Porvair Regulatory News (PRV)

26 Jun 2007 07:02

Porvair PLC26 June 2007 For immediate release 26 June 2007 Porvair plc Interim results for the six months ended 31 May 2007 Porvair plc ("Porvair"), the specialist filtration and environmental technologygroup, today, announces its interim results for the six months ended 31 May2007. Financial highlights • Sales revenues were £22.9m (2006: £23.0m). In constant currencies sales growth was 5% - the weaker US dollar reduced reported sales. • Profit before tax up 64% to £1.5m (2006: £0.9m). • Profit after tax up 70% to £1.0m (2006: £0.6m). • Earnings per share up 66% to 2.5p (2006: 1.5p). Operating highlights • Microfiltration sales up 4% to £13.3m (2006: £12.8m) driven by strong aerospace growth. • Metals filtration revenue up 8% to US$18.6m (2006: US$17.2m) and operating profits significantly improved following a restructuring in early 2007. • Omnifilter Inc was acquired to give the Microfiltration division a platform for growth in the US. Omnifilter traded well in its first 5 months with the Group. • Group borrowings reduced by £0.9m to £8.8m (2006: £9.7m) despite the debt funded acquisition of Omnifilter for £1.1m. • Dividend unchanged at 1.0p (2006: 1.0p). • Encouraging progress in key development projects: • Customer deliveries of new filter for high specification metal alloys started. • Gasification filters: further orders received. • Aerospace fuel tank inerting filter: qualification achieved with Boeing; Airbus contract win. • Diesel exhaust filtration: development work continues. • Bioscience filtration: product development using surface treatment of porous plastic. • Fuel Cells: manufacturing continued through period. Commenting on the results, Ben Stocks, Chief Executive, said: "Porvair has delivered profits growth and further progress in key developmentalprojects. The year is progressing well and in line with management'sexpectations. Customer demand, particularly for aviation products and USexports, is growing. We are pleased that the restructuring in the MetalsFiltration division is improving results which will be supported further byincreasing sales of our new filter for high specification metal alloys. TheGroup looks forward with confidence." For further information please contact: Porvair plc 0207 466 5000 todayBen Stocks, Chief Executive 01553 765 500 thereafterChris Tyler, Group Finance Director Buchanan Communications 0207 466 5000Charles Ryland / Ben Willey / Susanna Gale A copy of the presentation that accompanies these results is available atwww.porvair.com. Chief Executive's review Overview Porvair has delivered profits growth and further progress in its key developmentprojects in the six months to 31 May 2007. Sales revenue was £22.9m (2006: £23.0m). In constant currencies sales growth was5% - the weaker US dollar reduced reported sales. Profit before tax was heldback by a £0.25m restructuring charge in Metals Filtration but nonetheless rose64% to £1.5m (2006: £0.9m). Earnings per share were up 66% to 2.5p (2006: 1.5p).Demonstrable progress has again been made with new products: customer deliveriesof an entirely new metals filter started; further orders were received forgasification filters; and the Group's inerting filter secured a second majoraccount win. Omnifilter Inc was acquired to offer the UK based Microfiltrationdivision a platform for growth in the US. The Board has declared an unchanged interim dividend of 1.0p (2006: 1.0p). Strategy - focus on specialist filtration and environmental technologies Porvair looks for opportunities to grow its business where technicallychallenging applications and design expertise can give us a competitive edge. Weseek to acquire businesses that complement our existing skills and invest inprojects that offer the prospect of attractive growth. We see significantpotential in environmental technologies and our current development portfolioincludes: • filters to clean gasified coal and biomass; • substrates to reduce diesel exhaust emissions; • fuel cell components; • bioscience components and devices; • plates to improve gas combustion efficiency; • high-value metal alloys filters to reduce process waste; • aviation air-cleaning filters for fuel tank inerting. Our development projects are funded from core business cash flows, and for someyears this has had a considerable impact on cash flow and Group profits. Thescale of this investment is reducing as projects come to fruition across theGroup. Operating Review Microfiltration The UK based Microfiltration division continued its growth. Revenue for theperiod was up 4% to £13.3m (2006: £12.8m) despite a weaker US dollar affectingthe reported US dollar sales revenue. The strong aviation demand of 2006continued in 2007 with revenue up 22%, reflecting a robust underlying businessand growth in engineered components. This growth has helped offset a decline inthe export of laboratory filtration plates, with the weaker US dollar givingrise to price pressure in the US. Operating profit of the division was £2.3m (2006: £2.5m). The weakness of the USdollar accounts for the lower operating profit, principally as a result oftranslating US dollar revenue at a lower rate. Several of the Group's key development projects are managed in theMicrofiltration division: • Previous announcements have described a complex filter design that is to be used in fuel tank inerting systems for commercial aircraft. Following extensive trials this product received qualification from Boeing in the first half of 2007. We had expected production of this unit to start immediately after qualification but delays with other suppliers to this project have postponed this until later in the year. In February, we signed a supply agreement with Parker Hannifin for a similar filter to be used in the inerting systems on the Airbus fleet. This was exciting news and means that when production starts the sales opportunity is greater. • A large order for gasification filters was received in May for delivery early in 2008. The demand for engineering design work and test trials for gasification filters has continued to grow in the period. We expect this work to turn into substantial orders in the years ahead. • Our initiatives in BioScience continue to progress, primarily as a result of the successful development of chemical surface treatment of our porous plastic materials. We are working with a number of industrial partners on the commercialisation of this technology. Examples that may generate revenues in the next 12 months include Point of Care diagnostics components and a new range of devices for solid phase extraction use. Looking further ahead: work at Brighton University has shown our BioVyonTM Polyethylene to be a promising substrate for cell growth; and our materials have been incorporated into a device now in clinical trials for the treatment of Sepsis. Forecast growth from aviation and other development projects means that weexpect Microfiltrex - part of the Porvair Filtration Group - to outgrow itscapacity in the next 12 months, requiring a move to larger premises in 2008. In January 2007, the Group acquired OmniFilter ("Omni") and has successfullyintegrated it into the Microfiltration division. Omni is a manufacturer offilters and filtration media complementary to those already made in the Group.It is based in Virginia and offers the Microfiltration division a base fromwhich to accelerate its growth in the US. It has traded well in its first fivemonths and we welcome Omni's staff to the Porvair Group. Metals Filtration Sales in our US based Metals Filtration division were £9.4m (2006: £9.7m). In USdollar terms revenues grew 8% to $18.6m (2006: $17.2m). This was driven bygrowth in much of our domestic US business but also by improving export demand.In contrast with the UK Microfiltration business, the US Metals Filtrationbusiness's export sales benefit from a weaker US dollar making its products morecompetitive. In general it has been the more specialised parts of the Metals Filtrationdivision that have grown the most. Engineered Ceramics, a subsidiary based inIllinois, continues to trade well by concentrating on bespoke refractoryproducts for the investment casting and transportation wheel markets. Demand forfilters and consumables for specialist alloy manufacturers is strong, as isdemand for both iron and aluminium foundry filters. Operating margins in the Metals Filtration division started to benefit from arestructuring of its cost base in early 2007. The reported operating profit of£334,000 (2006: £34,000 loss) comprises an underlying operating profit of£583,000 and a restructuring charge of £249,000. In April an important milestone was reached in one of the Group's keydevelopment projects as customer deliveries began of an entirely new type ofspecialist metals filter. The technology for these products was originallydeveloped by Sandia National Laboratories in the US. Along with the necessaryintellectual property arrangements a multi-year customer contract was signed.Production scale-up will take place through 2007. At full capacity, which weexpect to reach in 2008, this product line should generate up to $5m in salesrevenue and will underpin the improving results in the Metals Filtrationdivision. Porvair Advanced Materials Manufacture of the latest generation of bipolar plates for fuel cells continuedthroughout the period in Porvair Advanced Materials ("PAM"), where lossesreduced to £528,000 (2006: £779,000). The Group has developed two materials inPAM: carbon composites for fuel cell components and metallic foam for a range ofapplications, principally combustion plates and diesel exhaust components. Whilethere is always more work to be done, the development cycle for the fuel cellcomponents is coming to a close. Our materials have been demonstrated to meetstringent standards and our manufacturing capability is good at current levelsof volume. We are discussing next steps with our principal customer, UnitedTechnologies, as we wait for the market for PEM fuel cells to develop. Porvair's unique metallic foams have a range of applications, of whichcombustion plates and diesel emission filters are currently the two most active.We have exhaust emission development projects covering stationary dieselengines, diesel cars and smaller engines. Field trials and design developmentswill continue throughout 2007. Profit for the period The profit for the period attributable to shareholders increased by 70% to £1.0m(2006: £0.6m). Profit for the period from the core specialist filtrationbusinesses, Microfiltration, Metals Filtration and other unallocated costs,increased by 12% to £1.55m (2006: £1.38m) and the loss arising from theinvestment in the Advanced Materials division reduced by 32% to £528,000 (2006:£779,000). Cash flow Cash generated from continuing operations was £2.2m (2006: £0.3m outflow). Netinterest paid was £309,000 (2006: £377,000), where higher interest paid as aresult of higher interest rates has been offset by a lower finance cost relatingto the Group's defined benefit pension scheme. £301,000 (2006: £773,000) waspaid in tax. The Group benefited from a £198,000 rebate of tax in the periodrelating to prior periods. £1.1m was paid to acquire Omni and £658,000 (2006: £439,000) was paid to acquireintangible and tangible fixed assets. The final expected receipt in relation tothe 2003 disposals of £200,000 (2006: £500,000) was received in the period. Interest cover was 7.6 times (2006: 3.1 times). Net borrowings reduced to £8.8m (2006: £9.7m) compared with the prior period. Outlook Porvair has delivered profits growth and further progress in key developmentalprojects. The year is progressing well and in line with management'sexpectations. Customer demand, particularly for aviation products and USexports, is growing. We are pleased that the restructuring in the MetalsFiltration division is improving results which will be supported further byincreasing sales of our new filter for high specification metal alloys. TheGroup looks forward with confidence. Consolidated income statement For the six months ended 31 May Six months ended 31 May Year ended 30 November ----------------------- ---------------------- 2007 2006 2006 Note Unaudited Unaudited AuditedContinuing operations £'000 £'000 £'000Revenue 1 22,899 23,001 46,204Cost of sales (15,605) (15,743) (31,436) -------- -------- ---------Gross profit 7,294 7,258 14,768Other operating expenses (5,624) (5,957) (11,095) -------- -------- ---------Operating profit 1 1,670 1,301 3,673Interest payable and similar charges (362) (461) (716)Interest receivable 143 44 119 -------- -------- ---------Profit before income tax 1,451 884 3,076Income tax expense (411) (273) (970)Overseas tax (19) (12) (15) -------- -------- ---------Profit for the period attributable to shareholders 1,021 599 2,091 -------- -------- --------- Earnings per share (basic) 2 2.5p 1.5p 5.2pEarnings per share (diluted) 2 2.5p 1.5p 5.1p Consolidated statement of recognised income and expense For the six months ended 31 May Six months ended 31 May Year ended 30 November ----------------------- ---------------------- 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000Exchange differences on translation of foreign subsidiaries (64) (1,011) (1,598)Actuarial gains on defined benefit pension scheme - - 2,300Taxation credit/(charge) on items taken directly to equity 9 38 (729) -------- -------- --------Net expense recognised directly in equity (55) (973) (27)Profit for the period 1,021 599 2,091 -------- -------- --------Total recognised income for the period 966 (374) 2,064 -------- -------- --------Attributable to shareholders of Porvair plc 966 (374) 2,064 -------- -------- -------- Consolidated balance sheet As at 31 May As at 31 May As at 30 November ----------------------- ------------------ 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000Non-current assets Property, plant and equipment 6,644 7,226 6,596Goodwill 26,926 26,784 26,243Other intangible assets 415 265 475Deferred tax asset 1,904 958 1,976Other receivable 990 978 968 -------- -------- -------- 36,879 36,211 36,258Current assetsInventories 6,917 6,391 6,499Trade and other receivables 8,043 8,525 8,195Derivative financial instruments 46 - 97Cash and cash equivalents 2,154 902 1,756 -------- -------- -------- 17,160 15,818 16,547 Current liabilitiesTrade and other payables (6,133) (6,286) (5,939)Current tax liabilities (342) (283) (355)Bank overdraft and loans (500) (500) (500)Provisions for other liabilities and charges - (275) (150) -------- -------- -------- (6,975) (7,344) (6,944) -------- -------- --------Net current assets 10,185 8,474 9,603 Non current liabilitiesBank loans (10,427) (10,085) (9,695)Retirement benefit obligations (4,187) (4,716) (4,275)Provisions for other liabilities and charges (367) (515) (367) -------- -------- -------- (14,981) (15,316) (14,337) -------- -------- --------Net assets 32,083 29,369 31,524 -------- -------- -------- Capital and reservesShare capital 811 811 811Share premium account 32,615 32,615 32,615Cumulative translation reserve (3,360) (2,709) (3,296)Retained earnings/(deficit) 2,017 (1,348) 1,394 -------- -------- --------Total shareholders' equity 32,083 29,369 31,524 -------- -------- -------- Consolidated cash flow statement For the six months ended 31 May As at 31 May As at 30 November ----------------------- ------------------ 2007 2006 2006 Note Unaudited Unaudited Audited £'000 £'000 £'000Cash flows from operating activitiesCash generated from operations 3 2,207 (312) 2,303Interest received 120 60 60Interest paid (429) (437) (744)Tax paid (301) (773) (1,266) -------- -------- --------Net cash generated from / (used by) operating activities 1,597 (1,462) 353 -------- -------- -------- Cash flows from investing activitiesAcquisition of subsidiaries (net of cash acquired) (1,059) - -Purchase of property, plant and equipment (640) (288) (573)Purchase of intangible assets (18) (151) (390)Available for sale investments 200 500 500 -------- -------- --------Net cash (used in) / generated from investing activities (1,517) 61 (463) -------- -------- -------- Cash flow from financing activitiesNet proceeds from issue of ordinary share capital - 103 103Increase in borrowings 4 767 1,682 1,669Dividends paid to shareholders (446) (426) (832) -------- -------- --------Net cash generated from financing activities 321 1,359 940 -------- -------- -------- Net increase/(decrease) in cash and cash equivalents 4 401 (42) 830Effects of exchange rate changes (3) (57) (75) -------- -------- -------- 398 (99) 755Cash and cash equivalents at the beginning of the period 1,756 1,001 1,001 -------- -------- --------Cash and cash equivalents at the end of the period 2,154 902 1,756 -------- -------- -------- Notes to the accounts 1. Segmental analyses Primary reporting format - business segments As at 31 May 2007, the Group is organised on a worldwide basis into three mainbusiness segments: 1) Metals Filtration 2) Microfiltration 3) Advanced Materials Income statement Six months ended 31 Metals Microfiltration Advanced Other Group May 2007 - Unaudited Filtration Materials unallocated £'000 £'000 £'000 £'000 £'000 Revenue 9,440 13,251 208 - 22,899 -------- -------- -------- -------- --------Operating profit/(loss) before share based payments 335 2,260 (528) (358) 1,709Share basedpayments (1) (6) - (32) (39) -------- -------- -------- -------- --------Operating profit/(loss) 334 2,254 (528) (390) 1,670Finance costs - - - (219) (219) -------- -------- -------- -------- --------Profit/(loss) before income tax 334 2,254 (528) (609) 1,451Income tax expense - - - (430) (430) -------- -------- -------- -------- --------Profit/(loss) for the period 334 2,254 (528) (1,039) 1,021 -------- -------- -------- -------- -------- Six months ended 31 Metals Microfiltration Advanced Other Group May 2006 - Unaudited Filtration Materials unallocated £'000 £'000 £'000 £'000 £'000 Revenue 9,738 12,782 481 - 23,001 -------- -------- -------- -------- -------- Operating profit/(loss) before share based payments (30) 2,469 (773) (330) 1,336Share based payments (4) (2) (6) (23) (35) -------- -------- -------- -------- --------Operating profit/(loss) (34) 2,467 (779) (353) 1,301Finance costs - - - (417) (417) -------- -------- -------- -------- --------Profit/(loss) before income tax (34) 2,467 (779) (770) 884Income tax expense - - - (285) (285) -------- -------- -------- -------- --------Profit/(loss) for the period (34) 2,467 (779) (1,055) 599 -------- -------- -------- -------- -------- Year ended 30 November Metals Microfiltration Advanced Other Group 2006 - Audited Filtration Materials unallocated £'000 £'000 £'000 £'000 £'000 Revenue 19,076 26,445 683 - 46,204 -------- -------- -------- -------- -------- Operating profit/(loss) before share based payments 363 5,506 (1,271) (833) 3,765Share based payments (9) (4) (11) (68) (92) -------- -------- -------- -------- --------Operating profit/(loss) 354 5,502 (1,282) (901) 3,673Finance costs - - - (597) (597) -------- -------- -------- -------- --------Profit/(loss) before income tax 354 5,502 (1,282) (1,498) 3,076Income tax expense - - - (985) (985) -------- -------- -------- -------- --------Profit/(loss) for the year 354 5,502 (1,282) (2,483) 2,091 -------- -------- -------- -------- -------- The Metals Filtration segment operating profit for the six months ended 31 May2007 includes a restructuring charge of £0.25m. The Other unallocated segment mainly comprises Group corporate costs, someresearch and development costs, new business development costs and generalfinancial services. The unallocated loss before tax in the six months ended 31May 2007 includes provisions written back of £0.15m, principally related tocosts associated with the business disposals in 2003. The unallocated lossbefore tax in the year ended 30 November 2006 includes provisions written backof £0.3m, principally related to a reduced expected onerous lease cost arisingon a building that was refurbished and sublet in 2006. Net assets At 31 May 2007 Metals Microfiltration Advanced Other Group- Unaudited Filtration Materials unallocated £'000 £'000 £'000 £'000 £'000Segmental assets 19,641 28,505 738 2,011 50,895Long term receivable 990 990Cash and cash equivalents 2,154 2,154 -------- -------- -------- -------- --------Total assets 19,641 28,505 738 5,155 54,039 -------- -------- -------- -------- -------- Segmental liabilities (2,240) (3,454) (32) (1,116) (6,842)Retirement obligations (4,187) (4,187)Borrowings (10,927) (10,927) -------- -------- -------- -------- --------Total liabilities (2,240) (3,454) (32) (16,230) (21,956) -------- -------- -------- -------- -------- At 31 May 2006 Metals Microfiltration Advanced Other Group- Unaudited Filtration Materials unallocated £'000 £'000 £'000 £'000 £'000Segmental assets 20,425 27,368 992 1,164 49,949Long term receivable 978 978Deferred payment on investment sale 200 200Cash and cash equivalents 902 902 -------- -------- -------- -------- --------Total assets 20,425 27,368 992 3,244 52,029 -------- -------- -------- -------- -------- Segmental liabilities (2,034) (3,496) (85) (1,744) (7,359)Retirement obligations (4,716) (4,716)Borrowings (10,585) (10,585) -------- -------- -------- -------- --------Total liabilities (2,034) (3,496) (85) (17,045) (22,660) -------- -------- -------- -------- -------- At 30 November Metals Microfiltration Advanced Other Group2006 - Audited Filtration Materials unallocated £'000 £'000 £'000 £'000 £'000Segmental assets 19,115 27,759 903 2,104 49,881Long term receivable 968 968Deferred payment on investment sale 200 200Cash and cash equivalents 1,756 1,756 -------- -------- -------- -------- --------Total assets 19,115 27,759 903 5,028 52,805 -------- -------- -------- -------- -------- Segmental liabilities (1,504) (3,698) (50) (1,559) (6,811)Retirement obligations (4,275) (4,275)Borrowings (10,195) (10,195) -------- -------- -------- -------- --------Total liabilities (1,504) (3,698) (50) (16,029) (21,281) -------- -------- -------- -------- -------- Secondary reporting format - geographical segments Revenue Six months ended 31 May Year ended 30 November ---------------------------------------------------------- ---------------------------- 2007 2006 2006 By By origin By By origin By By origin destination destination destination Unaudited Unaudited Unaudited Unaudited Audited Audited £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 7,425 12,840 6,286 12,782 13,581 26,445Continental Europe 3,308 - 3,006 - 6,012 -Americas 10,356 10,059 11,168 10,219 22,030 19,759Asia 1,327 - 1,879 - 3,385 -Australasia 244 - 199 - 506 -Africa 239 - 463 - 690 - ---------------------------- -------------------------- ----------------------------Continuingoperations 22,899 22,899 23,001 23,001 46,204 46,204 ---------------------------- -------------------------- ---------------------------- 2. Earnings per share Six months ended 31 May Year ended 30 November --------------------------- ----------------------Basic earnings 2007 2006 2006 per share Unaudited Unaudited Audited Weighted average number of shares 40,574,586 40,532,043 40,553,373 in issue Profits Per Profits Per Profits Per share share share £'000 £'000 £'000Earnings per 1,021 2.5p 599 1.5p 2,091 5.2p share ---------------- ---------------- ---------------Diluted earnings per share Fully diluted weighted average number 40,724,494 40,782,733 40,712,262 of shares in issue Profits Per Profits Per Profits Per share share share £'000 £'000 £'000 ---------------- ---------------- ---------------Earningsper 1,021 2.5p 599 1.5p 2,091 5.1pshare ---------------- ---------------- --------------- 3. Cash generated from operations Six months ended 31 May Year ended 30 November ----------------------- ---------------------- 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000 Operating profit 1,670 1,301 3,673Non cash pension charge 29 50 113Share based payments 39 35 92Depreciation and amortisation 726 747 1,466Loss on disposal of property, plant and equipment 1 - 4 -------- -------- --------Operating cash flows before movement in working capital 2,465 2,133 5,348 -------- -------- --------Increase in inventories (276) (439) (634)Decrease / (increase) in trade and other receivables 21 (1,171) (1,017)Increase / (decrease) in payables 147 94 (1,102)Decrease in provisions (150) (929) (292) -------- -------- --------Increase in working capital (258) (2,445) (3,045) -------- -------- --------Cash generated from / (used by) operating activities 2,207 (312) 2,303 -------- -------- -------- 4. Reconciliation of net cash flow to movement in net debt Six months ended 31 May Year ended 30 November ----------------------- ---------------------- 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000Net increase/(decrease) in cash and cash equivalents 401 (42) 830Effects of exchange rate changes 32 552 911Increase in borrowings (767) (1,682) (1,669)Net debt at the beginning of the period (8,439) (8,511) (8,511) -------- -------- --------Net debt at the end of the period (8,773) (9,683) (8,439) -------- -------- -------- 5. Exchange rates Exchange rates for the US dollar during the period were: Average rate to Average rate to Average rate to Closing rate at Closing rate at Closing rate at 31 May 07 31 May 06 30 Nov 06 31 May 07 31 May 06 30 Nov 06 Unaudited Unaudited Audited Unaudited Unaudited AuditedUS dollar 1.97 1.77 1.83 1.98 1.87 1.97 6. Dividends The Directors have declared an interim dividend of 1.0p per share (2006: 1.0p)to be paid on 14 September 2007 to shareholders on the register at the close ofbusiness on 17 August 2007. The ex-dividend date for the shares is 15 August2007. 7. Basis of preparationThese unaudited consolidated interim financial statements have been prepared in accordance with the Listing Rules of the Financial Services Authority. These comprise the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cash flow statement and the related notes ("the interim financial statements"). The Group has chosen not to adopt IAS 34 "Interim Financial Statements" in the preparation of these interim financial statements. The accounting policies remain as published in the financial statements for theyear ended 30 November 2006 and are expected to be applied for the year ending30 November 2007, in accordance with International Financial Reporting Standards(IFRS), as adopted in the EU, and International Financial ReportingInterpretation Council (IFRIC) interpretations issued and effective at the timeof their preparation. There has been no change to these accounting policies as a result of newstandards, amendments and interpretations to existing standards that have beenpublished and which are mandatory from 1 December 2006. These interim financial statements have been prepared on a going concern basisunder the historical cost convention, as modified by the revaluation of certaincurrent assets, financial assets and financial liabilities held for trading andderivative contracts, which are held at fair value. The preparation of financial statements in conformity with generally acceptedaccounting principles requires the use of estimates and assumptions that affectthe reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Although these estimates are based on management's bestknowledge of the amount, event or actions, actual results may ultimately differfrom those estimates. These interim financial statements and the comparative figures for the yearended 30 November 2006 do not constitute full accounts within the meaning of theCompanies Act 1985. Full accounts for the year ended 30 November 2006, whichinclude an unqualified audit report and no statements under sections 237(2) or(3) of the Companies Act 1985, have been delivered to the Registrar ofCompanies. This report is being sent to shareholders and will also be available at Porvairplc's registered office at Brampton House, 50 Bergen Way, King's Lynn, PE30 2JGand on the Company's website www.porvair.com. Independent review report to Porvair plc Introduction We have been instructed by the company to review the financial information forthe six months ended 31 May 2007 which comprises the Consolidated balance sheetas at 31 May 2007 and the related Consolidated income statement, Consolidatedstatement of recognised income and expense and Consolidated cash flow statementfor the six months then ended and related notes. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 7. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 May 2007. PricewaterhouseCoopers LLP Chartered Accountants Cambridge 25 June 2007 Notes: (a) The maintenance and integrity of the Porvair plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock Exchange