MayAir Group Regulatory News (MAYA)

21 September 2015

MayAir Group plc

("MayAir" or the "Group")

Interim Results for the six months ended 30 June 2015

MayAir Group plc (AIM: MAYA.L), a leading provider of air filtration and clean air technology in the industrial, commercial and residential markets, announces its maiden interim results for the six months ended 30 June 2015. MayAir was listed on the AIM market of the London Stock Exchange on 7 May 2015.

FINANCIAL SUMMARY

* EPS has been calculated based on weighted average number of ordinary shares outstanding. Calculation of EPS for H1 2014 and full year 2014 excludes the issuance of new shares issued during the year pursuant to listing on the AIM market of the London Stock Exchange.

OPERATIONAL HIGHLIGHTS

· Growth for industrial and commercial markets - with sales increasing 70% and 43% respectively

· Purchased land in Nanjing, China for building new manufacturing facility to increase production capacity

· Invested in sales & marketing in Asia, including recruiting new personnel, resulting in 31% increase in sales outside of China

· Post period end, signed an exclusive distributorship agreement for the sale and promotion of a selection of the Group's industrial cleanroom products into Thailand

· Launched, post period end, a new high efficiency product line - the PTFE Filter range - which is considered the next generation of filter technology

Mr Yap Wee Keong, Chief Executive Officer of MayAir, said: "We are pleased to be announcing our maiden interim results following our listing on AIM in May 2015. The significant revenue growth is a testament to the strength of our technology and solutions as well as our established reputation within China and elsewhere.

"We entered the second half of 2015 with a secured order book providing good visibility for the second half of 2015, and continue to receive increasing demand. As a result, we are on track to achieve significant growth for full year 2015 in line with market expectations. Looking further ahead, with funds raised in our IPO, we have begun investing to diversify our market segments and increase our production capacity. At the same time, the demand for clean air at work and at home shows no signs of abating. As such, the Board remains confident in MayAir's significant growth prospects and looks forward to utilising our expertise to provide clean air solutions for all markets."

Enquiries

About MayAir

MayAir Group plc (AIM: MAYA.L), is one of the market leaders in providing air purification solutions for use in industrial cleanrooms, and has supplied large multinational manufacturers. Founded in 2001, the Group's core business historically has been in providing fan filter units (FFUs) air filtering equipment for use in industrial cleanrooms, an area in which it has established itself as one of the leading providers in China. Since 2011, the Group has begun to diversify its product offering, increasingly implementing its strategy of expanding its business to include indoor clean air solutions for the commercial and residential markets. Key large flagship commercial customers so far include SOHO Galaxy Beijing and Huawei. The Group has an extensive IP portfolio, is ISO certified for quality management systems (9001:2008) and environment (14001:2004) and its products are certified by CE (European Union) and UL (Underwriters Laboratories, an American worldwide safety consulting and certification company). For additional information please visit: www.mayairgroup.com

Operational Review

MayAir's objective is to become a leading global provider in clean air solutions, initially in the indoor segment and with a long-term strategy to develop outdoor clean air solutions. In pursuit of this strategy, ongoing efforts have been made to focus on new market opportunities - both internationally and within China, product development, build recurring revenues and strengthen the Group's brand and reputation.

Markets Growth

The Group's products and services are sold to customers in the industrial and commercial markets, and MayAir is also expanding into the residential market. The industrial market continued to dominate the sales mix, accounting for almost 81% of total revenue for the six months ended 30 June 2015 compared with 69% for H1 2014. In addition, replacement parts - which is primarily for previously-completed industrial market projects - accounted for 13% of revenue compared with 24% in H1 2014. The commercial market contributed 6% of revenue compared with 7% for the prior year period. The residential market, as a newly-established business unit, made a minimal contribution to Group revenues.

Industrial

MayAir's customers for its industrial clean air solutions consist primarily of businesses requiring cleanrooms as part of their own manufacturing processes, including technology companies, semiconductor manufacturers, pharmaceutical companies, hospitals and food & beverage businesses.

During the period, industrial market sales grew 70% compared with the first half of 2014 as a result of the industrialisation of the technology sector in China. This included key projects delivered for customers such as Shen Zhen Optoelectronics Co. Ltd., Chongqing BOE Optoelectronics Technology Co. Ltd. and Nanjing Panda Flat Display Technology Co. Ltd. where MayAir provided cleanroom solutions.

Sales in replacement filter parts, which are primarily for previously-completed industrial projects, were slightly lower due to the reallocation of resources to support the significant demand for new projects in the industrial market. However, the Group has subsequently reinvested in this unit and anticipates growth going forward as the number of customers deploying the Group's solutions in the industrial market increases.

Commercial

In the commercial market, MayAir provides clean air solutions for venues such as commercial office buildings, airports, subways, hotels, exhibition centres and schools. Demand for the Group's solutions in the commercial market is driven by the desire for improved air quality to prevent health issues such as asthma and other respiratory conditions, skin conditions, allergies, increased cardiovascular risks, nausea and fatigue - and thereby improving quality of life.

During the period, sales in the commercial market grew 43% compared with the first half of 2014 due to the completion of projects such as HuaWei commercial offices and hotels that are part of the Wanda Group.

Residential

The Group established this business unit to address the demand in the residential market for clean air solutions to improve (as with the commercial market) health and quality of life. In this market, MayAir focused on developing unique solutions targeted at property developers rather than the existing "off the shelf" products for consumers. The Group has continued to gain traction in this market.

International Expansion

Currently, approximately 95% of MayAir's revenue is contributed by customers in China, with the remainder being generated in South East Asia, Europe, Middle East, Pakistan and Bangladesh. As noted at the time of the Group's IPO, a key objective is to expand MayAir's business internationally beyond China. During the period, the Group advanced this strategy by intensifying its sales and marketing efforts targeting Asia, which included recruiting personnel. As a result, revenue generated outside of China increased 31%. In addition, post period end, in August 2015, MayAir signed an exclusive distributorship arrangement for the sale and promotion of a selection of its industrial cleanroom products into Thailand.

Product Development

MayAir believes that continuous technological innovation and advancement through R&D activities in the clean air sector are critical for the Group's ongoing competitiveness. MayAir also continuously seeks collaborations with, and acquisitions of, businesses with products and processes that would enhance its product range and capabilities. In recognition of the strength of its product offering, during the period MayAir received two industry awards: the "2015 Frost & Sullivan Global Clean Air Solutions Company of the Year" award and "Best Quality Award" by China Star Optoelectronics Co., Ltd (Shenzhen), which is one the Group's key customers.

Post period end, in July 2015, MayAir launched a new PTFE High Efficiency product line, which is targeted primarily at industrial cleanrooms. The PTFE Filter is a highly efficient energy-saving filter, and is considered as the next generation of filter technology. The Group is already receiving initial demand. The Board believes MayAir is one of few companies in the world to have such a product offering. This new PTFE Filter product offering was developed under a strategic partnership with Nitto Denko Corporation of Japan.

Production Capacity Expansion

During the period, MayAir completed the acquisition of a parcel of land in Nanjing, China for the construction of a manufacturing facility in order to ensure sufficient manufacturing capacity for future anticipated growth. The purchase price, which was fully satisfied via internally generated funds, was US$3.4m. The construction cost for the new facility is expected to be approximately US$17m, and will be funded through a mixture of bank financing and internal funds. This new manufacturing facility is expected to commence production in 2017 when it will replace the existing leased manufacturing facility located in Nanjing. This is expected to double the Group's manufacturing capacity.

MayAir currently leases four manufacturing facilities (three of which are located in China and one in Malaysia) occupying a total of approximately 25,400m2.

Admission to AIM

MayAir was admitted to AIM and dealings in its ordinary shares commenced on 7 May 2015. The Group successfully raised £16.2m before costs and expenses via the placing of 12,475,000 new ordinary shares at a price of 130 pence per share.

The Board expects that the Admission to AIM will enhance MayAir's profile with existing and potential customers and support the development of the Group's brand in Asia, as well as globally. Specifically, the purpose of the placing was to use the funds raised, along with the Group's existing cash resources, to assist with its growth, to increase its R&D spending, and to provide funds for the construction of a new primary manufacturing facility.

Financial Review

Revenue for the first half of 2015 was US$31.6m, an increase of 49% over the same period of 2014 (H1 2014: $21.2m). This growth was a result of higher demand and the completion of some significant industrial cleanroom projects during the period.

Gross margin was 34.8% compared with 35.4% for H1 2014.

Gross profit increased by 47% to US$11m (H1 2014: US$7.5m) and EBITDA increased 21% to US$4.7m (H1 2014: US$3.9m) as a result of the significant growth in revenue and broadly stable gross margin.

Profit after tax increased 13% to US$3.4m (H1 2014: US$3.0m). The lower rate of growth was due to the Group intensifying, during the period, various activities that resulted in increased operational expenses compared with the first half of 2014, including research & development, sales and promotional-related activities and employee recruitment.

At 30 June 2015, the Group had cash and cash equivalents of US$26.0m (31 December 2014: US$5.8m; 30 June 2014: US$5.4m), with the increase due to the proceeds of MayAir's IPO on AIM, and US$11m in short-term borrowings (mainly working capital financing). MayAir has no long-term debt.

Outlook

The industry trends supporting MayAir's growth show no signs of abating. In the industrial market, the recognition that future economic growth will be based on innovation and high-technology has resulted in sustained investment and governmental support in China and internationally. As a result, whilst the Chinese economy has suffered from a slowdown recently, the Board remains positive about its future growth prospects in China. In addition, the recent devaluation of the Chinese yuan poses no major risk to MayAir as the Group's currency risks are naturally hedged and self-contained.

In the commercial and residential markets, the indoor air quality market in China is relatively young and is growing rapidly due to the demands for solutions to improve health and quality of life. The Board believes that MayAir has the technologies and solutions, as well as brand recognition, to successfully target these markets. In addition, with the investment in international expansion, the Board anticipates sales outside of China to increase significantly from full year 2016.

MayAir entered the second half of 2015 with a secured order book providing good visibility for the second half of 2015, and it continues to receive demand for its products and solutions. As a result, the Board is confident of achieving significant growth for full year 2015 in line with market expectations.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2015

Pro forma: Based on results of subsidiaries prior to the acquisition of subsidiaries by MayAir Group Plc.

Condensed Consolidated Statements of Financial Position

As at 30 June 2015

Condensed Consolidated Statements of Changes in Equity

For the six months ended 30 June 2015

Condensed Consolidated Statements of Cash Flows

For the six months ended 30 June 2015

NOTES TO THE INTERIM FINANCIAL INFORMATION

For the six months ended 30 June 2015

1. GENERAL INFORMATION

MayAir Group Plc ("the Company" or "the Group") was incorporated as a public limited company in Jersey with its registered office at 12 Castle Street, St. Helier, Jersey JE2 3RT, Channel Islands. The Company has its primary listing on the AIM market of the London Stock Exchange. The Company's nature of operations is to act as the holding company of a group of subsidiaries that are involved in production, marketing and distribution of clean air products and equipment and provision of related services.

The consolidated interim financial report has been prepared on a historical cost basis, with the fair value method being used if it is relevant.

This condensed interim financial report was approved by the Board of Directors for issue on 21 September 2015.

2. ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION

The interim financial report for the six months ended 30 June 2015 has been prepared in accordance with IAS 34, "Interim Financial Reporting". The interim financial report should be read in conjunction with the Group's Admission Document dated 7 May 2015 which contains financial information in relation to the financial year ended 31 December 2014, which has been prepared in accordance with IFRSs.

The company was incorporated on 6 February 2015 under the laws of Jersey, and on 17 April 2015 acquired the entire share capital of MayAir International Sdn. Bhd. ("MayAir International"). As a result of this transaction, the ultimate shareholders in MayAir International received shares in the Company in direct proportion to their original shareholding in MayAir International.

In determining the appropriate accounting treatment for this transaction, the Directors considered IFRS 3 - Business Combinations. However, they concluded that this transaction fell outside the scope of IFRS3 since the transaction described above represents a combination of entities under common control.

In accordance with IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, in developing an appropriate accounting policy, the Directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 6 - Acquisitions and Mergers) which does not conflict with IFRS and reflects the economic substance of the transaction.

Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value. Intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS, no goodwill is recognised, any expenses of the combination are written off immediately to the income statement and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting period presented.

Therefore, although the Group reconstruction did not become unconditional until 17 April 2015, the consolidated financial is presented as if the Group structure has always been in place, including the activity from incorporation of the Group's principal subsidiary. Both entities had the same management as well as majority shareholders.

2. ACCOUNTING POLICIES (CONT'D)

2.1 BASIS OF PREPARATION (CONT'D)

The interim financial report is presented in USD unless otherwise stated, which is the currency of the primary economic environment in which the holding company operates. All values are rounded to the nearest thousand pounds except where otherwise indicated.

The interim financial report has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future.

The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

2.2 BASIS OF CONSOLIDATION

The consolidated financial information includes the financial information of the Subsidiaries made up to the end of the reporting periods. The consolidated financial information includes the assets and liabilities of the MayAir Group Plc Employee Benefit Trust (''EBT'') within its Statement of Financial Position. In the event of the winding up of the Company, neither the shareholders nor creditors would be entitled to the assets of the EBT. The cost of ordinary shares held by the EBT is deducted from shareholders' funds and classified as 'Own Shares' until such time as they vest unconditionally to participating employees. At 30 June 2015 the EBT held 2,554,650 ordinary shares in the Company at a cost of $nil.

3. SEASONAL OR CYCLICAL FACTORS

There are no seasonal factors that materially affect the operations of any company in the Group.

4. ITEMS OF AN UNUSUAL NATURE

There were no other unusual items affecting assets, liabilities, equity, net income or cash flows due to their nature, size or incidence for the financial period ended 30 June 2015.

5. MATERIAL CHANGES IN ACCOUNTING ESTIMATES

The preparation of the unaudited interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses for the current and its corresponding financial period under review. Actual results may differ from these estimates.

In preparing the unaudited interim financial report, the significant judgements made by the management in applying the Group's accounting policies and the sources of estimates uncertainty were consistent as to those applied to the 2014 Audited Financial Statements.

There were no changes in estimates of amounts of the Group that may have a material effect on the financial period ended 30 June 2015.

6. ISSURANCE AND/ OR REPAYMENT OF DEBT AND EQUITY INSTRUMENTS

There was no issuance, repurchase and/or repayment of debt and equity instruments for the financial period ended 30 June 2015 except as below:

(a) On 6 February 2015, the Company was incorporated with the issuance of 2 Ordinary Shares at no par value.

(b) On 8 April 2015, by resolution of the Board, the Board approved the issue and allotment of 29,999,998 Ordinary Shares to certain shareholders (the "Sellers" of its wholly-owned subsidiary, MayAir International Sdn Bhd, "MayAir International") as specified in the Share Exchange Agreement. On 17 April 2015, as part of the Group Restructuring Exercise and preparation for the Company's IPO, the Company and the Sellers of MayAir International completed the share exchange exercise, resulting in the total issued number of Ordinary Shares at that date being 30,000,000.

(c) On 7 May 2015, the Company issued a further 12,475,000 Ordinary Shares (representing 29.4% of the Company's Enlarged Share Capital) at 130 pence per Ordinary Share to raise GBP16,217,500, in conjunction with the Admission to AIM of the Company's Enlarged Share Capital. The costs associated with the share issue, amounting to of USD1,953,000, have been deducted from the Company's stated capital as shown in the note 15 of this report.

(d) As at the date of this report, the Company's issued share capital is 42,475,000 Ordinary Shares.

7. DIVIDENDS

No interim dividend was recommended by the Directors during the financial period under review.

8. GEOGRAPHICAL SEGMENTS

The following table provides an analysis of the Group's revenue by geographical market:

9. SUBSEQUENT EVENTS

There were no significant events subsequent to the end of the current financial period up to the date of this report that have not been reflected in the interim financial report for the current period under review.

10. CHANGES IN CONTINGENT LIABILITIES AND CONTINGENT ASSETS

There were no major contingent liabilities and contingent assets that had arisen during the interim financial period as at 30 June 2015.

11. CAPITAL COMMITMENTS

12. TAXATION

The taxation charge for the period is based on the management's best estimate of the Group's weighted average annual tax rate (at its prevailing tax legislation) expected for the full financial year.

A subsidiary of the Group, MayAir Technology (China) Co., Ltd., has been granted a 15% exemption on corporate tax up to 31 December 2016 by State Revenue Department of Jiangsu under the "Hi-Technology Industry Incentive". Except for this, the average corporate tax rate for the subsidiaries is 25%.

13. EARNINGS PER SHARE

The calculation of basic earnings per ordinary share at 30 June 2015 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding calculated as follows:

14. CASH AND BANK BALANCES

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:-

Included in the deposits placed with the licensed banks is USD157,000 (30 June 2014 - USD157,000,

31 December 2014 - USD186,000) of Group funds pledged for a bank facility granted to a subsidiary.

Included in the cash and bank balances is an amount of USD2,633,000 (30 June 2014 - USD1,486,000,

31 December 2014 - USD1,746,000) of Group funds being set aside as deposit guarantees granted to the customers and suppliers.

15. STATED CAPITAL ACCOUNT

Please refer to Note 6 of this report for a chronological review of the issue of ordinary shares during the financial period under review.

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company.

16. MERGER RESERVE

The accounting treatment for Group reorganisations is scoped out of IFRS 3. Accordingly, as required under IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors the Group has referred to current UK GAAP to assist its judgement in identifying a suitable accounting policy. The introduction of the new holding company has been accounted for as a capital reorganisation using the merger accounting principles prescribed under current UK GAAP. Therefore the consolidated financial statements of MayAir Group Plc is presented as if MayAir Group Plc has always been the holding company for the Group.

The use of merger accounting principles has resulted in a balance on Group capital and reserves that has been classified as a merger reserve and included in the Group's shareholders' funds. The consolidated interim financial report includes the results of the Company and all its subsidiary undertakings made up to the same accounting date.

17. SHORT TERM borrowings

The short term borrowings bore interest ranging from 5.87% to 6.72% (30 June 2014 - 6.44% to 7.20%, 31 December 2014 - 6% to 7.20%) per annum at the end of the interim financial period and are secured by way of a corporate guarantee of a subsidiary.