RNS Number : 9391I
SWP Group PLC
26 November 2008
SWP GROUP PLC ("SWP" OR THE "GROUP")
PRELIMINARY RESULTS FOR THE YEAR ENDED 30THJ JUNE 2008
SWP Group (LSE: SWP) , the industrial engineering group, is pleased to announce its preliminary results for the twelve months ended 30
June 2008
Highlights
� Acquisition of the Ulva brand and associated assets on 29th November 2007
* a strategically important purchase.
� Vertical integration of Ulva brand with DRC*s manufacturing capability well under
way by 30 June 2008. Full continuity of supply chain and retention of customer base.
� Group revenues ahead by 20.1% (2007 - 12.5%) at �25.1m (2007 - �20.8m).
� Profit margins increased to 36.0% (2007 - 32.5%).
� Underlying operating profit increased by 87.8% (2007 - 43.0%) at �2.0m (2007 - �1.07m).
(Total operating profit increased from �1.068m to �8.181m)
� Underlying profits before tax increased by 200% (2007 - 203%) at �1.4m (2007 - �0.47m).
(Total profits before tax increased from �0.428m to �7.678m)
� After adoption of International Financial Reporting Standards (IFRS) shareholders
funds have advanced to �10.92m (2007 - �2.58m).
� Underlying basic earnings per share on ordinary trading activities up 250% to 8.8p
(2007 - 2.51p).
(Total basic earnings per share increased from 2.51p to 45.05p).
� Steady progress at Fullflow Group in challenging market conditions with sales
ahead by 9.7%. Particular emphasis placed on the rapid expansion of international
sales whilst in the UK, Plasflow*s penetration into the nuclear sector as well as
strategic partnerships augurs well for future growth.
� Management succession issues at Crescent successfully addressed. Key
appointments across the Group strengthen management competence for the future.
� DRC now profitable with potential to enhance profitability through sales of Hylam IQ
to the water utilities and Ulvashield to the oil, gas and petrochemical sectors.
Management change and restructuring now complete.
� Ulva sales and underlying profits provide a platform for strong organic growth and
positive trends in both Group profitability and cash generation.
� Post 30 June 2008 successful completion of refinancing away from current debt into a combination of overdraft facilities and 5 year
term loan.
Chairman's Statement
Corporate Review
The year to 30 June 2008 has seen significant change to the dynamics of our Group's activities. For several years the negative impact of
losses at DRC has held back the Group's development. On 29 November 2007 SWP was able to acquire the Ulva brand together with its associated
assets, thus bringing to a successful conclusion a series of litigation cases which were adjudged in DRC's favour earlier that summer. The
integration of DRC's manufacturing capability with Ulva's brand and marketing activities in the global oil, gas and petrochemical markets
has already had and will continue to have a profound effect on their combined ability to generate both profits and cash resources in the
future. The impact of the Ulva acquisition together with the resilient nature of the Group's other core activities means that we now have a
Group where each of the businesses is profitable. Through these businesses we operate a portfolio of brands which enjoy an enviable
reputation and are often specified by a discerning range of internationally based customers who have come to recognise our overall commitment to product quality and customer service.
In short SWP Group is now a fully integrated self contained industrial engineering group based on accredited product specifications
where brand development plays a pivotal role in winning business and driving international expansion. Our product range now extends far
beyond what might be referred to as the traditional construction industry and includes items such as leak detection systems for the water
utility companies and pipework for nuclear reactors. We also serve a wide range of specialist markets including Ministry of Defence projects
and international airport development and to those we can now add the management of corrosion under insulation ("CUI") through the
application of special thermal insulation to pipes and vessels used within the oil, gas and petrochemical industries. Our aim is to achieve
market leadership in each of the nice markets in which we operate.
Clearly the deteriorating economic environment will provide a stern challenge for our businesses in the period ahead and none of them
can be considered to be immune from the pressures and market forces which will develop as the global recession unfolds. However we believe
that the unique characteristics and underlying strengths of our businesses are such that we will be able to not only ride out the turbulence
but continue to build on the positive trends which are a feature of this report.
Results
The inclusion of sales at Ulva for the 7 month period to 30 June 2008 together with organic growth elsewhere enabled Group sales for the
year ended 30 June to increase by 20.1% to �25.1m (2007 - �20.8m). Underlying operating profit increased by 87.8% to �2.0m (2007 - �1.07m)
whilst underlying profits before tax increased by 200% to �1.41m (2007 - �0.47m.). Underlying earnings per share attributable to
shareholders rose by 250% to 8.80p per share (2007 - 2.51p per share).
Total operating profit increased from �1.07m to �8.18m whilst total profits before tax increased from �0.47m to �7.59m and total
earnings per share increased from 2.51p per share to 45.05p.
The attention of shareholders is drawn to the fact that this is the first year in respect of which we are obliged to report our results
under International Financial Reporting Standards (IFRS). The adoption of these rules represents an accounting change only and does not
affect the operations or cash flows of the Group. The most significant changes affect the treatment of deferred taxation and the adjustments
required to reflect the "fair value" of certain of the assets acquired pursuant to the acquisition of the Ulva brand on 29 November 2007.
Comparison between the "Recognised Values" (book values) and "Fair Value Adjustments" reflect the "Carrying Amounts" at which these assets
require to be reported in the underlying accounts as at 30 June 2008. An independent report has been commissioned into the value
attributable to the customer relationships and brand values as at the date of acquisition. This report excludes any goodwill element which a
willing purchaser would be expected to pay if the business was to be offered for sale on the open market and does not therefore reflect the enterprise value of Ulva and its maintainable earnings,
being confined only to those tangible and intangible assets purchased at that time. The report has been the subject of review by the
company's auditors and the adjustments referred to in Note 2 of the accounts have been taken through the company's profit and loss account
and included in reserves in the company's balance sheet as at 30 June 2008.
It is worth mentioning that compliance with this new accounting standard does not require our other brands including Fullflow, Plasflow
Crescent or Hylam IQ to be valued on the same basis. All of these brands are extremely important to the Group and are either retained at
their historic book values under GAAP accounting or at their original value when acquired many years ago.
Whilst nothing in particular turns on the adoption of these new accounting standards it is at least of comfort to shareholders to know
that in the purchase of Ulva and its associated assets we appear to have made a sound investment for the future development of the Group.
Fullflow Group (Rainwater Management Division)
The year under review was another positive one for Fullflow Group. Third party sales rose by 9.2% to �16,048,000 (2007 - �14,691,000)
and have now increased by more than 80% over the last four years. All of this year's turnover growth emanated from Fullflow's operations in
mainland Europe, with UK sales failing to match last year's levels. Operating profit remained stable at �949,000 (2007 - �969,000) before
the application of Group management charges.
The Fullflow UK rainwater drainage business encountered difficult market conditions. In particular the number of large distribution
warehouses being built reduced significantly, with the majority of developers preferring to wait for prospective tenants to sign up rather
than build speculatively. At the same time the competitive pressures we have referred to in previous reports intensified, with margins in a
number of instances being driven down to levels which are simply not sustainable in the long run. Fortunately Fullflow's reach extends to
every sector of the market and margins tend to be much more realistic on projects involving complex pipe routings and other operational
challenges. With the industrial and logistics sectors of the market likely to remain difficult in the foreseeable future it is important
that Fullflow continues to win at least its fair share of work in sectors such as schools, airports, railway stations and stadia and our
sales team is adopting a very focused approach in these areas. All the available indicators suggest that it is in the public sector where most opportunities will lie during the anticipated downturn.
During the year, Fullflow UK extended its product offer to include rainwater harvesting which is a system for collecting and storing
rainwater for use in "grey" applications such as vehicle washing, toilet flushing and irrigation. The general move towards "greening up" new
buildings has prompted a significant increase in the demand for such systems and they represent a natural addition to the package which
Fullflow offers its customers.
In the same context Fullflow gained independent accreditation to ISO 14001:2004 which is the international standard for Environmental
Management Systems. It is increasingly evident that some of the UK's largest businesses are adopting a green agenda and many of them are
expecting their supply chains to follow suit. Accordingly we anticipate that Fullflow will secure a commercial benefit from this initiative
as well as making its own contribution to the environmental revolution which is beginning to gather pace.
Fullflow France had a mixed year, with a strong second half more than making up for a relatively weak first half. Turnover rose to a
record level and enabled the business to record a small operating profit compared to the loss of the previous year. However the second half
also witnessed a fall-off in order intake resulting partly from the arrival into the market of two new competitors who perhaps not
surprisingly elected to win sales by offering extremely low prices. One of these companies has already departed the scene but in the period
it was active it alone took nearly EUR1 million worth of business from Fullflow. The other competitor remains a threat but we remain
confident that the service and quality standards which we achieve will ensure that we retain our market-leading position. So far the
construction market in France appears to be more resilient than in the UK and order intake levels have picked up considerably in recent
weeks.
At Fullflow Spain the improvement was even more marked, with turnover and operating profit both increasing significantly. Progress was
made both in terms of consolidating relationships with existing customers and winning new ones and our decision to open a new office near
Barcelona to provide a dedicated service to the commercially important region of Catalunya has been fully vindicated.
It is easy to forget that when the Spanish business was first established around six years ago, syphonic rainwater drainage systems were
virtually unknown in Spain and our management team has therefore had to build their business from a zero base, albeit that the incorporation
of a Fullflow system on the emblematic Terminal 4 building at Madrid Airport gave them the best possible reference point. Since those early
days the team has undergone a number of changes but it is now settled, focused and ambitious for further growth. If, and it is a big if, the
Spanish construction market holds up in the face of the country's general economic difficulties, there is every reason for us to anticipate
further progress in the years ahead.
At Plasflow, third party sales actually fell, mainly due to the timing of a large project which was held over into the current year as
opposed to the one under review. Even so, significant progress was made, with ever stronger relationships being forged in the nuclear sector
and a significant win in the form of a two-year supply agreement with the UK arm of one of Europe's leading pipe manufacturers. In the main
Plasflow's customers are unlikely to be affected by the economic difficulties facing the UK and if our team can continue to achieve the very
high standards of service and quality which have become their hallmark in recent years then the future looks extremely positive.
Fullflow's international aspirations remain firmly in place. In recent months orders have been received from both India and Australia
and we are hopeful that we may soon see tangible results in a number of other countries around the world. Almost every week we receive
approaches from companies wanting to work with us but it is vital that we find partners who share our vision and ideals and who have the
resources to initiate and develop what will generally be a brand new business line. In many instances cost pressures will mean that our
input will be restricted to design and the supply of specialised components but this means that the contribution required from our
prospective partners is more demanding. It is for this reason that we exercise a lot of caution before we commit ourselves to what are
generally three or even five year agreements.
As we have stated previously, international expansion represents an important element of Fullflow's overall development strategy and
especially in light of the likely downturn in the majority of our current markets we intend to allocate extra resources to this area in the
coming months.
Another vital element of Fullflow's strategy will be to drive efficiencies through its business both by upgrading its hydraulic software
and implementing a number of improvements to the key components of its system.
Crescent of Cambridge (Metal Staircase Division)
It was always going to be difficult for Crescent to repeat the outstanding performance it achieved in the year ended 30 June 2007, when
operating profits reached �605,000 before the application of management charges and dividends. The current year has been disappointing by
comparison, mainly because demand has not been so strong as previously with a number of projects being postponed or cancelled due to the
economic downturn. Over the last 12 months three senior directors/managers all over 60 years of age have left the business and this has
presented the opportunity for us to instigate a wholesale reorganisation of the company's management structure, control systems and
information systems as well as its selling methods and routes to market all of which had become outdated.
The year got off to a slow start after the 2007 summer floods adversely affected the activities of one of Crescent's major customers and
led to the postponement of a number of installations. In the end sales for the year of �4,440,000 (2007 - �4,749,000) were recorded, a fall
of 7.0% with operating profits of �156,000 (2007 - �354,000) after the application of management charges and dividends. However positive and
far-reaching changes have been made at every level of the company and we now have a much improved and simplified management structure which
is both slimmer and more customer-facing. The result of these changes is beginning to bear fruit notwithstanding the challenges faced in the
market place and Crescent should benefit from the significant amount of work it carries out in the public sector. The current year will also
see the introduction of new computer aided design systems which will radically shorten lead times, improve our ability to service the needs
of our customers and provide an increased measure of control over the design and manufacturing processes which ought to give rise to improved efficiency and productivity in the
on-site installation process. The new software will also provide significant benefits in the sales arena and we are confident that the
sizeable investment involved in this initiative will enjoy a rapid payback. Crescent's new web site (www.crescentstairs.com) reflects many
of these positive changes and represents an important step in re-establishing Crescent at the forefront of its market. With a new dynamic
management team now in place we have successfully resolved the succession issues which had begun to cause us some concern whilst at the same
time modernising the company so that it is far better placed than before to take advantage of the opportunities available to it. The current
year is likely to be difficult because of the economic climate but Crescent is much better equipped to face these challenges and should
benefit significantly when its markets recover.
DRC - Ulva (Polymer Membrane Division)
As highlighted at the beginning of this statement the interface between DRC's manufacturing competence and the global penetration of
Ulva's brand in the oil, gas and petrochemical sectors offers exciting potential. The assets of Ulva were acquired on 29 November 2007 and
their integration into the Group was successfully completed during the second half of the year.
Third party sales for the division have increased to �4,570,000 (2007 - �1,404,000) and profits after management charges and royalties
have increased markedly to �465,000 (2007 - �277,000 loss). Ulva has made a substantial contribution to this turnaround and continues to
generate sales in Europe, the Caspian Sea Region, the Far East and the Middle East. The United States offers a new set of challenges and
plans have been made to address this large market from where many world wide projects emanate.
DRC Polymer Products
We hope that the well-reported problems associated with this company are now well and truly behind it. The business is now operating
profitably in its own right before its links to Ulva are taken into account. The previous management team has been replaced and a radical
restructure of the underlying business processes has been completed. The company now operates in four defined market areas:-
* Modular build. This is a traditional market for DRC where its products are used in modular roofing structures through well
established distribution channels. DRC maintains a healthy share of this market.
* Hylam IQ. This is the Company's branded product employed widely by the water utility companies in providing cost effective leak
detection facilities using computer based technology to alarm the membrane cover so as to detect any incidence of leaks, introduction of
impurities, acts of vandalism and/or terrorism. This "intelligent membrane" is now actively specified by three major UK utility companies
with increasing frequency and there are a number of others looking to work with us in the future. The development of this niche business is
project based and is therefore dependent on the expenditure budgets of the utility companies in terms of capital spend and also the amount
of repair and maintenance they choose to allocate in any particular year. This product line is a core activity of DRC where through
technology-led product innovation we believe we enjoy a competitive advantage which will allow this business to grow steadily in the years
ahead.
* FPA Membrane. Drinking water inspectorate approved for tank linings and baffle curtains in treatment tanks and vessels.
* Ulvashield. The company originally manufactured this product under an exclusive supply agreement before the then owners of the
Ulva brand breached the agreement and faced liability to DRC for substantial damages awarded by the Courts. The acquisition of the brand by
SWP Group plc on 29 November 2007 opens up new horizons to the Group by way of vertical integration with the base material being
manufactured by DRC and then shipped to Ulva Insulation Systems where conversion takes place into modular components. These components, as
well as quantities of the original sheet membrane, are then in turn sold in volume to oil and gas majors for the management of "CUI" in
pipes and vessels used in oil, gas and petrochemical installations. DRC's new management has spent the last 6 months improving the Company's
ability to produce high quality product and gearing up its production base to cope with the strong level of demand which we expect to build
from Ulva's international customers who have accredited the brand with extensive specification on a project by project basis across many international borders. Significant economies of scale are
anticipated as demand increases and this core product will enhance the production efficiencies at DRC as product flows through the plant on
a continuous basis.
Ulva Insulation Systems Ltd. Operating from modern factory and warehousing facilities based in Telford this specialised niche brand was
added to SWP's portfolio in November 2007 and is a welcome addition. Ulva's customer base extends to many of the oil and gas majors located
throughout the world and offers considerable potential for organic growth. Sales are obtained by way of product specification and much of
Ulva's success is down to the close relationship which exists between Ulva and the oil and gas companies who recognise the track record of
success associated with the use of non-metallic cladding applied to pipelines in locations as diverse as the UK, Europe, the Caspian, Far
East, the Middle East and the United States. During the period of transition we have achieved full continuity of the supply chain and
retained all of our major customers.
We are in the early stages of our development strategy at Ulva and it is difficult to define precisely what our long term business plan
will be for this business which as a brand has considerable potential for worldwide exploitation. In the short run we are consolidating our
market position on a project by project basis where in most cases we are specified as well as planning investment in human resources in both
the Far East and the United States where we feel the brand needs a more visible market presence. Recruitment in this area is a vitally
important step in the strategic aim of globalising the Ulva brand as a benchmark product associated with the management of "CUI" which
remains a key issue for the oil and gas industry.
Product development and innovation will also be a key aspect of Ulva's future. We are committed to the principle of continuous product
improvement in order to maintain Ulva's outstanding track record in the management of "CUI" whilst endeavouring to reduce the costs
associated with installation and maintenance.
The challenges which lie before our management team are considerable but they are matched by the level of opportunity which exists in
what is still very much a growing market throughout the world.
Earnings per share. In relation to ordinary trading activities underlying EPS have risen by 250% to 8.80p against 2.51p in 2007 (total
EPS has risen from 2.51p to 45.05p)
Finance. The results for the year ended 30 June 2008 are much improved in terms of profitability and the increase in shareholders
funds. The balance sheet grows stronger with asset backing of up to approximately 61p per share based on IFRS accounting. This of course
ignores the intrinsic value which attaches to all of our brands save for Ulva which was purchased during the past year. One of your Board's
principal objectives in the short to medium term is to reduce our bank borrowings significantly and we are hopeful that the potential of the
DRC/Ulva business in particular will help us to achieve this objective. We are also determined to drive our earnings per share to new levels
and we are hopeful that we may be in a position to recommend the payment of a dividend sooner rather than later.
Bank Debt
Under IFRS the Directors are obliged to regard the Group's debt profile at 30 June 2008 as a current liability of under one year as the
facilities fell due for repayment on 31 October 2008. Subsequent to 30 June 2008 we have completed a successful refinancing to include both
overdraft facilities and a term loan repayable over a 5 year period. The position at 30 June 2008 is reflected in the Balance Sheet on page
11 whilst the up to date position is presented by way of a Pro Forma Balance Sheet on page 12 designed to appraise shareholders of the debt
profile which exists in the current financial year. Further details of the new facilities is referred to in the notes which accompany the
Annual Report and Accounts.
Employees. The past year has been one of considerable change particularly at DRC and Crescent. New management teams have been
established whilst at Ulva we have inherited a team of skilled individuals in whom we have great confidence and who we will support with
investment in the future. We have recruited a number of high calibre managers who will all be encouraged and incentivised to develop the
Group's organic growth notwithstanding the recessionary climate which prevails in most parts of the world. To the employees who have
contributed to these vastly improved results the Board offers its sincere thanks and we trust that our valued employees are ready, willing
and able to face the challenges which lie before us.
Future Prospects The economic downturn into global recession appears to be having a highly deleterious affect on almost all markets. We
are not immune from this and are mindful that this is a time for extreme caution. At the same time we recognise that the breadth of our
product offering has widened considerably through the purchase of the Ulva brand and that by being specified in a number of niche markets we
offer investors defensive qualities that may not exist in other businesses.
Fullflow, for example, has a number of major projects at the final stages of negotiation and should benefit from its increasingly
international reach and strong reputation.
Similarly Crescent has built up an excellent track record in fulfilling large Ministry of Defence work projects and has every chance of
being involved in future phases.
In the case of DRC the manufacturing of Ulvashield has in recent weeks started to flow through to Telford on a continuous basis and
Hylam IQ projects are expected to increase steadily especially when the new Asset Management Plan 5 ("AMP") comes into force in April 2010.
At Ulva we have already consolidated our market position and are investing in people for the future in key international markets. Even
in our existing markets, however, there is every reason for us to believe that we can achieve significant growth and Ulvashield is specified
on two very sizeable projects which will commence shortly and a whole series of smaller projects across international territories.
In summary we view the Group's prospects with a relatively healthy degree of optimism despite the worst economic climate for several
decades. We will manage our cost base rigorously but we will also seek to exploit the potential of all the businesses in the Group. The
current year has started well and all things remaining equal we expect to be able to report further growth in both turnover and profits this
time next year.
J A F Walker
Chairman
Group Income Statement
Total
Total Non-recurring
Underlying
Year ended 30 June 2008 2008 2008 2008 2007
Notes �'000 �'000 �'000 �'000
Revenue 3 25,058 25,058 - 20,844
Cost of sales (16,038) (16,038) - (14,065)
Gross profit 9,020 9,020 - 6,779
Operating expenses (7,104) (7,104) - (5,711)
Operating profit before 2,006 - 1,068
negative goodwill 2,006
Negative goodwill 2 6,175 - 6,175 -
Operating profit 8,181 2,006 - 1,068
Finance income 50 50 - 1
Finance costs (639) (639) - (597)
Profit on ordinary activities 3 7,592 1,417 6,175 472
before taxation
Income tax credit/(charge) 86 86 - (44)
Profit for the period 7,678 6,175 428
attributable to equity holders 1,503
of the parent
Basic earnings per share 4 45.05p 8.80p 2.51p
(pence)
Diluted earnings per share 4 45.05p 8.80p 2.51p
(pence)
Turnover and operating profit all derive from continuing operations.
Group Statement of Changes in Equity
Called up share Share premium Profit & loss
capital account account
Capital reserve
Total
�,000 �'000 �'000 �'000 �'000
At 1 July 2006 85 11,878 41 (10,014) 1,990
Total recognised income and - - 428 428
expenditure for the year -
Revaluation of property - - - 229 229
Deferred tax movement - - - (63) (63)
At 30 June 2007 85 11,878 41 (9,420) 2,584
Issue of share capital 4 656 - - 660
Total recognised income and - - 7,678 7,678
expenditure for the year -
At 30 June 2008 89 12,534 41 (1,742) 10,922
Group Balance Sheet
At 30 June 2008 2008 2007
�'000 �'000
Non current assets
Intangible assets 6,769 29
Property, plant and equipment 5,165 4,697
Trade and other receivables 549 543
Deferred tax assets 888 678
13,371 5,947
Current assets
Inventories 3,783 3,176
Trade and other receivables 9,459 6,399
13,242 9,575
Total assets 26,613 15,522
Current liabilities
Trade and other payables (8,418) (5,781)
Current tax liabilities (271) (44)
Obligations under finance leases (163) (172)
Bank loans and overdrafts (6,475) (3,066)
(15,327) (9,063)
Non current liabilities
Bank loans - (3,250)
Deferred tax liabilities (247) (394)
Obligations under finance leases (117) (231)
(364) (3,875)
Total liabilities (15,691) (12,938)
NET ASSETS 10,922 2,584
Equity
Called up share capital 89 85
Share premium account 12,534 11,878
Capital reserves 41 41
Retained earnings (1,742) (9,420)
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT 10,922 2,584
The consolidated financial statements were approved by the Board of Directors on 25 November 2008 and were signed on its behalf by
D.J. Pett
Director of Finance
Un-audited Pro-Forma Group Balance Sheet
Adjustment
to reflect post
balance
sheet refinancing
Un-audited proforma
IFRS IFRS
At 30 June 2008 2008 2008 2008 2007
�'000 �'000 �'000 �'000
Non current assets
Intangible assets 6,769 - 6,769 29
Property, plant and equipment 5,165 - 5,165 4,697
Trade and other receivables 549 - 549 543
Deferred tax assets 888 - 888 678
13,371 - 13,371 5,947
Current assets
Inventories 3,783 - 3,783 3,176
Trade and other receivables 9,459 - 9,459 6,399
13,242 - 13,242 9,575
Total assets 26,613 - 26,613 15,522
Current liabilities
Trade and other payables (8,418) - (8,418) (5,781)
Current tax liabilities (271) - (271) (44)
Obligations under finance (163) - (163) (172)
leases
Bank loans and overdrafts (6,475) 3,088 (3,387) (3,066)
(15,327) 3,088 (12,239) (9,063)
Non current liabilities
Bank loans - (3,088) (3,088) (3,250)
Deferred tax liabilities (247) - (247) (394)
Obligations under finance (117) - (117) (231)
leases
(364) (3,088) (3,452) (3,875)
Total liabilities (15,691) - (15,691) (12,938)
NET ASSETS 10,922 - 10,922 2,584
Equity
Called up share capital 89 - 89 85
Share premium account 12,534 - 12,534 11,878
Capital reserves 41 - 41 41
Retained earnings (1,742) - (1,742) (9,420)
EQUITY ATTRIBUTABLE TO 10,922 - 10,922 2,584
SHAREHOLDERS OF THE PARENT
The consolidated financial statements were approved by the Board of Directors on 25 November 2008 and were signed on its behalf by
D.J. Pett
Director of Finance
Group Cash Flow Statement
Year ended 30 June 2008
2008 2007
�'000 �'000
Profit after tax 7,678 428
Adjustments for:
Negative goodwill (6,175) -
Net finance costs 589 596
Depreciation of property, plant and equipment 334 384
Amortisation of intangible assets 15 15
Profit on disposal of plant and equipment - (22)
Operating cash flows before movement in working capital 2,441 1,401
Increase in inventories (507) (207)
Increase in receivables (3,276) (392)
Increase in payables 2,199 608
Net interest paid (589) (596)
Net cash inflow from operating activities 268 814
Cash flow from investing activities
Purchase of property, plant and equipment (308) (332)
Purchase of intangible assets (28) (2)
Ulva acquisition (628) -
Proceeds for disposals of property, plant and equipment
- 75
Net cash outflow from investing activities (964) (259)
Cash flow from financing activities
Issue of ordinary shares 660 -
Finance lease repayments (123) 47
Net cash inflow from financing 537 47
activities
Net (decrease)/increase in cash and bank 602
overdrafts (159)
Cash, cash equivalents and bank overdrafts at (6,918)
beginning of period (6,316)
Cash, cash equivalents and bank overdrafts at end of (6,316)
period (6,475)
Notes to the Financial Statements
1. ACCOUNTING POLICIES
The following accounting policies have been applied in preparation of consolidated financial statements of SWP plc ("SWP" or the
"Group").
Basis of preparation
SWP prepares its financial statements in accordance with applicable International Financial Reporting Standards as adopted by the
European Union ("Adopted IFRS"). The Company has elected to prepare its Parent Company's financial statements in accordance with UK GAAP.
SWP adopted IFRS for the first time in the financial year ended 30 June 2008. The adoption of these standards and interpretations has
resulted in changes to SWP's accounting policies. The effect of the adoption of IFRS on the results for the year ended 30 June 2007, the
comparative year, are set out in the notes to the financial statements.
As at the date of approval of the full year financial statements, the following standards and interpretations were in issue but not yet
effective:
IFRS 3 (revised) consolidated financial statements
IFRS 8 Operating Segments
IFRIC 12 Service concession arrangements
IFRIC 13 Customer loyalty programmes
IFRIC 14 IAS19 - The limit on a defined benefit asset, minimum funding requirements and their interaction
IAS 1 (revised) Presentation of financial statements
IAS 23 (revised) Borrowing costs
IAS 27 (revised) Consolidated and separate financial statements
The Directors do not anticipate that the adoption of these interpretations in future reporting periods will have a material impact on
the Group's results.
2. BUSINESS COMBINATION
Acquisition of trading assets
On 29 November 2007 the Group acquired certain assets of Ulva Ltd which was in liquidation.
The acquisition had the following effect on the Group's assets and liabilities.
Assets acquired 29 November 2007
Recognised values Fair value Carrying amounts
�'000 adjustments �'000 �'000
Property plant and equipment 160 314 474
Intangible assets - Trade 400 2,886 3,286
marks 60 3,381 3,441
- Customer relationships
Inventories 100 - 100
Net identifiable assets 720 6,581 7,301
acquired
Negative goodwill (6,175)
Total consideration 1,126
Cash consideration 250
Costs (including provision for
additional consideration and 876
acquisition costs)
Total consideration 1,126
Net cash outflow as shown in
the cash flow statement
comprises:
Cash consideration 250
Costs paid 378
Net cash outflow as shown in
the cash flow statement 628
Fair value adjustments comprise the uplift on the property, plant and equipment to depreciated replacement cost determined using market
prices, recognition of trade marks and customer relationships at fair value having taken advice from a firm of professional valuers and the
tax effects on the adjustments detailed above.
3. SEGMENTAL REPORTING
BUSINESS SEGMENTS
Metal staircases Polymer
Rainwater management year ended 30 June membrane Total
year ended 30 June 2008 year ended year ended
2008 30 June Corporate 30 June
2008 year ended 2008
30 June 2008
2008
�'000 �'000 �'000 �'000 �'000
Revenue
Total external revenue 16,719 4,440 4,570 - 25,729
Inter-segment sales are charged at prevailing market rates
Result
Segment result 949 157 465 435 2,006
Fair value adjustment
6,175
Profit from operation 8,181
Finance costs, net (589)
Profit before tax 7,592
Income tax credit 86
Profit for the year 7,678
Other information
Capital expenditure 109 89 584 - 782
Depreciation and amortization
157 96 76 5 334
Segmental assets 11,537 3,140 4,130 7,806 26,613
Segmental liabilities 8,765 987 3,810 2,129 15,691
Net assets as at
30 June 2008 2,772 2,153 320 5,677 10,922
Metal staircases Polymer
Rainwater management year ended30 June membrane Corporate Total
year ended 30 June 2007 year ended year ended year ended
2007 30 June 30 June 30 June
2007 2007 2007
2007
�'000 �'000 �'000 �'000 �'000
Revenue
Total external revenue
14,691 4,749 1,404 - 20,844
Inter segment sales are charged at prevailing market rates
Result
Segment result 965 605 (277) (225) 1,068
Profit from operation 1,068
Finance costs, net (596)
Profit before tax 472
Income tax credit (44)
Profit for the year 428
Other information
Capital additions 202 28 264 - 494
Depreciation and amortization
173 97 109 5 384
Segmental assets 9,507 3,315 2,283 417 15,522
Segmental liabilities 7,591 1,274 2,896 1,248 13,019
Net assets as at
30 June 2007 1,916 2,041 (613) (831) 2,503
GEOGRAPHICAL SEGMENTS
The Group's operations are located in the UK, France and Spain.
The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods/services
Year ended Year ended
30 June 2008 30 June 2007
�'000 �'000
UK 13,147 14,130
Europe 11,139 6,714
Far East 603 -
Africa and Middle East 153 -
USA 16 -
25,058 20,844
The following is an analysis of the carrying amount of segment net assets and additions to property, plant and equipment and intangible
assets, analysed by the geographical area in which the assets are located.
Carrying Additions to
amount of property, plant
segment assets and equipment
and intangible assets
Year ended 30 June Year ended 30 June Year ended 30 June 2008 Year ended 30 June 2007
2008 2007
�'000 �'000 �'000 �'000
UK 11,546 3,341 7,484 450
France (209) (176) 7 19
Spain (415) (581) 46 27
10,922 2,584 7,537 496
4. EARNINGS PER SHARE
The underlying earnings per share calculation for the year ended 30 June 2008 is based on the weighted average of 17,042,888 (2007
17,019,546) ordinary shares in issue during the year and the profit of �1,503,000 (2007: �428,000).
The total earnings per share calculation for the year ended 30 June 2008 is based on the weighted average of 17,042,888 (2007
17,019,546) ordinary shares in issue during the year and the profit of �7,678,000 (2007: �428,000).
There is no difference between basic and diluted earnings per share.
The financial information set out above does not constitute the company's statutory accounts for the years ended 30 June 2008 or 2007.
Statutory accounts for 2007, which were prepared under UK GAAP, have been delivered to the registrar of companies. The auditors have
reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 237(2) or (3) of the
Companies Act 1985. The statutory accounts for 2008, which are being prepared under IFRSs as adopted by the EU will be finalised on the
basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of
companies in due course.
A copy of the financial report and accounts will be despatched to shareholders by no later than 18 December 2008 and a copy will also be
available on the Company's website www.swpgroupplc.com.
For further information or enquiries please contact:
J A F Walker D J Pett
Chairman Finance Director
Tel Office: 01353 723270 Tel Office: 01353 723270
Mobile: 07800 951151 Mobile: 07940 523135
Oliver Scott/Richard Kauffer
KBC Peel Hunt
Nominated Adviser and Broker
Tel Office: 0207 418 900
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BRBDBUUDGGIU
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