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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Swp Grp. | LSE:SWP | London | Ordinary Share | GB00B010NX28 | ORD 0.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 8.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:1950M SWP Group PLC 26 October 2001 SWP GROUP PLC PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2001 CHAIRMAN'S STATEMENT Corporate Review We report to you at a time of considerable uncertainty in economic and financial markets across the world. Whilst it is much too soon for a considered assessment to be made of the likely consequences of the events which have unfolded since 11th September, it is already evident that the nervousness which existed in the global investment community prior to the New York and Washington attacks has been exacerbated. In last year's report we set out what we believed to be a sound strategy for the delivery of shareholder value. Our objective was to dispose of the Group's existing businesses and to acquire, probably through a reverse take-over, a large business operating in a sector more highly rated by investors and investment analysts alike. Unfortunately the nervousness and uncertainty to which we have already referred has meant that to date we have not received offers for any of our existing businesses which reflect the value which we ascribe to them and we do not consider it to be in shareholders' interests for us to agree disposals unless proper value is unlocked by so doing. Accordingly, it is our present intention to put our strategy on hold and to concentrate our full attention on the development of our three existing businesses. Given our view, recorded below, that each of these businesses has the potential to achieve sales and profit growth, this is by no means a retrograde step and we still anticipate that we will be able to build shareholder value by this route. If an offer is forthcoming for one of the businesses which we believe will deliver proper shareholder value, then we certainly would give such an offer very serious consideration. More information about the prospects for each of the businesses is provided below. Results In the year to 30 June 2001 the Group recorded a loss of #249,000 (2000: # 20,000 loss) on sales of #13,316,000 (2000: #13,548,000). Although it is disappointing for us to report an increased loss it was at least encouraging that before exceptional items our continuing businesses produced an increased operating profit of #432,000 (2000: #42,000) with Fullflow producing a strong performance during the period. Once again, however, the main drag on the Group's performance was the substantial loss recorded by DRC Polymer Products. Despite the significant cuts which had been made to this subsidiary's overhead base towards the end of the previous financial year, sales levels continued to fall well below break-even. Further comment on DRC's situation is provided below. In addition the Group suffered from increased financing costs, mainly on account of a higher average working capital requirement. Interest costs for the year amounted to #409,000 (2000: #341,000) and overall net bank and ancillary debt at the year-end stood at #4,682,000 (2000: #3,613,000). Review of Operations The Group continues to operate through three autonomous trading subsidiaries each of which is a supplier of specialist products to the construction industry. Fullflow Group, which is based in Sheffield, designs, manufactures and installs syphonic roof drainage systems and is, we believe, the leading British company in this field. Crescent of Cambridge, which is based in St Ives, is also a market leader, its main focus being the manufacture and installation of custom-designed spiral and helical staircases. DRC Polymer Products, which is based in Soham, Cambridgeshire, is a supplier of polymer-based sheet materials, generally for use in the roofing and structural waterproofing industries but also for more specialised applications such as fireproofing. Fullflow Group Following a year of consolidation in 2000, Fullflow delivered an encouraging result for the period under review. Sales showed a marginal increase and operating profit more than doubled, reflecting both the benefits accruing from the changes made to the structure of the business during the preceding twelve months and also a policy decision not to engage in low-margin business except in specific circumstances. In the UK Fullflow maintained its pre-eminence in the rainwater management market and continued to develop close links with its major customers. Among a number of significant projects completed during the year were those at Piccadilly Station, Manchester, Sellafield nuclear power station in Cumbria, Princess Margaret Hospital in Swindon and a new IKEA distribution warehouse in Doncaster. In Europe considerable progress was made during the year in terms of securing the various formal technical product approvals which are necessary if the business is to achieve its full potential. Fullflow now has full syphonic certification in France and is confident of gaining the relevant approvals in Belgium, Holland, Spain and Portugal in the near future. These processes have been - and remain - both expensive and time-consuming but represent an important investment in the Company's future. Meanwhile, the absence of formal accreditation has not hindered Fullflow's sales drive across the Continent and a number of major projects have been successfully completed, including two major car assembly plants in France. Fullflow's ability to provide a full turnkey service has been enthusiastically received by a number of Europe's largest contractors and the enquiry flow in recent months has been very encouraging. With a view to providing local support for its Spanish operations the Company has recently opened an office in Madrid and it is anticipated that a further base will be established on the outskirts of Paris in the near future. Plasflow, Fullflow Group's pipework supply and fabrication business, also delivered a good set of results during the year. Following a significant investment in new machinery Plasflow was able for the first time to provide a solution to the needs of the large diameter pipefittings market and has already managed to generate promising levels of business in this area. As Fullflow Group continues to expand, further investment in production capacity will be essential and we are currently considering a number of options in this respect. Crescent of Cambridge After registering a solid performance in the first nine months of the year Crescent suffered a significant fall-off in sales in the fourth quarter and this reversal had a marked impact on the Company's results for the year. However by the end of the year order intake levels had improved to such an extent that the Company's order book had eclipsed all previous records leaving Crescent well placed to regain the momentum generated in recent years. Following a focused advertising campaign, enquiries for helical staircases exhibited a substantial increase, thereby reinforcing the view of Crescent's management that by demonstrating the art of the possible the Company can create a market for its own products. In order both to underpin Crescent's competitiveness and also increase its production capacity - particularly in relation to large complex staircases some of which have to be partially assembled in the factory before being dismantled and reassembled on site- approval has recently been given for the purchase of two new CNC machines and these should be fully operational by the fourth quarter. DRC Polymer Products Reference has already been made to the disappointing performance produced by DRC in the period under review. The relative optimism which we expressed this time last year proved to be misplaced and sales levels across the board failed to achieve budget. In some areas DRC was unfortunate: for example sales of structural waterproofing products were affected by restrictions placed on access to reservoirs on account of foot-and-mouth disease. Export sales were also affected by the collapse of a Korean contractor whose role in a large infrastructure project was so pivotal that the project had to be put on hold. Elsewhere sales of certain of the Company's private label products (goods manufactured by DRC but marketed by others) fell short of the levels which had been anticipated leaving DRC frustrated on account of its inability to influence matters. On a more positive note, there were a number of promising signs for the future. During the year two new products developed by the Company in partnership with others came to commercial fruition and although for a variety of reasons sales of these products failed to accelerate as quickly as might have been hoped, there is every reason to believe that the foundations for future success have been laid. One of these products is a fire-resistant material for use in the petrochemical industry and the other is a mat used to provide cushioning for livestock in cowsheds. In both instances the goods are derivatives of products which already enjoy prominent positions in the markets which they serve. DRC's involvement in the re-engineering process has helped to enhance end user value and it is hoped that this will result in higher levels of off-take. At this stage the signs are encouraging. As we have remarked previously a feature of DRC's business is its high level of operational gearing. This means that if sales progress beyond break-even the Company has the potential to increase profits relatively quickly and against this background we remain of the view that the Company's prospects are such as to merit our support for the time being. Litigation Progress in relation to the various legal issues which we have mentioned in previous reports has been slow but our case against the principal vendor of DRC Holdings has been scheduled for trial early in the New Year. In accordance with the conservative accounting principles all legal costs incurred to date have been written off against the Group's profit and loss account although we are of course hopeful of a successful outcome to the litigation. Action against the Group's previous Directors and advisers is still pending and in part will be affected by the outcome of the above-mentioned case. Employees On behalf of shareholders we wish to record our appreciation of the efforts of the Group's employees during the past year. In the UK today, manufacturing companies face a wide range of pressures and it is to the credit of our employees that in circumstances which have not been entirely propitious our businesses have all managed to achieve progress in recent months. Current trading and future prospects It is now nearly three years since the present Group board was appointed. During that period we have had to deal with a wide range of difficult and time-consuming problems left to us by our predecessors and although we have achieved significant progress in a number of areas we have so far not been able to deliver the overall level of profit performance which we believe shareholders are entitled to expect. We are therefore pleased to be able to report not only that all three of the Group's businesses started the new financial year with record order books but that trading in the current period is well ahead of last year. Fullflow is operating in line with a challenging expansionary budget and is continuing to achieve widespread success in Europe and the UK. Crescent is enjoying strong levels of sales and order intake and losses at DRC have reduced to manageable proportions with the real likelihood of further improvement ahead. Accordingly, and notwithstanding both the uncertainty which we referred to at the beginning of this report and also the possibility that recessionary conditions will start to affect some of our main markets, we believe that the prospects for the Group are better than they have been at any time since we assumed office. Fullflow in particular appears to have the real potential to expand significantly beyond its current horizons but if this potential is to be realised, considerable investment in both fixed and working capital will be required. Whilst we are anxious to provide this support our ability to do so is likely to be constrained by the Group's indebtedness and we are presently reviewing the options open to us in this context. It may be that we will have to raise additional equity and if so we will write to shareholders again in due course. Finally, I have to remind shareholders that in last year's report I signalled my intention to retire from the Group at a convenient point during the twelve months which have just ended. However, in the event no such suitable juncture has occurred and I have been persuaded by my fellow Directors that it is in the Group's interests that I remain as Chairman for the time being. I am naturally grateful for their support and am prepared to continue in office for as long as required. We look forward to welcoming shareholders to the forthcoming Annual General Meeting and to communicating further with you in due course. R.M. Muddimer Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 30 June 2001 2001 2000 Notes #'000 #'000 Turnover Continuing operations 1 13,316 13,548 Cost of sales (7,832) (8,464) Gross profit 5,484 5,084 Net operating expenses (5,052) (4,763) Operating profit before exceptional items 432 321 Net operating expenses - exceptional items 2 (274) - Operating profit Continuing operations 158 42 Discontinued operations - 279 Operating profit 158 321 Interest receivable 2 - Interest payable and similar charges (409) (341) Loss on ordinary activities before taxation (249) (20) Taxation on loss on ordinary activities - - Loss on ordinary activities after taxation 1 (249) (20) Dividends - - Retained loss for the financial year (249) (20) Basic loss per share (pence) 3 (0.08)p (0.01)p Diluted loss per share (pence) 3 (0.07)p (0.01)p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended 30 June 2001 The Group 2001 2000 #'000 #'000 Loss for the financial year (249) (20) Revaluation of freehold premises and specialised tooling - 389 Total (losses)/gains recognised since last annual report (249) 369 NOTE OF HISTORICAL COST PROFIT AND LOSSES 2001 2000 #'000 #'000 Reported loss on ordinary activities before taxation (249) (20) Difference between a historical cost depreciation charge and the 17 - actual depreciation charge of the year calculated on the revalued amount Historical cost loss on ordinary activities before taxation (232) (20) Historical cost loss for the year retained after taxation, (232) (20) minority interests, extraordinary items and dividends RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Year ended 30 June 2001 The Group 2001 2000 #'000 #'000 Loss for the financial year (249) (20) Other recognised gains and losses relating to the - 389 year (net) New share capital subscribed 8 344 Net (decrease)/addition to shareholders' funds (241) 713 Opening shareholders' funds 983 270 Closing shareholders' funds 742 983 CONSOLIDATED BALANCE SHEET At 30 June 2001 2001 2000 #'000 #'000 #'000 #'000 Fixed assets Intangible assets 14 38 Tangible assets 2,942 2,953 2,956 2,991 Current assets Stocks 1,746 1,295 Debtors falling due within one year 3,928 3,444 Debtors falling due after more than one year 188 180 5,862 4,919 Creditors: amounts falling due within one year(4,573) (5,208) Net current assets/(liabilities) 1,289 (289) Total assets less current liabilities 4,245 2,702 Creditors: amounts falling due after more than 3,493 1,611 one year Provision for liabilities and charges 10 53 Capital and reserves Called up share capital 6,352 6,344 Share premium account 1,215 1,215 Capital reserve 41 41 Revaluation reserve 542 559 Profit and loss account (7,408) (7,176) Equity shareholders' funds 742 983 Minority interests Non equity - 55 4,245 2,702 CONSOLIDATED CASH FLOW STATEMENT Year ended 30 June 2001 2001 2000 #'000 #'000 #'000 #'000 Net cash flow from operating activities 4(a) (273) 492 Returns on investments and servicing of finance Interest received 2 - Interest paid (320) (282) Hire purchase interest (45) (70) (363) (352) Taxation Corporation tax paid - - Capital expenditure and financial investment Payments to acquire tangible fixed assets (407) (764) Receipts from sales of tangible fixed assets 21 268 (386) (496) Acquisitions and disposals Purchase of minority interest (55) (70) (55) (70) (1,077) (426) Financing Issue of ordinary share capital 8 344 Bank loans received 3,500 500 Bank loan repayments (1,844) (403) Capital element of finance lease and hire (42) (127) purchase payments 1,622 314 Increase/(decrease) in cash 4(b) 545 (112) PARENT COMPANY'S BALANCE SHEET At 30 June 2001 2001 2000 #'000 #'000 #'000 #'000 Fixed assets Tangible assets 640 249 Investments 7,153 7,098 7,793 7,347 Current assets Debtors 5,607 3,687 Creditors: amounts falling due (2,362) (3,601) within one year Net current assets 3,245 86 Total assets less current liabilities 11,038 7,433 Creditors: amounts falling due after more than 3,350 1,412 one year Capital and reserves Called up share capital 6,352 6,344 Share premium account 1,215 1,215 Profit and loss account 121 (1,538) Equity shareholders' funds 7,688 6,021 11,038 7,433 NOTES TO THE FINANCIAL STATEMENTS 1 SEGMENTAL ANALYSIS BY CLASS OF BUSINESS The analysis by class of business of the Group turnover, result before taxation and net assets is set out below: 2001 2000 Profit/ Profit/ (loss) (loss) Turn- before Net Turn- before Net over taxation assets over taxation assets #'000 #'000 #'000 #'000 #'000 #'000 Syphonic drainage 7,601 747 2,226 7,512 352 3,131 Staircases 3,351 141 1,610 3,636 291 1,714 Polymer sheet 2,364 (642) (2,083) 2,400 (622) (422) material Discontinued - - - - 279 - operations 13,316 246 1,753 13,548 300 4,423 Operating (274) - exceptional costs Common credits and 186 (1,011) 21 (3,385) net liabilities Profit before 158 321 interest Net interest (407) (341) payable Loss before (249) (20) taxation Total net assets 742 1,038 The Group operates predominantly within the United Kingdom. The geographical analysis of the Group's turnover by destination is as follows:- 2001 2000 #'000 #'000 United Kingdom 12,419 12,502 Europe 826 1,033 Africa and Middle East 71 13 13,316 13,548 2. EXCEPTIONAL ITEMS Exceptional items comprise the following: 2001 2000 #'000 #'000 Surrender premium paid in disposing of a medium term occupational 125 - lease no longer required Legal and professional fees pursuant to litigation in respect of warranty claims and claims against the former Board of Directors and their Advisers 149 - 274 - 3. LOSS PER SHARE The loss per share calculation for the year ended 30 June 2001 is based on the weighted average of 317,441,423 (2000: 304,408,749) ordinary shares in issue during the year and the loss of #249,000 (2000: loss of #20,000). The fully diluted loss per share calculation for the year ended 30 June 2001 taking account of the share options granted is based on a weighted average of 356,779,420 (2000: 317,333,793) ordinary shares and the loss of #249,000 (2000: loss of #20,000) 4. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (a) Reconciliation of operating profit to net cash (outflow)/inflow from operating activities 2001 2000 #'000 #'000 Operating profit 158 321 Depreciation charges 402 384 Amortisation of trade names and patents 24 36 (Profit)/loss on sale of tangible fixed assets (5) 74 Increase in stocks (451) (276) Increase in debtors (492) (92) Increase in creditors 91 45 (273) 492 (b) Reconciliation of net cash flow to movement in net debt 2001 2000 #'000 #'000 Increase/(decrease) in cash in period 545 (112) Cash (inflow)/outflow from (increase)/decrease in debt and (1,468) 302 lease financing Change in net debt resulting from cash flows (923) 190 New finance leases (146) (272) Movement in net debt in period (1,069) (82) Net debt at 30 June 2000 (3,613) (3,531) Net debt at 30 June 2001 (4,682) (3,613) (c) Analysis of net debt At 30 Cash Non cash At 30 June June Flow changes 2001 2000 #'000 #'000 #'000 Overdrafts (1,394) 545 - (849) Debt due within one year (432) 282 - (150) Debt due after one year (1,412) (1,938) - (3,350) Finance leases and hire (375) 188 (146) (333) purchase Total (3,613) (923) (146) (4,682) 5. DIVIDEND The Directors are not recommending the payment of a dividend. The 2001 figures have been abridged from the audited statutory accounts for the year which will be posted to shareholders on 12th November 2001. The figures for 2000 have been abridged from the audited statutory accounts for that year which have been delivered to the Registrar of Companies. The reports of the auditor on the statutory accounts were unqualified. Further copies of the accounts are available from the Company's registered office at SWP Group Plc, 4th Floor, Bedford House, 3 Bedford Street, London WC2E 9HD. For further information or enquiries please contact: J. A. F. Walker Director of Finance Telephone: 020 7379 7181
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