Interim Results
Porvair PLC
26 June 2007
For immediate release 26 June 2007
Porvair plc
Interim results for the six months ended 31 May 2007
Porvair plc ('Porvair'), the specialist filtration and environmental technology
group, today, announces its interim results for the six months ended 31 May
2007.
Financial highlights
• Sales revenues were £22.9m (2006: £23.0m). In constant currencies sales
growth was 5% - the weaker US dollar reduced reported sales.
• Profit before tax up 64% to £1.5m (2006: £0.9m).
• Profit after tax up 70% to £1.0m (2006: £0.6m).
• Earnings per share up 66% to 2.5p (2006: 1.5p).
Operating highlights
• Microfiltration sales up 4% to £13.3m (2006: £12.8m) driven by strong
aerospace growth.
• Metals filtration revenue up 8% to US$18.6m (2006: US$17.2m) and
operating profits significantly improved following a restructuring in early
2007.
• Omnifilter Inc was acquired to give the Microfiltration division a
platform for growth in the US. Omnifilter traded well in its first 5 months
with the Group.
• Group borrowings reduced by £0.9m to £8.8m (2006: £9.7m) despite the
debt funded acquisition of Omnifilter for £1.1m.
• Dividend unchanged at 1.0p (2006: 1.0p).
• Encouraging progress in key development projects:
• Customer deliveries of new filter for high specification metal alloys
started.
• Gasification filters: further orders received.
• Aerospace fuel tank inerting filter: qualification achieved with
Boeing; Airbus contract win.
• Diesel exhaust filtration: development work continues.
• Bioscience filtration: product development using surface treatment of
porous plastic.
• Fuel Cells: manufacturing continued through period.
Commenting on the results, Ben Stocks, Chief Executive, said:
'Porvair has delivered profits growth and further progress in key developmental
projects. The year is progressing well and in line with management's
expectations. Customer demand, particularly for aviation products and US
exports, is growing. We are pleased that the restructuring in the Metals
Filtration division is improving results which will be supported further by
increasing sales of our new filter for high specification metal alloys. The
Group looks forward with confidence.'
For further information please contact:
Porvair plc 0207 466 5000 today
Ben Stocks, Chief Executive 01553 765 500 thereafter
Chris Tyler, Group Finance Director
Buchanan Communications 0207 466 5000
Charles Ryland / Ben Willey / Susanna Gale
A copy of the presentation that accompanies these results is available at
www.porvair.com.
Chief Executive's review
Overview
Porvair has delivered profits growth and further progress in its key development
projects in the six months to 31 May 2007.
Sales revenue was £22.9m (2006: £23.0m). In constant currencies sales growth was
5% - the weaker US dollar reduced reported sales. Profit before tax was held
back by a £0.25m restructuring charge in Metals Filtration but nonetheless rose
64% to £1.5m (2006: £0.9m). Earnings per share were up 66% to 2.5p (2006: 1.5p).
Demonstrable progress has again been made with new products: customer deliveries
of an entirely new metals filter started; further orders were received for
gasification filters; and the Group's inerting filter secured a second major
account win. Omnifilter Inc was acquired to offer the UK based Microfiltration
division a platform for growth in the US.
The Board has declared an unchanged interim dividend of 1.0p (2006: 1.0p).
Strategy - focus on specialist filtration and environmental technologies
Porvair looks for opportunities to grow its business where technically
challenging applications and design expertise can give us a competitive edge. We
seek to acquire businesses that complement our existing skills and invest in
projects that offer the prospect of attractive growth. We see significant
potential in environmental technologies and our current development portfolio
includes:
• filters to clean gasified coal and biomass;
• substrates to reduce diesel exhaust emissions;
• fuel cell components;
• bioscience components and devices;
• plates to improve gas combustion efficiency;
• high-value metal alloys filters to reduce process waste;
• aviation air-cleaning filters for fuel tank inerting.
Our development projects are funded from core business cash flows, and for some
years this has had a considerable impact on cash flow and Group profits. The
scale of this investment is reducing as projects come to fruition across the
Group.
Operating Review
Microfiltration
The UK based Microfiltration division continued its growth. Revenue for the
period was up 4% to £13.3m (2006: £12.8m) despite a weaker US dollar affecting
the reported US dollar sales revenue. The strong aviation demand of 2006
continued in 2007 with revenue up 22%, reflecting a robust underlying business
and growth in engineered components. This growth has helped offset a decline in
the export of laboratory filtration plates, with the weaker US dollar giving
rise to price pressure in the US.
Operating profit of the division was £2.3m (2006: £2.5m). The weakness of the US
dollar accounts for the lower operating profit, principally as a result of
translating US dollar revenue at a lower rate.
Several of the Group's key development projects are managed in the
Microfiltration division:
• Previous announcements have described a complex filter design that is to
be used in fuel tank inerting systems for commercial aircraft. Following
extensive trials this product received qualification from Boeing in the
first half of 2007. We had expected production of this unit to start
immediately after qualification but delays with other suppliers to this
project have postponed this until later in the year. In February, we signed
a supply agreement with Parker Hannifin for a similar filter to be used in
the inerting systems on the Airbus fleet. This was exciting news and means
that when production starts the sales opportunity is greater.
• A large order for gasification filters was received in May for delivery
early in 2008. The demand for engineering design work and test trials for
gasification filters has continued to grow in the period. We expect this
work to turn into substantial orders in the years ahead.
• Our initiatives in BioScience continue to progress, primarily as a
result of the successful development of chemical surface treatment of our
porous plastic materials. We are working with a number of industrial
partners on the commercialisation of this technology. Examples that may
generate revenues in the next 12 months include Point of Care diagnostics
components and a new range of devices for solid phase extraction use.
Looking further ahead: work at Brighton University has shown our BioVyonTM
Polyethylene to be a promising substrate for cell growth; and our materials
have been incorporated into a device now in clinical trials for the
treatment of Sepsis.
Forecast growth from aviation and other development projects means that we
expect Microfiltrex - part of the Porvair Filtration Group - to outgrow its
capacity in the next 12 months, requiring a move to larger premises in 2008.
In January 2007, the Group acquired OmniFilter ('Omni') and has successfully
integrated it into the Microfiltration division. Omni is a manufacturer of
filters and filtration media complementary to those already made in the Group.
It is based in Virginia and offers the Microfiltration division a base from
which to accelerate its growth in the US. It has traded well in its first five
months and we welcome Omni's staff to the Porvair Group.
Metals Filtration
Sales in our US based Metals Filtration division were £9.4m (2006: £9.7m). In US
dollar terms revenues grew 8% to $18.6m (2006: $17.2m). This was driven by
growth in much of our domestic US business but also by improving export demand.
In contrast with the UK Microfiltration business, the US Metals Filtration
business's export sales benefit from a weaker US dollar making its products more
competitive.
In general it has been the more specialised parts of the Metals Filtration
division that have grown the most. Engineered Ceramics, a subsidiary based in
Illinois, continues to trade well by concentrating on bespoke refractory
products for the investment casting and transportation wheel markets. Demand for
filters and consumables for specialist alloy manufacturers is strong, as is
demand for both iron and aluminium foundry filters.
Operating margins in the Metals Filtration division started to benefit from a
restructuring of its cost base in early 2007. The reported operating profit of
£334,000 (2006: £34,000 loss) comprises an underlying operating profit of
£583,000 and a restructuring charge of £249,000.
In April an important milestone was reached in one of the Group's key
development projects as customer deliveries began of an entirely new type of
specialist metals filter. The technology for these products was originally
developed by Sandia National Laboratories in the US. Along with the necessary
intellectual property arrangements a multi-year customer contract was signed.
Production scale-up will take place through 2007. At full capacity, which we
expect to reach in 2008, this product line should generate up to $5m in sales
revenue and will underpin the improving results in the Metals Filtration
division.
Porvair Advanced Materials
Manufacture of the latest generation of bipolar plates for fuel cells continued
throughout the period in Porvair Advanced Materials ('PAM'), where losses
reduced to £528,000 (2006: £779,000). The Group has developed two materials in
PAM: carbon composites for fuel cell components and metallic foam for a range of
applications, principally combustion plates and diesel exhaust components. While
there is always more work to be done, the development cycle for the fuel cell
components is coming to a close. Our materials have been demonstrated to meet
stringent standards and our manufacturing capability is good at current levels
of volume. We are discussing next steps with our principal customer, United
Technologies, as we wait for the market for PEM fuel cells to develop.
Porvair's unique metallic foams have a range of applications, of which
combustion plates and diesel emission filters are currently the two most active.
We have exhaust emission development projects covering stationary diesel
engines, diesel cars and smaller engines. Field trials and design developments
will continue throughout 2007.
Profit for the period
The profit for the period attributable to shareholders increased by 70% to £1.0m
(2006: £0.6m). Profit for the period from the core specialist filtration
businesses, Microfiltration, Metals Filtration and other unallocated costs,
increased by 12% to £1.55m (2006: £1.38m) and the loss arising from the
investment in the Advanced Materials division reduced by 32% to £528,000 (2006:
£779,000).
Cash flow
Cash generated from continuing operations was £2.2m (2006: £0.3m outflow). Net
interest paid was £309,000 (2006: £377,000), where higher interest paid as a
result of higher interest rates has been offset by a lower finance cost relating
to the Group's defined benefit pension scheme. £301,000 (2006: £773,000) was
paid in tax. The Group benefited from a £198,000 rebate of tax in the period
relating to prior periods.
£1.1m was paid to acquire Omni and £658,000 (2006: £439,000) was paid to acquire
intangible and tangible fixed assets. The final expected receipt in relation to
the 2003 disposals of £200,000 (2006: £500,000) was received in the period.
Interest cover was 7.6 times (2006: 3.1 times).
Net borrowings reduced to £8.8m (2006: £9.7m) compared with the prior period.
Outlook
Porvair has delivered profits growth and further progress in key developmental
projects. The year is progressing well and in line with management's
expectations. Customer demand, particularly for aviation products and US
exports, is growing. We are pleased that the restructuring in the Metals
Filtration division is improving results which will be supported further by
increasing sales of our new filter for high specification metal alloys. The
Group looks forward with confidence.
Consolidated income statement
For the six months ended 31 May
Six months ended 31 May Year ended 30 November
----------------------- ----------------------
2007 2006 2006
Note Unaudited Unaudited Audited
Continuing operations £'000 £'000 £'000
Revenue 1 22,899 23,001 46,204
Cost of sales (15,605) (15,743) (31,436)
-------- -------- ---------
Gross profit 7,294 7,258 14,768
Other operating
expenses (5,624) (5,957) (11,095)
-------- -------- ---------
Operating profit 1 1,670 1,301 3,673
Interest payable and
similar charges (362) (461) (716)
Interest receivable 143 44 119
-------- -------- ---------
Profit before income
tax 1,451 884 3,076
Income tax expense (411) (273) (970)
Overseas tax (19) (12) (15)
-------- -------- ---------
Profit for the period
attributable to
shareholders 1,021 599 2,091
-------- -------- ---------
Earnings per share
(basic) 2 2.5p 1.5p 5.2p
Earnings per share
(diluted) 2 2.5p 1.5p 5.1p
Consolidated statement of recognised income and expense
For the six months ended 31 May
Six months ended 31 May Year ended 30 November
----------------------- ----------------------
2007 2006 2006
Unaudited Unaudited Audited
£'000 £'000 £'000
Exchange differences on
translation of foreign
subsidiaries (64) (1,011) (1,598)
Actuarial gains on
defined benefit pension
scheme - - 2,300
Taxation credit/(charge)
on items taken directly
to equity 9 38 (729)
-------- -------- --------
Net expense recognised
directly in equity (55) (973) (27)
Profit for the period 1,021 599 2,091
-------- -------- --------
Total recognised income
for the period 966 (374) 2,064
-------- -------- --------
Attributable to
shareholders of Porvair
plc 966 (374) 2,064
-------- -------- --------
Consolidated balance sheet
As at 31 May
As at 31 May As at 30 November
----------------------- ------------------
2007 2006 2006
Unaudited Unaudited Audited
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 6,644 7,226 6,596
Goodwill 26,926 26,784 26,243
Other intangible assets 415 265 475
Deferred tax asset 1,904 958 1,976
Other receivable 990 978 968
-------- -------- --------
36,879 36,211 36,258
Current assets
Inventories 6,917 6,391 6,499
Trade and other receivables 8,043 8,525 8,195
Derivative financial instruments 46 - 97
Cash and cash equivalents 2,154 902 1,756
-------- -------- --------
17,160 15,818 16,547
Current liabilities
Trade and other payables (6,133) (6,286) (5,939)
Current tax liabilities (342) (283) (355)
Bank overdraft and loans (500) (500) (500)
Provisions for other liabilities and
charges - (275) (150)
-------- -------- --------
(6,975) (7,344) (6,944)
-------- -------- --------
Net current assets 10,185 8,474 9,603
Non current liabilities
Bank loans (10,427) (10,085) (9,695)
Retirement benefit obligations (4,187) (4,716) (4,275)
Provisions for other liabilities and
charges (367) (515) (367)
-------- -------- --------
(14,981) (15,316) (14,337)
-------- -------- --------
Net assets 32,083 29,369 31,524
-------- -------- --------
Capital and reserves
Share capital 811 811 811
Share premium account 32,615 32,615 32,615
Cumulative translation reserve (3,360) (2,709) (3,296)
Retained earnings/(deficit) 2,017 (1,348) 1,394
-------- -------- --------
Total shareholders' equity 32,083 29,369 31,524
-------- -------- --------
Consolidated cash flow statement
For the six months ended 31 May
As at 31 May As at 30 November
----------------------- ------------------
2007 2006 2006
Note Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating
activities
Cash generated from
operations 3 2,207 (312) 2,303
Interest received 120 60 60
Interest paid (429) (437) (744)
Tax paid (301) (773) (1,266)
-------- -------- --------
Net cash generated from /
(used by) operating
activities 1,597 (1,462) 353
-------- -------- --------
Cash flows from investing
activities
Acquisition of
subsidiaries (net of cash
acquired) (1,059) - -
Purchase of property,
plant and equipment (640) (288) (573)
Purchase of intangible
assets (18) (151) (390)
Available for sale
investments 200 500 500
-------- -------- --------
Net cash (used in) /
generated from investing
activities (1,517) 61 (463)
-------- -------- --------
Cash flow from financing
activities
Net proceeds from issue
of ordinary share capital - 103 103
Increase in borrowings 4 767 1,682 1,669
Dividends paid to
shareholders (446) (426) (832)
-------- -------- --------
Net cash generated from
financing activities 321 1,359 940
-------- -------- --------
Net increase/(decrease)
in cash and cash
equivalents 4 401 (42) 830
Effects of exchange rate
changes (3) (57) (75)
-------- -------- --------
398 (99) 755
Cash and cash equivalents
at the beginning of the
period 1,756 1,001 1,001
-------- -------- --------
Cash and cash equivalents
at the end of the period 2,154 902 1,756
-------- -------- --------
Notes to the accounts
1. Segmental analyses
Primary reporting format - business segments
As at 31 May 2007, the Group is organised on a worldwide basis into three main
business segments:
1) Metals Filtration
2) Microfiltration
3) Advanced Materials
Income statement
Six months ended 31 Metals Microfiltration Advanced Other Group
May 2007 - Unaudited Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Revenue 9,440 13,251 208 - 22,899
-------- -------- -------- -------- --------
Operating
profit/(loss)
before share
based payments 335 2,260 (528) (358) 1,709
Share based
payments (1) (6) - (32) (39)
-------- -------- -------- -------- --------
Operating
profit/(loss) 334 2,254 (528) (390) 1,670
Finance costs - - - (219) (219)
-------- -------- -------- -------- --------
Profit/(loss)
before income
tax 334 2,254 (528) (609) 1,451
Income tax
expense - - - (430) (430)
-------- -------- -------- -------- --------
Profit/(loss)
for the period 334 2,254 (528) (1,039) 1,021
-------- -------- -------- -------- --------
Six months ended 31 Metals Microfiltration Advanced Other Group
May 2006 - Unaudited Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Revenue 9,738 12,782 481 - 23,001
-------- -------- -------- -------- --------
Operating
profit/(loss)
before share
based payments (30) 2,469 (773) (330) 1,336
Share based
payments (4) (2) (6) (23) (35)
-------- -------- -------- -------- --------
Operating
profit/(loss) (34) 2,467 (779) (353) 1,301
Finance costs - - - (417) (417)
-------- -------- -------- -------- --------
Profit/(loss)
before income
tax (34) 2,467 (779) (770) 884
Income tax
expense - - - (285) (285)
-------- -------- -------- -------- --------
Profit/(loss)
for the period (34) 2,467 (779) (1,055) 599
-------- -------- -------- -------- --------
Year ended 30 November Metals Microfiltration Advanced Other Group
2006 - Audited Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Revenue 19,076 26,445 683 - 46,204
-------- -------- -------- -------- --------
Operating
profit/(loss)
before share
based payments 363 5,506 (1,271) (833) 3,765
Share based
payments (9) (4) (11) (68) (92)
-------- -------- -------- -------- --------
Operating
profit/(loss) 354 5,502 (1,282) (901) 3,673
Finance costs - - - (597) (597)
-------- -------- -------- -------- --------
Profit/(loss)
before income
tax 354 5,502 (1,282) (1,498) 3,076
Income tax
expense - - - (985) (985)
-------- -------- -------- -------- --------
Profit/(loss)
for the year 354 5,502 (1,282) (2,483) 2,091
-------- -------- -------- -------- --------
The Metals Filtration segment operating profit for the six months ended 31 May
2007 includes a restructuring charge of £0.25m.
The Other unallocated segment mainly comprises Group corporate costs, some
research and development costs, new business development costs and general
financial services. The unallocated loss before tax in the six months ended 31
May 2007 includes provisions written back of £0.15m, principally related to
costs associated with the business disposals in 2003. The unallocated loss
before tax in the year ended 30 November 2006 includes provisions written back
of £0.3m, principally related to a reduced expected onerous lease cost arising
on a building that was refurbished and sublet in 2006.
Net assets
At 31 May 2007 Metals Microfiltration Advanced Other Group
- Unaudited Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Segmental
assets 19,641 28,505 738 2,011 50,895
Long term
receivable 990 990
Cash and cash
equivalents 2,154 2,154
-------- -------- -------- -------- --------
Total assets 19,641 28,505 738 5,155 54,039
-------- -------- -------- -------- --------
Segmental
liabilities (2,240) (3,454) (32) (1,116) (6,842)
Retirement
obligations (4,187) (4,187)
Borrowings (10,927) (10,927)
-------- -------- -------- -------- --------
Total
liabilities (2,240) (3,454) (32) (16,230) (21,956)
-------- -------- -------- -------- --------
At 31 May 2006 Metals Microfiltration Advanced Other Group
- Unaudited Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Segmental
assets 20,425 27,368 992 1,164 49,949
Long term
receivable 978 978
Deferred
payment on
investment
sale 200 200
Cash and cash
equivalents 902 902
-------- -------- -------- -------- --------
Total assets 20,425 27,368 992 3,244 52,029
-------- -------- -------- -------- --------
Segmental
liabilities (2,034) (3,496) (85) (1,744) (7,359)
Retirement
obligations (4,716) (4,716)
Borrowings (10,585) (10,585)
-------- -------- -------- -------- --------
Total
liabilities (2,034) (3,496) (85) (17,045) (22,660)
-------- -------- -------- -------- --------
At 30 November Metals Microfiltration Advanced Other Group
2006 - Audited Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Segmental
assets 19,115 27,759 903 2,104 49,881
Long term
receivable 968 968
Deferred
payment on
investment
sale 200 200
Cash and cash
equivalents 1,756 1,756
-------- -------- -------- -------- --------
Total assets 19,115 27,759 903 5,028 52,805
-------- -------- -------- -------- --------
Segmental
liabilities (1,504) (3,698) (50) (1,559) (6,811)
Retirement
obligations (4,275) (4,275)
Borrowings (10,195) (10,195)
-------- -------- -------- -------- --------
Total
liabilities (1,504) (3,698) (50) (16,029) (21,281)
-------- -------- -------- -------- --------
Secondary reporting format - geographical segments
Revenue
Six months ended 31 May Year ended 30 November
---------------------------------------------------------- ----------------------------
2007 2006 2006
By By origin By By origin By By origin
destination destination destination
Unaudited Unaudited Unaudited Unaudited Audited Audited
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 7,425 12,840 6,286 12,782 13,581 26,445
Continental Europe 3,308 - 3,006 - 6,012 -
Americas 10,356 10,059 11,168 10,219 22,030 19,759
Asia 1,327 - 1,879 - 3,385 -
Australasia 244 - 199 - 506 -
Africa 239 - 463 - 690 -
---------------------------- -------------------------- ----------------------------
Continuing
operations 22,899 22,899 23,001 23,001 46,204 46,204
---------------------------- -------------------------- ----------------------------
2. Earnings per share
Six months ended 31 May Year ended 30 November
--------------------------- ----------------------
Basic earnings 2007 2006 2006
per share Unaudited Unaudited Audited
Weighted
average
number
of shares 40,574,586 40,532,043 40,553,373
in
issue
Profits Per Profits Per Profits Per
share share share
£'000 £'000 £'000
Earnings
per 1,021 2.5p 599 1.5p 2,091 5.2p
share
---------------- ---------------- ---------------
Diluted
earnings
per share
Fully
diluted
weighted
average
number 40,724,494 40,782,733 40,712,262
of shares
in
issue
Profits Per Profits Per Profits Per
share share share
£'000 £'000 £'000
---------------- ---------------- ---------------
Earnings
per 1,021 2.5p 599 1.5p 2,091 5.1p
share
---------------- ---------------- ---------------
3. Cash generated from operations
Six months ended 31 May Year ended 30 November
----------------------- ----------------------
2007 2006 2006
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating profit 1,670 1,301 3,673
Non cash pension charge 29 50 113
Share based payments 39 35 92
Depreciation and
amortisation 726 747 1,466
Loss on disposal of
property, plant and
equipment 1 - 4
-------- -------- --------
Operating cash flows before
movement in working capital 2,465 2,133 5,348
-------- -------- --------
Increase in inventories (276) (439) (634)
Decrease / (increase) in
trade and other receivables 21 (1,171) (1,017)
Increase / (decrease) in
payables 147 94 (1,102)
Decrease in provisions (150) (929) (292)
-------- -------- --------
Increase in working capital (258) (2,445) (3,045)
-------- -------- --------
Cash generated from / (used
by) operating activities 2,207 (312) 2,303
-------- -------- --------
4. Reconciliation of net cash flow to movement in net debt
Six months ended 31 May Year ended 30 November
----------------------- ----------------------
2007 2006 2006
Unaudited Unaudited Audited
£'000 £'000 £'000
Net increase/(decrease) in
cash and cash equivalents 401 (42) 830
Effects of exchange rate
changes 32 552 911
Increase in borrowings (767) (1,682) (1,669)
Net debt at the beginning of
the period (8,439) (8,511) (8,511)
-------- -------- --------
Net debt at the end of the
period (8,773) (9,683) (8,439)
-------- -------- --------
5. Exchange rates
Exchange rates for the US dollar during the period were:
Average rate to Average rate to Average rate to Closing rate at Closing rate at Closing rate at
31 May 07 31 May 06 30 Nov 06 31 May 07 31 May 06 30 Nov 06
Unaudited Unaudited Audited Unaudited Unaudited Audited
US dollar 1.97 1.77 1.83 1.98 1.87 1.97
6. Dividends
The Directors have declared an interim dividend of 1.0p per share (2006: 1.0p)
to be paid on 14 September 2007 to shareholders on the register at the close of
business on 17 August 2007. The ex-dividend date for the shares is 15 August
2007.
7. Basis of preparation
These unaudited consolidated interim financial statements have been prepared in
accordance with the Listing Rules of the Financial Services Authority. These
comprise the consolidated income statement, the consolidated statement of
recognised income and expense, the consolidated balance sheet, the consolidated
cash flow statement and the related notes ('the interim financial statements').
The Group has chosen not to adopt IAS 34 'Interim Financial Statements' in
the preparation of these interim financial statements.
The accounting policies remain as published in the financial statements for the
year ended 30 November 2006 and are expected to be applied for the year ending
30 November 2007, in accordance with International Financial Reporting Standards
(IFRS), as adopted in the EU, and International Financial Reporting
Interpretation Council (IFRIC) interpretations issued and effective at the time
of their preparation.
There has been no change to these accounting policies as a result of new
standards, amendments and interpretations to existing standards that have been
published and which are mandatory from 1 December 2006.
These interim financial statements have been prepared on a going concern basis
under the historical cost convention, as modified by the revaluation of certain
current assets, financial assets and financial liabilities held for trading and
derivative contracts, which are held at fair value.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results may ultimately differ
from those estimates.
These interim financial statements and the comparative figures for the year
ended 30 November 2006 do not constitute full accounts within the meaning of the
Companies Act 1985. Full accounts for the year ended 30 November 2006, which
include an unqualified audit report and no statements under sections 237(2) or
(3) of the Companies Act 1985, have been delivered to the Registrar of
Companies.
This report is being sent to shareholders and will also be available at Porvair
plc's registered office at Brampton House, 50 Bergen Way, King's Lynn, PE30 2JG
and on the Company's website www.porvair.com.
Independent review report to Porvair plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 May 2007 which comprises the Consolidated balance sheet
as at 31 May 2007 and the related Consolidated income statement, Consolidated
statement of recognised income and expense and Consolidated cash flow statement
for the six months then ended and related notes. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in
Note 7.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of the Listing Rules of the Financial Services Authority
and for no other purpose. We do not, in producing this report, 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.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 May 2007.
PricewaterhouseCoopers LLP
Chartered Accountants
Cambridge
25 June 2007
Notes:
(a) The maintenance and integrity of the Porvair plc web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
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