Interim Results
Porvair PLC
04 July 2006
For immediate release 4 July 2006
Porvair plc
Interim results for the six months ended 31 May 2006
Porvair plc ('Porvair'), the specialist filtration and environmental technology
group, today announces its interim results for the six months ended 31 May 2006.
Highlights
• Sales up 7% to £23.0m. (2005: £21.6m).
• Earnings per share up 36% to 1.5p (2005: 1.1p).
• Operating profits before exceptional items up 18% to £1.3m
(2005: £1.1m). Operating profits were £1.3m (2005: £1.8m including
an exceptional gain of £0.7m).
• Microfiltration - 7% sales and 38% operating profit growth
before exceptional items driven by aerospace, high purity
liquids, industrial processes and bioscience demand.
• Metals Filtration - Management response to challenging
conditions in the early part of the year began to show
results towards the end of the period.
• Advanced Materials - 58% sales growth.
Encouraging progress in key investment projects:
• Gasification filters - joint development
agreement signed with major oil company and leading
provider of gasification technology for next
generation gasification filtration technology;
further hot gas filter orders received.
• Diesel exhaust filtration - initial orders
for heavy duty retrofit received and shipped.
• Bioscience filtration and separation -
first pharmaceutically approved filtration
component in production, several prototype
trials for separation devices underway.
• Fuel cells - first order for latest
generation of bipolar plates received.
Low cost manufacturing demonstrated.
Commenting on the results, Ben Stocks, Chief Executive, said:
'Porvair has delivered good sales and profit growth along with further progress
in its key investment projects in the six months to 31 May 2006. 2006 is
progressing satisfactorily. Current trading is healthy and order levels,
particularly in Microfiltration, are robust. The Metals Filtration business has
responded to the challenging conditions in the early part of the year and is
currently trading well. The key development opportunities are making good
progress and all parts of the business have growth opportunities for the second
half of the year.'
For further information please contact:
Porvair plc 0207 466 5000 today thereafter
Ben Stocks, Chief Executive 01553 765 500
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 good sales and profit growth along with further progress
in its key investment projects in the six months to 31 May 2006. These are
Porvair's first reported results under IFRS (International Financial Reporting
Standards) and prior period amounts have been restated to reflect the new
Standards.
Sales revenues were up 7% at £23.0m (2005 £21.6m). Earnings per share were up
36% to 1.5p (2005: 1.1p). Demonstrable progress has again been made with new
products, notably in gasification filters, fuel cell bipolar plates and
bioscience devices.
The Board has declared an unchanged interim dividend of 1.0p (2005: 1.0p).
Strategy - focus on specialist filtration and environmental technologies
Porvair makes specialist filters for growing market segments where product life
cycles are long and technical specifications challenging. The engineering
expertise necessary to design this sort of bespoke filter can be spread across
many of the market segments served. Porvair continues to invest heavily in R&D
projects that offer significant sustainable growth potential. These are often
environmental projects and include:
• Filters to clean gasified coal and biomass
• Substrates to reduce diesel exhaust emissions
• Fuel cell components
• Bioscience filtration and separation devices
• Combustion plates that improve efficiency and reduce emissions.
Operating Review
The first half of 2006 was encouraging for the Microfiltration
division, which includes the Porvair Filtration Group and
Porvair Sciences. Sales grew 7% to £12.8m (2005: £11.9m).
Operating profits before exceptional items grew 38% to £2.1m
(2005: £1.5m; £2.2m including an exceptional gain of £0.7m).
Growth during the first half of 2006 was broadly spread and was
led by the aerospace, high purity liquids, industrial processes
and bioscience markets. Two substantial, long term contracts
with civil aviation customers were won during the period which
will support our sales into this segment over the next few
years.
We continue to build our position in the market for gasification
filters with improved awareness of our capabilities and growth
in sales. This segment is a key growth opportunity for Porvair.
These filters are typically used in clean coal and biomass
applications and demand for our products and engineering
expertise has been strong. New and repeat orders have been
received during the period. In April we signed a joint
development agreement with a major oil company and leading
provider of gasification technology, under which we will design
and test the next generation of filters for hot gas. This
agreement follows the long-term, successful operation of Porvair
filters in a commercial coal gasification environment and
confirms our growing reputation and track record in this market
segment.
Part of the Porvair Filtration Group R&D investment in recent
years has been spent developing porous plastics capabilities by
physically and chemically altering the surface properties of the
plastics to broaden their range of applications. These
proprietary capabilities are opening up promising opportunities
in medical diagnostics and pharmaceutical research. Sales into
this segment were up 40% compared with the first half of 2005
helped in part by production and sales of our first
pharmaceutically approved filtration component. Several
bioscience separation devices have reached the prototype stage
and one product launch is expected in the second half of the
year.
Our US based Metals Filtration division specialises in the
filtration of hot metals, and in particular aluminium. The first
half of 2006 has been challenging as input costs rose faster
than selling prices in the early part of the year. Customer
contracts in this operation do not generally allow for quick
changes in price. Margins in the first half of 2006 have
therefore been compressed. Management actions to reduce costs
and pass on price rises have been underway for some months and
began to show results towards the end of the period. Sales in
the six months to 31 May 2006 were up 4% at £9.7m compared with
the prior year. The business had break even operating
performance, with profits in the second quarter giving
encouragement for the second half of the year. Our plant in
North Carolina continues to run efficiently; we continue to work
on our cost base; and we see opportunities for sales growth in
the second half of the year.
Porvair Advanced Materials (PAM) is a development company
working on two new materials for a range of applications
including fuel cells, clean diesel exhaust systems and low
emission combustion plates. These are key growth opportunities
for Porvair. As previously outlined, these projects are complex
and unforeseen challenges are to be expected. Consequently
success is all the more enjoyable and it is a pleasure to report
a 58% sales increase for the year to date from products already
sold commercially in the combustion and structural market
segments.
Production scale-up work on our diesel exhaust substrate
continues. This market has been slower to develop than expected
due to European legislative delays but we are pleased with
technical progress made and have high expectations for this
application. Our principal customer's test results continue to
be positive and we have refined our product specifications and
improved process capabilities. Small scale commercial orders
have been received for heavy duty diesel retrofit opportunities
in Europe.
The highlight of the year so far in PAM has been a successful
extended trial of our latest generation of low cost bipolar
plates for fuel cells. This is a lengthy development project and
we were particularly pleased to receive our first order for the
new generation of plates in May 2006. As has been previously
reported, when compared with plates produced in 2003 the latest
moulded products offer a better technical performance at almost
one tenth of the price. This first order will be manufactured
using production methods and quality standards suitable for low
cost mass production. We expect to move from product development
to preliminary sales, albeit only for prototype fuel cells, in
the second half of the year. Our proprietary carbon material can
be readily adapted to a variety of Proton Exchange Membrane
(PEM) fuel cell designs and we will continue with this work in
the months ahead.
Profit for the period
The profit for the period attributable to shareholders increased by
54% to £599,000 (2005: £390,000). The Group benefited from 100% of
the earnings of the Porvair Filtration Group in the period having
acquired the minority interest in November 2005. Profit for the
period from the core specialist filtration businesses,
Microfiltration and Metals Filtration, was £1.36m (2005: £1.15m) and
the loss arising from the investment in the Advanced Materials
division was £758,000 (2005: £757,000).
Cash flow
Cash generated from continuing operations was £617,000 (2005: £1.87m
including £711,000 from exceptional items). Net interest paid was
£377,000 (2005: £177,000), higher than the prior year as a result of
rising US interest rates, additional borrowings drawn down in November
2005 to finance the minority acquisition and the prior year benefiting
from of a one off interest credit on collection of an old debt. £773,000
(2005: £482,000) was paid in tax. The Group's tax paid in the first half
represents broadly half the tax due on the prior year's profits. The
increase in the period reflects the increase in UK generated profits in
2005 compared with 2004. £929,000 (2005: £648,000) was paid out in the
period from provisions relating the businesses disposed in 2003,
including the final £550,000 installment of the £1.5m payment to the
pension scheme agreed at the time of the business disposals. Interest
cover was three times (2005: four times).
Net borrowings rose by £1.2m to £9.7m compared with 30 November 2005.
Outlook
2006 is progressing satisfactorily. Current trading is healthy and order
levels, particularly in Microfiltration, are robust. The Metals Filtration
business has responded to the challenging conditions in the early part of
the year and is currently trading well. The key development opportunities
are making good progress and all parts of the business have growth
opportunities for the second half of the year.
Group profit and loss account - unaudited
For the six months ended 31 May
Six months ended 31 May Year ended 30 November
2006 2005 2005 2005 2005 2005 2005
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items items
Continuing £'000 £'000 £'000 £'000 £'000 £'000 £'000
operations
Revenue 23,001 21,566 - 21,566 44,873 - 44,873
Cost of goods (15,743) (15,213) - (15,213) (30,985) - (30,985)
sold
Gross profit 7,258 6,353 - 6,353 13,888 - 13,888
Other (5,957) (5,251) 711 (4,540) (10,654) 711 (9,943)
operating
expenses
Operating 1,301 1,102 711 1,813 3,234 711 3,945
profit
Finance costs (417) (275) - (275) (552) - (552)
Profit before 884 827 711 1,538 2,682 711 3,393
taxation
Taxation (285) (282) (213) (495) (800) (213) (1,013)
Profit after
taxation from
continuing 599 545 498 1,043 1,882 498 2,380
operations
Discontinued
operations
Loss after
taxation from
discontinued - - (451) (451) - (451) (451)
operations
Profit for the 599 545 47 592 1,882 47 1,929
period
Attributable
to minority
interests - (202) - (202) (561) - (561)
Attributable
to equity
shareholders
of Porvair plc
599 343 47 390 1,321 47 1,368
Earnings per
share (basic
and diluted) 1.5p 1.0p 0.1p 1.1p 3.6p 0.1p 3.7p
Earnings per
share from
continuing
operations
(basic and 1.5p 1.0p 1.3p 2.3p 3.6p 1.3p 4.9p
diluted)
Consolidated statement of recognised income and expense - unaudited
For the six months ended 31 May
Year ended
Six months ended 31 May 30 November
2006 2005 2005
£'000 £'000 £'000
Exchange differences on translation of (1,011) 511 1,079
foreign subsidiaries
Actuarial gains on defined benefit pension - - 300
scheme
Taxation credit/(charge) on items taken 38 - (73)
directly to equity
Net (expense)/income recognised directly (973) 511 1,306
in equity
Profit for the period 599 592 1,929
Total recognised (expense)/income for the (374) 1,103 3,235
period
Attributable to:
Minority interests - 202 561
Equity shareholders of Porvair plc (374) 901 2,674
(374) 1,103 3,235
Group balance sheet - unaudited
As at 31 May
As at
30 November
As at 31 May
2006 2005 2005
£'000 £'000 £'000
Non-current assets
Goodwill 26,784 26,538 27,690
Other intangible assets 265 99 114
Property, plant and equipment 7,226 8,113 8,045
Other receivable 978 1,142 1,159
Deferred tax asset 958 828 953
36,211 36,720 37,961
Current assets
Inventories 6,391 5,759 6,103
Trade and other receivables 8,525 9,160 7,970
Cash and cash equivalents 902 3,679 1,001
15,818 18,598 15,074
Current liabilities
Trade and other payables (6,286) (6,557) (6,776)
Current tax liabilities (283) (360) (676)
Bank overdraft and loans (500) (1,000) (500)
Provisions (275) - (324)
(7,344) (7,917) (8,276)
Net current assets 8,474 10,681 6,798
Non current liabilities
Bank loans (10,085) (10,509) (9,012)
Retirement benefit obligations (4,716) (5,002) (5,165)
Provisions (515) (1,427) (485)
(15,316) (16,938) (14,662)
Total liabilities (22,660) (24,855) (22,938)
Net assets 29,369 30,463 30,097
Capital and reserves
Share capital 811 736 810
Share premium account 32,615 28,679 32,513
Cumulative translation reserve (2,709) (2,266) (1,698)
Retained earnings (1,348) (2,407) (1,528)
Equity attributable to equity holders of 29,369 24,742 30,097
the parent
Minority interests - 5,721 -
Total equity 29,369 30,463 30,097
Group cash flow statement - unaudited
For the six months ended 31 May
Year ended
30 November
Six months ended 31 May
2006 2005 2005
£'000 £'000 £'000
Cash flows from operating activities
Cash (used)/generated by operations (312) 1,226 4,497
Interest received 60 132 185
Interest paid (437) (309) (494)
Tax paid (773) (482) (800)
Net cash (used)/generated by operating (1,462) 567 3,388
activities
Cash flows from investing activities
Acquisition of subsidiaries (net of cash - - (6,603)
acquired)
Purchase of property, plant and equipment (288) (407) (842)
Purchase of intangible assets (151) (28) (40)
Available for sale investments 500 827 1,288
Net cash generated/(used) by investing 61 392 (6,197)
activities
Cash flow from financing activities
Net proceeds from issue of ordinary share 103 - 3,908
capital
Increase/(repayment) of borrowings 1,682 - (2,508)
Dividends paid to shareholders (426) (368) (736)
Net cash generated/(used) by financing 1,359 (368) 664
activities
Net (decrease)/increase in cash and cash (42) 591 (2,145)
equivalents
Effects of exchange rate changes (57) 41 99
Cash and cash equivalents at the beginning 1,001 3,047 3,047
of the period
Cash and cash equivalents at the end of 902 3,679 1,001
the period
Notes to the accounts
1. Basis of preparation
For all periods up to and including the year to 30 November 2005, Porvair plc
prepared its financial statements in accordance with UK Generally Accepted
Accounting Principles ('UK GAAP'). From 1 December 2005, Porvair plc is required
to prepare consolidated financial statements in accordance with International
Financial Reporting Standards ('IFRS') as endorsed by the European Union ('EU').
The first results reported under IFRS are for the six months to 31 May 2006 and
the comparative information is also presented in accordance with IFRS. On 19 May
2006, the Group reported on the impact of changing from UK GAAP to IFRS on its
results for the six months to 31 May 2005 and the year to 30 November 2005 and
included a statement of the most significant IFRS accounting policies adopted.
Details of the changes are provided in the document 'Transition to International
Financial Reporting Standards (IFRS)' that is available on the Group's website (
www.porvair.com) or from the Company Secretary.
The financial information has been prepared in accordance with all IFRS and
International Financial Reporting Interpretations Committee ('IFRIC')
interpretations that had been published by 31 May 2006 and apply to accounting
periods beginning on or after 1 December 2005. The standards used are those
endorsed by the EU together with those standards and interpretations that have
been issued by the International Accounting Standards Board ('IASB') but had not
been endorsed by the EU by 31 May 2006. The 2005 comparative information, as
permitted by the exemption in IFRS1, has not been prepared in accordance with
IAS 32 'Financial Instruments: Disclosure and presentation' and IAS 39
'Financial Instruments: Recognition and Measurement'. Further standards and
interpretations may be issued that will be applicable for the financial years
beginning on or after 1 December 2005 or that are applicable to later accounting
periods but may be adopted early. Therefore, the Group's first full IFRS
financial statements to 30 November 2006 may be prepared in accordance with some
different accounting policies from the financial information presented here.
Furthermore, due to the number of new and revised Standards included within the
body of Standards that comprise IFRS, there is not yet a significant body of
established practice on which to draw in forming opinions regarding
interpretation and application. Accordingly, practice continues to evolve. At
this early stage therefore, the full financial effect of reporting under IFRS as
it will be applied and reported on in the Group's first IFRS financial
statements cannot be determined with certainty and may be subject to change.
2. Prior year adjustment
Porvair has elected to adopt IAS 32 Financial Instruments: Disclosure and
Presentation and IAS 39 Financial Instruments: Recognition and Measurement from
1 December 2005 with no restatement of comparative information. Consequently,
the relevant comparative financial information for the six months ended 31 May
2005 and the year ended 30 November 2005 does not reflect the impact of these
standards, but includes financial instruments accounted for on a UK GAAP basis.
A prior year charge of £66,000 is shown in changes in equity for the six months
ended 31 May 2006 to reflect the change of accounting policy in the period.
3. Turnover and segmental analyses
The geographical analyses of the group's turnover and segmental analyses of
turnover, operating profit and net assets are set out below:
Turnover
Six months ended 31 May Year ended 30
November
2006 2005 2005
By By By
destination By origin destination By origin destination By origin
£'000 £'000 £'000 £'000
United Kingdom 6,286 12,782 6,414 11,913 12,181 25,392
Continental Europe 3,006 2,454 - 5,144 -
Americas 11,168 10,219 10,290 9,653 22,019 19,481
Asia 1,879 1,878 - 4,376 -
Australasia 199 171 - 503 -
Africa 463 359 - 650 -
Continuing 23,001 23,001 21,566 21,566 44,873 44,873
operations
Year ended
30 November
Six months ended 31 May
2006 2005 2005
£'000 £'000 £'000
Metals Filtration 9,738 9,348 18,861
Microfiltration 12,782 11,913 25,392
Advanced Materials 481 305 620
Continuing operations 23,001 21,566 44,873
Operating profit/(loss) from continuing operations
Six months ended 31 May Year ended 30 November
2006 2005 2005 2005 2005 2005 2005
Before Exceptional Total Before Exceptional Total
exceptional items exceptional items
items items
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Metals 1 364 - 364 904 - 904
Filtration
Microfiltration 2,058 1,495 711 2,206 3,945 711 4,656
Advanced (758) (757) - (757) (1,615) - (1,615)
Materials
Operating 1,301 1,102 711 1,813 3,234 711 3,945
profit
Net assets
As at 30
November
As at 31 May
2006 2005 2005
£'000 £'000 £'000
Metals Filtration 17,850 18,606 19,079
Microfiltration 23,898 22,548 22,768
Advanced Materials 832 991 1,006
42,580 42,145 42,853
Long term related party 978 942 959
loan
Deferred consideration 200 1,161 700
Retirement benefit (4,716) (5,264) (5,165)
obligations
Discontinued operations (665) (1,159) (1,044)
Taxation 675 468 305
Net borrowings (9,683) (7,830) (8,511)
29,369 30,463 30,097
4. Exceptional items
The exceptional items recorded in the comparative period comprised a credit in
continuing operations of £711,000 before taxation (£498,000 after taxation)
arising from the collection of a debt that had been written off prior to the
acquisitions of 2001 and a charge of £451,000 after taxation in discontinued
operations principally relating to additional property costs associated with the
business disposals of 2003.
5. Earnings per share
Year ended
30 November
Six months ended 31 May
2006 2005 2005
Weighted average number
of shares in issue
40,532,043 36,803,011 37,037,333
Profits Per Profits Per Profits Per
share
£'000 £'000 share £'000 share
Earnings per share from
continuing operations
before exceptional items 599 1.5p 343 1.0p 1,321 3.6p
Add: Exceptional items
(including tax charge) in
continuing operations - - 498 1.3p 498 1.3p
Earnings per share from
continuing operations
599 1.5p 841 2.3p 1,819 4.9p
Earnings per share before
exceptional items
599 1.5p 343 1.0p 1,321 3.6p
Add: Exceptional items
(including tax charge)
- - 47 0.1p 47 0.1p
Earnings per share 599 1.5p 390 1.1p 1,368 3.7p
There is no material difference between the basic earnings per share and the
earnings per share on a fully diluted basis.
6. Consolidated statement of changes in shareholders' equity
Year ended
30 November
Six months ended 31 May
2006 2005 2005
£'000 £'000 £'000
Shareholders' equity at the start of the 30,097 24,170 24,170
period
Prior year adjustment (IAS 39) (66) - -
Restated shareholders' equity at the start 30,031 24,170 24,170
of the period
Total recognised income/(expense) for the (374) 901 2,674
period
Reversal of share based payments charge 35 39 81
Dividends (426) (368) (736)
Proceeds from new shares issued 103 - 3,908
Shareholders' equity at the end of the 29,369 24,742 30,097
period
7. Reconciliation of operating profit to net cash flow from operating activities
Year ended
30 November
Six months ended 31
May
2006 2005 2005
£'000 £'000 £'000
Operating profit from continuing operations
before exceptional items
1,301 1,102 3,234
Exceptional profits - 711 711
Operating profit from continuing operations 1,301 1,813 3,945
Share based payments 35 39 81
Depreciation 747 755 1,506
Profit on disposal of property plant and - - 4
equipment
Operating cash flows before movement in 2,083 2,607 5,536
working capital
(Increase)/decrease in inventories (439) 226 (19)
Increase in trade and other receivables (1,171) (1,144) (235)
Increase/(decrease) in payables 94 105 (85)
Increase in retirement benefit obligations 50 80 125
Cash generated by continuing operations 617 1,874 5,322
Operating profit from discontinued - (644) (644)
operations
Decrease in accruals and provisions (929) (4) (181)
Cash used by discontinued operations (929) (648) (825)
Cash (used)/generated by operations (312) 1,226 4,497
8. Reconciliation of net cash flow to net debt
Six months ended 31 May Year ended
30 November
2006 2005 2005
£'000 £'000 £'000
Net (decrease)/increase in cash and cash (42) 591 (2,145)
equivalents
Effects of exchange rate changes 552 (416) (869)
(Increase)/repayment of borrowings (1,682) - 2,508
Net debt at the beginning of the period (8,511) (8,005) (8,005)
Net debt at the end of the period (9,683) (7,830) (8,511)
9. Summary reconciliations of IFRS to UK GAAP for the comparative periods
A full reconciliation of the differences between UK GAAP and IFRS was published
on 19 May 2006 and is available on the Group's website at www.porvair.com. The
table below shows a summary of the principal differences relating to the
previously published comparative periods.
Six months ended 31 May Year ended 30 November
2005 2005
Profit before tax Underlying Statutory Underlying Statutory
* *
£'000 £'000 £'000 £'000
UK GAAP profit before tax 1,008 (34) 3,028 874
Add back loss on - 644 - 644
discontinued operations
UK GAAP profit before tax
(continuing operations) 1,008 610 3,028 1,518
Adjustments:
Amortisation of goodwill - 1,109 - 2,221
SSAP 24 to IAS19 retirement
benefit adjustment (180) (180) (325) (325)
Charge for share based payments (39) (39) (81) (81)
Interest earned on long term
debtor held at fair value 10 10 20 20
Net impact of capitalised
development costs 28 28 40 40
IFRS profit before tax
(continuing operations) 827 1,538 2,682 3,393
Six months ended 31 May Year ended 30 November
2005 2005
Earnings per share Underlying Statutory Underlying Statutory
* *
pence pence pence pence
UK GAAP - earnings per 1.3p (1.3)p 4.3p (1.1)p
share
IFRS - earnings per share
Basic 1.0p 1.1p 3.6p 3.7p
Basic - on continuing 1.0p 2.3p 3.6p 4.9p
operations
Shareholders' funds
As at As at
31 May 30 November
2005 2005
£'000 £'000
Shareholders' funds under UK GAAP 29,672 33,305
Adjustments (net of deferred tax)
Goodwill amortisation and currency revaluation (238) 1,188
Fair value of long term debtor (98) (91)
Retirement benefit provision adjustment (4,936) (4,827)
Dividend 368 425
Development expenditure 63 71
Deferred tax on share based payments - 26
Minority interests (89) -
Shareholders' funds under IFRS 24,742 30,097
* Underlying performance is before goodwill amortisation and exceptional items
under UK GAAP and before exceptional items under IFRS.
10. Exchange rates
Exchange rates for the US dollar during the period were:
Average Average Average Closing Closing Closing
rate to 31 rate to 31 rate to 30 rate at 31 rate at 31 rate at 30
May 06 May 05 Nov 05 May 06 May 05 Nov 05
US dollar 1.7711 1.8915 1.8377 1.8713 1.8225 1.7304
11. Dividends
The Directors have declared an interim dividend of 1.0p per share (2004: 1.0p)
to be paid on 15 September 2006 to shareholders on the register at the close of
business on 18 August 2006. The ex-dividend date for the shares is 16 August
2006.
12. Group statutory accounts
The interim financial statements do not constitute statutory accounts and are
unaudited, although they have been reviewed by the auditors. The accounts for
the year ended 30 November 2005, prepared under UK GAAP, on which the auditors
gave an unqualified audit opinion, have been filed with the Registrar of
Companies.
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 2006 which comprises the Group balance sheet as at
30 June 2005 and the related Group profit and loss account, Group cash flow
statement, Consolidated statement of recognised income and expenditure and the
Consolidated statement of changes in shareholders' equity 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 directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority.
As disclosed in note 1, the next annual financial statements of the Group will
be prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. This interim report has been prepared in
accordance with the basis set out in the note 1.
The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements. As explained in note1, there is,
however, a possibility that the Directors may determine that some changes are
necessary when preparing the full annual financial statements for the first time
in accordance with International Financial Reporting Standards as adopted by the
European Union. The IFRS standards and IFRIC interpretations that will be
applicable and adopted by the European Union at 30 November 2006 are not known
with certainty at the time of preparing this interim financial information.
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.
Independent review report to Porvair plc (continued)
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 2006.
PricewaterhouseCoopers LLP
Chartered Accountants
Cambridge
3 July 2006
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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