BRINGING TRANSFORMATIONAL & SUSTAINABLE SOLUTIONS
THAT ADDRESS WORLD MATERIAL CHALLENGESEVERY DAY
VICTREX PLC
ANNUAL REPORT 2023
ENABLING
ENVIRONMENTAL &
SOCIETAL BENEFITS
WE BRING TRANSFORMATIONAL &
SUSTAINABLE SOLUTIONS THAT
ADDRESS WORLD MATERIAL
CHALLENGES EVERY DAY
Strategicreport
1 Highlights
2 Victrex at a glance
6 Chair’s statement
8 Our investment case
10 Our markets and megatrends
12 Our business model
14 Strategy
16 Overview of strategy
18 Strategy and key performance indicators
20 Stakeholder engagement
24 Financial review
28 Operating review
32 Risk
39 Going concern and viability statement
42 Sustainability report
Corporategovernance
68 Introduction from the Chair
70 Board of Directors
72 Statement of corporate governance
86 Nominations Committee report
90 Audit Committee report
98 Corporate Responsibility Committee
report
100 Directors’ remuneration report
124 Directors’ report – other
statutoryinformation
128 Statement of Directors’ responsibilities
in respect of the Annual Report and
the financial statements
129 Independent auditors’ report to the
members of Victrex plc
Financial statements
136 Consolidated income statement
137 Consolidated statement
ofcomprehensiveincome
138 Balance sheets
139 Cash flow statements
140 Consolidated statement
ofchangesinequity
141 Company statement
ofchangesinequity
142 Notes to the financial statements
Shareholder information
183 Five-year financial summary and
Cautionary note regarding
forward-looking statements
184 Notice of Annual GeneralMeeting
188 Explanatory notes
192 Financial calendar
193 Advisors
Highlights:
PBT in line* after challenging year
u
Underlying PBT in line at £80.0m; reported PBT £72.5m
u
FY 2023 volume down 24%; Group revenue down 10%
u
Significant weakness in Electronics, Energy & Industrial and VAR
u
Record Medical revenues, +12% & broad-based growth; strong
Aerospaceperformance
u
Robust cost discipline whilst prioritising Medical & innovation investment
Strong average selling prices; improved gross margin
u
ASP up 18%, driven by price increases (& mix and FX)
u
FY 2023 gross margin up 180bps, offset by lower asset utilisation
Well placed for macro-recovery, with new strategic growth targets
u
Targeting mid-term revenue growth of 5–7% CAGR** based on core business
& new applications
u
Upside potential to 8–10% CAGR driven by mega-programme commercialisation
u
Targeting £25m–£35m of revenues from mega-programme portfolio in FY 2025
u
Decarbonisation targets submitted to Science Based Targets initiative (‘SBTi’)
Mega-programmes prioritised to drive enhanced commercialisation
u
Investment prioritised in streamlined portfolio: Aerospace, E-mobility, Knee, Magma and Trauma
u
Key milestones delivered in pathways to £10m revenue:
u
E-mobility: £6m revenues, ahead of expectations & new customer collaborations
u
Trauma plates: growing demand & broader customer opportunities
u
Knee: clinical trial & top five OEM collaboration; two to three years to first sales
u
Aerospace: broader customer portfolio for composite parts & revenues growing
u
Magma: supporting TechnipFMC for Brazil scale-up
Strong balance sheet & opportunity for cash flow improvement
u
FY 2023 available cash
1
of £30.1m (FY 2022: £66.0m) after major capex & higher inventory
u
Well-invested assets: new China facilities ready & UK facilities upgraded
u
Inventory set to unwind from FY 2024 (FY 2023: £134.5m vs FY 2022: £86.8m)
u
Final dividend*** maintained at 46.14p/share, reflecting confidence in future performance
Group sales volume
tonnes
3,598 -24%
Group revenue
£m
307.0 -10%
Underlying profit
before tax
1
£m
80.0 -16%
Financial highlights
22
21
92.5
23
72.5
87.7
22
21
84.3
23
70.9
87.6
22
21
50.00
23
59.56
59.56
22
21
4,373
23 3,598
4,727
22
21
306.3
23 307.0
341.0
22
21
91.7
23 80.0
95.6
Regular dividend Special dividend
Dividend per share p
(regular & special dividends)
59.56 flat
Reported earnings
pershare p
70.9 -19%
Reported profit
beforetax £m
72.5 -17%
PBT in line* after challenging year; record
Medical revenues & new growth targets
59.56
1 Alternative performance measures are defined in note 25.
* In line with revised June 2023 guidance of £80m–£85m underlying PBT.
** Revenue (5 yr CAGR). Opportunity for PBT to grow faster with improved operating leverage.
*** Proposed.
STRATEGIC REPORT
1
Annual Report 2023 Victrex plc
Victrex at a glance
OUR
STRATEGIC
ROADMAP
Enhance inclusion and diversity,
supportlocal communities and
inspire STEM-based careers
Read more on page 44
Maximise resource efficiency
acrossthe value chain
Read more on page 44
Our sustainable products
provideclear environmental
andsocietal benefits
Read more on page 44
CULTURE
Safety,
sustainability &
accountability
Innovation
Service for
customers
Delivering
with speed
A SUSTAINABLE BUSINESS
PEOPLE PLANET PRODUCTS
VALUES BEHAVIOURS
STRATEGIC IMPERATIVES
PURPOSE
To bring
transformational
and sustainable
solutions that address
world material challenges
every day
Read more on page 6
STRATEGIC IMPERATIVES
Passion
Innovation
Performance
Read more on page 65
Drive
Differentiate
Create and deliver
Underpin
Read more
on page 15
Driving results
Working together
Doing the right thing
Continuously improving
Focusing on our customers
Read more on page 82
STRATEGIC REPORT
Victrex plc Annual Report 2023
2
BRINGING TRANSFORMATIONAL
&SUSTAINABLE SOLUTIONS
Victrex’s strategy is based on Polymer & Parts and our purpose is to bring transformational
and sustainable solutions which address the world’s material challenges. Through ourMedical
and Sustainable Solutions business areas, we have a strong core business based on PEEK
polymer, which has formed Victrex’s business since 1993, typically replacing metal with
alighter, durable and sustainable alternative. Through a developing and differentiated
portfolio of product forms and parts, we seek to grow new revenue streams, enabling
environmental and societal benefit for our customers.
Victrex solutions are found across a range of applications and end markets.
1,000+
employees
globally
55%
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
ValueAdded Resellers volumes currently, due to the lack of full clarity on exact end market destinations. Sustainable products represented 55%
ofGrouprevenues in FY 2023.
## 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.
of sales invested
inR&D
##
c.5%–6%
Aerospace
20,000+
aircraft flying with Victrexsolutions
Automotive
500m+
VICTREX™ PEEK based applications in use
Electronics
4bn+
mobile devices using Aptiv™ film
Energy & Industrial
75m+
VICTREX™ PEEK seal rings in use today
Energy & Industrial
100m+
machines operate using Victrex solutions
Medical
15m+
implanted medical devices using
VICTREX™PEEK to date
STRATEGIC REPORT
3
Annual Report 2023 Victrex plc
HOW OUR PRODUCTS ENABLE
ENVIRONMENTAL & SOCIETAL BENEFITS
Supporting CO
2
reduction, improving energy efficiency and better patient
outcomes arejustsome of the benefits our products bring, with over half
ofourrevenues nowcoming from sustainable products (FY 2023 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 based onpaperby Zhang Q, Yuan Y, Li X, et al, World Neurosurgeon 2018.
**** Data on file, refers to Trauma outcomes in high risk patients using PEEK carbon fibre trauma plates vs metal.
Automotive
80,000 tonnes
80,000 tonne annual CO
2
saving
in Europe for selected applications*
Aerospace
CO
2
saving
Our annual sales to Aerospace
support CO
2
savings c3x Victrex’s
annual Scope 1 & 2 emissions**
Medical
25% improved
brain function
Using PEEK-OPTIMA
TM
Natural
in CMF skull plates vsmetal***
Enhanced
unionrate
Using carbon fibre PEEK trauma plate
vs 85% union rate for steel plates****
Electronics
30–40% lighter
PEEK is approximately 30–40% lighter than some
metals and supports improved energy efficiency
inhomeappliance devices
Victrex at a glance continued
STRATEGIC REPORT
Victrex plc Annual Report 2023
4
Today 2050
Decarbonisation plan & options
PEOPLE, PLANET & PRODUCTS
Our decarbonisation roadmap is aligned to the Science Based Targets initiative (‘SBTi’),
witha Net Zero goal by 2050 across Scope 1, 2 & 3 emissions (subject to SBTi validation),
andan interim goal by 2032.
SBTi interim target
(2032)
SBTi Net Zero
(2050)
Our progress:
Planet: how we manage our resources
55%
reduction in hazardous waste per £m revenue
since 2013
17%
CO
2
intensity (CO
2
/kg of PEEK produced)
reduction since2013
Our future goals:
Planet: how we manage our resources
100%
goal for renewable electricity globally*
* Where the market exists by 2024 (currently 90%).
2050
Net Zero emissions by 2050; SBTi targets submitted
aligned to the Paris Agreement
Sustainability report Pages 42 to 66
Assess alternative
technologies/
sustainable chemistry
Electrification or alternative fuels for manufacturing
Renewable electricity
Continuous Improvement programmes
STRATEGIC REPORT
5
Annual Report 2023 Victrex plc
Overview
This has been my first full financial year
as Chair. Our strong purpose, innovative
culture and strong balance sheet have
helped Victrex to remain resilient through
the challenging macro-economic conditions
in FY 2023.
A clear purpose
Our purpose is to bring transformational
andsustainable solutions to the performance
challenges faced by our customers, and
our products come with environmental,
technical or medical benefits. Sustainable
product revenues grew this year, which
includes applications in the Aerospace or
Automotive industries, with lighter, more
durable and faster to process materials
supporting CO
2
reduction; in Electronics
and Energy to support energy efficiency;
orin Medical, supporting patient outcomes.
In each, we have a key role to enable
environmental and societal benefits, which
will drive value for all of ourstakeholders.
Safety – fundamental to
everything we do
With manufacturing, technical and support
facilities globally to support our customers,
we have a zero accidents, zero incidents goal
across our business. I am pleased to report
that our safety culture remains strong.
We continue to align to US Occupational
Safety & Health (‘OSHA’) based metrics,
with our recordable injury frequency rate
A CLEAR STRATEGY:
FOCUSED ON DELIVERY
Chair’s statement
(‘RIFR’) at 0.2 (FY2022:0.2) and better
than the industry averageof1.3. Alongside
Victrex’s UK polymer manufacturing
facilities, our new PEEK facility in China
successfully produced first product and is
commercially ready tosupport first sales in
FY 2024. Wherever we operate, we have
anunwavering focus on safety.
A unique strategy
Our ‘Polymer & Parts’ 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. The addressable
market opportunity for our polymers is
atleast 10 times our current sales volume.
Across Sustainable Solutions, beyond
products benefiting from a global economic
recovery, we seek to translate application
growth and develop adjacent opportunities,
particularly in metal replacement. In Medical,
we have the scope to extend our position
through broader applications, with the
opportunity for Medical to become around
a third of revenues within the next decade,
changing the shape of the Group.
Differentiation
Our unique strategy is focused on a
core polymer business, complemented
by our parts business to adopt new and
potentially game-changing applications
(our‘mega-programmes’) – typically where
there is end demand but no supply chain
exists. Victrex’s history is built on innovation,
Dr Vivienne Cox DBE
Chair
With our technology aligned
to powerful megatrends such
as carbon reduction and
improving patient outcomes,
Victrex’s products enable
environmental and societal
benefit for our customers.
We have a clear strategy, and
remain well positioned to
drive substantial growth from
these opportunities over the
coming years.
Dr Vivienne Cox DBE
Chair
Bringing transformational & sustainable
solutions which address the world’s
material challenges, every day
Our purpose
Sustainable product revenues by 2030
>70%
(from 55% in FY 2023)
by applying our know-how and expertise
tohelp develop new application uses for
ourPEEK and PAEK materials.
‘Polymer & Parts’ differentiates us from
competitors, which largely focus on a
portfolio of materials other than PEEK.
Technically, our polymers are developed
by adifferentiated manufacturing process.
As well as expanding our range of
polymer grades, product forms or parts,
many of which are protected by patents
or know-how, this enables us to be the
STRATEGIC REPORT
Victrex plc Annual Report 2023
6
number1 PEEK and PAEK experts. We will
continue to invest around 5–6% of sales
every year to support R&D investment,
principally in application development, but
also exploring sustainable chemistry for
the future.
Core business &
mega-programme targets
Our strategic plan targetscore business
growth of at least 5–7% (revenue CAGR)
over the medium term, with an opportunity
towards 8–10% growth as differentiated
applications and the ‘mega-programmes’
see increasing commercialisation. PBThas
the opportunity to grow faster than revenue
as operating leverage improves and overhead
investment moderates. During the year,
investment in our ‘mega-programme’
portfolio was prioritised. This prioritisation
ofthe game-changing programmes of
Aerospace Composites, E-mobility, Magma
(composite pipe for the energy industry),
Trauma plates and Knee comes ata time
when the opportunity of £10m revenues
inseveral mega-programmes is moving
closer. Auto Gears saw further growth and
has been integrated within the core business
as it builds adoption and further commercial
revenue. We are also targeting £25m–£35m
of revenues from the mega-programme
portfolio in FY 2025.
Sustainability & ESG
People, Planet & Products is our focus and
the environmental & societal benefits of
Victrex
TM
PEEK have helped us to continue
growing our portfolio of sustainable
products, which this year reached 55%
of revenues. Further detail is in our
Sustainability report on pages 42 to 66.
The decarbonisation agenda continues
apace and whilst we face hurdles from
access to alternative fuels or technologies,
orgrid capacity, we have set out a revised
decarbonisation goal which is aligned to the
Science Based Targets initiative (‘SBTi’). This
is focused on a goal of Net Zero across all
scopes by 2050 (including an interim target
by 2032), and we expect to communicate
our short and long-term goals in 2024,
post-review by SBTi. We continue to lobby
for support to progress our
decarbonisation agenda.
In our People agenda, we actively engage with
communities wherever we operate, typically
with significant employee volunteering.
Anew Biodiversity partnership was created
this year in the UK with Lancashire Wildlife
Trust, focusing on industry and nature
in harmony. In our Science, Technology,
Engineering & Maths (‘STEM’) programme,
we saw the first STEM ambassadors in
China, a recognition of how we support
employees of the future.
Results
Victrex was not alone in seeing a
challenging macro-economic environment.
Results were in line with expectations, with
revenue declining 10% to £307.0m (FY
2022: £341.0m) and profit before tax (‘PBT’)
down 17% to £72.5m (FY 2022: £87.7m).
Pleasingly, recovery of energy and raw
material inflation was strong, with average
selling prices, including the benefit of sales
mix and currency, up 18%. Whilst we have
yet to see a notable upturn in demand, we
remain well positioned for a global recovery
in several industries.
Strong balance sheet
The Group retains a strong balance sheet,
with available cash of £30.1m, offering
security of supply to our customers and
flexibility to invest. Our cash-generative
business model enables us to invest in
our growth, as well as offer attractive
shareholder returns. Capital expenditure
has been elevated since FY 2020 as we
invested in our new China facilities and
inUK asset improvement. Whilst we have
allocated investment towards our ESG
anddecarbonisation goals over the coming
years, our cash flows are set to improve as
we realise the fruits of ourinvestments.
Shareholder returns
&capitalallocation
With a well-invested asset base and cash
flows set to see an upturn, the opportunity
for incremental shareholder returns is set
to improve. Following engagement with
shareholders, we confirmed that share
buybacks are now part of our options to
return cash. Our capital allocation policy
continues to focus on quality growth first
and foremost. We will look to progressively
increase our regular dividend in line with
earnings, once dividend cover returns close
to 2x. Special dividends remain an option
based on a minimum 50p/share, with share
buybacks able to be utilised for smaller
cash returns, typically up to £25m. Despite
the challenging year, we maintained the
FY 2023 regular dividend (total dividends
59.56p/share).
Governance & the Board
We pride ourselves on strong governance
across the Group. We saw the first full
year of our newly formed Corporate
Responsibility Committee (‘CRC’) and a full
summary of this Committee’s activities is
shown on pages 98 and 99.
We are focused on further progress on our
Diversity, Equity & Inclusion (‘DE&I’) journey.
With a target for 40% of the leadership
group to be female by 2030, we stayed at
19% during the year and have identified
further actions to build on this progress.
Onthe Board, we have a talented and diverse
team, with 50% of Directors being female.
In September, Dr Martin Court, our Chief
Commercial Officer, stepped down from
the Board after 10 years of service. We are
grateful to Martin for his strong contribution
and wish him well in his retirement. We
will not be directly replacing this role at
Board level, with a reorganisation to have
two Managing Directors for Sustainable
Solutions and Medical respectively, one
ofwhom is an internal promotion.
People, stakeholders, values
&culture
During a challenging macro-economic
environment, it is important that we
recognise and thank each and every one of
Victrex’s employees for their resilience and
contribution. We also continue to support
employees by investing in training, as well
asflexible working and other policies.
Victrex has a strong track record of
ensuringwe engage with stakeholders
across our global locations, from customers,
to investors, to suppliers and, of course,
tolocal communities wherever we operate.
Employee volunteering remains embedded
in our culture, with 3,895 employee hours
supporting local communities this year
(FY2022: 4,784 hours). In our DE&I agenda,
we have a number of employee forums
to drive progress, with further detail on
page 55 of the Sustainability report. Our
Non-executive Director for Workforce
Engagement, Brendan Connolly, has
continued to engage with employees across
our global locations and a summary of this is
shown on pages 84 and 85. With our values
of Passion, Innovation and Performance
and our highly innovative culture, our focus
remains very clearly ondelivery.
Outlook
Overall, the Group is well placed for recovery
and growth. With a strong and diversified
core business, increasing commercialisation
in our mega-programmes, well invested
assets and incremental capacity, and the
opportunity for cash flow improvement,
ourinvestment proposition remains strong.
Dr Vivienne Cox DBE
Chair
5 December 2023
STRATEGIC REPORT
7
Annual Report 2023 Victrex plc
Our investment case
OUR LONG-TERM
GROWTHCREDENTIALS
By enabling environmental & societal benefits for our customers and the planet,
we arealigned to global megatrends, which in turn support our long-term
growth opportunities, underpinned by our strong financial position.
An innovative world leader:
building the PEEK/PAEK market
Read more online www.victrexplc.com
Strong pipeline of medium to
long-termgrowth opportunities
Mega-programmes Page 9 Our markets and megatrends Pages 10 and 11
Proportion of total R&D investment on
dedicated sustainable products or programmes
Highly cash-generative
businessmodel
Our business model Pages 12 and 13 Financial review Pages 24 to 31
Sector leading returns
Sustainable product goals
Sustainability report Pages 42 to 66
No.1
PEEK expert
>70%
Group revenue from sustainable products with
environmental and societal benefits by 2030 (from
55% today)
5
mega-programmes
40%
total R&D expenditure (including labour) tosupport
sustainable products as a proportion oftheGroup’s
total R&D expenditure
2
£30.1m
available cash
1
c.19%
Five-year average return on capital employed(‘ROCE’)
1
1 Alternative performance measures are defined in note 25.
2 This metric was updated in FY2023, with the previous metric based on project-based R&D investment to support
sustainableproducts as a proportion of project-based R&D investment, which is 92% in the current year (FY 2022: 89%).
STRATEGIC REPORT
Victrex plc Annual Report 2023
8
DELIVERING OUR GROWTHOPPORTUNITIES:
CORE BUSINESS AND ‘MEGA-PROGRAMMES’
Victrex
TM
PEEK & PAEK
polymers:technology with
auniquecombination of
properties tounderpin
ourgrowthopportunities
Victrex
TM
PEEK’s success has been applying
the benefits of this technology to new
and ever growing applications, across a
number of industries. Our core polymer
business remains the bulk of our revenues
(the remainder as product forms, e.g.film,
composite tape or parts), with PEEK found
inmany mission-critical applications,
replacing metal and helping to enable
environmental and societal benefits.
Our core business offers the potential
of at least mid-single digit top-line
growth over the medium term, and
an addressable market more than 10x
current volumes. Thiscould be enhanced
towards double-digit growth over the
medium to long term, aided by new and
differentiated applications, and increasing
commercialisation in our game-changing
‘mega-programmes’. We are mindful of
execution risk and delivery of our strategy,
particularly reflecting the ‘disruptive’ nature
of our mega-programmes. The future
success of Victrex will be built on applying
our unique technology, and its benefits,
to a focused and growing portfolio of
applications, supported by our wellinvested
assets andgrowingcapabilities.
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
Mega-programmes*
Our five game-changing mega-programmes offer the potential of at least £50m revenue in their peak sales year. This year we chose to
prioritise investment in five specific programmes, with a goal of reaching £25m–£35m of revenues from the portfolio in 2025 (from £11m
now). Three programmes – E-mobility, Trauma and Magma – are moving closer to inflection points, with major customers also investing,
technical proof delivered and the drive to greater commercialisation, with £10m of annual revenue closing in.
Mega-programme Magma (composite pipe)
E-mobility (electric
vehicleapplications)
Trauma plates
(compositetrauma plates
forpatient fractures)
Aerospace Composites &
Structures (the aeroplanes
of tomorrow)
PEEK Knee (alternative to metal
knee replacement)
1. Revenue phase
Commercial (£1–£2m) Commercial (£6m) Commercial (<£1m) Commercial (c.£3m) Development (<£1m)
2. Annual
milestones
TechnipFMC new
Brazil pipe facility
Additional EV
business wins
In2Bones roll-out &
Paragon manufacturing
scale-up; >3,000
plates supplied
1st large scale
demonstrator parts
(Airbus Clean Sky 2)
46 patient implants, 10
past 2-year clinical phase;
Aesculap collaboration
3. Next milestones
Petrobras
bid outcomes
Enhanced
wire coating
adoption (FY2024)
Meeting initial demand,
customer launches and
revenue build (FY2024)
Qualifications
broadened to other
OEMs (ongoing)
Post-clinical phase
towards commercialisation
(FY2025)
4. Investment
requirements
Limited –
TechnipFMC
investing
Limited – Victrex
XPI
TM
patented
grade established
Modest – further
product development
investment
Limited – investment
through supply chain
Modest – further
industrialisation scale-up
5. Timeline to
£10mrevenue**
2–3 years ~2 years 2–3 years 2–3 years >3 years (based
on appropriate
regulatory pathway)
* Mega-programmes defined as offering at least £50m of revenue in peak sales year.
** Estimated.
STRATEGIC REPORT
9
Annual Report 2023 Victrex plc
Our markets and megatrends
SIZEABLE AND SUSTAINABLE
GROWTHOPPORTUNITIES
With long-term megatrends in our favour and sustainable products, we have
astrong and diverse mix of growth opportunities across our key markets.
End markets Market opportunity Megatrends Increasing penetration of PEEK
SUSTAINABLE SOLUTIONS
Aerospace
39,000
Source: Airbus.
new passenger and freight
aircraft by 2040
Fly lighter
u
Lighter weight and CO
2
reduction trends
withmore 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
efficientprocessing.
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
10g average over long term,
based on 800V electric vehicle)
CO
2
reduction, durability
andelectrification
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 manyregions.
Increase PEEK content per vehicle in EVs
u
Moving from 10g average PEEK content in ICE cars to potential of >200g per car
(long-termopportunity, based on EV with dual motors).
u
Multiple opportunities in electric cars, bikes and green transport.
u
Majority of existing ICE applications translate across EVs (braking, powertrain and gears).
Electronics
30bn+
Source: Statista.
connected devicesby2030
(double current levels)
Thinner, smaller, smarter
u
The need for instant access to
communication and information onthe
move is driving trends for mobile devices.
Energy efficiency and thermal management
u
Broadening range of applications; Semiconductor, mobile devices and home appliances.
u
Strong capability of PEEK in durability and thermal management.
u
Metal replacement supporting energy efficiency of devices and applications.
Energy &
Industrial
1%
Source: IEA.
global increase every year in
annual energy needs by 2040
Energy transition
u
Increasing demand for and depletion
of existing resources drive exploration
into uncharted territory, as well as the
energytransition and opportunities
inrenewable energy.
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 hydrogenopportunity.
u
Metal replacement in traditional energy; Magma composite pipe.
u
Drive new application areas in General Industrial, including food, robotics and opportunity
forPEEK following PFAS regulations.
MEDICAL
Medical
15–20
seconds
Vision to treat a patient with Invibio
solutions every 15–20 seconds by 2027
(Victrex internal aspiration – from
current 25–30 seconds)
Ageing global population
u
People are living longer and have a
strong desire to maintain their quality
oflife and activity levelsin their later
years, requiring better patient outcomes.
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
Opportunity for Medical revenues to become >30% of the Group by 2032.
STRATEGIC REPORT
Victrex plc Annual Report 2023
10
Visit www.victrexplc.com to seehow we are
shaping future performance in our markets
End markets Market opportunity Megatrends Increasing penetration of PEEK
SUSTAINABLE SOLUTIONS
Aerospace
39,000
Source: Airbus.
new passenger and freight
aircraft by 2040
Fly lighter
u
Lighter weight and CO
2
reduction trends
withmore 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
efficientprocessing.
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
10g average over long term,
based on 800V electric vehicle)
CO
2
reduction, durability
andelectrification
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 manyregions.
Increase PEEK content per vehicle in EVs
u
Moving from 10g average PEEK content in ICE cars to potential of >200g per car
(long-termopportunity, based on EV with dual motors).
u
Multiple opportunities in electric cars, bikes and green transport.
u
Majority of existing ICE applications translate across EVs (braking, powertrain and gears).
Electronics
30bn+
Source: Statista.
connected devicesby2030
(double current levels)
Thinner, smaller, smarter
u
The need for instant access to
communication and information onthe
move is driving trends for mobile devices.
Energy efficiency and thermal management
u
Broadening range of applications; Semiconductor, mobile devices and home appliances.
u
Strong capability of PEEK in durability and thermal management.
u
Metal replacement supporting energy efficiency of devices and applications.
Energy &
Industrial
1%
Source: IEA.
global increase every year in
annual energy needs by 2040
Energy transition
u
Increasing demand for and depletion
of existing resources drive exploration
into uncharted territory, as well as the
energytransition and opportunities
inrenewable energy.
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 hydrogenopportunity.
u
Metal replacement in traditional energy; Magma composite pipe.
u
Drive new application areas in General Industrial, including food, robotics and opportunity
forPEEK following PFAS regulations.
MEDICAL
Medical
15–20
seconds
Vision to treat a patient with Invibio
solutions every 15–20 seconds by 2027
(Victrex internal aspiration – from
current 25–30 seconds)
Ageing global population
u
People are living longer and have a
strong desire to maintain their quality
oflife and activity levelsin their later
years, requiring better patient outcomes.
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
Opportunity for Medical revenues to become >30% of the Group by 2032.
STRATEGIC REPORT
11
Annual Report 2023 Victrex plc
Our business model
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
futurevalue
Underpin through
safety,sustainability
andcapability
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.
1. A sustainable business model
We enable environmental & societal benefits for our customers
andtheplanet. Oursustainable products offer a unique combination
ofproperties, 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
strategy, and decarbonisation goals across all scopes, weseek to
minimise our use of resources, with the opportunity to utilise process
change or alternative fuels to support alignment to Net Zero emissions
by 2050 (goal subject to SBTi validation; 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
andunderstand customer needs, targeting industries
andapplications with opportunities for significant growth
andattractive returns.
3. Innovation
Our culture is built on continual innovation, with a focus
solely onPEEK/PAEK and the high performance materials
area,beyondsimply manufacturing polymers. We have a
high level of technical capability, with investment in Research
&Development representingc.5–6% of revenue, and we
work withacademia and partners to bring new and enhanced
products toour customers and our end markets.
What we do
HOW WE CREATE VALUE
FROM OUR POLYMER
&PARTS STRATEGY
UN Sustainable Development Goals (‘SDGs’)
A SUSTAINABLE BUSINESS
WITHSUSTAINABLE PRODUCTS
Shaping future
performance
Our Polymer & Parts strategy
sees usdevelop 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.
STRATEGIC REPORT
Victrex plc Annual Report 2023
12
How we create value
4. Manufacturing differentiation
Our Polymer & Parts strategy and unique
manufacturing process (Type 1 PEEK) differentiate
us from competitors, with >200 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’ withinAutomotive,
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 1,000 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
5. Capital, cost and cash generation
Our strong financial profile enables us to invest
(capex or M&A) in support of our Polymer & Parts
strategy. Cost efficiency and productivity is key, as
we focus on operating efficiency, supporting margin
and returns. With high value products, we seek to
retain a strong financial position. generating cash to
support further investment and shareholder returns.
6. Sales, marketing and
technical service
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 adoption of our materials.
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 20 and 21
For employees
Investing in skills, apprenticeships
and training brings significant
opportunity for development as
part of our Polymer & Parts strategy.
Performance-based reward drives
astrong retention rate.
Read more on pages 20 and 21
For investors
Continued innovation and
deliveringperformance benefits for
our customers drive strong returns
and cash generation to invest and
support shareholder returns.
Read more on pages 8, 24 to 31
For communities
Engagement with our local communities
enables us to partner on a wide range
of social responsibility programmes.
Read more on pages 54 to 57
For society & the planet
Our purpose is to bring
transformational & sustainable
solutions, with products which
cansupport environmental
orsocietalbenefits.
Read more on pages 64 to 65
STRATEGIC REPORT
13
Annual Report 2023 Victrex plc
Strategy
NO.1 PEEK EXPERTS:
BRINGING TRANSFORMATIONAL
& SUSTAINABLE SOLUTIONS
Enabling environmental and societal benefit through Polymer & Parts
Underpin
u
Safety, health
andwellbeing
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
u
No.1 manufacturing capacity
ofc8,000 tonnes (UK
nameplatecapacity)
u
Enhance cost efficiency
u
Sustainability & productivity
Differentiate through
innovation
u
Commercialise application
development pipeline (MAR)
u
Invent and develop
newgrades
u
Increasedifferentiation &
support 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
revenues
u
Drive adoption with OEMs
and Key Opinion Leaders
(Medical)
u
Increase Medical contribution
STRATEGIC REPORT
Victrex plc Annual Report 2023
14