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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% | 614.00 | 602.00 | 630.00 | 20,880 | 08:00:16 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Chemicals & Chem Preps, Nec | 176.01M | 15.97M | 0.3445 | 17.82 | 284.6M |
From Apr 2019 to Apr 2024
TIDMPRV
RNS Number : 3102S
Porvair PLC
25 June 2018
For immediate release 25 June 2018
Porvair plc
Half yearly results for the six months ended 31 May 2018
Continued growth and earnings 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 2018.
Highlights:
-- Revenue up 7% to GBP59.7 million (2017: GBP55.5 million), 12% on a constant currency basis*.
-- Profit before tax up 8% to GBP5.2 million (2017: GBP4.9 million).
-- Basic earnings per share were 10.7p (2017: 8.3 pence). Basic earnings per share before an exceptional income tax credit were up 8% to 9.0 pence (2017: 8.3 pence).
-- Net cash was GBP2.2 million (31 May 2017: GBP4.0 million; 30 November 2017: GBP9.8 million) after investing GBP7.0 million on acquisitions and capital expenditure.
-- Rohasys BV and Keystone Filter were acquired; both are performing as expected. -- Interim dividend increased 7% to 1.6 pence per share (2017: 1.5 pence).
Commenting on the outlook, Ben Stocks, Chief Executive, said:
"Porvair traded well in the first half of 2018, with a healthy order book for the second half and robust levels of activity. The business is achieving further organic growth through incremental new product introductions and continues to expand manufacturing capacity to meet demand. We expect to integrate our two first half acquisitions in the balance of the financial year, with both bringing a wider product range to existing customers and adding intellectual property to our portfolio. We see considerable opportunity for growth ahead."
*See note 14 for definition of revenue at constant currency and underlying (which excludes large projects and acquisitions) revenue at constant currency
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 25 June 2018 at Buchanan. An audio webcast and a copy of the presentation will be available at www.porvair.com on the day.
Operating review
Overview
Hot Features
Premium
2018 2017 Growth
GBPm GBPm %
Revenue 59.7 55.5 7
----- ----- -------
Profit before tax 5.2 4.9 8
----- ----- -------
Earnings per share before exceptional
income tax credit 9.0p 8.3p 8
----- ----- -------
Net cash 2.2 4.0
----- -----
Profit before tax rose 8% to GBP5.2 million. Earnings per share increased 8% to 9.0 pence. Revenue was GBP59.7 million, an increase of 7%. At constant currency revenue increased by 12%.
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.
Over the last five years the Group has achieved revenue growth of 43% (7% CAGR), earnings per share growth of 83% (13% CAGR) and cash from operations of GBP64 million.
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 generally 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: 53% of revenue is in the Americas; 18% in Asia; 15% in the EU; 13% 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, 59% of revenue was manufactured in the US, 30% in the UK, 8% in Europe and 3% 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.
New operating segments
From 1 December 2017, after acquiring J G Finneran earlier in 2017, the Group changed its management and reporting structure to improve market focus and offer greater investor clarity. The Group now reports under three operating segments: Aerospace & Industrial; Laboratory; and Metal Melt Quality.
Investment and future development
In the last five years, GBP40 million has been invested in acquisitions and capacity expansion. The Group invested GBP7.0 million (2017: GBP9.9 million) in acquisitions and capital expenditure in first half of 2018. During this period:
-- Rohasys BV was acquired and is now part of the Laboratory division, this business broadens Seal Analytical's product range, adding robotic handling and sample preparation expertise that complements Seal's existing technology. Its sample preparation capabilities will be of wider benefit to the Laboratory division's life science development plans.
-- Keystone Filter ("Keystone") was acquired by the Aerospace & Industrial division. Keystone manufactures filter cartridges for the industrial process, food, beverage and nuclear markets in the USA. It will be relocated to our facility in Ashland VA in the second half.
-- Expansion of the J G Finneran facility in Vineland NJ continues and should complete in the second half, after which further investment in clean manufacturing capabilities will follow.
-- A refurbishment and upgrade of our microelectronics plant in Boise ID has begun and will complete in the second half.
New product development remains core to Porvair's strategy with incremental range extensions and increasing product differentiation being priorities. In the first half:
-- Our new nuclear HEPA filter received regulatory approval and production will accelerate in the second half.
-- New customer orders were received for 3D printed ceramic filters.
-- Seal Analytical introduced a significant platform upgrade. This re-engineered product will replace Seal's best-selling and longest established analyser, offering a better product to its substantial installed customer base.
Divisional review
Aerospace & Industrial
2018 2017 Growth
GBPm GBPm %
Revenue 21.7 20.5 6
Operating profit 2.4 2.5 (3)
----- ----- -------
Revenue increased by 6% to GBP21.7 million. Underlying operating profit growth is obscured by a GBP0.8 million gasification profit taken in 2017 which did not recur and as a result reported operating profits fell by 3%.
Growth has been strong in US industrial, helped by the first contribution from the recent Keystone acquisition. A major US nuclear order received in the last quarter of 2017 has progressed well with all the agreed milestones met on time. Further revenue will be recognised in the second half. Orders for microelectronics and disposable filters were also robust. Having grown 38% (7% p.a.) over the last five years, aerospace revenues have been lower in the period as aircraft programme changes work through the order book. We expect a return to growth in the second half.
Commissioning is underway at all three large gasification projects. These are complex power plants using new gasification technology for which our filter systems are a relatively small but critical component. The facilities in Korea, India and China are all experiencing commissioning challenges due to variations in feedstocks and operating conditions in each plant. We are working with the customers and other equipment suppliers to resolve those matters relating to the filtration systems. At this early stage our filters are performing as expected. We expect this work to continue into 2019.
Laboratory
2018 2017 Growth
GBPm GBPm %
Revenue 20.3 16.8 21
Inter segment revenue (1.3) (0.9)
------ ------ -------
External revenue 19.0 15.9 19
------ ------ -------
Operating profit 2.9 2.7 6
------ ------ -------
Revenue was up 19% to GBP19.0 million. Laboratory orders were robust throughout the period. The pipeline of bioscience and sample preparation projects is encouraging and the consolidation of the technical teams in their upgraded laboratory in Wrexham is going well. J G Finneran has performed ahead of expectations in its first year with the Group. Cross sales and manufacturing benefits from the acquisition were realised and further synergies will be achieved when the plant expansion is completed.
Seal Analytical has started strongly in the US and SE Asia, offsetting a fall in revenue to China. Instrument upgrades introduced at the start of 2018 have been well received. Rohasys is being integrated into Seal's sales channels and the benefits are starting to be seen in revenue. These are promising opportunities for the second half and beyond.
The operating profit is up 6% to GBP2.9 million, lower than the revenue growth rate reflecting the initial profitability of Rohasys and changes in the transfer pricing arrangements between the Aerospace & Industrial and Laboratory.
Metal Melt Quality
2018 2017 Growth
GBPm GBPm %
Revenue 19.0 19.1 (1)
----- ----- -------
Operating profit 1.2 0.8 59
----- ----- -------
Reported revenue was down 1%, but revenue at constant currency was up 8% and US$ sales are at record levels. Profitability improved but is still held back by losses recognised in China.
Activity in the US business has been high, with demand particularly strong in iron foundry and super-alloy filtration. The range and volume of ceramic 3D manufactured products again increased and revenue grew 5%. Plant efficiencies have also been much better than the prior period. Profitability margin in the US plants improved to 10% (2017: 7%)
As expected, China continues to be loss making, although, when the US margin earned from Chinese sales is taken into account, the situation is improving. Chinese customers are beginning to switch to the same products made in our Xiaogan plant and, as this trend increases, reported losses will diminish.
Acquisition related costs
Amortisation of acquired intangibles was GBP0.2 million (2017: GBP0.1 million) in the period. Acquisition expenses were GBP0.1 million (2017: GBP0.4 million).
Interest
The Group incurred an interest charge of GBP0.3 million (2017: GBP0.3 million). GBP0.2 million (2017: 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 GBP0.4 million (2017: GBP1.1 million). Included in the income tax expense is a one off credit of GBP0.8 million reflecting the impact of the change of US tax rates on the Group's deferred tax liability. The underlying rate of income tax for the period has reduced to 22% (2017: 23%), which was 2% lower than the rate for the full year ended 30 November 2017 reflecting the lower rates of tax on profits earned in the US.
Earnings per share and dividends
The basic earnings per share for the period increased to 10.7 pence (2017: 8.3 pence). As described above the change in tax rates in the US resulted in a one off exceptional income tax credit which contributed 1.7 pence of earnings. Excluding the exceptional item earnings per share grew by 8% to 9.0 pence (2017: 8.3 pence)
The Board has declared an interim dividend of 1.6 pence (2017: 1.5 pence) per share, an increase of 7%.
Cash flow and net debt
Cash generated from operations in the six months to 31 May 2018 was GBP0.9 million (2017: GBP1.6 million). Working capital increased in the period by GBP5.9 million (2017: GBP3.6 million). Working capital usually increases in the first half, a particularly strong May trading performance led to unusually high receivables at the period end.
Interest paid was GBP0.1 million (2017: GBP0.1 million). Tax payments were GBP1.0 million (2017: GBP1.3 million), lower US tax was paid in the first half to compensate for overpayments in prior periods.
Capital expenditure was GBP1.7 million (2017: GBP4.0 million), spent on capacity upgrades and plant expansion.
GBP5.3 million (2017: GBP5.9 million) was spent on acquisitions. GBP1.5 million (GBP0.8 million on acquisition, GBP0.5 million to settle a loan on acquisition and GBP0.2 million of settled contingent consideration) was paid to acquire Rohasys BV and GBP3.8 million was paid to acquire the business of Keystone. As described in notes 9 and 11, deferred and contingent consideration of up to GBP7.3 million (2017: GBP4.6 million) is payable from the second half of 2018 to 2022.
Net cash at 31 May 2018 was GBP2.2 million (31 May 2017: GBP4.0 million; 30 November 2017: GBP9.8 million).
Return on capital employed
The Group's return on capital employed was 14% (2017: 14%). Excluding the impact of goodwill, acquired intangible assets and the pension liability the return on operating capital employed was 42% (2017: 43%).
Current trading and outlook
Porvair traded well in the first half of 2018, with a healthy order book for the second half and robust levels of activity. The business is achieving further organic growth through incremental new product introductions and we continue to expand manufacturing capacity to meet demand. We expect to integrate our two first half acquisitions in the balance of the financial year, with both bringing a wider product range to existing customers and adding intellectual property to our portfolio. We see considerable opportunity for growth ahead.
Ben Stocks
Group Chief Executive
22 June 2018
Related parties
There were no related party transactions in the six months ended 31 May 2018 (2017: 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 2017.
Although healthy at 31 May 2018, 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 2018.
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
----------------------
2018 2017
Note Unaudited Unaudited
GBP'000 GBP'000
Revenue 1 59,685 55,538
Cost of sales (39,921) (37,285)
---------- ----------
Gross profit 19,764 18,253
Other operating expenses (14,174) (13,051)
---------- ----------
Operating profit 1 5,590 5,202
Interest payable and similar charges (346) (347)
Profit before income tax 5,244 4,855
---------- ----------
Income tax expense - before exceptional
item (1,146) (1,121)
Income tax credit - exceptional item 778 -
---------- ----------
Income tax expense (368) (1,121)
---------- ----------
Profit for the period 4,876 3,734
Profit attributable to:
Owners of the parent 4,877 3,738
Non-controlling interests (1) (4)
Profit for the period 4,876 3,734
---------- ----------
Earnings per share (basic) 2 10.7p 8.3p
Earnings per share before exceptional
item (basic) 2 9.0p 8.3p
Earnings per share (diluted) 2 10.7p 8.2p
Condensed consolidated statement of comprehensive income
For the six months ended 31 May
Six months ended 31
May
------------------------
2018 2017
Unaudited Unaudited
GBP'000 GBP'000
Profit for the period 4,876 3,734
----------- -----------
Other comprehensive income:
Items that will not be reclassified to profit
and loss
Actuarial gains/(losses) in defined benefit pension
plans net of tax 490 (937)
----------- -----------
Items that may be subsequently reclassified to
profit or loss
Exchange differences on translation of foreign
subsidiaries 994 (1,510)
Changes in the fair value of foreign exchange
contracts held as a cash flow hedge, net of tax - 157
----------- -----------
994 (1,353)
Net other comprehensive income 1,484 (2,290)
----------- -----------
Total comprehensive income for the period 6,360 1,444
----------- -----------
Comprehensive income attributable to:
Owners of the parent 6,361 1,448
Non-controlling interests (1) (4)
----------- -----------
Total comprehensive income for the period 6,360 1,444
----------- -----------
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 2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 4 20,453 20,676 19,997
Goodwill and other intangible
assets 4 64,856 59,048 57,227
Deferred tax asset 2,725 3,722 2,933
88,034 83,446 80,157
Current assets
Inventories 18,626 16,745 16,067
Trade and other receivables 22,881 20,765 19,186
Derivative financial instruments - - 40
Cash and cash equivalents 8,461 11,457 12,497
----------- ----------- ----------
49,968 48,967 47,790
Current liabilities
Trade and other payables (30,574) (27,948) (27,736)
Current tax liabilities (853) (1,482) (1,164)
Derivative financial instruments (44) (523) -
Provisions for liabilities
and charges 12 (854) - (1,217)
(32,325) (29,953) (30,117)
Net current assets 17,643 19,014 17,673
Non-current liabilities
Bank loans (6,303) (7,501) (2,711)
Deferred tax liability (1,781) (1,745) (2,166)
Retirement benefit obligations (14,298) (16,605) (15,670)
Other payables (3,050) (2,324) (2,216)
Provisions for other liabilities
and charges 12 (178) (1,900) (178)
----------
(25,610) (30,075) (22,941)
----------- ----------- ----------
Net assets 80,067 72,385 74,889
----------- ----------- ----------
Capital and reserves
Share capital 5 914 907 913
Share premium account 5 35,932 35,546 35,831
Cumulative translation reserve 6 7,958 9,439 6,964
Retained earnings 6 35,244 26,458 31,161
----------- ----------- ----------
Equity attributable to equity
shareholders of the parent 80,048 72,350 74,869
Non-controlling interests 19 35 20
----------- ----------- ----------
Total equity 80,067 72,385 74,889
----------- ----------- ----------
The interim financial information on pages 8 to 22 was approved by the Board of Directors on 22 June 2018 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 2018 Unaudited 2017 Unaudited
GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 7 860 1,571
Interest paid (120) (142)
Tax paid (1,030) (1,310)
--------------- ---------------
Net cash generated from operating activities (290) 119
--------------- ---------------
Cash flows from investing activities
Acquisition of subsidiaries (net of
cash acquired) 11 (5,294) (5,932)
Purchase of property, plant and equipment 4 (1,401) (3,947)
Purchase of intangible assets 4 (255) (65)
Share capital from non-controlling
interests - 39
--------------- ---------------
Net cash used in investing activities (6,950) (9,905)
--------------- ---------------
Cash flows from financing activities
Net proceeds from the issue of ordinary
shares 5 102 34
Purchase of Employee Benefit Trust
shares 5 (207) (145)
Increase in borrowings 8 3,218 7,792
Net cash generated from financing activities 3,113 7,681
--------------- ---------------
Net decrease in cash and cash equivalents 8 (4,127) (2,105)
Effects of exchange rate changes 91 (71)
--------------- ---------------
(4,036) (2,176)
Cash and cash equivalents at the beginning
of the period 12,497 13,633
--------------- ---------------
Cash and cash equivalents at the end
of the period 8,461 11,457
--------------- ---------------
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
2016 906 35,513 10,949 24,078 71,446 - 71,446
--------- -------- ------------ ---------- ------------- -------------- ----------
Profit for the period - - - 3,738 3,738 - 3,738
Other comprehensive
income/(expense):
Exchange differences
on translation of foreign
subsidiaries - - (1,510) - (1,510) - (1,510)
Changes in fair value
of foreign exchange
contracts held as a
cash flow hedge - - - 157 157 - 157
Actuarial losses in
defined benefit pension
plans net of tax - - - (937) (937) - (937)
--------- -------- ------------ ---------- ------------- -------------- ----------
Total comprehensive
income for the period - - (1,510) 2,958 1,448 - 1,448
--------- -------- ------------ ---------- ------------- -------------- ----------
Transactions with owners:
Consideration paid
for purchase of own
shares (held in trust) - - - (145) (145) - (145)
Proceeds from shares
issued 1 33 - - 34 - 34
Employee share option
schemes:
value of employee services
net of tax - - - 655 655 - 655
Dividends approved
as final or paid - - - (1,088) (1,088) - (1,088)
--------- -------- ------------ ---------- ------------- -------------- ----------
Total transactions
with owners recognised
directly in equity 1 33 - (578) (544) - (544)
--------- -------- ------------ ---------- ------------- -------------- ----------
Adjustment arising
from change in non-controlling
interest - - - - - 35 35
--------- -------- ------------ ---------- ------------- -------------- ----------
Balance at 31 May 2017 907 35,546 9,439 26,458 72,350 35 72,385
--------- -------- ------------ ---------- ------------- -------------- ----------
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
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
--------- -------- ------------ ---------- ------------- -------------- ----------
The accompanying notes are an integral part of this interim financial information.
Notes to the condensed half-yearly consolidated financial information
1. 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 2018, the Group is organised on a worldwide basis into three operating segments:
1) Aerospace & Industrial 2) Laboratory 3) Metal Melt Quality
From 1 December 2017, after acquiring J G Finneran earlier in 2017, the Group changed its management and reporting structure to improve market focus and offer greater investor clarity. It reports under these three operating segments for the first time in these results. A reconciliation between the reporting under these segments and the previous two segments for the six month period to 31 May 2017 is given in note 15.
The segment results for the period ended 31 May 2018 are as follows:
Six months ended Aerospace Laboratory Metal Melt Central Group
31 May 2018 - & Industrial Quality
Unaudited
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
-------------- ----------- ----------- ---------- --------
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 - - - (1,146) (1,146)
Income tax expense
-exceptional - - - 778 778
-------------- ----------- ----------- ---------- --------
Profit/(loss)
for the period 2,436 2,871 1,211 (1,642) 4,876
-------------- ----------- ----------- ---------- --------
The segment results for the period ended 31 May 2017 are as follows:
Six months ended Aerospace Laboratory Metal Melt Central Group
31 May 2017 - & Industrial Quality
Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total segment
revenue 20,537 16,787 19,138 - 56,462
Inter-segment
revenue (65) (859) - - (924)
-------------- ----------- ----------- ---------- --------
Revenue 20,472 15,928 19,138 - 55,538
-------------- ----------- ----------- ---------- --------
Operating profit/(loss) 2,513 2,700 761 (772) 5,202
Interest payable
and similar charges - - - (347) (347)
-------------- ----------- ----------- ---------- --------
Profit/(loss)
before income
tax 2,513 2,700 761 (1,119) 4,855
Income tax expense - - - (1,121) (1,121)
-------------- ----------- ----------- ---------- --------
Profit/(loss)
for the period 2,513 2,700 761 (2,240) 3,734
-------------- ----------- ----------- ---------- --------
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.
Segment assets and liabilities
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 31 May 2017 Aerospace Laboratory Metal Melt Central Group
- Unaudited & Industrial Quality
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segmental assets 48,182 31,785 37,147 3,842 120,956
Cash and cash
equivalents - - - 11,457 11,457
-------------- ----------- ----------- ----------- -----------
Total assets 48,182 31,785 37,147 15,299 132,413
-------------- ----------- ----------- ----------- -----------
Segmental liabilities (15,359) (10,512) (4,189) (5,862) (35,922)
Retirement
benefit obligations - - - (16,605) (16,605)
Bank overdraft
and loans - - - (7,501) (7,501)
-------------- ----------- ----------- ----------- -----------
Total liabilities (15,359) (10,512) (4,189) (29,968) (60,028)
-------------- ----------- ----------- ----------- -----------
At 30 Nov 2017 Aerospace Laboratory Metal Melt Central Group
- & Industrial Quality
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segmental assets 46,985 30,250 35,222 2,993 115,450
Cash and cash
equivalents - - - 12,497 12,497
-------------- ----------- ----------- ----------- -----------
Total assets 46,985 30,250 35,222 15,490 127,947
-------------- ----------- ----------- ----------- -----------
Segmental liabilities (15,979) (7,690) (3,917) (7,091) (34,677)
Retirement
benefit obligations - - - (15,670) (15,670)
Bank overdraft
and loans - - - (2,711) (2,711)
-------------- ----------- ----------- ----------- -----------
Total liabilities (15,979) (7,690) (3,917) (25,472) (53,058)
-------------- ----------- ----------- ----------- -----------
Geographical analysis
Revenue
Six months ended 31 May
--------------------------------------------------------
2018 2017
Unaudited Unaudited
By destination By origin By destination By origin
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 7,550 17,539 7,514 18,362
Continental Europe 9,872 5,536 7,232 5,245
United States of America 25,724 34,661 24,071 30,400
Other NAFTA 4,146 - 4,747 -
South America 929 - 596 -
Asia 10,628 1,949 10,772 1,531
Africa 836 - 606 -
--------------- ---------- --------------- ----------
59,685 59,685 55,538 55,538
--------------- ---------- --------------- ----------
2. Earnings per share
Six months ended 31 May
------------------------------------------------------------------------
2018 2017
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 4,877 3,738
Shares in issue 45,661,303 45,325,567
Shares owned by
the Employee Benefit
Trust (135,576) (17,280)
Basic earnings 4,877 45,525,727 10.7 3,738 45,308,287 8.3
Effect of dilutive
securities - share
options - 249,215 - - 322,906 (0.1)
--------- ------------ ---------- --------- ------------ ----------
Diluted EPS 4,877 45,774,942 10.7 3,738 45,631,193 8.2
--------- ------------ ---------- --------- ------------ ----------
Basic earnings 4,877 45,525,727 10.7 3,738 45,308,287 8.3
Effect of exceptional
income tax credit (778) - (1.7) - - -
-------- ------------- -------- -------- ------------- ------
Basic earnings
before exceptional
income tax credit 4,099 45,525,727 9.0 3,738 45,308,287 8.3
-------- ------------- -------- -------- ------------- ------
3. Dividends per share
Six months ended 31 May
------------------------------------------
2018 2017
Unaudited Unaudited
Per share GBP'000 Per share GBP'000
Final dividend approved 2.7p 1,229 2.4p 1,088
---------- -------- ---------- --------
The final dividend approved for the year ended 30 November 2017 was paid to shareholders on 1 June 2018.
The Directors have declared an interim dividend of 1.6 pence (2017: 1.5 pence) per share to be paid on 31 August 2018 to shareholders on the register at the close of business on 27 July 2018. The ex-dividend date for the shares is 26 July 2018.
4. Property, plant and equipment and goodwill and other intangible assets
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
--------------- ------------ --------
Six months ended 31 May 2017 Property, Goodwill Total
- Unaudited plant and other
and equipment intangible
assets
--------------- ------------ --------
GBP'000 GBP'000 GBP'000
Opening net book amount at 1
December 2016 18,102 52,578 70,680
Additions 3,947 65 4,012
Acquisitions 324 7,843 8,167
Depreciation and amortisation (1,306) (214) (1,520)
Exchange movements (391) (1,224) (1,615)
Closing net book amount at 31
May 2017 20,676 59,048 79,724
--------------- ------------ --------
5. 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 2016 45,308 906 35,513 36,419
Employee share options
schemes:
Exercise of options under
share option schemes 36 1 33 34
------------- ----------- -------------- ------------
At 31 May 2017 45,344 907 35,546 36,453
------------- ----------- -------------- ------------
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
------------- ----------- -------------- ------------
The authorised number of ordinary shares is 75 million (2017: 75 million) shares with a par value of 2.0 pence (2017: 2.0 pence) per share. All issued shares are fully paid. 42,600 (2017: 36,000) ordinary shares of 2p each were issued in the period on the exercise of employee share options for a cash consideration of GBP102,000 (2017: GBP34,000). The weighted average share price at the date of exercise of the options was 483 pence (2017: 491 pence).
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 42,000 (2017: 30,000) ordinary shares of 2.0 pence for a consideration of GBP207,000 (2017: GBP145,000). As at 31 May 2018 the Employee Benefit Trust held a total of 154,000 ordinary shares of 2 pence (2017: 30,000) at a cost of GBP759,000 (2017: GBP222,000) and a market value of GBP801,000 (2017:GBP180,000).
6. Other reserves
Cumulative
translation Retained
reserve earnings
Unaudited Unaudited
------------- ------------
GBP'000 GBP'000
At 1 December 2016 10,949 24,078
Profit for the period attributable
to shareholders - 3,738
Direct to equity:
Final dividends approved - (1,088)
Actuarial loss - (1,129)
Tax on actuarial loss - 192
Share based payments - 251
Tax on share based payments - 404
Foreign exchange contract cash
flow hedge - 157
Employee Benefit Trust shares - (145)
Exchange differences (1,510) -
At 31 May 2017 9,439 26,458
------------- ------------
At 1 December 2017 6,964 31,161
Profit for the period attributable
to shareholders - 4,877
Direct to equity:
Final dividends approved - (1,229)
Actuarial gain - 590
Tax on actuarial gain - (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
------------- ------------
7. Cash generated from operations
Six months ended 31
May
------------------------
2018 2017
Unaudited Unaudited
GBP'000 GBP'000
Operating profit 5,590 5,202
Post-employment benefits (972) (859)
Fair value of derivatives through
profit and loss 84 (898)
Share based payments 322 251
Depreciation and amortisation 1,714 1,520
Operating cash flows before movement
in working capital 6,738 5,216
----------- -----------
Increase in inventories (1,538) (840)
Increase in trade and other receivables (2,478) (1,421)
Decrease in payables (1,499) (760)
Decrease in provisions (363) (624)
Increase in working capital (5,878) (3,645)
----------- -----------
Cash generated from operations 860 1,571
----------- -----------
8. Reconciliation of net cash flow to movement in net cash
Six months ended 31
May
------------------------
2018 2017
Unaudited Unaudited
GBP'000 GBP'000
Net decrease in cash and cash equivalents (4,127) (2,105)
Effects of exchange rate changes (283) 220
Increase in borrowings (3,218) (7,792)
Net cash at the beginning of the period 9,786 13,633
----------- -----------
Net cash at the end of the period 2,158 3,956
----------- -----------
9. Acquisitions
On 7 December 2017 the Group, through its subsidiary Seal Analytical Limited, purchased 100% of the share capital of Rohasys B.V. ("Rohasys") to increase the Group's offering in the laboratory market. The trade is the manufacture of robotic sample handling systems and is based in the Netherlands. The total maximum consideration is EUR3,046,000 (GBP2,677,000); EUR896,000 (GBP787,000) was paid in cash on the acquisition date, together with EUR502,000 (GBP442,000) to settle the outstanding loan. The balance is contingent on financial performance and due for payment in cash over 4 years.
The contingent consideration is dependent on Rohasys meeting sales and profit targets and will be settled in cash. Management has forecast that payment of 91% of the maximum contingent consideration, EUR1,960,000 (GBP1,722,000), is the most probable outcome, of which EUR250,000 (GBP225,000) was earned and paid in the period. The balance has been discounted to EUR1,529,000 (GBP1,341,000) using the discount rate of 14.5%, calculated for Rohasys. A reduction in the annual sales by EUR100,000 (GBP88,000), which is considered a reasonable possible alternative, would reduce this contingent liability to EURnil. In the period since acquisition, the business has contributed EUR1,071,000 (GBP942,000) sales and EUR1,000 (GBP1,000) operating profit to the Group results. The direct costs of acquisition charged to the income statement were GBP35,000.
Total
GBP'000
Purchase consideration:
Cash paid 787
Contingent consideration 1,517
Total purchase consideration 2,304
Fair value of net
assets acquired (858)
Goodwill 1,446
--------
Provisional recognised amounts
of identifiable assets acquired
and liabilities assumed Fair value
GBP'000
Property plant and equipment 22
Trade name 72
Knowhow 318
Customer list 530
Inventory 394
Trade receivables 369
Trade payables (425)
Other working capital
(net) 20
Loan (442)
-------------
Net assets acquired 858
-------------
Purchase consideration
settled in cash 787
-------------
Cash outflow on acquisition 787
-------------
An independent valuation of the identifiable intangible assets has been carried out in the period. The goodwill is attributable to the non-contractual relationships, the synergies between the business acquired and the existing operations of the Group and the potential to develop the technologies acquired. The goodwill recognised is attributable to the Laboratory division and is not expected to be deductible for income tax purposes. The purchase has been accounted for as an acquisition. The intangible assets arising on the acquisition are to be written off between three and ten years.
On 28 February 2018 the Group, through its subsidiary Porvair Filtration Group Inc., purchased the net assets of Keystone Filter ("Keystone"), a division of CECO Environmental Corp. The trade is the design and manufacture of a range of filter cartridges and housings for the food and beverage, drinking water, and chemical process markets and is based in the USA. The total consideration is $7,190,000 (GBP5,219,000); $5,290,000 (GBP3,840,000) of this was paid in cash on 28 February 2018, with the balance being deferred and due for payment by July 2018. In the period since acquisition, the business has contributed $878,000 (GBP638,000) revenue and $68,000 (GBP49,000) operating profit to the Group results. The direct costs of acquisition, which have been charged to the income statement, were $77,000 (GBP56,000).
Total
GBP'000
Purchase consideration:
Cash paid 3,840
Deferred consideration 1,379
Total purchase consideration 5,219
Fair value of net
assets acquired (3,030)
Goodwill 2,189
--------
Provisional recognised amounts
of identifiable assets acquired
and liabilities assumed Fair value
GBP'000
Property plant and equipment 170
Trade name 194
Order backlog 87
Customer list 2,058
Inventory 372
Trade receivables 325
Trade payables (171)
Other working capital
(net) (5)
Net assets acquired 3,030
-------------
Purchase consideration
settled in cash 3,840
-------------
Cash outflow on acquisition 3,840
-------------
An independent valuation of the identifiable intangible assets has been carried out in the period. The goodwill is attributable to the non-contractual relationships, the synergies between the business acquired and the existing operations of the Group and the potential to develop the technologies acquired. The goodwill recognised is attributable to the Aerospace & Industrial division and is expected to be deductible for income tax purposes. The purchase has been accounted for as an acquisition. The intangible assets arising on the acquisition are to be written off between three and ten years.
A full fair value exercise of contingent consideration, and identifiable assets and liabilities acquired will be completed for Rohasys and Keystone for inclusion in the results for the year ending 30 November 2018.
10. Contingent liabilities
At 31 May 2018, the Group has performance bonds totalling US$6,189,000 (30 November 2017: US$7,179,000). The bonds are released after a warranty period and in any event no later than November 2019.
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 2017. 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 - (44) - (44)
Contingent consideration - - (5,937) (5,937)
Deferred consideration - - (1,341) (1,341)
At 31 May 2018 - (44) (7,278) (7,322)
---------- -------- -------- --------
Financial liabilities at
fair value through profit
or loss:
* Trading derivatives - 40 - 40
Contingent consideration - - (4,432) (4,432)
At 30 November 2017 - 40 (4,432) (4,392)
---------- -------- -------- --------
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.
A summary of the movements in deferred and contingent consideration on acquisitions contained in Level 3 is given below:
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 - (46) - (46)
Foreign exchange movement (77) (3) (49) (129)
--------------- -------- --------- --------
At 31 May 2018 (4,509) (1,341) (1,428) (7,278)
--------------- -------- --------- --------
J. G. Finneran TEM Filter
Associates, Company Total
Inc.
--------------- ----------- ---------
GBP'000 GBP'000 GBP'000
At 1 December 2016 - (696) (696)
Purchase consideration additions
in the period (10,069) - (10,069)
Cash paid in the period 5,248 684 5,932
Recognised in the income
statement - (20) (20)
Foreign exchange movement 173 32 205
--------------- ----------- ---------
At 31 May 2017 (4,648) - (4,648)
--------------- ----------- ---------
Details regarding the valuation and sensitivity of the contingent consideration are disclosed in Note 9. 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 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, all of which are non-current, arise from a discounted dilapidations provision for leased property, which is expected to be utilised in 2023, and sale warranties, which are utilisable before 2020.
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
18 17 18 17
Unaudited Unaudited Unaudited Unaudited
US dollar 1.38 1.26 1.33 1.35
Euro 1.14 1.17 1.14 1.14
14. Alternative performance measures
a. Underlying revenue at constant currency estimation
2018 2017 Growth
Aerospace & Industrial GBP'000 GBP'000 %
Underlying revenue* 20,639 19,499 6
Acquisitions 638 -
-------- -------- -------
Underlying revenue including
acquisitions* 21,277 19,499 9
Large projects 233 215
-------- -------- -------
Revenue at constant currency* 21,510 19,714 9
Exchange 190 758
-------- -------- -------
Revenue as reported 21,700 20,472 6
-------- -------- -------
Laboratory
Underlying revenue* 12,987 13,745 (6)
Acquisitions 5,550 1,540
-------- -------- -------
Revenue at constant currency* 18,537 15,285 21
Exchange 437 643
-------- -------- -------
Revenue as reported 18,974 15,928 19
-------- -------- -------
Metal Melt Quality
Revenue at constant currency* 18,528 17,181 8
Exchange 483 1,957
-------- -------- -------
Revenue as reported 19,011 19,138 (1)
-------- -------- -------
Group
Underlying revenue* 52,154 50,425 3
Acquisitions 6,188 1,540
-------- -------- -------
Underlying revenue including
acquisitions* 58,342 51,965 12
Large projects 233 215
-------- -------- -------
Revenue at constant currency* 58,575 52,180 12
Exchange 1,110 3,358
-------- -------- -------
Revenue as reported 59,685 55,538 7
-------- -------- -------
*Revenue at constant currency is based upon retranslating the overseas subsidiaries at fixed exchange rates in both years of $1.4:GBP and EUR1.2:GBP. Large projects are the four large gasification and nuclear remediation projects that the Group is currently completing. Inter-segment revenue has been eliminated in the selling segment.
b. Performance before exceptional item
Included in the income tax expense is a one off non-cash exceptional credit of GBP778,000 (2017: GBPnil) reflecting the impact of the change of US tax rates on the Group's deferred tax liability. As disclosed in note 2, the earnings per share impact of this item is 1.7 pence per share. Excluding this item from basic earnings per share reduces earnings per share from 10.7 pence per share to 9.0 pence per share.
15. Reconciliation of new operating segments to amounts reported in 2017
From 1 December 2017 the Group has reported under a three operating segment structure. The new divisions are Aerospace & Industrial, Laboratory, and Metal Melt Quality. Metal Melt Quality is the new name for Metals Filtration, no changes were made to the components of the division. The table below reconciles the Aerospace & Industrial and Laboratory operating segments with the Microfiltration operating segment as previously reported.
Restated As reported
Six months ended Aerospace Laboratory Eliminations Microfiltration
31 May 2017 - & Industrial
Unaudited
GBP'000 GBP'000 GBP'000 GBP'000
Total segment
revenue 20,537 16,787 (924) 36,400
Inter-segment
revenue (65) (859) 924 -
-------------- ----------- ------------- ----------------
Revenue 20,472 15,928 - 36,400
-------------- ----------- ------------- ----------------
Operating profit 2,513 2,700 - 5,213
Profit before
income tax 2,513 2,700 - 5,213
Income tax expense - - - -
-------------- ----------- ------------- ----------------
Profit for the
period 2,513 2,700 - 5,213
-------------- ----------- ------------- ----------------
Restated As reported
At 31 May 2017 Aerospace Laboratory Microfiltration
- Unaudited & Industrial
GBP'000 GBP'000 GBP'000
Segmental assets 48,182 31,785 79,967
-------------- ----------- ----------------
Segmental liabilities (15,359) (10,512) (25,871)
-------------- ----------- ----------------
Restated As reported
At 30 Nov 2017 Aerospace Laboratory Microfiltration
- Unaudited & Industrial
GBP'000 GBP'000 GBP'000
Segmental assets 46,985 30,250 77,235
----------------
Segmental liabilities (15,979) (7,690) (23,669)
-------------- ----------- ----------------
16. Seasonality
The results for the six months ended 31 May 2018 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.
17. 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 2018 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 2017, which have been prepared in accordance with IFRSs as adopted by the European Union.
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 November 2017, as described in those financial statements. A number of amendments to IFRSs became effective for the financial year beginning 1 December 2017. However, the Group did not have to change its accounting policies or make material retrospective adjustments as a result of adopting these new standards.
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 2017, 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 2018, 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 2017, which were approved by the Board of Directors on 26 January 2018, 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 2017. 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.
The Directors of Porvair plc are listed in the Porvair plc Annual Report for the year ended 30 November 2017. 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
22 June 2018
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 2018 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 17. 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 17, 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 2018 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
22 June 2018
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.
END
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