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Porvair PLC  -  PRV   

Half Yearly Results

Released 07:00 25-Jun-2018

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 £59.7 million (2017: £55.5 million), 12% on a constant currency basis*.

·      Profit before tax up 8% to £5.2 million (2017: £4.9 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 £2.2 million (31 May 2017: £4.0 million; 30 November 2017: £9.8 million) after investing £7.0 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


2018


2017


Growth


£m


£m


%

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 £5.2 million. Earnings per share increased 8% to 9.0 pence.  Revenue was £59.7 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 £64 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, £40 million has been invested in acquisitions and capacity expansion.  The Group invested £7.0 million (2017: £9.9 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


£m


£m


%

Revenue

21.7


20.5


6

Operating profit

2.4


2.5


(3)

 

Revenue increased by 6% to £21.7 million. Underlying operating profit growth is obscured by a £0.8 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


£m


£m


%

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 £19.0 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 £2.9 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


£m


£m


%

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 £0.2 million (2017: £0.1 million) in the period.  Acquisition expenses were £0.1 million (2017: £0.4 million).

Interest

The Group incurred an interest charge of £0.3 million (2017: £0.3 million).  £0.2 million (2017: £0.2 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 £0.4 million (2017: £1.1 million).  Included in the income tax expense is a one off credit of £0.8 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 £0.9 million (2017: £1.6 million). Working capital increased in the period by £5.9 million (2017: £3.6 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 £0.1 million (2017: £0.1 million).  Tax payments were £1.0 million (2017: £1.3 million), lower US tax was paid in the first half to compensate for overpayments in prior periods.

Capital expenditure was £1.7 million (2017: £4.0 million), spent on capacity upgrades and plant expansion.

£5.3 million (2017: £5.9 million) was spent on acquisitions.  £1.5 million (£0.8 million on acquisition, £0.5 million to settle a loan on acquisition and £0.2 million of settled contingent consideration) was paid to acquire Rohasys BV and £3.8 million was paid to acquire the business of Keystone.  As described in notes 9 and 11, deferred and contingent consideration of up to £7.3 million (2017: £4.6 million) is payable from the second half of 2018 to 2022.

Net cash at 31 May 2018 was £2.2 million (31 May 2017: £4.0 million; 30 November 2017: £9.8 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




£'000


£'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

Unaudited


2017

Unaudited


£'000


£'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 31 May


As at 30 November


Note

2018

Unaudited


2017

Unaudited


2017

Audited



£'000


£'000


£'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



£'000


£'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 capital

£'000

Share premium account

£'000

Cumulative translation reserve

£'000

 

Retained earnings

£'000

 

 

Total

£'000

Non-controlling interest

£'000

 

 

Total

£'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 31 May 2018 - Unaudited

Aerospace & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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)


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 31 May 2017 - Unaudited

Aerospace & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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 - Unaudited

Aerospace & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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 - Unaudited

Aerospace & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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 & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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

Unaudited


2017

Unaudited


By destination

£'000

By origin

£'000


By destination

£'000

By origin

£'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

Unaudited


2017

Unaudited


Earnings

 

 

£'000

Weighted average number of shares

Per share amount

 

Pence


Earnings

 

 

£'000

Weighted average number of shares

Per share amount

 

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

£'000


Per share

£'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 - Unaudited


Property, plant and equipment


Goodwill and other intangible assets


Total



£'000


£'000


£'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)


Exchange movements


279


778


Closing net book amount at 31 May 2018


20,453


64,856


85,309

 

Six months ended 31 May 2017 - Unaudited


Property, plant and equipment


Goodwill and other intangible assets


Total



£'000


£'000


£'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)


Exchange movements


(391)


(1,224)


Closing net book amount at 31 May 2017


20,676


59,048


79,724

 

5.             Share capital and premium



Number of shares (thousands)


Ordinary shares

Unaudited


Share premium account

Unaudited


 

Total

Unaudited





£'000


£'000


£'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 £102,000 (2017: £34,000).  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 £207,000 (2017: £145,000).  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 £759,000 (2017: £222,000) and a market value of £801,000 (2017:£180,000).

 



6.             Other reserves




Cumulative translation reserve

Unaudited


 

Retained earnings

Unaudited




£'000


£'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

Unaudited

£'000


2017

Unaudited

£'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

Unaudited

£'000


2017

Unaudited

£'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 €3,046,000 (£2,677,000); €896,000 (£787,000) was paid in cash on the acquisition date, together with €502,000 (£442,000) 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, €1,960,000 (£1,722,000), is the most probable outcome, of which €250,000 (£225,000) was earned and paid in the period.  The balance has been discounted to €1,529,000 (£1,341,000) using the discount rate of 14.5%, calculated for Rohasys.  A reduction in the annual sales by €100,000 (£88,000), which is considered a reasonable possible alternative, would reduce this contingent liability to €nil.  In the period since acquisition, the business has contributed €1,071,000 (£942,000) sales and €1,000 (£1,000) operating profit to the Group results.  The direct costs of acquisition charged to the income statement were £35,000.

 







Total







£'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







£'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 (£5,219,000); $5,290,000 (£3,840,000) 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 (£638,000) revenue and $68,000 (£49,000) operating profit to the Group results.  The direct costs of acquisition, which have been charged to the income statement, were $77,000 (£56,000).

 







Total







£'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







£'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 1


Level 2


Level 3


Total



£'000


£'000


£'000


£'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 Associates, Inc.


Rohasys BV


Keystone Filter


 

Total



£'000


£'000


£'000


£'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 Associates, Inc.


TEM Filter Company


 

Total





£'000


£'000


£'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





£'000


£'000


£'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 to 31 May 18

Average rate to 31 May 17

Closing rate at 31 May 18

Closing rate at 30 Nov 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


£'000


£'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:£ and €1.2:£.  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 £778,000 (2017: £nil) 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 31 May 2017 - Unaudited

Aerospace & Industrial


Laboratory


Eliminations


Microfiltration


£'000


£'000


£'000


£'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 - Unaudited

Aerospace & Industrial


Laboratory


Microfiltration


£'000


£'000


£'000

Segmental assets

48,182


31,785


79,967







Segmental liabilities

(15,359)


(10,512)


(25,871)

 


Restated


As reported

At 30 Nov 2017 - Unaudited

Aerospace & Industrial


Laboratory


Microfiltration


£'000


£'000


£'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



 

INDEPENDENT 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

 

 


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Half Yearly Results - RNS