Porvair PLC Stock

Good morning, everyone, and welcome to Porvair's interim results presentation. I will start with a summary of the highlights for the period and then hand over to James to cover the financials and the divisional performance. I'll then give an update on our priorities, progress made on M&A and finish with the outlook for the year before opening up for questions.

So let's start with the highlights for the first half. It's been a busy 6 months for us with a lot of momentum and good activity going on across the group. We have made strong progress against our near-term priorities we outlined as part of our full year results announcement in February, building on the platform to set the business up for the future. We are continuing to execute at pace and drive performance across the business, underpinned by disciplined capital allocation. This includes several initiatives to drive margin improvement and profitable growth, which I will come back to.

The integration of Drache, which we completed in January, is progressing to plan, and the business is trading ahead of expectations. We have also continued to deliver against our M&A strategy and progressed 2 further transactions in June. In addition to Drache, we agreed to acquire GV Filtri and we acquired Carekem. As previously announced, we are planning to host a Capital Markets event this year. The date is set for the 14th of October here in London. The event will be an opportunity to hear more about the business and the group's 3 divisions and to meet members of the senior team. We will also provide further insight into our future ambition, strategic priorities and financial framework.

Turning now to the financial results for the first 6 months. We delivered record revenue and profit. Revenue increased by 9% and operating profit was up 10%, resulting in adjusted EPS increasing by 11%. And our expectations for the full year remain unchanged before taking into account the part year contributions from GV and Carekem. At the bottom of this slide, you can see Porvair's track record for growth. As shown, the 5-, 10- and 15-year CAGRs are relatively consistent over a period when the group has grown from around GBP 60 million turnover to GBP 200 million today.

In terms of the key themes in H1, we have seen variability across our end markets. We experienced strong aerospace demand. Nuclear was also up, and we saw growing demand from our aluminum end markets across all regions and good demand for our value-added life science products. Petrochem was down as expected, reflecting reduced activity in Europe follow the very strong comparator with record revenue in H1 '25. We also experienced mixed demand across industrial consumables. James will give you more color around the end markets in just a minute.

And as we all know, this has been a period of macroeconomic uncertainty, including events in the Middle East. These haven't had a material impact on the group so far as our manufacturing footprint mainly serves local customers and our decentralized management structure gives us flexibility and speed in navigating volatile trading conditions.

Now variability across end market isn't unusual for us as we serve a range of markets in different parts of the world, while some markets can be down, we seem to experience others being up and over time, resulting in a relatively consistent progress across the group. In fact, this reflects the strength and resilience of Porvair's diversified portfolio. Our focus with the Executive Committee formed last year has therefore been on enhancing execution, driving operational excellence and strengthening accountability across the business. All of this is underpinned by disciplined capital allocation with continued investment across the business, including the final phase of the aluminum cast house upgrade in MMQ, which has been delivered on time and to budget. This has been complemented by 3 value-accretive acquisitions, which we will come back to. And we finished the period with a net cash position of GBP 7 million after investing around GBP 21 million in CapEx and M&A.

I'll now hand over to James to talk you through the financials and the divisional performance.

Turning then to cover the financial performance for the 6 months, and let me give you the headlines before providing some detail on what's been driving the group performance in the period. So top left-hand side, total group revenue of GBP 106.2 million is up 9% on prior period, with this being the first time that the group has delivered over GBP 100 million of revenue for the half. Adjusted operating profit of GBP 13.8 million is up 10% with the adjusted OP margin of 13% being an improvement of 10 basis points on the prior period with some ups and downs within the group, which I will come to in just a moment. So adjusted basic EPS of 22.1p is up 11% and cash generated from operations of GBP 9.7 million, down 5% with a return on capital employed of 14%, up 20 basis points on the prior period.

Turning to the income statement. These are the adjusted results only, which exclude the amortization of acquired intangibles and acquisition-related costs for the 3 deals that Hooman has just mentioned and details of the adjusting items can be found in Note 1 of this morning's announcement. So within GBP 106.2 million of revenue, the net impact of ForEx on the retranslation of the results has been modest with a weaker U.S. dollar almost entirely offset by a stronger Euro. And so the 9% reported revenue growth was also 9% on a constant currency basis. These results include Drache for the first time, consolidated from the 12th of January. And when excluding Drache, organic constant currency revenue growth was 2% with revenue performance adversely impacted by a GBP 7 million reduction in petrochemical activities within the Aerospace and Industrial division, where the European petrochemical market has remained subdued as expected and as previously signaled.

And so the group has delivered 2% organic growth, having managed a GBP 7 million reduction from petrochem against a record prior period. And I'll give some color on the other end market performance across the group in just a moment. As I mentioned, we delivered GBP 13.8 million of operating profit, a 10% increase on prior period, with the margin at 13%, a 10 basis points improvement on prior period, having managed both the short-term dilutionary margin effect from Drache, which comes in at around 10% and the operational gearing from reduced petrochem activities, which on its own and all things equal, has had approximately 170 basis points impact to group OP margin.

The impact of these margin headwinds has been more than compensated for by leverage on increased volumes in other areas, operational performance across the group and, of course pricing. The interest charge has remained broadly flat, noting that we drew down on our committed borrowing facilities in the period to help fund the Drache deal and the effective rate of tax increased marginally from 22% in the prior period to 23%, all of which has delivered the 11% increase in adjusted EPS to 22.1p. So before leaving this slide, a word on the interim dividend at the bottom. We maintain the group's progressive dividend policy. The Board has approved a 9% increase in the interim dividend to 2.4p. Turning to the cash flow. Cash generation is clearly central to the group's business model and supports our investment in both organic and inorganic future growth. So let me talk you through the headlines of the period.

And as I just mentioned, cash generated from operations was down 5% to GBP 9.7 million against the strong comparison. As a reminder, the group typically sees a working capital outflow in the first half of the year and the GBP 5.8 million outflow that you can see here in the line above with the resulting cash generation is more typical of what we see at this time of the year, supported as ever by strong working capital disciplines right across the group.

Moving down the cash flow, we invested a total of GBP 21.2 million in acquisitions and CapEx in the period. Drache, net of cash acquired was GBP 17.2 million, a provisional number, which will be firmed up in the second half once we've agreed the final purchase price adjustment with the seller, but we're not expecting a significant change, and we invested GBP 4 million in CapEx ahead of the usual run rate on a range of projects across the group focused on capacity, productivity and long-term efficiency, which in this period included the final GBP 1.5 million for the group's GBP 5.5 million investment in the aluminum cast house production line in Hensville in the U.S.

CapEx is expected to be around GBP 7 million for the full -- we drew down a net GBP 8.3 million on our committed borrowing facilities to help fund the Drache deal and still finished the period in a net cash position with GBP 7.1 million on the balance sheet. You can see at the bottom of the slide here despite having invested GBP 21.2 million in Drache and CapEx. And so it's the cash-generative nature of the group's business model, together with the strength of our balance sheet, which will continue to support ongoing investment in both organic and inorganic growth.

Moving to the divisional review. So starting then with Aerospace & Industrial, which delivered 41% of our group revenue in the period, of which Aerospace now accounts for around 11% of group sales and industrial the remaining 30%. So revenue is down 2% to GBP 43.8 million and down 3% at constant currency with operating profit at GBP 6.1 million and the margin at 13.9%. The end market dynamics have been mixed, which is not unusual for this division. And as I mentioned before, revenue has been adversely impacted by a reduction in petrochem activities, which can be lumpy and which resulted in a GBP 7 million reduction or 50% against a record prior period. And to note, we still expect the European petrochem market to remain subdued for the rest of this year.

In Aerospace, revenue grew by 8% on prior period, and we continue to have good order visibility for aerospace into the second half, though scheduling can always be affected by the broader supply chain, including OEM stocking levels. We had a pleasing period for nuclear. As previously signaled, we had a healthy order book coming into this year and the sector dynamics have remained favorable during the period. And as we go into the second half, the nuclear order book remains healthy. Once again, we had some gasification revenue in the period this time from a new customer contract won in the second half of last year, which has been great in demonstrating our capability beyond our existing client base. And whilst we still see future opportunities in the years ahead for gasification, we do not expect any more of this revenue in the remainder of this year.

As with the group results, A&I has delivered this performance despite having managed a GBP 7 million reduction from petrochem. And so the 70 basis points reduction in margin is largely a result of the operational gearing on net reduced volumes given the petrochem reduction, which on its own and all things equal, it had approximately a 350 basis points adverse impact on the OP margin within this division. Turning to Laboratory, which delivered 31% of our group revenue in the period. The revenue profile is slightly weighted towards Life Sciences, which accounts for just over 15% of group sales and Environmental, our Seal Analytical business, just under 15%.

Revenue was up 3% to GBP 33.2 million and up 4% at constant currency, with revenue growth balanced evenly across both Life Sciences and Environmental with consistent demand within both. Operating profit at GBP 5 million and the margin at 15.1%. And as ever, the division continued working on a range of new product introductions across both Life Sciences and Seal Analytical, all of which bode well for the future. In terms of the drivers behind the margin performance, progress has been delivered through the value-add product offerings and continued operational performance supported with capital investment.

And finally, then turning across the metal melt quality, which this time with the inclusion of Drache delivered 28% of our group revenue in the period from sites in the U.S. and China and now also, of course, from Germany. Aluminum cast house filters now account for approximately 12% of group sales with a range of filters and solutions for other applications making up the remaining 16%. So reported revenue was up 40% to GBP 29.3 million and up 46% at constant currency. And if we exclude Drache, organic constant currency revenue growth was 10%. Operating profit is at GBP 4.6 million and the margin at 15.7%. So in terms of the drivers of performance in the period, aluminum demand has remained robust, and we expect to see this demand continuing over the long term, given its infinite recyclability, its strength-to-weight benefits, particularly for use in transport, the initiatives to replace plastic and steel with aluminum and increasingly, the energy efficiency of cast house recycling, which is where we mostly play compared to primary aluminum production.

As an update on the group's GBP 5.5 million aluminum cast house investment in the U.S., which we talked to previously, being the upgrade of the production facilities. As Hooman has mentioned, the project has completed on time and to budget in the period. And as a reminder, that is a once in a 20- to 25-year CapEx, which replaces the outdated line, increases capacity and all of which will set the U.S. business up for future growth within the aluminum market.

Coming back to the performance then, Super alloys products range has delivered another pleasing performance with revenue growth driven by ongoing sector demand within both aerospace and energy. And so it's the performance of aluminum and super alloys, which once again has continued to drive revenue growth and margin performance in the division, with the 20 basis points reduction in margin being a result of improvements in the underlying business from value-added products, continued operational excellence and operating leverage on increased volumes, which have been more than offset in this period by the short-term dilutionary effect of Drache margins. That's all for me for the moment. Back to Hooman.

Thanks, James. Let me now tell you about what we have been up to in the period. As I said, it's been a busy one for us. We have made strong progress against our strategic priorities. As you know, last year, we formed an ExCo with the objective of enhancing execution and increasing momentum. It's about sharpening performance management, aligning on priorities as a team and deciding based on what's best for the group. Our decentralized model has several benefits, such as empowering the businesses to make decisions close to the markets they serve, creating an entrepreneurial spirit and a strong sense of ownership throughout the organization. In such a model, earned autonomy and accountability is essential.

Our operating model drives profitable growth while we continue to strengthen accountability across the business. It's also about sharing best practices between the divisions, such as approach to new product development, safety, operational best practices and driving a culture of continuous improvement. We have got amazing people in our business, and we continue to invest in people and leadership development to strengthen capability and improve succession planning. Leveraging expertise and resources across the business and across divisions is also an area to continue to actively work on as an ExCo. We've also taken the opportunity to strengthen the team in targeted areas.

As a cash-generative business with a strong balance sheet, it's all about disciplined approach to capital allocation. And we have improved the CapEx governance with focus on business case accountability and improved post-investment reviews. All of these are assessed against internal hurdle rates. On M&A, the ExCo with the support of the central M&A resource and input from general managers across the group proactively manages an M&A pipeline. Much of last year was about structuring the M&A work, building the pipeline and evaluating opportunities in a disciplined manner against well-defined M&A criteria. While we have reviewed many opportunities, we have completed 3 highly complementary transactions, one in each division for a total GBP 25 million consideration spent on M&A so far this year. This compares with the last 10-year average spend on M&A of circa GBP 7 million per year.

When we then acquired the businesses, the integration is crucial, and we have improved the integration process with disciplined governance. And I will tell you more about how the Drache integration is going on the next slide. As we continue to work on the many initiatives we have ongoing, it will strengthen the execution, build the capabilities we need to capture the opportunities the business faces and reinvesting in the business, all of which ultimately will drive margin improvement and profitable growth. We're looking forward to telling you more about this at our Capital Markets event in October.

Let me now say a few words about the 3 acquisitions. Starting with Drache, which we completed in January and was the largest deal in Porvair's recent history in the last 30 years. The business is a leading supplier to the aluminum filtration market and is an excellent fit with our MMQ division. As James mentioned, the growing global demand for aluminum is one of the many attractive end markets in which the group operates. In terms of completion update, the integration is progressing as planned with a solid 30-, 60-, 90-day plan in place with disciplined governance to ensure progress. The MMQ teams are working closely together between the U.S., Germany and China to drive commercial and operational improvements.

Early trading is ahead of expectations. As you may recall, this was a business below our divisional margin corridor for operating margin when acquired. And despite integration costs, it has already reached within the divisional corridor after 4.5 months with the group. So this is a good example of our disciplined M&A approach and strategy in action.

If we move on to the further 2 acquisitions post period end, -- we've also reached an agreement to acquire GV Filtri for EUR 6.7 million with completion pending regulatory approvals. This business specializes in engineering and manufacturing of industrial filters and filtration systems. It serves various industrial applications and end markets and has a turnover of approximately EUR 5 million. GV is a business we have known for many years and have an existing business relationship with. Under its current management, the business will join our Aerospace & Industrial division, increasing the division's capability and reach into the Italian market. It will also bring complementary products to those we currently have and enable cross-selling opportunities for the division.

And finally, we acquired Carekem, a U.K. laboratory servicing company focused on environmental instruments for around GBP 1 million. This is a small bolt-on acquisition for our Seal Analytical business within our laboratory division. It will give Seal access to a new customer base, enable cross-selling opportunities and to scale our Seal U.K. business. So all in all, so far this year, we have done 3 highly complementary acquisitions, one in each division for an aggregate consideration of GBP 25 million. And we continue to proactively manage and develop a pipeline of opportunities. We will also tell you more about our structural approach to M&A during our CME.

Let me quickly remind you of our investment case. We make products that are regularly replaced, they contain emissions, cleanup processes, reduced waste, et cetera. Demand is driven by the global growth trends shown at the top right, and Porvair remains well positioned to benefit from end markets with long-term potential. These demand drivers, along with our business model are what have delivered the 5-, 10- and 15-year growth track records you've seen. The advantages of making specialist filters are reflected in the attractive business characteristics shown in the middle of the slide. We make largely bespoke products with recurring revenue and high customer retention. Our products are regularly replaced either by regulation or maintenance schedules, so there is a stickiness to the business.

And we generally have good barriers to entry, some patents, but more importantly, quality accreditations and the fact that the customers will need to requalify if they want to change supplier. Our strategic purpose then is to develop these businesses for the benefit of all stakeholders. We principally measure success through consistent earnings growth. This consistency is fundamental to how we manage the business. We then aim on generating value by focusing on the right markets. Key to how we run the business is our decentralized structure with a lot of customer-led product development going on across the business. It's then all about allocating capital and our priorities are, firstly, organic growth opportunities and then M&A when we can find good businesses at a reasonable price.

So how we try to achieve this is through our 3 divisions shown here and the markets we serve. You can also here see our main operating companies within each division. This slide illustrates what we mean by regulated markets, which is particularly clear in aerospace with the FAA and CAA accreditations. You can also see the growth drivers and growth rates for these markets as well as our competitive advantages. In our case, the engineered design and installed base is important. Once we have been qualified to deliver a specific filter for a specific application, it becomes a sticky business and gives us high recurring sales.

You also see the margin corridor for the 3 divisions at the bottom of this slide. So this describes what we do, why we do it and why we have enjoyed the growth rate the group has delivered. Historically, around half the growth delivered has come from the market and the other half from new product development and M&A. Now turning to the final slide and the outlook. You can see the key points summarizing the first half of '26 at the top. In terms of the outlook, there is much to look forward to in '26, continuing the integration of Drache, welcoming GV and Carekem to the group and new product introductions in Aerospace, Seal Analytical and Porvair Life Sciences.

Although we expect the subdued market conditions for Petrochem in Europe to remain throughout '26, we see no change to the fundamental demand drivers for the group. These have served the group well in the past and will continue to do so. And before taking into account the part-year contributions from GV and Carekem, the expectations for the full year remain unchanged. We will, therefore, continue to deliver on our priorities, invest in the business as per our capital allocation framework, and we remain committed to a strategy of organic and inorganic growth.

Good morning, everyone, and welcome to Porvair's results presentation for the year ending 30th of November 2025. I will start by giving a summary of the highlights for the year and then hand over to James to talk through the financials. After that, I will give an update on our business model, strategic priorities and the outlook for the year.

So let's start with the highlights for the year. I will talk about the results in a minute, but allow me to first give you a flavor of what we have been up to in the year. It's been a busy year. Having been in the role for 10 months now, I spent a lot of time with our teams, visiting all our locations and understanding the business. We have carried out a full review of the strategy and defined near-term priorities, which I'll speak to a bit later.

We have also enhanced the way we work as a team by establishing an executive committee responsible for the management of the group, we have been proactively managing the M&A pipeline and adding a resource in the center to support in M&A activities. And post period end, by now, you know that we have been deploying some of the cash generated during last year in the acquisition of Drache, which has taken the best part of last year to land. And we will speak about Drache a bit later as well.

We also plan to host a Capital Markets event later in the year, where we will provide more details about the business, who we are and what we do. At the bottom of this slide, you can see Porvair's track record for growth. As shown, the 5-, 10- and 15-year CAGRs are relatively consistent over a period where the size of the group has gone from around GBP 60 million turnover to close to GBP 200 million now.

In terms of the year then, the group delivered record revenue, profit and margin. We have seen the usual variable trading patterns across the segments and our end markets, and we will come back to that in the divisional slides. Our focus has been on the quality of earnings and margin progression, resulting in operating margin being 80 basis points up to 13.5%, with margin progress across all our divisions.

We delivered a strong cash performance and have been focusing on our capital allocation priorities to deploy the cash generated. All of this resulting in delivering a 10% EPS growth. So overall, the group delivered another year of progress despite economic uncertainty and end market inconsistency.

In terms of key themes for the year, we have seen variability across our end markets, which isn't unusual across our group, as we serve a range of markets in different parts of the world. While some markets can be down, we seem to experience others being up and over time, resulting in a relatively consistent progress across the group.

We saw increased demand from the aerospace market, which started slower in H1 and had a strong H2, which led to the year overall being up on previous year. The laboratory end markets showed steady progress with clean water and the environmental demand being strong. The industrial demand was mixed with nuclear sales growing in the year, while Petrochem, which can be lumpy, had a stronger first half than the second half.

And of course, as we all know, a year with macroeconomic uncertainty and tariff environment, noting, however, that the group's manufacturing footprint mainly serves local customers.

On margin, cash and continued investment, focus has been on margin improvement, and we have had some FX headwinds as expected. We generated GBP 23 million of net cash after investing GBP 7.7 million in CapEx, and we are making good progress in the investment for the aluminum cast house capabilities in metal melt quality.

I will now hand over to James to talk you through the financials and the divisional performance.

Thank you very much, Hooman, and good morning, everyone.

Turning then to cover the financial summary of the year, top left-hand side. Total group revenue of GBP 194 million is up 1% on prior year and adjusted operating profit of GBP 26.2 million is up 7%, with the adjusted OP margin of 13.5%, being an improvement of 80 basis points on the prior year. And as Hooman mentioned, with progress -- margin progress across all 3 divisions. And I'll provide a bit more detail on the drivers of performance in the divisional review in just a moment.

Adjusted basic EPS of 42.3p, up 10% year-on-year and cash generated from operations of GBP 29.2 million, up 14%, helping to deliver a closing cash balance just shy of GBP 23 million at the end of the year.

Turning then to the adjusted income statement. Within the GBP 194 million of revenue, we had a translation of ForEx headwinds from a weaker U.S. dollar, noting that around 45% of our group revenue is delivered from the U.S. And on a constant currency basis, revenue growth was 2%. Price increases have been around 3% on average across the group with volumes impacted by some strong comps in certain parts of the business, which I'll come on to shortly.

And as with revenue, the OP of GBP 26.2 million was also adversely impacted by ForEx this time by around GBP 0.3 million. The interest charge, you can see here has decreased from GBP 1.8 million to GBP 1.1 million, as we repaid our borrowings in the second half of last year and the effective rate of tax, has increased marginally to 22%, up from 21% last year. And so the increase in operating profit performance, together with the lower interest charge and higher effective rate of tax delivered the 10% growth in EPS to the 42.3p.

Turning then to the cash flow. So clearly, cash generation is central to the group's business model and supports our investment in both organic and inorganic future growth. So if I put out the headlines then for the year, the 14% increase in cash generated from operations to GBP 29.2 million was driven by improved trading performance, particularly with the margin coming through the business together with continued discipline in our working capital management, with the working capital outflow of GBP 1.6 million improvement against the GBP 3.8 million that we had at this time last year.

So as a reminder, the GBP 29.2 million is stated after the recovery payments into the group's U.K. defined benefit pension scheme. And as an update during the year, we completed the latest triennial valuation of the scheme, after which we agreed with the trustees to maintain recovery payments of GBP 2.1 million per annum with a view to reaching a low-risk self-sufficiency basis for the scheme by December '28.

It's been a busy year for CapEx with GBP 7.7 million invested in a range of capital projects across all 3 divisions, which includes the usual GBP 1 million to GBP 1.5 million of maintenance sustaining type CapEx, but the CapEx is higher than the usual run rate of GBP 5 million per annum as it includes around GBP 3 million this year in relation to the group's GBP 5.5 million investment in the aluminum cast house production line in Hensonville in the U.S., which is a project we talked about before, and we have another GBP 1.5 million to go in '26 on that project as that comes to a close.

So the CapEx number for next year is likely to be around GBP 7 million again. So moving towards the bottom of the slide, finished the year, as I said, with GBP 22.9 million of cash and no debt, having invested the GBP 7.7 million in CapEx. And important to note at this point that we deployed a big chunk of that cash shortly after the year-end, as Hooman has mentioned, we'll talk to in just a moment.

And as ever, the cash towards the bottom is stated, excluding the IFRS 16 lease liabilities, which form part of our reported position. So a word on dividends and maintaining the group's progressive dividend policy, the Board is recommending a 7% increase in the final dividend to 4.5p.

Okay. Turning over to the divisional review. So this time around, we've included a slide on each division. As a reminder of what we do as well as to provide some detail into the drivers of performance across the group. So starting then with the Aerospace and Industrial division or A&I as we refer to it, which delivered 43% of our group revenue this year from sites in the U.K., U.S., the Netherlands, Belgium and India.

So within the 43%, aerospace accounts for around 12%. So clearly, the industrials are just over 30%. And as a reminder then of what we do in aerospace, we mainly filter liquids on commercial aircraft. So as an example, this is an image, a pretty cool image of an Airbus A321XLR, one of the newest in the Airbus fleet on which we supply over 200 parts on each aircraft, including filters and components for fuel systems, coolants, hydraulics as well as inerting filters.

So the industrial part of our business is a little more difficult to summarize as we provide a range of filters and solutions into various markets, including nuclear, microelectronics, Petrochem and Gasification as well as for pharmaceuticals and food and beverage.

So in terms of the financial performance for this year, revenue is down 1%, flat at constant currency, with operating profit at GBP 11.9 million and the margin at 14.2% 20 basis points improvement on prior year, they're still at the bottom end of the 14% to 16% target range for the division. The end market dynamics have been mixed, particularly with industrials, which is not unusual for us. So if I start with Aerospace then.

So revenue grew by 4% for the full year with a stronger second half than first, where, as a reminder, revenue was down 8% on the prior period. And whilst we continue to have good order visibility for aerospace, the timing of that revenue can always be affected by the broader supply chain, including fluctuations in OEM stocking levels.

Petrochem sales finished 6% down after a strong first half. And as a reminder, Petrochem sales can be lumpy and so proved this year with a much weaker second half than first. And as we enter 2026, we expect the European petrochem market to remain subdued for the remainder of the year. You may recall that we had a gasification win in the prior year with a particular client with the majority of revenue trading in the '24 numbers, but with some filters to ship in '25. And so gasification revenue is as expected, down year-on-year.

In the second half, we won another modest gasification project with a new client, which is a testament to the quality of our offering, and this revenue is due to trade in '26.

A word on EFC then. EFC is a business that we acquired back in December '23. So that's now completed 2 full years with the group and has continued to demonstrate progress in the division and the benefits of becoming part of Porvair and we continue to experience mixed end market performance within the U.S. industrial with some weakness, particularly within microelectronics. So we had a pleasing end to the year within nuclear, where we finished 8% up and with a healthy nuclear order book going into '26.

Turning then to the Laboratory division or lab, which delivered 35% of the group revenue this year from sites in the U.K., U.S., Germany, Hungary, the Netherlands and China.

Life Science accounts for approximately 20% of group sales in environmental, our Seal analytical business around 15%. So in terms of what we do, as a reminder, life science supports chromatography and other lab activities with Bion filters used in various applications, for example, within pipettes and together with microplates vials, lab consumables and lab automation equipment supplied by our Kbiosystems business.

Within environmental, Seal Analytical is a global leading supplier of automated lab instruments, which supports environmental, agriculture and industrial testing with a particular focus on water quality and the analysis of inorganic contamination and nutrients. So this background image you can see here is of the AQ700, a recent product launched by Seal Analytical, which we referenced in recent results announcements, which runs large testing batches with next to no manual intervention in the lab and in doing so, delivers accurate low detection limit results.

So in terms of the financial performance then, revenue was up 4% to GBP 66.9 million, 5% up at constant currency, with operating profit at GBP 10.9 million and the margin at 16.3%, nicely ahead of the target range of 15% plus for the division. Environmental delivered 9% revenue growth with continued demand for Seal instruments.

And the Life Sciences businesses delivered steady progress with a particularly pleasing year for Kbiosystems, providing a range of new lab automation equipment into the market.

So in terms of the drivers of performance this year, progress has been delivered by 3 main factors: one, an improved operational focus across the division; two, continued CapEx in automation and capacity and three, a revenue drop-through on increased volumes and throughput, particularly within Seal. And as ever, the division has been busy working on a range of new product introductions across both Life Sciences and Seal Analytical, all of which bode well for the future.

Finally, then turning across to Metal Melt quality or MMQ, as we refer to as, which delivered 22% of our group revenue this year from 3 sites, 2 in the U.S. and 1 in China, with aluminum cast house accounting for approximately 10% of group sales and a range of filters and solutions for other applications making up the remaining 12%.

So in terms of what we do, and as a reminder, MMQ manufactures filters, primarily ceramic filters, which you can see a glimpse of in the image just above the numbers here, ceramic filters and related equipment for use in various molten metal applications.

In aluminum cast house, our ceramic filters are a global leading product supporting the growing demand for aluminum filtration, which is a market we are excited about given the global growth trends, which include the replacement of plastic by aluminum, the light weighting of transport and the energy efficiency of cast house aluminum recycling compared to primary production. And all of that, of course, is supported by aluminum's infinite recyclability.

So clearly, this backdrop image is of aluminum can stock, and we estimate that over 90 billion cans have been through air filter. So next time you guys are drinking from one of these, perhaps you can spare a thoughtful MMQ.

The remaining other section of the MMQ business includes foundry, for which filters are supplied into the auto truck and agriculture end markets and also super alloy filters and systems, which support high-strength applications, including those in aerospace and the energy markets.

So in terms of the financial performance for this year, so revenue was 1% lower at GBP 43.4 million and up 1% on constant currency with operating profit at GBP 6.6 million. And again, the margin just over 15% and still above the target range for the division of 10% to 12%.

In terms of the product line performance then, so foundry was down and has weighed on the top line performance with softness in our U.S. markets, particularly within agricultural, although the second half did see an improvement in performance over the first half. And important to note again that whilst foundry has weighed on the top line, it's a relatively small lower-margin offering within MMQ.

Superalloys range, however, has delivered another encouraging performance with revenue growth driven by demand in aerospace and energy and the aluminum demand has remained robust, including within our China business, and we see this aluminum demand continuing over the longer term, backed by the global growth trends that I've already referred to. And so it's the performance of super alloys and aluminum, which continues to drive margin performance in the division.

So worth noting that the aluminum cast house investments that we've talked to before and that we kicked off last year, progressing to plan with completion expected in the first half of '26. And as a reminder, this is a once in a 20- to 25-year CapEx to replace and upgrade the aluminum production line, which will set the business up nicely for future growth within this market.

So that's all from me. My final point for Metal Melt, probably a nice segue to pass you back to Hooman.

Thank you, James. Let me say a few words about the acquisition of Drache, which we announced on the 12th of January this year. Drache is a leading supplier to the aluminum filtration market.

The growing global demand for aluminum is one of the many attractive end markets which the group operates in, and James just talked about some of the trends in this market. Drache is a business that we have known for many years and is a cultural fit with [ Seal ]. It is a strong strategic fit with MMQ division in terms of geography, products, global commercial and technical team and becoming a significant player in an attractive market. It gives the division a global reach with a new European base.

And as you can see on the map, the 2 businesses complement each other from a geographical perspective in an excellent way, with [ Seal ] being strong in North America, while Drache is stronger in the EMEA region and combine the businesses strengthen the position in Asia. This will also bring complementary products to the ones [ Seal ] has and strengthens MMQ's systems and engineering expertise, enabling the business to become a full product and service provider to its aluminum cast house customers. All of this should start to contribute to the group in 2026 and beyond. And as a result of the acquisition, MMQ's position within the group becomes more balanced.

Let me quickly remind you about our business fundamentals. We make products that are regularly replaced. They are highly engineered and they contain emissions, clean up processes and reduce waste. And by doing that, our products typically protect our customers' critical downstream systems. Demand is driven by the global growth trends shown on the top right, and Porvair remains well positioned to benefit from end markets with long-term growth potential. And these demand drivers, along with our business model are what has delivered the 5-, 10- and 15-year growth track record you have seen.

Now the advantage of making specialist filters are that you have this attractive business characteristics shown at the bottom of the slide. Niche positions, these are largely bespoke products for applications with recurring revenue and high customer retention. Fundamental demand drivers with the long-term growth trends mentioned. These products are regularly replaced either by regulation or maintenance schedules, so there is a stickiness to the business. And generally quite good barriers to entry, some patents, but more so quality accreditation and the fact that a customer will need to requalify if they want to change supplier is very important to us.

In terms of the group and the markets that we approach, you can on this slide, see our 3 divisions and our main operating companies within each division. This slide is also trying to show what we mean with regulated markets. This is, for example, very clear in aerospace with the FAA and CAA accreditations. You can also see the growth drivers and growth rates for these markets and what our competitive advantages are.

And in our case, the installed base is important. Once you have been qualified to deliver a specific filter for a specific application, it's a sticky business, making us one of those businesses with high recurring sales. We have -- as we have engineered designer, you typically engineered into our customer system. So for example, if you get on to an aircraft model, you tend to be there for a very long time provided that you deliver and perform. So this describes what we do and why we do it and why we have enjoyed the growth rate that this group has delivered.

Historically, half of the growth has been coming from the growth of the market and half from new product development and inorganic growth. Most of you are by now familiar with our business model, which this slide is summarizing. Our strategic purpose being to develop these businesses for the benefit of all stakeholders. We principally measure success through consistent earnings growth, which is what we are trying to achieve and certain ESG metrics. This consistency is something that is fundamental to how we drive the business.

And I will speak to the ESG metrics on the next slide. It is then all about focusing on the right markets, and I did highlight the ones that we are focusing on. Key to the group is a lot of customer-led product development going on across the whole business and our capital allocation priorities. Firstly, to organic growth opportunities and then M&A when we can find decent businesses for a reasonable price.

Moving on to ESG. Generally, filtration companies have a good ESG story to tell, given that our products reduce emissions, cut waste and improve efficiency of our customers' processes.

We measure and incentivize senior managers with ESG metrics, some of which you can see on the top right box. You can see the progress on various of these on the slide, and it's a key focus for us with a lot of activities going on around all of these. Overall, we are making progress on many of these, but also have more work to do. We continue to invest in our people, talent development and employee engagement.

On carbon intensity, in 2020, we set a target of reducing our carbon intensity ratio by 10% by 2025. Having met this target in '22, the group set an additional target of reducing the ratio a further 10% by '25, which we achieved. So in total, reducing it by 31% from the baseline of 2020, and 11% from 2022. We do publish our ESG report as part of our annual report, in which we elaborate more around these. And within that report, we also outline our strategic framework. This explains why we like the markets in which we operate in and how we see them developing.

Now if we turn to the strategic update and near-term priorities, as mentioned already, we formed an executive committee during last year, consisting of the executive directors and the divisional MDs. We carried out a full review of the strategy together as a team. We like what we have got. There are many strengths of the group to build on, such as all divisions facing attractive end markets, which we have talked about earlier. We have outstanding people across the business.

The decentralized model is key to how we operate and creates an entrepreneurial spirit across the business with key commercial decisions being made close to the customers and suppliers, our technical expertise and know-how and the fact that many of our products are engineered into our customer systems and therefore, leading to a high customer retention and high proportion of recurring revenue, of which most is derived from customers' OpEx spend.

Our low customer concentration, diverse end market spread and geographical spread and the differentiated product portfolio, all of which contributes to a source of resilience and consistency for the group.

So to build on this great foundation, the strategy review covered how we can enhance execution and forming an executive committee to deliver on the many opportunities we have is a part of this. Other areas are our approach to the market, given that we provide highly engineered products and solutions that protects our customers' complex and costly downstream systems. Agile, customer-led new product development continues to be a core business activity.

The group's operating model empowers our businesses to make decisions close to the markets they serve. At the same time, continuous improvement, operational excellence and leveraging the experience across the group remains important. Our operating model drives profitable growth while we continue to strengthen accountability across the business. I will, of course, be looking into us having the right focus and resources for execution. And underpinning all of what we do are our people across the business and to continue to invest in our people and talent development across the business remains an area of focus.

And our capital allocation priorities continue to focus on investment in organic and margin-enhancing opportunities and then inorganic growth by acquiring complementary businesses for a reasonable price.

And as you know by now, we have added a resource in the center to support M&A activities. All of these will underpin the group's long-term growth potential.

Now turning to the final slide and the outlook. You can see the key themes summarizing 2025 on the top.

Looking forward, in the near term, there is much to look forward to in 2026, welcoming the team at Drache to the group, new product introductions in Aerospace, Seal Analytical and Porvair Life Sciences. We also hope to see the recovery of industrial consumables. And longer term, we see no change to the fundamental demand drivers for the group. These have served the group well in the past and will continue to do so. So we will continue to invest in the business, such as the installation of our new manufacturing line for aluminum filtration in Hendersonville, which should be up and running during this year. And we are committed to a strategy of organic and inorganic growth.