Preliminary Results

RNS Number : 0040A
Porvair PLC
25 January 2011
 



For immediate release                                                                                                25 January 2011

Preliminary results for the year ended 30 November 2010

Porvair plc ("Porvair"), the specialist filtration and environmental technology group, today announces its preliminary results for the year ended 30 November 2010.

Key features:

·      Financial results ahead of expectations:

Revenues up 15% to £63.6m (2009: £55.2m).

Profit before tax up 82% to £3.1m (2009: £1.7m before exceptional items of £0.7m).

Earnings per share increased substantially to 5.2p (2009: 2.7p before exceptional items of 1.1p).

Net cash generated from operating activities of £6.9m (2009: £4.5m).

Net debt reduced to £9.7m (2009: £13.9m).  Net debt to EBITDA ratio was 1.5 times (2009: 2.9 times).

Final dividend increased to 1.3 pence per share (2009: 1.25 pence per share).  Total dividend 2.3 pence per share (2009: 2.25 pence per share).

·      The Microfiltration division had a good year and a strong second half:

Revenues increased 11% in the year.

Aviation revenue improved in the second half.  Promising outlook supported by a $40m 10 year deal signed with Parker Hannifin.

Revenue in nuclear and energy filtration up over 70%.

Revenue from environmental laboratories for clean water analysis had a second good year.

·      The Metals Filtration division has recovered well from a difficult 2009 and has a clear path for further gains in 2011:

Revenues increased by 24% in the year.

Three key product groups now patented.

Manufacture of un-patented products underway in China.

·      2011 has started well and order books are healthy.

 

Commenting on the results and outlook, Ben Stocks, Chief Executive, said:

"Porvair made good progress in 2010 and there is opportunity for more in 2011. The Metals Filtration division will benefit from changes afforded by the development of its operation in China and the better margins generated from its patented products.  The Microfiltration division has a firm aviation order book and a full pipeline of opportunities in nuclear and gasification markets.  Its US subsidiary is set for further growth with a larger sales team and improved manufacturing capabilities.  Seal Analytical has more new products to launch in the year ahead, and will benefit further as it reconnects with its installed base of customers.

"2011 has started well with revenues in December and January ahead of the prior year and the momentum in the second half of 2010 carrying forward into 2011.  Order books are healthy.  Provided the general economic situation remains as it is, the Board sees plenty of opportunity for 2011 and is optimistic about Porvair's development."

For further information please contact:

Porvair plc


01553 765 500

Ben Stocks, Chief Executive



Chris Tyler, Group Finance Director



Buchanan Communications


0207 466 5000

Charles Ryland



Helen Chan




Chairman and Chief Executive's statement

Overview

In 2010 Porvair made further progress against its strategic objectives and showed that it is recovering well from the economic upheaval of 2009.  Revenues grew 15%, profits before income tax increased 82% and cash generation was strong, contributing to a significant reduction in debt.  We are pleased with improvements made across the business in the year and see further opportunities in 2011.

Revenues in the year to 30 November 2010 were £63.6m (2009: £55.2m).  Microfiltration revenues grew 11% to £40.4m (2009: £36.5m) and Metals Filtration revenues grew 24% to £23.2m (2009: £18.7m).

Operating profit increased 51% to £4.2m (2009: £2.8m before exceptional items of £0.7m).  Profit before income tax was £3.1m (2009: £1.7m before exceptional items of £0.7m) and earnings per share were 5.2p (2009: 2.7 pence per share before exceptional items).  

Cash generation was strong, net cash generated from operating activities was £6.9m (2009: £4.5m).  Net debt at 30 November 2010 reduced by over 30% to £9.7m (2009: £13.9m).

These results show the benefit of Porvair's strategy, which has remained settled for several years.  Encouraging progress was made in 2010.  Of particular note is:

·      New product development.  Revenue attributable to next generation products made up 21% (2009: 13%) of Group revenues.  The Metals Filtration division now has a patented product in each of its key market segments.  Seal Analytical introduced its first new product under Porvair's management in 2010 with more to come in 2011.  Microfiltration secured a $40m multi-year contract for its aviation fuel tank inerting filter.

·      Geographic expansion in support of key markets.  Record revenue (growth of 96%) was recorded at the Microfiltration division's US subsidiary.  Seal Analytical ("Seal") opened a sales and technical support office in Shanghai and further investment is being made in the Metals Filtration division's plant in Wuhan, China, where revenue more than doubled.

Porvair's activities and strategy

Porvair specialises in filtration and related environmental technology.  We operate two divisions.  The Microfiltration division comprises the Porvair Filtration Group, Porvair Sciences and Seal Analytical ('Seal').  It principally serves aviation, laboratory and energy markets.  The Metals Filtration division serves global aluminium, NAFTA iron foundry and super-alloy markets.

The Group manufactures principally in the UK, US, Germany and China.  Its sales are global.

Porvair's strategy for growth and the creation of sustainable shareholder value is to:

·      Develop filtration and environmental technology positions in markets where typically:

specialist design or engineering skills win business;

regulation or quality accreditation requirements mandate product use;

consumable products, which protect more costly downstream components, are often replaced as part of a maintenance routine;

products, once designed into a specification, have very long lifecycles.

·      Focus on selected markets which have good long term growth: aviation, energy & industrial, environmental laboratory supplies and aluminium filtration.

·      Invest consistently in specified new products.  In this statement these products are referred to as "new (or next) generation products".

·      Expand geographically, where appropriate, in our chosen markets.

·      Acquire complementary businesses that meet Group financial and commercial criteria.

·      Maintain an appropriately funded balance sheet and generate sufficient cash to sustain a

progressive dividend policy.



Operating review

Divisional performance - Microfiltration

Revenue at the Microfiltration division was £40.4m (2009: £36.5m), up 11%.  Operating profits were £5.5m (2009: £5.3m before exceptional items of £0.3m).

Aviation demand declined in the second half of 2009 and the early part of 2010 but recovered steadily in the second half of 2010, as predicted in the interim report.  As a consequence margins were compressed early in the year but recovered well in the second half.  Aviation order books going into 2011 are 18% higher than twelve months ago.  A significant contract with Parker Hannifin has been signed, against which Porvair has schedules worth $40m over the next 10 years.  The contract is for the supply of fuel tank inerting filters for aircraft safety systems which has been one of Porvair's next generation growth projects for several years.  End customers include Boeing, Airbus and other commercial manufacturers of aircraft with more than 30 seats. Other aviation schedules also moved forward in the year, notably the V22 Osprey, which has developed slowly over the last ten years.  Porvair is specified in the V22 fuel and hydraulic system.

Sales to nuclear and energy markets were again strong, growing over 70% in 2010.  Porvair's long track record in both nuclear and gasification applications is an increasingly useful asset to the business.  Orders were shipped in 2010 for both new installation and replacement filters, notably for the Wabash River IGCC plant, which uses Conoco Philips' Egas™ technology, with which we already have years of experience.  Levels of enquiry for 2011 are higher than they have been for some time, and although much work needs to be done to convert these to orders, the outlook is promising.

The Microfiltration division's small US subsidiary recovered well in 2010, increasing revenue by 96% to a record level.  Building this business by extending our UK capabilities into the US market is an important part of our growth plans for the future.  Investments in plant and equipment have been made in 2010 and sales resources have been increased.  Necessary ISO 9001 and AS9100 quality certifications have been awarded.

Sales to environmental laboratories are largely made through Seal Analytical, which performed well, posting revenue and profits in line with a very strong 2009.  Since its acquisition in 2008 we have been concentrating on re-invigorating Seal's installed base and improving its record of new product development, both of which improved significantly in 2010.  New products have been launched, and more will follow in 2011.  Re-connecting with the installed base allows us to provide consumables and system upgrades to existing users and the number of such customers now active has doubled over the course of the year.  Seal's main European plant in Germany was moved to upgrade its laboratory and development facilities.  A sales, procurement and technical support office was opened in Shanghai.  Plant upgrades were made in the UK to increase the capability and cleanliness of our BioVyon porous plastics and laboratory consumables manufacture.

Divisional performance - Metals Filtration

Revenue at the Metals Filtration division was £23.2m (2009: £18.7m), a 24% increase.  Operating profits recovered to £0.5m (2009: loss of £1.2m before exceptional items of £0.4m).  Modest losses were recorded at the new plant in Wuhan, China, however the division as a whole remains very cash generative.

Whilst the Board is pleased with progress in this division, it notes that operating margins will not fully recover until revenue in its operating currency returns to levels last seen in 2007 and 2008.  Revenue in 2010 remained 20% below 2008.  As reported at the interim stage, the Board has started a programme of remodelling this division around its three patented next generation products: Selee CSX™ (aluminium); Selee IC (iron foundry); and Selee SA (super alloys).  Plans are well advanced to transfer the production of certain other products to Wuhan, China.  This will underpin further margin improvements in 2011.

The patented products have performed well in 2010.  Almost all existing customers have switched to the Selee CSX™ aluminium cast house filter and Porvair has over 50% share of this market.  We supply over 90% of Alcoa's requirements worldwide and have won competitive accounts steadily throughout 2010 with the cleaner environmental footprint and higher filtration efficiency of the CSX™ product.  Sales resources were increased in Europe.  Patents were awarded for the new Selee IC foundry filter early in the year and customer conversions are now at 20%.  The new filter offers improved performance and uses commonly found raw materials that are less subject to raw material price variation.  The patented Selee SA super alloy filter has been in full use for two years and is performing well.

Dividend and financing

Cash generated from operations was £8.1m (2009: £6.0m).  Operating cash from trading was helped by a programme to reduce work-in-progress inventory.  Moreover, capital investment in the year was lower than average.  After interest and tax, net cash generated from operating activities was £6.9m (2009: £4.5m).  Net debt at 30 November 2010 was £9.7m (2009: £13.9m).  Over the last two years net debt has reduced by £7.0m.  

The Directors recommend an improved final dividend of 1.3 pence (2009: 1.25 pence) making a full year dividend of 2.3 pence (2009: 2.25 pence).

Staff

Porvair has shown in 2010 that it has weathered the economic storms of 2009 and emerged as a stronger business.  This is due to the dedication and expertise of our staff.  The directors are pleased to acknowledge this effort and pay tribute to the hard work that has been involved.

Current trading and outlook

Porvair made good progress in 2010 and there is opportunity for more in 2011. The Metals Filtration division will benefit from changes afforded by the development of its operation in China and the better margins generated from its patented products.  The Microfiltration division has a firm aviation order book and a full pipeline of opportunities in nuclear and gasification markets.  Its US subsidiary is set for further growth with a larger sales team and improved manufacturing capabilities.  Seal Analytical has more new products to launch in the year ahead, and will benefit further as it reconnects with its installed base of customers.

2011 has started well with revenues in December and January ahead of the prior year and the momentum in the second half of 2010 carrying forward into 2011.  Order books are healthy.  Provided the general economic situation remains as it is, the Board sees plenty of opportunity for 2011 and is optimistic about Porvair's development.

 

 

 

Charles Matthews - Chairman

Ben Stocks- Chief Executive

24 January 2011



Finance Director's review

 

Group operating performance

Group revenues were £63.6m (2009: £55.2m) and operating profit was £4.2m (2009: £2.8m before exceptional items of £0.7m).  The operating performance and key performance indicators of the Microfiltration and Metals Filtration divisions are described in detail in the Chairman and Chief Executive's statement.  The operating loss associated with the Other Unallocated segment was £1.8m (2009: £1.3m), which mainly comprises Group corporate costs.  These include new business development costs, some research and development costs and general financial costs. 

Key performance indicators

The Group considers its key performance indicators to be: revenue growth and operating margins of its principal operations; revenue from new products; profit before tax growth; earnings per share growth; interest cover; net debt to EBITDA, gearing; and return on capital employed.  The table below summarises these indicators:


2010


2009

Revenue growth

15%


1%

Revenue growth - Metals Filtration (US dollars)

24%


(32)%

Revenue growth - Microfiltration

11%


13%

Revenue from new generation products

21%


13%

Operating margin - Group (before restructuring in 2009)

7%


5%

Operating margin - Metals Filtration (before restructuring in 2009)

2%


(6)%

Operating margin - Microfiltration (before restructuring in 2009)

14%


14%

Profit before tax growth (before restructuring in 2009)

82%


(59)%

Earnings per share growth (before restructuring in 2009)

93%


(61)%

Interest cover (before restructuring in 2009)

4 times


3 times

Net debt to EBITDA ratio

1.5 times


2.9 times

Gearing

24%


38%

ROCE (before restructuring in 2009)

6%


3%

 

"Revenue from new generation products" has now reached more than 20% of the total revenue for the Group and these products are now central to the business. This metric will be redefined in future periods to report only on the latest product developments.

Impact of exchange rate movements on performance

The international nature of the Group's business means that relative movements in exchange rates can have a significant impact on the reported performance.  The average rate used for translating the results of US operations into Sterling was $1.55:£ (2009: $1.55:£), so there was very little currency impact on the retranslation of the Metals Filtration operations compared with 2009.  The Group's Euro operations were translated at €1.16:£ (2009: €1.12:£) holding back the performance of the European operations of the Microfiltration division by a small amount compared with 2009.  The Group sold forward the majority of its UK business's 2010 US dollar revenue at the start of the financial year and achieved rates of $1.58:£ (2009: $1.5:£) on that revenue.  This held back the performance of the Microfiltration division by approximately £0.3m compared with the rates achieved in 2009.



Finance costs

Net interest payable remained consistent at £1.0m (2009: £1.0m).  Included within interest payable are finance costs in relation to the defined benefit pension scheme, which increased to £0.4m (2009: £0.3m) in the year.  Although the year end net debt position is significantly lower than the previous year the interest cost is in line with the prior year.  The higher banking facility margin, renegotiated in June 2009, had a full year's impact in 2010.

The Group has a policy of maintaining between 40% and 60% of its borrowings on fixed interest terms.  It achieves this profile by taking out interest rate swaps to fix the interest rates on certain of its borrowings.  These provide some protection for the Group in the event of interest rate rises or another spike in LIBOR such as occurred in late 2008.  The contracts in place are summarised below:

Fixed rate

Principal amount

Principal terms

In place throughout 2010

2.21%

$5m

Matured on 12 December 2010

2.43%

$5m

Matures on12 December 2011

3.03%

£3m

Reducing by £1m on each of 30 November 2010, 2011 and 2012

Taken out in 2010

1.88%

$5m

Effective from 12 December 2010 to 12 December 2013

2.29%

$2.5m

Effective from 12 December 2011 to 12 December 2013

 

Interest cover was 4 times (2009: 3 times before exceptional items).

Tax

The Group tax charge was £1.0m (2009: £0.6m on profits before exceptional items).  This is an effective rate of 31% (2009: 34% before exceptional items), higher than the standard corporate tax rate of 28%, mainly as a result of higher tax rates on profits made in Germany and the US.  The tax charge comprises current tax of £0.7m (2009: £1.2m before exceptional items) and a deferred tax charge of £0.3m (2009: credit of £0.6m before exceptional items).  The Group carries a deferred tax asset in relation to the past losses in its US operations and the deficit on the pension fund.  The tax asset related to the past losses is limited to the amount expected to be recovered in the foreseeable future.

Total equity

Total equity at 30 November 2010 was £40.5m (2009: £36.4m), an increase of 11% over the prior year.  Total equity increased by the profit after tax of £2.2m and by an actuarial gain in the pension scheme of £2.3m net of tax and smaller movements in relation to exchange retranslation and share based payments.  Dividends paid of £0.9m reduced total equity.

Cash flow

Cash generated from operations was £8.1m (2009: £6.0m).  Reductions in working capital of £1.5m (2009: £1.3m) continued the progress made in 2009 and resulted in operating cash flow exceeding operating profits for the year.  Receivables and payables both increased due to revenue growth particularly in a strong final quarter.  Inventories, however, continue to be held under tight control and were reduced by a further £0.7m (2009: £1.5m).

Net interest paid was £0.7m (2009: £0.9m), in line with the bank interest charged in the year.  Tax paid was £0.6m (2009: £0.6m), broadly in line with the current tax charge.

Capital expenditure was £1.3m (2009: £1.2m).  The principal investments in 2010 were to upgrade facilities within the Microfiltration division.



Borrowings and bank finance

At the year end, the Group had net borrowings of £9.7m (2009: £13.9m) comprising gross borrowings of £15.5m (2009: £17.1m) and finance lease obligations of £0.1m (2009: £0.2m) offset by cash balances of £5.9m (2009: £3.4m).  Borrowings of £9.6m (2009: £9.1m) ($15.0m) are held in US dollars and the modest strengthening of the US dollar relative to Sterling was the principal component in the increase in net debt of £0.3m relating to exchange movements.

Banking facilities were renegotiated on slightly improved terms in the year to extend the facilities out to December 2013.  The Group has adequate facilities and operating headroom under these facilities.  At 30 November 2010 the Group had fully drawn down its borrowing facilities but had an unutilised overdraft facility of £2.5m (2009: £1.5m) and cash balances of £5.9m (2009: £3.4m).

Since the year end, the Group has collected its €1.6m interest bearing debtor and repaid and cancelled its secured Euro revolving credit facility of €1.6 million.

The Group's net debt to EBITDA ratio improved to 1.5 times (2009: 2.9).  The Group's gearing ratio (net debt as a percentage of total equity) reduced to 24% (2009: 38%).

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.  It seeks to limit the Group's exposure to trading in currencies other than its operations' local currency and to hedge its investments in currencies other than Sterling.  The Group does not hedge against the impact of exchange rate movements on the translation of profits and losses of overseas operations.

At the year end, the Group had $15.0m (2009: $15.0m) of US dollar borrowings exposure which hedged underlying US net tangible assets on the balance sheet of $27.5m (2009: $24.0m).

The Group finances its operations by a combination of share capital and retained profits; and short and long term loans.

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 defined contribution schemes for its US employees and other UK employees.

The Group recorded a retirement benefit obligation of £5.6m (2009: £8.6m).  The reduction in the deficit arose principally from an actuarial gain in the year of £3.1m (2009: loss of £4.9m), comprising a gain in the value of the assets of £0.7m and a gain arising on changes in financial and demographic assumptions of £2.4m.  £2m of the gain relates to the adoption of a changed basis for statutory minimum pension increases in line with statutory orders published by the Government.

The life expectancy of members of the scheme at age 65 is assumed to be 19.5 years (2009: 19.7 years) for men and 22.1 years (2009: 22.6 years) for women.

A full triennial actuarial valuation of the assets and liabilities of the defined benefit scheme was completed in 2010, based on data at 31 March 2009.  As a result of this review, the Group and the Trustees agreed to alter the employer's contributions from 8% of salary to 8.2% of salary plus a £175,000 contribution towards the running costs of the scheme increasing by 3.25% per annum.  The Group also committed to make additional annual contributions, to cover the past service deficit, of £300,000 per annum increasing by 5% per annum commencing in December 2010, with an increase to £450,000 per annum increasing by 5% per annum from December 2013.  The funding shortfall is expected to be eliminated by December 2027. The next full actuarial valuation of the scheme will be based on the pension scheme's position at 31 March 2012.



Principal risks and uncertainties

There are a number of risks and uncertainties, described below, which could have a material impact on the Group's long term performance and prospects.

Existing market risk

The Group serves the needs of a range of specialist filtration markets, such that it is not dependent upon any one market.  No single market represents more than 25% of revenue.  However, four key markets: aviation filtration; energy and industrial process filtration; environmental laboratory supplies and non-ferrous metals filtration each contribute more than 10% of the Group's revenue and the Group would be exposed to a significant decline in any of these markets.

The aerospace market has traditionally been a relatively stable business as the product cycles are very long and the Group offers a broad range of products.  There is unlikely to be such a rapid decline in the aerospace market that the Group could not manage the consequences over time. 

The energy and industrial process products serve a range of customers who use filters as an integral part of processes in their plants.  Sales are both for new build and after market spares.  A sustained economic downturn, as experienced in 2009, will affect demand in these markets.

Environmental laboratory supplies are chiefly sold to laboratories engaged in meeting the regulatory requirements for clean water.  This market is expected to grow as water regulations tighten throughout the world and demand for clean water in the developing world increases.  Whilst revenue will be affected by access to capital in customer markets (municipal/utilities and industrial labs), it is expected that the regulated nature of this market will mitigate cyclical changes.

Aluminium production can fluctuate and the Group's revenue is affected by the levels of production. However, the Group now has a stronger market position having successfully converted its customers to a new filter formulation.  The production of aluminium is gradually moving to larger smelters in regions of low cost energy.  The Group is developing its sales presence accordingly.

New products and markets risks

The Group invests into the development of new products often driven either by environmental imperatives or legislation.  In the early stage of development there is a risk that these products will either not be adopted as part of the potential solutions or that the legislation or regulation will not develop in the way that the Group anticipates. 

The Group has brought a number of these products to market recently and is now much less exposed to the risks of new products.  However, the Group maintains a close review of each of its major developments and is not significantly exposed if the market for any one product does not develop. 

Raw materials, resources and facilities risks

The Group uses raw materials in its production processes.  Prices for these raw materials can be volatile and are affected by the cyclical movement in commodity prices such as oil, alumina, silicon carbide and steel.  The Group's ability to pass on these price fluctuations to its customers is to some extent dependent on the contracts it has entered into and the prevailing market conditions.  There may be times when the Group's results are adversely affected by an inability to recover increases in raw material prices.

The Group operates from a number of production facilities, the largest of which generates approximately one third of the Group's revenue. A disaster, such as a fire or flood, at any of the Group's facilities could have a material impact on the Group's performance.  The Group maintains insurance of its equipment and facilities and carries business interruption insurance to cover loss of profits.  In addition, the Group has ISO 9001 and other industry specific quality control systems which reduce the risk that a disaster will occur.



Competitive risk

Porvair operates in competitive global markets.  The Group's achievement of its objectives is reliant on its ability to respond to many competitive factors including, but not limited to, pricing, technological innovations, product quality, customer service, manufacturing capabilities and the employment of qualified personnel.  If the Group does not continue to compete in its markets effectively by developing innovative solutions for its customers, it could lose them and its results could be adversely affected.

Technological risk

Porvair has a broad portfolio of products delivered to a diverse range of markets.  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 of its competitors are larger and have greater financial resources.  This may enable them to deliver products on more attractive terms than the Group or to invest more resources, including research and development, than the Group.  

The Group carefully selects its development prospects and monitors their progress.  The nature of the Group's development projects means that their potential commercial or technical success cannot be assessed with certainty throughout the development process.  The ultimate commercial success of a project can often only be judged when the development cycle is close to completion.

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 the profitability of the Group.  To mitigate this risk, the Group has sufficient long-term facilities in place for its expected requirements.  It maintains a close relationship with its bankers and carefully monitors the performance of the business against the covenant restrictions on its borrowings. 

Treasury and exchange rate risks

The Group has operations in the UK, US, Germany and China and sells its products throughout the world.  As a result, the Group is exposed to fluctuations in exchange rates.  The Group maintains certain of its borrowings in US dollars to hedge its investments in the US and enters into forward sales of its principal foreign currency revenues to reduce the impact of exchange rate movements.

Liability risk

The Group manufactures products that are potentially vital to the safe operation of its customers' products or processes.  A failure of the Group's products could expose the Group to loss as a result of claims made by the Group's customers or users of their products.  The Group seeks to minimise this risk through limitations of liability in its contracts and carries insurance cover in the event that claims are made.

 

 

 

Christopher Tyler

Group Finance Director

24 January 2011



 

 

Consolidated income statement

For the year ended 30 November


Note


2010

2009


2009


2009




Total

Before exceptional items


Exceptional items


Total




£'000

£'000


£'000


£'000










Revenue

1


63,563

55,225


-


55,225

Cost of sales



(42,955)

(37,783)


-


(37,783)

Gross profit



20,608

17,442


-


17,442

Distribution costs



(780)

(724)


-


(724)

Administrative expenses



(15,665)

(13,953)


(662)


(14,615)

Operating profit/(loss)

1


4,163

2,765


(662)


2,103

Interest payable and similar charges



(1,225)

(1,115)


-


(1,115)

Interest receivable



191

68


-


68

Profit/(loss) before income tax



3,129

1,718


(662)


1,056

Income tax (expense)/credit



(961)

(577)


210


(367)

Profit/(loss) for the year attributable to shareholders



 

2,168

 

1,141


 

(452)


 

689



















Earnings/(loss) per share (basic)

2


5.2p

2.7p


(1.1)p


1.6p

Earnings/(loss) per share (diluted)

2


5.2p

2.7p


(1.1)p


1.6p










 

 

 

 

Consolidated statement of comprehensive income

For the year ended 30 November


2010

£'000


2009

£'000





Profit for the year

2,168


689

Other comprehensive income




Exchange differences on translation of foreign subsidiaries

379


(872)

Changes in fair value of interest rate swaps held as a cash flow hedge

(25)


(245)

Actuarial gains/(losses) in defined benefit pension plans net of tax

2,263


(3,528)

Net other comprehensive income/(expense)

2,617


(4,645)

Total comprehensive income/(expense) for the year attributable to shareholders of Porvair plc

 

4,785


 

(3,956)

 

 



 

Consolidated balance sheet

As at 30 November


Note

2010

£'000


2009

£'000

Non-current assets





Property, plant and equipment

4

8,659


8,872

Goodwill and other intangible assets

5

37,916


37,634

Deferred tax asset


1,652


2,664

Other receivable


-


1,431



48,227


50,601

Current assets





Inventories


7,727


8,335

Trade and other receivables


11,330


8,865

Derivative financial instruments


-


100

Cash and cash equivalents


5,897


3,384



24,954


20,684






Current liabilities





Trade and other payables


(10,402)


(7,945)

Current tax liabilities


(777)


(735)

Bank overdrafts and loans

6

(2,344)


(582)

Finance lease liabilities


(34)


(142)

Derivative financial instruments


(284)


(245)



(13,841)


(9,649)






Net current assets


11,113


11,035






Non-current liabilities





Bank loans

6

(13,188)


(16,530)

Finance lease liabilities


(6)


(40)

Retirement benefit obligations


(5,594)


(8,606)

Provisions for other liabilities and charges


(71)


(65)



(18,859)


(25,241)

Net assets


40,481


36,395






Capital and reserves





Share capital

7

841


841

Share premium account

7

34,024


34,024

Cumulative translation reserve

8

802


423

Retained earnings

8

4,814


1,107

Total equity


40,481


36,395

 



Consolidated cash flow statement

For the year ended 30 November


Note


2010

£'000


2009

£'000

Cash flows from operating activities






Cash generated from operations

9


8,142


6,016

Interest received



156


61

Interest paid



(886)


(997)

Tax paid



(556)


(564)

Net cash generated from operating activities



6,856


4,516







Cash flows from investing activities






Purchase of property, plant and equipment



(1,269)


(928)

Purchase of intangible assets



(65)


(267)

Net cash used in investing activities



(1,334)


(1,195)







Cash flows from financing activities






Repayment of borrowings



(1,945)


(1,286)

Dividends paid to shareholders



(947)


(947)

Capital element of finance leases



(142)


(151)

Net cash used in financing activities



(3,034)


(2,384)







Net increase in cash and cash equivalents



2,488


937

Effects of exchange rate changes



25


(54)




2,513


883

Cash and cash equivalents at 1 December



3,384


2,501

Cash and cash equivalents at 30 November



5,897


3,384

 

Reconciliation of net cash flow to movement in net debt



2010

£'000


2009

£'000

Net increase in cash and cash equivalents


2,488


937

Effects of exchange rate changes


(340)


446

Repayment of borrowings


1,945


1,286

Repayment of finance leases


142


151

Net debt at 1 December


(13,910)


(16,730)

Net debt at 30 November


(9,675)


(13,910)

 



 Consolidated statement of changes in equity


 

 

Share capital

£'000

Share premium account

£'000

Cumulative translation

reserve

£'000

 

Retained earnings

£'000

 

 

Total

£'000

Balance at 1 December 2008

841

34,024

1,295

5,024

41,184

Profit for the year

-

-

-

689

689

Other comprehensive income/(expense):






Exchange differences on translation of foreign subsidiaries

 

-

 

-

 

(872)

 

-

 

(872)

Changes in fair value of interest rate swaps held as a cash flow hedge

 

-

 

-

 

-

 

(245)

 

(245)

Actuarial losses in defined benefit pension plans net of tax

 

-

 

-

 

-

 

(3,528)

 

(3,528)

Total comprehensive expense for the year

 

-

 

-

 

(872)

 

(3,084)

 

(3,956)

Employee share option schemes:






   Value of employee services net of tax

-

-

-

114

114

Dividends approved or paid

-

-

-

(947)

(947)

Balance at 30 November 2009

841

34,024

423

1,107

36,395







Balance at 1 December 2009

841

34,024

423

1,107

36,395

Profit for the year

-

-

-

2,168

2,168

Other comprehensive income/(expense):






Exchange differences on translation of foreign subsidiaries

 

-

 

-

 

379

 

-

 

379

Changes in fair value of interest rate swaps held as a cash flow hedge

 

-

 

-

 

-

 

(25)

 

(25)

Actuarial gains in defined benefit pension plans net of tax

 

-

 

-

 

-

 

2,263

 

2,263

Total comprehensive income for the year

-

-

379

4,406

4,785

Employee share option schemes:






   Value of employee services net of tax

-

-

-

248

248

Dividends approved or paid

-

-

-

(947)

(947)

Balance at 30 November 2010

841

34,024

802

4,814

40,481

 



 

Notes

 

1.             Segment information

The segmental analyses of revenue, operating profit/(loss), segment assets and liabilities and geographical analyses of revenue are set out below:

 

 

2010


Metals Filtration


Microfiltration


Other Unallocated


Group



£'000


£'000


£'000


£'000

Revenue


23,177


40,386


-


63,563










Operating profit/(loss)


471


5,486


(1,794)


4,163

Finance costs


-


-


(1,034)


(1,034)

Profit/(loss) before income tax


471


5,486


(2,828)


3,129

Income tax expense


-


-


(961)


(961)

Profit/(loss) for the year


471


5,486


(3,789)


2,168

 

 

2009


Metals Filtration


Microfiltration


Other Unallocated


Group



£'000


£'000


£'000


£'000

Revenue


18,696


36,529


-


55,225










Operating (loss)/profit before exceptional items


 

(1,210)


 

5,276


 

(1,301)


 

2,765

Exceptional items


(366)


(296)


-


(662)

Operating (loss)/profit


(1,576)


4,980


(1,301)


2,103

Finance costs


-


-


(1,047)


(1,047)

(Loss)/profit before income tax


(1,576)


4,980


(2,348)


1,056

Income tax expense


-


-


(367)


(367)

(Loss)/profit for the year


(1,576)


4,980


(2,715)


689

 

 

Other Group operations are included in  "Other Unallocated" these mainly comprise Group corporate costs  and include new business development costs, some research and development costs and general financial costs.

 

Exceptional items in 2009 of £0.7m related to restructuring and redundancy costs incurred in reorganising the Group's operations.  £0.4m was incurred in Metals Filtration and £0.3m was incurred in Microfiltration.



1.             Segment information continued

 

Segment assets and liabilities

 

At 30 November 2010


Metals Filtration


Microfiltration


Other Unallocated


Group



£'000


£'000


£'000


£'000

Segmental assets


25,873


38,061


3,350


67,284

Cash and cash equivalents


-


-


5,897


5,897

Total assets


25,873


38,061


9,247


73,181










Segmental liabilities


(2,767)


(6,805)


(1,962)


(11,534)

Retirement obligations


-


-


(5,594)


(5,594)

Borrowings


-


(40)


(15,532)


(15,572)

Total liabilities


(2,767)


(6,845)


(23,088)


(32,700)

 

At 30 November 2009


Metals Filtration


Microfiltration


Other Unallocated


Group



£'000


£'000


£'000


£'000

Segmental assets


25,153


38,646


2,671


66,470

Long term receivable


-


-


1,431


1,431

Cash and cash equivalents


-


-


3,384


3,384

Total assets


25,153


38,646


7,486


71,285










Segmental liabilities


(2,194)


(5,101)


(1,695)


(8,990)

Retirement obligations


-


-


(8,606)


(8,606)

Borrowings


-


(182)


(17,112)


(17,294)

Total liabilities


(2,194)


(5,283)


(27,413)


(34,890)

 

 

Geographical analysis





2010




2009



By destination

£'000


 

By origin

£'000


By destination

£'000


 

By origin

£'000

Revenue









United Kingdom


13,136


27,645


13,301


26,297

Continental Europe


8,744


6,548


8,047


6,860

United States of America


27,864


28,692


22,188


21,762

Other NAFTA


2,745


-


2,466


-

South America


1,177


-


802


-

Asia


8,519


678


7,026


306

Australasia


614


-


525


-

Africa


764


-


870


-



63,563


63,563


55,225


55,225

 



2.             Earnings per share


2010


2009


Earnings

 

 

 

£'000

Weighted average number of shares

 

Per share amount

 

 

(pence)


Earnings

 

 

 

£'000

Weighted average number of shares

 

Per share amount

 

 

(pence)

Basic EPS - earnings before exceptional items

 

2,168

 

42,073,640

 

5.2


 

1,141

 

42,073,640

 

2.7

Exceptional items

-

-

-


(452)

-

(1.1)

Earnings attributable to ordinary shareholders

 

2,168

 

42,073,640

 

5.2


 

689

 

42,073,640

 

1.6

Effect of dilutive securities - share options

 

-

 

1,958

 

-


 

-

 

-

 

-

Diluted EPS

2,168

42,075,598

5.2


689

42,073,640

1.6

 

3.             Dividends per share


2010


2009


Per share

£'000


Per share

£'000

Final dividend paid

1.25p

526


1.25p

526

Interim dividend paid

1.00p

421


1.00p

421


2.25p

947


2.25p

947

 

The Directors recommend the payment of a final dividend of 1.3 pence per share (2009: 1.25 pence per share) on 10 June 2011 to shareholders on the register on 6 May 2011; the ex-dividend date is 4 May 2011.  This makes a total dividend for the year of 2.3 pence per share (2009: 2.25 pence per share).

 

4.             Property, plant and equipment

 

Cost


Land and buildings


Assets in the course of construction


Plant, machinery and equipment


Total



£'000


£'000


£'000


£'000

At 1 December 2009


4,007


126


21,549


25,682

Reclassification


(62)


(384)


446


-

Additions


117


551


601


1,269

Disposals


(14)


-


(715)


(729)

Exchange differences


124


7


620


751

At 30 November 2010


4,172


300


22,501


26,973

 

Depreciation











£'000


£'000


£'000


£'000

At 1 December 2009


(1,071)


-


(15,739)


(16,810)

Charge for the year


(217)


-


(1,418)


(1,635)

Disposals


14


-


616


630

Exchange differences


(51)


-


(448)


(499)

At 30 November 2010


(1,325)


-


(16,989)


(18,314)

 

Net book value









At 30 November 2010


2,847


300


5,512


8,659

At 30 November 2009


2,936


126


5,810


8,872

 



5.             Goodwill and other intangible assets

 

2010

 

 

Goodwill


Development expenditure capitalised


 

Software capitalised


 

 

Trademarks


 

 

Total


£'000


£'000


£'000


£'000


£'000

Net book amount at 1 December 2009

 

35,843


 

1,331


 

434


 

26


 

37,634

Additions

-


24


41


-


65

Disposals

-


(12)


-


-


(12)

Amortisation

-


(167)


(197)


(7)


(371)

Exchange differences

537


72


(8)


(1)


600

Net book amount at 30 November 2010

 

36,380


 

1,248


 

270


 

18


 

37,916

 

At 30 November 2010

 

 

Goodwill


Development expenditure capitalised


 

Software capitalised


 

 

Trademarks


 

 

Total


£'000


£'000


£'000


£'000


£'000

Cost

54,922


1,880


975


35


57,812

Accumulated amortisation and impairment

 

 

(18,542)


 

 

(632)


 

 

(705)


 

 

(17)


 

 

(19,896)

Net book amount

36,380


1,248


270


18


37,916

 

6.             Borrowings


2010

£'000


2009

£'000

Secured multi-currency revolving credit facility of US$15 million (2009: $nil)  maturing in December 2013 with interest at 2.95% above US dollar LIBOR

 

9,440


 

-

Secured five year amortising debt facility of £4.75 million (2009: £nil) expiring in December 2013 with interest at 2.95% above LIBOR

 

4,655


 

-

Secured multi-currency revolving credit facility of $25 million maturing in July 2011 with interest at 2.95% above US dollar LIBOR

 

-


 

13,588

Secured five year amortising debt facility of £1.875 million expiring in July 2013 with interest at 3.25% above LIBOR

 

-


 

1,863

Secured Euro revolving credit facility of €1.6 million (2009: €1.6 million) maturing in January 2011 with interest at 2.95% (2009: 2.95%) above EURIBOR

 

1,337


 

1,461

Unsecured loan notes relating to the acquisition of Toolturn Engineering Limited payable in three annual instalments to March 2011

 

100


 

200

At 30 November

15,532


17,112

 

In addition, the Group had an unutilised overdraft facility of £2.5m (2009: £1.5m).

 

7.             Share capital and premium



Number of shares


Ordinary shares

 


Share premium account


Total

 



thousands


£'000


£'000


£'000

At 30 November 2009 and 2010


42,074


841


34,024


34,865

 



8.             Other reserves




Cumulative translation reserve


Retained earnings

 




£'000


£'000

At 1 December 2008



1,295


5,024

Profit for the year attributable to shareholders



-


689

Direct to equity:






Dividends paid



-


(947)

Actuarial losses



-


(4,900)

Tax on actuarial losses



-


1,372

Share based payments



-


124

Tax on share based payments



-


(10)

Interest rate swap cash flow hedge



-


(245)

Exchange differences



(872)


-

At 30 November 2009



423


1,107

Profit for the year attributable to shareholders



-


2,168

Direct to equity:



-



Dividends paid



-


(947)

Actuarial gains



-


3,100

Tax on actuarial gains



-


(837)

Share based payments



-


113

Tax on share based payments



-


135

Interest rate swap cash flow hedge



-


(25)

Exchange differences



379


-

At 30 November 2010



802


4,814

 

9.             Cash generated from operations






2010

£'000


2009

£'000

Operating profit





4,163


2,103

Non cash pension charge





200


500

Share based payments





113


124

Depreciation and amortisation





2,006


1,991

Loss on disposal of property, plant and equipment





111


5

Operating cash flows before movement in working capital





6,593


4,723

Decrease in inventories





662


1,522

(Increase)/decrease in trade and other receivables





(980)


1,982

Increase/(decrease) in payables





1,867


(2,211)

Decrease in working capital





1,549


1,293

Cash generated from operations





8,142


6,016

 

10.          Basis of preparation 

The preliminary announcement for the year ended 30 November 2010 has been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union as at 30 November 2010.  The financial information contained in this preliminary announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The financial information has been extracted from the financial statements for the year ended 30 November 2010, which have been approved by the Board of Directors and on which the auditors have reported without qualification.  The financial statements will be delivered to the Registrar of Companies after the Annual General Meeting.  The financial statements for the year ended 30 November 2009, upon which the auditors reported without qualification, have been delivered to the Registrar of Companies.

 

11.          Annual general meeting

The Company's Annual General Meeting will be held on Tuesday 5 April 2011 at 7 Regis Place, Bergen Way, King's Lynn, PE30 2JN.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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