Victrex plc

Investor overview

An innovative world

leader in high performance

polymer solutions

INVESTMENT

CASE

A STRONG TRACK RECORD

#1 PEEK experts & balanced portfolio

Proven record of creating new markets

Differentiated strategy: Polymer & Parts

Strong & innovative growth pipeline

Highly cash generative & sector leading returns

£300m+ sales

25%+ ROCE (10 year average)

900+ employees

serving over 40 countries

UK & US manufacturing

(polymer & parts)

Operating in

growth

markets

33

Manufacturing product forms: Pipes,

Films, Fibres and Composite Tapes

POLYMER

MANUFACTURING

GLOBAL CAPABILITY

Developing new applications

for PEEK, PAEK and Thermoplastic

Composites

PEEKEXPERTS

Delivering the key PEEK & PAEK

materials with No.1 manufacturing

capacity of 7,150 tonnes

900+ 40+

Employees Countries served

by Victrex across

our markets

PRODUCT FORMS

PARTS & COMPONENTS

40+ YEARS SHAPING

FUTURE PERFORMANCE

Enabling customers to overcome

complex design & engineering

challenges across 6 key markets

A WORLD LEADER IN VALUE

CREATION THROUGH HIGH

PERFORMANCE PEEK & PAEK

POLYMER SOLUTIONS

‘POLYMER & PARTS’

£200m+

Invested in

manufacturing

facilities in the

last 5 years

INVESTMENT IN INNOVATION

5%of annual sales

invested in R&D

NEW CAPABILITIES

• Partnerships • Strategic Alliances • Polymer Innovation Centre• Acquisitions • Composites Manufacturing

c£2bn

• FTSE 250 Company

• £300m+ Revenue

~

POLYMER

First to commercialise PEEK, with

unmatched knowledge and experience

DIFFERENTIATE THROUGH INNOVATION

TO CREATE NEW MARKETS

ELECTRONICS

AUTOMOTIVE ENERGY

MEDICAL

AEROSPACE

MANUFACTURING

& ENGINEERING

hProducing new grades including for

Additive Manufacturing (3D Printing)

Market Value

CONFIDENTIAL

Differentiation and value creation….

Magma M-Pipes

Dental Discs

Knees

Com

posi

tes

APTIV Film

UD Tape

Loaded Brackets

Trauma Plates

Vicote Coatings

Pipe

Compounds

POLYMER

PRODUCT FORMS

PARTS

PEEK & PAEK

Polymers

Gears

4

POLYMER& PARTS

Differentiation & value creation…

AEROSPACE

20,000+aircraft have VICTREX

solutions on-board

ENERGY

75+ millionVICTREXTM PEEK

seals in use today

MEDICAL

Every 35 seconds a patient is treated using

Invibio PEEK OPTIMA™ solutions

9 million+implanted devices

AUTOMOTIVE

500 million VICTREXTM PEEK based applications

on the road today

ELECTRONICS

Over 4 billionmobile devices use

APTIV™ Film technology

INDUSTRIAL AND

MANUFACTURING &

ENGINEERING

100+ million machines using

Victrex solutions

5

Over 900 people waking up every day focused on making, selling

and developing the market for PEEK and PAEK polymers…

OUR MARKETS & OUR PRODUCTS

Victrex Confidential

PEEK: ON TOP OF THE POLYMER PYRAMIDP

OLY

MER

PER

FO

RM

AN

CE

High

Performance

Polymers

Engineering

Polymers

Commodity

Polymers

VICTREX™PEEK

Polyetheretherketone (PEEK) is part of the PAEK family

of polymers. Developed by ICI in the late 1970s, PEEK

has a unique combination of properties and is typically

used to replace metal across critical applications

6

Victrex Confidential

Bio inert

VICTREX™ PEEK:

A UNIQUE COMBINATION OF PROPERTIES

Extreme Temperature

Wear Property

Chemical Resistance

Electrical Property

High PurityEasy

Processing

Recyclable

Mechanical Strengths

Hydrolysis

7

Victrex Confidential

METAL REPLACEMENT: A SIGNIFICANT OPPORTUNITY

Ranked by Weight

(Lightest to Heaviest)

VICTREX® PEEK

Magnesium

Aluminum

Titanium

Steel

Brass0

100

200

300

400

500

600

700

800

0.01.02.03.04.05.06.07.08.09.010.0

Op

era

tin

g T

em

pera

ture

(˚C

)

Specific Gravity

Victrex

Polymer

Aluminium

Brass

Magnesium

Titanium

Stainless Steel

Carbon Steel

8

Victrex Confidential

WEIGHT REDUCTION: A SIGNIFICANT OPPORTUNITY

2,00mm 2,48mm 2,48mm 2,88mm 3,44mm 3,54mm

380gr490gr710gr1000gr 320gr

Steel Cast Iron Titanium Aluminium Magnesium VictrexPolymer

Weig

ht

Th

ickn

ess

+77%

-68%

1130gr

c70% lighter than traditional aerospace materials

$M saving and improved fleet efficiency 9

CONFIDENTIAL

GLOBAL MANUFACTURING FOOTPRINT

Global Manufacturing: Polymer & Parts

ROTHERHAM, SEALSANDS

MONOMER

Upstream integration of key raw

material for supply, quality control &

differentiation

POLYMER

3 independent PEEK & PAEK plants

with over 7000T of capacity

APTIV™ FILM,

2 manufacturing lines

VICTREX PIPES™

Composite PEEK pipe

POLYMER INNOVATION CENTRE

Develop lab concepts at scale

STONEHOUSE

ZYEX™ FIBRES

PORTSMOUTH

MAGMA GLOBAL

Dedicated pipe

manufacturing (Victrex equity

interest)

UK Sites

COMPOSITE UD TAPE

Supporting our Aerospace, Energy & Medical

programmes

MEDICAL DEVICES

- Clean room injection moulding

- Invibio Trauma plates & JUVORA Dental disc

THORNTON-CLEVELEYS

US Sites

BRISTOL, RHODE ISLAND

AEROSPACE COMPOSITES

GRANTSBURG

VICTREX™ PEEK GEARS

10

CONFIDENTIAL 11

NEW POLYMER CAPACITYOPTIONS

Composite parts capability Additional Gears capacity Fibre capacity investment

• Multiple capacity options under review

• Build & other options; single stage or two-stage approach

• Debottlenecking opportunity in FY20/FY21 (c£20m capex over 2 years)

• Investment for growth remains the priority

CONFIDENTIAL

GLOBAL TECHNICAL EXCELLENCE

c5% of sales invested in R&D

Polymer Innovation Centre (UK)

UKHillhouse

ChinaShanghai

JapanTokyo

Partnering with

academiaUSGrantsburg

Prototype development: Polymer Innovation Centre

Victrex Confidential

DIFFERENTIATION VS COMPETITORS

POLYMER (VICTREX

TYPE 1 PEEK &

OTHER GRADES)

NEW POLYMERS,

COMPOUNDS &

NEW GRADES

SELECTED PARTSPRODUCT FORMS

Make polymer

VICTREX

Make markets

13

Victrex Confidential

POLYMER & PARTS: INCREASE VALUE SHARE

Material

* FY ASP ex-Consumer Electronics:

£75.5/kgMaterials

manufacturer

Downstream

development

Downstream

manufacturing

Sales &

distributionEnd markets

• Move downstream:

- Increase value share of each application

- Increase differentiation vs competitors

INCREASE VALUE SHARE

Semi-finished or

componentsFinished or devices

14

Victrex Confidential

15

Current polymer manufacture Mid-term polymer manufacture Mid-term parts manufacture Mid-term total

ECONOMICS OF POLYMER & PARTS

Polymer cost Parts cost Gross margin

• Focus on absolute margin opportunity vs % margin

• Focus on ROCE

CONFIDENTIAL

AEROSPACE

41,000 new or

replacement

planes by 2035

AUTOMOTIVE

Electric vehicles

100g+ PEEK/car

opportunity

ELECTRONICS

$4Trillion revenue

opportunity through

25 billion+ intelligent

systems by 2020

ENERGY

Global energy

demand to increase

>30% by 2040

M&E

2.7bn more mouths

to feed by 2030;

requiring efficient

food processing

MEDICAL

Ageing population

Vision for Invibio

solutions to treat a

patient every 15-20

seconds by 2027

STRONG

FUNDAMENTALS SUPPORTIVE MEGATRENDS

16

CONFIDENTIAL

Magma

Dental

Gears

Aerospace

Loaded

Brackets

Mobile

Devices

HA

Enhanced

Trauma

KneeAero Structures

Pro

bab

ilit

y o

f su

ccess

(in

dic

ati

ve)

Time to meaningful revenue of £1m-£2m (indicative)

Size of bubble

= potential annual revenue in peak year:

<£20m

£20-50m

>£50m

(all bubbles are

indicative only)

Position and colour of bubble

= time to meaningful revenue:

Horizon 1 (0-2 years)

Horizon 2 (2-5 years)

Horizon 3 (5 years +)

Sales from new products aspiration:10-20% of medium term salesTODAY

Meaningful revenue delivered

NEWE PRODUCT PIPELINE

17

CONFIDENTIAL

PROGRAMMES REVENUE STATUS H1 19 MILESTONES FY 19 FOCUS

MAGMA

HA-ENHANCED

DENTAL

GEARS

TRAUMA

AERO

BRACKETS

KNEE

Meaningful (£1m+)

Meaningful (£1m+)

< £1m

< £1m

Prototype revenue

Prototype revenue

n/a

• Support Technip preparation

& qualification

• Hammertoe foot & ankle

application using HA

• Asti & Umbra agreements

• Launch of Oyster White

• 2nd major OEM

• IATF16949 certification

• Manufacturing scale-up

• Capacity plan complete

• Scale up manufacturing

• TxV Aero Composites facility

operational

• First prototype parts supplied

• Drive commercial revenue

• Patient recruitment imminent

(30 patients)

• Explore Equinor opportunities

• Explore well containment opportunity

(MWCC & HWCG)

• Commitment from top 10 device company

• Assess Porous PEEK opportunity

• Drive adoption through OEM partners

• Deliver additional supply agreements

• Focus on delivering meaningful revenue

• 5 plates agreed for launch

• Drive growth in AETM250 composites

• Parts qualified with OEMs

• Safely progress clinical trial

• Engage with 2nd partner

18

PIPELINE MILESTONES

CONFIDENTIAL

DELIVER THE “BURDEN OF PROOF”

PROVE

CONCEPT &

CAPABILITY

“Burden of proof”APPLICATION

DEVELOPMENT

BUILD SUPPLY CHAIN &

MANUFACTURING

CAPABILITY

19

PROTOTYPING,

EVIDENCE &

VALIDATION

INNOVATORS,

PARTNERS &

OPINION LEADERS

APPENDIX

20

Jakob SigurdssonChief Executive

Richard ArmitageGroup Finance Director

Tim CooperExecutive Director

Industrial

Martin CourtExecutive Director

Medical

21

EXECUTIVE

MANAGEMENT

CONFIDENTIAL

STRATEGIC KPIs

REVENUE GROWTH

RETURN ON SALES

POLYMER & PARTS

R&D INVESTMENT

SALES FROM NEW PRODUCTS

STRONG PIPELINE

EARNINGS PER SHARE

+12%

39%

5% OF SALES

4% OF SALES

6 MEGA-PROGRAMMES

128.8 PENCE

2018 FUTURE

Differentiate

throughinnovation

CREATEfuture value

22

DRIVEcore business

CONFIDENTIAL23

USE OF CASH FY14 TO FY18

* Regular & special dividends shown are based on the financial year

those dividends are declared (rather than paid)

0

20

40

60

80

FY14 FY15 FY16 FY17 FY18

CAPEX (£m)

0

20

40

60

FY14 FY15 FY16 FY17 FY18

REGULAR DIVIDENDS (£m)*

0

20

40

60

80

FY14 FY15 FY16 FY17 FY18

SPECIAL DIVIDENDS (£m)*

0

5

10

15

FY14 FY15 FY16 FY17 FY18

DOWNSTREAM

ACQUISITIONS/INVESTMENTS (£m)

- Maintenance capex c5-6% of revenue

- Periodic investment in capacity & innovation

- ‘Enablers’ to support mega-programmes

- Develop further downstream capability

- Average growth c8%

- Grow in line with EPS

- Policy retained at c50% of net cash

- 50p/share minimum

CONFIDENTIAL24

FUTURE USE OF CASH PRIORITIES

Investment for growth remains the priority

CAPEX

• Maintenance capex

c5-6% of sales

• Periodic investment in

capacity & innovation

M&A / INVESTMENT

• Developing capability

• Further investments to

support mega-

programmes & growth

REGULAR DIVIDENDS

• Average growth c8%

over last 5 years

• Grow in line with EPS

SPECIAL DIVIDENDS

• Policy retained at

c50% of net cash

>£85m threshold

• 50p/share minimum

CONFIDENTIAL

Strong core growth

• FY 2018 sales volumes up 10% to 4,407 tonnes

• Mix reflects Medical & Consumer Electronics

‘Front end’ investment &

additional bonus/LTIP accrual

• Overheads up 5% ex-bonus, LTIP, acquisitions

25

INCOME

STATEMENT

2018Full year ended 30 September

FY 2018 FY 2017 Change

£m £m %

Revenue 326.0 290.2 +12%

Gross profit 208.0 183.8 +13%

Gross margin % 63.8% 63.3% +50bps

Overheads (81.1) (72.7) +12%

Interest 0.6 (0.1)

Profit before tax 127.5 111.0 +15%

Earnings per share 128.8p 116.4p +11%

Dividend per share

(regular and special)

142.24p 121.80p +17%

CONFIDENTIAL

FY 2018 ASP £74/kg

• Currency offsetting weaker sales mix

• Stable underlying pricing

FY 2018 GM 63.8%

• Stable underlying margin

Gross margin

(GM) %£/kg Average selling price

(ASP)

26

STABLE ASP &

MARGIN

CONFIDENTIAL

GROUP END MARKETS

FY 2018: 4,407 tonnes

FY 2017: 3,992 tonnes

Volume by Region Volume by Industry

* Medical volume reflects both non-implantable and implantable volumes

Asia-Pacific

+20%

EMEA

+7%

Americas

+6%

Medical *

-7% Transport

(Auto &

Aero)

+11%

Energy &

Other

Industrial #

+23%

Value Added

Resellers

+5% Electronics

+19%

27

# Includes Manufacturing & Engineering volumes

CONFIDENTIAL

34.5m

62%

15.5m

28%

5.6m

10%

MEDICAL: KEY MARKETS

Asia-Pacific

+27%

EMEA

-5%

Americas

+4%

Spine

+0%

Other markets

+8%

FY 2018: £55.6m

FY 2017: £53.9m

Revenue by Region Revenue by Market

28

£36.3m

65%

£19.3m

35%

CONFIDENTIAL

BALANCE SHEET

29

* Available cash includes cash held on deposit. Excluding cash held on deposit, cash was £71.2m

2018 2017

£m £m

PPE and intangible assets 281.0 289.2

Investments 4.5 10.0

Inventories 69.3 61.5

Cash (available*) 144.4 120.1

Trade receivables and other assets 51.1 53.5

Retirement benefit asset 13.5 3.8

Trade payables and other liabilities (73.9) (59.7)

Equity shareholders' funds 489.9 478.4

CONFIDENTIAL

Weaker H1

• H1 2019 sales volumes down 16% to 1,899 tonnes

• Margin impacted by currency, raw material and

energy inflation & weaker operating leverage

Further “front-end” investment; no

accrual for Employee bonus scheme

• Overheads (excluding exceptional items) down 18%

• Excluding YoY bonus impact, overheads up 3%

(investment in R&D, marketing, sales)

30

INCOME

STATEMENT

H1 2019 Half year (6 months) ended 31 March

H1 2019 H1 2018 Change

Change

(constant

currency)1

£m £m % %

Revenue 145.7 166.6 -13% -12%

Losses on foreign currency net hedging* (2.9) - -100%

Gross profit 87.4 106.3 -18% -13%

Gross margin % 60.0% 63.8% -380bps

Overheads** (35.5) (43.3) -18%

Exceptionals (2.2) - -100% -13%

Interest 0.5 0.3 67%

Profit before tax 50.2 63.3 -21% -13%

Earnings per share 51.4p 64.7p -21%

Dividend per share 13.42p 13.42p flat

** Excluding exceptional items of £2.2m.

* Losses on foreign currency contracts, when net hedging is applied on cash flow hedges, are disclosed separately within gross margin on adoption of

IFRS 9.

CONFIDENTIAL

H1 2019 ASP £76.7/kg

• Improved mix offset by currency

• Stable underlying pricing

H1 2019 GM 60.0%

• Margin impacted by currency, inflation,

operating leverage

• Stable underlying margin

• IFRS 9 (currency gains & losses) impact

on GM%

Gross margin

(GM) %£/kg Average selling price

(ASP)

31

H1 2019

ASP & MARGIN

CONFIDENTIAL

₁ Effective rates

₂ Weighted average spot exchange rates (before the impact of hedging).

# Management estimate of impact on 2019 full year forecast PBT from a 5% movement in weighted average spot exchange rates (before the impact of hedging).32

• FY 2019 currency headwind c£6m – £8m at PBT (currency & inflation)

• FY 2020 c1/3rd hedging in place

CURRENCYH1 2019 H1 2018 Change in

ReportedCurrency

Impact

Constant

currency

Constant

currency

£m £m £m £m £m

Revenue 145.7 0.7 146.4 166.6 -12%

Losses on foreign currency net hedging (2.9) 2.9 0.0 -

Gross profit 87.4 4.9 92.3 106.3 -13%

Gross margin % 60.0% 63.0% 63.8%

Profit before tax 50.2 5.1 55.3 63.3 -13%

Exchange rates H1 2018 1 H1 2019 2 FY 2019 2 Exchange

rate sensitivity#

$/£ 1.26 1.31 1.30 £6.5m

€/£ 1.13 1.12 1.13 £5.4m

¥/£ 143 145 144 £1.2m

CONFIDENTIAL

MEGA-PROGRAMME: GEARS

0

ICE

0

Hybrid/PHEV

0

EV

MULTIPLE APPLICATIONS ACROSS ICE & EVs

50% lower noise vibration & harshness vs metal

Potential 20g+ PEEK per application

Up to 70% lighter than metal gears

First PEEK Gears on the road (Europe)

Closing in on multiple agreements

Manufacturing partnerships in place (retain IP)

33

CONFIDENTIAL

MEGA-PROGRAMME: MAGMA

IDP deployment: auxiliary drill pipeSubsea gas jumper line 6” 2.5km flowline

• Growth in FY18; new long-term opportunities

• Industry qualifications: 3” m-pipe® qualified to DNV standard

• Long term TechnipFMC Brazil opportunity

INCREASING INDUSTRY ADOPTION & VALIDATION

34

Offshore opportunity: Brazil

CONFIDENTIAL

MEGA-PROGRAMME

AEROSPACE

LOADED BRACKETS

PEEK

polymer &

new PAEK

grades

Hybrid

molding

capability

Composite

laminates & parts

• New US composites manufacturing facility operational

• Prototype orders in place: differentiated solutions

• Increased pull for PEEK and new AETM250 composites grade

35

Differentiated solutions:

>70% weight saving

>20% cost saving

CONFIDENTIAL

MEGA-PROGRAMME : DENTAL

A strong proposition:

Quality of life: long term bone & gum health

Lower infection rates & device failure

Manufacturing efficiencies

5 year clinical data; regulatory approvals

Customer agreements in place (Straumann)

Implant Dentures

21,000 patients0 patients 2013 - 2017 2025 - 2028Potential for

>500,000 patients

36

CONFIDENTIAL

MEGA-PROGRAMME: TRAUMA

Tailored stiffness and similar

mechanical strength (vs metal)

PROGRESS AND OPPORTUNITIES

- Initial manufacturing capability in place

- Collaboration with top 5 player

50x greater fatigue resistance (vs metal)

and radiolucent

Improved imaging aiding surgical

techniques and follow up

37

CONFIDENTIAL 38

- Clinical trial underway, patient recruitment starts mid-2019 (30 patients)

- Sizeable opportunity ($6bn global market) and demand for change

- Simplicity and speed of manufacture

- Develop 2nd OEM partner, build clinical evidence & key opinion leaders

MEGA-PROGRAMME

Knee

Clinical evidence & key opinion leadersIP & manufacturing capability

Manufacturing product forms: Pipes,

Films, Fibres and Composite Tapes

POLYMER

MANUFACTURING

GLOBAL CAPABILITY

Developing new applications

for PEEK, PAEK and Thermoplastic

Composites

PEEKEXPERTS

Delivering the key PEEK & PAEK

materials with No.1 manufacturing

capacity of 7,150 tonnes

900+ 40+

Employees Countries served

by Victrex across

our markets

PRODUCT FORMS

PARTS & COMPONENTS

40+ YEARS SHAPING

FUTURE PERFORMANCE

Enabling customers to overcome

complex design & engineering

challenges across 6 key markets

INFORMATION & CONTACTS

Andrew HansonDirector of IR &

Corporate Communications

+44 (0) 1253 898121ir@victrex.com

www.victrexplc.com

£200m+

Invested in

manufacturing

facilities in the

last 5 years

INVESTMENT IN INNOVATION

5%of annual sales

invested in R&D

NEW CAPABILITIES

• Partnerships • Strategic Alliances • Polymer Innovation Centre• Acquisitions • Composites Manufacturing

c£2bn

• FTSE 250 Company

• £300m+ Revenue

~

POLYMER

First to commercialise PEEK, with

unmatched knowledge and experience

DIFFERENTIATE THROUGH INNOVATION

TO CREATE NEW MARKETS

ELECTRONICS

AUTOMOTIVE ENERGY

MEDICAL

AEROSPACE

MANUFACTURING

& ENGINEERING

hProducing new grades including for

Additive Manufacturing (3D Printing)

Market Value