28th Jun 2005 07:00
Porvair PLC28 June 2005 For immediate release 28 June 2005 Porvair plc Interim results for the six months ended 31 May 2005 Porvair plc ("Porvair"), the specialist filtration and advanced materials group,today announces its interim results for the six months ended 31 May 2005. Highlights • Results demonstrate Porvair delivering on its 2005 commitments to grow profits; generate cash; and continue investment into high growth opportunities in clean energy, environmental compliance and bioscience filtration. • Profits up 20%. Profits before tax, exceptional items and goodwill amortisation increased to £1.01m (2004: £0.84m). After accounting for exceptional items and goodwill amortisation, loss before tax reduced substantially to £34K (2004: £271K loss). • Earnings up 30%. Earnings per share before goodwill amortisation and exceptional items increased to 1.3p (2004: 1.0p). After accounting for exceptional items and goodwill amortisation loss per share improved to 1.3p (2004: 1.7p loss). • Cash generation good: Borrowings reduced to £7.8m (2004: £11.2m). • New product development: two key growth opportunities in pre-production scale-up trials. • Key supply contracts signed: • 5 year deal with Alcoa Inc (Metals Filtration). • Aircraft fuel tank inerting filter for Parker Hannifin (Microfiltration). • Gasification supply contract with SG Solutions. First order will be delivered in the second half (Microfiltration). • Interim dividend declared of 1.0p (2004: 1.0p). Commenting on the results, John Morgan, Chairman, said: "It is a pleasure to be able to report another satisfactory set of results.2005 is progressing well. Current trading and net cash generation are healthy.Enquiry and order levels in the core businesses are robust and our key growthprospects are making demonstrable and exciting progress." For further information please contact:Porvair plc 0207 466 5000 (today)Ben Stocks, Chief Executive 01553 765 500 (thereafter)Chris Tyler, Group Finance DirectorBuchanan Communications 0207 466 5000Charles Ryland / Ben Willey A copy of the presentation that accompanies these results is available atwww.porvair.com Chairman's statement and operating review Summary It is a pleasure to be able to report another satisfactory set of results forthe six months to 31 May 2005. Porvair is delivering on its 2005 commitments togrow profits, generate cash and continue investment into the key developmentopportunities that have been outlined in previous reports to shareholders.Several of these opportunities are now making demonstrable progress towardscommercialisation. Porvair's strategy is to focus on growing specialist filtration markets in whichour proprietary materials science expertise can bring competitive advantage. Wehave invested heavily in recent years to develop opportunities in areas where wesee sustainable long-term growth: clean energy, environmental compliance andbioscience filtration. Profitability and cash generation in the first half of 2005 have been good.Profits before tax, exceptional items and goodwill amortisation were 20% higherthan the previous period at £1.01m (2004: £0.84m). After accounting forexceptional items and goodwill amortisation loss before tax was reducedsubstantially to £34K (2004: £271K loss). Cash generation was healthy with netborrowings falling to £7.8m (2004: £11.2m). Interest cover before exceptionalitems and goodwill amortisation is 6 times (2004: 4 times). Earnings per share before exceptional items and goodwill amortisation were up30% at 1.3p (2004: 1.0p). After accounting for exceptional items and goodwillamortisation basic loss per share improved by 24% to (1.3)p (2004: loss of (1.7)p). The Board has declared an interim dividend of 1.0p (2004: 1.0p). Operating review Divisional performance Our US Metals Filtration business, Selee, has performed well in the first sixmonths of 2005. In US dollars, sales revenues grew by 3% and operating profitby 21%. After the impact of exchange retranslation, operating profit inSterling grew by 15% to £0.4m. The plant in North Carolina is running veryefficiently and this enhances our highly competitive cost position. As aresult, market share gains have been made both in the US and internationally.Particularly important was the award of a five year supply agreement with AlcoaInc, the global leader in aluminium casting, which will reinforce Selee'sposition as a market leader in this field. One of the Group's key growthprospects is Selee's proprietary metal conditioning filter, sales of which are16% ahead of the same period in 2004. This patented technology enhances ourcustomers' product quality in a cost-effective manner, and is expected to growfurther as new applications become qualified. Sales revenues in the Microfiltration business were 2% higher at £11.9m. Atconstant currencies sales growth would have been 5%. Operating profits grew 7%to £1.6m (2004: £1.5m). Enquiry and order levels are robust and several largeorders will be fulfilled in the second half. Notable amongst these is our firstorder for coal gasification filters under the supply agreement announced inJanuary 2005. This agreement is expected to generate approximately $1.5m insales revenues each year. Gasification is another of the Group's key growthprospects and it is pleasing to report demonstrable progress in this rapidlyexpanding field. Sales into the aerospace market grew by 9% compared with 2004. We are delightedto have secured a supply contract for filter systems used to deliver nitrogenenriched air into aircraft fuel tanks. This new product, another key growthprospect for the Group, is expected to start shipping in mid 2006, and shouldgenerate at least $3m of revenue over the ensuing five years. High purityliquid filtration sales increased 77% compared with 2004. We now have a premiumquality and highly competitive product range and benefited in the first halffrom a contract to supply the Royal Navy with water filtration systems for itsmajor ships. Porvair Sciences has recovered from a difficult 2004 with revenue20% up on the prior year and operating profits more than doubled. New Product Development Investment in the development of our new materials at Porvair Advanced Materials("PAM") continued, generating an operating loss for the period of £0.8m (2004:£0.7m). PAM is developing two new materials for high growth markets: porousmetals, which have a wide range of applications; and microporous carbons, whichare specifically developed for fuel cells and other electrically conductiveapplications. Sales of PAM's proprietary porous metals grew by 35% compared with 2004.Combustion plate revenues grew by almost 400% compared with the same period inthe prior year. PAM's material shows superior combustion efficiency andphysical strength in a market where higher fuel costs and stricter emissionlegislation is driving change. Other key projects with significant potentialhave now reached pre-production scale-up trials. A compact heat managementcustomer is undergoing advanced design verification trials with a view tolaunching its product later in the year. In the last few weeks a supplyagreement has been signed with a diesel exhaust customer, opening the way forthis customer to complete its own commercial negotiations. This large market isbeing driven by emissions control legislation due to start in 2006. Bothprojects offer smart technical solutions to problems in growth markets and weare very encouraged that our materials provide a unique solution in each case. Development work on bipolar plates for fuel cells has continued successfully.Our objective for 2005 was to establish the capabilities of our new low costmoulded plates across a range of fuel cell designs. Customers are undertakingaccelerated testing of product durability and PAM must demonstrate tightmanufacturing process capability. This qualification work is going well and willcontinue for the rest of this year. Orders have now been received for ourlatest generation of plates for delivery in the second half of 2005. We areencouraged that the number of customers testing our materials continues to grow,particularly in the Far East where fuel cell development is currently veryactive. Other financial matters The Group benefited from a net £0.1m exceptional credit in the period. Thiscomprised an exceptional credit of £0.7m arising on the collection of a debtthat had been written off prior to the acquisitions of 2001; and a charge of£0.6m principally relating to property costs associated with the businessdisposals of 2003. An important beneficial characteristic of Porvair is its ability to generatecash. The Group's cash generation in the period was an encouraging £0.6m (2004:£2.0m outflow). Borrowings reduced by £0.2m in the period as retranslation ofdollar borrowings at a higher rate at the end of the period increased borrowingsby £0.4m. Outlook 2005 is progressing well. Current trading and net cash generation are healthy.Enquiry and order levels in the core businesses are robust and our key growthprospects are making demonstrable and exciting progress. Group profit and loss accountFor the six months ended 31 May (unaudited) Year ended 30 Six months ended 31 May November 2005 2005 2005 2005 2004 2004 2004 2004 Before Goodwill Exceptional Before Goodwill exceptional amortisation items exceptional amortisation items and items and goodwill goodwill amortisation amortisation £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 21,566 - - 21,566 21,794 - 21,794 44,632 Group operatingprofit/(loss) 1,193 (1,109) 67 151 1,032 (1,112) (80) 339 Share of operatingprofit in associatedundertaking - - - - 60 - 60 454 Total operatingprofit/(loss) 1,193 (1,109) 67 151 1,092 (1,112) (20) 793 Interest payable (185) - - (185) (251) - (251) (460)(net)Profit/(loss) onordinary activitiesbefore taxation 1,008 (1,109) 67 (34) 841 (1,112) (271) 333 Tax on profit/(loss)on ordinaryactivities (325) - (20) (345) (239) - (239) (833)Profit/(loss) onordinary activitiesafter taxation 683 (1,109) 47 (379) 602 (1,112) (510) (500) Equity minorityinterests (202) 89 - (113) (235) 104 (131) (249) Profit/(loss)attributable toshareholders 481 (1,020) 47 (492) 367 (1,008) (641) (749) Dividends (368) (368) (736)Deficit for thefinancial period (860) (1,009) (1,485) Profit/(loss) pershare (basic anddiluted) 1.3p (2.7)p 0.1p (1.3)p 1.0p (2.7)p (1.7)p (2.0)pDividend per share 1.0p 1.0p 2.0p Reconciliation of movements in equity shareholders' fundsFor the six months ended 31 May (unaudited) Year ended 30 November Six months ended 31 May 2005 2004 2004 £'000 £'000 £'000Loss attributable to shareholders (492) (641) (749)Dividends (368) (368) (736)Deficit for the financial period (860) (1,009) (1,485)Exchange differences 60 (59) (239)Net reduction in equity shareholders' funds (800) (1,068) (1,724)Opening equity shareholders' funds 30,472 32,196 32,196Closing equity shareholders' funds 29,672 31,128 30,472 Statement of total recognised gains and lossesFor the six months ended 31 May (unaudited) Year ended 30 November Six months ended 31 May 2005 2004 2004 £'000 £'000 £'000Loss attributable to shareholders (492) (641) (749)Exchange differences 60 (59) (239)Total losses recognised in the period (432) (700) (988) Group balance sheetAs at 31 May (unaudited) At 30 November At 31 May 2005 2004 2004 £'000 £'000 £'000Fixed assetsIntangible assets 26,776 28,969 27,785Tangible assets 8,122 8,829 8,241Investment in associated undertaking - 2,440 - 34,898 40,238 36,026Current assetsStocks 5,759 6,152 5,897Debtors: amounts falling due after more than one year 1,887 1,546 3,071Debtors: amounts falling due within one year 9,852 10,555 8,263Cash at bank and in hand 3,679 1,860 3,047 21,177 20,113 20,278 Creditors: amounts falling due within one year (8,285) (7,977) (6,753)Net current assets 12,892 12,136 13,525 Total assets less current liabilities 47,790 52,374 49,551 Creditors: amounts falling due after more than one year (10,509) (13,065) (11,052)Provisions for liabilities and charges (1,977) (2,780) (2,508) 35,304 36,529 35,991 Capital and reservesCalled up share capital 736 736 736Share premium account 28,679 28,679 28,679Other reserves (1,040) (920) (1,100)Profit and loss account 1,297 2,633 2,157Total equity shareholders' funds 29,672 31,128 30,472Equity minority interests 5,632 5,401 5,519 35,304 36,529 35,991 Group cash flow statementFor the six months ended 31 May (unaudited) Year ended 30 November Six months ended 31 May 2005 2004 2004 £'000 £'000 £'000Net cash inflow/(outflow) from operating activities 1,198 (1,072) 2,811 Dividend from associated undertaking - - 161Returns on investments and servicing of financeInterest received 132 64 112Interest paid (309) (41) (635) (177) 23 (523)TaxationUK corporation tax (paid)/ refunded (482) 372 18Overseas tax paid - - (18) (482) 372 -Capital expenditurePurchase of tangible fixed assets (407) (785) (1,228)Sale of tangible fixed assets - - 57 (407) (785) (1,171)Acquisitions and disposalsDisposal of subsidiaries' assets and liabilities 300 - -Sale of associated undertaking 527 - 526 827 - 526 Equity dividends paid (368) (368) (736) Net cash inflow/(outflow) before financing 591 (1,830) 1,068FinancingLoans repaid - (7) (7)Decrease in borrowings - (167) (1,820) (174) (1,827)Increase/(decrease) in cash in the period 591 (2,004) (759) Reconciliation of net cash flow to movement in net debtIncrease/(decrease) in cash in the period 591 (2,004) (759)Decrease in borrowings - 174 1,827Change in net debt from cash flows 591 (1,830) 1,068Exchange differences (416) 733 1,035Movement in net debt in the period 175 (1,097) 2,103Opening net debt (8,005) (10,108) (10,108)Closing net debt (7,830) (11,205) (8,005) Notes to the accounts Turnover and segmental analyses The geographical analyses of the group's turnover and segmental analyses ofturnover, operating profit/(loss) and net assets are set out below: Turnover Six months ended 31 May Year ended 30 November 2005 2004 2004 By By By destination destination destination By origin By origin By origin £'000 £'000 £'000 £'000 £'000 £'000United Kingdom 6,414 11,913 6,145 11,726 12,707 24,121Continental Europe 2,454 - 2,722 - 5,735 -Americas 10,290 9,653 10,363 10,068 21,036 20,511Asia 1,878 - 1,652 - 3,526 -Australasia 171 - 306 - 665 -Africa 359 - 606 - 963 -Continuing operations 21,566 21,566 21,794 21,794 44,632 44,632 Year ended 30 November Six months ended 31 May 2005 2004 2004 £'000 £'000 £'000Metals Filtration 9,348 9,533 19,387Microfiltration 11,913 11,726 24,121Advanced Materials 305 535 1,124Continuing operations 21,566 21,794 44,632 Operating profit/(loss) Six months ended 31 May Year ended 30 November 2005 2004 2004 Operating Operating Operating Operating profit/ profit/ profit/(loss) profit/(loss) (loss) (loss) after before Operating before Operating before goodwill goodwill profit/(loss) goodwill profit/(loss) goodwill amortisation amortisation after goodwill amortisation after goodwill amortisation amortisation amortisation £'000 £'000 £'000 £'000 £'000 £'000Metals Filtration 371 (233) 322 (286) 855 (358)Microfiltration 1,579 1,074 1,472 968 3,487 2,476Advanced Materials (757) (757) (702) (702) (1,325) (1,325)Exceptional items 67 67 - - - -Operating profit/(loss) 1,260 151 1,092 (20) 3,017 793 Net assets As at 31 May As at 30 November 2005 2004 2004 Net assets Net assets Net assets including including including Before goodwill Before goodwill Before goodwill goodwill goodwill goodwill £'000 £'000 £'000 £'000 £'000 £'000Metals Filtration 6,798 19,028 7,825 21,236 6,252 18,985Microfiltration 8,131 22,677 9,595 25,153 8,686 23,738Advanced Materials 1,018 1,018 1,063 1,063 809 809 15,947 42,723 18,483 47,452 15,747 43,532Long term relatedparty loan 1,082 1,066 1,112 Equity investment inassociatedundertaking - 1,374 - Deferredconsideration 1,161 1,000 1,988 Discontinuedoperations (1,709) (3,027) (2,349) Taxation 245 237 81Dividend payable (368) (368) (368)Net borrowings (7,830) (11,205) (8,005) 35,304 36,529 35,991 Exceptional items Two exceptional items were recorded in the period giving rise to a net credit of£67K. An exceptional credit of £711K resulted from the collection of a debtpreviously transferred to head office that had been written off prior to theacquisition of Microfiltrex in 2001; and a charge of £644K resulted fromadditional costs associated with the business disposals from the discontinuedoperations in 2003, principally related to vacant property. Profit/(loss) before tax and earnings/(losses) per share Six months ended 31 May Year ended 30 November 2005 2004 2004 Profits/ Profits/ Profits/ (losses) (losses) (losses) £'000 £'000 £'000 Profit/(loss) on ordinary activitiesbefore taxation (34) (271) 333Add back: Goodwill amortisation 1,109 1,112 2,224Deduct: Exceptional items (67) - -Adjusted profit/(loss) on ordinaryactivities before exceptional items,goodwill amortisation and taxation 1,008 841 2,557 Profits/ Profits/ Profits/ (losses) (losses) (losses) £'000 Per share £'000 Per share £'000 Per share Loss per share - basic and dilutedon shares in issue of 36,803,011 (492) (1.3)p (641) (1.7)p (749) (2.0)p Add back: Goodwill amortisation(excluding minority interests'share) 1,020 2.7p 1,008 2.7p 2,016 5.4pDeduct: Exceptional items (includingtax charge) (47) (0.1)p - - - - Adjusted earnings per share beforegoodwill amortisation andexceptional items 481 1.3p 367 1.0p 1,267 3.4p Reconciliation of operating profit/(loss) to net cash flow from operatingactivities Year ended 30 November Six months ended 31 May 2005 2004 2004 £'000 £'000 £'000Total group operating profit/(loss) before shareof associated undertaking and exceptional items 84 (80) 339Goodwill amortisation 1,109 1,112 2,224Depreciation 755 859 1,654Loss on sale of fixed assets - 24 4Decrease in stocks 226 320 359(Increase)/decrease in debtors (1,144) (1,304) 963Increase/(decrease) in creditors 105 (590) (629)Net cash inflow from operating activities beforeexceptional items 1,135 341 4,914Cash inflow/(outflow) relating to exceptional 63 (1,413) (2,103)itemsNet cash inflow/(outflow) from operating 1,198 (1,072) 2,811activities Exchange rates Exchange rates for the major currencies during the period were: Average rate to Average rate to Average rate to Closing rate at Closing rate Closing rate 31/05/05 31/05/04 30/11/04 31/05/05 at 31/05/04 at 30/11/04 US dollar 1.8915 1.7980 1.8134 1.8225 1.8334 1.9115Canadian dollar N/A 2.3946 2.3725 2.2858 2.5019 2.2729Euro N/A 1.4697 1.4697 1.4761 1.5014 1.4382 Dividends The Directors have declared an interim dividend of 1.0p per share (2004: 1.0p)to be paid on 16 September 2005 to shareholders on the register at the close ofbusiness on 19 August 2005. The ex-dividend date for the shares is 17 August2005. Statutory Group accounts The interim financial statements have been prepared in accordance withapplicable accounting standards. The accounting policies applied are those setout in the annual report and accounts for the year ended 30 November 2004. The interim financial statements do not constitute statutory accounts and areunaudited, although they have been reviewed by the auditors. The abridgedaccounts for the year ended 30 November 2004 set out above are an extract fromthe latest statutory accounts for the Group which have been delivered to theRegistrar of Companies. The report of the auditors on those accounts wasunqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. Independent review report to Porvair plc Introduction We have been instructed by the Company to review the financial information setout in the Group profit and loss account, Group balance sheet, Group cash flowstatement and related notes. We have read the other information contained inthe interim report and considered whether it contains any apparent misstatementsor material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the Directors. The Directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulleting1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an auditopinion on the financial information. This report, including the conclusion,has been prepared for and only for the company for the purpose of the ListingRules of the Financial Services Authority and for no other purpose. We do not,in producing this report, accept or assume responsibility for any other purposeor to any other person to whom this report is shown or into whose hands it maycome save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 May 2005. PricewaterhouseCoopers LLP Chartered Accountants Cambridge 27 June 2005 Notes: a) The maintenance and integrity of the Porvair plc website is theresponsibility of the Directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the website. b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions.-------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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