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.
END
IR SEEFFDFUSESM
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