TIDMSWP
RNS Number : 7814V
SWP Group PLC
08 November 2010
SWP Group Plc
("SWP" or the "Group")
Preliminary Results for the year ended 30 June 2010
SWP Group (LSE: SWP); the industrial engineering group, is pleased to announce
its preliminary results for the year ended 30 June 2010.
Highlights
n Group sales increased by 7.4% to GBP26.58M (2009 - GBP24.75M).
n Favourable sales mix allowing gross margins overall to increase by 4.2% (2009
- 4.3%).
n Operating profits (before exceptional costs and amortisation of intangible
assets) increased by 34.9% to GBP3.27M (2009 - GBP2.42M).
n Operating profits (after exceptional costs and amortisation of intangible
assets) increased by 25.3% to GBP2.66M (2009 - GBP2.12M).
n Pre-tax profits increased by 39.3% to GBP2.27M (2009 - GBP1.63M).
n Underlying earnings per share before tax advanced by 35.5% to 1.14p (2009
restated - 0.84p)
n Market conditions in the United Kingdom remained subdued for both Fullflow and
Crescent due to the economic downturn. This was once again countered by revenue
growth at DRC-Ulva (the Polymer Membrane segment) where sales advanced by 34.3.%
and gross profit increased by 25.8%
n Fullflow's profits were sharply ahead in the year following a particularly
strong performance by Fullflow Sistemas in Spain where despite a weakening
economy Fullflow delivered its strongest ever results having completed the
enhancement works at Barajas Airport, Madrid during the year.
n Due to the severity of the economic recession, a stringent review of the
group's overhead base was undertaken to ensure that cost containment is
maximised for 2010/2011 during an extended period of economic uncertainty.
n Potential for Crescent to restore profitability after two disappointing years
where demand has been highly muted as a consequence of the recession within the
construction sector.
n Product development challenges intensified for DRC in the year and have been
appropriately resourced internally and externally.
n Current year has started positively for all businesses in the Group with order
books at satisfactory levels notwithstanding the challenging market conditions
faced across the board.
n The Group's aspirations on debt reduction have been met with debt reduced by
39.2% as compared to 30th June 2009. The Board's target is to eliminate debt by
31st December 2011 and achieve a debt free status. The capital reorganisation,
bonus issue and elimination of Share Premium Account were approved by the Court
in early 2010.
n The Board of Directors is pleased to be in a position to propose a maiden
dividend of 0.2p to be paid on all shares ranking pari passu on 4th January 2011
subject to approval at the forthcoming Annual General Meeting which is scheduled
to take place on 15th December 2010.
Chairman's Statement
Corporate Review
Shareholders may recall that when we delivered our Annual Report and Accounts
for the year ended 30th June 2007, just after we had acquired the Ulva brand on
29th November 2007, I expressed the view and/or fervent hope that this important
strategic acquisition would prove pivotal to the future of our Group with the
expectation that it could have a transformational impact on our financial
results. It is therefore gratifying to report to shareholders just short of
three years after this acquisition that we are reporting for the year ended 30th
June 2010 the most successful year in the Group's trading history
notwithstanding that these results have been achieved against a background of
deep economic recession in a number of the sectors in which we operate and that
generally challenging market conditions continue to exist at this time without
material signs of abatement.
The Group is today a highly focused provider of industrial engineering products
operating within niche markets through highly respected brands to a discerning
range of internationally based customers operating on a global basis in the
Middle East, the UK, Continental Europe, Asia, Scandinavia and North America.
Our various management teams are very focused in these difficult market
conditions in developing strong relationships and alliances with a growing range
of customers based on improved levels of service and product quality as well as
innovative solutions designed to ensure that our product is specified in future
as the "product of choice".
Results
In the year to 30th June 2010 Group sales increased by 7.4% to GBP26.58M (2009 -
GBP24.75M). Consistent with earlier years as a result of favourable sales mix
and improved operating efficiencies on larger scale projects, margins advanced
by 4.2% in line with the improvement recorded in 2009 of 4.3%. Operating profits
before exceptional costs increased by 34.9% to GBP3.27m (2009 - GBP2.42M) whilst
operating profits after exceptional costs and after amortisation of intangible
assets under IFRS accounting increased by 25.3% to GBP2.66M (2009 - GBP2.12M).
Profits at the pre-tax stage increased by 39.3% to GBP2.27M (2009 - GBP1.63M)
and represent a solid year of progress against a background of difficult
economic market conditions where there has been little evidence of growth, a
lack of optimism and a continuous stream of project delays, cancellations and
postponements to which we refer below.
During the year further seeds have been planted in a number of Ulva's targeted
international markets, where the gestation period to gain full product
accreditation leading to specification by the oil and gas multinational
companies can take a number of years. Considerable benefit is expected to accrue
from our commitment to invest in these international territories where we
believe top line sales can be driven in the future. It is early days in the
globalisation of the Ulva brand and we are pleased with our progress to date but
far from complacent given the significant growth potential which exists and the
massive amount of work still to be undertaken. The DRC-Ulva alliance,
representing the Polymer Membrane segment, is the cornerstone to our Group's
future in terms of international expansion and our success in terms of growth in
profits recorded, and cash generated bodes most encouragingly for the future.
Your attention is drawn to the Operational Review below which further amplifies
our aspirations for the Ulva branded range of products.
Similar global ambitions exist within the Fullflow Group in terms of penetrating
international markets where increasingly discerning customers recognise the
value of a tailored approach when seeking solutions to the greater awareness of
rainwater management.
It has been a difficult year for Fullflow UK due in simple terms to the downturn
in construction activity in the United Kingdom whereas in Europe the results
achieved particularly by Fullflow Spain have been most welcome at a time of
depression within the wider Spanish economic market.
Plasflow has sustained solid results without achieving the type of growth of
which we know they are capable whilst at Fullflow France a solid performance was
recorded once we addressed the leadership issues which have held this subsidiary
in check for the last few years. The Fullflow brand is widely respected and
routinely endorsed by some of the world's most famous architects in the guise of
Lords Foster & Rogers. Their endorsement of the modern techniques used to
dispose of water from large scale roofs has helped to identify customers in
markets further afield who wish to benefit from improvements in technical
development where climate changes have alerted many to the increased risks and
demands placed on rainwater management systems when faced with torrential
downpours of tropical proportions. This is a modern day feature of weather
conditions worldwide - torrential rain.
The Fullflow team remain focused on product innovation and the development of
techniques which will easily export into jurisdictions as widely spread as Oman,
Quatar, New Zealand, Morocco, India and Singapore which we intend to serve
through our newly established subsidiary Fullflow International Limited. We
envisage the pace of international expansion of the Fullflow brand will gather
pace through the internal establishment of an "International Committee" and the
external development of selected strategic alliances with local partners who
have expertise in the areas of installation and access allowing Fullflow to
concentrate on its design capability and the manufacture as well as distribution
of outlets and associated products.
Losses in Crescent have reduced year on year even though they continue to suffer
the rigours of a construction market which has been to all intents and purposes
"closed for business". Progress has been made throughout the business from sales
and marketing to production effectiveness but there remains much to do in terms
of achieving installation improvements on a "right first time" basis and to
extracting much of the investment benefit contained within our Solid Works
Design capability which is now functioning on line for the benefit of our
in-house design team and our valued customers.
Borrowings
Shareholders will recognise that one of the Board's key objectives has been the
retirement of debt with a residual ambition to become debt free as a matter of
priority. The capital restructuring to which we made reference last year has
been completed and approved by the Court whereby we added to our issued Share
Capital through a bonus issue (10 for 1) whilst also eliminating our Share
Premium Account so as to enhance the Retained Earnings and Distributable
Reserves thereby facilitating the payment of a dividend which is covered at
least 4 times by current year earnings.
Debt has fallen to GBP4.09M (2009 - GBP6.73M) or by 39.2% during the year
notwithstanding the fact that we took the opportunity to acquire the freehold of
the Ulva factory on advantageous terms back in April 2010 for a consideration of
a little less than GBP800,000 after associated costs and refurbishment.
The Group's balance sheet grows ever stronger with net shareholders funds
advancing to some GBP14.5M (2009 - GBP12.5M) a far cry from the highly geared
balance sheet back in 2004/2005. It remains a key objective of the Board to
continue to retire debt at every opportunity and our target is to be debt free
on or around 31st December 2011.
Dividend
The strength of our results and a measure of the confidence with which your
Board of Directors views the future of the Group, permits the recommendation of
the payment of a maiden final dividend of 0.2p per share. This final dividend is
subject to approval by shareholders at the Annual General Meeting to be held on
15th December 2010. Your Board of Directors anticipates a progressive dividend
policy in future years and is particularly pleased to be able to join the
dividend list at this time.
Taxation
Shareholders will realise that the Group has benefitted from the utilisation of
losses sustained in earlier years against profits recorded in the various
businesses more recently. The tax charge of GBP591,000 (2009 - GBP37,000)
represents current taxation due and payable of GBP108,000 whilst the balance of
GBP483,000 equates to the release of the deferred tax asset created in earlier
years in compliance with the provisions of IFRS accounting standards and as such
does not fall to be paid in cash.
Earnings per share
Earnings per share before the tax charge have increased to 1.14p (2009 as
restated 0.84p) an increase of 35.5%. After tax and the amortisation of the
deferred tax asset earnings per share have risen more modestly to 0.84p per
share (2009 as restated 0.82p) an increase of 2.6%.
Outlook
Your Board of Directors have every reason to be pleased with the results which
have been achieved in the year to 30th June 2010. These have been recorded
notwithstanding the harsh and difficult trading conditions which have been
prevalent for the past two to three years. We are making significant progress in
international markets in creating both demand for and increased levels of
interest in both the Ulva and Fullflow brands which both enjoy enviable
reputations at home and abroad. A difficulty which we have to take in our stride
is the fact that a high proportion of sales to both Fullflow and Ulva are
dependent upon product specification within large scale projects, the award and
timing of which is not under our direct control. This makes budgeting and
forecasting more difficult than in a normal trading environment where demand can
be more easily assessed. The challenges which lie before us are considerable and
we remain excited by the potential which our product offering appears to have on
a global basis as and when the economic climate improves.
As a Group we have come a long way in a short period of time. We have built a
highly profitable and cash generative Group from humble origins and our
management remains dedicated to achieving sustainable growth given the momentum
we have created these past two years. We view the future with considerable
optimism.
J A F Walker
Chairman
Operational Review
Group Management
Recruitment, retention and development of key management and staff has, and
continues to be a key focus for the Group which has been strengthened through
the year where key talent has been encouraged and seen to blossom, some
positions have been filled through recruitment and those in the business that
could not meet the Group's increasing standards and aspirations have departed.
Much headway has been made down this particular road but there is still some
distance to travel. Recruitment, retention and management development remains a
key objective for the coming year.
Crescent
Crescent continues to be held back by the poor state of its market place which
is showing little signs of recovery in the short term. Revenues further declined
in the year by 29% to GBP1,944K with the operating loss reducing by 64% to
(GBP125K). Investment in the sales team is delivering a satisfying outcome,
with increased volumes now being achieved despite the static market. Investment
has continued in order to further enhance the capabilities of the business to
service its customers with ISO9001 being achieved during the year together with
further development in design automation which will substantially benefit the
business and its customers as the market begins to recover and demand increases.
With a strong brand, long serving loyal employees and new leadership, the
business is anticipating a return to profit in FY 2010/11 and growth beyond.
Polymer Membrane Division
Global base polymer price increases have introduced new product development
challenges into the business which are consuming much management attention and
focus and will continue well into the 2010/11 financial year. Specialist
external expertise has been engaged and results are encouraging, but the
projects are lengthy given the technically differentiated nature of the product
range. The impact of the polymer price increases has impacted on margins, so
whilst external revenues have increased by 34.3% to GBP8,865K, gross profit is
ahead by 25.8%.
Ulva has been active on a number of major flagship projects for both onshore and
offshore Oil & Gas applications in the management of Corrosion Under Insulation
(CUI) and the business can be proud of the high standards attained. The strength
of Ulva's management and employee teams continues to support the development of
the business and the team was expanded in the year to include the provision of
site based quality assurance personnel to assist applicators to deliver best
practice for the end customer. International development continues with the
Houston and Kuala Lumpur based teams beginning to become well established, and
partners in other territories likewise gaining traction. The number of end users
specifying Ulva increased in the year. Bespoke solutions, developed to meet
individual customers' technically demanding applications together with three
major projects and a strong base load of specification driven new project
business and in-field maintenance delivered good volumes for Ulva in the year.
The visibility of a good flow of new major projects provides confidence of
further growth over the year under review in the near term, 2010/11, however,
will be an opportunity to pause for breath.
DRC's Hylam Uniroof construction related products have remained stable in a
static market but the customer base has proven itself to be resilient and like
DRC, eagerly awaits a recovery in the market. A number of important Hylam IQ
projects have been completed with an enhanced design and the system for sealing
service reservoir roofs in the water utilities sector, with in-built electronic
leak detection, is now more user-friendly and consistent between sites. Activity
under the industry's Asset Management Programme AMP 5, which commenced in April
2010, has got off to a slow start but DRC remains ready, willing and able when
the programme gets underway in earnest. Hylam FPA is a specialised product for
the water utilities sector being Drinking Water Inspectorate (DWI) approved for
contact with potable water. The FPA range was successfully extended in the year
and continues to perform well with a growing international content.
Fullflow Group
Fullflow entered the year under review equipped for growth in the core UK,
French and Spanish businesses at a time when the underlying construction market
remained in no fit state to reward this strategy. The successful execution of a
number of key projects in Spain and international markets underpinned the
Group's performance whilst it underwent a substantial reorganisation to bring
operating costs into line with current market conditions. The reorganisation was
completed in the year without impacting upon the organisation's ability to
deliver quality turnkey systems with a high level of customer satisfaction. The
combination of strong management and cost control across the group, its
recognised technical leadership and its critical mass has meant that Fullflow
has fared significantly better than its competition through the recession.
The Group has entered the 2010/11 year a slimmer, fitter and hungrier business
and it is not unreasonable to anticipate a good performance in difficult market
conditions. The major Barajas T4 project in Spain was well executed with night
working by rope access in a live airport with zero disruption to the terminal's
operations and an on-time quality completion. Early success in the initiative to
develop the international business has resulted in the application of increased
focus and resource. This has been rewarded with the receipt of a number of key
projects, building further upon the success in the year of projects such as the
new Doha international airport and a new Renault factory which is being built in
Morocco. Sales in the year increased by 2.5% to GBP15,769K and operating profit
increased by 91% to GBP1,584K.
Health and Safety
A long standing key priority within the operating units, health and safety has
taken an enhanced prominence at Group level to provide the cooperation and drive
to turn it from a position of compliance to one of competitive advantage.
C A Stott
Managing Director
Consolidated Statement of Comprehensive Income
+-------------------------------------+-------+----------+--+----------+
| | | | | |
+-------------------------------------+-------+----------+--+----------+
| | | | | |
+-------------------------------------+-------+----------+--+----------+
| Year ended 30 June 2010 | Notes | 2010 | | 2009 |
+-------------------------------------+-------+----------+--+----------+
| | | | | GBP'000 |
| | | GBP'000 | | |
+-------------------------------------+-------+----------+--+----------+
| | | | | |
+-------------------------------------+-------+----------+--+----------+
| Continuing operations | | | | |
+-------------------------------------+-------+----------+--+----------+
| Revenue | 2 | 26,578 | | 24,745 |
+-------------------------------------+-------+----------+--+----------+
| Cost of sales | | (14,730) | | (14,764) |
+-------------------------------------+-------+----------+--+----------+
| Gross profit | | 11,848 | | 9,981 |
+-------------------------------------+-------+----------+--+----------+
| Operating expenses | | (8,580) | | (7,558) |
+-------------------------------------+-------+----------+--+----------+
| | | 3,268 | | 2,423 |
+-------------------------------------+-------+----------+--+----------+
| Exceptional operating expenses | 2, 3 | (442) | | (134) |
+-------------------------------------+-------+----------+--+----------+
| Amortisation of intangible assets | 2 | (165) | | (165) |
| acquired through business | | | | |
| combinations net of deferred tax | | | | |
+-------------------------------------+-------+----------+--+----------+
| Operating profit | | 2,661 | | 2,124 |
+-------------------------------------+-------+----------+--+----------+
| Financial income | 2 | 3 | | 42 |
+-------------------------------------+-------+----------+--+----------+
| Financial costs | 2 | (390) | | (534) |
+-------------------------------------+-------+----------+--+----------+
| Profit on ordinary activities | | 2,274 | | 1,632 |
| before taxation | | | | |
+-------------------------------------+-------+----------+--+----------+
| Income tax charge | 2 | (591) | | (37) |
+-------------------------------------+-------+----------+--+----------+
| Profit for the year | 2 | 1,683 | | 1,595 |
+-------------------------------------+-------+----------+--+----------+
| | | | | |
+-------------------------------------+-------+----------+--+----------+
| Total comprehensive income | | | | |
+-------------------------------------+-------+----------+--+----------+
| Profit for the year and total | | 1,683 | | 1,595 |
| comprehensive income attributable | | | | |
| to equity holders of the company | | | | |
+-------------------------------------+-------+----------+--+----------+
| | | | | |
+-------------------------------------+-------+----------+--+----------+
| Basic earnings per share (pence) | 4 | 0.84p | | 0.82p |
+-------------------------------------+-------+----------+--+----------+
| Diluted earnings per share (pence) | 4 | 0.84p | | 0.82p |
+-------------------------------------+-------+----------+--+----------+
The comparative earnings per share figures have been restated to enable better
comparison following the bonus issue of shares in the year (see note 4).
Consolidated Statement of Changes in Equity
+----------------+---------+----------+---------+-------------+---------+---------+
| | Called | Share |Capital |Revaluation | Profit | Total |
| | up | premium |reserve | reserve | & loss | Equity |
| | share | account | | |account | |
| |capital | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+----------+---------+-------------+---------+---------+
| | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| At 1 July 2008 | 89 | 12,534 | 41 | 229 | (1,971) | 10,922 |
+----------------+---------+----------+---------+-------------+---------+---------+
| Result for the | - | - | - | - | 1,595 | 1,595 |
| year | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| Purchase of | | - | - | - | (44) | (44) |
| treasury | - | | | | | |
| shares | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| | | 12,534 | 41 | 229 | (420) | 12,473 |
| At 30 June | 89 | | | | | |
| 2009 | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| | | - | - | - | 1,683 | 1,683 |
| Result for the | - | | | | | |
| year | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| Issue of | 3 | 671 | - | - | - | 674 |
| shares | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| Bonus issue | 924 | (924) | - | - | - | - |
+----------------+---------+----------+---------+-------------+---------+---------+
| Capital | - | (12,281) | - | - | 12,281 | - |
| reorganisation | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| Purchase of | | - | - | - | (288) | (288) |
| treasury | - | | | | | |
| shares | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
| At 30 June | 1,016 | - | 41 | 229 | 13,256 | 14,542 |
| 2010 | | | | | | |
+----------------+---------+----------+---------+-------------+---------+---------+
Consolidated Statement of Financial Position
+-------------------------------------+-----+----------+---+----------+----------+---+
| At 30 June 2010 | | 2010 | | 2009 | |
+-------------------------------------+-----+----------+---+---------------------+---+
| | | GBP'000 | | GBP'000 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Non current assets | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Intangible assets | | 8,799 | | 9,045 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Property, plant and equipment | | 5,761 | | 5,114 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Trade and other receivables | | 598 | | 655 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Deferred tax assets | | 736 | | 1,150 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| | | 15,894 | | 15,964 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Current assets | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Inventories | | 3,692 | | 3,972 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Trade and other receivables | | 9,144 | | 9,866 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| | | 12,836 | | 13,838 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Total assets | | 28,730 | | 29,802 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Current liabilities | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Trade and other payables | | (7,118) | | (7,410) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Current tax liabilities | | (213) | | (309) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Obligations under finance leases | | (34) | | (117) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Bank loans and overdrafts | | (1,250) | | (4,127) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| | | (8,615) | | (11,963) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Non current liabilities | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Bank loans | | (2,842) | | (2,600) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Deferred tax liabilities | | (2,717) | | (2,719) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Obligations under finance leases | | (14) | | (47) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| | | (5,573) | | (5,366) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Total liabilities | | (14,188) | | (17,329) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Net assets | | 14,542 | | 12,473 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Equity | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Called up share capital | | 1,016 | | 89 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Share premium account | | - | | 12,534 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Capital reserves | | 41 | | 41 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Revaluation reserve | | 229 | | 229 | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Retained earnings | | 13,256 | | (420) | |
+-------------------------------------+-----+----------+---+----------+--------------+
| Equity attributable to shareholders | | 14,542 | | 12,473 | |
| of the parent | | | | | |
+-------------------------------------+-----+----------+---+----------+--------------+
| | | | | | | |
+-------------------------------------+-----+----------+---+----------+----------+---+
Consolidated Statement of Cash Flows
Year ended 30 June 2010
+----------------------------------+----+-----------+--+---------+
| | | 2010 | | 2009 |
| | | | | GBP'000 |
| | | GBP'000 | | |
+----------------------------------+----+-----------+--+---------+
| | | | | |
+----------------------------------+----+-----------+--+---------+
| Profit after tax | | 1,683 | | 1,595 |
+----------------------------------+----+-----------+--+---------+
| Adjustments for: | | | | |
+----------------------------------+----+-----------+--+---------+
| Net finance costs | | 387 | | 492 |
+----------------------------------+----+-----------+--+---------+
| Corporation tax charge | | 133 | | 269 |
+----------------------------------+----+-----------+--+---------+
| Depreciation of property, plant | | 325 | | 414 |
| and equipment | | | | |
+----------------------------------+----+-----------+--+---------+
| Amortisation of intangible | | 246 | | 243 |
| assets | | | | |
+----------------------------------+----+-----------+--+---------+
| Loss/(profit) on disposal of | | 35 | | (6) |
| plant and equipment | | | | |
+----------------------------------+----+-----------+--+---------+
| Operating cash flows before | | 2,809 | | 3,007 |
| movement in working capital | | | | |
+----------------------------------+----+-----------+--+---------+
| Decrease/(increase) in | | 280 | | (189) |
| inventories | | | | |
+----------------------------------+----+-----------+--+---------+
| Decrease/(increase) in | | 1,193 | | (735) |
| receivables | | | | |
+----------------------------------+----+-----------+--+---------+
| Decrease in payables | | (293) | | (967) |
+----------------------------------+----+-----------+--+---------+
| Interest paid | | (391) | | (612) |
+----------------------------------+----+-----------+--+---------+
| Interest received | | 3 | | 2 |
+----------------------------------+----+-----------+--+---------+
| Corporation tax paid | | (229) | | (231) |
+----------------------------------+----+-----------+--+---------+
| Net cash inflow from operating | | 3,372 | | 275 |
| activities | | | | |
+----------------------------------+----+-----------+--+---------+
| | | | | |
+----------------------------------+----+-----------+--+---------+
| Cash flow from investing | | | | |
| activities | | | | |
+----------------------------------+----+-----------+--+---------+
| Purchase of property, plant and | | (1,011) | | (384) |
| equipment | | | | |
+----------------------------------+----+-----------+--+---------+
| Purchase of intangible assets | | - | | (10) |
+----------------------------------+----+-----------+--+---------+
| Proceeds from disposals of | | | | |
| property, plant and equipment | | 4 | | 27 |
+----------------------------------+----+-----------+--+---------+
| Net cash outflow from investing | | (1,007) | | (367) |
| activities | | | | |
+----------------------------------+----+-----------+--+---------+
| Cash flow from financing | | | | |
| activities | | | | |
+----------------------------------+----+-----------+--+---------+
| Issue of ordinary shares | | 674 | | - |
+----------------------------------+----+-----------+--+---------+
| Term loan conversion to euro | | 1,303 | | - |
| denomination | | | | |
+----------------------------------+----+-----------+--+---------+
| Bank loans repaid | | (764) | | - |
+----------------------------------+----+-----------+--+---------+
| Purchase of treasury shares | | (288) | | (44) |
+----------------------------------+----+-----------+--+---------+
| Finance lease repayments | | (116) | | (116) |
+----------------------------------+----+-----------+--+---------+
| | | | | |
+----------------------------------+----+-----------+--+---------+
| Net cash inflow/(outflow) from | | 809 | | (160) |
| financing | | | | |
| activities | | | | |
+----------------------------------+----+-----------+--+---------+
| Net decrease/(increase) in cash | | | | |
| and bank | | 3,174 | | (252) |
| overdrafts | | | | |
+----------------------------------+----+-----------+--+---------+
| Cash, cash equivalents and bank | | | | |
| overdrafts at | | (3,477) | | (3,225) |
| beginning of year (see note 23) | | | | |
+----------------------------------+----+-----------+--+---------+
| Cash, cash equivalents and bank | | | | |
| overdrafts at end of year (see | | (303) | | (3,477) |
| note 23) | | | | |
+----------------------------------+----+-----------+--+---------+
Notes to the Financial Statements
1. BASIS OF PREPARATION
Whilst the information including in this preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRS") as adopted for use in the
European Union and as issued by the International Accounting Standards Board,
this announcement does not itself contain sufficient information comply with
IFRS.
The preliminary announcement for the 12 months to 30 June 2010 has been prepared
on a consistent basis with the financial accounting policies set out in the
Accounting Policies section of the SWP Group Plc Annual Report and Financial
Statements 2009, with the exception of the adoption of IFRS 8 Operating Segments
and IAS 1 Presentation of Financial Statements, which had no impact on results
or financial position, impacting on presentation and disclosure only.
2. SEGMENTAL REPORTING
BUSINESS SEGMENTS
+-----------------------+------------+------------+----------+-----------+----------+
| | Rainwater | Metal | Polymer |Corporate | Total |
| |management |staircases |membrane | year | year |
| |year ended |year ended | year | ended | ended |
| | 30 June | 30 June | ended | 30 June | 30 |
| 2010 | 2010 | 2010 |30 June | 2010 | June |
| | | | 2010 | | 2010 |
+-----------------------+------------+------------+----------+-----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Revenue | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| External revenues | 15,769 | 1,944 | 8,865 | - | 26,578 |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup sales | 956 | 120 | 598 | - | 1,674 |
+-----------------------+------------+------------+----------+-----------+----------+
| Total revenues | 16,725 | 2,064 | 9,463 | - | 28,252 |
+-----------------------+------------+------------+----------+-----------+----------+
| Cost of sales | (9,898) | (1,418) | (5,088) | - | (16,404) |
+-----------------------+------------+------------+----------+-----------+----------+
| Gross profit | 6,827 | 646 | 4,375 | - | 11,848 |
+-----------------------+------------+------------+----------+-----------+----------+
| Operating expenses | (4,920) | (771) | (2,116) | (773) | (8,580) |
+-----------------------+------------+------------+----------+-----------+----------+
| | 1,907 | (125) | 2,259 | (773) | 3,268 |
+-----------------------+------------+------------+----------+-----------+----------+
| Exceptional operating | (263) | - | - | (179) | (442) |
| expenses | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Amortisation of | - | | | | |
| intangible assets | | | | | |
| acquired through | | - | - | (165) | (165) |
| business combinations | | | | | |
| net of deferred tax | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup royalty | - | - | (1,409) | 1,409 | - |
| (charge)/income | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup management | (60) | - | (288) | 348 | - |
| fees | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup rent | - | - | (67) | 67 | - |
| (charges)/income | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Operating profit | 1,584 | (125) | 495 | 707 | 2,661 |
+-----------------------+------------+------------+----------+-----------+----------+
| Financial income | 3 | - | - | - | 3 |
+-----------------------+------------+------------+----------+-----------+----------+
| Financial costs | (14) | (1) | (10) | (365) | (390) |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup financial | (27) | - | (60) | 87 | - |
| charges | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Profit on ordinary | 1,546 | | | | |
| activities before | | (126) | 425 | 429 | 2,274 |
| taxation | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Income tax | (315) | 55 | (155) | (176) | (591) |
| (charge)/credit | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Profit for the year | 1,231 | | | | |
| attributable to | | (71) | 270 | 253 | 1,683 |
| equity holders of the | | | | | |
| company | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
2. SEGMENTAL REPORTING (CONTINUED)
BUSINESS SEGMENTS (continued)
+--------------------+------------+------------+----------+-----------+------------+----------+
| | Rainwater | Metal | Polymer |Corporate |Intergroup | Total |
| |management |staircases |membrane | year |year ended | year |
| |year ended |year ended | year | ended | 30 June | ended |
| | 30 June | 30 June | ended | 30 June | 2010 | 30 |
| 2010 | 2010 | 2010 | 30 June | 2010 | | June |
| | | | 2010 | | | 2010 |
+--------------------+------------+------------+----------+-----------+------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | |
+--------------------+------------+------------+----------+-----------+------------+----------+
| Other information | | | | | | |
+--------------------+------------+------------+----------+-----------+------------+----------+
| Capital | 18 | 2 | 196 | 795 | - | 1,011 |
| expenditure | | | | | | |
+--------------------+------------+------------+----------+-----------+------------+----------+
| Depreciation and | 115 | 94 | 116 | 246 | - | 571 |
| amortisation | | | | | | |
+--------------------+------------+------------+----------+-----------+------------+----------+
| | | | | | | |
+--------------------+------------+------------+----------+-----------+------------+----------+
| Segmental assets | 14,260 | 2,724 | 9,155 | 7,143 | (4,552) | 28,730 |
+--------------------+------------+------------+----------+-----------+------------+----------+
| Segmental | (9,071) | (1,066) | (7,565) | (1,038) | 4,552 | (14,188) |
| liabilities | | | | | | |
+--------------------+------------+------------+----------+-----------+------------+----------+
| Net assets as at | 5,189 | 1,658 | 1,590 | 6,105 | - | 14,542 |
| 30 June 2010 | | | | | | |
+--------------------+------------+------------+----------+-----------+------------+----------+
+-----------------------+------------+------------+----------+-----------+----------+
| | Rainwater | Metal | Polymer |Corporate | Total |
| |management |staircases |membrane | year | year |
| |year ended |year ended | year | ended | ended |
| | 30 June | 30 June | ended | 30 June | 30 |
| 2009 | 2009 | 2009 |30 June | 2009 | June |
| | | | 2009 | | 2009 |
+-----------------------+------------+------------+----------+-----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Revenue | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| External revenues | 15,389 | 2,757 | 6,599 | - | 24,745 |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup sales | 790 | - | 948 | - | 1,738 |
+-----------------------+------------+------------+----------+-----------+----------+
| Total revenues | 16,179 | 2,757 | 7,547 | - | 26,483 |
+-----------------------+------------+------------+----------+-----------+----------+
| Cost of sales | (10,549) | (1,884) | (4,069) | - | (16,502) |
+-----------------------+------------+------------+----------+-----------+----------+
| Gross profit | 5,630 | 873 | 3,478 | - | 9,981 |
+-----------------------+------------+------------+----------+-----------+----------+
| Operating expenses | (4,633) | (1,156) | (1,551) | (218) | (7,558) |
+-----------------------+------------+------------+----------+-----------+----------+
| | 997 | (283) | 1,927 | (218) | 2,423 |
+-----------------------+------------+------------+----------+-----------+----------+
| Exceptional operating | (92) | (42) | - | - | (134) |
| expenses | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Amortisation of | - | | | | |
| intangible assets | | | | | |
| acquired through | | - | - | (165) | (165) |
| business combinations | | | | | |
| net of deferred tax | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup royalty | - | - | (1,058) | 1,058 | - |
| (charge)/income | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup management | (75) | (25) | (253) | 353 | - |
| fees | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup rent | - | - | - | - | - |
| (charges)/income | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Operating profit | 830 | (350) | 616 | 1,028 | 2,124 |
+-----------------------+------------+------------+----------+-----------+----------+
| Financial income | 2 | - | 40 | - | 42 |
+-----------------------+------------+------------+----------+-----------+----------+
| Financial costs | (70) | (1) | (25) | (438) | (534) |
+-----------------------+------------+------------+----------+-----------+----------+
| Intergroup financial | (26) | - | (57) | 83 | - |
| charges | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Profit on ordinary | 736 | | | | |
| activities before | | (351) | 574 | 673 | 1,632 |
| taxation | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Income tax | 220 | (16) | (160) | (81) | (37) |
| (charge)/credit | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
| Profit for the year | 956 | | | | |
| attributable to | | (367) | 414 | 592 | 1,595 |
| equity holders of the | | | | | |
| company | | | | | |
+-----------------------+------------+------------+----------+-----------+----------+
2. SEGMENTAL REPORTING (CONTINUED)
BUSINESS SEGMENTS (continued)
+----------------------+------------+------------+----------+-----------+------------+----------+
| | Rainwater | Metal | Polymer |Corporate |Intergroup | Total |
| |management |staircases |membrane | year |year ended | year |
| |year ended |year ended | year | ended | 30 June | ended |
| | 30 June | 30 June | ended | 30 June | 2009 | 30 |
| 2009 | 2009 | 2009 | 30 June | 2009 | | June |
| | | | 2009 | | | 2009 |
+----------------------+------------+------------+----------+-----------+------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | |
+----------------------+------------+------------+----------+-----------+------------+----------+
| Other information | | | | | | |
+----------------------+------------+------------+----------+-----------+------------+----------+
| Capital expenditure | 111 | 101 | 105 | 77 | - | 394 |
+----------------------+------------+------------+----------+-----------+------------+----------+
| Depreciation and | 164 | 126 | 82 | 285 | - | 657 |
| amortisation | | | | | | |
+----------------------+------------+------------+----------+-----------+------------+----------+
| | | | | | | |
+----------------------+------------+------------+----------+-----------+------------+----------+
| Segmental assets | 17,850 | 2,943 | 7,656 | 9,190 | (7,837) | 29,802 |
+----------------------+------------+------------+----------+-----------+------------+----------+
| Segmental | (14,029) | (1,168) | (6,993) | (2,976) | 7,837 | (17,329) |
| liabilities | | | | | | |
+----------------------+------------+------------+----------+-----------+------------+----------+
| Net assets as at 30 | 3,821 | 1,775 | 663 | 6,214 | - | 12,473 |
| June 2009 | | | | | | |
+----------------------+------------+------------+----------+-----------+------------+----------+
Management has determined the operating segments based on the reports reviewed
by the board that are used to make strategic decisions. The board reviews the
results of each entity within the group on a regular basis and accordingly each
entity is deemed to be an operating segment. The operating segments have been
aggregated into the reportable segments disclosed above in accordance with IFRS
8 Operating Segments.
The Board are provided with financial reports for each of the reportable
segments above on a regular basis. The United Kingdom is the home country of
the group.
The directors consider that each entity within the group is an operating segment
as information about each company is regularly presented to the board.
Sales between segments are carried out at arm's length. The revenue from
external parties reported to the board is measured in a manner consistent with
that in the statement of comprehensive income.
The amounts provided to the board with respect to total assets and total
liabilities are measured in a manner consistent with that of the consolidated
financial statements. Assets are allocated based on the operations of the
segment and the physical location of the asset. Liabilities are allocated based
on the operations of the segment.
Information in respect of revenues from external customers and detailed splits
of revenues between individual foreign countries has not been disclosed. This
type of information is not presented to the board when making strategic
decisions and is not readily available.
One contract in the year generated revenues of GBP3.3m (2009: GBPNil) in the
rainwater management segment, which represents more than 10% of group income.
Other than this contract, there were no other major clients or contracts
representing more than 10% of group revenue.
2. SEGMENTAL REPORTING (CONTINUED)
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 |
| | 30 June 2010 | ended |
| | | 30 June |
| | | 2009 |
+-----------------------------------+--------------------+-----------+
| | | |
| | GBP'000 | GBP'000 |
+-----------------------------------+--------------------+-----------+
| UK | 10,727 | 12,421 |
+-----------------------------------+--------------------+-----------+
| Rest of Europe | 11,335 | 8,972 |
+-----------------------------------+--------------------+-----------+
| Far East | 4,437 | 2,847 |
+-----------------------------------+--------------------+-----------+
| Africa and Middle East | 69 | 501 |
+-----------------------------------+--------------------+-----------+
| USA | 10 | 4 |
+-----------------------------------+--------------------+-----------+
| | 26,578 | 24,745 |
+-----------------------------------+--------------------+-----------+
3. EXCEPTIONAL ITEMS
Exceptional items in the current and prior year relate to redundancy payments,
payments in lieu of notice and associated costs.
4. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the parent company by the weighted average number of ordinary
shares in issue during the year excluding ordinary shares purchased by group
companies and held as treasury shares.
The basic and diluted earnings per share is 0.84p (2009 - 0.82p) the comparative
is restated following bonus issue of 10 new shares for every 1 share hold.
There is no difference between basic and diluted earnings per share.
The underlying earnings per share calculation for the year ended 30 June 2010 is
based on the weighted average of 200,065,417 (2009 - 194,560,894) ordinary
shares in issue during the year and the profit of GBP1,683,000 (2009 -
GBP1,595,000).
The total earnings per share calculation for the year ended 30 June 2010 is
based on the weighted average of 200,065,417 (2009 - 194,560,894) ordinary
shares in issue during the year and the profit of GBP1,698,000 (2009 -
GBP1,595,000).
A copy of the financial report and accounts will be dispatched to shareholders
by no later than 19th November 2010 and a copy will also be available on the
Group's website, www.swpgroupplc.com
For further information or enquiries please contact:
J.A.F Walker D.J Pett
R. Kauffer/ D. Harris
Chairman Finance Director
Nominated Advisor & Broker
SWP Group plc SWP Group plc KBC Peel
Hunt
Tel office: 01353 723270 Tel office: 01353 723270 Tel office: 0207
418 900
Mobile: 07800 951151 Mobile: 07940 523135
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BGBDBRUGBGGI
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