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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Porvair Plc | LSE:PRV | London | Ordinary Share | GB0006963689 | ORD 2P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 618.00 | 608.00 | 614.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Chemicals & Chem Preps, Nec | 176.01M | 15.97M | 0.3445 | 17.94 | 286.45M |
TIDMPRV
RNS Number : 1067D
Porvair PLC
24 June 2019
For immediate release 24 June 2019
Porvair plc
Half yearly results for the six months ended 31 May 2019
Strong results and continued momentum
Porvair plc ("Porvair" or "the Group"), the specialist filtration and environmental technology group, today announces its half yearly results for the six months ended 31 May 2019.
Highlights:
-- Revenue up 21% to GBP72.0 million (2018: GBP59.7 million), 17% on a constant currency basis*.
-- Operating profit up 39% to GBP7.8 million (2018: GBP5.6 million). Adjusted operating profit* up 38% to GBP8.0 million (2018: GBP5.8 million)
-- Profit before tax up 41% to GBP7.4 million (2018: GBP5.2 million). -- Adjusted basic earnings per share* up 36% to 12.9 pence (2018: 9.5 pence). -- Basic earnings per share were 12.4 pence (2018: 10.7 pence).
-- Net cash was GBP3.2 million (31 May 2018: GBP2.2 million). GBP2.8 million (2018: 7.0 million) was invested in acquisitions and capital expenditure during the period.
-- Interim dividend increased 6% to 1.7 pence per share (2018: 1.6 pence).
Commenting on the outlook, Ben Stocks, Chief Executive, said:
"Porvair has started 2019 strongly, with demand in aerospace and industrial markets more than offsetting the effects of global trade disturbances seen in some of our smaller product lines. The Group's new product pipeline is promising and investment in more capacity has continued. Order books for the second half are robust and prospects are encouraging."
*See note 1 for definition of alternative performance measures
For further information please contact:
Porvair plc 020 7466 5000 today Ben Stocks, Chief Executive 01553 765 500 thereafter Chris Tyler, Group Finance Director Buchanan Communications 020 7466 5000 Charles Ryland / Steph Watson
An analyst briefing will take place at 9:30 a.m. on 24 June 2019 at Buchanan. An audio webcast and a copy of the presentation will be available at www.porvair.com on the day.
Operating review
Overview
2019 2018 Growth GBPm GBPm % Revenue 72.0 59.7 21 ------ ------ ------- Operating profit 7.8 5.6 39 ------ ------ ------- Adjusted operating profit 8.0 5.8 38 ------ ------ ------- Profit before tax 7.4 5.2 41 ------ ------ ------- Pence Pence Adjusted earnings per share 12.9 9.5 36 ------ ------ ------- Earnings per share 12.4 10.7 16 ------ ------ ------- GBPm GBPm Net cash 3.2 2.2 ------ ------
Revenue growth was 21% (17% at constant currency). Strength in aerospace offset a slower start to the year in markets affected by global tariff or related US/China trade disturbances. Several larger orders in the Aerospace & Industrial division, which commenced shipment in the final quarter of 2018, were delivered in the period.
Profit before tax rose 41%, benefitting from higher volumes through the plants and better operating efficiencies. Adjusted earnings per share increased 36% to 12.9 pence.
Over the last five years the Group has achieved revenue growth of 46% (8% CAGR), earnings per share growth of 92% (14% CAGR) and cash from operations of GBP67 million.
Strategic statement
Porvair's strategy is to generate shareholder value through the development of specialist filtration and associated environmental technology businesses, both organically and by acquisition. Such businesses have certain key characteristics in common:
-- Specialist design or engineering skills are required;
-- Product use and replacement is mandated by regulation, quality accreditation or a maintenance cycle; and
-- Products are typically designed into a system that will have a long life-cycle.
This strategy continues to work well for the Group, which is in a position of financial strength, able to invest in both organic and acquired growth as appropriate.
Business model outline
Our customers require filtration or emission control products that perform to a given specification. Orders are won by offering the best technical solutions for these requirements at an acceptable commercial cost. Filtration expertise is applicable across all markets with new products often being adaptations of existing designs. Experience in specific markets or applications is valuable in building customer confidence. Domain knowledge is important, as is deciding where to direct resources.
This leads the Group to:
1. Focus on markets where we see long term growth potential.
2. Look for applications where product use is mandated and replacement demand is therefore regular.
3. Make new product development a core business activity. 4. Establish geographic presence where end-markets require. 5. Invest in both organic and acquired growth.
Therefore:
-- We focus on three operating segments: Aviation & Industrial; Laboratory; and Metal Melt Quality. All have clear structural growth drivers.
-- Our products typically protect complex downstream systems and as a result are replaced regularly. A high proportion of our annual revenue is from repeat orders.
-- Through a focus on new product development we aim to generate growth rates in excess of the underlying market. Where possible we build intellectual property around our product developments.
-- Our geographic presence follows the markets we serve. In the last twelve months: 51% of revenue was in the Americas; 23% in Asia; 13% in continental Europe; 12% in the UK; and 1% in Africa. The Group has plants in the US, UK, Germany, the Netherlands and China. In the last twelve months, 55% of revenue was manufactured in the US, 33% in the UK, 8% in Europe and 4% in China.
-- We aim to meet dividend and investment needs from free cash flow and modest borrowing facilities. In recent years we have expanded manufacturing capacity in the UK, Germany, US and China and made several acquisitions. All investments are subject to a hurdle rate analysis based on strategic and financial priorities.
Aerospace & Industrial
2019 2018 Growth GBPm GBPm % Revenue 32.1 21.7 48 Operating profit 4.1 2.4 68 ----- ----- ------- Adjusted operating profit 4.2 2.5 68 ----- ----- -------
This division designs and manufactures a wide range of specialist filtration products, demand for which grows as aerospace and industrial customers seek cleaner, safer or more efficient operations. Differentiation is achieved through design engineering; intellectual property; and quality accreditations.
Revenue increased by 48% and margins improved with greater volume. Demand in aerospace and US industrial was strong. Several larger orders which commenced shipment in the final quarter of 2018 were delivered in the period. These included further gasification spares, for which similar orders should repeat periodically but will not be regular. In the US, work for nuclear clean-up and tighter marine emissions standards contributed, as did a full period of the Keystone acquisition. Sales into the microelectronics segment were affected by US/China trade issues, although the profit impact of this was modest.
Laboratory
2019 2018 Growth GBPm GBPm % Revenue 21.2 20.3 4 Inter segment revenue (1.1) (1.3) ------ ------ ------- External revenue 20.1 19.0 6 ------ ------ ------- Operating profit 2.9 2.9 2 ------ ------ ------- Adjusted operating profit 3.0 3.0 2 ------ ------ -------
This division has two operating businesses: Porvair Sciences and Seal Analytical.
-- Porvair Sciences manufactures laboratory filters and associated consumables. Differentiation is achieved through proprietary manufacturing capabilities and filtration media.
-- Seal Analytical is a leading supplier of instruments and consumables for environmental laboratories for which demand is driven by water quality regulations. Differentiation is achieved through active new product development.
After a strong 2018, revenue remained stable for the first half of 2019 with growth in Porvair Sciences offset by a slow start to the year for Seal Analytical. Porvair Sciences grew sales by 10% with demand increasing in most segments supported by new production capacity and patented molecular separations technology acquired in 2018. Seal Analytical sales were down 1% with demand from China affected by tariff changes, and lower production during the switch over to manufacturing the newest platform, the AA500. Tooling is now complete and the new model is in full production. Orders for the second half are healthy.
Metal Melt Quality
2019 2018 Growth GBPm GBPm % Revenue 19.8 19.0 4 ----- ----- ------- Operating profit 1.6 1.2 29 ----- ----- -------
This division manufactures filters for molten metal, specialising in aluminium, ductile iron and nickel-cobalt alloys. It has a well differentiated product range based on patented products.
Revenue at constant currency was down 2%. Revenue in the US in automotive and agricultural end markets was affected by global trade issues, however revenue in China grew 33%. Operating profit grew through strong operational efficiencies in the US and losses in China reduced by a third.
Impact of the adoption of IFRS 15
The Group has adopted IFRS 15 for the first time in these results. The Group profit before tax was GBP0.2 million higher in the period and net assets and total equity were GBP0.1 million lower at 1 December 2018 under IFRS 15 than would have been the case under the previous revenue reporting standards. Under the adjustment made at 1 December 2018 to reflect the adoption of IFRS 15, deferred revenue of GBP7.7 million and accrued revenue of GBP0.3 million was eliminated.
As a consequence of the adoption of IFRS 15 provisions for warranties of GBP8.2 million were created and accrued losses of GBP0.7 million were eliminated. Matters that could affect the timing and quantum of the utilisation of the provisions include the impact of any remedial work, claims against the outstanding performance bonds, and the demonstrated life of the filtration equipment installed. Any future residual release to the income statement would be a non-cash item.
Alternative performance measures
2019 2018 Growth GBPm GBPm % Adjusted operating profit 8.0 5.8 38 ----- ----- ------- Adjusted profit before tax 7.6 5.5 40 ----- ----- ------- Adjusted profit for the year 5.9 4.3 36 ----- ----- -------
Adjusted operating profit and adjusted profit before tax exclude the impact of acquiring businesses:
-- the amortisation of acquired intangible assets was GBP0.3 million (2018: GBP0.2 million); and
-- other adjustments to profit and loss related to acquiring businesses was GBPnil million (2018: GBP0.1 million).
Adjusted profit for the year excludes an exceptional one off tax credit of GBPnil (2018: GBP778,000), reflecting a reduction in the Group's deferred tax liability from the change in US tax rates from December 2017 enacted in the US Tax Cuts and Jobs Act.
More detailed disclosure of the alternative performance measures is given in note 1.
Interest
The Group incurred an interest charge of GBP0.4 million (2018: GBP0.3 million). GBP0.2 million (2018: GBP0.2 million) relates to the finance cost of the defined benefit pension scheme. The remainder comprises undrawn commitment fees and interest on the Group's banking facilities.
Tax
The Group tax charge was GBP1.7 million (2018: GBP0.4 million). The adjusted income tax expense was GBP1.7 million (2018: GBP1.1 million). The underlying rate of income tax for the period has increased to 24% (2018: 22%).
Earnings per share and dividends
The basic earnings per share for the period increased to 12.4 pence (2018: 10.7 pence). Adjusted earnings per share grew by 36% to 12.9 pence (2018: 9.5 pence).
The Board has declared an interim dividend of 1.7 pence (2018: 1.6 pence) per share, an increase of 6%.
Investment
In the last five years, GBP42.4 million has been invested in acquisitions and capacity expansion. The Group invested GBP2.8 million (2018: GBP7.0 million) in acquisitions and capital expenditure in first half of 2019.
Cash flow and net debt
Cash generated from operations in the six months to 31 May 2019 was GBP1.4 million (2018: GBP0.9 million). Working capital increased in the period by GBP7.5 million (2018: GBP5.9 million). Working capital usually increases in the first half. A particularly strong May trading performance this year led to unusually high receivables at the period end. In addition, inventories are higher than the year end reflecting the strength of the order book over the next quarter and increases as a result of Brexit preparations, which have not yet been utilised.
Net cash at 31 May 2019 was GBP3.2 million (31 May 2018: GBP2.2 million; 30 November 2018: GBP6.6 million).
Return on capital employed
The Group's return on capital employed increased to 16% (2018: 14%). Excluding the impact of goodwill, acquired intangible assets and the pension liability the return on operating capital employed was 46% (2018: 44%).
Current trading and outlook
Porvair has started 2019 strongly, with demand in aerospace and industrial markets more than offsetting the effects of global trade disturbances seen in some of our smaller product lines. The Group's new product pipeline is promising and investment in capacity has continued. Order books for the second half are robust and prospects are encouraging.
Ben Stocks
Group Chief Executive
21 June 2019
Related parties
There were no related party transactions in the six months ended 31 May 2019 (2018: none).
Principal risks
Each division considers strategic, operational and financial risks and identifies actions to mitigate those risks. These risk profiles are reviewed by the Board and updated at least annually. The principal risks and uncertainties for the remaining six months of the financial year are discussed below. Further details of the Group's risk profile analysis can be found in the Strategic Report section of the Annual Report for the year ended 30 November 2018.
Although healthy at 31 May 2019, certain elements of the Group's order position can change quickly in the face of changing economic circumstances. The Metal Melt Quality division, Laboratory division and general industrial filtration within the Aerospace & Industrial division all have relatively short lead times and order cycles and, therefore, revenues are subject to fluctuations, which could have a material effect on the Group's results for the balance of 2019.
Forward looking statements
Certain statements in this half yearly financial information are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.
We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Condensed consolidated income statement
For the six months ended 31 May
Six months ended 31 May ---------------------- 2019 2018 Note Unaudited Unaudited GBP'000 GBP'000 Revenue 1,2 72,039 59,685 Cost of sales (47,518) (39,921) ---------- ---------- Gross profit 24,521 19,764 Other operating expenses (16,758) (14,174) ----- ---------- ---------- Adjusted operating profit 1,2 8,018 5,807 Adjustments Amortisation of acquired intangibles (269) (163) Other acquisition related adjustments 14 (54) --------------------------------------- ----- ---------- ---------- Operating profit 1,2 7,763 5,590 Interest payable and similar charges (390) (346) Profit before income tax 7,373 5,244 ----- ---------- ---------- Adjusted income tax expense 1 (1,742) (1,146) Adjustments Exceptional reduction of US deferred tax liability - 778 --------------------------------------- ----- ---------- ---------- Income tax expense 1 (1,742) (368) ---------- ---------- Profit for the period 5,631 4,876 Profit attributable to: Owners of the parent 5,634 4,877 Non-controlling interests (3) (1) Profit for the period 5,631 4,876 ---------- ---------- Earnings per share (basic) 3 12.4p 10.7p Adjusted earnings per share (basic) 3 12.9p 9.5p Earnings per share (diluted) 3 12.3p 10.7p Adjusted earnings per share (diluted) 3 12.8p 9.4p
Condensed consolidated statement of comprehensive income
For the six months ended 31 May
Six months ended 31 May ------------------------ 2019 2018 Unaudited Unaudited GBP'000 GBP'000 Profit for the period 5,631 4,876 ----------- ----------- Other comprehensive income: Items that will not be reclassified to profit and loss Actuarial (losses)/gains in defined benefit pension plans net of tax (2,372) 490 ----------- ----------- Items that may be subsequently reclassified to profit or loss Exchange differences on translation of foreign subsidiaries 757 994 757 994 Net other comprehensive income (1,615) 1,484 ----------- ----------- Total comprehensive income for the period 4,016 6,360 ----------- ----------- Comprehensive income attributable to: Owners of the parent 4,019 6,361 Non-controlling interests (3) (1) ----------- ----------- Total comprehensive income for the period 4,016 6,360 ----------- -----------
The accompanying notes are an integral part of this interim financial information.
Condensed consolidated balance sheet
As at 31 May
As at 30 As at 31 May November ------------------------ ---------- Note 2019 2018 2018 Unaudited Unaudited Audited GBP'000 GBP'000 GBP'000 Non-current assets Property, plant and equipment 5 22,375 20,453 21,827 Goodwill and other intangible assets 5 67,499 64,856 67,001 Deferred tax asset 2,647 2,725 2,304 92,521 88,034 91,132 Current assets Inventories 22,810 18,626 19,856 Trade and other receivables 26,407 22,881 22,336 Cash and cash equivalents 8,194 8,461 11,492 ----------- ----------- ---------- 57,411 49,968 53,684 Current liabilities Trade and other payables (23,739) (30,574) (32,826) Current tax liabilities (1,356) (853) (1,530) Derivative financial instruments (43) (44) - Provisions for other liabilities and charges 12 (10,435) (854) (506) (35,573) (32,325) (34,862) Net current assets 21,838 17,643 18,822 Non-current liabilities Bank loans (4,946) (6,303) (4,867) Deferred tax liability (2,148) (1,781) (2,032) Retirement benefit obligations (14,409) (14,298) (12,356) Other payables (413) (3,050) (1,008) Provisions for other liabilities and charges 12 (231) (178) (219) ---------- (22,147) (25,610) (20,482) ----------- ----------- ---------- Net assets 92,212 80,067 89,472 ----------- ----------- ---------- Capital and reserves Share capital 6 917 914 917 Share premium account 6 35,958 35,932 35,958 Cumulative translation reserve 7 11,327 7,958 10,570 Retained earnings 7 44,010 35,244 42,024 ----------- ----------- ---------- Equity attributable to equity shareholders of the parent 92,212 80,048 89,469 Non-controlling interests - 19 3 ----------- ----------- ---------- Total equity 92,212 80,067 89,472 ----------- ----------- ----------
The interim financial information on pages 7 to 22 was approved by the Board of Directors on 21 June 2019 and was signed on its behalf by:
Ben Stocks Chris Tyler
Group Chief Executive Group Finance Director
The accompanying notes are an integral part of this interim financial information.
Condensed consolidated cash flow statement
For the six months ended 31 May
Six months ended 31 May -------------------------------- Note 2019 Unaudited 2018 Unaudited GBP'000 GBP'000 Cash flows from operating activities Cash generated from operations 8 1,430 860 Interest paid (152) (120) Tax paid (1,549) (1,030) --------------- --------------- Net cash used by operating activities (271) (290) --------------- --------------- Cash flows from investing activities Acquisition of subsidiaries (net of cash acquired) 11 (591) (5,294) Purchase of property, plant and equipment 5 (1,844) (1,401) Purchase of intangible assets 5 (330) (255) Net cash used in investing activities (2,765) (6,950) --------------- --------------- Cash flows from financing activities Net proceeds from the issue of ordinary shares 6 - 102 Purchase of Employee Benefit Trust shares 6 (271) (207) (Decrease)/increase in borrowings 9 (31) 3,218 Net cash (used in)/generated from financing activities (302) 3,113 --------------- --------------- Net decrease in cash and cash equivalents 9 (3,338) (4,127) Effects of exchange rate changes 40 91 --------------- --------------- (3,298) (4,036) Cash and cash equivalents at the beginning of the period 11,492 12,497 --------------- --------------- Cash and cash equivalents at the end of the period 8,194 8,461 --------------- ---------------
The accompanying notes are an integral part of this interim financial information.
Condensed consolidated statement of changes in equity
For the six months ended 31 May (Unaudited)
Share Cumulative Non-controlling Share premium translation Retained interest capital account reserve earnings Total GBP'000 Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 --------- -------- ------------ ---------- --------- ------------------ ---------- Balance at 1 December 2017 913 35,831 6,964 31,161 74,869 20 74,889 --------- -------- ------------ ---------- ------------- -------------- ---------- Profit for the period - - - 4,877 4,877 - 4,877 Other comprehensive income/(expense): Exchange differences on translation of foreign subsidiaries - - 994 - 994 - 994 Actuarial gains in defined benefit pension plans net of tax - - - 490 490 - 490 --------- -------- ------------ ---------- ------------- -------------- ---------- Total comprehensive income for the period - - 994 5,367 6,361 - 6,361 --------- -------- ------------ ---------- ------------- -------------- ---------- Transactions with owners: Consideration paid for purchase of own shares (held in trust) - - - (207) (207) - (207) Proceeds from shares issued 1 101 - - 102 - 102 Employee share option schemes: value of employee services net of tax - - - 152 152 - 152 Dividends approved as final or paid - - - (1,229) (1,229) - (1,229) --------- -------- ------------ ---------- ------------- -------------- ---------- Total transactions with owners recognised directly in equity 1 101 - (1,284) (1,182) - (1,182) --------- -------- ------------ ---------- ------------- -------------- ---------- Adjustment arising from change in non-controlling interest - - - - - (1) (1) --------- -------- ------------ ---------- ------------- -------------- ---------- Balance at 31 May 2018 914 35,932 7,958 35,244 80,048 19 80,067 --------- -------- ------------ ---------- ------------- -------------- ---------- Balance at 30 November 2018 917 35,958 10,570 42,024 89,469 3 89,472 IFRS 15 adjustment (note 15) - - - (57) (57) - (57) --------- -------- ------------ ---------- ------------- -------------- ---------- Balance at 1 December 2018 917 35,958 10,570 41,967 89,412 3 89,415 --------- -------- ------------ ---------- ------------- -------------- ---------- Profit for the period - - - 5,634 5,634 - 5,634 Other comprehensive income/(expense): Exchange differences on translation of foreign subsidiaries - - 757 - 757 - 757 Actuarial losses in defined benefit pension plans net of tax - - - (2,372) (2,372) - (2,372) --------- -------- ------------ ---------- ------------- -------------- ---------- Total comprehensive income for the period - - 757 3,262 4,019 - 4,019 --------- -------- ------------ ---------- ------------- -------------- ---------- Transactions with owners: Consideration paid for purchase of own shares (held in trust) - - - (271) (271) - (271) Employee share option schemes: * value of employee services net of tax - - - 420 420 - 420 Dividends approved or paid - - - (1,368) (1,368) - (1,368) --------- -------- ------------ ---------- ------------- -------------- ---------- Total transactions with owners recognised directly in equity - - - (1,219) (1,219) - (1,219) --------- -------- ------------ ---------- ------------- -------------- ---------- Adjustment arising from change in non-controlling interest - - - - - (3) (3) --------- -------- ------------ ---------- ------------- -------------- ---------- Balance at 31 May 2019 917 35,958 11,327 44,010 92,212 - 92,212 --------- -------- ------------ ---------- ------------- -------------- ----------
The accompanying notes are an integral part of this interim financial information.
Notes to the condensed half-yearly consolidated financial information
Notes
1. Alternative performance measures
The Group uses adjusted figures as alternative performance measures in addition to those reported under IFRS, as management believe that these measures provide a useful analysis of trends in underlying performance compared with prior periods.
Alternative revenue measures
2019 2018 Growth Aerospace & Industrial GBP'000 GBP'000 % Underlying revenue 29,844 20,872 43 Acquisitions 1,426 638 -------- -------- ------- Revenue at constant currency 31,270 21,510 45 Exchange 868 190 -------- -------- Revenue as reported 32,138 21,700 48 -------- -------- ------- Laboratory Underlying revenue 18,213 17,605 3 Acquisitions 804 942 -------- -------- ------- Revenue at constant currency 19,017 18,547 3 Exchange 1,045 427 -------- -------- ------- Revenue as reported 20,062 18,974 6 -------- -------- ------- Metal Melt Quality Revenue at constant currency 18,178 18,528 (2) Exchange 1,661 483 -------- -------- ------- Revenue as reported 19,839 19,011 4 -------- -------- ------- Group Underlying revenue 66,235 57,005 16 Acquisitions 2,230 1,580 -------- -------- ------- Revenue at constant currency 68,465 58,585 17 Exchange 3,574 1,110 -------- -------- ------- Revenue as reported 72,039 59,685 21 -------- -------- -------
Revenue at constant currency is derived from translating overseas subsidiaries at budgeted fixed exchange rates. In 2019 and 2018 the rates used were $1.4:GBP and EUR1.2:GBP.
Underlying revenue is revenue at constant currency adjusted for the impact of acquisitions made in the current and prior year.
1. Alternative performance measures continued
Alternative profit measures
A reconciliation of the Group's adjusted performance measures to the reported IFRS measures is presented below:
2019 2018 Adjusted Adjustments Total Adjusted Adjustments Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Operating profit 8,018 (255) 7,763 5,807 (217) 5,590 Finance costs: (390) - (390) (346) - (346) Profit before income tax 7,628 (255) 7,373 5,461 (217) 5,244 Income tax expense (1,742) - (1,742) (1,146) 778 (368) ------------- ------------ ---------- --------- ----------- ------------ Profit for the year 5,886 (255) 5,631 4,315 561 4,876 ------------- ------------ ---------- --------- ----------- ------------
An analysis of adjusting items is given below:
2019 2018 Affecting operating profit GBP'000 GBP'000 Amortisation of intangible assets acquired through acquisitions (269) (163) Release of contingent consideration 14 - Acquisition expenses - (54) (255) (217) ----------- -------- Affecting tax Tax - exceptional item - 778 - 778 ----------- -------- Total adjusting items (255) 561 ----------- --------
Adjusted operating profit and adjusted profit before tax exclude:
-- the impact of acquiring businesses:
o the amortisation of acquired intangible assets was GBP0.3 million (2018: 0.2 million); and
o acquisition expenses and other adjustments to the income statement related to acquiring businesses was GBPnil (2018: GBP0.1 million).
Adjusted profit for the year excludes the adjustments to profit before tax and an exceptional one off tax credit of GBPnil (2018: GBP0.8 million) reflecting a reduction in the Group's deferred tax liability from the change in US tax rates from December 2017 enacted in the US Tax Cuts and Jobs Act.
2. Segmental analyses
The chief operating decision maker has been identified as the Board of Directors. The Board of Directors review the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on this reporting.
As at 31 May 2019, the Group is organised on a worldwide basis into three operating segments:
1) Aerospace & Industrial 2) Laboratory 3) Metal Melt Quality
The segment results for the period ended 31 May 2019 are as follows:
2019 Aerospace Laboratory Metal Melt Central Group & Industrial Quality GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Total segment revenue 32,145 21,193 19,841 - 73,179 Inter-segment revenue (7) (1,131) (2) - (1,140) -------------- ----------- ----------- ---------- -------- Revenue 32,138 20,062 19,839 - 72,039 -------------- ----------- ----------- ---------- -------- Adjusted operating profit/(loss) 4,241 3,047 1,564 (834) 8,018 Amortisation of acquired intangibles (145) (124) - - (269) Other acquisition related adjustments - 14 - - 14 ------------------------- -------------- ----------- ----------- ---------- -------- Operating profit/(loss) 4,096 2,937 1,564 (834) 7,763 Interest payable and similar charges - - - (390) (390) -------------- ----------- ----------- ---------- -------- Profit/(loss) before income tax 4,096 2,937 1,564 (1,224) 7,373 Income tax expense - - - (1,742) (1,742) Profit/(loss) for the year 4,096 2,937 1,564 (2,966) 5,631 -------------- ----------- ----------- ---------- --------
The segment results for the period ended 31 May 2018 are as follows:
2018 Aerospace Laboratory Metal Melt Central Group & Industrial Quality GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Total segment revenue 21,710 20,306 19,011 - 61,027 Inter-segment revenue (10) (1,332) - - (1,342) -------------- ----------- ----------- ---------- -------- Revenue 21,700 18,974 19,011 - 59,685 -------------- ----------- ----------- ---------- -------- Adjusted operating profit/(loss) 2,529 2,995 1,211 (928) 5,807 Amortisation of acquired intangibles (39) (124) - - (163) Other acquisition related adjustments (54) - - - (54) ------------------------- -------------- ----------- ----------- ---------- -------- Operating profit/(loss) 2,436 2,871 1,211 (928) 5,590 Interest payable and similar charges - - - (346) (346) -------------- ----------- ----------- ---------- -------- Profit/(loss) before income tax 2,436 2,871 1,211 (1,274) 5,244 Income tax expense - - - (368) (368) Profit/(loss) for the year 2,436 2,871 1,211 (1,642) 4,876 -------------- ----------- ----------- ---------- --------
Other Group operations are included in "Central". These mainly comprise Group corporate expenditure such as head office and Board costs, new business development and general financial costs.
2. Segmental analyses continued
Segment assets and liabilities
At 31 May 2019 Aerospace Laboratory Metal Melt Central Group - Unaudited & Industrial Quality GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Segmental assets 65,154 39,247 34,536 2,801 141,738 Cash and cash equivalents - - - 8,194 8,194 -------------- ----------- ----------- ----------- ----------- Total assets 65,154 39,247 34,536 10,995 149,932 -------------- ----------- ----------- ----------- ----------- Segmental liabilities (18,044) (10,362) (4,470) (5,489) (38,365) Retirement benefit obligations - - - (14,409) (14,409) Bank overdraft and loans - - - (4,946) (4,946) -------------- ----------- ----------- ----------- ----------- Total liabilities (18,044) (10,362) (4,470) (24,844) (57,720) -------------- ----------- ----------- ----------- ----------- At 31 May 2018 Aerospace Laboratory Metal Melt Central Group - Unaudited & Industrial Quality GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Segmental assets 55,042 35,675 35,996 2,828 129,541 Cash and cash equivalents - - - 8,461 8,461 -------------- ----------- ----------- ----------- ----------- Total assets 55,042 35,675 35,996 11,289 138,002 -------------- ----------- ----------- ----------- ----------- Segmental liabilities (16,255) (9,780) (4,751) (6,548) (37,334) Retirement benefit obligations - - - (14,298) (14,298) Bank overdraft and loans - - - (6,303) (6,303) -------------- ----------- ----------- ----------- ----------- Total liabilities (16,255) (9,780) (4,751) (27,149) (57,935) -------------- ----------- ----------- ----------- -----------
At 30 Nov 2018 Aerospace Laboratory Metal Melt Central Group - Audited & Industrial Quality GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Segmental assets 59,655 37,608 33,869 2,192 133,324 Cash and cash equivalents - - - 11,492 11,492 -------------- ----------- ----------- ----------- ----------- Total assets 59,655 37,608 33,869 13,684 144,816 -------------- ----------- ----------- ----------- ----------- Segmental liabilities (18,610) (11,365) (3,999) (4,147) (38,121) Retirement benefit obligations - - - (12,356) (12,356) Bank overdraft and loans - - - (4,867) (4,867) -------------- ----------- ----------- ----------- ----------- Total liabilities (18,610) (11,365) (3,999) (21,370) (55,344) -------------- ----------- ----------- ----------- ----------- 2. Segmental analyses continued
Geographical analysis
Revenue
Six months ended 31 May -------------------------------------------------------- 2019 2018 Unaudited Unaudited By destination By origin By destination By origin GBP'000 GBP'000 GBP'000 GBP'000 United Kingdom 7,787 25,616 7,550 17,539 Continental Europe 9,558 5,523 9,872 5,536 United States of America 30,921 38,388 25,724 34,661 Other NAFTA 3,965 - 4,146 - South America 1,041 - 929 - Asia 18,198 2,512 10,628 1,949 Africa 569 - 836 - --------------- ---------- --------------- ---------- 72,039 72,039 59,685 59,685 --------------- ---------- --------------- ---------- 3. Earnings per share Six months ended 31 May -------------------------------------------------------------------------- As reported 2019 2018 Unaudited Unaudited Earnings Weighted Per share Earnings Weighted Per share average amount average amount number number GBP'000 of shares Pence GBP'000 of shares Pence --------- ------------- ---------- --------- ------------- ---------- Basic EPS - earnings attributable to ordinary shareholders 5,634 4,877 Shares in issue 45,842,280 45,661,303 Shares owned by the Employee Benefit Trust (222,874) (135,576) Basic earnings per share 5,634 45,619,406 12.4 4,877 45,525,727 10.7 Effect of dilutive securities - share options - 288,827 (0.1) - 249,215 - --------- ------------- ---------- --------- ------------- ---------- Diluted earnings per share 5,634 45,908,233 12.3 4,877 45,774,942 10.7 --------- ------------- ---------- --------- ------------- ---------- 2019 2018 Adjusted Earnings Weighted Per share Earnings Weighted Per share average amount average amount number number of GBP'000 of shares Pence GBP'000 shares Pence Earnings attributable to ordinary shareholders 5,634 4,877 Adjusting items (note 1) 255 (561) --------- ------------- ---------- --------- ------------- ---------- Adjusted earnings attributable to ordinary shareholders 5,889 4,316 --------- ------------- ---------- --------- ------------- ---------- Adjusted basic earnings per share 5,889 45,619,406 12.9 4,316 45,525,727 9.5 Adjusted diluted earnings per share 5,889 45,908,233 12.8 4,316 45,774,942 9.4 --------- ------------- ---------- --------- ------------- ---------- 4. Dividends per share Six months ended 31 May ------------------------------------------ 2019 2018 Unaudited Unaudited Per share GBP'000 Per share GBP'000 Final dividend approved 3.0p 1,368 2.7p 1,229 ---------- -------- ---------- --------
The final dividend approved for the year ended 30 November 2018 was paid to shareholders on 7 June 2019.
The Directors have declared an interim dividend of 1.7 pence (2018: 1.6 pence) per share to be paid on 30 August 2019 to shareholders on the register at the close of business on 26 July 2019. The ex-dividend date for the shares is 25 July 2019.
5. Property, plant and equipment and goodwill and other intangible assets Six months ended 31 May 2019 Property, Goodwill Total - Unaudited plant and other and equipment intangible assets --------------- ------------ -------- GBP'000 GBP'000 GBP'000 Opening net book amount at 1 December 2018 21,827 67,001 88,828 Additions 1,844 330 2,174 Disposals (52) - (52) Depreciation and amortisation (1,430) (348) (1,778) Exchange movements 186 516 702 Closing net book amount at 31 May 2019 22,375 67,499 89,874 --------------- ------------ -------- Six months ended 31 May 2018 Property, Goodwill Total - Unaudited plant and other and equipment intangible assets --------------- ------------ -------- GBP'000 GBP'000 GBP'000 Opening net book amount at 1 December 2017 19,997 57,227 77,224 Additions 1,401 255 1,656 Acquisitions 192 6,894 7,086 Depreciation and amortisation (1,416) (298) (1,714) Exchange movements 279 778 1,057 Closing net book amount at 31 May 2018 20,453 64,856 85,309 --------------- ------------ -------- 6. Share capital and premium Number Ordinary Share premium of shares shares account Total (thousands) Unaudited Unaudited Unaudited ------------- ----------- -------------- ------------ GBP'000 GBP'000 GBP'000 At 1 December 2017 45,641 913 35,831 36,744 Employee share options schemes: Exercise of options under share option schemes 43 1 101 102 ------------- ----------- -------------- ------------ At 31 May 2018 45,684 914 35,932 36,846 ------------- ----------- -------------- ------------ At 1 December 2018 45,843 917 35,958 36,875 At 31 May 2019 45,843 917 35,958 36,875 ------------- ----------- -------------- ------------
The authorised number of ordinary shares is 75 million (2018: 75 million) shares with a par value of 2.0 pence (2018: 2.0 pence) per share. All issued shares are fully paid. No (2018: 42,600) ordinary shares of 2.0 pence each were issued in the period on the exercise of employee share options for a cash consideration of GBPnil (2018: GBP102,000).
The Group uses an Employee Benefit Trust to purchase shares in the Company to satisfy entitlements under the Group's long term incentive plan. During the period, the Group purchased 54,000 (2018: 42,000) ordinary shares of 2.0 pence for a consideration of GBP271,000 (2018: GBP207,000). As at 31 May 2019 the Employee Benefit Trust held a total of 250,000 ordinary shares of 2.0 pence (2018: 154,000) at a cost of GBP1,239,000 (2018: GBP759,000) and a market value of GBP1,350,000 (2018: GBP801,000).
7. Other reserves Cumulative translation Retained reserve earnings Unaudited Unaudited ------------- ------------ GBP'000 GBP'000 At 1 December 2017 6,964 31,161 Profit for the period attributable to shareholders - 4,877 Direct to equity: Final dividend approved - (1,229) Actuarial loss - 590 Tax on actuarial loss - (100) Share based payments - 322 Tax on share based payments - (170) Employee Benefit Trust shares - (207) Exchange differences 994 - At 31 May 2018 7,958 35,244 ------------- ------------ At 30 November 2018 10,570 42,024 Recognised under IFRS 15 - (57) ------------- ------------ At 1 December 2018 10,570 41,967 Profit for the period attributable to shareholders - 5,634 Direct to equity: Final dividend approved - (1,368) Actuarial loss - (2,858) Tax on actuarial loss - 486 Share based payments - 326 Tax on share based payments - 94 Employee Benefit Trust shares - (271) Exchange differences 757 - At 31 May 2019 11,327 44,010 ------------- ------------ 8. Cash generated from operations Six months ended 31 May ------------------------ 2019 2018 Unaudited Unaudited GBP'000 GBP'000 Operating profit 7,763 5,590 Post-employment benefits (983) (972) Fair value of derivatives through profit and loss 43 84 Share based payments 238 322 Depreciation and amortisation 1,778 1,714 Loss on disposal of property, plant 52 - and equipment Operating cash flows before movement in working capital 8,891 6,738 ----------- ----------- Increase in inventories (2,792) (1,538) Increase in trade and other receivables (3,912) (2,478) Decrease in payables (10,640) (1,499) Increase/(decrease) in provisions 9,883 (363) Increase in working capital (7,461) (5,878) ----------- ----------- Cash generated from operations 1,430 860 ----------- ----------- 9. Reconciliation of net cash flow to movement in net cash Six months ended 31 May ------------------------ 2019 2018 Unaudited Unaudited GBP'000 GBP'000 Net decrease in cash and cash equivalents (3,338) (4,127) Effects of exchange rate changes (70) (283) Repayment/(increase) in borrowings 31 (3,218) Net cash at the beginning of the period 6,625 9,786 ----------- ----------- Net cash at the end of the period 3,248 2,158 ----------- ----------- 10. Contingent liabilities
At 31 May 2019, the Group had advanced payment bonds totalling US$2.4 million (30 November 2018: US$2.4 million) relating to monies received in advance on contracts. The advanced payment bonds are released no later than November 2019. The Group has performance bonds totalling US$7.5 million (30 November 2018: US$7.5 million). The bonds are released after a warranty period and in any event no later than April 2022.
11. Fair value estimation
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The condensed half-yearly consolidated financial information does not include all financial risk management information and disclosures required in the annual financial statements; it should be read in conjunction with the Group's annual financial statements as at 30 November 2018. There have been no changes in the risk management processes or in any risk management policies since the year end.
The Group's finance department performs the valuations of financial assets and liabilities required for financial reporting purposes, including Level 3 fair values. The department reports directly to the Group Finance Director and the Audit Committee. Discussions of valuation processes and results are held between the Group Finance Director, the Audit Committee and the valuation team at least twice a year, in line with the Group's external reporting dates.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined below:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
-- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
Level Level Level Total 1 2 3 --------- -------- -------- -------- GBP'000 GBP'000 GBP'000 GBP'000 Financial liabilities at fair value through profit or loss: * Trading derivatives - (43) - (43) Contingent consideration - - (3,343) (3,343) At 31 May 2019 - (43) (3,343) (3,386) ---------- -------- -------- -------- Financial liabilities at fair value through profit or loss: Contingent consideration - - (3,892) (3,892) At 30 November 2018 - - (3,892) (3,892) ---------- -------- -------- --------
There were no transfers between levels during the period, and there were no changes in valuation techniques in the period.
Level 2 trading and hedging derivatives comprise forward foreign exchange contracts. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. The effects of discounting are generally insignificant for Level 2 derivatives.
11. Fair value estimation continued
A summary of the movements in deferred and contingent consideration on acquisitions contained in Level 3 is given below:
J. G. Finneran Rohasys Associates, BV Total Inc. --------------- --------- -------- GBP'000 GBP'000 GBP'000 At 1 December 2018 (2,351) (1,541) (3,892) Cash paid in the period - 591 591 Recognised in the income statement: * Unearned contingent consideration - 14 14 * Unwinding discounted contingent consideration - (46) (46) Foreign exchange movement (29) 19 (10) --------------- --------- -------- At 31 May 2019 (2,380) (963) (3,343) --------------- --------- -------- J. G. Finneran Rohasys Keystone Associates, BV Filter Total Inc. --------------- -------- --------- -------- GBP'000 GBP'000 GBP'000 GBP'000 At 1 December 2017 (4,432) - - (4,432) Purchase consideration additions in the period - (2,746) (5,219) (7,965) Cash paid in the period - 1,454 3,840 5,294 Recognised in the income statement: * Unwinding discounted contingent consideration - (46) - (46) Foreign exchange movement (77) (3) (49) (129) --------------- -------- --------- -------- At 31 May 2018 (4,509) (1,341) (1,428) (7,278) --------------- -------- --------- --------
The fair value of the following financial assets and liabilities approximate their carrying amount: borrowings, trade and other receivables, other current financial assets, cash and cash equivalents, and trade and other payables.
12. Provisions for other liabilities and charges Dilapidations Warranty Total -------------- --------- -------- GBP'000 GBP'000 GBP'000 At 30 November 2018 219 506 725 Recognised under IFRS 15 - 8,187 8,187 -------------- --------- -------- At 1 December 2018 219 8,693 8,912 Charged to/(released from) the consolidated income statement: * Unwinding of discount 12 - 12 * Warranty - 1,786 1,786 Utilised: * Warranty - (44) (44) At 31 May 2019 231 10,435 10,666 -------------- --------- -------- Dilapidations Warranty Total -------------- --------- -------- GBP'000 GBP'000 GBP'000 At 1 December 2017 178 1,217 1,395 Charged to/(released from) the consolidated income statement: * Warranty - (363) (363) At 31 May 2018 178 854 1,032 -------------- --------- --------
The provisions arise from a discounted dilapidations provision for leased property, which is expected to be utilised in 2023, and sale warranties.
12. Provisions for other liabilities and charges continued
Warranty provisions arising on the adoption of IFRS 15 reflect the impact of recognising potential future costs arising on construction contracts, which had previously been held as future cost estimates and gave rise to deferred revenue. The warranty provision includes amounts that will be utilised or released as these contracts approach completion. Matters that could affect the timing and quantum of the utilisation of the provisions include the impact of any remedial work, claims against the outstanding performance bonds, and the demonstrated life of the filtration equipment installed. Any future residual release to the income statement would be a non-cash item.
13. Exchange rates
Exchange rates for the US dollar and Euro during the period were:
Average rate Average rate Closing rate Closing rate to 31 May to 31 May at 31 May at 30 Nov 19 18 19 18 Unaudited Unaudited Unaudited Unaudited US dollar 1.29 1.38 1.26 1.28 Euro 1.14 1.14 1.13 1.13 14. Seasonality
The results for the six months ended 31 May 2019 are impacted by a lower number of working days in the first six months of the year than in the second half of the year.
15. Basis of preparation
Porvair plc is a public limited company registered in the UK and listed on the London Stock Exchange.
This unaudited condensed half-yearly consolidated financial information for the six months ended 31 May 2019 has been prepared in accordance with the Disclosure and Transparency Rules ('DTR') of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed half-yearly consolidated financial information should be read in conjunction with the annual financial statements for the year ended 30 November 2018, which have been prepared in accordance with IFRSs as adopted by the European Union.
Except as described below, the accounting policies applied in these interim financial statements are consistent with those applied in the Group's consolidated financial statements for the year ended 30 November 2018. The changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 30 November 2019. The Group has adopted IFRS 15 'Revenue from Contracts with Customers' (see A) and IFRS 9 Financial Instruments (see B) from 1 December 2018. A number of other new standards are effective from 1 December 2018 but they do not have a material effect on the Group's financial statements.
A. IFRS 15 Revenue from Contracts with Customers
The Group has adopted IFRS 15, 'Revenue from Contracts with Customers', for the year ending 30 November 2019. This establishes a comprehensive framework for determining whether, how much and when revenue is recognised. The majority of the Group's transactions are unaffected by IFRS 15, however when the standard is applied to specific customer contracts previously recognised under construction contract accounting (IAS 11) this leads to a difference in the timing of recognising revenue. The impact of the timing difference varies from contract to contract. In addition, certain companies provide installation services for goods shipped to customers as part of their sale of goods contracts. Having reviewed these contracts, there is a change in accounting required under IFRS 15 to defer the installation related revenue.
As permitted by the standard, the Group has adopted the modified retrospective approach. Under this approach the comparatives for the year ended 30 November 2018 have not been restated. Instead, an adjustment in respect of the contracts open as at 1 December 2018 will be recognised in the opening retained earnings.
The following adjustment has been made to brought forward retained earnings and recognised in the Condensed Consolidated Statement of Changes in Equity:
15. Basis of preparation continued
Impact of adopting IFRS 15 on the opening reserves as at 1 December 2018
Retained earnings Unaudited GBP'000 ----------- Loss before tax (88) Tax 31 Impact at 1 December 2018 (57) -----------
The impact of adoption in the period to 31 May 2019 can be seen below and arises primarily from timing differences due to measuring the progress of Aerospace & Industrial division contracts using an output method of measuring progress towards complete satisfaction of performance obligations, based on milestones reached under IFRS 15 rather than the cost to cost ("percentage completion") method used under IAS 18 and IAS 11.
Impact on the condensed consolidated income statement and other comprehensive income in the six months ended 31 May 2019
Amount without Adjustments adoption As reported Unaudited of IFRS15 GBP'000 GBP'000 GBP'000 Revenue 72,039 (456) 71,583 Operating profit 7,763 (237) 7,526 Total comprehensive income 4,016 (180) 3,836 -------------- -------------- ---------------
Impact on the condensed consolidated statement of financial position as at 31 May 2019
Amount without Adjustments adoption As reported Unaudited of IFRS15 GBP'000 GBP'000 GBP'000 Non-current assets 92,521 - 92,521 Current assets 57,441 - 57,441 Current liabilities Trade and other payables (23,739) (8,583) (32,322) Current tax liabilities (1,356) 25 (1,331) Derivative financial instruments (43) - (43) Provisions for other liabilities and charges (10,435) 8,435 (2,000) (35,573) (123) (35,696) Net current assets 21,838 (123) 21,715 Non-current liabilities (22,147) - (22,147) -------------- -------------- --------------- Net assets 92,212 (123) 92,089 -------------- -------------- ---------------
B. IFRS 9 Financial Instruments
IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. The standard replaces IAS 39 'Financial Instruments: Recognition and Measurement'. The adoption of IFRS 9 'Financial Instruments' from 1 December 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements, however the overall impact on the interim financial information is not material. In accordance with the transitional provisions in IFRS 9, comparative figures have not been restated.
15. Basis of preparation continued
Taxes on income in the interim period are accrued using the tax rate that would be applicable to expected total annual earnings.
This condensed half-yearly consolidated financial information has 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 condensed half-yearly consolidated financial information 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 condensed half-yearly consolidated financial information 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. In preparing the condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 30 November 2018, with the exception of changes in estimates that are required in determining the provision for income taxes.
After having made appropriate enquiries, including a review of progress against the Group's budget for 2019, its medium term plans and taking into account the banking facilities available until May 2022, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve months from the date of approval of the condensed half yearly consolidated financial information. Accordingly, they continue to adopt the going concern basis in preparing this condensed half-yearly consolidated financial information.
This condensed half-yearly consolidated financial information and the comparative figures does not constitute full accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 November 2018, which were approved by the Board of Directors on 25 January 2019, and which include an unqualified audit report, no emphasis of matter paragraph and no statements under sections 498(2) or (3) of the Companies Act 2006, have been delivered to the Registrar of Companies. This condensed half-yearly consolidated financial information has been reviewed, not audited.
The condensed half-yearly consolidated financial information does not include all financial risk management information and disclosures required in the annual financial statements; it should be read in conjunction with the Group's annual financial statements for the year ended 30 November 2018. There have been no changes in any risk management policies since the year end.
This report will be available at Porvair plc's registered office at 7 Regis Place, Bergen Way, King's Lynn, PE30 2JN and on the Company's website www.porvair.com.
Statement of directors' responsibilities
The Directors confirm that this condensed half-yearly consolidated financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months of the year, their impact on the condensed half-yearly consolidated financial information and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related party transactions in the first six months of the year and any material changes in the related party transactions described in the last annual report.
With the exception of Jasi Halai, appointed on 18 June 2019, the Directors of Porvair plc are listed in the Porvair plc Annual Report for the year ended 30 November 2018. A list of current Directors is maintained on the Porvair plc website www.porvair.com.
By order of the board
Ben Stocks Chris Tyler Group Chief Executive Group Finance Director
21 June 2019
INDEPENT REVIEW REPORT TO PORVAIR PLC
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 May 2019 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated cash flow statement, condensed consolidated statement of changes in equity, and related notes 1 to 15. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 15, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 May 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
Cambridge, United Kingdom
21 June 2019
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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June 24, 2019 02:00 ET (06:00 GMT)
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