Preliminary Results
Porvair PLC
30 January 2007
For immediate release 30 January 2007
Porvair plc
('Porvair' or 'the Company')
Preliminary results for the year ended 30 November 2006
Good earnings growth and encouraging technical progress in key development
opportunities
Porvair plc ('Porvair'), the specialist filtration and environmental technology
group, today announces its preliminary results for the year ended 30 November
2006.
Highlights
• Profit before tax up 12% to £3.1m (2005: £2.7m);
• Operating profits up 11% to £3.7m (2005: £3.3m);
• Earnings per share up 40% to 5.2p (2005: 3.7p);
• Demonstrable progress again made in key development projects: more orders
for coal and biomass gasification filters; first orders for bipolar plates;
and encouraging developments in bioscience components;
• The acquisition in January 2007 of the business and assets of Omnifilter,
a US filter business, opens the way for further Microfiltration growth.
Commenting on the results Ben Stocks, Chief Executive, said:
It is a pleasure to report on another year of progress at Porvair for the year
ended 30 November 2006. Earnings and profits were up and demonstrable strides
were made in our key development projects.
The Microfiltration division has again delivered steady growth. We will continue
to develop this business in 2007 both organically and, where appropriate, by
acquisition.
The Metals Filtration division underwent a restructuring programme early in the
new financial year. It enters 2007 with a greater focus on its core markets and
a lower cost base.
The Advanced Materials division has been focused on its two most promising
development projects - diesel exhaust substrates and bipolar plates. The
prospects for both these opportunities are encouraging.
After several years of investment, Porvair has reached the point where its
current business and future prospects are attractively set. 2007 trading has
started well and the Company is well positioned for the future.
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
Statement by the Chairman and the Chief Executive
Overview of 2006
It is a pleasure to report on another good set of results at Porvair for the
year ended 30 November 2006, of which the highlights were:
• Profit before tax up 12% to £3.1m (2005: £2.7m);
• Operating profits up 11% to £3.7m (2005: £3.3m);
• Earnings per share up 40% to 5.2p (2005: 3.7p);
• Demonstrable progress again made in key development projects: more
orders for coal and biomass gasification filters; first orders for bipolar
plates; and encouraging developments in bioscience components;
• The acquisition in January 2007 of the business and assets of
Omnifilter, a US filter business, opens the way for further Microfiltration
growth.
Business Overview - focus on specialist filtration and environmental
technologies
Porvair aims to develop and exploit its expertise in specialist filtration and
environmental technologies for the sustainable benefit of its shareholders,
staff and other stakeholders.
The Company develops, designs and manufactures specialist filtration and
separation equipment. We serve a range of market segments of which aviation,
molten metal and life science filtration are the three largest.
Specialist filters share several common characteristics. They typically protect
larger and more costly systems from break-down. Consequently, product
performance is often more important than unit price. Specialist filters tend to
be consumable and replaced as part of a maintenance or production routine. They
are often bespoke designs which, once approved, are used by customers for many
years. In our view these are attractive characteristics that we aim to foster in
our business wherever possible. At the heart of what we do is the filtration and
engineering expertise which allows us to solve customer problems across all the
markets we serve.
Porvair's strategy
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
Board expects the scale of this investment to start reducing in 2007 as projects
come to fruition across the Group.
Trading summary
Overall we were pleased with the 2006 result, the first under International
Financial Reporting Standards ('IFRS'). Profit before tax grew 12% to £3.1m
(2005: £2.7m) on Group sales up 3% to £46.2m (2005: £44.9m). Operating profits
rose by 11% to £3.7m (2005: £3.3m). These figures include the losses associated
with the Group's Advanced Materials division which were £1.3m (2005: £1.7m). Net
borrowings were £8.4m (2005: £8.5m). Interest cover remained at 6 times (2005: 6
times).
The prior year's results included two exceptional items which are described in
full in the Finance Director's review. Throughout this statement the comparisons
of divisional performance with the prior year excludes these exceptional items.
We believe that this analysis allows for greater clarity of actual performance.
Divisional performance: Microfiltration
The Microfiltration division, which comprises the Porvair Filtration Group and
Porvair Sciences, had an excellent year with operating profit growth of 14% to
£5.5m (2005: £4.8m) on sales up 4% to £26.4m (2005: £25.4m). The prospects for
many parts of this division are encouraging and during the year additional staff
were recruited into the commercial and engineering teams. Aviation sales were
particularly strong during the year. Several notable account wins contributed to
revenue; including a 5 year, $5m sales revenue programme for a filter system for
Airbus aircraft; and a $1m commercial aircraft filter retrofit programme. A
previously announced aviation project, the fuel tank inerting system developed
in association with Parker Hannifin for Boeing, underwent several unforeseen
design changes and associated delays. This is one of the Group's key development
projects and so was a concern, but we now expect to start production in the
Spring of 2007. Encouraging developments late in 2006 are opening the way for
further adoption of this product by other commercial fleets.
The filtration of gasified coal and biomass - one of the Group's key development
projects - is undertaken in this division and had another year of exciting
progress. In the first half we signed a joint development agreement with a major
oil company and leading provider of gasification technology under which we are
able to develop new products in an existing gasification power plant. This will
add further to our proven expertise in this fast growing area. The amount of
engineering design, sales proposals, and prototype filter sales grew steadily
throughout the year. A further suite of filters was delivered to SG Solutions
LLC (owners of the Wabash River IGCC power plant) as part of the $20m supply
agreement signed with them in 2005.
Our focus in the bioscience field is on proprietary processes, which change the
surface properties of a material. We have a range of projects using this
technology at beta and development trial stages. The first of these, a filter
for an inhaling device, began commercial sales during the year.
Divisional performance: Metals Filtration
As reported at the Interim stage, Metals Filtration had a challenging start to
the year and management took action to reduce costs and pass on input cost
rises. Encouragingly, the benefit of these actions came through in the second
half, in which Metals Filtration returned to profitability and the operating
profit margin recovered to more normal levels with several parts of the
organisation finishing strongly. For the full year, sales grew to £19.1m (2005:
£18.9m) and operating profits were £0.4m (2005: £1.0m).
Engineered Ceramics, a part of Metals Filtration which makes molten metal
handling equipment, had a second successive record year. The iron foundry
product line also did well, particularly in the final quarter, and sales into
the specialist alloy market were strong throughout. Sales into the aluminium
cast shop industry were marginally down on the prior year as US based customers
held back on production in the face of their own rises in input costs. Export
sales however finished the year strongly, helped in part by the weaker US
dollar. Late in the year, an agreement was reached with Howmet, a major
precision investment casting company, to supply them with a new range of
high-value metal alloy handling equipment. This will become a key growth project
for the Group. Sales will start early in 2007 and will help to secure a strong
rebound by Metals Filtration in the year ahead.
Divisional performance: Advanced Materials
Porvair Advanced Materials is developing several of the Group's key projects.
Operating losses in this division were £1.3m (2005: £1.7m). As noted in previous
results' statements, this sort of work is complex and determining when new
products will generate commercial revenues is difficult. 2006 demonstrated this
well. Our diesel exhaust substrate underwent successful development trials, but
commercial sales have not yet been forthcoming. Towards the end of 2006 we
switched partners on our most near term project and are now working directly
with Deutz AG, an international diesel engine manufacturer, who are conducting
the primary trials. We expect these trials to finish towards the end of 2007. We
have also begun to work with several other exhaust specialists who are
evaluating metal foam as part of their solution in the more complex exhaust
systems required to meet the next generation of emission standards.
The Advanced Material division made great strides in its bipolar plate
development. Qualification trials of our low-cost bipolar plate finished
successfully in the early part of the year and we received our first order for
the new plates in May. Production began in September and we are now shipping
plates regularly. Sales are modest at this stage, but the income nonetheless
contributes to the technical expenditure of the division. After five years of
development it was a real pleasure to see a demonstration of our latest low cost
bipolar plates installed in a 2007 fuel cell car. They outperform previous
generations of plates while offering substantial cost savings. The development
team on this project has done a terrific job. Our principal customer, United
Technologies Power, anticipates growth in 2007 and beyond. Our next objective is
to achieve qualification on a second plate design. This design work will finish
in early 2008.
Acquisitions
In January 2007, we announced the acquisition of the business and assets of
OmniFilter and Manufacturing Inc ('Omnifilter'), based in Richmond, Virginia.
Omnifilter's product range is complementary to that of the Porvair Filtration
Group ('PFG'), of which it will become a part. Its US location will help PFG
with its trans-Atlantic customer base, which has been growing for the last few
years. The acquisition was made for cash and is expected to be immediately
earnings enhancing. We are pleased to welcome the Omnifilter staff to Porvair
and offer our thanks to the Gerschick family - Omnifilter's founders - for their
help and support through the transition process.
Earnings per share and dividend
Earnings per share increased 40% to 5.2p (2005: 3.7p). Growth in profit after
tax and the benefit of acquiring the minority interest in the Porvair Filtration
Group in 2005 account for the growth in earnings per share. The Directors
recommend a final dividend of 1.1p (2005: 1.05p) per share for 2006. The
Directors see this progressively increasing dividend as appropriate, given the
Group's growth prospects.
Employees and the Board
Charles Matthews took over from John Morgan as Chairman of Porvair plc earlier
in the year. John had been with the Group for 25 years and guided it from its
debut as a public Company in 1988. Porvair evolved under John's stewardship from
a single product polymer business to today's filtration and environmental
technologies group. He was a much-valued colleague, and we were pleased to pass
on the many expressions of gratitude we received from staff and shareholders on
his retirement in April.
We are pleased to welcome Dr John Sexton to the Board as an Executive Director
from 29 January 2007. Dr Sexton joined the Group with its acquisition of Filters
for Industry in 2001, and since then he has been very successful in his
leadership of the Porvair Filtration Group. He will bring thirty years of
filtration and engineering experience to the Board, and we look forward to his
contribution both in the further development of the Porvair Filtration Group and
in wider technology and engineering projects.
On behalf of the Board, we would like to thank our excellent staff for their
hard work in 2006. We have a talented workforce, which has risen to the
challenges of continuing to develop the business.
Outlook
The Board believes that after several years of investment, Porvair is ready to
move to the next stage of its development in 2007.
The Microfiltration division has delivered steady growth since its formation in
2002. Its development will continue in 2007 both organically and, where
appropriate, by acquisition. The weaker US dollar may provide a headwind in the
short term, but the opportunities to manufacture in the US offered by the
acquisition of Omni will help to mitigate this. We are excited by prospects in
the pipeline: for sales of filters into coal and biomass gasification; for
bioscience diagnostic components; and for aviation filters. We expect these to
contribute in 2007 and grow further thereafter.
Towards the end of 2006 an extensive review was undertaken at the Metals
Filtration division. A restructuring programme was completed early in the new
financial year. The business enters 2007 with a greater focus on its core
markets and a lower cost base. This will help the business rebound from a
challenging 2006, as will export prospects enhanced by the weaker US dollar and
recent contract wins in high-value metal alloys filtration.
The same strategic review addressed the Advanced Materials division. It has also
been restructured to concentrate on its two most promising development projects
- diesel exhaust substrates and bipolar plates. We expect to complete diesel
exhaust field trials with Deutz towards the end of 2007. Bipolar plates have
already generated initial commercial sales and we will build on the recent
encouraging progress.
The Board believes that Porvair has reached the point where its current business
and future prospects are attractively set. 2007 trading has started well and the
Board believes that Porvair is well positioned for the future.
Charles Matthews: Chairman
Ben Stocks: Chief Executive Officer
29 January 2007
Finance Director's review
Adoption of International Financial Reporting Standards
The Group has adopted International Financial Reporting Standards ('IFRS') with
effect from 1 December 2005. In adopting the new requirements, the Group has
restated the comparatives for the year ended 30 November 2005. A reconciliation
of the differences between UK GAAP and IFRS and the principal accounting
policies adopted under IFRS was published on 19 May 2006.
Key performance indicators
The Group considers its key performance indicators to be: the sales and
operating profit performance of its principal operations, the profit before tax,
operating cash flow and earnings per share of the Group measured against a
predetermined budget; and the development progress towards commercialisation of
its key growth opportunities. These indicators are discussed in detail
throughout the Statement by the Chairman and Chief Executive and the Finance
Director's review.
Group operating performance
Group sales were £46.2m (2005: £44.9m) and operating profits rose by 11% to
£3.7m (2005: £3.3m). The operating performance of the Microfiltration, Metals
Filtration and Advanced Materials Division are described in detail in the
Statement by the Chairman and the Chief Executive. The operating loss associated
with the Other Unallocated segment was £0.9m (2005: £1.0m before exceptional
items, £1.6m including exceptional items). 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 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.
Exceptional items
In 2005, the Group benefited from a net £0.1m exceptional credit. This comprised
an exceptional credit of £0.7m arising on a collection of a debt in
Microfiltration which was written off prior to the acquisitions of 2001 and a
charge of £0.6m principally relating to additional property costs associated
with buildings retained following the disposals of 2003.
Finance costs
Net interest payable increased by 8% to £0.6m (2005: £0.6m). The Group holds a
significant amount of its borrowings in US dollars ($14m at 30 November 2006)
and interest rates on US borrowings have more than doubled in the past two
years. The additional cost of the US dollar borrowing has been offset by the
finance costs in relation to the closed defined benefit pension scheme reducing
to zero (2005: £0.2m). Interest cover was 6 times (2005: 6 times).
Tax
The Group tax charge of £1.0m (2005: £0.8m) represents an effective tax rate of
32% on profits before tax. The tax charge comprises current tax of £0.9m (2005:
£1.0m) and a deferred tax charge of £0.1m (2005: £0.2m credit). The Group
carries a deferred tax asset in relation to the past losses in its US
operations. The tax credits associated with this year's losses in the US have
not been recognised as their recoverability is considered uncertain.
Shareholders' funds
Shareholders' funds at 30 November 2006 of £31.5m were £1.4m higher than at 30
November 2005. Shareholders' funds were increased by profit after tax of £2.1m,
actuarial gains net of deferred tax added £1.6m and £0.1m was added as a
consequence of issuing new shares on the exercise of share options.
Shareholders' funds were reduced by exchange losses on retranslation of foreign
currencies of £1.6m and dividends paid of £0.8m.
Cash flow
Net cash generated from operating activities was £2.3m (2005: £4.5m). Higher
working capital requirements to service the growth in Microfiltration and the
payment of certain provisions and accruals in 2006 reduced the cash generated
compared with the prior year. Net interest paid was £0.7m (2005: £0.3m). The
higher interest charge principally arises as a result of the increase in US
interest rates over the previous two years. Capital expenditure was £1.0m (2005:
£0.9m) and the Group paid £0.8m (2005: £0.7m) in dividends.
The Group's increase in borrowings was offset by the currency translation
effects of the US dollar denominated borrowings, resulting in an overall
reduction in net debt of £0.1m.
At the year end, the Group had net borrowings of £8.4m (2005: £8.5m) comprising
gross borrowings of £10.2m offset by cash balances of £1.8m. The Group had
unutilised borrowing facilities of £2.0m (2005: £4.5m) and an unutilised
overdraft facility of £3m (2005: £3m).
The Group's gearing (net debt as a percentage of shareholders' funds) reduced to
27% (2005: 28%).
Finance and treasury policy
The treasury function at Porvair is managed centrally, under Board supervision.
It is not a profit centre and does not undertake speculative transactions. It
seeks to limit the Group's exposure to trading in currencies other than its
operations' local currency and to hedge its investments in currencies other than
Sterling. The Group does not hedge against the impact of exchange rate movements
on the translation of profits and losses of overseas operations.
At the year end, the Group had $14.0m (2005: $18.1m) of US dollar borrowings
exposure which hedged underlying US net tangible assets on the balance sheet of
$18.6m (2005: $17.1m). In addition, the Group has a Euro 1.6m interest bearing
debtor that was fully hedged by borrowings in Euros.
The Group finances its operations by a combination of share capital and retained
profits and short and long term loans. Borrowings are principally at floating
rate.
Pension schemes
The Group continues to support its defined benefit pension scheme in the UK,
which is closed to new members, and to provide access to a defined contribution
scheme for its US employees and other UK employees.
During the year, the Group made a £550,000 payment to the defined benefit
pension fund in addition to its ongoing funding commitments, bringing the total
contributions to the fund, in excess of ongoing funding, over the last three
years to £1.4m.
The Group recorded a retirement benefit obligation of £4.3m (2005: £7.0m). The
reduction arose from an actuarial gain in the year of £2.3m and contributions to
the scheme in excess of the service charge of £0.4m.
Risks and uncertainties
There are a number of risks and uncertainties, described below, which could have
a material impact on the Group's long term performance and prospects.
Existing market risk
The Group's strategy is to serve the needs of a range of specialist filtration
markets, such that it is not dependent upon any one market. No single market
segment represents more than 17% of sales. However, three key segments:
aluminium filtration; aviation filtration; and foundry products, contribute more
than 10% of the Group's revenue and the Group is exposed to a significant
decline in any of these segments.
Aluminium is currently in a high demand phase. The production of aluminium is,
however, gradually moving to larger smelters in regions of low cost energy. The
Group is actively engaged in developing its overseas markets for its aluminium
cast shop business to reduce its reliance on the US market.
The Aerospace market has traditionally been a very steady business as the
product cycles are very long and the Group offers a broad range of products.
There is unlikely to be such a rapid decline in the aerospace market that the
Group could not manage the consequences over time.
The foundry filter business is being enhanced by developments of innovative
products and improved overseas distribution has broadened the Group's ability to
access markets outside the US. Both these actions will reduce the business's
reliance on existing products in the US market.
New markets risk
The Group invests significant amounts into the development of new products for
new markets. Many of these new markets are at an early stage of development and
are driven either by environmental imperatives or legislation. There is a risk
that the products that the Group is developing will either not be adopted as
part of the potential solutions or that the legislation or regulation will not
develop in the way that the Group anticipates.
The Group maintains a portfolio of potential products addressing different
market segments and recognises that not all of its potential products will
become significant revenue generators. The Group maintains a close review of
each of its major developments and is not significantly exposed if the market
for any one product does not develop.
Financing risk
The Group maintains a level of borrowing to finance its operations. Damage to,
or loss of, its banking relationships could have a material impact on the
profitability of the Group. To mitigate this risk, the Group has sufficient
long-term facilities in place for its expected requirements. It maintains a
close relationship with its bankers and carefully monitors the restrictions on
its borrowings.
Treasury and exchange rate risk
The Group has operations in the UK and US and sells its products throughout the
world and as a result, the Group is exposed to fluctuations in exchange rates.
The Group maintains certain of its borrowings in US dollars to hedge its
investments in the US and enters into forward sales of its principal foreign
currency revenues to reduce the impact of exchange rate movements.
Competitive risk
Porvair operates in competitive global markets. The Group's achievement of its
objectives is reliant on its ability to respond to many competitive factors
including, but not limited to, pricing, technological innovations, product
quality, customer service, manufacturing capabilities and the employment of
qualified personnel. If the Group does not continue to compete in its markets
effectively by developing innovative solutions for its customers, it could lose
them and its results could be adversely affected.
Technological risk
Porvair has a broad portfolio of products delivered to a diverse range of
markets. The Group's business could be affected if it does not:
• continue to develop new designs for its customers that provide technical
or cost advantages over its competitors;
• develop new technologies and materials that are adopted by its customers
to provide improved performance.
The Group recognises that certain of its competitors are larger and have greater
financial resources. This may enable them to deliver products on more attractive
terms than the Group or to invest more resources, including research and
development, than the Group.
The Group carefully selects its development prospects and monitors their
progress carefully to maintain a range of potential opportunities. The nature of
the Group's development projects means that their potential commercial or
technical success cannot be assessed with certainty throughout the development
process. The ultimate commercial success of a project can often only be judged
when the development cycle is close to completion.
Raw materials and resources risk
The Group uses raw materials in its production processes. Prices for these raw
materials can be volatile and are affected by the cyclical movement in commodity
prices such as oil, alumina, silicon carbide and steel. The Group's ability to
pass on these price fluctuations to its customers is to some extent dependent on
the contracts it has entered into and the prevailing market conditions. There
may be times when the Group's results are adversely affected by an inability to
recover increases in raw material prices.
Liability risk
The Group manufactures products that are potentially vital to the safe operation
of its customers' products or processes. A failure of the Company's products
could expose the Group to loss as a result of claims made by the Company's
customers or users of their products. The company seeks to minimise this risk
through limitations of liability in its contracts and carries insurance cover in
the event that claims are made.
Global and regional economic, political risk and environmental risk
The company sells its products throughout the world and derives a substantial
portion of its revenue and earnings from outside the UK. The Group's ability to
achieve its financial objectives could be impacted by risks and uncertainties
associated with local legal requirements, the enforceability of laws and
contracts, changes in the tax laws and economic conditions, political
instability, war, terrorist activity, natural disasters or health epidemics.
Christopher Tyler
Group Finance Director
29 January 2007
Consolidated income statement
For the year ended 30 November
2006 2005 2005 2005
Note Before Exceptional Total
Exceptional items
items
Continuing operations £'000 £'000 £'000 £'000
Revenue 1 46,204 44,873 - 44,873
Cost of sales (31,436) (30,985) - (30,985)
Gross profit 14,768 13,888 - 13,888
Distribution costs (619) (510) - (510)
Administrative expenses (10,476) (10,144) 67 (10,077)
Operating profit 1 3,673 3,234 67 3,301
Interest payable and similar (716) (757) - (757)
charges
Interest receivable 119 205 - 205
Profit before income tax 3,076 2,682 67 2,749
Income tax expense (985) (800) (20) (820)
Profit for the year 2,091 1,882 47 1,929
Profit attributable to - (561) - (561)
minority interest
Profit attributable to 2,091 1,321 47 1,368
shareholders
Earnings per share (basic) 5.2p 3.6p 0.1p 3.7p
Earnings per share (diluted) 5.1p 3.6p 0.1p 3.7p
Consolidated statement of recognised income and expense
For the year ended 30 November
2006 2005
£'000 £'000
Exchange differences on translation of foreign (1,598) 1,079
subsidiaries
Actuarial gains on defined benefit pension scheme 2,300 300
Taxation charge on items taken directly to equity (729) (73)
Net (expense)/income recognised directly in equity (27) 1,306
Profit for the year 2,091 1,929
Total recognised income for the year 2,064 3,235
Attributable to minority interests - (561)
Attributable to shareholders of Porvair plc 2,064 2,674
Consolidated balance sheet
As at 30 November
2006 2005
£'000 £'000
Non-current assets
Property, plant and equipment 6,596 8,045
Goodwill and other intangible assets 26,718 27,804
Deferred tax asset 1,976 2,819
Other receivable 968 1,159
36,258 39,827
Current assets
Inventories 6,499 6,103
Trade and other receivables 8,195 7,970
Derivative financial instruments 97 -
Cash and cash equivalents 1,756 1,001
16,547 15,074
Current liabilities
Trade and other payables (5,939) (6,710)
Current tax liabilities (355) (676)
Bank overdraft and loans (500) (500)
Derivative financial instruments - (66)
Provisions (150) (324)
(6,944) (8,276)
Net current assets 9,603 6,798
Non current liabilities
Bank loans (9,695) (9,012)
Retirement benefit obligations (4,275) (7,031)
Provisions (367) (485)
(14,337) (16,528)
Net assets 31,524 30,097
Capital and reserves
Share capital 811 810
Share premium account 32,615 32,513
Cumulative translation reserve (3,296) (1,698)
Retained earnings/(deficit) 1,394 (1,528)
Total shareholders' equity 31,524 30,097
Consolidated cash flow statement
For the year ended 30 November
Note 2006 2005
£'000 £'000
Cash flows from operating activities
Cash generated from operations 2 2,303 4,497
Interest received 60 185
Interest paid (744) (494)
Tax paid (1,266) (800)
Net cash generated from operating 353 3,388
activities
Cash flows from investing activities
Acquisition of subsidiaries (net of cash - (6,603)
acquired)
Purchase of property, plant and equipment (573) (835)
Purchase of intangible assets (390) (47)
Available for sale investments 500 1,288
Net cash used in investing activities (463) (6,197)
Cash flow from financing activities
Net proceeds from issue of ordinary share 103 3,908
capital
Increase/(repayment) of borrowings 1,669 (2,508)
Dividends paid to shareholders (832) (736)
Net cash generated from financing 940 664
activities
Net increase/(decrease) in cash and cash 3 830 (2,145)
equivalents
Effects of exchange rate changes (75) 99
755 (2,046)
Cash and cash equivalents at the beginning 1,001 3,047
of the period
Cash and cash equivalents at the end of 1,756 1,001
the period
Notes
1. Segmental analyses
The geographical analyses of the Group's turnover and segmental analyses of
turnover, operating profit/(loss) and net assets are set out below:
Primary reporting format - business segments
2006 Metals Microfiltration Advanced Other Group
Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Revenue 19,076 26,445 683 - 46,204
Operating profit/ 363 5,506 (1,271) (833) 3,765
(loss) before
share based
payments
Share based (9) (4) (11) (68) (92)
payments
Operating profit/ 354 5,502 (1,282) (901) 3,673
(loss)
Finance costs - - - (597) (597)
Profit/(loss) 354 5,502 (1,282) (1,498) 3,076
before income tax
Income tax expense - - - (985) (985)
Profit/(loss) for 354 5,502 (1,282) (2,483) 2,091
the year
2005 Metals Microfiltration Advanced Other Group
Filtration Materials unallocated
£'000 £'000 £'000 £'000 £'000
Revenue 18,861 25,392 620 - 44,873
Operating profit/ 1,032 4,819 (1,633) (903) 3,315
(loss) before
share based
payments
Share based (11) (1) (17) (52) (81)
payments
Operating profit/ 1,021 4,818 (1,650) (955) 3,234
(loss) before
exceptional items
Exceptional items - 711 - (644) 67
Operating profit/ 1,021 5,529 (1,650) (1,599) 3,301
(loss) after
exceptional items
Finance costs - - - (552) (552)
Profit/(loss) 1,021 5,529 (1,650) (2,151) 2,749
before income tax
Income tax expense - - - (820) (820)
Profit/(loss) for 1,021 5,529 (1,650) (2,971) 1,929
the year
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 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.
Secondary reporting format - geographical segments
2006 2005
By By
destination By origin destination By origin
£'000 £'000 £'000 £'000
Revenue
United Kingdom 13,581 26,445 12,181 25,392
Continental 6,012 - 5,144 -
Europe
Americas 22,030 19,759 22,019 19,481
Asia 3,385 - 4,376 -
Australasia 506 - 503 -
Africa 690 - 650 -
46,204 46,204 44,873 44,873
1. Segmental analyses continued
As at 30 November
Net assets 2006 2005
Assets Liabilities Total Assets Liabilities Total
£'000 £'000 £'000 £'000 £'000 £'000
Metals 19,115 (1,504) 17,611 21,533 (2,020) 19,513
Filtration
Microfiltration 27,759 (3,698) 24,061 26,550 (3,315) 23,235
Advanced 903 (50) 853 1,175 (100) 1,075
Materials
Other
unallocated
Long term 968 - 968 959 - 959
receivable
Deferred 200 - 200 700 - 700
consideration
Cash and cash 1,756 - 1,756 1,001 - 1,001
equivalents
Retirement - (4,275) (4,275) - (7,031) (7,031)
obligations
Borrowings - (10,195) (10,195) - (9,512) (9,512)
Other 2,104 (1,559) 545 2,983 (2,826) 157
Continuing Group 52,805 (21,281) 31,524 54,901 (24,804) 30,097
2. Cash generated from operations
2006 2005
£'000 £'000
Operating profit before exceptional items 3,673 3,234
Exceptional items - 67
Operating profit 3,673 3,301
Non cash pension charge 113 125
Share based payments 92 81
Depreciation and amortisation 1,470 1,506
Loss on disposal of property, plant and - 4
equipment
Operating cash flows before movement in 5,348 5,017
working capital
Increase in inventories (634) (19)
Increase in trade and other receivables (1,017) (235)
Decrease in payables (1,102) (85)
Decrease in provisions (292) (181)
Cash generated from operating activities 2,303 4,497
3. Reconciliation of net cash flow to movement in net debt
2006 2005
£'000 £'000
Net increase/(decrease) in cash and cash 830 (2,145)
equivalents
Effects of exchange rate changes 911 (869)
(Increase)/repayment of borrowings (1,669) 2,508
Net debt at the beginning of the period (8,511) (8,005)
Net debt at the end of the period (8,439) (8,511)
4. Dividends
An interim dividend of 1.0p per share was paid on 15 September 2006. The
Directors recommend the payment of a final dividend of 1.1p per share (2005:
1.05p per share) on 16 May 2007 to shareholders on the register on 13 April
2007, the ex-dividend date is 11 April 2007. This makes a total dividend for the
year of 2.1p per share (2005: 2.05p).
5. Basis of preparation
The preliminary announcement for the year ended 30 November 2006 has been
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union as at 30 November 2006 and in accordance with
the accounting policies included in the IFRS transitional disclosure published
by the Group on 19 May 2006. The financial information contained in this
preliminary announcement does not constitute statutory accounts as defined in
Section 240 of the Companies Act 1985. The financial information has been
extracted from the financial statements for the year ended 30 November 2006,
which have been approved by the Board of Directors and on which the auditors
have reported without qualification. The financial statements will be delivered
to the Registrar of Companies after the Annual General Meeting. The financial
statements for the year ended 30 November 2005, upon which the auditors reported
without qualification, have been prepared under United Kingdom Generally
Accepted Accounting Principles (UK GAAP) and have been delivered to the
Registrar of Companies.
6. Annual general meeting
The Company's annual general meeting will be held on Tuesday 17 April 2007 at
Brampton House, Bergen Way, King's Lynn.
This information is provided by RNS
The company news service from the London Stock Exchange
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