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Porvair PLC   -  PRV   

Half Year Results 2019

Released 07:00 24-Jun-2019

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 £72.0 million (2018: £59.7 million), 17% on a constant currency basis*.

·      Operating profit up 39% to £7.8 million (2018: £5.6 million).  Adjusted operating profit* up 38% to £8.0 million (2018: £5.8 million)

·      Profit before tax up 41% to £7.4 million (2018: £5.2 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 £3.2 million (31 May 2018: £2.2 million). £2.8 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


£m


£m


%

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








£m


£m



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 £67 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


£m


£m


%

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


£m


£m


%

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


£m


£m


%

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 £0.2 million higher in the period and net assets and total equity were £0.1 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 £7.7 million and accrued revenue of £0.3 million was eliminated.

As a consequence of the adoption of IFRS 15 provisions for warranties of £8.2 million were created and accrued losses of £0.7 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


£m


£m


%

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 £0.3 million (2018: £0.2 million); and

·      other adjustments to profit and loss related to acquiring businesses was £nil million (2018: £0.1 million).

 

Adjusted profit for the year excludes an exceptional one off tax credit of £nil (2018: £778,000), 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 £0.4 million (2018: £0.3 million).  £0.2 million (2018: £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 £1.7 million (2018: £0.4 million).  The adjusted income tax expense was £1.7 million (2018: £1.1 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, £42.4 million has been invested in acquisitions and capacity expansion.  The Group invested £2.8 million (2018: £7.0 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 £1.4 million (2018: £0.9 million). Working capital increased in the period by £7.5 million (2018: £5.9 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 £3.2 million (31 May 2018: £2.2 million; 30 November 2018: £6.6 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




£'000


£'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

Unaudited


2018

Unaudited


£'000


£'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 31 May


As at 30 November


Note

2019

Unaudited


2018

Unaudited


2018

Audited



£'000


£'000


£'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



£'000


£'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 capital

£'000

Share premium account

£'000

Cumulative translation reserve

£'000

 

Retained earnings

£'000

 

Non-controlling interest

£'000

 

 

Total

£'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


£'000


£'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:£ and €1.2:£.

 

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

£'000

Adjustments

£'000

Total

£'000


Adjusted

£'000

Adjustments

£'000

Total

£'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

£'000


£'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:

the amortisation of acquired intangible assets was £0.3 million (2018: 0.2 million); and

acquisition expenses and other adjustments to the income statement related to acquiring businesses was £nil (2018: £0.1 million).

 

Adjusted profit for the year excludes the adjustments to profit before tax and an exceptional one off tax credit of £nil (2018: £0.8 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 & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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



 

1,564



 

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 & 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











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



 

1,211



 

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 - Unaudited

Aerospace & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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 - 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 30 Nov 2018 - Audited

Aerospace & Industrial


Laboratory


Metal Melt Quality


Central


Group


£'000


£'000


£'000


£'000


£'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

Unaudited


2018

Unaudited


By destination

£'000

By origin

£'000


By destination

£'000

By origin

£'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

Unaudited


2018

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

 

 

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

 

 

£'000

Weighted average number of shares

Per share amount

 

Pence


Earnings

 

 

£'000

Weighted average number of shares

Per share amount

 

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

£'000


Per share

£'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 - Unaudited


Property, plant and equipment


Goodwill and other intangible assets


Total



£'000


£'000


£'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 - 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)


(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 of shares (thousands)


Ordinary shares

Unaudited


Share premium account

Unaudited


 

Total

Unaudited





£'000


£'000


£'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 £nil (2018: £102,000). 

 

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 £271,000 (2018: £207,000).  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 £1,239,000 (2018: £759,000) and a market value of £1,350,000 (2018: £801,000).

 



7.             Other reserves




Cumulative translation reserve

Unaudited


 

Retained earnings

Unaudited




£'000


£'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

Unaudited

£'000


2018

Unaudited

£'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 and equipment


52


-

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

Unaudited

£'000


2018

Unaudited

£'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 1


Level 2


Level 3


Total



£'000


£'000


£'000


£'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 Associates, Inc.


Rohasys BV


 

Total




£'000


£'000


£'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 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:









-       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





£'000


£'000


£'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





£'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 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 to 31 May 19

Average rate to 31 May 18

Closing rate at 31 May 19

Closing rate at 30 Nov 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

£'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

 


 

 

As reported


 

Adjustments

Unaudited


Amount without adoption of IFRS15


£'000


£'000


£'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

 


 

 

As reported


 

Adjustments

Unaudited


Amount without adoption of IFRS15


£'000


£'000


£'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



 

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 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

 


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Half Year Results 2019 - RNS