Right, morning everybody. Thank you so much for coming to the interim results, which, as you know, won't take very long. But we will go through the slides because we're recording this for the purposes of the tape. Hi, good morning. So we'll just run through it. No change to the strategy, which is we're now in its 20th year. The results are pretty much as expected. James will take you through those in just a few moments. And as always, we put the five, 10, and 15-year record in. So the first six months of the year, perhaps a little below trend, on the five, 10, and 15-year view. But as I'll come back and say at the end, we think that, you know, we feel pretty comfortable about 2024 as a whole.
So just to run through the background, as you know, we make filters, and related products, regularly replaced engineered products. We like these, the number of attractive business characteristics that we list, at the bottom there. And this is quite important, I think, when you look at us, global growth trends. The reason the business performs as consistently as it does is it's in markets that there is a consistent following wind. It's not to say that all the businesses that we own perform consistently, and we'll get onto that, but the underlying market drivers don't really change. We all operate in three divisions, helpfully color-coded here.
This slide actually has a lot in it in terms of how the business splits across those divisions, what we mean by regulated markets, FAA, CAA for aviation, the EPA for water quality, and so forth. The growth drivers to which I've alluded earlier are set out in a little bit more detail for you there. And the growth rates, which we update pretty much every time. They never move very much, actually. Airbus and Boeing have brought their 20-year view down a couple of points in the last six months, but more or less that doesn't change, nor does the competitive advantage. This is an annuity business where the installed base, the incumbent supplier has a huge advantage over the competition on a application-by-application basis. So no real change there. No change to the strategy.
We develop these businesses. Principal measures of success are consistent earnings growth. We don't really do the ESG result at the half time. We produce a full report in February, and we talk about it a good bit, a lot more detail at the end of the year. So we won't do that today, but if you do have any questions, we'd be very happy to answer them. And then what does that mean? Well, regulated markets, customer-led product introduction to try and move a bit quicker than those markets, and allocating cash primarily to organic growth where we get the best return on capital employed, acquisitions when we can find them. We are always a willing buyer, but that doesn't necessarily mean that we can find a willing seller at a reasonable price and a progressive dividend. So that's it. That's the whole Porvair story.
In terms of then, how's the last six months been and what does it feel like, and I'll talk about the outlook in, in, in a few moments. There's more variability around the normal, and that's what has been the case in the last two six-month periods. So we've had, I think last time we, the left-hand box was called swings and roundabouts. So this time we've gone with ebbs and flows just to make sure that everybody's concentrating. So on the positive side, aerospace and petrochemical, they've both been strong for at least 12 months, and continue to be so and are booked well out into 2025. Water quality is nearly always pretty steady, I must say, for pretty obvious reasons, I think.
So on the weaker side, really, now for 12 months have been the consumables business where we typically would provide a filter that will actually go into the maintenance shed or into the warehouse waiting for the replacement cycle to turn. And so destocking, be it structural or to do with corporate treasurers squeezing working capital, does have an effect on this sort of business. And so both in laboratory and industrial, we've found some weakness over the last 12 months. That's still sort of the case in the U.S., we think. I'll talk a bit more about that in a moment. But lab consumables, which had a tremendous post-COVID stock, then had an equally tremendous destock, and now actually is back to normal times.
Spring of 2023, laboratory consumables were out to 24 or 26 week lead times, which is, you know, ridiculous for that sort of product. They are now back to 4 weeks-6 weeks, which is where they ordinarily should be. So that actually is quite good news, and it means things are settling down. And then in terms of sort of margins, cash, and so forth, we enjoyed the ambrosia of Forex benefit for, I think, about 4 years. So we can't complain too much when the worm turns, as it has done, and there's about GBP 400,000 of operating profit headwind in this six months. Cash is fine. The cash balance compared to 12 months ago is less by almost exactly the amount that we paid for EFC on the 4th of December, so you would expect that.
We haven't done a deal in the last six months, but we did two last year, so we are digesting them. EFC has started really well. That's a Belgian industrial filter distributor. Ratiolab is now picking up, but it has been a bit more, has taken us a bit longer, and you'll see that in the laboratory margins when we get there. Investment continues unabated. It doesn't really matter about this sort of short-term variability. This is just to warn you that we've just signed off quite a large upgrade in the metal melt business in Hendersonville, for a new oven, which will go in in 2024 and 2025. So that will be $6 million-$7 million worth of investment over that period, which is a lot for us, and we'll, you know, it's fine.
We've planned for it, just so you are aware that that's coming up in 12 and 24 months' time. So that's it. James will now give you the detail.
Thanks, Ben, and good morning to you all. So moving to the summary of financial performance for the six months, top left-hand side and working left to right. Total group revenue is up 5% on prior period with double-digit revenue increases of 11% in aerospace and industrial and 10% in laboratory, whilst we had an 11% reduction in metal melt quality. And as usual, I will add some color to the divisional performance in just a moment. Bottom left then, adjusted PBT is 3% lower at GBP 11.5 million, whilst adjusted EPS is 4% lower at GBP 0.195. And we finished the period with GBP 4.1 million of net cash. On the balance sheet, a GBP 10 million reduction on the GBP 14.1 million. We closed the year-end with having bought EFC in the first week of this financial year.
Moving to the income statement, as usual, we are presenting the adjusted results only this morning, and details of the adjusting items can be found in note one of this morning's announcement. The 5% top-line growth delivered GBP 94.6 million of revenue. And as previously signaled and Ben has referred to, we experienced a Forex headwind in the half, and at constant currency, revenue growth was 8% rather than the 5% as reported. These results include Ratiolab and EFC, both of which were not in the prior period. And if we exclude these two acquisitions, then the underlying revenue was 3% lower against a strong comparator. The operating profit of GBP 12.5 million is 2% up on prior period, and the margin performance remained above 13%.
The forex headwind that Ben and I have referred to has, unsurprisingly, also affected operating profit, which had an adverse impact of around GBP 0.4 million. Interest increased to GBP 1 million, primarily from the IFRS 16 lease liability charges within the two acquired businesses, together with the cost of borrowing as we drew on our facilities to help fund the EFC deal at the start of the period. The tax charge is consistent with prior period, albeit the effective rate increased to 22% from 21%. With the movements in interest and tax, the 2% growth in operating profit resulted in EPS being 4% lower at GBP 0.195, as I say, against a strong comparator.
Moving to the simplified cash flow and pulling out the headlines from the period, starting from the top and moving down, operating cash flow at GBP 14.2 million was GBP 1 million up on prior period, with cash generated from operations broadly GBP 1 million lower at GBP 7.1 million with the movement in working capital. And as a reminder, the group typically experiences a working capital outflow in the first half, which was particularly so this half year with some engineering projects in the Q2 performance, which, can sometimes be lumpy. Moving down, we invested GBP 10.2 million on the acquisition of EFC, and we continued with CapEx investment with a further GBP 2.5 million invested around the group, a little ahead of the prior period.
Also, as a reminder, we typically invest around GBP 5 million each year on CapEx, though for this full year, we expect this to be closer to GBP 6 million as we start to upgrade one of the production lines within our U.S. metal melt facility, as Ben has mentioned. Moving to the very bottom of the slide, we finished the period with GBP 4.1 million of net cash on the balance sheet, having invested GBP 12.7 million on acquisitions and CapEx. The net cash of GBP 4.1 million includes GBP 7.9 million of borrowings, which, as I said, we drew to help fund the acquisition of EFC. As ever, the cash numbers at the bottom of the slide exclude the IFRS 16 lease liabilities, which form parts of our reported position. A word on the interim dividend.
In maintaining the group's progressive dividend policy, the board has approved a 5% increase in the interim dividend to 2.1 pence. Okay, moving over to the divisional review and to add some color on the business performance, and again, working from left to right. Aerospace and industrial revenue was up 11% to GBP 40.4 million, with operating profit at GBP 5.9 million and margin at 14.6% within the target range for the division of 14%-16%. Within the top-line performance, it's been mixed. Aerospace sales were up 15%, and petrochemical sales, which can, as I mentioned a moment ago, be lumpy, were up 43%. However, U.S. industrial sales were down, though broadly offset by EFC's strong start with the group.
During a period of low volume, which we've had, the HRW acquisition from last year has continued to support microelectronics margins, which has been helpful, as has better order intake from certain industrial markets over recent weeks. Moving across to laboratory, revenue was up 10% to GBP 32.1 million, with operating profit of GBP 4.5 million and margin at 14%, a little below the 15% plus target for the division. First half performance of this year, very similar to the second half of last year. And as with U.S. industrial, we've started to see better orders in labs in recent weeks. The business has remained busy, with further investment going into the Hungary facility that came with the Ratiolab acquisition and with further product developments, particularly within SEAL.
Looking forward, we expect margins to return to target levels, which will be helped by certain integration costs within Ratiolab falling away in the second half of the year. Finally, moving across to metal melt quality, revenue was 11% lower at GBP 22.1 million, with operating profit of GBP 3.5 million and the margin at around 16%, well ahead of the 10%-12% target range for the division. U.S. industrial stocking also had an adverse effect on the metal melt quality top line, though the turbine blade business had a really strong half. So it was mix and operational disciplines which drove the margin performance and also a good performance from the China business. And as we said previously, the underlying demand drivers remain robust for metal melt quality. And that's all from me for the moment. Thanks.
I'll pass you back to Ben.
So finally, the outlook. So half one, as expected, we saw you in February, which feels like about five minutes ago, and told you that this was, you know, likely to be a half one, half two sort of a year. No change in the underlying drivers of the business at all. So we expect aero and petrochemical to be very solid all the way out beyond the end of this year. And so it's really a question of where some of the consumable businesses, where demand is patchy, how and when they properly pick up. There are some signs, as James was saying, that that's coming now. Orders in the last few weeks in one or two of the operations have been better. So, but, you know, we'll have to see.
We certainly think the second half will be better than last year's second half, which will, you know, enable us to deliver a pretty solid full year, I think. And beyond that, we think that we've got a number of things coming along which will be promising for 2025. There are some large petrochemical orders that should ship just at the end of the year and will bleed into early 2025. Ratiolab is starting to pick up now, really quite a good second quarter. It took us a while to dust down some management and other issues, so that will be helpful. And so we think that by the time we see you again just after Christmas, we'll have a pretty solid set of results. That's it. Are there any questions?
Dan Dalton from Davy.
Yeah.
Can I very solid set of results. Can I just ask on EFC, which you've had for the first half, it looks like it's sort of made about GBP 1 million of profit contribution. Is there a sort of seasonality to the business, or can we sort of think about that as a, you know?
Can you annualize that figure, basically?
It's not as much as that. No, there should be no seasonality. They've got general industrial, industrial distribution, which should be steady. And then they do have demisting filters, which will come and go a bit, but modest effect. Yeah.
Yeah. So it's quite a decent start, really, isn't it?
Yeah.
Better start than we expected. Yeah.
Sure.
Yeah.
Should we think about annualizing the first half profit contribution from that, or?
You think, Dan, you think about whatever, you know, we never answer those sorts of leading questions. But yeah, that would be a fair assumption, wouldn't it?
Okay. Thanks.
Any other questions? Andrew?
Hi, Andrew Humphrey, Peel Hunt. Can I ask about the Ratiolab integration? Was there anything there that was kind of unexpected? Could you kind of drill down into a bit more detail?
Yeah, we didn't really drill down. So there are two aspects to that. The first is that we've gone quicker than we expected to in putting kit into the Hungarian plant. So there's a German sales operation and Hungarian manufacturing operation. And we bought the Hungarian freehold in order to be able to put kit in unfettered high bay . And, and we've that, that's very promising indeed. And they've got some great toolmakers. So we've accelerated that. So there's some cost associated with that. As sometimes happens with acquisitions, the guy who sold it turned out to offer less value for money than he felt that he was offering. So that took a while to unwind and was quite expensive when it did. So those are the two effects you see.
Anybody else?
Yes, sir.
Just a quick question about the CapEx, obviously, an increase this year. Anything in terms of the next 24 months, so in terms of infrastructure CapEx that you can see of, of note?
Well, just the one I mentioned, which is, so the underlying CapEx for the business is about GBP 5 million. If push really came to shove, we could see GBP 2.5 million or GBP 3 million is, if you like, the maintenance rate. So above that, we try and do capacity or capability or automation and, you know, margin enhancement. And that will continue, that underlying five, you know, for several years, on top of which we will replace, which we have to do about every 25 years, the largest line we have actually is a huge 107-foot oven and all the accoutrements that go with it. And that we've just signed it off, and the fit-out work will start now.
And then the money will start flowing out right at the end of this year and mainly through 2025.
Well, is that, is that the kiln?
That's a kiln.
Kiln. Thank you.
Thank you.
Perfect. Thank you.
Okay. Anything else? Marvelous. Thank you very much. Very nice to see you all bright and early on a Monday morning, and we'll see you again at the end of the year.