
u
the Strategic report includes a fair review
of the development and performance
ofthe business and the position of the
Group and Company, together with
adescription of the principal risks and
uncertainties that it faces.
In the case of each Director in office at
thedate the Directors’ report is approved:
u
so far as the Director is aware, there is
norelevant audit information of which
the Group’s and Company’s auditors are
unaware; and
u
they have taken all the steps that they
ought to have taken as a Director in
order to make themselves aware of
anyrelevant audit information and
toestablish that the Group’s and
Company’s auditors are aware of
thatinformation.
This Responsibility statement was approved
by the Board on 2 December 2024 and
issigned on its behalf by:
Ian Melling
Chief Financial Officer
3 December 2024
138 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Report on the audit of the financial
statements
Opinion
In our opinion, Victrex plc’s group financial
statements and company financial
statements (the “financial statements”):
u
give a true and fair view of the state
ofthe group’s and of the company’s
affairs as at 30 September 2024 and
ofthe group’s profit and the group’s
andcompany’s cash flows for the year
then ended;
u
have been properly prepared
inaccordance with UK-adopted
international accounting standards as
applied in accordance with the provisions
of the Companies Act 2006; and
u
have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements,
included within the Annual Report,
whichcomprise: the Group and Company
Balance sheets as at 30 September 2024;
the Consolidated income statement, the
Consolidated statement of comprehensive
income, the Group and Company Cash flow
statements, the Consolidated statement
ofchanges in equity and the Company
statement of changes in equity for the
yearthen ended; and the notes to the
financial statements, comprising material
accounting policy information and other
explanatory information.
Our opinion is consistent with our reporting
to the Audit Committee.
Basis for opinion
We conducted our audit in accordance
withInternational Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities for
the audit of the financial statements section
of our report. We believe that the audit
evidence we have obtained is sufficient
andappropriate to provide a basis for
ouropinion.
Independence
We remained independent of the group in
accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, which includes the
FRC’s Ethical Standard, as applicable to listed
public interest entities, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we
declare that non-audit services prohibited by
the FRC’s Ethical Standard were not provided.
We have provided no non-audit services to
the company or its controlled undertakings
in the period under audit.
Our audit approach
Overview
Audit scope
u
Our audit focused on those entities with
the most significant contribution to the
group’s profit before tax and exceptional
items. Of the Group’s 21 reporting units,
we identified four, which in our view,
required an audit of their complete
financial information for group reporting
purposes. These were Victrex Plc, Victrex
Manufacturing Limited, Invibio Limited
and Victrex Europa GmbH.
u
Another three reporting units were
subject to audit procedures over specific
balances and transactions, due to their
contribution towards specific financial
statement line items. Revenue was in
scope for Invibio Inc. Revenue and
tradereceivables were in scope for
Victrex USA Inc. Property, plant and
equipment, and borrowings were in
scope for Victrex (Panjin) High
Performance Materials Co. Ltd.
u
All audits in scope for group reporting
were performed by the Group engagement
team with the exception of Victrex
Europa GmbH, which was audited by
aPwC component audit team.
u
The components within the scope of
ourwork, and work performed centrally
by the Group team, accounted for 77%
of Group revenue and 77% of Group
profit before tax and exceptional items.
Key audit matters
u
Valuation of the UK defined benefit
obligations (group).
u
Risk of impairment of investments
insubsidiaries and amounts owed
bygroupundertakings (parent).
Materiality
u
Overall group materiality: £3.9m (2023:
£4.0m) based on 5% of the three-year
average of profit before tax and
exceptional items.
u
Overall company materiality: £1.3m
(2023: £1.4m) based on 0.5% of total
assets capped due to the Group
materiality allocation.
u
Performance materiality: £2.9m
(2023:£3.0m) (group) and £1.0m
(2023:£1.1m) (company).
The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that,
inthe auditors’ professional judgement,
were of most significance in the audit of the
financial statements of the current period
and include the most significant assessed
risks of material misstatement (whether or
not due to fraud) identified by the auditors,
including those which had the greatest
effect on: the overall audit strategy; the
allocation of resources in the audit; and
directing the efforts of the engagement
team. These matters, and any comments
wemake on the results of our procedures
thereon, were addressed in the context of
our audit of the financial statements as a
whole, and in forming our opinion thereon,
and we do not provide a separate opinion
on these matters.
This is not a complete list of all risks
identified by our audit.
Valuation of inventories, which was a
keyaudit matter last year, is no longer
included because of our reassessment of
risks determining that it no longer requires
the level of attention to be classified as a
KAM. Otherwise, the key audit matters
below are consistent with last year.
Independent auditors’ report to the members of Victrex plc
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 139
Independent auditors’ report to the members of Victrex plc continued
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued
Key audit matter How our audit addressed the key audit matter
Valuation of the UK defined benefit obligations (group)
Refer to page 103 of the Audit Committee report and
Note17within the Notes to the financial statements
oftheAnnual Report 2024.
The measurement of the net defined benefit asset (£10.7m net
surplusat 30 September 2024, (2023: £9.7m net surplus)) requires the
application of an actuarial valuation method, the attribution of benefits
to periods of service, and the use of significant actuarial assumptions
including in particular the discount rate, inflation rates and the average
life expectancy of members. Small changes in the assumptions used
could have a significant effect on the financial position of the Group.
To assess the appropriateness of the valuation of the UK defined
benefit obligations, we performed the following:
u
we evaluated, with the support of our own actuarial experts,
thekey assumptions applied to calculate the year end defined
benefit obligation. These procedures included assessing the
methodology, consistency of approach with the prior period
andcomparison to acceptable ranges, which are developed
usingexternally derived market data and internally developed
benchmarks; and
u
we considered the adequacy of the Group’s disclosures in respect
of the sensitivity of the surplus to changes in the assumptions.
Based on the results of our testing, we found the assumptions made
inthe valuation of the UK defined benefit obligations to be within
anacceptable range. We also consider the disclosures made in the
financial statements to be appropriate.
Risk of impairment of investments in subsidiaries and amounts
owed by group undertakings (parent)
Refer to Note 11 and 14 of the Notes to the financial statements
of the Annual Report 2024
The company has investments in subsidiaries of £131.9m (2023: £131.9m)
and amounts owed by group undertakings of £132.1m (2023: £141.0m).
Given the magnitude of both of these balances we considered there
tobe a risk that the performance of the subsidiary undertakings is not
sufficient to support the carrying value and the assets may be impaired.
Management has considered both of these balances for impairment
and concluded that no impairments are required.
In assessing the appropriateness of valuation of investment in
subsidiaries and amounts owed by group undertakings we have
performed the following procedures:
u
we obtained a schedule of investments in subsidiaries and ensured
this is reconciled to the financial statements;
u
we performed a review of the performance and net assets of each
material subsidiary against the carrying value of the investments;
u
we compared the overall carrying value of the investments to the
group’s market capitalisation and also our review of the discounted
cash flow models prepared for the purposes of testing overall
group goodwill for impairment;
u
we performed a reconciliation of the amounts owed by group
undertakings and ensured this agrees with the counterparty;
u
we have obtained management’s intercompany recoverability
model and assessed whether the methods applied were consistent
with IFRS 9. We checked the calculations within the model and
agreed the figures included to the relevant financial information
included in the group consolidation schedules;
u
we evaluated management’s assessment of the recoverability of
amounts owed by group undertakings including assessing the
ability of other group companies to settle the intercompany
balances; and
u
we assessed the adequacy of the disclosure provided in the
company financial statements in relation to the relevant
accountingstandards.
Based on the above procedures we concluded that there were no
triggers that would indicate the directors were required to perform
afull impairment test of the carrying value of the investments in
subsidiaries. We found no exceptions as a result of our procedures and
consider the recoverability of amounts owed by group undertakings to
be appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as
awhole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which
they operate.
The Group is organised into 21 reporting components and the Group financial statements are a consolidation of these reporting
components. The reporting units vary in size. We identified four units that required a full scope audit of their financial information due
toeither their size or risk characteristics. These were Victrex plc, Victrex Manufacturing Limited, Invibio Limited and Victrex Europa GmbH.
Another three reporting units were subject to audit procedures over specific balances and transactions, due to their contribution towards
specific financial statement line items. Revenue was in scope for Invibio Inc. Revenue and trade receivables were in scope for Victrex USA
Inc. Property, plant and equipment and bank loans were in scope for Victrex (Panjin) High Performance Materials Co. Ltd. Our audit scope
was determined by considering the significance of each component’s contribution to profit before tax and exceptional items, and individual
financial statement line items, with specific consideration to obtaining sufficient coverage over significant risks. On the remaining 14
components we performed analytic procedures to respond to any potential risks of material misstatement to the group financial statements.
140 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
All audit work was performed by the Group
team, with the exception of Victrex Europa
GmbH which was performed by a PwC
component audit team. The Group audit
team supervised the direction and execution
of the audit procedures performed by the
component team. Our involvement in their
audit process included the review of their
reporting and supporting working papers.
The Group audit team also attended
planning and clearance meetings during
theaudit cycle. Together with the additional
procedures performed at Group level, this
gave us the evidence required for our opinion
on the financial statements as a whole.
The Group engagement team also
performed the audit of the Company.
The impact of climate risk on our audit
We made enquiries of management to
understand the process they have adopted
to assess the extent of the potential impact
of climate risk on the Group’s financial
statements, including their commitments
made to achieving Net Zero carbon emissions
for Scope 1, 2 & 3 by 2050. The key areas of
the financial statements where management
evaluated that climate risk has a potential
impact are set out in note 1, Basis of
preparation, Climate change in the notes
tothe financial statements. The Directors
have reached the overall conclusion that
there has been no material impact on the
financial statements for the current year
from the potential impact of climate change.
We used our knowledge of the Group
tochallenge management’s assessment.
Weparticularly considered how climate
Riskwould impact the assumptions made
intheforecasts prepared by management
usedin their impairment analyses, going
concern and viability. We also considered
the consistency of the disclosures in relation
to climate change (including the disclosures
in the Task Force on Climate-related Financial
Disclosures (‘TCFD’) section) within the Annual
Report with the financial statements and
our knowledge obtained from our audit.
Our procedures did not identify any material
impact in the context of our audit of the
financial statement as a whole, or on our
key audit matters for the year ended
30September 2024.
Materiality
The scope of our audit was influenced byour application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent ofour audit procedures on
the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate
on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £3.9m (2023: £4.0m). £1.3m (2023: £1.4m).
How we determined it 5% of the three-year average of profit before tax and
exceptional items.
0.5% of total assets capped due to the Group
materiality allocation.
Rationale for benchmark
applied
Based on the benchmarks used in the Annual Report
2024, profit before tax and exceptional items is in
ourview the primary measure used by the shareholders in
assessing the performance of the Group, and is a generally
accepted auditing benchmark. In FY24, we have used a
three year average given that volatility in the market has
resulted in a decrease in volumes and profitability without
any fundamental changes in the balance sheet or size
ofoperations.
We believe that total assets is the primary measure
used by the shareholders in assessing the performance
of the entity, and is a generally accepted auditing
benchmark for non-trading companies.
For each component in the scope of our
group audit, we allocated a materiality that
is less than our overall group materiality.
The range of materiality allocated across
components was £1.3m and £3.5m. Certain
components were audited to a local statutory
audit materiality that was also less than our
overall group materiality.
We use performance materiality to reduce
to an appropriately low level the probability
that the aggregate of uncorrected and
undetected misstatements exceeds overall
materiality. Specifically, we use performance
materiality in determining the scope of our
audit and the nature and extent of our
testing of account balances, classes of
transactions and disclosures, for example in
determining sample sizes. Our performance
materiality was 75% (2023: 75%) of overall
materiality, amounting to £2.9m (2023: £3.0m)
for the group financial statements and
£1.0m (2023: £1.1m) for the company
financial statements.
In determining the performance materiality,
we considered a number of factors – the
history of misstatements, risk assessment
and aggregation risk and the effectiveness
of controls – and concluded that an amount
at the upper end of our normal range
wasappropriate.
We agreed with the Audit Committee that
we would report to them misstatements
identified during our audit above £0.2m
(group audit) (2023: £0.2m) and £0.1m
(company audit) (2023: £0.1m) as well as
misstatements below those amounts that,
in our view, warranted reporting for
qualitative reasons.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 141
Independent auditors’ report to the members of Victrex plc continued
Report on the audit of the financial
statements continued
Conclusions relating to going concern
Our evaluation of the directors’ assessment
of the group’s and the company’s ability to
continue to adopt the going concern basis
of accounting included:
u
we obtained from management their
latest assessments that support the
Board’s conclusions with respect to
thegoing concern basis of preparation
for the financial statements;
u
we reviewed management’s 24 month
forecast and downside scenarios (Scenario 1
and Scenario 2) and challenged the
adequacy and appropriateness of the
underlying assumptions;
u
we reviewed management accounts
forthe financial period to date and
checked that these were consistent
withthe starting point of management’s
scenarios and supported the key assumptions
included in the assessments;
u
we reviewed the historical accuracy of
the budgeting process to assess the
reliability of the data;
u
we challenged management with
regardsto the impact of climate change
and how this has been taken into
account in the forecasts;
u
we reviewed financing agreements
tounderstand bank covenants and
performed covenant calculations
underScenario 2;
u
we tested the mathematical integrity
ofmanagement’s going concern forecast
models; and
u
we reviewed the disclosures made
inrespect of going concern included
inthefinancial statements.
Based on the work we have performed,
wehave not identified any material
uncertainties relating to events or conditions
that, individually or collectively, may cast
significant doubt on the group’s and the
company’s ability to continue as a going
concern for a period of at least twelve
months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate.
However, because not all future events or
conditions can be predicted, this conclusion
is not a guarantee as to the group’s and
thecompany’s ability to continue as a
goingconcern.
In relation to the directors’ reporting on
how they have applied the UK Corporate
Governance Code, we have nothing material
to add or draw attention to in relation to
thedirectors’ statement in the financial
statements about whether the directors
considered it appropriate to adopt the
goingconcern basis of accounting.
Our responsibilities and the responsibilities
of the directors with respect to going
concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the
information in the Annual Report other than
the financial statements and our auditors’
report thereon. The directors are responsible
for the other information. Our opinion on
the financial statements does not cover the
other information and, accordingly, we do
not express an audit opinion or, except to
the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial
statements, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
orour knowledge obtained in the audit,
orotherwise appears to be materially
misstated. If we identify an apparent
material inconsistency or material
misstatement, we are required to perform
procedures to conclude whether there is
amaterial misstatement of the financial
statements or a material misstatement of
the other information. If, based on the work
we have performed, we conclude that there
is a material misstatement of this other
information, we are required to report
thatfact. We have nothing to report
basedon these responsibilities.
With respect to the Strategic report
andDirectors’ report, we also considered
whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the
courseof the audit, the Companies Act 2006
requires us also to report certain opinions
and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work
undertaken in the course of the audit,
theinformation given in the Strategic
reportand Directors’ report for the year
ended 30September 2024 is consistent
withthe financial statements and has been
prepared in accordance with applicable
legalrequirements.
In light of the knowledge and
understandingof the group and company
andtheir environment obtained in the
course of the audit, we did not identify
anymaterial misstatements in the
Strategicreport and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the
directors’ statements in relation to going
concern, longer-term viability and that part
of the corporate governance statement
relating to the company’s compliance
withthe provisions of the UK Corporate
Governance Code specified for our review.
Our additional responsibilities with respect
to the corporate governance statement
asother information are described in the
Reporting on other information section
ofthis report.
Based on the work undertaken as part
ofour audit, we have concluded that each
of the following elements of the corporate
governance statement is materially consistent
with the financial statements and our
knowledge obtained during the audit,
andwe have nothing material to add
ordraw attention to in relation to:
u
The directors’ confirmation that they
have carried out a robust assessment
ofthe emerging and principal risks;
u
The disclosures in the Annual Report
thatdescribe those principal risks, what
procedures are in place to identify
emerging risks and an explanation
ofhow these are being managed
ormitigated;
u
The directors’ statement in the financial
statements about whether they considered
it appropriate to adopt the going concern
basis of accounting in preparing them,
and their identification of any material
uncertainties to the group’s and company’s
ability to continue to do so over a period
of at least twelve months from the date
of approval of the financial statements;
u
The directors’ explanation as to
theirassessment of the group’s and
company’s prospects, the period this
assessment covers and why the period
isappropriate; and
u
The directors’ statement as to whether
they have a reasonable expectation that
the company will be able to continue in
operation and meet its liabilities as they
fall due over the period of its assessment,
including any related disclosures drawing
attention to any necessary qualifications
or assumptions.
142 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Our review of the directors’ statement
regarding the longer-term viability of the
group and company was substantially less
inscope than an audit and only consisted
ofmaking inquiries and considering the
directors’ process supporting their
statement; checking that the statement
isinalignment with the relevant provisions
ofthe UK Corporate Governance Code;
andconsidering whether the statement is
consistent with the financial statements and
our knowledge and understanding of the
group and company and their environment
obtained in the course of the audit.
In addition, based on the work undertaken
as part of our audit, we have concluded
thateach of the following elements of
thecorporate governance statement is
materially consistent with the financial
statements and our knowledge obtained
during the audit:
u
The directors’ statement that they
consider the Annual Report, taken
asawhole, is fair, balanced and
understandable, and provides the
information necessary for the members
to assess the group’s and company’s
position, performance, business model
and strategy;
u
The section of the Annual Report that
describes the review of effectiveness of
risk management and internal control
systems; and
u
The section of the Annual Report describing
the work of the Audit Committee.
We have nothing to report in respect of our
responsibility to report when the directors’
statement relating to the company’s
compliance with the Code does not properly
disclose a departure from a relevant
provision of the Code specified under the
Listing Rules for review by the auditors.
Responsibilities for the financial
statements and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Statement
ofDirectors’ responsibilities in respect of
theAnnual Report and financial statements,
the directors are responsible for the
preparation of the financial statements in
accordance with the applicable framework
and for being satisfied that they give a
trueand fair view. The directors are also
responsible for such internal control as
theydetermine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the financial statements,
thedirectors are responsible for assessing
the group’s and the company’s ability to
continue as a going concern, disclosing,
asapplicable, matters related to going
concern and using the going concern basis
of accounting unless the directors either
intend to liquidate the group or the
company or to cease operations, or have
norealistic alternative but to do so.
Auditors’ responsibilities for the audit
ofthe financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or
error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance
is a high level of assurance, but is not a
guarantee that an audit conducted in
accordance with ISAs (UK) will always
detecta material misstatement when it
exists. Misstatements can arise from fraud
or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are instances
of non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent
towhich our procedures are capable of
detecting irregularities, including fraud,
isdetailed below.
Based on our understanding of the
groupand industry, we identified that
theprincipal risks of non-compliance with
laws and regulations related to medical
devices regulations and REACH regulations
(Registration, Evaluation, Authorisation and
Restriction of Chemicals), and we considered
the extent to which non-compliance might
have a material effect on the financial
statements. We also considered those laws
and regulations that have a direct impact on
the financial statements such as Companies
Act 2006 and tax legislation. We evaluated
management’s incentives and opportunities
for fraudulent manipulation of the financial
statements (including the risk of override of
controls), and determined that the principal
risks were related to posting journal entries
to manipulate revenue and financial
performance, and management bias within
accounting estimates and judgements. The
group engagement team shared this risk
assessment with the component auditors
sothat they could include appropriate audit
procedures in response to such risks in their
work. Audit procedures performed by the
group engagement team and/or component
auditors included:
u
challenging assumptions and judgements
made by management in their significant
accounting estimates, in particular
around the valuation of inventories and
the valuation of the UK defined benefit
pension scheme;
u
identifying and testing journal entries,
inparticular any journal entries posted
with unusual account combinations;
u
discussions with the Audit Committee,
management, internal audit and the
in-house legal team including
consideration of known or suspected
instances of non-compliance with laws
and regulation or fraud; and
u
reviewing minutes of meetings of those
charged with governance throughout
theyear and post-year end to identify
any one off or unusual transactions.
There are inherent limitations in the audit
procedures described above. We are less
likely to become aware of instances of
non-compliance with laws and regulations
that are not closely related to events
andtransactions reflected in the financial
statements. Also, the risk of not detecting
amaterial misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations,
orthrough collusion.
Our audit testing might include testing
complete populations of certain transactions
and balances, possibly using data auditing
techniques. However, it typically involves
selecting a limited number of items for
testing, rather than testing complete
populations. We will often seek to target
particular items for testing based on their
size or risk characteristics. In other cases,
wewill use audit sampling to enable us to
draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities
for the audit of the financial statements
islocated on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities.
Thisdescription forms part of our
auditors’report.
Use of this report
This report, including the opinions, has been
prepared for and only for the company’s
members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act
2006 and for no other purpose. We do not,
in giving these opinions, accept or assume
responsibility for any other purpose or to
any other person to whom this report is
shown or into whose hands it may come
save where expressly agreed by our prior
consent in writing.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 143
Independent auditors’ report to the members of Victrex plc continued
Other required reporting
Companies Act 2006 exception
reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
u
we have not obtained all the information
and explanations we require for our audit; or
u
adequate accounting records have not
been kept by the company, or returns
adequate for our audit have not been
received from branches not visited
byus;or
u
certain disclosures of directors’
remuneration specified by law are
notmade; or
u
the company financial statements and
the part of the Directors’ remuneration
report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising
from this responsibility.
Appointment
Following the recommendation of the
AuditCommittee, we were appointed by
themembers on 9 February 2018 to audit
the financial statements for the year ended
30 September 2018 and subsequent financial
periods. The period of total uninterrupted
engagement is seven years, covering
theyears ended 30 September 2018
to30September 2024.
Other matter
The company is required by the Financial
Conduct Authority Disclosure Guidance and
Transparency Rules to include these financial
statements in an annual financial report
prepared under the structured digital format
required by DTR 4.1.15R – 4.1.18R and filed
on the National Storage Mechanism of the
Financial Conduct Authority. This auditors’
report provides no assurance over whether
the structured digital format annual financial
report has been prepared in accordance
with those requirements.
Graham Parsons (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory
Auditors
Manchester
3 December 2024
144 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
FINANCIAL
STATEMENTS
Contents
146 Consolidated income statement
147 Consolidated statement ofcomprehensiveincome
148 Balance sheets
149 Cash flow statements
150 Consolidated statement ofchangesinequity
151 Company statement ofchangesinequity
152 Notes to the financial statements
SHAREHOLDER
INFORMATION
Contents
199 Five-year financial summary and Cautionary
noteregardingforward-looking statements
200 Financial calendar and Advisors
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 145
20242023
Notes£m£m
Revenue
2
2 91. 0
3 0 7. 0
Gains/(losses) on foreign currency net hedging
5.2
(7. 6)
Cost of sales
(161 . 9)
(13 6. 8)
Gross profit
1 34.3
16 2 . 6
Sales, marketing and administrative expenses
3
(71.0)
(70. 8)
Research and development expenses
10
(1 7. 5)
(18 .6)
Operating profit before exceptional items
60.3
8 0.7
Exceptional items
3
(1 4 .5)
(7. 5)
Operating profit
45.8
73. 2
Finance income
6
0.7
1. 3
Finance costs
6
(1. 9)
(0.7)
Result of associate
3, 11
(21. 2)
(1. 3)
Profit before tax and exceptional items
5 9 .1
80.0
Exceptional items
3
(3 5.7)
(7. 5)
Profit before tax
23.4
7 2.5
Income tax expense
7
(7. 6)
(11 . 5)
Profit for the financial year
15 . 8
61. 0
Profit/(loss) for the year attributable to:
– Owners of the Company
1 7. 2
61.7
– Non-controlling interests
11
(1. 4)
(0 .7)
Earnings per share
Basic
8
19 . 8p
70.9p
Diluted
8
19 .7p
70.5p
Dividend per ordinary share
Interim
22
13 . 4 2p
13 . 42p
Final
22
4 6 .14p
4 6 .14p
22
59. 56p
59.56p
A final dividend in respect of FY 2024 of 46. 14p per ordinary share (£40.2m) has been recommended by the Directors for approval at the
Annual General Meeting on 7 February 2025.
Consolidated income statement
for the year ended 30 September
146 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
20242023
Note£m£m
Profit for the financial year
15 . 8
61.0
Items that will not be reclassified to profit or loss
Defined benefit pension schemes’ actuarial gains/(losses)
17
0.3
(6 .9)
Income tax on items that will not be reclassified to profit or loss
7
(0 .1)
1. 4
0.2
(5.5)
Items that may be reclassified subsequently to profit or loss
Currency translation differences for foreign operations
(6.7)
(10 . 0)
Effective portion of changes in fair value of cash flow hedges
9.6
10 . 0
Net change in fair value of cash flow hedges transferred to profit or loss
(5. 2)
7. 6
Income tax on items that may be reclassified to profit or loss
7
(1 .1)
(3. 4)
(3. 4)
4.2
Total other comprehensive expense for the year
(3. 2)
(1. 3)
Total comprehensive income for the year
12 . 6
59 .7
Total comprehensive income/(expense) for the year attributable to:
– Owners of the Company
14 . 0
60.4
– Non-controlling interests
(1. 4)
(0.7)
Consolidated statement of comprehensive income
for the year ended 30 September
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 147
Balance sheets
as at 30 September
Group
Company
2024 20232024 2023
Note£m£m£m£m
Assets
Non-current assets
Property, plant and equipment
9
3 5 2 .1
3 51. 2
—
—
Intangible assets
10
17.1
18 .7
—
—
Investment in subsidiaries
11
—
—
131.9
131.9
Investment in associated undertakings
11
—
9 .1
—
—
Financial assets held at fair value through profit and loss
11
3.5
13 . 2
—
—
Financial assets at amortised cost
16
1.0
0.6
—
—
Deferred tax assets
12
6. 2
5.6
—
—
Retirement benefit asset
17
10.7
9 .7
—
—
390.6
4 0 8 .1
131.9
131.9
Current assets
Inventories
13
11 5 .1
13 4. 5
—
—
Current income tax assets
3.9
1. 3
—
—
Trade and other receivables
14
45.8
4 7. 2
132.1
141.0
Derivative financial instruments
16
7. 3
2.0
—
—
Other financial assets
16
—
0 .1
—
—
Cash and cash equivalents
16
29. 3
33.4
0.1
0.1
20 1. 4
218 . 5
132.2
141.1
Total assets
592 .0
6 26. 6
264.1
273.0
Liabilities
Non-current liabilities
Deferred tax liabilities
12
(4 0. 8)
(34.0)
—
—
Long-term lease liabilities
19
(8 . 3)
(8.9)
—
—
Borrowings
15
(32 . 9)
(34.5)
—
—
Retirement benefit obligation
17
(2. 5)
(2. 5)
—
—
(8 4. 5)
(79.9)
—
—
Current liabilities
Derivative financial instruments
16
(0 . 3)
(1. 8)
—
—
Borrowings
15
(7. 5)
(5. 2)
—
—
Current income tax liabilities
(2 . 2)
(3.0)
—
—
Trade and other payables
18
(34 . 2)
(3 4 .1)
(1.2)
(0.1)
Current lease liabilities
19
(1 .7)
(1. 6)
—
—
(45.9)
(4 5 .7)
(1.2)
(0.1)
Total liabilities
(13 0 . 4)
(1 25.6)
(1.2)
(0.1)
Net assets
4 61 . 6
5 0 1. 0
262.9
272.9
Equity
Share capital
22
0.9
0.9
0.9
0.9
Share premium
22
6 2 .1
61. 9
62.1
61.9
Translation reserve
22
(3.9)
2. 8
—
—
Hedging reserve
22
3.9
0.6
—
—
Retained earnings
1
22
398 .0
4 32. 8
199.9
210.1
Equity attributable to owners of the Company
4 61. 0
49 9.0
262.9
272.9
Non-controlling interest
0.6
2.0
—
—
Total equity
4 61 . 6
5 0 1. 0
262.9
272.9
1 The profit for the financial year dealt with in the financial statements of the Company is £41.4m, which includes dividends from subsidiaries of £42.4m
(FY2023: loss of £0.8m, which includes dividends from subsidiaries of £nil).
These financial statements of Victrex plc on pages 146 to 198, registered number 2793780, were approved by the Board of Directors on
3 December 2024 and were signed on its behalf by:
Jakob Sigurdsson Ian Melling
Chief Executive Officer Chief Financial Officer
148 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Group
Company
2024 2023 20242023
Notes£m£m£m£m
Profit/(loss) for the financial year
15 . 8
61. 0
41.4
(0.8)
Income tax expense
7
7. 6
11 . 5
0.2
—
Finance income
6
(0.7)
(1. 3)
—
—
Finance costs
6
1.9
0 .7
—
—
Result of associate
3,11
21. 2
1. 3
—
—
Dividends received from subsidiaries
—
—
(42.4)
—
Operating profit/(loss)
45.8
73. 2
(0.8)
(0.8)
Adjustments for:
Depreciation
9
21. 5
19 . 8
—
—
Amortisation
10
1.7
1.7
—
—
Impairment of property, plant and equipment
9
4.6
—
—
—
Gain on early termination of long-term lease liabilities
(0 .1)
(0. 2)
—
—
Loss on disposal of non-current assets
9, 10
0 .1
0.3
—
—
Equity-settled share-based payment transactions
21
0. 2
1 .1
0.2
1.1
Gains on derivatives recognised in income statement that have not yet settled
16
(2 . 4)
(2. 5)
—
—
Losses on financial assets held at fair value
11
—
0. 2
—
—
Decrease/(increase) in inventories
17. 2
(5 0.7)
—
—
(Increase)/decrease in receivables
(1. 7)
1 6.4
8.9
50.9
Increase/(decrease) in payables
2 .5
(14 . 6)
1.1
—
Retirement benefit obligations charge less contributions
(0.7)
(1. 8)
—
—
Cash generated from operations
8 8 .7
42.9
9.4
51.2
Interest received
0 .7
1. 0
—
—
Interest paid
(1 .1)
(0. 2)
—
—
Net income tax paid
(4.3)
(2.0)
(0.2)
—
Net cash flow generated from operating activities
84 .0
41 .7
9.2
51.2
Cash flows (used in)/generated from investing activities
Acquisition of property, plant and equipment and intangible assets
9, 10
(32. 6)
(38 .5)
—
—
Withdrawal of cash invested for greater than three months
16
0 .1
10 . 0
—
—
Dividends received
—
—
42.4
—
Other loans granted
16
(0.7)
(0 .9)
—
—
Loans to associated undertakings
11
(2 . 2)
(2. 9)
—
—
Net cash flow (used in)/generated from investing activities
(35. 4)
(32.3)
42.4
—
Cash flows generated from/(used in) financing activities
Proceeds from issue of ordinary shares exercised under option
22
0.2
0.4
0.2
0.4
Repayment of lease liabilities
19
(1. 9)
(2 .1)
—
—
Transactions with non-controlling interest
11
—
2.6
—
—
Bank borrowings received
15, 16
33 .8
19 . 0
—
—
Bank borrowings repaid
16
(3 1 .1)
(0 .9)
—
—
Interest paid on capital related bank borrowings
15
(1 .1)
(0.9)
—
—
Dividends paid
22
(51 . 8)
(51. 8)
(51.8)
(51.8)
Net cash flow used in financing activities
(51 . 9)
(3 3 .7)
(51.6)
(51.4)
Net decrease in cash and cash equivalents
(3 . 3)
(24 .3)
—
(0.2)
Effect of exchange rate fluctuations on cash held
(0. 8)
(1. 0)
—
—
Cash and cash equivalents at beginning of year
33. 4
5 8 .7
0.1
0.3
Cash and cash equivalents at end of year
29. 3
33.4
0.1
0.1
Cash flow statements
for the year ended 30 September
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 149
Consolidated statement of changes in equity
Total
attributableNon-
ShareShareTranslation Hedging Retainedto owners ofcontrolling
capital premium reserve reserveearnings the CompanyinterestTotal
Note£m £m £m £m £m£m£m£m
Equity at 1 October 2022
0.9
61. 5
12 . 8
(13 . 6)
4 2 7. 2
4 88.8
1. 8
49 0.6
Total comprehensive income/(expense) for the year
Profit for the year attributable to owners of the Company
—
—
—
—
61. 7
61.7
—
61. 7
Loss for the year attributable to non-controlling interest
—
—
—
—
—
—
(0 .7)
(0 .7)
Other comprehensive (expense)/income
Currency translation differences for foreign operations
—
—
(1 0 . 0)
—
—
(10 . 0)
—
(10 . 0)
Effective portion of changes in fair value of
cash flow hedges
—
—
—
10 . 0
—
10 . 0
—
10. 0
Net change in fair value of cash flow hedges transferred
to profit or loss
—
—
—
7. 6
—
7. 6
—
7. 6
Defined benefit pension schemes’ actuarial losses
17
—
—
—
—
(6.9)
(6.9)
—
(6.9)
Tax on other comprehensive (income)/expense
7
—
—
—
(3.4)
1. 4
(2.0)
—
(2. 0)
Total other comprehensive (expense)/income for
the year
—
—
(1 0 . 0)
14 . 2
(5.5)
(1. 3)
—
(1. 3)
Total comprehensive (expense)/income for the year
—
—
(10 . 0)
14 . 2
56.2
6 0.4
(0 .7)
59 .7
Contributions by and distributions to owners
oftheCompany
Share options exercised
22
—
0.4
—
—
—
0.4
—
0. 4
Contributions of equity from non-controlling interest
11
—
—
—
—
—
—
0.9
0.9
Equity-settled share-based payment transactions
21
—
—
—
—
1 .1
1.1
—
1 .1
Tax on equity-settled share-based payment transactions
7
—
—
—
—
0 .1
0 .1
—
0 .1
Dividends to shareholders
22
—
—
—
—
(51 . 8)
(51. 8)
—
(51 . 8)
Equity at 30 September 2023
0.9
61.9
2.8
0.6
4 32. 8
499.0
2. 0
5 01. 0
Total comprehensive income/(expense) for the year
Profit for the year attributable to owners of the Company
—
—
—
—
1 7. 2
1 7. 2
—
1 7. 2
Loss for the year attributable to non-controlling interest
—
—
—
—
—
—
(1. 4)
(1 . 4)
Other comprehensive (expense)/income
Currency translation differences for foreign operations
—
—
(6.7)
—
—
(6.7)
—
(6 .7)
Effective portion of changes in fair value of
cash flow hedges
—
—
—
9. 6
—
9. 6
—
9.6
Net change in fair value of cash flow hedges transferred
to profit or loss
—
—
—
(5. 2)
—
(5 . 2)
—
(5. 2)
Defined benefit pension schemes’ actuarial gains
17
—
—
—
—
0. 3
0.3
—
0. 3
Tax on other comprehensive (expense)/income
7
—
—
—
(1 .1)
(0 .1)
(1 . 2)
—
(1. 2)
Total other comprehensive (expense)/income for
the year
—
—
(6.7)
3.3
0.2
(3 . 2)
—
(3. 2)
Total comprehensive (expense)/income for the year
—
—
(6 .7)
3.3
1 7. 4
14 .0
(1. 4)
12 .6
Contributions by and distributions to owners
oftheCompany
Share options exercised
22
—
0. 2
—
—
—
0. 2
—
0.2
Equity-settled share-based payment transactions
21
—
—
—
—
0. 2
0. 2
—
0. 2
Tax on equity-settled share-based payment transactions
7
—
—
—
—
(0. 6)
(0.6)
—
(0. 6)
Dividends to shareholders
22
—
—
—
—
(51. 8)
(51. 8)
—
(51. 8)
Equity at 30 September 2024
0.9
6 2 .1
(3 .9)
3.9
398 .0
4 61 . 0
0.6
4 61 . 6
150 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Company statement of changes in equity
Note
Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Total
£m
Equity at 1 October 2022 0.9 61.5 261.6 324.0
Total comprehensive expense for the year
Loss for the year — — (0.8) (0.8)
Contributions by and distributions to owners of the Company
Share options exercised 22 — 0.4 — 0.4
Equity-settled share-based payment transactions 21 — — 1.1 1.1
Dividends to shareholders 22 — — (51.8) (51.8)
Equity at 30 September 2023 0.9 61.9 210.1 272.9
Total comprehensive income for the year
Profit for the year — — 41.4 41.4
Contributions by and distributions to owners of the Company
Share options exercised 22 — 0.2 — 0.2
Equity-settled share-based payment transactions 21 — — 0.2 0.2
Dividends to shareholders 22 — — (51.8) (51.8)
Equity at 30 September 2024 0.9 62.1 199.9 262.9
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 151
1. Basis of preparation
General information
Victrex plc (the ‘Company’) is a public company, which is limited by shares and is listed on the London Stock Exchange. The Company is
incorporated and domiciled in England 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 2024 comprise the Company and its subsidiaries
(together referred to as the ‘Group’).
These consolidated financial statements have been approved for issue by the Board of Directors on 3 December 2024.
Basis of preparation and statement of compliance
Both the consolidated and Company financial statements have been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and in accordance with UK-adopted International Accounting Standards.
The financial statements have been prepared under the historical cost basis except for derivative financial instruments, defined benefit
pension scheme assets and financial assets held at fair value through profit and loss, which are measured at their fair value.
The Group’s business activities, together with factors likely to affect its future development, performance and position, are set out in the
Strategic report on pages 1 to 75. In addition, note 16 on financial risk management details the Group’s exposure to a variety of financial
risks, including currency and credit risk.
On publishing the Company financial statements here together with the consolidated financial statements, the Company is taking
advantage of Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form part
of the approved financial statements.
Unless a change has been required by adoption of new standards, the accounting policies set out in these notes have been applied
consistently to all periods presented in these consolidated and Company financial statements.
The accounting policies have been consistently applied by Group entities.
Climate change
In preparing the financial statements of the Group, an assessment of the potential impact of climate change has been made in line with the
requirements of the Task Force on Climate-related Financial Disclosures (‘TCFD’) and with specific consideration of the disclosures made in
the Sustainability report starting on page 46. This has specifically incorporated the impact of the physical risks of climate change and
transitional risks including the potential impact of government and regulatory actions as well as the Group’s stated Net Zero targets.
The potential impact has been considered in the following areas:
u
the key areas of judgement and sources of estimation – see below;
u
the expected useful lives of property, plant and equipment;
u
those areas which rely on future forecasts which have the potential to be impacted by climate change:
u
carrying value of non-current assets;
u
going concern; and
u
viability;
u
the recoverability of deferred taxation assets; and
u
the recoverability of inventory and trade receivables.
The specific considerations have been included in the corresponding financial statement notes below.
The Directors recognise the inherent uncertainty in predicting the impact of climate change and the actions which regulators and
governments, both domestic and overseas, will take in order to achieve their various targets. However, from the work undertaken to date,
outlined in the Sustainability report, the Directors have reached the overall conclusion that there has been no material impact on the
financial statements for the current year from the potential impact of climate change.
The specific considerations in respect to the viability of the Group are included in the viability statement on pages 44 and 45.
The Group’s analysis on the impact of climate change continues to evolve as more clarity on timings and targets emerges, with Victrex
committed to reducing its carbon impact towards Net Zero across all Scopes by 2050 in line with SBTi targets.
Going concern
The Directors have performed a robust going concern assessment including a detailed review of the business’ 24-month rolling forecast and
consideration of the principal risks faced by the Group and the Company, as detailed on pages 38 to 42. This assessment has paid particular
attention to current trading results and the impact of the ongoing global economic challenges on the aforementioned forecasts.
The Company maintains a strong balance sheet providing assurance to key stakeholders, including customers, suppliers and employees.
The Group had net debt of £21.1m at 30 September 2024, a reduction of £28.7m from 31 March 2024, and an increase of £4.4m from
30 September 2023. The increase in net debt during the year largely relates to the payment of the regular dividends in February 2024,
£40.1m, and June 2024, £11.7m, with ongoing capital expenditure and soft trading reducing the cash generation in the short term.
Underlying operating cash conversion improved to 114% for the year ended September 2024 from 18% for the year ended September
2023, supported by the partial unwind of the inventory position built during FY 2023. The Group drew on its UK Revolving Credit Facility
during the period, with a maximum drawn down of £26m, before fully repaying the facility by the end of the year from operating cash
flows. Of the gross debt position of £50.4m, £9.2m is due within one year. The Group maintains a cash balance sufficient to manage
short-term liquidity and provide headroom against ongoing trading volatility.
Notes to the financial statements
152 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
1. Basis of preparation continued
Going concern continued
The cash balance at 30 September 2024 was £29.3m. Approximately 50% is held in the UK, on instant access, where the Company incurs
the majority of its expenditure. At the date of this report, the Group has drawn debt of c.£40m in its Chinese subsidiaries (with a total
facility of c.£43m available until December 2026) and has unutilised UK banking facilities of £60m through to October 2027, of which £40m
is committed and immediately available and £20m is available subject to lender approval.
The 24-month forecast is derived from the Company’s Integrated Business Planning (‘IBP’) process which runs monthly. Each area of the
business provides forecasts which consider a number of external data sources, triangulating with customer conversations, trends in market
and country indices as well as forward-looking industry forecasts: for example, forecast aircraft build rates from the two major
manufacturers for Aerospace, rig count and purchasing manager indices for E&I, World Semiconductor Trade Statistics semiconductor
market forecasts for Electronics and Needham and IQVIA forecasts for Medical procedures.
The assessment of going concern included conducting scenario analysis on the aforementioned forecast. Whilst Sustainable Solutions has
seen a partial recovery in sales volumes during calendar year 2024 compared to the suppressed levels seen in 2023, Medical continues to
experience lower demand with destocking remaining a challenge as the industry carefully manages its inventory down from the elevated
levels seen during 2022 and 2023. With economic forecasts remaining mixed and supply chains continuing to be cautious in both segments,
the scenario analysis performed by management focuses on the Group’s ability to sustain a further period of suppressed demand. In
assessing the severity of the scenario analysis, the scale and longevity of the impact experienced during previous economic downturns have
been considered, including the differing impacts on Sustainable Solutions versus Medical segments.
Using the IBP data and the reference points from previous economic cycles, management has created two scenarios to model the impact
of a reversal of the partial recovery seen in Sustainable Solutions during 2024 and the continuing effect of destocking within Medical at a
regional/market level and aggregated levels on the Group’s profits and cash generation through to January 2026 with consideration also given
to the six months beyond this. The impact of climate change and the Group’s goal of Net Zero across all Scopes by 2050 are considered as part
of the aforementioned IBP process, from both a revenue and cost perspective, with the anticipated impact (assessed as insignificant over the
shorter-term going concern period) incorporated in the forecasts. As a result, the scenario testing noted below does not incorporate any
additional sensitivity specific to climate change.
The Directors have modelled the following scenarios:
Scenario 1 – Sustainable Solutions demand reduces back to the levels seen during H2 FY 2023 from January 2025 for six months, before
recovering to the levels seen in H2 FY 2024 for the remainder of the going concern period. Medical revenue remains in line with the softer
level experienced during FY 2024 through to June 2025 before recovery commences at a rate of 10% per annum through the remainder
of the going concern period. Inventory is reduced in line with sales.
Scenario 2 – in line with scenario 1 through to June 2025 but with the lower demand continuing throughout 2025, i.e. throughout the
going concern period, taking the total period of lower demand, which for Sustainable Solutions started in early FY 2023, to three years,
well above the duration of any previous downturn experienced by the Company. This would give an annualised volume below c.3,300
tonnes, a level not seen since 2013. In this scenario, destocking would continue to impact Medical revenue which would remain at an
annualised revenue comparable to FY 2024. With the period of prolonged lower demand, a more aggressive unwind of the inventory
balance has been assumed. The Directors consider scenario 2 to be a severe but plausible scenario.
Commercial sales from the new PEEK manufacturing facility in China commenced during H2 FY 2024; however, with volumes building over
time the entity will require additional funding to see it through to net cash generation. In concluding on the going concern position, it has
been assumed that Victrex will provide the additional funds in full, which the Board considers to be the worst case scenario.
Before any mitigating actions the sensitised cash flows show the Company has significantly reduced cash headroom, which would require
continued use of the committed facility during the going concern period. The level of facility drawn down is higher in scenario 2 but in
neither scenario is the committed facility fully drawn, nor drawn for the whole year. With cash levels lower than has historically been the
case for Victrex, the Company has identified a number of mitigating actions which are readily available to increase the headroom. These include:
u
use of committed facility – the committed facility could be drawn at short notice. Conversations with our banking partners indicate that
the £20m uncommitted accordion could also be readily accessed. The covenants of the facility have been successfully tested under each
of the scenarios;
u
deferral of capital expenditure – the base case capital investment over the next 12 months is lower than recent years with major projects
now completed in China and the UK. This could be reduced significantly by limiting expenditure to essential projects and deferring all
other projects later into 2025 or beyond;
u
reduction in discretionary overheads – costs would be limited to prioritise and support customer related activity;
u
reduction in inventory levels – the elevated inventory level seen at the end of FY 2023 has already been partially unwound and is
forecast to continue to unwind during FY 2025. The scenarios noted above include an acceleration of the inventory unwind but a more
aggressive approach could be taken to provide additional cash resources; and
u
deferral/cancellation of dividends – the Board considers the cash position and interests of all stakeholders before recommending
payment of a dividend. A dividend has been proposed for payment in February 2025 of c.£40m and in the past an interim dividend
of c.£12m has been paid in June, giving a combined annual outflow of c.£52m.
Reverse stress testing was performed to identify the level that sales would need to drop by in order for the Group to be unable to meet
its liabilities as they fall due by the end of the going concern assessment period. Sales volumes would need to consistently drop materially
below the low point in scenario 2, which is not considered plausible.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 153
Notes to the financial statements continued
1. Basis of preparation continued
Going concern continued
As a result of this detailed assessment and with reference to the Company’s strong balance sheet, existing committed facilities and the cash
preserving levers at the Company’s disposal, but also acknowledging the current economic uncertainty with a number of global economies
remaining in or close to recession and the wars in Ukraine and the Middle East continuing, the Board has concluded that the Company has
sufficient liquidity to meet its obligations when they fall due for a period of at least 12 months after the date of this report. For this reason,
it continues to adopt the going concern basis for preparing the financial statements.
Critical judgements made in applying accounting policies
The critical judgements involving estimation uncertainty are shown below. The Directors also consider the critical judgements, other than
those involving estimation uncertainty, in the process of applying accounting policies that would have a significant effect on the amounts
recognised in the financial statements.
The Directors consider that the application of the exceptional items accounting policy involves significant judgement, with the application
and areas of judgement outlined in note 3. There are no other judgements that the Directors have made in the process of applying
accounting policies that would have a significant effect on the amounts recognised in the financial statements.
Sources of estimation uncertainty
The Group uses estimates and assumptions in applying accounting policies to value balances and transactions recorded in the financial
statements. The estimates and assumptions that, if revised, would have a significant risk of a material impact on the valuation of assets
and liabilities within the next financial year, and therefore classified as critical at 30 September 2024, are retirement benefits (see note 17)
and the valuation of inventory (see note 13), consistent with the prior year. The use of estimates in assessing the carrying value of the
investment in associate and fair value of convertible loan notes (see note 11) held in Bond 3D High Performance Technology BV (‘Bond’)
was classified as critical in the prior year. With the investment in associate and loans due from Bond both now valued at £nil, the carrying
value of these assets is no longer a source of estimation uncertainty at 30 September 2024.
The critical judgements and key sources of estimation uncertainty that the Directors have considered in the process of applying the
Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements are included
within the relevant notes. Critical judgements and key sources of estimation uncertainty can be identified throughout the notes by the
following symbol . Management has discussed these with the Audit Committee. These should be read in conjunction with the
material accounting policies provided in the notes to the financial statements.
The consideration of critical judgements and key sources of estimation uncertainty includes consideration of the potential impact of
climate change on the financial statements. The areas considered and the conclusions made can be identified throughout the financial
statements by the symbol . None of the areas of estimation uncertainty considered had a significant risk of material adjustment in the
next 12 months as a result of climate change, although it is noted that there could be a more significant impact over the medium and
longer-term time frames.
Other areas of judgement and sources of estimation uncertainty
The financial statements include other areas of judgement and sources of estimation uncertainty which do not meet the above definition
of critical either due to the level of risk or the time frame of the potential impact; however, they apply to the measurement of certain
material assets and liabilities. These include the useful economic lives and residual value of property, plant and equipment and the
recognition of deferred taxation balances for which there is uncertainty over the longer term.
New accounting standards and amendments to existing standards
New standards and amendments to existing standards were effective for the financial year ended 30 September 2024, which included:
u
Amendments to IAS 1 – Practice Statement 2 and IAS 8 – Distinguish Between Changes in Accounting Policies and Accounting Estimates;
u
Amendment to IAS 12 – Deferred Tax Related to Assets and Liabilities arising from a Single Transaction;
u
IFRS 17 – Insurance Contracts – Replacement of IFRS 4; and
u
Amendment to IAS 12 – International Tax Reform – Pillar Two Model Rules.
None of these have had a material impact on the consolidated or Company result or financial position.
Standards effective from 1 October 2024 onwards
A number of standards, amendments and interpretations have been issued and endorsed by the UK but are not yet effective in the UK and,
accordingly, the Group has not yet adopted them. These include:
u
Amendment to IFRS 16 – Leases on Sale and Leaseback;
u
Amendments to IAS 1 – Non-Current Liabilities with Covenants and Classification of Liabilities as Current or Non-Current;
u
Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements; and
u
Amendments to IAS 21 – Lack of Exchangeability;
None of these are expected to have a material impact on the consolidated or Company result or financial position.
The Group continues to monitor the potential impact of other new standards and interpretations which may be endorsed and require
adoption by the Group in future reporting periods. The Group does not consider that any other standards, amendments or interpretations
issued by the IASB, but not yet applicable, will have a material impact on the Group’s consolidated result or financial position.
154 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
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 (‘CODM’). The CODM 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,
and research and development functions servicing both business units is consolidated and reported at a Group level. Segmental balance
sheets are not produced; instead, the CODM reviews the balance sheet at a Group level which provides the necessary level of detail
to make an informed assessment of the financial position of the Group on which to base key business decisions.
The Group’s business is strategically organised as two business units (operating segments): Sustainable Solutions (formerly Industrial), which
focuses on our Energy & Industrial, VAR, Transport and Electronics markets, and Medical, which focuses on providing specialist solutions for
medical device manufacturers.
Year ended 30 September 2024
Year ended 30 September 2023
Sustainable Sustainable
Solutions Medical Group Solutions Medical Group
£m £m £m £m £m £m
Segment revenue
240.6
53.0
293.6
250.3
65.2
315.5
Internal revenue
(2.6)
—
(2.6)
(8.5)
—
(8.5)
Revenue from external sales
238.0
53.0
291.0
241.8
65.2
307.0
Gains/(losses) on foreign currency net hedging
4.2
1.0
5.2
(5.4)
(2.2)
(7.6)
Cost of sales
(151.9)
(10.0)
(161.9)
(125.9)
(10.9)
(136.8)
Segment gross profit
90.3
44.0
134.3
110.5
52.1
162.6
Impact of climate change
The CODM for the Group monitors climate change metrics, primarily the revenue from sustainable products, on a six-monthly
basis. However, the primary basis for reviewing financial performance over all time horizons, from monthly to annually, remains
at the operating segment level. It is noted that products sold into sustainable applications are primarily the same as products
sold into non-sustainable applications. It is only the end application which differentiates them. As a result, it is not anticipated
that any change will be required in the segmental reporting as a result of the Group’s focus on sustainable applications.
Transactions between segments are conducted at arm’s length.
Revenue recognition
Revenue in both segments comprises the amounts receivable for the sale of goods, net of value added tax, rebates and discounts and after
eliminating sales within the Group. Revenue from the sale of goods is recognised when all performance obligations are met, which is when
the goods are dispatched or delivered in line with Incoterms. Victrex receives Medical Unit Payments (‘MUPs’) from a number of medical
customers. MUPs are deferred payments contingent on the customer selling its final component to the end user. Revenue from MUPs is a
form of variable consideration where all performance obligations have been met when the material is sold by the Group. The initial value of
the MUP recognised is based on management’s best estimate of the value that will flow to the Group only to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the
variable consideration is subsequently resolved. This will be adjusted as appropriate, with a final adjustment being made in the period the final
declaration is made. The value of MUPs recognised but not invoiced is included in prepayments and accrued income. See note 14.
No revenue is recognised if there is significant uncertainty regarding recovery of the consideration due or associated costs.
The Group has taken advantage of the expedient allowed in IFRS 15 (121b) not to disclose information about its remaining performance
obligations because the Group only recognises revenue on the satisfaction of performance obligations.
Information about products
The Group derives its revenue from the sale of high performance thermoplastic polymers.
Information about geographical areas
The Group’s country of domicile is the United Kingdom.
1) Revenue from external sales
The following is an analysis of revenue from external sales based on the customer’s location.
Revenue from external sales
Sustainable Sustainable
Solutions Medical 2024 Solutions Medical 2023
£m £m £m £m £m £m
United Kingdom
3.1
—
3.1
4.2
—
4.2
Europe, the Middle East and Africa (‘EMEA’)
114.1
14.7
128.8
111.2
16.4
127.6
Americas
48.2
24.6
72.8
52.7
30.0
82.7
Asia-Pacific
72.6
13.7
86.3
73.7
18.8
92.5
238.0
53.0
291.0
241.8
65.2
307.0
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 155
Notes to the financial statements continued
2. Segment reporting continued
Information about geographical areas continued
1) Revenue from external sales continued
Revenue from external customers based in Germany was £76.6m (FY 2023: £73.2m), the US was £70.7m (FY 2023: £75.7m) and China
was £44.0m (FY 2023: £45.5m). The revenue from any individual country, with the exception of Germany, the US and China, is not more
than 10% of the Group’s total revenue in either the current or prior year.
2) Non-current assets
The following is an analysis of the carrying value of non-current assets by the geographical area in which the assets are located.
Non-current assets include property, plant and equipment, intangible assets and investments in associates. It does not include retirement
benefit assets, deferred tax assets and financial instruments.
2024 2023
£m £m
United Kingdom
261.9
253.8
China
90.7
91.3
Other
16.6
33.9
369.2
379.0
At 30 September 2024 and 2023, non-current assets held in any individual country, with the exception of the United Kingdom and China,
are not more than 10% of the Group’s total non-current assets.
Segmental assets and liabilities are no presented because neither management nor the Board receive or review this information.
Information about major customers
In the current year no customers contributed more than 10% to Group revenue (FY 2023: no customers contributed more than 10% to Group revenue).
3. Operating profit
Detailed below are the key amounts recognised in arriving at our operating profit:
2024 2023
Note £m £m
Staff costs
5
80.1
78.4
Depreciation of property, plant and equipment
9
21.5
19.8
Loss on disposal of non-current assets
9, 10
0.1
0.3
Amortisation of intangibles
10
1.7
1.7
Trade receivables impairment allowance during the year
16
—
1.3
Reversal of trade receivables impairment allowance
16
(0.1)
(1.9)
Inventory written down during the year
13
3.0
3.1
Reversal of previously written down inventory
13
(1.9)
(2.7)
Fees payable to auditors
4
0.8
0.8
Exchange differences recognised in the Consolidated income statement, except for those arising on financial instruments measured at fair
value through profit or loss in accordance with IFRS 9, are a gain of £1.6m (FY 2023: loss of £0.6m).
Exceptional items
Exceptional items are those which are, in aggregate, material in size and/or unusual or infrequent in nature.
Critical judgement in relation to application of the accounting policy in relation to exceptional items
The application of the accounting policy for exceptional items contains a number of judgements. These include determining whether an
item would have a material impact on the understanding of the financial performance if it was included within pre exceptional profit for
the year, including the impact on trends/movements between financial periods. In addition, determining whether an item is unusual in
nature is a matter of judgement which requires comparison with other items to conclude if it is sufficiently different to meet the criteria
of being unusual in nature. Exceptional items in FY 2024 have significantly increased to £35.7m from £7.5m in FY 2023.
Exceptional items were as follows:
2024 2023
£m £m
Included within sales, marketing and administrative expenses:
Impairment of property, plant and equipment relating to gears manufacturing
4.6
—
Business process improvements including ERP system
9.9
7.5
14.5
7.5
Included within result of associate:
Impairment of investment in associate
9.1
—
Fair value loss on loans due from Bond
11.9
—
Legal fees in relation to Bond
0.2
—
21.2
—
Exceptional items before tax
35.7
7.5
Tax on exceptional items
(8.0)
(1.7)
Exceptional items after tax
27.7
5.8
156 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
3. Operating profit continued
Impairment of property, plant and equipment relating to gears manufacturing
The Company has successfully seeded the PEEK gears market with sales coming through both parts manufacture and polymer resin sales.
With an increasing proportion of sales, both current and forecast, materialising from resin sales, the Company has performed a review of its
property, plant and equipment which is specific to its gear manufacturing operations. Following this review the Company has written down
a number of assets which are either no longer required or are not forecast to be fully utilised in the future by the gears business and cannot
be redeployed elsewhere in the Group. The assets have been written down to their recoverable amount with an impairment loss recognised
of £4.6m, none of which is deductible for tax. Given the size of the impairment, its impact on the reported profit-based metrics and the
infrequent nature of such charges, it meets the Company’s criteria to be presented as exceptional.
Business process improvements including ERP system implementation
During FY 2022 the Group commenced a multi-year improvement project centred around the implementation of a new cloud-based ERP
system. The project, which includes process redesign, customisation and configuration of the new ERP system, change management and
training, will deliver benefits to both customer interactions and internal business processes including those covering procurement, back
office processing and organisational efficiency.
The project costs relating directly to the new ERP system implementation do not meet the criteria for capitalisation (as the majority of costs
relating to past systems have), in line with the IFRS Interpretations Committee’s decision clarifying how arrangements in respect of
cloud-based Software as a Service (‘SaaS’) systems should be accounted for. Accordingly, the cost is expensed rather than capitalised and
amortised. Given the size of the overall improvement project and its impact on the reported profit-based metrics, the fact the system is
evergreen and thus this level and nature of cost will not happen again, it meets the Group’s criteria to be presented as exceptional. The
improvement project, including the ERP system go live, will be completed in 2025.
Impairment of investment in associate and fair value loss on loans due from Bond 3D High Performance Technology BV (‘Bond’)
Details of the non-cash impairment of investment in associate, fair value loss on loans (comprising convertible loan notes and 2024 Bridging
loan), and associated legal fees are detailed in note 11 below. At £21.2m, this meets the criteria to be disclosed as exceptional, being
material in size, and would therefore impact the reported profit-based metrics unduly affecting the comparability of the performance
between reporting periods. The total cost has been disclosed within “Result of associate” on the income statement, a presentation
which the Directors consider appropriately reflects the nature of the impairment and reduction in fair value of the loans.
Of the £21.2m, £9.1m relates to impairment of the investment in associate which is capital in nature for tax purposes and therefore not
deductible for tax.
The cash flow in the year associated with exceptional items was a £11.7m outflow (FY 2023: £7.6m outflow).
4. Fees payable to auditors
Auditors’ remuneration was as follows:
2024 2023
£000 £000
Audit services relating to:
– Victrex plc and Group consolidation
287
330
– The Company’s subsidiaries, pursuant to legislation
503
463
790
793
Non-audit fees for FY 2024 were £nil (FY 2023: £nil).
5. Staff costs
2024 2023
Note £m £m
Wages and salaries
66.5
65.0
Social security costs
6.8
6.7
Defined contribution pension schemes
17
6.9
6.7
Defined benefit pension schemes
17
(0.3)
(0.7)
Equity-settled share-based payment transactions
21
0.2
0.7
80.1
78.4
Detailed disclosures that form part of these financial statements are given in the Directors’ remuneration report on pages 111 to 133.
The monthly average number of people employed by the Group during the year, analysed by category, was as follows:
2024 2023
Number Number
Make
658
654
Develop, market and sell
283
249
Support
174
214
1,115
1,117
There are no people employed by the Company (FY 2023: none).
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 157
Notes to the financial statements continued
6. Finance income and costs
2024 2023
£m £m
Finance income/(costs):
– Interest received
0.7
1.3
– Interest payable and similar charges
(1.4)
(0.2)
– Other finance costs
(0.2)
(0.3)
– Interest on lease liabilities
(0.3)
(0.2)
(1.2)
0.6
In addition, the Group has incurred interest costs of £0.9m (FY 2023: £1.2m) on bank loans and loans payable to the non-controlling
interest funding the construction of property, plant and equipment in China, which have been capitalised within the associated cost of the
qualifying property, plant and equipment (see note 9). Capitalisation of these interest costs ceased in April 2024 when the property, plant
and equipment to which the loans relate was commissioned.
7. Income tax expense
Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the
extent that it relates to items recognised directly in other comprehensive income or equity as appropriate.
Current tax is the expected tax payable on the taxable income for the current and prior years, using tax rates (and tax laws) enacted or
substantively enacted at the balance sheet date. The Group is subject to income tax in numerous jurisdictions. Estimates are required in
determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination
is uncertain because it may be unclear how tax law applies to a particular transaction or circumstance. Where the Group determines that it
is more likely than not that the tax authorities would accept the position taken in the tax return, amounts are recognised in the financial
statements on that basis. Where the amount of tax payable or recoverable is uncertain, the Group recognises a liability or asset based on either
the Group’s judgement of the most likely outcome or, where there is a wide range of possible outcomes, the expected value.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for tax purposes. The following temporary differences are not provided
for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affects neither accounting nor taxable
profit; and differences relating to investments in subsidiaries except to the extent that they will probably reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable, within a reasonable time frame (typically a period of up to five
years), that future taxable profits will be available against which the asset can be utilised. The probability assessment takes into account
the legislation in each jurisdiction, including any restrictions in place, on a company by company basis, including consideration of the
ability to relieve losses between Group companies in the same country and jurisdiction. The availability of taxable temporary differences
(i.e. deferred tax liabilities) relating to the same tax jurisdiction and company, which are expected to reverse over a similar time frame, is
also taken into account when assessing the recognition of any deferred tax asset. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realised. The assessment over the recoverability of deferred tax assets is reviewed
at each reporting date. Where forward-looking forecasts are used to assess the recognition of a deferred tax balance, forecasts
consistent with those used for other assessments within the Annual Report (including going concern, impairment and viability) are used,
but disaggregated to a level appropriate for tax to be assessed, either by company or by tax jurisdiction.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
2024 2023
Note £m £m
Current tax
UK corporation tax on profits for the year
(0.7)
5.5
Overseas tax on profits for the year
2.7
2.5
2.0
8.0
Deferred tax
Origination and reversal of temporary differences
12
5.3
3.2
Tax adjustments relating to prior years:
– Current tax
0.2
1.0
– Deferred tax
0.1
(0.7)
Total tax expense in income statement
7.6
11.5
158 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
7. Income tax expense continued
Reconciliation of standard and effective tax rate
2024
2023
%
£m
%
£m
Profit before tax
23.4
72.5
Tax expense at UK corporation tax rate
25.0
5.9
22.0
16.0
Effects of:
– Income not deductible for tax purposes
(1.1)
(1.0)
– Higher rates of tax on overseas earnings
1.2
0.7
– UK tax incentives for capital expenditure and other allowances
—
(0.5)
– Impairments not deductible for tax purposes (note 3)
3.4
—
– Withholding tax suffered
0.2
—
– Foreign deferred tax
(1.0)
0.1
– Tax adjustments relating to prior years
0.3
0.3
– Share of loss of associate
—
0.3
– Difference in rates between deferred tax and corporation tax
—
0.5
– Deferred tax on losses not recognised
1.7
0.9
– Deferred tax on unremitted earnings
0.2
0.3
– Patent Box deduction
(3.2)
(6.1)
Effective tax rate and total tax expense
32.5
7.6
15.9
11.5
The Group has reviewed the requirements of amendments to IAS 12 relating to deferred tax on assets and liabilities arising from a single
transaction and has concluded that there is no material impact on the Group’s result or financial position. In addition, the Group has reviewed
its position in respect of the OECD Pillar 2 rules and has concluded that, at this stage, it is not within the remit of these rules due to being
below the €750.0m revenue threshold.
Deferred tax assets/liabilities have been recognised at the rate they are expected to reverse. For UK assets/liabilities this is 25% of the assets
and liabilities (30 September 2023: 25% for the majority), being the UK tax rate effective from 1 April 2023, in accordance with the Finance Bill
2021, which was substantively enacted on 24 May 2021. For overseas assets/liabilities the corresponding overseas tax rate has been applied.
Tax components of other comprehensive expense
2024 2023
£m £m
Tax on items that will not be reclassified to the income statement:
Deferred tax (charge)/credit on defined benefits pension schemes’ actuarial result
(0.1)
1.4
Tax on items that have or may be subsequently reclassified to the income statement:
Current tax charge on changes in fair value of cash flow hedges
(1.1)
(3.4)
(1.2)
(2.0)
Current tax charge
(1.1)
(3.4)
Deferred tax (charge)/credit
(0.1)
1.4
(1.2)
(2.0)
Tax components of items recognised directly in equity
2024 2023
£m £m
Deferred tax charge/(credit) on equity-settled share-based payment transactions
0.6
(0.1)
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 159
Notes to the financial statements continued
8. Earnings per share
Basic earnings per share is based on the Group’s profit attributable to ordinary shareholders and a weighted average number of ordinary
shares outstanding during the year, excluding own shares held (see note 22). Diluted earnings per share is calculated by adjusting the
weighted average number of shares used for the calculation of basic earnings per share as increased by the dilutive effect of potential
ordinary shares. Dilutive shares arise from employee share option schemes where the exercise price is less than the average market price
of the Company’s ordinary shares during the year. Where the option price is above the average market price, the option is not dilutive and
is excluded from the diluted earnings per share calculation.
2024
2023
Earnings per share
– basic
19.8p
70.9p
– diluted
19.7p
70.5p
Profit for the financial year attributable to the owners of the Company
£17.2m
£61.7m
Weighted average number of shares used:
– Issued ordinary shares at beginning of year
87,018,377
86,995,029
– Effect of own shares held
(75,847)
(75,847)
– Effect of shares issued during the year
8,421
18,005
Basic weighted average number of shares
86,950,951
8 6,937,187
Effect of share options
420,332
559,222
Diluted weighted average number of shares
87,371,283
87,496,409
9. Property, plant and equipment
Owned assets
All owned items of property, plant and equipment are stated at historical cost less accumulated depreciation and provision for
impairment. The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
All other repairs and maintenance costs are charged to the income statement during the financial year in which they are incurred.
Borrowing costs relating to the construction of qualifying property, plant and equipment are capitalised at the actual cost incurred where
the funds are borrowed specifically to fund the construction project. All other finance costs are expensed as incurred.
Depreciation
Depreciation is charged to the income statement on a straight line basis over the estimated useful economic lives as follows:
Buildings 25–50 years
Plant and machinery 10–30 years
Fixtures, fittings, tools and equipment 5–10 years
Computers and motor vehicles 2–5 years
Freehold land is not depreciated.
The residual values and useful lives of assets are reviewed annually for continued appropriateness and indications of impairment and
adjusted if appropriate.
Depreciation on assets classified as in the course of construction commences when the assets are ready for their intended use and
transferred from assets in the course of construction into the relevant asset category.
Profits and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the income statement.
Impairments
At each reporting date, property, plant and equipment is reviewed for impairment if events or changes in circumstances indicate that the
carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is assessed by reference to the
assets’ value in use or fair value less costs to sell if higher. Any impairment in value is charged to profit or loss in the period in which it occurs.
160 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
9. Property, plant and equipment continued
Impact of climate change
The impact of climate change on property, plant and equipment is primarily a result of physical risks, for example increasing severity
of flooding or high winds which could impact the useful economic life of the asset. The maximum useful life of assets is 50 years,
relating to office buildings, with primary plant assets being depreciated over 30 years. The latest date for an asset to be fully
depreciated is 2062, with the latest date for manufacturing assets currently under construction expected to be 2054. Based on the
site by site climate change impact assessments performed to date, it is not anticipated that any physical risks would materially impact
the Group’s assets to the extent that their current carrying value or remaining useful economic lives would be reduced.
Assets which may be impacted by proactive actions to reduce carbon emissions, for example gas powered boilers, or by potential
regulations to curb carbon emissions are being assessed as the path to Net Zero is planned in detail and regulators provide more
transparency on their potential approach. Based on the planning work performed to date, for example replacing gas as the heat
source with hydrogen, biogas or green electricity, and the infancy of the regulatory approach, there is not expected to be a
material impact on the remaining useful economic lives, or the carrying value, of the assets held by the Group.
The Company has minimal asset value in market/application specific property, plant and equipment where there is expected
to be a material drop in demand due to climate change.
Right of use (‘ROU’) assets
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as
an ROU asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group.
At the lease commencement date an ROU asset is measured at cost comprising the following: the amount of the initial measurement
of the lease liability; any lease payments made at or before the commencement date less any lease incentives received; any initial direct
costs; and restoration costs to return the asset to its original condition.
The ROU asset is depreciated over the shorter of the asset’s useful economic life and the lease term on a straight line basis. If ownership
of the ROU asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation
is calculated using the estimated useful economic life of the asset.
Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and
non-lease components based on their relative stand-alone prices. However, for leases of retail estate for which the Company is a lessee
and for which it has major leases, it has elected not to separate lease and non-lease components and instead accounts for these as
a single lease component.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 161
Notes to the financial statements continued
9. Property, plant and equipment continued
Fixtures,
Computers fittings, Right Assets in
Land and Plant and and motor tools and of use the course of
buildings machinery vehicles equipment assets construction Total
£m £m £m £m £m £m £m
Cost
At 1 October 2022
64.6
352.5
6.8
4.1
13.5
105.6
5 47.1
Exchange differences
(0.9)
(1.8)
(0.1)
(0.2)
—
(7.8)
(10.8)
Additions
—
0.2
0.1
—
3.0
30.5
33.8
Disposals
—
(0.3)
—
—
(3.2)
—
(3.5)
Reclassification
4.1
28.2
2.5
0.1
—
(34.9)
—
At 30 September 2023
67.8
378.8
9.3
4.0
13.3
93.4
566.6
Exchange differences
(0.7)
(3.7)
(0.1)
(0.1)
(0.1)
(1.9)
(6.6)
Additions
—
0.5
—
—
2.4
30.9
33.8
Disposals
(0.1)
(0.9)
(0.8)
(0.1)
(3.0)
—
(4.9)
Reclassification
1.7
93.1
1.1
0.1
—
(96.0)
—
At 30 September 2024
68.7
467.8
9.5
3.9
12.6
26.4
588.9
Accumulated depreciation
At 1 October 2022
19.0
169.4
3.5
3.7
4.3
—
199.9
Exchange differences
(0.2)
(0.6)
(0.1)
(0.2)
—
—
(1.1)
Disposals
—
(0.2)
—
—
(3.0)
—
(3.2)
Depreciation charge
2.2
14.3
1.2
0.1
2.0
—
19.8
At 30 September 2023
21.0
182.9
4.6
3.6
3.3
—
215.4
Exchange differences
(0.2)
(0.6)
(0.1)
(0.1)
—
—
(1.0)
Disposals
(0.1)
(0.8)
(0.8)
(0.1)
(1.9)
—
(3.7)
Impairment
0.8
3.8
—
—
—
—
4.6
Depreciation charge
2.3
16.3
1.4
0.1
1.4
—
21.5
At 30 September 2024
23.8
201.6
5.1
3.5
2.8
—
236.8
Carrying amounts
At 30 September 2024
44.9
266.2
4.4
0.4
9.8
26.4
352.1
At 30 September 2023
46.8
195.9
4.7
0.4
10.0
93.4
351.2
At 30 September 2022
45.6
183.1
3.3
0.4
9.2
105.6
347.2
£0.9m (FY 2023: £1.2m) of additions within assets in the course of construction relates to borrowing costs capitalised; see note 15 for
further details.
162 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
9. Property, plant and equipment continued
Reclassification relates to the movement from assets in the course of construction to the relevant asset category when the assets are ready
for their intended use. Details of significant projects reclassified are included in the Financial review.
During the year, the Group recognised an impairment loss of £4.6m in relation to property, plant and equipment which is specific to its
gears manufacturing operations. The impairment charge is included in exceptional expenses. The fair value of property, plant and
equipment is not materially different to its carrying value.
The Company has no property, plant or equipment.
At 30 September 2024 and 30 September 2023, the Group leased a small number of assets, principally land and buildings:
Land and Motor
buildings vehicles Total
£m £m £m
Right of use assets
Balance at 1 October 2022
9.0
0.2
9.2
Additions
2.7
0.3
3.0
Depreciation charge
(1.8)
(0.2)
(2.0)
Disposal
(0.2)
—
(0.2)
Balance at 30 September 2023
9.7
0.3
10.0
Additions
2.0
0.4
2.4
Depreciation charge
(1.2)
(0.2)
(1.4)
Disposal
(1.2)
—
(1.2)
Balance at 30 September 2024
9.3
0.5
9.8
The information in respect of the lease liabilities associated with the right of use assets is disclosed in note 19.
Land and building right of use assets are primarily leases to support manufacturing capability.
10. Intangible assets
Goodwill
Goodwill arising on the acquisition of businesses is allocated, at acquisition, to the cash-generating units (‘CGUs’) that are expected
to benefit from that business combination.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is not amortised but is tested annually for impairment.
Any impairment provisions that arose during impairment testing would not be reversed.
In respect of acquisitions prior to 1 October 2004, goodwill is included on the basis of its deemed cost, which represents the net amount
recorded previously under UK GAAP. In respect of acquisitions that have occurred since 1 October 2004, goodwill represents the
difference between the cost of the acquisition and the fair value of the assets, liabilities and contingent liabilities acquired.
Goodwill is tested annually for impairment by reference to the estimated future cash flows of the relevant CGU, discounted to their
present value using risk-adjusted discount factors to give its value in use. A CGU is the smallest identifiable asset group that generates
cash flows that are largely independent from other assets and groups.
Impairment losses are recognised if the carrying amount of the CGU to which goodwill has been allocated exceeds its recoverable value
(the higher of value in use and fair value less costs to sell) and are recognised in the income statement.
Other intangible assets
Other intangible assets are stated at cost less accumulated amortisation and any provisions for impairment. The cost of an internally
generated intangible asset comprises all directly attributable costs necessary to create, produce and prepare the asset to be capable of
operating in the manner intended by management. The cost of intangible assets acquired in a material business combination is the fair
value as at the date of acquisition. Other intangible assets are assessed for impairment only when there is an indication that they might
be impaired. The estimated useful economic life and amortisation method are reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets not yet ready for use are not amortised but are subject to annual impairment reviews.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 163
Notes to the financial statements continued
10. Intangible assets continued
Amortisation
Amortisation is charged to sales, marketing and administrative expenses in the income statement over the estimated useful economic
lives as follows:
Computer software 3–7 years straight line
Customer relationships 10 years systematic
Brand name 5 years systematic
Know-how 10 years straight line
Amortisation on assets classified as in the course of construction commences when the assets are ready for their intended use, the point
at which they are reclassified from assets in the course of construction, on the same basis as other assets of that class.
Assets in
Computer Customer the course of
Goodwill software relationships Brand name Know-how construction Total
£m £m £m £m £m £m £m
Cost
At 1 October 2022
14.3
16.7
1.7
0.7
3.2
—
36.6
Additions
—
—
—
—
—
0.2
0.2
Reclassification
—
0.2
—
—
—
(0.2)
—
At 30 September 2023
14.3
16.9
1.7
0.7
3.2
—
36.8
Additions
—
—
—
—
—
0.1
0.1
Disposals
—
(0.6)
—
—
—
—
(0.6)
Reclassification
—
0.1
—
—
—
(0.1)
—
At 30 September 2024
14.3
16.4
1.7
0.7
3.2
—
36.3
Accumulated amortisation
At 1 October 2022
—
13.4
1.7
0.7
0.6
—
16.4
Amortisation charge
—
1.3
—
—
0.4
—
1.7
At 30 September 2023
—
14.7
1.7
0.7
1.0
—
18.1
Disposals
—
(0.6)
—
—
—
—
(0.6)
Amortisation charge
—
1.4
—
—
0.3
—
1.7
At 30 September 2024
—
15.5
1.7
0.7
1.3
—
19.2
Carrying amounts
At 30 September 2024
14.3
0.9
—
—
1.9
—
17.1
At 30 September 2023
14.3
2.2
—
—
2.2
—
18.7
At 30 September 2022
14.3
3.3
—
—
2.6
—
20.2
Computer software is an internally generated intangible asset. The average remaining useful life is one year (FY 2023: two years).
The Group has know-how in respect of the hybrid overmoulding technology for brackets. The remaining useful life of the know-how
is six years (FY 2023: seven years).
Goodwill recognised is assessed for impairment against discounted future pre-taxation cash flow projections for the relevant CGU (value in
use model). Management has prepared cash flow projections for a five-year period derived from the business’ 24-month forecast and the
five-year strategy. These forecasts are the same ones used for both the going concern and viability reviews. Further details are included on
pages 43 to 45. These forecasts include assumptions around volumes and sales prices, costs of manufacture, operating costs, working
capital movements and capital expenditure. In measuring these assumptions, the Directors have taken into account:
u
expected demand in the markets and geographies within which the Group operates, including industry trends and external market forecasts;
u
operating profits, based on historical experience of operating margins including changes to the price of raw material and utility costs
and production volumes;
u
the timing and cost of major capital projects;
u
cash conversion, based on historical rates; and
u
the impact of climate change (see below).
164 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
10. Intangible assets continued
Impact of climate change
The impact of climate change on the carrying value of goodwill has been considered. The majority of the goodwill relates to
the acquisition of the monomer supply chain. As with all manufacturing areas, the monomer supply chain is being assessed for
its impact on the path to Net Zero with the potential for decarbonising and reducing water usage and waste. The impact of
this on the processes associated with the goodwill is not yet known, but current forecasts used for the consideration of
impairment, see below, underpin the carrying value at 30 September 2024. This position will continue to be monitored as the
approach to decarbonisation of the monomer supply chain is developed to support the Group’s path to Net Zero.
Climate change will potentially impact the future forecasts of the Group which are used for the aforementioned impairment
review. The overall impact on the revenue of the Group is assessed as positive, with the majority of the growth programmes
supporting carbon reduction in end markets, which will more than offset the adverse impact from reductions anticipated to be
seen, for example in Oil & Gas and internal combustion engine related applications. The primary adverse impact is expected to
be seen in carbon pricing and the cost of using greener energy sources. To reflect this in the impairment review an amount of
£10m in 2026 and £20m in 2027 (growing by inflation thereafter) has been included in the scenarios used for the sensitivity
analysis supporting the impairment review. Further detail of this is included in the Sustainability report starting on page 46.
The sensitivity analysis performed as part of the viability assessment on the CGUs of the Group demonstrated a sufficient level of headroom
as noted below; therefore, no specific adjustments or impairments have been made.
The Group has two CGUs, Sustainable Solutions and Medical, which are the smallest identifiable independent groups of assets that
generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Where assets and costs
are shared between the two CGUs, a reasonable apportionment of these is made for the purpose of the impairment calculation.
Goodwill is split between the two CGUs: Sustainable Solutions £12.8m (30 September 2023: £12.8m) and Medical £1.5m (30 September
2023: £1.5m).
The goodwill and other intangible assets that relate to the Sustainable Solutions CGU include previous acquisitions that have been
fully integrated. The businesses acquired generate/have the potential to generate revenue across all Sustainable Solutions geographies
and markets.
The long-term average growth rate used was 2.0% (FY 2023: 2.0%) which reflects the long-term inflation rates in the main territories
within which the Group operates and the risk-adjusted pre-tax discount rate was 9.6% (FY 2023: 10.7%). The impairment test results in
more than 100% headroom in the base scenario (FY 2023: more than 100% headroom). In addition, a number of sensitivities, incorporating
reverse sensitivities, have been performed including increasing the discount rate by 20%, removing both the growth through the strategy
period and the terminal growth rate and the aforementioned potential impact of climate change, with the results indicating that a
reasonably possible change in key assumptions would not result in an impairment of goodwill or other intangibles.
Research & Development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding,
is recognised within the income statement as an expense as incurred.
Development expenditure is recognised in the income statement as an expense as incurred unless it meets all the criteria to be capitalised
under IAS 38 – Intangible Assets, including technical feasibility of completing the asset, intention to complete, probability of future
economic benefits, the availability of resources to complete and the ability to reliably measure expenditure attributed to the development.
Research & Development expenditure of £17.5m (FY 2023: £18.6m) was expensed to the income statement in the year within sales,
marketing and administrative expenses. No development expenditure was capitalised (FY 2023: £nil) as the Directors consider there is
insufficient evidence available that the criteria have been met for the reasons noted below.
The Group has the intention and resources to complete the projects being undertaken, along with the ability to accurately measure
attributable expenditure. Therefore, whilst these criteria are met, the assessment of the technical feasibility and future economic benefits
is more difficult.
For Medical-based development projects there are strict regulatory approvals which are required to be obtained before a new product can
be brought to market. Prior to these approvals a varying degree of clinical trials need to be undertaken, many of which are multi-year in
length. The vast majority of development expenditure is incurred up to the point of regulatory approval; however, the outcome cannot be
considered probable until approval is obtained. Without approval the Group or its customers cannot sell a Medical product. Even with
regulatory approval, market adoption remains uncertain and therefore the criteria for capitalisation is rarely met.
Sustainable Solutions-based development projects typically do not have the same strict regulatory approvals; however, they are often
subject to rigorous qualification and testing programmes, often over a sustained period of time. Examples of this include wear testing
within Automotive, Aerospace and Energy & Industrial. Potential customers are also often testing multiple solutions at the same time with
a view to selecting one following the testing/qualification programme. As a result it is only when a successful outcome to the testing/
qualification programmes is achieved that technical feasibility is reached and market adoption becomes the key assessment. At this point,
whilst market adoption risk remains, the vast majority of development expenditure has been incurred and expensed.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 165
Notes to the financial statements continued
11. Interests in other entities
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the investee and can affect those returns through its power over the investee. This can be determined either
by the Group’s ownership percentage or by the terms of the shareholder agreement. Where there is deemed to be an ability to affect
the return, investments are consolidated from the date that ability commences until the date that it ceases.
The acquisition method is used to account for business combinations. Goodwill represents the difference between the acquisition date
fair value of the consideration transferred, the amount of any non-controlling interests in the acquiree and the net of the acquisition date
fair values of the identifiable assets acquired, including intangibles, and liabilities assumed, including contingent liabilities as required by
IFRS 3. If this difference is negative, the amount is recognised directly in the Consolidated income statement.
A non-controlling interest is the proportion of net assets of the subsidiary entity owned by shareholders external to the Group. The value
of non-controlling interests at the acquisition date is measured as the non-controlling interests’ proportionate share of net assets of the
acquiree or at fair value. The choice of measurement basis is determined on an acquisition-by-acquisition basis as permitted by IFRS 3.
Financial derivatives in place over the remaining equity of an entity are taken into account when calculating the proportionate share
of the non-controlling interest.
Any contingent consideration is measured at fair value at the date of acquisition. Subsequent changes to the fair value of contingent
consideration are recognised in the Consolidated income statement.
Costs related to the acquisition, other than those associated with the issue of debt, that the Group incurs in connection with a business
combination are expensed as incurred.
Non-controlling interests in the net assets of consolidated subsidiaries are distinguished from the equity attributable to holders of the
Parent. The value of non-controlling interests comprises the value of non-controlling interests on the date control commences, adjusted
for the non-controlling interests’ share of any subsequent changes in equity.
Investment in subsidiaries
Investments in subsidiaries are stated at cost less any impairment in the value of the investment.
Investment in associated undertakings
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint
arrangement. Significant influence is the power to participate in the financial and operating policy decisions of the investee but where
the Group does not have control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the equity method of
accounting. Investments in associates are carried in the balance sheet at cost as adjusted for post-acquisition changes in the Group’s
share of the net assets of the associate, less any impairment in the value of the investment. Any goodwill recognised on acquisition is
included in the carrying values of the investment. Impairment is recognised when there is objective evidence that a loss event (or events)
has arisen which adversely impacts the future cash flows from the net investment and therefore provides evidence of impairment.
Objective evidence includes observable data about the associate that comes to the Group’s attention covering the loss events described
in IAS 28 Investments in Associates and Joint Ventures paragraphs 41A to 41C. Where objective evidence exists, an impairment test is
performed whereby the carrying value of the investment is compared to the recoverable amount (higher of value in use and fair value
less costs to sell).
The Group’s share of the post-tax profits/(losses) of associates is included in the Consolidated income statement. If the Group’s share of
losses in an associate equals or exceeds its investment in the associate, the Group does not recognise further losses, unless it has incurred
legal or constructive obligations to do so or made payments on behalf of the associate. Unrealised gains arising from transactions with
associates are eliminated to the extent of the Group’s interest in the entity.
Interests in joint arrangements
A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject
to joint control. Joint arrangements are either joint operations or joint ventures.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control have the rights to the assets, and obligations for
the liabilities, relating to the arrangement or other facts and circumstances indicate that this is the case. The Group’s share of assets,
liabilities, revenue, expenses and cash flows is combined with the equivalent items in the financial statements on a line-by-line basis.
Transactions eliminated on consolidation
Intragroup balances and transactions, and any unrealised gains and losses or income and expenses arising from intragroup transactions,
are eliminated in preparing the consolidated financial statements.
Financial assets held at fair value through profit and loss
Financial assets held at fair value through profit and loss comprise investments in unquoted companies and convertible loans made
to associated undertakings. Investments in unquoted companies are initially carried at fair value, where neither control nor significant
influence is held. The initial fair value is deemed to be at cost where transactions are at arm’s length. They are remeasured at subsequent
reporting dates to fair value with any changes recognised directly in the income statement.
166 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
11. Interests in other entities continued
Basis of consolidation continued
Financial assets held at fair value through profit and loss continued
Financial assets that are compound financial instruments from the holder’s perspective are accounted for under IFRS 9. Under IFRS 9
financial assets are held at either amortised cost, fair value through other comprehensive income (‘FVTOCI’) or fair value through
profit and loss (‘FVTPL’). In making the assessment the Company’s business model and the contractual terms are assessed against
the conditions in IFRS 9. Where the conditions for holding an asset at amortised cost are not met and where no election is made
to measure at FVTOCI, FVTPL is the default.
At initial recognition financial assets are measured at fair value. This is assumed to be the transaction price unless there is evidence
to the contrary.
All transaction costs related to financial instruments designated as at fair value through profit and loss are expensed as incurred.
Investments in unquoted companies and convertible loans are classified as Level 3 in the financial hierarchy because there are no
observable market inputs. For these assets unobservable inputs are used to measure the range of fair values, using an income approach
to convert future cash flows into present values. Inputs into the valuation model include both Group forecasts and forecasts from the
investee, with consideration given to performance against technical and commercial milestones. Where there is insufficient information
to determine fair value or there is a wide range of possible fair value measures, and cost represents the best estimate in that range, then,
as permitted by IFRS 9, cost will continue to be used as a proxy for fair value. Cost will not be used as a proxy if, at the balance sheet
date, there is an identified change in value, which could be illustrated by significant performance variations to plan or the value implied
by subsequent funding rounds or other equity transactions.
Group
Material subsidiaries and non-controlling interest (‘NCI’)
Victrex (Panjin) High Performance Materials Co. Ltd (‘VIPL’) (formerly Panjin VYX High Performance Materials Co Ltd (‘PVYX’)) is a limited
liability company set up for the purpose of the manufacture of PAEK polymer powder and granules, based in mainland China. The Group
continues to hold a 75% equity interest with the remaining 25% held by Liaoning Xingfu New Material Co., Ltd. (‘LX’) (formerly Yingkou
Xingfu Chemical Co., Ltd). Consistent with prior years, with 75% of the voting equity and the majority of appointments on the board,
the Group is considered to have control of VIPL and therefore it is accounted for as a subsidiary. The income statement and balance sheet
of VIPL are fully consolidated with the share owned by LX represented by a non-controlling interest.
During the year ended 30 September 2023 LX made cash injections into VIPL totalling RMB 22.5m (£2.6m), split as RMB 15m (£1.7m)
in the form of loans and further equity investment of RMB 7.5m (£0.9m). There were no cash injections made during the year ended
30 September 2024.
In the year to 30 September 2024 the subsidiary incurred a loss of £5.7m (FY 2023: loss of £2.6m), of which £1.4m (FY 2023: £0.7m)
is attributable to the non-controlling interest. Total non-controlling interest as at 30 September 2024 is £0.6m (FY 2023: £2.0m).
At 30 September 2024 the subsidiary had aggregate capital and reserves of £2.1m (30 September 2023: £8.2m).
Investments in associates and financial assets held at fair value through profit and loss
Financial assets
held at fair
Investment in value through
associates profit and loss Total
£m £m £m
At 1 October 2022
10.4
10.1
20.5
Group’s share of loss of Bond 3D High Performance Technology BV
(1.3)
—
(1.3)
Convertible loans issued to Bond 3D High Performance Technology BV
—
2.9
2.9
Interest on loans issued to Bond 3D High Performance Technology BV
—
0.4
0.4
Gain/(loss) on financial assets held at fair value - exchange differences
—
(0.2)
(0.2)
At 30 September 2023
9.1
13.2
22.3
Convertible loan notes and 2024 bridging loan issued to Bond
—
2.2
2.2
Impairment of investment in associate
(9.1)
—
(9.1)
Fair value loss on convertible loan notes and 2024 bridging loan issued to Bond
—
(11.9)
(11.9)
At 30 September 2024
—
3.5
3.5
Surface Generation Limited
—
3.5
3.5
Bond 3D High Performance Technology BV
9.1
9.7
18.8
At 30 September 2023
9.1
13.2
22.3
Surface Generation Limited
—
3.5
3.5
Bond 3D High Performance Technology BV
—
—
—
At 30 September 2024
—
3.5
3.5
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 167
Notes to the financial statements continued
11. Interests in other entities continued
Group continued
Bond 3D High Performance Technology BV (‘Bond’)
Until its liquidation (as detailed below), Bond was a company incorporated in the Netherlands, which was developing unique, protectable
3D printing (Additive Manufacturing) processes capable of producing high strength parts from existing grades of PEEK and PAEK polymers.
The investment in Bond offered the potential of utilising this technology to help accelerate the market adoption of 3D printed PEEK parts,
with particular emphasis on the Medical market.
Since FY 2021, the Group, along with other investors, has provided additional funding to Bond in the form of convertible loan notes (‘CLNs’)
to fund the development and commercialisation through to net cash generation.
The carrying value of the investment in associate in Bond and the fair value of convertible loan notes and bridging loans due from Bond
collectively described as the ’Bond assets’ below.
Investment in associate
The Group’s investment in the ordinary share capital of Bond (24.5% ownership) at 30 September 2024 is €14.7m/£12.8m at cost (30
September 2023: €14.7m/£12.8m), with a carrying value of £nil (30 September 2023: £9.1m), which includes the impact of the Group’s
share of losses since investment and an impairment in the year of £9.1m.
Convertible loan notes (‘CLNs’) due from Bond
The CLNs were convertible into ordinary shares of Bond, at the Group’s option, or were to be repaid by Bond on or before the end of the
five-year agreed term, unless Bond exercised its right, available in certain circumstances, to extend the term by up to five years. The majority
of the CLNs accrued interest which was accumulated into the value of the CLN and attracted the same conversion rights as the principal.
The CLNs had preferential treatment to the ordinary equity in an exit scenario but were subordinated to certain other tranches of debt.
The CLNs in Bond were therefore classified as fair value through profit and loss, with the transaction value considered materially equal
to the fair value of the convertible loan for initial recognition.
During the year the Group provided a €1.0m/£0.9m bridging loan (‘2024 bridging loan’) to Bond to extend the time available for Bond to find
additional funding from new investors.
As detailed below the fair value of the CLNs and the 2024 bridging loan have been reduced resulting in a loss of £11.9m being recognised
in the year (FY 2023: no gain or loss).
FY 2024 impairment of investment in associate and fair value loss on loans due from Bond
At previous reporting dates, in the absence of an arm’s length transaction in the equity, the assessment of carrying value of the Bond assets
was based on the future forecasts of the business, with the application of a number of scenarios to provide a range of potential outcomes
which were used to both assess for indicators of impairment of investment in associate and to determine the range of fair values for the
CLNs. In making this assessment, the progress against each of Bond’s key milestones, required for its future success, and therefore driving
business valuation, was also considered.
The three key milestones, as detailed in the FY 2023 Annual Report, were:
u
optimisation of the technology;
u
regulatory approval being obtained from the relevant medical authority for the resulting products and successful commercialisation; and
u
receipt of additional funding from new investors.
Due to the inherent uncertainty of delivery of these milestones, the valuation exercise at each reporting date required the use of significant
judgement and estimation and therefore was classed as a ‘critical judgement and use of estimation uncertainty’ from March 2023.
The 2023 Annual Report included four valuation scenarios ranging from scenario 1, which saw full delivery of the strategy and resulted in
an increase to the fair value of the CLNs, to scenario 4, which saw a full impairment of investment in associate and fair value reduction to
£nil of the CLNs caused either by the technology being superseded and not making it to market or failure to raise sufficient external funding
to sustain Bond. All scenarios required additional funding by mid-FY 2024.
The final €1.5m/£1.3m of the 2023 CLN from the Group was drawn down by Bond between October 2023 and February 2024.
Despite actively seeking additional external funding since October 2023, Bond was unsuccessful in identifying new investors. Consequently, a request
was made in February 2024 to existing shareholders for a bridging loan to provide an additional period of headroom to find new investment.
Victrex was the only investor to provide this funding, with a bridging loan of up to €2.5m, drawable only as required and assuming progress
was being made to further reduce costs and secure the required funding and holding preference over all existing Bond debt. €1.0m/£0.9m
of the 2024 bridging loan was drawn down in April 2024.
With no external funding raised, and slower than planned progression in obtaining regulatory approval, the Directors considered that the
facts and circumstances available provided objective evidence that a loss event existed. A full impairment of investment in associate and fair
value loss on loans due from Bond totalling £20.1m combined was recognised at 31 March 2024.
168 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
11. Interests in other entities continued
Group continued
Bond 3D High Performance Technology BV (‘Bond’) continued
FY 2024 impairment of investment in associate and fair value loss on loans due from Bond continued
In late May 2024, the last potential investor declined to invest. At this point, with no credible investment options remaining, Victrex
determined the likelihood of securing new external funding was low and therefore the milestones would not be met. Accordingly,
the Directors decided no further funding would be made available to Bond under the 2024 bridging loan.
Subsequently the trade and assets of Bond were sold for a nominal value, leaving all amounts owed to Victrex still outstanding. The terms
of sale of the trade and assets by Bond includes a clause entitling certain existing Bond debt holders, including Victrex, to participate in any
upside of a subsequent sale of the business within the next five years. Due to the high level of uncertainty around any future sale, no value
has been attributed to this provision.
On 30 October 2024 Bond was liquidated. Following that liquidation there is no chance of the Group recovering any value from the
investment in associate, CLNs and 2024 bridging loan. Therefore, the carrying value of the Bond assets at 30 September 2024 is £nil and
the valuation of the Bond assets is no longer considered an area requiring ‘critical judgement and use of estimation uncertainty’.
The total charge recognised in the year is £21.2m, included in ‘Result of associate’ in the income statement, comprising the impairment of
investment in associate of £9.1m, fair value loss on the CLNs of £11.0m and 2024 bridging loan of £0.9m and £0.2m of legal fees. This has
been classified as an exceptional cost in the income statement. The impairment of investment in associate is non-tax deductible.
Company
Investment in
subsidiaries
£m
Cost and carrying value
At 1 October 2023 and at 30 September 2024
131.9
The Company has considered impairment of its investment in subsidiaries with this including amounts receivable from those subsidiaries.
The results of the impairment tests described in note 10 have been used in this consideration. Given the results of those tests, the Directors
do not consider that the carrying value of the Company’s investment in subsidiaries has been impaired.
The following is a full list of the Company’s interests:
Company number
Company status
Registered office address
Wholly owned subsidiary undertakings
Victrex Manufacturing Limited
1
2845018
Trading entity
Victrex Technology Centre,
1 Hillhouse International,
Invibio Limited
4088050
Trading entity
Thornton Cleveleys,
Invibio Knees Limited
8149440
Trading entity
Lancashire FY5 4QD, UK
Invibio Device Component Manufacturing Limited
8861250
Trading entity
Juvora Limited
8149439
Trading entity
Zyex Limited
2890014
Dormant
Victrex USA Holdings Inc.
1
Intermediate
300
Conshohocken State Road, Suite 120,
holding company West Conshohocken, PA 19428, USA
Victrex USA Inc.
Trading entity
Invibio Inc.
Trading entity
Invibio Device Components Manufacturing Inc.
Trading entity
Victrex Europa GmbH
1
Trading entity
Langgasse 16,
65719
Hofheim, Germany
Victrex Japan, Inc.
1
Trading entity
Mita Kokusai Building Annex, 1-4-28 Mita,
Minato-ku, Tokyo 108/0073, Japan
Victrex High Performance Materials (Shanghai)
Trading entity
Victrex Asian Innovation & Technology Centre,
Co., Ltd Part B Building G, No. 1688, Zhuanxing Road,
Xinzhuang Industry Park, Shanghai 201108, China
Invibio (Beijing) Trading Co., Limited
Trading entity
Room
7108
, Building 7, Second Lane 5, The South of
Xiang Jun, Chao Yang District, Beijing 100020, China
Kleiss Gears, Inc.
Trading entity
390
Industrial Avenue, Grantsburg, WI 54840, USA
TxV Aerospace Composites LLC
Trading entity
55 Broadcommon Road, Bristol,
RI
0280
9, USA
Victrex Hong Kong Limited
Trading entity
Level 54, Hopewell Centre 183,
Queen’s Road East, Hong Kong
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 169
Notes to the financial statements continued
Company number
Company status
Registered office address
Subsidiary undertaking with non-controlling interests
Victrex (Panjin) High Performance Materials
Trading entity
Room 501–23, Technology Mansion, Qingyu Road
Co., Ltd
2
East, Zhifang Street North, Liaodong Bay New
District, Panjin, Liaoning Province, China
Associate
Bond 3D High Performance Technology BV
3
Trading entity
Institutenweg 50, 7521 PK,
Enschede, Netherlands
Joint operation
Aghoco 1491 Limited
4
10523749
Trading entity
Victrex Technology Centre, Hillhouse International,
Thornton Cleveleys, Lancashire FY5 4QD, UK
Investment
Surface Generation Limited
4379384
Trading entity
7 Brackenbury Court, Lyndon Barns,
Edith Weston Road, Lyndon, Oakham LE15 8TW, UK
1 Directly held by Victrex plc.
2 Victrex (Panjin) High Performance Materials Co., Ltd changed its name during FY 2024; it was formerly known as Panjin VYX High Performance Materials
Co. The company is also referred to as ‘VIPL’.
3 Bond 3D High Performance Technology BV was liquidated on 30 October 2024.
4 On 13 December 2016, the Group, via its subsidiary Victrex Manufacturing Limited, incorporated Aghoco 1491 Limited with AGC Chemicals Europe
Limited. Aghoco 1491 Limited is a joint arrangement in which the Group holds equal ownership and rights over the entity. The purpose of Aghoco 1491
Limited is to build, operate and maintain an electrical substation (cost of c.£3m) for both parties’ own use to ensure continuity of electrical supply.
Due to the terms of the joint arrangement, Aghoco 1491 Limited meets the criteria to be accounted for as a joint operation.
Annual reports and financial statements are filed with Companies House for all UK dormant companies.
All subsidiaries are wholly owned, with the exception of Victrex (Panjin) High Performance Materials Co., Ltd (‘VIPL’), and are involved in
the principal activities of the Group.
In the opinion of the Directors the recoverable amount of investments in and amounts due from the Company’s subsidiary undertakings
are at least the carrying value at which they are stated in the balance sheet.
12. Deferred tax assets and liabilities
As at 30 September 2024
Property, Set-off of
plant and Employee Unremitted deferred tax
equipment benefits Inventories earnings Other Total
balances
1
Net
£m £m £m £m £m £m £m £m
Deferred tax assets
—
0.9
4.7
—
2.0
7.6
(1.4)
6.2
Deferred tax liabilities
(38.6)
(2.7)
—
(0.9)
—
(42.2)
1.4
(40.8)
Net deferred tax (liabilities)/assets
(38.6)
(1.8)
4.7
(0.9)
2.0
(34.6)
—
(34.6)
As at 30 September 2023
Property, Set-off of
plant and Employee Unremitted deferred tax
equipment benefits Inventories earnings Other Total
balances
1
Net
£m £m £m £m £m £m £m £m
Deferred tax assets
—
1.5
7.0
—
1.2
9.7
(4.1)
5.6
Deferred tax liabilities
(34.7)
(2.4)
—
(1.0)
—
(38.1)
4.1
(34.0)
Net deferred tax (liabilities)/assets
(34.7)
(0.9)
7.0
(1.0)
1.2
(28.4)
—
(28.4)
1 The Group has applied the tax consolidation legislation, in accordance with IAS 12, whereby deferred tax assets and liabilities recognised on consolidation
have been allocated to the tax jurisdictions where they arise, resulting in an offset within deferred tax assets and deferred tax liabilities in the balance sheet.
11. Interests in other entities continued
Company continued
170 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
12. Deferred tax assets and liabilities continued
Property,
plant and Employee Unremitted
equipment benefits Inventories earnings Other Total
Note £m £m £m £m £m £m
Movement in net provision
At 1 October 2022
(32.0)
(2.2)
6.1
(0.6)
1.6
(27.1)
Exchange differences
—
—
—
(0.1)
(0.2)
(0.3)
Prior period adjustment
0.7
—
—
—
—
0.7
Recognised in income statement
7
(3.4)
(0.2)
0.9
(0.3)
(0.2)
(3.2)
Recognised in other comprehensive income
—
1.4
—
—
—
1.4
Recognised directly in equity
—
0.1
—
—
—
0.1
At 30 September 2023
(34.7)
(0.9)
7.0
(1.0)
1.2
(28.4)
Exchange differences
—
—
—
—
(0.1)
(0.1)
Prior period adjustment
(0.2)
—
—
—
0.1
(0.1)
Recognised in income statement
7
(3.7)
(0.2)
(2.3)
0.1
0.8
(5.3)
Recognised in other comprehensive income
—
(0.1)
—
—
—
(0.1)
Recognised directly in equity
—
(0.6)
—
—
—
(0.6)
At 30 September 2024
(38.6)
(1.8)
4.7
(0.9)
2.0
(34.6)
Of the net deferred tax liability of £34.6m (30 September 2023: £28.4m), a £2.9m net asset (30 September 2023: £3.9m net asset) is
expected to be recovered no more than 12 months after the balance sheet date, and a £34.2m net liability (30 September 2023: £32.3m
net liability) is expected to be settled more than 12 months after the balance sheet date.
Deferred tax liabilities of £0.9m (30 September 2023: £1.0m) have been recognised for the withholding tax and other taxes that would
be payable on the unremitted earnings of £18.3m (30 September 2023: £19.4m) of the EU subsidiary, as the Group no longer benefits
from the EU Parent Subsidiary Directive on dividends. It is likely that future amounts will be remitted as a dividend rather than being
permanently reinvested.
Outside the EU no deferred tax liabilities have been recognised (30 September 2023: £nil) for the withholding tax and other taxes, as such
amounts are permanently reinvested, and the Group can control the timing of any dividends. Unremitted earnings from non-EU subsidiaries
totalled £56.5m at 30 September 2024 (30 September 2023: £55.6m).
Impact of climate change
Deferred tax assets are recognised to the extent that it is probable that future taxable profits are generated against which to
utilise the carried forward tax losses and other timing differences. The majority of the deferred tax assets relates to profit in
inventory generated when the UK manufacturing entities sell products to overseas subsidiaries that distribute the products
to the end customer. The targeted inventory levels at overseas locations are set at approximately three to four months, a time
period considered to be too short to be impacted by climate change. The short time period between 30 September 2024
and the expected external sale of the aforementioned inventory makes the realisation of the deferred tax asset probable,
supporting its recognition at the end of the year.
Unrecognised deferred tax assets
In the US, the Group has unrelieved net operating losses arising in the year ended 30 September 2024 of £nil (FY 2023: £0.2m). The
cumulative unused operating losses at 30 September 2024 are £3.5m (30 September 2023: £8.6m). Of this, £2.2m arises in TxV Aerospace
Composites LLC on which deferred tax of £0.5m has been recognised following the treatment of specified research and development
expenditure under US tax law resulting in TxV Aerospace Composites LLC generating taxable profits to utilise these losses. The potential
deferred tax asset on the remaining cumulative unrelieved tax losses of £1.3m, which arise in Kleiss Gears, Inc, amounts to £0.3m (FY 2023:
£2.2m). Deferred tax has not been recognised on these net operating losses because of uncertainty regarding their future availability and
deductibility. There are also unrecognised net deferred tax assets in TxV Aerospace Composites LLC and Kleiss Gears, Inc of £2.3m in
relation to timing differences on capital and research and development expenditure because of uncertainty regarding their future
availability and deductibility.
In addition, the Group has unrelieved net operating losses arising in the year ended 30 September 2024 of £5.7m (FY 2023: £2.6m), which
relate to the early stage losses in Victrex (Panjin) High Performance Materials Co., Ltd. Total cumulative losses are £12.0m (FY 2023: £6.8m)
and the potential deferred tax asset on these losses amounts to £3.0m (FY 2023: £1.7m). Although the plant has now been commissioned,
given the early stage in the commercialisation of the new polymer grades being manufactured, there is inherent uncertainty over the time
period to profitability, and therefore utilisation of the losses means that recovery within a reasonable time frame is uncertain.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 171
Notes to the financial statements continued
13. Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in, first-out principle
and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. The cost of
finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads
(allocated based on the higher of actual and normal production levels). Cost is calculated using the standard cost method. Net realisable
value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
In calculating the estimated selling price, a number of factors are taken into account, including the age of the inventory, customer order
profiles, the quality status, alternative routes to market and options to reprocess. Where the net realisable value is below the cost of the
inventory a provision is made to write down the inventory to the net realisable value which is expensed to the profit and loss account. If
subsequently the value realised from the inventory is above the net realisable value the provision is written back to the profit and loss account.
Critical judgements and key sources of estimation uncertainty in relation to valuation of inventories
The carrying value of inventory, comprising raw materials, work in progress and finished goods totalling £115.1m, requires the use of
estimates and judgement. The Group absorbs directly attributable costs over the higher of actual production and normal production to
avoid absorbing more overheads than incurred in periods of high production or absorbing excess overheads in periods of low production.
Judgement is required when assessing the level of normal production to compare with the actual production in determining the rate at
which to absorb the directly attributable costs. This judgement considers historical production levels and budgeted production, as well as
the relationship between production and sales when concluding on the appropriate level over which to absorb production costs. The primary
estimate is in respect of the level of variations, including material usage and purchase price variances, between actual and standard cost
absorbed into inventory at each period end. Management uses its detailed experience in the process of forming its view on the adjustments
required to record inventory at cost. Management has assessed the range of possible outcomes which might result from a change in
assumptions and has determined this to be from a £0.5m increase in inventory to a £4.7m reduction in inventory at 30 September 2024.
Inventory provisions are put in place for slow moving and potentially obsolete inventory as well as damaged and/or out of specification
product where cost is considered to be higher than net realisable value. The level of provisioning is an estimate, with judgement required
on ageing, customer order profiles, alternative routes to market and the option to reprocess. The estimation of the range of possible
outcomes is an increase in the value of inventory of £0.9m to a decrease of £3.2m and is therefore not considered to materially impact
the carrying value of inventory within the next 12 months.
Impact of climate change
The impact of climate change on consumer behaviour may affect the demand for the Group’s products, resulting in
obsolescence or reduced demand, thus reducing the net realisable value. The Group targets carrying approximately three to
four months of inventory cover across the supply chain at any point in time, a time frame over which the impact of climate
change on consumer behaviour is not expected to impact. The majority of the Group’s core products serve multiple
applications in multiple markets, further reducing the risk of material obsolete inventory over the longer term with each SKU’s
inventory holding levels and manufacturing plan regularly reviewed against forecast demand over the next 24 months.
2024 2023
As at 30 September £m £m
Raw materials and consumables
25.4
33.7
Work in progress
29.9
30.9
Finished goods
59.8
69.9
115.1
134.5
The amount of inventory expensed in the year is £147.2m (FY 2023: £122.1m).
During the year the Group wrote down inventory by £3.0m (FY 2023: £3.1m) and reversed previously written down inventory by £1.9m
(FY 2023: £2.7m) resulting in a net increase in the overall inventory write down charge in the year of £1.1m (FY 2023: increase of £0.4m).
The Group continues to focus on driving down aged and non-conforming product by working with suppliers and customers, reworking
and repackaging product to realise value from this inventory and, where successful, any provision against this inventory is reversed.
172 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
14. Trade and other receivables
Trade receivables are amounts due from customers for goods sold in the ordinary course of business.
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost
using the effective interest method less any impairment losses. The carrying amount of these balances approximates to fair value due
to the short maturity of amounts receivable.
Allowances are calculated by reference to credit losses expected to be incurred over the lifetime of the receivable using the simplified
approach, as described in note 16.
Group
Company
2024 2023 2024 2023
As at 30 September £m £m £m £m
Trade receivables
33.0
35.5
—
—
Amounts owed by Group undertakings
—
—
132.1
141.0
Prepayments and accrued income
7.9
7.6
—
—
Sales taxes recoverable
3.9
2.4
—
—
Other receivables
1.0
1.7
—
—
45.8
47.2
132.1
141.0
Amounts owed by Group undertakings are interest free, unsecured, have no fixed date of repayment and are repayable on demand, with
sufficient liquidity in the Group to flow funds if required. These balances have been considered for impairment and no future credit losses
are recognised on these balances.
The value of MUPs recognised but not invoiced is included in prepayments and accrued income. The value at 30 September 2024 was £1.1m
(30 September 2023: £0.9m). No credit loss has been recognised in respect of the MUPs’ balance at 30 September 2024 (30 September
2023: £nil).
No credit losses are recognised on the sales taxes recoverable balance due to the financial strength of the counterparties.
15. Borrowings
Borrowings are recognised initially at fair value, which equals the proceeds received less attributable transaction costs. Following the
initial recognition, borrowings are subsequently held at amortised cost.
2024 2023
As at 30 September £m £m
Due within one year
Bank loans
7.5
5.2
Total due within one year
7.5
5.2
Due after one year
Bank loans
25.0
26.4
Loan payable to non-controlling interest
7.9
8.1
Total due after one year
32.9
34.5
Bank loans
Bank loans relate to the capital expenditure facility and the working capital facility in China.
The Group’s total capital expenditure facility is RMB 250m with the amount due at 30 September 2024 £26.2m/RMB 243m (30 September
2023: £26.5m/232m RMB). The amount due on the capital expenditure facility is split between the amount due within one year of £1.2m/
RMB 11m (30 September 2023: £0.1m/ RMB 1m) and the amount due after one year of £25.0m/RMB 232m (30 September 2023: £26.4m/
RMB 231m).
The facility is repayable in line with an agreed schedule up to December 2026. Interest is charged at the five-year Loan Prime Rate of the
People’s Bank of China, which has been in the range of 3.85–4.20% in the year ended 30 September 2024. The purpose of the loan is to
fund the construction of a manufacturing facility in China.
During FY 2024, interest of £0.7m (FY 2023: £0.9m) was capitalised as part of qualifying capital expenditure within property, plant and
equipment. Capitalisation ceased in April 2024 when the property, plant and equipment to which the loans relate was commissioned.
The working capital facility in China is RMB 150m which increased from RMB 50m during FY 2024. Each drawdown under the working
capital facility is required to be repaid at least annually, after which the balance can be redrawn. As such all amounts due on the working
capital facility of £6.3m/RMB 58m (30 September 2023: £5.1m/RMB 44m) is included within the amount due within one year at 30
September 2024. Interest is charged at the one-year Loan Prime Rate of the People’s Bank of China +50bps and is charged to the income
statement, included within finance costs.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 173
Notes to the financial statements continued
15. Borrowings continued
Loan payable to non-controlling interest
The Group’s loan payable to the non-controlling interest (‘shareholder loan’), Liaoning Xingfu New Material Co Ltd (‘LX’), is interest bearing
at 4% per annum. Interest payable on the shareholder loan is rolled up into the value of the loan, until repayment occurs. The purpose of
the shareholder loan was to fund the construction of a manufacturing facility in China, with the interest payable capitalised as part of
qualifying capital expenditure within property, plant and equipment until that plant is commissioned, which took place in April 2024.
The loan is unsecured and is denominated in Chinese Renminbi (‘RMB’). At 30 September 2024 the Sterling value of the loan, including
rolled up interest and the impact of exchange rate movement, was £7.9m (30 September 2023: £8.1m).
The loan is repayable in two instalments: the first is on 30 September 2026, with the second on 30 September 2027, or such date as may be
mutually agreed by the shareholders, LX and Victrex Hong Kong Limited. During the year, interest costs of £0.2m was capitalised into assets
under construction (30 September 2023: £0.3m).
16. Financial instruments and risk management
Derivative financial instruments and hedging activities
Derivative financial instruments are primarily used by the Group to manage its exposure to changes in foreign exchange rates relating to overseas
sales and purchases. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes.
The Group hedges a proportion of its net forecast sales, purchases and expenses which are denominated in a foreign currency (cash flow
hedge) using forward exchange contracts. The Board is responsible for setting the hedging policy which is detailed overleaf. The policy
is reviewed and approved annually by the Board. Hedging is only applied for the most significant currency exposures which are reviewed
annually alongside the policy. During FY 2024 the currencies hedged were US Dollar and Euro (FY 2023: US Dollar and Euro).
At the inception of the transaction, the Group documents the relationship between hedging instruments and hedged items including
whether or not a net position is being hedged. A conclusion is reached as to whether the transaction qualifies as a cash flow hedge.
Details on hedge documentation are shown below.
Cash flow hedges
As permitted by IFRS 9 B.6.6.1, the Group designates overall net positions as hedged items when:
u
transactions are managed as net positions for risk management purposes;
u
the hedges are for foreign currency risks; and
u
the initial hedge designation and documentation set out how the items within the net position will affect the income statement.
The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used
in hedging transactions are effective in offsetting changes in cash flows of hedged items.
These foreign exchange contracts are initially recognised at fair value, with most having maturities of less than one year after the balance sheet date.
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a
highly probable forecast transaction, the effective portion of changes in fair value is recognised in equity via the Consolidated statement
of comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement, through
sales, marketing and administrative expenses.
The recognition of any cumulative gain or loss existing in equity is aligned to the timing of the hedged transaction impacting the income
statement and is classified as follows:
u
hedging of a net position – the cumulative gain or loss transferred from equity is separately presented on the face of the income
statement within gains/losses on foreign currency net hedging. Subsequent revaluations prior to the settlement date are included
in sales, marketing and administrative expenses; and
u
other cash flow hedges – cumulative gain or loss existing in equity at the time when the forecast transaction occurs is recognised in
the income statement in the corresponding line that the hedged item goes through, being revenue, cost of sales or sales, marketing
and administrative expenses.
When a forecast transaction is no longer expected to occur, and therefore does not meet the criteria for cash flow hedge accounting,
the cumulative gain or loss that was reported in equity is immediately transferred to the income statement, through sales, marketing and
administrative expenses.
174 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
16. Financial instruments and risk management continued
Hedge documentation and effectiveness testing
The documentation includes identification of the hedging item(s), the nature of the risk being hedged and how the Group will assess
whether the hedging relationship meets the hedge effectiveness requirements.
Hedge effectiveness is a qualitative assessment of effectiveness performed in accordance with IFRS 9. A hedging relationship qualifies
for hedge accounting if it meets all the following effectiveness requirements:
u
there is an economic relationship between the hedged item and the hedging instrument;
u
the effect of the credit risk does not dominate the value changes that result from the economic relationship; and
u
the hedge ratio of the hedging relationship is the same as that used for risk management purposes.
For financial instruments not designated in hedge accounting relationships or that do not meet the criteria for hedge accounting,
the gain or loss on remeasurement to fair value is recognised immediately in the income statement through sales, marketing and
administrative expenses.
Group
Currency risk
Currently, the Group exports in excess of 98% of sales from the UK and also imports raw materials from overseas.
Currency risk is managed by the Currency Committee, which is chaired by the Chief Financial Officer and comprises the Chief Executive
Officer and senior finance executives. It meets monthly to review and manage the Group’s currency hedging activities, in line with the
hedging policy approved by the Board.
The Group’s hedging policy is to defer the impact on profits of currency movements by hedging:
u
a minimum of 80% and a maximum of 100% of projected transaction exposures arising from trading in the forthcoming six-month
period; and
u
a minimum of 75% and a maximum of 100% of projected transaction exposures arising in the following six-month period.
Profitability can vary due to the impact of fluctuating exchange rates on the unhedged portion of the transaction exposures and from
revised forecasts of future trading, which can lead to an adjustment of currency cover in place.
In addition, the Group includes a number of foreign subsidiaries. As a result of these factors, the Group’s financial statements are exposed
to currency fluctuations. The currencies giving rise to this translation risk are primarily US Dollar and Euro.
Sensitivity analysis
The impact of a 5% strengthening in the average Sterling/US Dollar, Sterling/Euro, and Sterling/Chinese Renminbi rates reduces profit for
2024 by £3.5m, £4.7m and £1.2m (FY 2023: £2.7m, £4.2m and £1.4m) respectively. The impact of a 5% strengthening in the average
Sterling/US Dollar, Sterling/Euro and Sterling/Chinese Renminbi rates reduces equity for 2024 by £1.4m, £1.0m and £2.3m (FY 2023:
increases of £0.7m, £0.8m and £1.0m) respectively.
In accordance with IFRS 9, the fair value of gains and losses recognised on cash flow hedges is recognised in the Consolidated income
statement as part of gross profit.
The notional contract amount, carrying amount and fair value of the Group’s forward exchange contracts and swaps are as follows:
As at 30 September 2024
As at 30 September 2023
Notional Carrying Notional Carrying
contract amount and contract amount and
amount fair value amount fair value
£m £m £m £m
Current assets
170.9
7.3
105.5
2.0
Current liabilities
(5.2)
(0.3)
86.7
(1.8)
165.7
7.0
192.2
0.2
The fair values have been calculated by applying (where relevant), for equivalent maturity profiles, the rate at which forward currency
contracts with the same principal amounts could be acquired at the balance sheet date. These are categorised as Level 2 within the fair
value hierarchy under IFRS 7.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 175
Notes to the financial statements continued
16. Financial instruments and risk management continued
Group continued
Sensitivity analysis continued
The following table indicates the periods in which cash flows associated with the maturity date of the forward foreign exchange contracts
for which hedge accounting is applied are expected to occur:
As at 30 September 2024
As at 30 September 2023
Expected Expected
cash 6 months 6 to 12 12 to 18 cash 6 months 6 to 12 12 to 18
flows or less months months flows or less months months
£m £m £m £m £m £m £m £m
Forward exchange contracts:
– Assets
170.9
75.9
76.2
18.8
105.5
48.1
49.7
7.7
– Liabilities
(5.2)
(3.7)
(1.5)
—
86.7
30.9
39.2
16.6
165.7
72.2
74.7
18.8
192.2
79.0
88.9
24.3
The average exchange rates on open forward currency contracts are:
As at 30 September 2024
As at 30 September 2023
6 months 6 to 12 12 to 18 6 months 6 to 12 12 to 18
or less months months or less months months
£m £m £m £m £m £m
US Dollar
1.24
1.28
1.32
1.23
1.24
1.22
Euro
1.14
1.16
1.18
1.13
1.13
1.13
Gains and losses deferred in the hedging reserve in equity on forward foreign exchange contracts at 30 September 2024 will be recognised
in the income statement during the period in which the hedged forecast transaction affects the income statement, which is typically one to
two months prior to the cash flow occurring. At 30 September 2024, there are a number of hedged foreign currency transactions which are
expected to occur at various dates during the next 12 months. During the year, gains of £1.8m (FY 2023: losses of £0.6m) relating to
unsettled forward exchange contracts on the balance sheet at 30 September 2024 were released to the income statement.
Gains and losses recognised in the income statement on contracts which are yet to settle are adjusted as a non-cash movement on the cash
flow statement. This equated to a gain of £2.4m in the year (FY 2023: gain of £2.5m).
There was no hedge ineffectiveness during the year (FY 2023: nil). The hedge ratio is 1:1 in all instances.
Credit risk
The Group manages exposure to credit risk at many levels, ranging from Executive Director approval being required for the credit limits
of larger customers, to the use of letters of credit and cash in advance where appropriate. Internal procedures require regular consideration
of credit ratings, both internally for lower value customers and recognised credit reference agencies for higher value customers, payment
history, aged items and proactive debt collection. All customers are assigned a credit limit which is subject to annual review. Consideration
is given to significant adverse changes in business, financial and economic conditions that may cause a significant change in the ability
of customers to meet their obligations. Any adverse data relating to these factors is considered in determining whether there has been
a significant increase in credit risk of a financial asset on an ongoing basis throughout each reporting period. Regardless of the analysis,
an increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment.
The Group has applied the simplified approach to measuring expected credit losses, which requires lifetime expected losses to be
recognised from initial recognition for trade receivables. Lifetime expected credit losses for trade receivables are calculated based on
historical loss rates and adjusted where necessary for relevant forward-looking estimates. Trade receivables have been grouped for this
analysis based on shared credit risk characteristics, including the segment and country/region in which the customer operates. The model,
which considers macro-economic information, has been applied to the Group’s two segments differently. For trade receivables in the
Sustainable Solutions sector, a different loss rate has been applied to the USA and Japan compared to the remainder of the segment’s
geographical markets. In the Medical sector, a single higher rate of allowance has been used to reflect the higher risk of default of the
customer base.
The Group’s payment terms typically range from 30 to 60 days depending on geography. Trade receivables are specifically impaired and
considered in default when the amount is in dispute, when customers are believed to be in financial difficulty, or if any other reason exists
which implies that there is doubt over the recoverability of the debt. They are written off when there is no reasonable expectation
of recovery, based on an estimate of the financial position of the customer.
Impact of climate change
Climate change will impact the Group’s customers in different ways and over different time horizons. Whilst the overall impact
of climate change on the Group’s revenue is anticipated to be positive, there will be markets/sectors which are adversely
impacted. This is not anticipated to have an adverse impact in the short-term assessment of recoverability, i.e. over the life of
the receivables on the balance sheet at 30 September 2024. The ageing of trade receivables is shown below with 84% not yet
due, of which the vast majority will become due within 60 days of the year end. The Group monitors the ageing and profile of
the receivables on a regular basis, including the regular use of external credit rating agencies, and updates the expected credit
loss model assumptions if evidence of changing trends or risk profiles emerges.
176 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
16. Financial instruments and risk management continued
Group continued
Credit risk continued
Trade receivables, being ‘held to collect’ assets, can be analysed as follows:
2024 2023
As at 30 September £m £m
Amounts not past due
30.1
30.5
Amounts past due:
– Less than 30 days
2.5
4.6
– 30 to 60 days
0.6
0.6
– More than 60 days
0.3
0.3
Total past due
3.4
5.5
Lifetime expected credit losses
(0.5)
(0.5)
Amounts specifically impaired
—
0.1
Specific allowances for bad and doubtful debts
—
(0.1)
Carrying amount of impaired receivables
—
—
Trade receivables net of allowances
33.0
35.5
Movements in the allowance for impairments were:
2024 2023
£m £m
At beginning of year
0.6
1.2
Charge in the year
—
1.3
Release of allowance
(0.1)
(1.9)
At end of year
0.5
0.6
The range of expected credit loss (‘ECL’) allowance is as follows:
Less than 30 to 60 60 to 90 More than
30 days days days 90 days
Current past due past due past due past due Total
£m £m £m £m £m £m
2024
% allowance
0–0.3%
0.5–1.5%
20–50%
50–60%
75–100%
Trade receivables
30.1
2.5
0.6
0.1
0.2
33.5
Allowance (inclusive of specific
impairments)
(0.1)
—
(0.1)
(0.1)
(0.2)
(0.5)
33.0
2023
% allowance
0–0.3%
0.5–1.5%
20–50%
50–60%
75–100%
Trade receivables
30.5
4.6
0.6
0.1
0.3
36.1
Allowance (inclusive of specific
impairments)
(0.1)
(0.1)
(0.1)
(0.1)
(0.2)
(0.6)
35.5
The credit risk in respect of cash and cash equivalents, other financial assets and derivative financial instruments is limited because the
counterparties with significant balances are established international banks whose credit ratings are monitored on an ongoing basis.
These balances are therefore considered to have low credit risk on initial recognition.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 177
Notes to the financial statements continued
16. Financial instruments and risk management continued
Group continued
Credit risk continued
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and other short-term deposits with original maturities typically of three
months or less. The cash and cash equivalents disclosed in the Group balance sheet and in the Group cash flow statement include £0.8m
ring-fenced in the Group’s Chinese subsidiaries, which is committed to capital expansion (30 September 2023: £3.4m) and therefore
is not available for general use by the other entities within the Group.
Other financial assets
Cash invested in term or notice deposits with original maturities greater than three months in duration does not meet the criteria to
be classified as cash and cash equivalents. Accordingly, these deposits have been presented within other financial assets and are carried
at amortised cost in accordance with IFRS 9.
Financial assets held at amortised cost
Financial assets held at amortised cost consist of loans receivable. The loan receivable’s initial fair value is the present value of the future
repayments, discounted using a market rate of interest for an arm’s length loan, when the loan is granted interest free. As the loans
receivable are held for collection of contractual cash flows, where cash flows represent solely payments of principal and effective interest,
they are measured at amortised cost in accordance with IFRS 9. Both the initial discount between the fair value and loan value and the
subsequent unwind of the discount are included within finance (costs)/income in the income statement.
As at 30 September 2024, the maximum exposure with a single bank for deposits (cash and cash equivalents and other financial assets) was
£15.2m (30 September 2023: £19.8m) for the Group. As at 30 September 2024, the largest mark to market exposure for gains on forward
foreign exchange contracts to a single bank was £3.0m (30 September 2023: £0.9m). The amounts on deposit at the year end represent
the Group’s maximum exposure to credit risk on cash and deposits.
Liquidity risk
The Group’s objective in terms of funding capacity is to ensure that it always has sufficient short-term and long-term funding available,
either in the form of the Group’s cash resources or committed bank facilities. The Group has sufficient funds available to meet its current
funding requirements for both revenue and capital expenditure. In order to further manage liquidity risk to an acceptable level, the Group
has a bank facility of £60.0m (£40.0m committed and £20.0m accordion) which expires in October 2027. Interest is charged at a rate
of SONIA +0.75% to SONIA +1.05% depending on the level of utilisation. In February 2024, £26.0m of the bank facility was drawn and
was fully repaid by 30 September 2024.
The facility contains covenant measures that are tested biannually. They consist of:
u
leverage, being the ratio of Group consolidated net debt to Group consolidated profit before interest, tax, depreciation and
amortisation; and
u
interest cover, being the ratio of Group consolidated profit before interest and tax to the Group consolidated net interest.
In addition to the UK bank facility, the Group has an RMB loan facility in VIPL, details of which are included in note 15.
As at 30 September 2024, the Group had a cash and cash equivalents balance of £29.3m (30 September 2023: £33.4m). The Group had no
cash held on 95-day notice deposit accounts (30 September 2023: £0.1m). The maximum deposit length utilised by the Group when cash
was invested both during the year ended 30 September 2024 and up to the date of this report was 95 days (FY 2023: 95 days).
Financial assets held at amortised cost
The loans receivable granted in the current and previous year are secured and non-interest bearing with an agreed term of 12 years, with
repayments commencing from FY 2029. The loans receivable have been discounted to present value, with this discount charge included
in finance costs in the income statement, matching against where the interest is being unwound over the term of the loan.
The credit risk in relation to the loans receivable is deemed to be low after consideration of the risk of default; the debtor is considered
to have capacity to meet the contractual cash flow obligations per the contract.
Price risk
The Group’s products contain a number of key raw materials and its operations require energy, notably electricity and natural gas. Any
increase or volatility in prices and any significant decrease in the availability of raw materials or energy could affect the Group’s results.
Victrex strives to obtain the best prices and uses contractual means to benefit where appropriate and possible. The Group has a significant
degree of influence over its supply chain which enables it to effectively manage the risk in this area.
Interest rate risk
The Group has an exposure to interest rate risk only on its borrowings which are at variable rates of interest. The loans from HSBC, referred
to in note 15, and the revolving credit facility, are at variable rates of interest. The group does not manage this risk through the use of
financial derivatives. The impact of a 100 bps increase in the interest rate charged on the HSBC loan would reduce profit in FY 2024 by
£0.3m (FY 2023: £0.2m). The impact of a 100 bps increase in the interest rate charged on the revolving credit facility would reduce profit
in FY 2024 by £0.1m (FY 2023: nil).
178 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
16. Financial instruments and risk management continued
Financial assets held at amortised cost continued
Capital management
The Group defines the capital that it manages as the Group’s total equity. The Group’s policy for managing capital is to maintain a strong
balance sheet with the objective of maintaining customer, supplier and investor confidence in the business and to ensure that the Group
has sufficient resources to be able to invest in future development and growth of the business.
Share buybacks are now included as an option for future shareholder returns, alongside special dividends, within our capital allocation
policy. To ensure the Board has the necessary flexibility, there is a resolution proposed at each AGM to authorise the Company to make one
or more market purchases of its ordinary shares up to a maximum number of shares equal to 10% of its issued ordinary share capital as
at the date of the Notice of Annual General Meeting.
The Group’s capital and equity ratio is as follows:
2024 2023
As at 30 September £m £m
Total equity
461.6
501.0
Total assets
592.0
626.6
Equity ratio
78%
80%
Financial instruments
Summary of categories of financial assets and liabilities
Carrying amount and fair value
2024 2023
As at 30 September
Note
Classification under IFRS 9
 £m £m
Financial assets
Forward exchange contracts used for hedging (derivative instruments)
Fair value –
7.3
2.0
hedging instrument
Unquoted investments
11
FVTPL
3.5
3.5
Other financial assets held at fair value
FVTPL
—
9.7
Other financial assets held at amortised cost
Amortised cost
1.0
0.7
Trade and other receivables
14
Amortised cost
34.0
37.2
Cash and cash equivalents
Amortised cost
29.3
33.4
Financial liabilities
Forward exchange contracts used for hedging (derivative instruments)
Fair value –
(0.3)
(1.8)
hedging instrument
Borrowings – due within one year
15
Amortised cost
(7.5)
(5.2)
Borrowings – due after one year
15
Amortised cost
(32.9)
(34.5)
Trade and other payables
18
Other financial liabilities
(34.2)
(34.1)
Financial assets and liabilities held at fair value
Fair value is determined using the fair value hierarchy which takes into account the availability of input data into the fair value calculation,
with levels going from Level 1 (quoted market prices available) through to Level 3 (unobservable inputs) with more assumptions inherent
in the fair value calculation of Level 3 assets. Where observable inputs are not available then another valuation technique is used, such
as an income approach or market approach.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 179
Notes to the financial statements continued
16. Financial instruments and risk management continued
Financial instruments continued
Summary of categories of financial assets and liabilities continued
All financial assets and liabilities measured at fair value are categorised as Level 2 within the fair value hierarchy, with the exception of
investments in unquoted companies and other financial assets held at fair value which are categorised as Level 3. See note 11 for further
details. The maturity profiles of the derivative instruments in designated hedge accounting relationships and trade receivables are given
on pages 177 and 178 respectively. Information on the maturity of the financial liabilities is included both within this note and within note
15. For trade and other payables there are no amounts due after one year, the majority falling due in 30 days or less. All fair value
measurements are recurring.
Reconciliation of movement in net (debt)/funds
Net (debt)/funds consists of cash and cash equivalents together with other financial assets (within current assets), long-term and short-term
loans and finance lease liabilities.
As at Exchange and As at
1 October other non-cash 30 September
2023 Cash flow movements 2024
Note £m £m £m £m
Cash and cash equivalents
16
33.4
(3.3)
(0.8)
29.3
Other financial assets
16
0.1
(0.1)
—
—
Borrowings
15, 16
(39.7)
(0.5)
(0.2)
(40.4)
Lease liabilities
19
(10.5)
1.9
(1.4)
(10.0)
Net debt
(16.7)
(2.0)
(2.4)
(21.1)
As at Exchange and As at
1 October other non-cash 30 September
2022 Cash flow movements 2023
Note £m £m £m £m
Cash and cash equivalents
16
58.7
(24.3)
(1.0)
33.4
Other financial assets
16
10.1
(10.0)
—
0.1
Borrowings
15, 16
(22.5)
(18.9)
1.7
(39.7)
Lease liabilities
19
(9.6)
2.1
(3.0)
(10.5)
Net funds/(debt)
36.7
(51.1)
(2.3)
(16.7)
Company
The only receivables of the Company are amounts owed by subsidiary undertakings. These are carried at amortised cost subsequent
to initial recognition.
The future expected credit losses on amounts owed by subsidiary undertakings are considered to be immaterial and therefore no expected
credit losses have been recognised.
The Company has issued financial guarantee contracts to guarantee the indebtedness of other companies within its Group as follows:
u
in favour of Barclays Bank PLC (‘Barclays’) to cover any liabilities due to Barclays by the Company and its fellow UK subsidiaries
up to a maximum value of £12m; and
u
in favour of HSBC Bank (China) Company Ltd (‘HSBC’) to cover the RMB loan facilities due to HSBC by VIPL (see note 15).
The probability of default is considered remote and therefore the estimated financial effect of issuing is £nil (FY 2023: £nil). The fair value
of the issued financial guarantee contracts is deemed to be immaterial.
180 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
17. Retirement benefits
Employee benefits
Defined contribution pension schemes
Obligations for contributions to defined contribution pension schemes are recognised as an expense in the income statement as incurred.
Defined benefit pension schemes
The Group’s asset and obligation in respect of defined benefit pension schemes recognised in the balance sheet are the present value
of the future benefits that employees have earned in return for their service in the current and prior periods, less the fair value of plan
assets. The defined benefit obligation is calculated by independent actuaries using the projected unit credit method. The present value of
the defined benefit asset and obligation is determined by discounting the estimated future cash outflows using interest rates of high
quality corporate bonds that are denominated in the currency in which the benefits will be paid and have terms to maturity
approximating to the terms of the related pension liability.
When the calculation results in a benefit to the Group, the recognised asset is the present value of economic benefits available in the form
of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic
benefits, consideration is given to any minimum funding requirements that apply. An economic benefit is available to the Group if it is
realisable during the life of the plan or on settlement of the plan liabilities. When the benefits of a plan are improved, the portion of the
increased benefit relating to past service by employees is recognised in profit or loss on a straight line basis over the average period until
the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised in profit or loss.
Actuarial gains and losses are immediately recognised in full through the Consolidated statement of comprehensive income.
Critical judgements and key sources of estimation uncertainty in relation to pension scheme valuation
The valuation of pension scheme liabilities is calculated in accordance with Group policy. The valuations are prepared by independent
qualified actuaries, but significant estimates are required in relation to the assumptions for pension increases, inflation, the discount rate
applied and member longevity, which underpin the valuations. Information about the assumptions relating to retirement benefit assets
and obligations and also the sensitivity of the pension asset and liability to movements in these assumptions is presented below. The
sensitivity shows that a change in the estimation assumptions could result in a material change in the carrying value of the scheme assets
and liabilities within the next 12 months.
Impact of climate change
The impact of climate change has been discussed with the UK pension trustee. Whilst not an income statement impacting change,
a movement in the net defined benefit pension balance would potentially impact long-term cash flows if further contributions
were required or a lower surplus were returned to the Company on satisfaction of all outstanding liabilities. The potential impact
of climate change would most likely be seen in the value of scheme assets if they were not appropriately managed.
At 30 September 2024 the scheme does not hold any equities or growth funds with the funds held at 30 September 2022 sold
during the year. The pension trustees, with the support of the Company, continue to develop their own ESG policy which is likely
to result in an ESG linked investment strategy for when equity and growth assets are held by the scheme. This will align to the
Company’s strategy and also ensure that investments are not ‘stuck’ in declining equities, thus risking underperformance.
As a result, the Directors have concluded that no climate-related risk adjustment is required at 30 September 2024.
The Group operates a number of pension schemes for its employees throughout the world. Outside the UK and Germany, the Company
operates defined contribution pension schemes. Each scheme operates under the regulatory environment of the jurisdiction in which
it is located.
Victrex Pension Fund (UK)
The principal scheme operated by the Group is a funded UK pension scheme, which is subject to the statutory funding objective under
the Pensions Act 2004, in which employees of UK subsidiary undertakings participate. The scheme has two sections. One section provides
benefits on a defined benefit basis with benefits related to final pensionable pay. The defined benefit section was closed to new members
from 31 December 2001. From this date new employees have been invited to join the second section that provides benefits on a defined
contribution basis. The defined benefit scheme closed to future accrual on 31 March 2016, with employees in the scheme eligible to join
the defined contribution scheme.
The latest triennial valuation was performed to 31 March 2022 and showed a scheme surplus of £16.8m. The surplus position means the
Group has no current obligation to make further contributions to the scheme, although this may change following future valuations. The
Group made additional contributions of £1.0m during the years ended 30 September 2022 and 2023 as part of an ongoing programme
with the trustees to work towards self-sufficiency. The Group remains committed to working towards self-sufficiency and intends to
continue to make voluntary contributions where appropriate.
The current investment strategy was agreed with the trustees following the latest triennial valuation and focused on working towards
self-sufficiency with the assets increasingly matched to the nature and term of the liabilities. During FY 2024 this involved transitioning part
of the asset portfolio from liability-driven investments to debt instruments with tenors which match those of the liabilities, further
protecting the scheme against market risks. The investment strategy is reviewed on a regular basis with the trustees and scheme advisors.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 181
Notes to the financial statements continued
17. Retirement benefits continued
Employee benefits continued
Victrex Pension Fund (UK) continued
The defined contribution scheme is open to all UK employees with the Group making contributions at a level which varies with the
percentage of salary the employee contributes. The total expense for the defined contribution scheme is included in ‘staff costs’ within the
income statement line where the employee operates. The expense for the year ended 30 September 2024 was £6.9m (FY 2023: £6.7m).
In June 2023, the English High Court issued a judgement involving the Virgin Media NTL Pension Plan which held that amendments to the
plan’s rules in relation to benefit changes were invalid in the absence of a confirmation from the scheme actuary under Section 37 of the
Pension Schemes Act 1993. The Court of Appeal dismissed an appeal to this judgement in July 2024. While uncertainty around this ruling
persists, it could create a precedent that could impact other UK ‘contracted-out’ pension plans, including potentially the Victrex Pension
Fund (UK). The Directors are in discussion with the trustee and preliminary comments from the trustee’s legal advisors note that the deed
of amendment closing the DB Section to future benefit accrual appears to include the required s37 confirmation. Other deed amendments
will be assessed when the outcome of this case becomes more certain but are not expected to result in a material change to the valuation
of scheme liabilities.
Victrex Europa GmbH Pension Fund (Germany)
The Group operates another defined benefit scheme in Germany for the benefit of one, now retired, employee.
Risks associated with the defined benefit scheme
Investment risk
The scheme has the option to hold investments in asset classes, such as equities, which have volatile market values, and while these assets are
expected to provide real returns over the long term, the short-term volatility can cause additional funding to be required if a deficit emerges.
Interest rate risk
The scheme’s liabilities are assessed using market yields on high quality corporate bonds to discount the liabilities. As the scheme holds
assets such as equities, the value of the assets and liabilities may not move in the same way, although this is mitigated to some extent by
the scheme’s liability-driven investment holdings which, although not based on changes in corporate bonds, would be expected to move
in a similar way to the liabilities.
Inflation risk
A significant proportion of the benefits under the scheme are linked to inflation. Although the scheme’s assets are expected to provide
a good hedge against inflation over the long term, in particular through the scheme’s liability-driven investment holdings, movements in
the short term could lead to deficits emerging.
Longevity risk
In the event that members live longer than assumed, an additional deficit will emerge in the scheme, as the present value of the defined
benefit liabilities is calculated with regard to a best estimate of the mortality of plan members.
Where the IAS 19 valuation shows scheme assets in excess of scheme liabilities, an asset is recognised based on the fact that under the
terms of the Trust Deed agreement, the sponsoring company is entitled to any assets that remain in the scheme after the settlement of
all pension liabilities. There are no restrictions on the current realisability of the surplus.
182 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
17. Retirement benefits continued
Risks associated with the defined benefit scheme continued
Longevity risk continued
IAS 19 disclosures relating to defined benefits are as follows:
Principal actuarial assumptions
As at 30 September
2024 – UK Scheme
2024 – German Scheme
2023 – UK Scheme
2023 – German Scheme
Discount rate
5.05%
3.41%
5.40%
3.75%
RPI inflation
3.40%
n/a
3.55%
n/a
CPI inflation
2.80%
2.20%
2.95%
2.30%
Future pension increases
3.25%
n/a
3.40%
n/a
Mortality tables:
– Male
92% of S3PMA
100% of RT2018G
92% of S3PMA
100% of RT2018G
– Female
95% of S3PFA
n/a
95% of S3PFA
n/a
Mortality improvements:
– Model
CMI2023
RT
2
018
G
CMI2022
R
T2018
G
– Long-term rate of improvement
1.25%
Individual
1.25%
Individual
– Initial addition
0.25%
Individual
0.25%
Individual
Life expectancy from age 62 of current
pensioners:
– Male
25.3 yrs ¹
23.7 yrs ¹
25.3 yrs
2
23.5 yrs
2
– Female
27.6 yrs ¹
n/a
27.6 yrs
2
n/a
Life expectancy from age 62 of active and
deferred members:
– Male
26.5 yrs ³
26.0 yrs ³
26.5 yrs
4
26.0 yrs
4
– Female
28.9 yrs ³
n/a
28.8 yrs
4
n/a
1 Life expectancy from age 62 for members aged 62 in 2024.
2 Life expectancy from age 62 for members aged 62 in 2023.
3 Life expectancy from age 62 for members aged 45 in 2024.
4 Life expectancy from age 62 for members aged 45 in 2023.
The average duration of the benefit obligation at the end of the reporting period is 15 years (FY 2023: 15 years).
Significant actuarial assumptions for the determination of the defined benefit surplus are discount rate and inflation rate. The sensitivity
analysis below has been determined based on reasonably possible changes in the assumptions occurring at the end of the reporting period
assuming that all other assumptions are held constant:
UK Scheme – reduction in fund
surplus as at 30 September
2024 2023
Change in assumption £m £m
Reduce discount rate by 1% p.a.
7.8
7.6
Increase inflation expectations by 1% p.a.
5.4
5.0
Increase life expectancy by one year
1.4
1.3
Inter-relationships between the assumptions, especially between discount rate and expected inflation rates, are expected to exist in
practice. The above analysis does not take the effect of these inter-relationships into account.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 183
Notes to the financial statements continued
17. Retirement benefits continued
Amounts recognised in the balance sheet
2024 2023
As at 30 September £m £m
Retirement benefit assets
UK Scheme
10.7
9.7
Total retirement benefit assets
10.7
9.7
Retirement benefit liabilities
German Scheme
(2.5)
(2.5)
Total retirement benefit liabilities
(2.5)
(2.5)
UK Scheme/Combined Scheme disclosures
UK Scheme
Combined Schemes
2024 2023 2022 2021 2020
As at 30 September £m £m £m £m £m
Present value of funded obligations
(47.7)
(45.7)
(49.2)
(81.1)
(88.2)
Fair value of scheme’s/schemes’ assets
58.4
55.4
64.1
95.3
95.7
Net asset before deferred taxation
10.7
9.7
14.9
14.2
7.5
Related deferred taxation liability
(2.7)
(2.4)
(3.7)
(3.6)
(1.4)
Net asset after deferred taxation
8.0
7.3
11.2
10.6
6.1
Change in assumptions and experience adjustments
arising on scheme’s/schemes’ liabilities
(1.4)
3.4
30.8
(0.4)
(2.2)
Experience adjustments arising on scheme’s/schemes’ assets
1.7
(10.4)
(31.4)
4.1
(0.8)
Changes in the present value of the funded obligation
UK Scheme
2024 2023
£m £m
Defined benefit obligation at beginning of year
(45.7)
(49.2)
Interest cost
(2.4)
(2.4)
Actuarial (losses)/gains
(1.4)
3.4
Benefits paid
1.8
2.5
Defined benefit obligation at end of year
(47.7)
(45.7)
Changes in the fair value of the scheme assets
UK Scheme
2024 2023
£m £m
Fair value of scheme assets at beginning of year
55.4
64.1
Interest income on assets
2.9
3.2
Return on assets excluding interest
1.7
(10.4)
Contributions by employer
0.3
1.0
Benefits paid
(1.8)
(2.5)
Administration expenses
(0.1)
—
Fair value of scheme assets at end of year
58.4
55.4
184 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
17. Retirement benefits continued
Major categories of UK scheme assets
UK Scheme
UK Scheme
2024 2024 2024 2023 2023 2023
Quoted Unquoted Total Quoted Unquoted Total
As at 30 September £m £m £m £m £m £m
Liability-driven investments
1
26.9
—
26.9
40.5
—
40.5
Debt instruments
17.9
13.1
31.0
1.2
12.6
13.8
Cash
0.5
—
0.5
1.1
—
1.1
Fair value of scheme assets at end of year
45.3
13.1
58.4
42.8
12.6
55.4
1 Liability-driven investments are a portfolio of assets that are linked to the drivers of movements in pension liabilities such as inflation and interest rates.
These are assets designed to deliver geared movements in the underlying liabilities as they reflect changes to inflation and interest rates.
Quoted assets are those with a quoted price in an active market. The Liability-driven investments are recognised as quoted because all the
Fund’s investments within this component are held via pooled funds with publicly available daily prices. Unquoted assets are those which do
not have a daily market price and are valued by investment managers.
The Group does not hold any of its own transferable financial instruments as plan assets and the plan assets do not contain any properties
that are occupied by the Group.
Amounts recognised in the income statement
UK Scheme
2024 2023
Note £m £m
Interest on liabilities
(2.4)
(2.4)
Interest income on assets
2.9
3.2
Total income
0.5
0.8
Interest on liabilities – German Scheme (see below)
(0.1)
(0.1)
Total income included in ‘staff costs’
5
0.4
0.7
Administration expenses
(0.1)
—
Total included in the income statement
0.3
0.7
The total amount included in the income statement is included within sales, marketing and administrative expenses.
Gross amounts of actuarial gains and losses recognised in the Consolidated statement of comprehensive income
UK Scheme
2024 2023
£m £m
UK Scheme at beginning of year
(3.9)
3.1
Gain/(loss) in year
0.3
(7.0)
Cumulative amount at end of year
(3.6)
(3.9)
Up to and including the year ending 30 September 2020 the cumulative amount of actuarial gains and losses on the UK and German
schemes was presented on a combined basis and totalled a loss of £16.3m. Obtaining a historical split of this balance between these
schemes was not practical and therefore, from 1 October 2021, following the presentation of these schemes gross, the individual
cumulative effects were restarted from £nil. The cumulative aggregate amount of actuarial gains and losses on the UK and German
schemes at 30 September 2024 was a loss of £20.1m (30 September 2023: loss of £20.4m).
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 185
Notes to the financial statements continued
17. Retirement benefits continued
Actuarial gains and losses arising from changes in demographic and financial assumptions
UK Scheme
2024 2023
£m £m
Changes in demographic assumptions
0.1
1.1
Changes in financial assumptions
(1.5)
3.5
Experience losses on liabilities
—
(1.2)
Total actuarial (losses)/gains on scheme liabilities
(1.4)
3.4
Return on assets excluding interest
1.7
(10.4)
Total actuarial gains/(losses)
0.3
(7.0)
German Scheme disclosures
German Scheme
2024 2023
As at 30 September £m £m
Present value of funded obligations
(2.5)
(2.5)
Related deferred taxation asset
0.4
0.4
Net liability after deferred taxation
(2 .1)
(2.1)
Change in assumptions and experience adjustments arising on scheme’s liabilities
—
0.1
Changes in the present value of the funded obligation
German Scheme
2024 2023
£m £m
Obligations at beginning of year
(2.5)
(2.7)
Exchange gain on opening obligations
—
0.1
Interest cost
(0.1)
(0.1)
Actuarial gains
—
0.1
Benefits paid
0.1
0.1
Defined benefit obligation at end of year
(2.5)
(2.5)
The German Scheme had no scheme assets at 30 September 2024 (£nil at 30 September 2023).
186 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
17. Retirement benefits continued
Changes in the present value of the funded obligation continued
The gross amount of actuarial gains and losses recognised in the Consolidated statement of comprehensive income in respect of the
scheme was £nil (FY 2023: gain of £0.1m).
German Scheme
2024 2023
£m £m
German Scheme at beginning of year
1.7
1.6
Movement in year
—
0.1
Cumulative amount at end of year
1.7
1.7
Actuarial gains and losses arising from changes in demographic and financial assumptions
German Scheme
2024 2023
£m £m
Changes in financial assumptions
—
(0.1)
Experience gains on liabilities
—
0.2
Total actuarial gains on scheme liabilities
—
0.1
18. Trade and other payables
Trade payables are obligations to pay for goods acquired in the ordinary course of business from suppliers.
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method.
Group
Company
2024 2023 2024 2023
As at 30 September £m £m £m £m
Trade payables
6.9
7.6
—
—
Accruals
21.0
22.2
0.1
0.1
Other
6.3
4.3
—
—
Amounts owed to Group undertakings
—
—
1.1
—
34.2
34.1
1.2
0.1
The fair value of trade and other payables approximates to their carrying value.
Amounts owed to Group undertakings are interest free, unsecured, have no fixed repayment and are repayable on demand, with sufficient
liquidity in the Group to flow funds if required.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 187
Notes to the financial statements continued
19. Lease liabilities
Lease liabilities
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made.
The Group has elected not to recognise ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less
and those leases of low value assets. Payments associated with short-term leases and leases of low value assets are recognised on a
straight line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less that do not
contain a purchase option. Low value assets mainly comprise office equipment.
Lease liabilities are initially measured at their present value, which includes the following lease payments: fixed payments (including
in-substance fixed payments), less any lease incentives receivable; variable lease payments that are based on an index or a rate (using the
index or rate in place at transition); amounts expected to be payable by the Group under residual value guarantees; the exercise price of
a purchase option if the Group is reasonably certain to exercise that option; payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option; and payments to be made under reasonably certain extension options. Lease liabilities and
the corresponding right of use asset are subsequently remeasured where there is a change in future lease payments resulting from a rent
review or change in index or rate.
The lease payments are discounted using the Group’s incremental borrowing rate. Each lease payment is allocated between the principal
and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the lease liability for each period.
Lease liabilities recognised at 30 September are as follows:
£m
Lease liabilities
Balance at 1 October 2022
9.6
Additions
3.0
Payments
(2.1)
Interest on lease liabilities
0.2
Disposals
(0.2)
Balance at 30 September 2023
10.5
Additions
2.4
Payments
(1.9)
Interest on lease liabilities
0.3
Disposals
(1.2)
Exchange differences
(0.1)
Balance at 30 September 2024
10.0
The maturity of these lease liabilities at 30 September is as follows:
2024 2023
£m £m
Due within one year
1.7
1.6
Due between two and five years
4.4
5.0
Due after five years
3.9
3.9
Total
10.0
10.5
20. Contingent liabilities
Contingent liabilities
Contingent liabilities are potential future cash outflows, where the likelihood of payment is considered more than remote but is not
considered probable or cannot be measured reliably.
At 30 September 2024, the Group had no contingent liabilities (30 September 2023: none).
188 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
21. Share-based payments
Share-based payment transactions and employee share ownership trusts (‘ESOT’)
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense with a
corresponding increase in equity. Share-based payment transactions are recharged from the Company to those subsidiaries benefiting
from the service of the employees to whom options are granted.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding
the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of
options that are expected to vest and include employee service periods and performance targets which are not related to the Company’s
share price, such as earnings per share growth. The fair value of the options is measured by the Black-Scholes or stochastic model, taking
into account the terms and conditions upon which the instruments were granted. At each balance sheet date, the entity revises its
estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original
estimates, if any, in the income statement and a corresponding adjustment to equity over the remaining vesting period.
Any failure to meet market conditions, which include performance targets such as share price or total shareholder return, would not
result in a reversal of original estimates in the income statement and any remaining charges would be accelerated.
The proceeds received, net of any directly attributable costs, are credited to share capital (nominal value) and share premium when
the options are exercised.
The Group and Company provide finance to the ESOT to purchase Company shares in the open market. Costs of running the ESOT are
charged to the income statement. The cost of shares held by the ESOT is deducted in arriving at equity until they are exercised by employees.
All share-based payment costs are recharged to the trading entities.
All options are settled by the physical delivery of shares. The terms and conditions of all the grants are as follows:
Victrex 2015 Executive Share Option Plan (‘ESOP’)
All employees are eligible to participate. All ESOP options are exercisable from the date of vesting to the 10-year anniversary of the grant
date. The Remuneration Committee currently excludes Executive Directors from participating in this plan. Option awards are based on a
percentage of basic salary, not exceeding 100% of salary in each financial year. The exercise price of the options is equal to the market price
of the shares on the date of grant. ESOP options are conditional on the employee completing three years’ service (the vesting period) and
achieving the performance condition(s), if applicable. The level of awards vesting will vary depending on EPS growth, where performance
conditions apply.
Victrex 2015 Sharesave Plan
UK resident employees and full-time Directors of the Company or any designated participating subsidiary are eligible to participate.
The exercise price of the granted Sharesave Plan options is equal to the market price of the ordinary shares less 20% on the date of grant.
Victrex 2015 Employee Stock Purchase Plan
US-based employees (including Executive Directors) are eligible to participate. The price payable for each ordinary share shall be a price
determined by the Board, and it shall not be less than 85% of the lower of the market value of an ordinary share on the date of grant
or the date of purchase.
Awards may be granted over a number of ordinary shares determined by the amount employees have saved by the end of a one-year
savings period.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 189
Notes to the financial statements continued
21. Share-based payments continued
Victrex 2019 Long Term Incentive Plan (‘LTIP’)
Each year Executive Directors, and senior executives by invitation, are eligible to be awarded options to acquire, at no cost, market
purchased ordinary shares in the Company up to a maximum equivalent of 175% of basic salary. In exceptional circumstances, such
as recruitment or retention, this limit is increased to 200% of an employee’s annual basic salary.
Details of the 2019 LTIP can be found within the Directors’ remuneration report on page 117.
Victrex 2017 Deferred Bonus Scheme (‘DBS’)
Adopted by the Remuneration Committee on 9 October 2017, this plan requires Executive Directors to defer up to a maximum of 100%
of their earned bonus into shares for three years.
Number and weighted average exercise prices of share options
ESOP
Sharesave Plan
Stock Purchase Plan
LTIP
DBS
Weighted Weighted Weighted Weighted Weighted
average average average average average
exercise Number exercise Number exercise Number exercise Number exercise Number
price of options price of options price of options price of options price of options
Outstanding at
1 October 2022
2,182p
865,730
1,932p
340,678
—
—
nil p
326,727
nil p
27,792
Granted during the year
1,596p
328,221
1,394p
374,055
1,490p
11,328
nil p
365,932
nil p
27,885
Forfeited during the year
2,079p
(257,085)
1,857p
(195,423)
—
—
nil p
(85,613)
—
—
Cancelled during the year
—
—
1,814p
(93,277)
—
—
—
—
—
—
Exercised during the year
1,573p
(12,020)
—
—
1,490p
(11,328)
nil p
(7,311)
nil p
(4,410)
Outstanding at
30 September 2023
1,965p
924,846
1,520p
426,033
—
—
nil p
599,735
nil p
51,267
Granted during the year
1,430p
322,783
1,129p
364,846
1,046p
16,526
nil p
400,304
—
—
Forfeited during the year
1,996p
(293,082)
1,537p
(10,170)
—
—
nil p
(80,923)
—
—
Cancelled during the year
—
—
1,346p
(357,561)
—
—
nil p
(109,460)
—
—
Exercised during the year
—
—
—
—
1,046p
(16,526)
—
—
—
—
Outstanding at
30 September 2024
1,776p
954,547
1,260p
423,148
—
—
nil p
809,656
nil p
51,267
Range of exercise prices
2024
1,305p
–2,730p
1,129p
–1,997p
—
nil p
n/a
2023
1,496p–2,730p
1,394p
–2,164p
—
nil p
n/a
Weighted average
contractual life (years)
2024
7.2
3.2
0.4
8.6
5.8
2023
7.0
3.2
0.4
8.6
6.8
Exercisable at end of year
2024
1,964p
201,315
1,949p
21,597
—
—
nil p
3,472
—
—
2023
1,938p
249,014
2,015p
30,430
—
—
nil p
3,472
—
—
During the year, there were no ESOP or Sharesave Plan exercises (FY 2023: ESOP weighted average share price at the date of exercise was
1,704p, no Sharesave Plan exercises in FY 2023). Details of the LTIP and DBS exercises are included in the Directors’ remuneration report on
page 129.
190 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
21. Share-based payments continued
Fair value of share options and assumptions
Fair value of share options and weighted average assumptions
As at 30 September 2024
As at 30 September 2023
Stock Stock
Sharesave Purchase Sharesave Purchase
ESOP Plan
Plan
LTIP
DBS
ESOP
 Plan
Plan
LTIP
DBS
Fair value at
measurement date
323p
385p
241p
1,318p
1,826p
370p
552p
165p
1,550p
1,826p
Share price at grant
1,788p
1,540p
1,297p
1,678p
1,996p
1,972p
1,968p
1,753p
1,910p
1,996p
Exercise price
1,781p
1,260p
n/a
nil p
n/a
1,964p
1,520p
n/a
nil p
n/a
Expected volatility
28%
28%
27%
27%
n/a
30%
29%
25%
28%
n/a
Expected dividends
3.3%
4.0%
4.6%
3.8%
3.1%
2.8%
3.0%
3.4%
3.2%
3.1%
Risk-free interest
rate
2.6%
3.6%
4.9%
3.3%
n/a
1.6%
2.6%
2.6%
2.0%
n/a
Option life
10 years
3.6 years
1 year
10 years
8 years
10 years
3.6 years
1 year
10 years
8 years
The Company uses the Black-Scholes model for calculating the fair value of the share options where there are no market-based
performance conditions. Where there are market-based performance conditions a stochastic model is used.
The expected volatility is based on historical volatility over the period prior to grant equal to the expected term.
All share options are granted under a service condition and, for ESOP and LTIP, a non-market condition (‘EPS’). Such conditions are not taken
into account in the grant date fair value measurement of services received. In addition, the LTIP has a market condition (‘TSR’) and for the
LTIPs issued from FY 2022, a further non-market condition for ESG, which is taken into account in the grant date measurement of fair value.
Staff costs – equity-settled share-based payment transactions
2024 2023
Note £m £m
ESOP
(0.1)
(0.2)
Sharesave Plan
0.6
0.6
LTIP and Deferred Bonus Scheme
(0.3)
0.3
Total equity-settled share-based payment transactions recognised in staff costs
5
0.2
0.7
Reclassified from trade and other payables
—
0.4
Amount recognised directly in equity
0.2
1.1
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 191
Notes to the financial statements continued
22. Share capital and reserves
Share capital
2024
2023
Number
£m
Number
£m
Allotted, called up and fully paid shares of 1p each
Ordinary shares
At 1 October 2023 and 1 October 2022
87,018,377
0.9
86,995,029
0.9
Issued for cash
16,526
—
23,348
—
At 30 September 2024 and 30 September 2023
87,034,903
0.9
87,018,377
0.9
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per ordinary share
at meetings of the Company.
Share premium
During the year 16,526 (FY 2023: 23,348) shares were issued for cash, resulting in an increase in share premium of £0.2m (FY 2023: £0.4m).
Retained earnings
Retained earnings have been reduced by the reserve for own shares, which consists of the cost of shares of Victrex plc held by employee
trusts, and are administered by independent trustees. The total number of shares held in trust as at 30 September 2024 was 75,847
(30 September 2023: 75,847). Distribution of shares from the trusts is at the discretion of the trustees. Dividends attaching to these shares
have been waived.
Translation reserve
The translation reserve comprises all foreign exchange differences, since 1 October 2004 (as permitted by IFRS 1), arising from the
translation of the financial statements of foreign operations, adjusted for exchange differences arising on intragroup monetary items,
that, in substance, form part of the entity’s net investment in a foreign operation.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related
to forecast hedged transactions.
Dividends to shareholders
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which
the dividends are approved.
2024 2023
£m £m
Year ended 30 September 2022
– Final dividend paid February 2023 at 46.14p per ordinary share
—
40.1
Year ended 30 September 2023
– Interim dividend paid June 2023 at 13.42p per ordinary share
—
11.7
– Final dividend paid February 2024 at 46.14p per ordinary share
40.1
—
Year ended 30 September 2024
– Interim dividend paid June 2024 at 13.42p per ordinary share
11.7
—
51.8
51.8
A final dividend in respect of 2024 of £40.2m (46.14p per ordinary share) has been recommended by the Directors for approval at the
Annual General Meeting in February 2025. These financial statements do not reflect this dividend.
192 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
23. Related party transactions
Identity of related parties
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and so are only
disclosed for the Company’s financial statements.
Company
2024 2023
£m £m
Trading transactions with subsidiaries
Administrative expenses paid on Company’s behalf by subsidiaries
0.8
0.7
Financing transactions with subsidiaries
Dividends received from subsidiaries (net of withholding tax)
42.2
—
Cash transfers received from subsidiaries
58.5
56.0
Cash transfers made to subsidiaries
6.9
4.8
Amounts receivable from subsidiaries are disclosed in note 14.
The Group’s retirement benefit plans are related parties and the Group’s and Company’s transactions with them are disclosed in note 17.
Details of transactions during the year relating to the Company’s investments in subsidiaries can be found in note 11.
During the year the Group fully impaired its investment in associate, Bond 3D High Performance Technology BV (‘Bond’). No share of loss
was recognised in relation to the associated company during FY 2024 (FY 2023: £1.3m). The fair value of the loans due from Bond was also
reduced to £nil. See note 11 for further details.
There were sales of material of £11,000 to Bond in FY 2024 (FY 2023: £nil). During FY 2023 Bond was engaged to provide technical services
to the Group of £34,000. No such services were provided during FY 2024.
Transactions with key management personnel
The key management of the Group and Company is those people having authority and responsibility for planning, directing and controlling
the activities of the Group and consists of the Board of Directors.
Compensation of key management personnel is shown in the table below:
2024 2023
£m £m
Short-term employment benefits
1.8
2.0
Post-employment benefits
0.1
0.2
1.9
2.2
More detailed information concerning Directors’ remuneration, including non-cash benefits and contributions to post-employment defined
benefit plans, is given in the Directors’ remuneration report on pages 111 to 133.
Directors of the Company control 0.09% of the voting shares of the Company, details of which are given on page 128.
Details of Directors’ indemnities are given on page 135.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 193
Notes to the financial statements continued
24. Exchange rates
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operated (the ‘functional currency’). The consolidated financial statements are presented in Sterling,
which is the Company’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing on the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the retranslation to balance sheet date
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when
deferred in equity as qualifying cash flow hedges. In addition, where an exchange difference arises on an intragroup monetary item that,
in substance, forms part of the entity’s net investment in a foreign operation, these differences are recognised in other comprehensive
income in the consolidated financial statements and accumulated in equity until the disposal of the foreign operation.
Group companies
The results and financial position of all the Group entities (none of which have the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are translated into the presentation currency as follows:
u
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
u
income and expenses for each income statement are translated at weighted average exchange rates; and
u
all resulting exchange differences, from 1 October 2004, are recognised as a separate component of equity.
The most significant Sterling exchange rates used in the financial statements under the Group’s accounting policies are:
2024
2023
Average spot
Closing
Average spot
Closing
US Dollar
1.26
1.32
1.16
1.22
Euro
1.16
1.18
1.14
1.16
The average exchange rates in the above table are the weighted average spot rates applied to foreign currency transactions, excluding the
impact of foreign currency contracts. Any gains and losses on foreign currency contracts, where net hedging has been applied for cash flow
hedges, have been separately disclosed in the income statement as required, in accordance with IFRS 9.
194 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
25. Alternative performance measures
This section includes a reconciliation of certain alternative performance measures (‘APMs’) to the most directly reconcilable line items in
the financial statements. The presentation of APMs should not be considered in isolation or as a substitute for related financial measures
prepared in accordance with IFRS. The APMs presented in this report may differ from similarly titled measures used by other companies.
Where one APM is derived from another APM, a cross-reference to the relevant APM has been included, which then provides the
reconciliation to the most directly reconcilable line items. APM 1 to APM 9 below have been calculated on a consistent basis to prior year.
One additional APM, Underlying effective tax rate (APM 10), has been included in the current year because it has been used by the Board to
assess the effective tax rate excluding the tax impact of exceptional items.
Given the change in the financing structure of the Group, with the utilisation of the revolving credit facility and continued use of bank loans
to fund new manufacturing operations in China, the Directors now consider the broader net funds/debt metric (see note 16) to better
represent the financial position when determining the use of cash under the capital allocation policy, and therefore are no longer
presenting the Available Cash APM metric previously used.
The Return on Sales metric is also not presented in FY 2024 as it is no longer a strategic KPI.
APM 1 Operating profit before exceptional items (referred to as underlying operating profit) is based on operating profit before
the impact of exceptional items. This metric is used by the Board to assess the underlying performance of the business excluding
items that are, in aggregate, material in size and/or unusual or infrequent in nature. Exceptional items for FY 2024 within
operating profit is a charge of £14.5m (FY 2023: charge of £7.5m) relating to business process improvements including ERP system
implementation and the impairment of property, plant and equipment relating to gears manufacturing (FY 2023: business process
improvements including ERP system implementation), further details of which are disclosed in note 3.
2024 2023
£m £m
Operating profit
45.8
73.2
Exceptional items
14.5
7.5
Underlying operating profit
60.3
80.7
APM 2
Profit before exceptional items and tax (referred to as underlying profit before tax) is based on profit before tax (‘PBT’) before
the impact of exceptional items. This metric is used by the Board to assess the underlying performance of the business excluding
items that are, in aggregate, material in size and/or unusual or infrequent in nature. Exceptional items for FY 2024 is a charge of
£35.7m (FY 2023: charge of £7.5m) relating to business process improvements including ERP system implementation, impairment of
property, plant and equipment relating to gears manufacturing, impairment of investment in associate and fair value loss on the
loans due from Bond (FY 2023: business process improvements including ERP system implementation), further details of which
are disclosed in note 3.
2024 2023
£m £m
Profit before tax
23.4
72.5
Exceptional items
35.7
7.5
Underlying profit before tax
59.1
80.0
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 195
Notes to the financial statements continued
25. Alternative performance measures continued
APM 3 Constant currency metrics are used by the Board to assess the year-on-year underlying performance of the business excluding
the impact of foreign currency rates, which by nature can be volatile. Constant currency metrics are reached by applying current
year (FY 2024) weighted average spot rates to prior year (FY 2023) transactions. Gains and losses on foreign currency net
hedging are shown separately in the income statement and are excluded from the constant currency calculation.
2024 2023
Group £m
£m
% change
Revenue
291.0
307.0
-5%
Impact of FX retranslation
—
(10.9)
Revenue at constant currency
291.0
296.1
-2%
Volume
3,731
3,598
ASP at constant currency
78.0
82.3
-5%
2024 2023
Sustainable Solutions £m
£m
% change
Revenue
238.0
241.8
-2%
Impact of FX retranslation
—
(8.6)
Revenue at constant currency
238.0
233.2
+2%
2024 2023
Medical £m
£m
% change
Revenue
53.0
65.2
-19%
Impact of FX retranslation
—
(2.3)
Revenue at constant currency
53.0
62.9
-16%
APM 4 Underlying operating cash conversion is used by the Board to assess the business’ ability to convert underlying operating
profit into cash effectively. Underlying operating cash conversion is underlying operating cash flow as a percentage of underlying
operating profit. Underlying operating cash flow is underlying operating profit before depreciation, amortisation and loss on
disposal, less capital expenditure, adjusted for working capital movements.
2024 2023
£m £m
Underlying operating profit (APM 1)
60.3
80.7
Depreciation, amortisation and loss on disposal
1
23.3
21.6
Change in working capital
17.5
(48.9)
Capital expenditure
(32.6)
(38.5)
Underlying operating cash flow
68.5
14.9
Underlying operating cash conversion
114%
18%
1 Excludes impact of profit or loss on disposal of right of use assets.
APM 5 Underlying EPS is earnings per share based on profit after tax but before exceptional items divided by the weighted average
number of shares in issue. This metric is used by the Board to assess the underlying performance of the business excluding items
that are, in aggregate, material in size and/or unusual or infrequent in nature.
2024 2023
£m £m
Profit after tax attributable to owners of the Company
17.2
61.7
Exceptional items
35.7
7.5
Tax on exceptional items
(8.0)
(1.7)
Profit after tax before exceptional items net of tax
44.9
67.5
Weighted average number of shares
86,950,951
86,937,187
Underlying EPS (p)
51.7
77.7
196 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
25. Alternative performance measures continued
APM 6 Underlying dividend cover is used by the Board to measure the affordability and sustainability of the regular dividend.
Underlying dividend cover is underlying earnings per share/total dividend per share. This excludes special dividends.
2024 2023
p p
Underlying earnings per share (APM 5)
51.7
77.7
Total dividend per share
59.56
59.56
Underlying dividend cover (times)
0.9
1.3
APM 7 Return on Invested Capital (‘ROIC’) is used by the Board to assess the return on investment at a Group level and provides a
metric for long-term value creation. ROIC is defined as profit after tax adjusted to exclude exceptional items net of tax, finance
costs and finance income (‘ROIC adjusted profit’)/average adjusted net assets. Adjusted net assets is total equity attributable to
shareholders at the year end excluding cash and cash equivalents, other financial assets, retirement benefit asset, retirement
benefit obligations and borrowings. Average adjusted net assets is (adjusted net assets at the start of the year plus adjusted net
assets at the end of the year)/2. This metric has been renamed in FY 2024 from ‘Return on Capital Employed’, with no change in
the calculation.
2024 2023
£m £m
Profit after tax attributable to owners of the Company
17.2
61.7
Exceptional items
35.7
7.5
Tax on exceptional items
(8.0)
(1.7)
Finance income
(0.7)
(1.3)
Finance costs
1.9
0.7
ROIC adjusted profit
46.1
66.9
Net assets
461.6
501.0
Cash and cash equivalents
(29.3)
(33.4)
Other financial assets
—
(0.1)
Retirement benefit asset
(10.7)
(9.7)
Retirement benefit obligations
2.5
2.5
Borrowings
40.4
39.7
Adjusted net assets
464.5
500.0
Average adjusted net assets
482.2
466.1
ROIC
10%
14%
APM 8 Underlying operating overheads is made up of sales, marketing and administrative expenses, and research and development
expenses, before exceptional items. This metric is used by the Board to assess the underlying movement in overheads of the
business excluding items that are, in aggregate, material in size and/or unusual or infrequent in nature.
2024 2023
£m £m
Sales, marketing and administrative expenses
71.0
70.8
Exceptional items
(14.5)
(7.5)
Research and development expenses
17.5
18.6
Underlying operating overheads
74.0
81.9
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 197
Notes to the financial statements continued
25. Alternative performance measures continued
APM 9 Underlying PBIT is used by the Group as the financial measure on which the Executive Directors’ performance is assessed for
the annual bonus targets as set out in the Directors’ remuneration report starting on page 111. This metric removes the impact
of finance income and costs from the underlying profit before tax metric (APM 2).
2024 2023
£m £m
Underlying profit before tax (APM 2)
59.1
80.0
Finance income
(0.7)
(1.3)
Finance costs
1.9
0.7
Underlying PBIT
60.3
79.4
APM 10 Underlying effective tax rate is used by the Board to assess the Groups effective rate excluding the impact of exceptional
items. This metric is the underlying tax charge divided by underlying profit before tax. The underlying tax charge is the tax
expense adjusted to exclude the tax effect of exceptional items.
2024 2024 2023 2023
£m % £m %
Underlying profit before tax (APM 2)
59.1
80.0
Tax expense/effective tax rate
7.6
32.5%
11.5
15.9%
Tax on exceptional items
8.9
1.7
Less: tax effect of impairments not deductible for tax purposes
(3.4)
—
Underlying tax charge/underlying effective tax rate
13.1
22.2%
13.2
16.5%
26. Commitments
Capital expenditure authorised and contracted for which has not been provided for in the financial statements amounted to £9.2m
(30 September 2023: £14.4m) in the Group and £nil (30 September 2023: £nil) in the Company.
198 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc | Annual Report 2024
Five-year financial summary
for the year ended 30 September and as at 30 September
2020
£m
2021
£m
2022
£m
2023
£m
2024
£m
Results
Revenue 266.0 306.3 341.0 307.0 291.0
Profit before tax 63.5 92.5 87.7 72.5 23.4
Balance sheet
Property, plant, equipment and intangible assets 300.1 330.5 367.4 369.9 369.2
Investments and other non-current financial assets 20.3 24.1 20.5 22.9 4.5
Inventories 98.5 70.3 86.8 134.5 115.1
Net cash 73.1 74.9 58.7 33.4 29.3
Other financial assets — 37.5 10.1 0.1 —
Trade receivables and other assets 50.0 63.8 83.2 56.1 63.2
Retirement benefit asset 7.5 14.2 14.9 9.7 10.7
Retirement benefit obligation — (1.9) (2.7) (2.5) (2.5)
Borrowings — (5.9) (22.5) (39.7) (40.4)
Trade payables and other liabilities (68.5) (95.8) (125.8) (83.4) (87.5)
Equity shareholders’ funds 481.0 511.7 490.6 501.0 461.6
Cash flow
Net cash flow from operating activities 69.4 127.1 80.0 41.7 84.0
Capital expenditure (24.9) (41.9) (45.5) (38.5) (32.6)
Withdrawal/(deposit) of cash invested for greater than three months 0.3 (37.5) 27.4 10.0 0.1
Other investing activities (4.9) (3.8) 1.9 (3.8) (2.8)
Transactions with non-controlling interest — 5.6 — 2.6 —
Net bank borrowings received — — 14.5 17.2 2.7
Dividends and other financing items (38.7) (47.3) (96.9) (53.5) (54.7)
Net increase/(decrease) in cash and cash equivalents 1.2 2.2 (18.6) (24.3) (3.3)
Ratios
Earnings per ordinary share – basic 62.6p 84.3p 87.6p 70.9p 19.8p
Full year dividend per ordinary share 46.14p 59.56p 59.56p 59.56p 59.56p
Special dividend per ordinary share — 50.00p — — —
Return on invested capital (‘ROIC’) 17% 18% 20% 14% 10%
Sales volume
Tonnes 3,492 4,373 4,727 3,598 3,731
Cautionary note regarding forward-looking statements
This Annual Report may contain forward-looking statements that may or may not prove accurate. Although it is believed that the
expectations reflected in these statements are based on reasonable assumptions, such statements involve risk and uncertainty. There are a
number of factors, many of which are outside the control of Victrex plc and its subsidiaries (’Victrex’), which could cause actual outcomes
and results to be materially different from those anticipated. All written or oral forward-looking statements attributed to Victrex are
qualified by this caution. Victrex does not undertake any obligation to update or revise any forward-looking statements to reflect any
change in circumstances or in its expectations. The information in this Annual Report is believed to be accurate at the date of its preparation
but no warranty, guarantee or representation as to its accuracy or completeness is made. Nothing in this Annual Report should be
construed as a profit forecast.
Victrex plc | Annual Report 2024
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION 199
This is the Annual Report of Victrex plc for the year ended
30September2024.
This Annual Report has been sent to shareholders who have elected
toreceive a copy. A Notice of the AGM to be held on 7 February 2025.
In this Annual Report, references to ‘Victrex’, ‘the Group’, ‘the
Company’, ‘we’ and ‘our’ are to Victrex plc and its subsidiaries and
linesof business, or any of them as the context may require.
References to the years 2024/FY 2024, 2023/FY 2023, 2022/FY 2022
and 2021/FY 2021 are to the financial years ended 30 September 2024
(for 2024), 30 September 2023 (for 2023), 30 September 2022 (for
2022) and 30 September 2021 (for 2021). Unless otherwise stated, all
non-financial statistics are at 30 September 2024.
This Annual Report contains forward-looking statements with respect to
the Group’s financial condition, operating results and business strategy,
plans and objectives.
Please see the discussion of our principal risks and uncertainties in the
sections entitled ‘Risk management’ and ‘Principal risks’, and the section
entitled ‘Cautionary note regarding forward-looking statements’.
This Annual Report contains references to Victrex’s website. These
references are for convenience only – we are not incorporating by
reference any information posted on www.victrexplc.com.
This Annual Report has been drawn up and presented in accordance
with and in reliance upon applicable English company law and the
liabilities of the Directors in connection with this report shall be subject
to the limitations and restrictions provided by such law.
The Directors’ report – Strategic report has been prepared to inform
theCompany’s shareholders and help them assess how the Directors
have performed their duty to promote the success of the Company
forthe benefit of the Company’s shareholders as a whole. It should
notbe relied upon by anyone, including the Company’s shareholders,
forany other reason. The Directors’ report – Strategic report contains
afair review of the business of the Group and a description of the
principal risks and uncertainties that the Group faces. As a consequence,
the Directors’ report – Strategic report only focuses on material issues
and facts.
This Annual Report does not constitute an invitation to underwrite,
subscribe for, or otherwise acquire or dispose of any Victrex plc shares.
Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
1 Hardman Square
Manchester
M3 3EB
Broker and financial advisor
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London
E14 5JP
Lawyers
Addleshaw Goddard LLP
One St Peter’s Square
Manchester
M2 3DE
Bankers
Barclays Bank PLC
3 Hardman Street
Manchester
M3 3AX
HSBC UK Bank PLC
St Peter’s Square
Manchester
M1 4PB
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
BN99 6DA
Visit www.victrexplc.com or scan with your
QR code reader to visit our Group website.
Advisors
Financial calendar
Ex-dividend date 23 January 2025
Record date
1
24 January 2025
AGM 7 February 2025
Payment of final dividend 21 February 2025
Announcement of 2025 half yearly results May 2025
Payment of interim dividend June/July 2025
1 The date by which shareholders must be recorded on the share register to receive the dividend.
Victrex plc | Annual Report 2024
200 STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Victrex plc’s commitment to environmental issues is reflected in
this Annual Report, which has been printed on Arena Extra
White Smooth, an FSC
®
certified material. This document was
printed by Park Communications using its environmental print
technology, which minimises the impact of printing on the
environment, with 99% of dry waste diverted from landfill.
Both the printer and the paper mill are registered to ISO 14001.
CBP028216
VICTREX PLC ANNUAL REPORT 2024
Victrex plc
Victrex Technology Centre
Hillhouse International
Thornton Cleveleys
Lancashire
FY5 4QD
United Kingdom
Tel: +44 (0) 1253 897700
Fax: +44 (0) 1253 897701
Web: www.victrexplc.com