Porvair Regulatory News (PRV)

29 Jan 2008 07:00

Porvair PLC29 January 2008 For immediate release 29 January 2008 Porvair plc Preliminary results for the year ended 30 November 2007 Earnings growth, strong cash generation and encouraging progress Porvair plc ("Porvair"), the specialist filtration and environmental technologygroup, today announces its preliminary results for the year ended 30 November2007. Highlights • Profit before tax up 10% to £3.4m (2006: £3.1m) • Earnings per share up 12% to 5.8p (2006: 5.2p) • Strong cash generation reducing net borrowings to £7.0m (2006: £8.4m). Interest cover was 8 times (2006: 6 times). • Recovery at Metals Filtration after restructuring - record sales of $38.6m (2006: $36.1m). • New Nickel-Cobalt filters launched in April. Production equipment capable of $5m in annual sales being commissioned. • Customer trials of the first new aluminium filter to be introduced in 25 years are under way - offers superior performance at a premium price. • Manufacturing and sales of our proprietary carbon bipolar plates and metallic combustion plates continued throughout 2007. • A year of consolidation at the Microfiltration division with sales of £26.2m (2006: £26.4m) affected by US dollar weakness. • Aviation filtration delivered another strong year with 13% sales growth. Contract wins during the year underpin growth projections. • Larger manufacturing facilities will be ready by mid 2008. • Omnifilter acquired and traded well in its first 10 months with the Group. • Orders received for gasification filters for delivery early in 2008. • Strong order book augurs well for 2008. • Exchange rate movements held reported profits back by £0.4m. The weaker US dollar, however, is supporting export sales from Metals filtration. Commenting on the results Ben Stocks, Chief Executive, said: "Porvair has delivered a solid step forward in the year ended 30 November 2007.Earnings and profits were up and demonstrable strides were made in our keygrowth projects. With order books robust both in the UK and the US, 2008 hasstarted well." For further information please contact: Porvair plc 0207 466 5000 (today)Ben Stocks, Chief Executive 01553 765 500 (thereafter)Chris Tyler, Group Finance Director Buchanan Communications 0207 466 5000Charles Ryland / Ben Willey /Susanna Gale Chairman and Chief Executive's statement Performance summary Porvair has delivered a solid step forward in the year ended 30 November 2007:profit before tax increased by 10% to £3.4m (2006: £3.1m); and earnings pershare was up 12% to 5.8p (2006: 5.2p). Porvair achieved strong cash generationreducing net borrowings to £7.0m (2006: £8.4m) and increased interest cover to 8times (2006: 6 times). Metals Filtration was restructured early in the year and recovered to producerecord sales of $38.6m (2006: $36.1m). Metals Filtration's key growth projectsmade good technical progress and began to contribute sales: • A new Nickel-Cobalt filter was launched in April. • Customer trials of the first new aluminum filter to be introduced in 25 years are under way. • Manufacturing and sales of our proprietary carbon bipolar plates and metallic combustion plates continued throughout 2007. Microfiltration had a year of consolidation and delivered sales of £26.2m (2006:£26.4m). Performance was held back by the weak US dollar but good progress wasmade in a number of areas: • Aviation filtration delivered another strong year with 13% sales growth. • Larger manufacturing facilities will be ready by mid 2008. • Omnifilter was acquired and traded well in its first 10 months with the Group. • Orders were received for gasification filters for delivery early in 2008. • A strong order book augurs well for 2008. Business overview and strategy Porvair's strategy is to develop and exploit its expertise in specialistfiltration and environmental technologies for the sustainable benefit of itsshareholders, staff and other stakeholders. Porvair manufactures in the UK and the US. Its sales are global. The UK basedMicrofiltration division primarily serves aviation, life science, clean energyand industrial markets. The US based Metals Filtration division uses ceramictechnology to serve the molten metal handling market worldwide. MetalsFiltration has particular expertise in the filtration of aluminium, but alsoserves the iron foundry market and has niche positions in steel, copper and highvalue alloys. Porvair's strategy for the creation of growth and sustainable shareholder valueis to: • Develop in filtration and environmental technology markets where superior returns can be achieved because products: • require specialist design and engineering skills • are protected either by regulation, quality accreditation or technical know-how • are consumable and replaced as part of a maintenance routine • have long product lives. • Broaden the range of products Porvair delivers to key market segments, particularly in aviation and molten aluminium. • Acquire specialist filtration and environmental technology businesses that meet strict financial and commercial criteria. • Maintain an appropriately funded balance sheet and generate sufficient cash to sustain a progressive dividend policy. The Board believes that this strategy will enable Porvair to grow its revenuesand operating profits. For several years the Group has funded key developmentprojects from its own cash flows. This has had a considerable impact on Groupprofits, which the Board has considered a prudent investment in the Company'sfuture. One feature of the 2007 results is that these investments have startedto generate sales. Divisional performance The Group's Metals Filtration division performed well in 2007 following itsrestructuring early in the year. The restructuring was carried out to adjustSelee's cost base and to move Porvair Advanced Materials' ('PAM') focus awayfrom product development and towards product commercialisation. As a result PAMhas been integrated within Selee and came under Selee's management. The twobusinesses are now reported as one segment. The table below splits out theSpecial Projects, mainly the former PAM research and development projects, fromthe Selee core business: Year ended 30 November 2007 Selee Special Metals Projects Filtration $000 $000 $000 Revenue 37,431 1,211 38,642 Operating profit / (loss) before 2,773 (1,689) 1,084restructuringRestructuring costs (464) - (464)Operating profit / (loss) 2,309 (1,689) 620 Year ended 30 November 2006 Selee Special Metals Projects Filtration $000 $000 $000 Revenue 34,840 1,247 36,087 Operating profit / (loss) 646 (2,341) (1,695) Sales at Selee rose to $37.4m (2006: $34.8m), a record for the business with allproduct lines performing well. Domestic sales of foundry filters continued theirsteady growth. Aluminium cast shop filters - in which Selee has a leading marketshare - grew through export sales. Engineered Ceramics, the operation that makesspecialist metals handling products, had another year of record sales. Operatingprofits, after charging restructuring costs of $0.5m, increased substantially to$2.3m (2006: $0.6m). Selected customer trials began of the first new aluminium cast shop filter for25 years. Using proprietary technology, this product offers superior performanceto the current industry standard and is expected to command a premium price. Itwill also better conform to up-to-date materials handling requirements. Customertrials and qualifications are underway and will continue throughout the year. Weexpect commercial sales to begin in 2008 and are excited by the opportunitiesthis new product offers. It was a good year for Special Projects. • Customer deliveries of new specialist molten Nickel-Cobalt filters began in April. These are based on patents licenced from Sandia National Laboratories. A multi-year supply contract was signed with one of Selee's core customers and sales increased through 2007 as production capacity was commissioned. We expect to reach full production capacity during 2008 with this product line contributing up to $5m in annual sales revenue once fully commissioned and qualified. • Bipolar plates were manufactured throughout 2007 and will continue in 2008 for the current product. We have a good product that is working well in what remains a very small market for vehicular fuel cells. We have agreed with our principal customer, UTC Power, that we will wait for the market to develop before committing further investment to the next generation product. • A product that uses very similar technology to bipolar plates has been under development throughout 2007 for a very interesting energy storage application. This offers good prospects for near term commercialisation. We are evaluating final product specifications along with production and supply options. • Sales of combustion plates continued through the year. Demand for diesel emission substrates remains strong, albeit still for product development samples, which we supply on a fully-costed basis. After its excellent year in 2006, the Microfiltration division, which comprisesthe Porvair Filtration Group, Omnifilter and Porvair Sciences, was expected toperform less well in 2007 as major gasification contracts were in place fordeliveries in 2006 and 2008 but not in 2007. Sales for the year were £26.2m(2006: £26.4m). After taking into account the weakness in the US dollar holdingback profits by an estimated £0.4m, operating profits were in line withmanagement expectations at £4.4m (2006: £5.5m). Aviation filtration sales grew 13%, offsetting declines in ink jet filter saleswhere a key customer moved production to China. Aviation filtration continues tobe a prominent feature of this business having grown consistently since 2002.The Group previously announced that it will be supplying new filters for fueltank inerting systems to Boeing and Airbus. This project was subject to repeatedcustomer delays but production did finally start towards the end of 2007 andsales are now being generated. This, along with several other sizeable contractwins during the year, persuaded the Board to invest in larger premises for ouraviation manufacturing operation, which is expected to commission during thefirst half of 2008. Early in the year we completed the acquisition of Omnifilter, in the US, whichwas immediately earnings accretive and traded well throughout 2007. Thisbusiness offers the Microfiltration division a base from which to accelerate itsgrowth in the US. The Microfiltration division also manages some of the Group's key growthprojects, which have developed further in 2007: • The latest large commercial order for gasification filters was received in 2007 and will be delivered in the first half of 2008. Demand for engineering and design work in this segment has been robust throughout the year and dedicated resources have been recruited. Eleven separate requests for product trials of R&D and demonstration scale were received during the year, covering clean coal opportunities, carbon dioxide sequestration and gas-to-liquid applications. This continues to be a highly promising long term development field for Porvair. • The division has a number of bioscience projects based on the chemical treatment of filtration media. A second product was launched during the year in conjunction with a point-of-care diagnostic device company. Third party customer trials are under discussion. Earnings per share and dividend Earnings per share increased 12% to 5.8p (2006: 5.2p). The Directors recommend afinal dividend of 1.2p (2006: 1.1p) per share for 2007, making a full yeardividend of 2.2p (2006: 2.1p). Porvair staff On the Board's behalf we would like to thank all our staff for their hard workand dedication in 2007. We have made great progress during the year, withchanges undergone at Selee; planning for changes in premises to come at theFareham plant of Microfiltration; and a raft of product development projectscoming to fruition. The prospects for 2008 are encouraging and we are gratefulto all Porvair's employees for their efforts. Outlook Following progress made in recent years, Porvair is well positioned forcontinued growth: operating margins continue to improve; cash generation hasbeen sufficient to pay down borrowings, support a full capital investmentprogramme and pay a progressive dividend; and we have embarked on a programme ofbolt-on acquisitions. Several of Porvair's key growth projects reached early commercial stages and theassociated R&D investment should now begin to decrease rapidly. Growth prospectsfrom these projects are evident and are starting to show positive results. Longterm customer contracts for new products are in place both in Microfiltrationand Metals Filtration. With order books robust both in the UK and the US, 2008has started well. Charles Matthews: Chairman Ben Stocks: Chief Executive 28 January 2008 Finance Director's review Group operating performance Group sales were £45.5m (2006: £46.2m) and operating profits were £3.8m (2006:£3.7m). The operating performance of the Microfiltration and Metals FiltrationDivisions are described in detail in the Chairman and Chief Executive'sstatement. The operating loss associated with the Other Unallocated segment was£0.9m (2006: £0.9m). The Other Unallocated segment mainly comprises Groupcorporate costs, some research and development costs, new business developmentcosts and general financial services. The unallocated loss before tax in 2007includes provisions written back of £0.4m (2006: £0.3m) related to reducedexpenses arising on the businesses disposed of in 2003 and to the elimination ofan onerous lease cost arising on a building that was refurbished and sublet in2006 and disposed of in January 2008. The Microfiltration segment's operating profit includes the effects of thetransactions in connection with the imminent move of the business to newpremises, comprising a contribution towards remedial works received from theoutgoing tenant of the Group's new premises, a provision for future dilapidationcosts on the property to be vacated, and duplicate rent and other operatingcosts. The net credit to the income statement from these transactions is lessthan £0.1m. Impact of exchange rate movements on performance Due to its international nature, relative movements in exchange rates have animpact on the Group's reported performance. The US dollar weakness in 2007adversely affects the retranslation of the results of the US operations andreduces the value of the UK operations' US dollar sales. We estimate that hadthe US dollar/Sterling exchange rate remained constant throughout 2006 and 2007,Group operating profits would have been £0.4m higher. General trading in our US operations benefits from a weaker US dollar however,with export sales at Metals Filtration growing quickly through the year. Key performance indicators The Group considers its key performance indicators to be: the sales growth andoperating margins of its principal operations; the profit before tax growth;earnings per share growth; gearing; and return on capital employed. The tablebelow summarises these indicators: Key performance indicators 2007 2006 Sales growth - Selee (in US dollars) 7% 1%Sales growth - Microfiltration (1)% 4%Operating margin - Group 8% 8%Operating margin - Selee (before restructuring) 7% 2%Operating margin - Microfiltration 17% 21%Profit before tax growth 10% 12%Earnings per share growth 12% 40%Interest cover 8 times 6 timesGearing 20% 27%ROCE 9% 9% The Group also considers progress towards commercialisation of its key growthprojects to be a key indicator of performance. These indicators are discussed indetail throughout the Chairman and Chief Executive's statement and the FinanceDirector's review. Finance costs Net interest payable reduced by 22% to £0.5m (2006: £0.6m). The Group holds asignificant amount of its borrowings in US dollars ($14.8m at 30 November 2007).The weaker US dollar has reduced the interest cost and there was a financecredit in relation to the closed defined benefit pension scheme of £0.1m (2006:£nil). Interest cover was 8 times (2006: 6 times). Tax The Group tax charge of £1.0m (2006: £1.0m) represents an effective tax rate of30% on profits before tax. The tax charge comprises current tax of £0.5m (2006:£0.9m) and a deferred tax charge of £0.5m (2006: £0.1m). The Group carries adeferred tax asset in relation to the past losses in its US operations. This taxasset is limited to the amount expected to be recovered in the foreseeablefuture. Shareholders' funds Shareholders' funds at 30 November 2007 were £34.4m (2006: £31.5m), an increaseof 9% over the prior year. Shareholders' funds increased by the profit after taxof £2.4m plus £0.1m in relation to the reversal of the share based paymentscharge in the income statement; actuarial gains net of deferred tax added £1.6m;and new shares issued on the exercise of options in relation to an SAYE schemegenerated £0.2m. Shareholders' funds were reduced by exchange losses onretranslation of foreign currencies of £0.5m and dividends paid of £0.9m. Cash flow Net cash generated from operations was £5.7m (2006: £2.3m). Profits beforedepreciation and amortisation were substantially all turned into cash withworking capital reducing by £0.4m (2006: £3.0m increase). Net interest paid was£0.6m (2006: £0.7m). The lower interest charge reflects the lower averageborrowings for the year and the impact of the weaker US dollar on the US dollarborrowings. Lower tax paid of £0.6m (2006: £1.3m) arises as a result of a taxrepayment in the year relating to prior periods. Capital expenditure increased to £2.0m (2006: £1.0m) principally as a result ofthe fit out costs of the new Microfiltration facility and additionalmanufacturing capacity installed in Metals Filtration. Omnifilter was acquiredfor £1.0m. At the year end, the Group had net borrowings of £7.0m (2006: £8.4m) comprisinggross borrowings of £9.9m (2006: £10.2m) offset by cash balances of £2.9m (2006:£1.8m). The Group had unutilised borrowing facilities of £1.4m (2006: £2.0m) andan unutilised overdraft facility of £3.0m (2006: £3.0m). The Group's gearing (net debt as a percentage of shareholders' funds) reduced to20% (2006: 27%). Finance and treasury policy The treasury function at Porvair is managed centrally, under Board supervision.It is not a profit centre and does not undertake speculative transactions. Itseeks to limit the Group's exposure to trading in currencies other than itsoperations' local currency and to hedge its investments in currencies other thanSterling. The Group does not hedge against the impact of exchange rate movementson the translation of profits and losses of overseas operations. At the year end, the Group had $14.8m (2006: $14.0m) of US dollar borrowingsexposure which hedged underlying US net tangible assets on the balance sheet of$22.7m (2006: $18.6m). In addition, the Group has a Euro 1.6m interest bearingdebtor that was fully hedged by borrowings in Euros. The Group finances its operations by a combination of share capital and retainedprofits; and short and long term loans. Borrowings are principally at floatingrate. Pension schemes The Group continues to support its defined benefit pension scheme in the UK,which is closed to new members, and to provide access to a defined contributionscheme for its US employees and other UK employees. During the year, a valuation of the assets and liabilities of the closed definedbenefit scheme was completed. As a result of this review the Group and theTrustees agreed to reduce the employer's contributions from 15% of salary to 8%of salary. The Group also committed to make additional annual contributions tocover the past service deficit of £250,000 per annum increasing by 5% per annumfor the next eight years. The first payment was made in December 2007. The Group recorded a retirement benefit obligation of £1.8m (2006: £4.3m). Thereduction arose from an actuarial gain in the year of £2.4m and a return onassets in excess of the service charge of £0.1m. Risks and uncertainties There are a number of risks and uncertainties, described below, which could havea material impact on the Group's long term performance and prospects. Existing market risk The Group's strategy is to serve the needs of a range of specialist filtrationmarkets, such that it is not dependent upon any one market. No single marketrepresents more than 20% of sales. However, three key markets: aluminiumfiltration; aviation filtration; and foundry products contribute more than 10%of the Group's revenue. The Group would be exposed to a significant decline inany of these markets. Aluminium is currently in a high demand phase. The production of aluminium isgradually moving to larger smelters in regions of low cost energy. The Group isactively engaged in developing its overseas markets for its molten aluminiumfiltration business to reduce its reliance on the US market and hassignificantly increased its proportion of export business in the course of thelast year. The Aerospace market has traditionally been a very steady business as theproduct cycles are long and the Group offers a broad range of products. There isunlikely to be such a rapid decline in the aerospace market that the Group couldnot manage the consequences over time. The foundry filter business is being enhanced by product developments andimproved overseas distribution. Both these actions will reduce the business'sreliance on existing products in the US market. New markets risk The Group invests significant amounts into the development of new products fornew markets. Many of these new markets are at an early stage of development andare driven either by environmental influences or legislation. There is a riskthat the products that the Group is developing will either not be adopted aspart of the potential solutions or that the legislation or regulation will notdevelop in the way that the Group anticipates. The Group maintains a portfolio of potential products addressing differentmarket segments and recognises that not all of its potential products willbecome significant revenue generators. The Group maintains a close review ofeach of its major developments and is not significantly exposed if the marketfor any one product does not develop. Financing risk The Group maintains a level of borrowing to finance its operations. Damage to,or loss of, its banking relationships could have a material impact on theprofitability of the Group. To mitigate this risk, the Group has sufficientlong-term facilities in place for its expected requirements. It maintains aclose relationship with its bankers and carefully monitors the restrictions onits borrowings. Treasury and exchange rate risk The Group has operations in the UK and US and sells its products throughout theworld and as a result, the Group is exposed to fluctuations in exchange rates.The Group maintains certain borrowings in US dollars to hedge its investments inthe US and enters into forward sales of its principal foreign currency revenuesto reduce the impact of exchange rate movements. Competitive risk Porvair operates in competitive global markets. The Group's achievement of itsobjectives is reliant on its ability to respond to many competitive factorsincluding, but not limited to, pricing, technological innovations, productquality, customer service, manufacturing capabilities and the employment ofqualified personnel. If the Group does not continue to compete in its marketseffectively by developing innovative solutions for its customers, it could losethem and its results could be adversely affected. Technological risk Porvair has a broad portfolio of products delivered to a diverse range ofmarkets. The Group's business could be affected if it does not: • continue to develop new designs for its customers that provide technical or cost advantages over its competitors; and • develop new technologies and materials that are adopted by its customers to provide improved performance. The Group recognises that certain competitors are larger and have greaterfinancial resources. This may enable them to deliver products on more attractiveterms than the Group or to invest more resources, including research anddevelopment, than the Group. The Group carefully selects its development prospects and monitors theirprogress carefully to maintain a range of potential opportunities. The nature ofthe Group's development projects means that their potential commercial ortechnical success cannot be assessed with certainty throughout the developmentprocess. The ultimate commercial success of a project can often only be judgedwhen the development cycle is close to completion. Raw materials, resources and facilities risk The Group uses raw materials in its production processes. Prices for these rawmaterials can be volatile and are affected by the cyclical movement in commodityprices such as oil, alumina, silicon carbide and steel. The Group's ability topass on these price fluctuations to its customers is to some extent dependent onthe contracts it has entered into and the prevailing market conditions. Theremay be times when the Group's results are adversely affected by an inability torecover increases in raw material prices. The Group operates from a number of production facilities, the largest facilitygenerating approximately one third of the Group's revenue. A disaster, such as afire or flood, at any of the Group's facilities could have a material impact onthe Group's performance. The Group maintains insurance of its equipment andfacilities and carries business interruption insurance to cover loss of profits.In addition, the Group has ISO 9001 and other industry specific quality controlsystems which reduce the risk that a disaster will occur. Liability risk The Group manufactures products that are potentially vital to the safe operationof its customers' products or processes. A failure of the Group's products couldexpose the Group to loss as a result of claims made by the Group's customers orusers of their products. The Group seeks to minimise this risk throughlimitations of liability in its contracts and carries insurance cover in theevent that claims are made. Global and regional economic, political risk and environmental risk The Group sells its products throughout the world and derives a substantialportion of its revenue and earnings from outside the UK. The Group's ability toachieve its financial objectives could be impacted by risks and uncertaintiesassociated with local legal requirements, the enforceability of laws andcontracts, changes in the tax laws and economic conditions, politicalinstability, war, terrorist activity, natural disasters or health epidemics. Christopher TylerGroup Finance Director28 January 2008 Consolidated income statementFor the year ended 30 November Note 2007 2006Continuing operations £'000 £'000 Revenue 1 45,517 46,204Cost of sales (31,320) (31,436)Gross profit 14,197 14,768Distribution costs (679) (619)Administrative expenses (9,683) (10,476)Operating profit 1 3,835 3,673Interest payable and similar charges (722) (716)Interest receivable 258 119Profit before income tax 3,371 3,076Income tax expense (930) (970)Overseas tax (65) (15)Profit for the year attributable to shareholders 2,376 2,091 Earnings per share (basic) 5.8p 5.2pEarnings per share (diluted) 5.8p 5.1p Consolidated statement of recognised income and expenseFor the year ended 30 November 2007 2006 £'000 £'000 Exchange differences on translation of foreign (528) (1,598)subsidiariesActuarial gains on defined benefit pension scheme 2,400 2,300Taxation charge on items taken directly to equity (756) (729)Net income/(expense) recognised directly in equity 1,116 (27)Profit for the year 2,376 2,091Total recognised income for the year attributable to 3,492 2,064shareholders Consolidated balance sheetAs at 30 November 2007 2006 £'000 £'000Non-current assetsProperty, plant and equipment 6,722 6,596Goodwill and other intangible assets 27,138 26,718Deferred tax asset 753 1,976Other receivable 1,056 968 35,669 36,258Current assetsInventories 6,888 6,499Trade and other receivables 7,888 8,195Derivative financial instruments 44 97Cash and cash equivalents 2,893 1,756 17,713 16,547 Current liabilitiesTrade and other payables (6,937) (5,939)Current tax liabilities (224) (355)Bank overdraft and loans (500) (500)Provisions for other liabilities and charges (78) (150) (7,739) (6,944) Net current assets 9,974 9,603 Non-current liabilitiesBank loans (9,364) (9,695)Retirement benefit obligations (1,804) (4,275)Provisions for other liabilities and charges (55) (367) (11,223) (14,337)Net assets 34,420 31,524 Capital and reservesShare capital 814 811Share premium account 32,765 32,615Cumulative translation reserve (3,824) (3,296)Retained earnings 4,665 1,394Total shareholders' equity 34,420 31,524 Consolidated cash flow statementFor the year ended 30 November Note 2007 2006 £'000 £'000Cash flows from operating activitiesCash generated from operations 2 5,711 2,303Interest received 130 60Interest paid (780) (744)Tax paid (608) (1,266)Net cash generated from operating activities 4,453 353 Cash flows from investing activitiesAcquisition of subsidiaries (net of cash acquired) (1,046) -Purchase of property, plant and equipment (1,688) (573)Purchase of intangible assets (284) (390)Proceeds from sale of property, plant and equipment 295 -Available for sale investments 200 500Net cash used in investing activities (2,523) (463) Cash flow from financing activitiesNet proceeds from issue of ordinary share capital 153 103(Repayment)/increase of borrowings (68) 1,669Dividends paid to shareholders (853) (832)Net cash (used in)/generated from financing activities (768) 940 Net increase in cash and cash equivalents 1,162 830Effects of exchange rate changes (25) (75) 1,137 755Cash and cash equivalents at 1 December 1,756 1,001Cash and cash equivalents at 30 November 2,893 1,756 Reconciliation of net cash flow to movement in net debt 2007 2006 £'000 £'000 Net increase in cash and cash equivalents 1,162 830Effects of exchange rate changes 238 911Repayment /(increase) of borrowings 68 (1,669)Net debt at 1 December (8,439) (8,511)Net debt at 30 November (6,971) (8,439) Notes 1. Segmental analyses The segmental analyses of turnover, operating profit/(loss) and net assets andgeographical analyses of turnover are set out below: Primary reporting format - business segments 2007 Metals Microfiltration Other Group Filtration unallocated £'000 £'000 £'000 £'000 Revenue 19,330 26,187 - 45,517 Operating profit/(loss)before share based payments 308 4,414 (783) 3,939Share based payments 2 (31) (75) (104)Operating profit/(loss) 310 4,383 (858) 3,835Finance costs - - (464) (464)Profit/(loss) before income tax 310 4,383 (1,322) 3,371Income tax expense - - (995) (995)Profit/(loss) for the year 310 4,383 (2,317) 2,376 2006 Metals Microfiltration Other Group Filtration unallocated £'000 £'000 £'000 £'000 Revenue 19,759 26,445 - 46,204 Operating profit/(loss)before share based payments (908) 5,506 (833) 3,765Share based payments (20) (4) (68) (92)Operating profit/(loss) (928) 5,502 (901) 3,673Finance costs - - (597) (597)Profit/(loss) before income tax (928) 5,502 (1,498) 3,076Income tax expense - - (985) (985)Profit/(loss) for the year (928) 5,502 (2,483) 2,091 The Metals Filtration segment's operating profit for the year includes arestructuring charge of £0.2m (2006: £nil). The Microfiltration segment's operating profit includes the effects of thetransactions in connection with the imminent move of the business to newpremises, comprising a contribution towards remedial works received from theoutgoing tenant of the Group's new premises, a provision for future dilapidationcosts on the property to be vacated, and duplicate rent and other operatingcosts. The net credit to the income statement from these transactions is lessthan £0.1m. 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 2007 includes provisionswritten back of £0.4m (2006: £0.3m) related to reduced expenses arising on thebusinesses disposed of in 2003 and to the elimination of an onerous lease costarising on a building that was refurbished and sublet in 2006 and disposed of inJanuary 2008. 1. Segmental analyses continued Net assets At 30 November 2007 Metals Microfiltration Other Group Filtration unallocated £'000 £'000 £'000 £'000 Segmental assets 20,859 28,151 423 49,433Long term receivable - - 1,056 1,056Cash and cash equivalents - - 2,893 2,893Total assets 20,859 28,151 4,372 53,382 Segmental liabilities (1,847) (4,587) (860) (7,294)Retirement obligations - - (1,804) (1,804)Borrowings - - (9,864) (9,864)Total liabilities (1,847) (4,587) (12,528) (18,962) At 30 November 2006 Metals Microfiltration Other Group Filtration unallocated £'000 £'000 £'000 £'000 Segmental assets 20,018 27,759 2,104 49,881Long term receivable - - 968 968Deferred payment on - - 200 200investment saleCash and cash equivalents - - 1,756 1,756Total assets 20,018 27,759 5,028 52,805 Segmental liabilities (1,554) (3,698) (1,559) (6,811)Retirement obligations - - (4,275) (4,275)Borrowings - - (10,195) (10,195)Total liabilities (1,554) (3,698) (16,029) (21,281) Secondary reporting format - geographical segments 2007 2006 By By destination By origin destination By origin £'000 £'000 £'000 £'000 RevenueUnited Kingdom 14,657 25,166 13,581 26,445Continental Europe 6,208 - 6,012 -Americas 21,074 20,351 22,030 19,759Asia 2,659 - 3,385 -Australasia 457 - 506 -Africa 462 - 690 - 45,517 45,517 46,204 46,204 2. Cash generated from operations 2007 2006 £'000 £'000 Operating profit 3,835 3,673Non cash pension charge 100 113Share based payments 104 92Depreciation and amortisation 1,345 1,466(Profit)/loss on disposal of property, plant and equipment (41) 4Operating cash flows before movement in working capital 5,343 5,348Increase in inventories (322) (634)Decrease/(increase) in trade and other receivables 102 (1,017)Increase/(decrease) in payables 972 (1,102)Decrease in provisions (384) (292)Decrease/(increase) in working capital 368 (3,045)Cash generated from operating activities 5,711 2,303 3. Dividends An interim dividend of 1.0p per share was paid on 14 September 2007. TheDirectors recommend the payment of a final dividend of 1.2p per share (2006:1.1p per share) on 8 May 2008 to shareholders on the register on 4 April 2008,the ex-dividend date is 2 April 2008. This makes a total dividend for the yearof 2.2p per share (2006: 2.1p). 4. Basis of preparation The preliminary announcement for the year ended 30 November 2007 has beenprepared in accordance with International Financial Reporting Standards (IFRS)as adopted by the European Union as at 30 November 2007. The financialinformation contained in this preliminary announcement does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thefinancial information has been extracted from the financial statements for theyear ended 30 November 2007, which have been approved by the Board of Directorsand on which the auditors have reported without qualification. The financialstatements will be delivered to the Registrar of Companies after the AnnualGeneral Meeting. The financial statements for the year ended 30 November 2006,upon which the auditors reported without qualification, have been delivered tothe Registrar of Companies. 5. Annual general meeting The Company's annual general meeting will be held on Wednesday 9 April 2008 atBrampton House, Bergen Way, King's Lynn. This information is provided by RNS The company news service from the London Stock Exchange