Porvair Regulatory News (PRV)

4 Jul 2006 07:01

Porvair PLC04 July 2006 For immediate release 4 July 2006 Porvair plc Interim results for the six months ended 31 May 2006 Porvair plc ("Porvair"), the specialist filtration and environmental technologygroup, today announces its interim results for the six months ended 31 May 2006. Highlights • Sales up 7% to £23.0m. (2005: £21.6m). • Earnings per share up 36% to 1.5p (2005: 1.1p). • Operating profits before exceptional items up 18% to £1.3m (2005: £1.1m). Operating profits were £1.3m (2005: £1.8m including an exceptional gain of £0.7m). • Microfiltration - 7% sales and 38% operating profit growth before exceptional items driven by aerospace, high purity liquids, industrial processes and bioscience demand. • Metals Filtration - Management response to challenging conditions in the early part of the year began to show results towards the end of the period. • Advanced Materials - 58% sales growth. Encouraging progress in key investment projects: • Gasification filters - joint development agreement signed with major oil company and leading provider of gasification technology for next generation gasification filtration technology; further hot gas filter orders received.• Diesel exhaust filtration - initial orders for heavy duty retrofit received and shipped. • Bioscience filtration and separation - first pharmaceutically approved filtration component in production, several prototype trials for separation devices underway. • Fuel cells - first order for latest generation of bipolar plates received. Low cost manufacturing demonstrated. Commenting on the results, Ben Stocks, Chief Executive, said: "Porvair has delivered good sales and profit growth along with further progressin its key investment projects in the six months to 31 May 2006. 2006 isprogressing satisfactorily. Current trading is healthy and order levels,particularly in Microfiltration, are robust. The Metals Filtration business hasresponded to the challenging conditions in the early part of the year and iscurrently trading well. The key development opportunities are making goodprogress and all parts of the business have growth opportunities for the secondhalf of the year." For further information please contact: Porvair plc 0207 466 5000 today thereafterBen Stocks, Chief Executive 01553 765 500 Chris Tyler, Group Finance Director Buchanan Communications 0207 466 5000Charles Ryland / Ben Willey / SusannaGale A copy of the presentation that accompanies these results is available atwww.porvair.com Chief Executive's review Overview Porvair has delivered good sales and profit growth along with further progressin its key investment projects in the six months to 31 May 2006. These arePorvair's first reported results under IFRS (International Financial ReportingStandards) and prior period amounts have been restated to reflect the newStandards. Sales revenues were up 7% at £23.0m (2005 £21.6m). Earnings per share were up36% to 1.5p (2005: 1.1p). Demonstrable progress has again been made with newproducts, notably in gasification filters, fuel cell bipolar plates andbioscience devices. The Board has declared an unchanged interim dividend of 1.0p (2005: 1.0p). Strategy - focus on specialist filtration and environmental technologies Porvair makes specialist filters for growing market segments where product lifecycles are long and technical specifications challenging. The engineeringexpertise necessary to design this sort of bespoke filter can be spread acrossmany of the market segments served. Porvair continues to invest heavily in R&Dprojects that offer significant sustainable growth potential. These are oftenenvironmental projects and include: • Filters to clean gasified coal and biomass• Substrates to reduce diesel exhaust emissions• Fuel cell components• Bioscience filtration and separation devices• Combustion plates that improve efficiency and reduce emissions. Operating Review The first half of 2006 was encouraging for the Microfiltrationdivision, which includes the Porvair Filtration Group andPorvair Sciences. Sales grew 7% to £12.8m (2005: £11.9m).Operating profits before exceptional items grew 38% to £2.1m(2005: £1.5m; £2.2m including an exceptional gain of £0.7m).Growth during the first half of 2006 was broadly spread and wasled by the aerospace, high purity liquids, industrial processesand bioscience markets. Two substantial, long term contractswith civil aviation customers were won during the period whichwill support our sales into this segment over the next fewyears. We continue to build our position in the market for gasificationfilters with improved awareness of our capabilities and growthin sales. This segment is a key growth opportunity for Porvair.These filters are typically used in clean coal and biomassapplications and demand for our products and engineeringexpertise has been strong. New and repeat orders have beenreceived during the period. In April we signed a jointdevelopment agreement with a major oil company and leadingprovider of gasification technology, under which we will designand test the next generation of filters for hot gas. Thisagreement follows the long-term, successful operation of Porvairfilters in a commercial coal gasification environment andconfirms our growing reputation and track record in this marketsegment. Part of the Porvair Filtration Group R&D investment in recentyears has been spent developing porous plastics capabilities byphysically and chemically altering the surface properties of theplastics to broaden their range of applications. Theseproprietary capabilities are opening up promising opportunitiesin medical diagnostics and pharmaceutical research. Sales intothis segment were up 40% compared with the first half of 2005helped in part by production and sales of our firstpharmaceutically approved filtration component. Severalbioscience separation devices have reached the prototype stageand one product launch is expected in the second half of theyear. Our US based Metals Filtration division specialises in thefiltration of hot metals, and in particular aluminium. The firsthalf of 2006 has been challenging as input costs rose fasterthan selling prices in the early part of the year. Customercontracts in this operation do not generally allow for quickchanges in price. Margins in the first half of 2006 havetherefore been compressed. Management actions to reduce costsand pass on price rises have been underway for some months andbegan to show results towards the end of the period. Sales inthe six months to 31 May 2006 were up 4% at £9.7m compared withthe prior year. The business had break even operatingperformance, with profits in the second quarter givingencouragement for the second half of the year. Our plant inNorth Carolina continues to run efficiently; we continue to workon our cost base; and we see opportunities for sales growth inthe second half of the year. Porvair Advanced Materials (PAM) is a development companyworking on two new materials for a range of applicationsincluding fuel cells, clean diesel exhaust systems and lowemission combustion plates. These are key growth opportunitiesfor Porvair. As previously outlined, these projects are complexand unforeseen challenges are to be expected. Consequentlysuccess is all the more enjoyable and it is a pleasure to reporta 58% sales increase for the year to date from products alreadysold commercially in the combustion and structural marketsegments. Production scale-up work on our diesel exhaust substratecontinues. This market has been slower to develop than expecteddue to European legislative delays but we are pleased withtechnical progress made and have high expectations for thisapplication. Our principal customer's test results continue tobe positive and we have refined our product specifications andimproved process capabilities. Small scale commercial ordershave been received for heavy duty diesel retrofit opportunitiesin Europe. The highlight of the year so far in PAM has been a successfulextended trial of our latest generation of low cost bipolarplates for fuel cells. This is a lengthy development project andwe were particularly pleased to receive our first order for thenew generation of plates in May 2006. As has been previouslyreported, when compared with plates produced in 2003 the latestmoulded products offer a better technical performance at almostone tenth of the price. This first order will be manufacturedusing production methods and quality standards suitable for lowcost mass production. We expect to move from product developmentto preliminary sales, albeit only for prototype fuel cells, inthe second half of the year. Our proprietary carbon material canbe readily adapted to a variety of Proton Exchange Membrane(PEM) fuel cell designs and we will continue with this work inthe months ahead. Profit for the period The profit for the period attributable to shareholders increased by54% to £599,000 (2005: £390,000). The Group benefited from 100% ofthe earnings of the Porvair Filtration Group in the period havingacquired the minority interest in November 2005. Profit for theperiod from the core specialist filtration businesses,Microfiltration and Metals Filtration, was £1.36m (2005: £1.15m) andthe loss arising from the investment in the Advanced Materialsdivision was £758,000 (2005: £757,000). Cash flow Cash generated from continuing operations was £617,000 (2005: £1.87mincluding £711,000 from exceptional items). Net interest paid was£377,000 (2005: £177,000), higher than the prior year as a result ofrising US interest rates, additional borrowings drawn down in November2005 to finance the minority acquisition and the prior year benefitingfrom of a one off interest credit on collection of an old debt. £773,000(2005: £482,000) was paid in tax. The Group's tax paid in the first halfrepresents broadly half the tax due on the prior year's profits. Theincrease in the period reflects the increase in UK generated profits in2005 compared with 2004. £929,000 (2005: £648,000) was paid out in theperiod from provisions relating the businesses disposed in 2003,including the final £550,000 installment of the £1.5m payment to thepension scheme agreed at the time of the business disposals. Interestcover was three times (2005: four times). Net borrowings rose by £1.2m to £9.7m compared with 30 November 2005. Outlook 2006 is progressing satisfactorily. Current trading is healthy and orderlevels, particularly in Microfiltration, are robust. The Metals Filtrationbusiness has responded to the challenging conditions in the early part ofthe year and is currently trading well. The key development opportunitiesare making good progress and all parts of the business have growthopportunities for the second half of the year. Group profit and loss account - unaudited For the six months ended 31 May Six months ended 31 May Year ended 30 November 2006 2005 2005 2005 2005 2005 2005 Before Exceptional Total Before Exceptional Total exceptional items exceptional items items itemsContinuing £'000 £'000 £'000 £'000 £'000 £'000 £'000operationsRevenue 23,001 21,566 - 21,566 44,873 - 44,873Cost of goods (15,743) (15,213) - (15,213) (30,985) - (30,985)soldGross profit 7,258 6,353 - 6,353 13,888 - 13,888Other (5,957) (5,251) 711 (4,540) (10,654) 711 (9,943)operatingexpensesOperating 1,301 1,102 711 1,813 3,234 711 3,945profitFinance costs (417) (275) - (275) (552) - (552)Profit before 884 827 711 1,538 2,682 711 3,393taxationTaxation (285) (282) (213) (495) (800) (213) (1,013)Profit aftertaxation fromcontinuing 599 545 498 1,043 1,882 498 2,380operations DiscontinuedoperationsLoss aftertaxation fromdiscontinued - - (451) (451) - (451) (451)operationsProfit for the 599 545 47 592 1,882 47 1,929periodAttributableto minorityinterests - (202) - (202) (561) - (561)Attributableto equityshareholdersof Porvair plc 599 343 47 390 1,321 47 1,368 Earnings pershare (basicand diluted) 1.5p 1.0p 0.1p 1.1p 3.6p 0.1p 3.7pEarnings pershare fromcontinuingoperations(basic and 1.5p 1.0p 1.3p 2.3p 3.6p 1.3p 4.9pdiluted) Consolidated statement of recognised income and expense - unaudited For the six months ended 31 May Year ended Six months ended 31 May 30 November 2006 2005 2005 £'000 £'000 £'000Exchange differences on translation of (1,011) 511 1,079foreign subsidiariesActuarial gains on defined benefit pension - - 300schemeTaxation credit/(charge) on items taken 38 - (73)directly to equityNet (expense)/income recognised directly (973) 511 1,306in equityProfit for the period 599 592 1,929Total recognised (expense)/income for the (374) 1,103 3,235periodAttributable to:Minority interests - 202 561Equity shareholders of Porvair plc (374) 901 2,674 (374) 1,103 3,235 Group balance sheet - unaudited As at 31 May As at 30 November As at 31 May 2006 2005 2005 £'000 £'000 £'000Non-current assetsGoodwill 26,784 26,538 27,690Other intangible assets 265 99 114Property, plant and equipment 7,226 8,113 8,045Other receivable 978 1,142 1,159Deferred tax asset 958 828 953 36,211 36,720 37,961Current assetsInventories 6,391 5,759 6,103Trade and other receivables 8,525 9,160 7,970Cash and cash equivalents 902 3,679 1,001 15,818 18,598 15,074 Current liabilitiesTrade and other payables (6,286) (6,557) (6,776)Current tax liabilities (283) (360) (676)Bank overdraft and loans (500) (1,000) (500)Provisions (275) - (324) (7,344) (7,917) (8,276) Net current assets 8,474 10,681 6,798 Non current liabilitiesBank loans (10,085) (10,509) (9,012)Retirement benefit obligations (4,716) (5,002) (5,165)Provisions (515) (1,427) (485) (15,316) (16,938) (14,662)Total liabilities (22,660) (24,855) (22,938)Net assets 29,369 30,463 30,097 Capital and reservesShare capital 811 736 810Share premium account 32,615 28,679 32,513Cumulative translation reserve (2,709) (2,266) (1,698)Retained earnings (1,348) (2,407) (1,528)Equity attributable to equity holders of 29,369 24,742 30,097the parentMinority interests - 5,721 -Total equity 29,369 30,463 30,097 Group cash flow statement - unaudited For the six months ended 31 May Year ended 30 November Six months ended 31 May 2006 2005 2005 £'000 £'000 £'000Cash flows from operating activitiesCash (used)/generated by operations (312) 1,226 4,497Interest received 60 132 185Interest paid (437) (309) (494)Tax paid (773) (482) (800)Net cash (used)/generated by operating (1,462) 567 3,388activities Cash flows from investing activitiesAcquisition of subsidiaries (net of cash - - (6,603)acquired)Purchase of property, plant and equipment (288) (407) (842)Purchase of intangible assets (151) (28) (40)Available for sale investments 500 827 1,288Net cash generated/(used) by investing 61 392 (6,197)activities Cash flow from financing activitiesNet proceeds from issue of ordinary share 103 - 3,908capitalIncrease/(repayment) of borrowings 1,682 - (2,508)Dividends paid to shareholders (426) (368) (736)Net cash generated/(used) by financing 1,359 (368) 664activities Net (decrease)/increase in cash and cash (42) 591 (2,145)equivalentsEffects of exchange rate changes (57) 41 99Cash and cash equivalents at the beginning 1,001 3,047 3,047of the periodCash and cash equivalents at the end of 902 3,679 1,001the period Notes to the accounts 1. Basis of preparation For all periods up to and including the year to 30 November 2005, Porvair plcprepared its financial statements in accordance with UK Generally AcceptedAccounting Principles ('UK GAAP'). From 1 December 2005, Porvair plc is requiredto prepare consolidated financial statements in accordance with InternationalFinancial Reporting Standards ('IFRS') as endorsed by the European Union ('EU').The first results reported under IFRS are for the six months to 31 May 2006 andthe comparative information is also presented in accordance with IFRS. On 19 May2006, the Group reported on the impact of changing from UK GAAP to IFRS on itsresults for the six months to 31 May 2005 and the year to 30 November 2005 andincluded a statement of the most significant IFRS accounting policies adopted.Details of the changes are provided in the document "Transition to InternationalFinancial Reporting Standards (IFRS)" that is available on the Group's website (www.porvair.com) or from the Company Secretary. The financial information has been prepared in accordance with all IFRS andInternational Financial Reporting Interpretations Committee ('IFRIC')interpretations that had been published by 31 May 2006 and apply to accountingperiods beginning on or after 1 December 2005. The standards used are thoseendorsed by the EU together with those standards and interpretations that havebeen issued by the International Accounting Standards Board ('IASB') but had notbeen endorsed by the EU by 31 May 2006. The 2005 comparative information, aspermitted by the exemption in IFRS1, has not been prepared in accordance withIAS 32 'Financial Instruments: Disclosure and presentation' and IAS 39'Financial Instruments: Recognition and Measurement'. Further standards andinterpretations may be issued that will be applicable for the financial yearsbeginning on or after 1 December 2005 or that are applicable to later accountingperiods but may be adopted early. Therefore, the Group's first full IFRSfinancial statements to 30 November 2006 may be prepared in accordance with somedifferent accounting policies from the financial information presented here.Furthermore, due to the number of new and revised Standards included within thebody of Standards that comprise IFRS, there is not yet a significant body ofestablished practice on which to draw in forming opinions regardinginterpretation and application. Accordingly, practice continues to evolve. Atthis early stage therefore, the full financial effect of reporting under IFRS asit will be applied and reported on in the Group's first IFRS financialstatements cannot be determined with certainty and may be subject to change. 2. Prior year adjustment Porvair has elected to adopt IAS 32 Financial Instruments: Disclosure andPresentation and IAS 39 Financial Instruments: Recognition and Measurement from1 December 2005 with no restatement of comparative information. Consequently,the relevant comparative financial information for the six months ended 31 May2005 and the year ended 30 November 2005 does not reflect the impact of thesestandards, but includes financial instruments accounted for on a UK GAAP basis.A prior year charge of £66,000 is shown in changes in equity for the six monthsended 31 May 2006 to reflect the change of accounting policy in the period. 3. Turnover and segmental analyses The geographical analyses of the group's turnover and segmental analyses ofturnover, operating profit and net assets are set out below: Turnover Six months ended 31 May Year ended 30 November 2006 2005 2005 By By By destination By origin destination By origin destination By origin £'000 £'000 £'000 £'000 United Kingdom 6,286 12,782 6,414 11,913 12,181 25,392Continental Europe 3,006 2,454 - 5,144 -Americas 11,168 10,219 10,290 9,653 22,019 19,481Asia 1,879 1,878 - 4,376 -Australasia 199 171 - 503 -Africa 463 359 - 650 -Continuing 23,001 23,001 21,566 21,566 44,873 44,873operations Year ended 30 November Six months ended 31 May 2006 2005 2005 £'000 £'000 £'000Metals Filtration 9,738 9,348 18,861Microfiltration 12,782 11,913 25,392Advanced Materials 481 305 620Continuing operations 23,001 21,566 44,873 Operating profit/(loss) from continuing operations Six months ended 31 May Year ended 30 November 2006 2005 2005 2005 2005 2005 2005 Before Exceptional Total Before Exceptional Total exceptional items exceptional items items items £'000 £'000 £'000 £'000 £'000 £'000 £'000Metals 1 364 - 364 904 - 904FiltrationMicrofiltration 2,058 1,495 711 2,206 3,945 711 4,656Advanced (758) (757) - (757) (1,615) - (1,615)MaterialsOperating 1,301 1,102 711 1,813 3,234 711 3,945profit Net assets As at 30 November As at 31 May 2006 2005 2005 £'000 £'000 £'000Metals Filtration 17,850 18,606 19,079Microfiltration 23,898 22,548 22,768Advanced Materials 832 991 1,006 42,580 42,145 42,853Long term related party 978 942 959loanDeferred consideration 200 1,161 700Retirement benefit (4,716) (5,264) (5,165)obligationsDiscontinued operations (665) (1,159) (1,044)Taxation 675 468 305Net borrowings (9,683) (7,830) (8,511) 29,369 30,463 30,097 4. Exceptional items The exceptional items recorded in the comparative period comprised a credit incontinuing operations of £711,000 before taxation (£498,000 after taxation)arising from the collection of a debt that had been written off prior to theacquisitions of 2001 and a charge of £451,000 after taxation in discontinuedoperations principally relating to additional property costs associated with thebusiness disposals of 2003. 5. Earnings per share Year ended 30 November Six months ended 31 May 2006 2005 2005Weighted average numberof shares in issue 40,532,043 36,803,011 37,037,333 Profits Per Profits Per Profits Per share £'000 £'000 share £'000 shareEarnings per share fromcontinuing operationsbefore exceptional items 599 1.5p 343 1.0p 1,321 3.6pAdd: Exceptional items(including tax charge) incontinuing operations - - 498 1.3p 498 1.3pEarnings per share fromcontinuing operations 599 1.5p 841 2.3p 1,819 4.9p Earnings per share beforeexceptional items 599 1.5p 343 1.0p 1,321 3.6pAdd: Exceptional items(including tax charge) - - 47 0.1p 47 0.1pEarnings per share 599 1.5p 390 1.1p 1,368 3.7p There is no material difference between the basic earnings per share and theearnings per share on a fully diluted basis. 6. Consolidated statement of changes in shareholders' equity Year ended 30 November Six months ended 31 May 2006 2005 2005 £'000 £'000 £'000Shareholders' equity at the start of the 30,097 24,170 24,170periodPrior year adjustment (IAS 39) (66) - -Restated shareholders' equity at the start 30,031 24,170 24,170of the periodTotal recognised income/(expense) for the (374) 901 2,674periodReversal of share based payments charge 35 39 81Dividends (426) (368) (736)Proceeds from new shares issued 103 - 3,908Shareholders' equity at the end of the 29,369 24,742 30,097period 7. Reconciliation of operating profit to net cash flow from operating activities Year ended 30 November Six months ended 31 May 2006 2005 2005 £'000 £'000 £'000Operating profit from continuing operationsbefore exceptional items 1,301 1,102 3,234Exceptional profits - 711 711Operating profit from continuing operations 1,301 1,813 3,945Share based payments 35 39 81Depreciation 747 755 1,506Profit on disposal of property plant and - - 4equipmentOperating cash flows before movement in 2,083 2,607 5,536working capital(Increase)/decrease in inventories (439) 226 (19)Increase in trade and other receivables (1,171) (1,144) (235)Increase/(decrease) in payables 94 105 (85)Increase in retirement benefit obligations 50 80 125Cash generated by continuing operations 617 1,874 5,322Operating profit from discontinued - (644) (644)operationsDecrease in accruals and provisions (929) (4) (181)Cash used by discontinued operations (929) (648) (825)Cash (used)/generated by operations (312) 1,226 4,497 8. Reconciliation of net cash flow to net debt Six months ended 31 May Year ended 30 November 2006 2005 2005 £'000 £'000 £'000Net (decrease)/increase in cash and cash (42) 591 (2,145)equivalentsEffects of exchange rate changes 552 (416) (869)(Increase)/repayment of borrowings (1,682) - 2,508Net debt at the beginning of the period (8,511) (8,005) (8,005)Net debt at the end of the period (9,683) (7,830) (8,511) 9. Summary reconciliations of IFRS to UK GAAP for the comparative periods A full reconciliation of the differences between UK GAAP and IFRS was publishedon 19 May 2006 and is available on the Group's website at www.porvair.com. Thetable below shows a summary of the principal differences relating to thepreviously published comparative periods. Six months ended 31 May Year ended 30 November 2005 2005 Profit before tax Underlying Statutory Underlying Statutory * * £'000 £'000 £'000 £'000 UK GAAP profit before tax 1,008 (34) 3,028 874 Add back loss on - 644 - 644discontinued operations UK GAAP profit before tax (continuing operations) 1,008 610 3,028 1,518 Adjustments: Amortisation of goodwill - 1,109 - 2,221 SSAP 24 to IAS19 retirement benefit adjustment (180) (180) (325) (325) Charge for share based payments (39) (39) (81) (81) Interest earned on long term debtor held at fair value 10 10 20 20 Net impact of capitalised development costs 28 28 40 40IFRS profit before tax (continuing operations) 827 1,538 2,682 3,393 Six months ended 31 May Year ended 30 November 2005 2005Earnings per share Underlying Statutory Underlying Statutory * * pence pence pence pence UK GAAP - earnings per 1.3p (1.3)p 4.3p (1.1)pshare IFRS - earnings per share Basic 1.0p 1.1p 3.6p 3.7p Basic - on continuing 1.0p 2.3p 3.6p 4.9poperations Shareholders' funds As at As at 31 May 30 November 2005 2005 £'000 £'000 Shareholders' funds under UK GAAP 29,672 33,305 Adjustments (net of deferred tax) Goodwill amortisation and currency revaluation (238) 1,188Fair value of long term debtor (98) (91) Retirement benefit provision adjustment (4,936) (4,827) Dividend 368 425Development expenditure 63 71 Deferred tax on share based payments - 26 Minority interests (89) - Shareholders' funds under IFRS 24,742 30,097 * Underlying performance is before goodwill amortisation and exceptional itemsunder UK GAAP and before exceptional items under IFRS. 10. Exchange rates Exchange rates for the US dollar during the period were: Average Average Average Closing Closing Closing rate to 31 rate to 31 rate to 30 rate at 31 rate at 31 rate at 30 May 06 May 05 Nov 05 May 06 May 05 Nov 05US dollar 1.7711 1.8915 1.8377 1.8713 1.8225 1.7304 11. Dividends The Directors have declared an interim dividend of 1.0p per share (2004: 1.0p)to be paid on 15 September 2006 to shareholders on the register at the close ofbusiness on 18 August 2006. The ex-dividend date for the shares is 16 August2006. 12. Group statutory accounts The interim financial statements do not constitute statutory accounts and areunaudited, although they have been reviewed by the auditors. The accounts forthe year ended 30 November 2005, prepared under UK GAAP, on which the auditorsgave an unqualified audit opinion, have been filed with the Registrar ofCompanies. 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 2006 which comprises the Group balance sheet as at30 June 2005 and the related Group profit and loss account, Group cash flowstatement, Consolidated statement of recognised income and expenditure and theConsolidated statement of changes in shareholders' equity for the six monthsthen ended and related notes. We have read the other information contained inthe interim report and considered whether it contains any apparent misstatementsor material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. As disclosed in note 1, the next annual financial statements of the Group willbe prepared in accordance with International Financial Reporting Standards asadopted by the European Union. This interim report has been prepared inaccordance with the basis set out in the note 1. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. As explained in note1, there is,however, a possibility that the Directors may determine that some changes arenecessary when preparing the full annual financial statements for the first timein accordance with International Financial Reporting Standards as adopted by theEuropean Union. The IFRS standards and IFRIC interpretations that will beapplicable and adopted by the European Union at 30 November 2006 are not knownwith certainty at the time of preparing this interim financial information. 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. Independent review report to Porvair plc (continued) 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 2006. PricewaterhouseCoopers LLP Chartered Accountants Cambridge 3 July 2006 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