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Can you explain the changes Porvair plc has undergone in recent years?

In line with a strategy first laid out in the 2000 Annual Report, in recent
years Porvair has:

- Significanty increased research and development investment in new materials technologies that the Board believes have the potential to transform the financial performance of the Group.

- Commissioned new manufacturing facilities in both Selee and Porvair Filtration Group and made strategic acquisitions to strengthen both these specialist filtration businesses.

- Disposed of those businesses which no longer fitted into the long term plans for Porvair.

As a result Porvair has evolved into a profitable, cash generative specialist filtration business with technical expertise in some new microporous materials that have the potential to transform the financial performance of the Group.

Porvair Group profits are held back by significant R&D expenditure. Can you explain why?
Porvair is a materials science business. In the materials science field the best returns are typically found in companies who develop and exploit their own proprietary materials. Porvair has been developing two such proprietary materials since 2001 : porous/microporous metals; and microporous carbons for bipolar plates.
The Board recognises that the R&D expenditure required to develop these materials holds back Group profits, but believes that the nature of the materials and markets involved fully justifies the expenditure incurred.

How much R&D expenditure is undertaken by Porvair ?
In 2003 the Group spent £5.8m in R&D, and £5.9m in 2002. Of this, approx. £3m was spent on the new materials in each year. The remiander was spent on the core filtration businesses which themselves have several high growth potential products in development.

What are the main growth opportunities for Porvair?
All the 2004 Porvair businesses are growing and have interesting prospects, including:
Hot gas filtration products of the Porvair Filtration Group. “Coal gasification” is fast growing as energy companies look to find alternatives to natural gas, and to use unexploited deposits of coal. Porvair filters are proven to work in the gas clean up phase of coal gassification plants
Aerospace filtration devices. Porvair's Microfiltrex operation specialises in aerospace filtration devices for both new build and replacement parts.
Fuel cell components. Porvair's proprietary bi-polar plates have demonstrated outstanding technical performance in 2003 and are undergoing further technical development in 2004
Porous metals. Porvair is constantly developing its unique range of porous metals. Porous metals have a number of interesting attributes. Whilst strong and light, they wick fluids, conduct heat and electricity, diffuse flame and attenuate sound. These attributes are valuable notably in heat exchange, catalysis, radiant burner, electrical conductor and water treatment fields.
Ceramic foam filters. Selee Corp has added-value foam filters in early commercial stages. Selee specialises in metals filtration and metals handling materials. These are large global markets and if successful these developments will significantly improve Selee's profitability.

Does Porvair make fuel cells ?
No. The Group is actively developing fuel cell components in its subsidiary - Porvair Fuel Cell Technologies. The Group has unique, microporous bi-polar plates under development. Bi-polar plates are a critical component of PEM
fuel cells. In a typical 50kw fuel cell will be approx. 300 bipolar plates. These products, if brought successfully to commercial scale will transform the prospects for the Group.