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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 | |
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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:7627N SWP Group PLC 13 December 2006 SWP Group PLC Preliminary results for the year ended 30 June 2006 CHAIRMAN'S STATEMENT Corporate Review Following a sustained period of losses we are pleased to advise shareholders that in the year to 30 June 2006 the Group returned to profit, buoyed by an excellent performance from staircase manufacturer Crescent of Cambridge and a significant turnaround at rainwater drainage specialist Fullflow Group. In general the momentum which we had managed to create in the second half of the previous year was sustained and turnover for the year increased by more than 15%, mainly due to rapid sales growth posted by Fullflow's European operations. Although the markets which our businesses serve remain strong, they continue to be highly price-driven and this will mean that our next challenge - that of driving returns to significantly higher levels - will not be easy to achieve. However we have a clear view as to what actions need to be taken in pursuit of our objectives and we are already implementing a number of these initiatives. Results For the year to 30 June 2006 the Group recorded a profit (before and after tax) of #232,000 (2005: #521,000 loss). At the operating level, the extent of the recovery was even more pronounced, with a profit of #748,000 replacing the loss of #325,000 incurred the previous year. Net interest costs amounted to #516,000 (2005: #569,000) thanks mainly to lower average interest rates. There were no exceptional items of any nature in the year under review (2005:#373,000 net exceptional operating income). The net profit recorded by the Group equates to 1.43p per ordinary share (2005: 3.30p loss). Review of Operations The Group continues to operate through three principal subsidiaries each of which is a supplier of specialist products to the construction and/or civil engineering industries. The largest subsidiary is Fullflow Group which is based in Sheffield and has subsidiary operations in Paris, Madrid and Rotherham. Fullflow's main business involves the design, manufacture and installation of rainwater management systems, with a particular emphasis on syphonic drainage systems for large roofs, but through its Rotherham operation it also manufactures and distributes polyethylene pipework fittings and fabrications to a customer base serving the gas, water and petrochemical industries. Next in terms of size is Crescent of Cambridge which is based in St Ives, Cambridgeshire and is the UK's leading manufacturer of spiral and other custom-built steel staircases. Finally there is DRC Polymer Products which is based in Soham, Cambridgeshire and manufactures a wide range of polymer-based sheet materials for use in a variety of structural waterproofing applications and other more specialist markets such as fireproofing and soundproofing. Fullflow Group Following a significantly improved performance in 2005, Fullflow continued its progress during the year under review. Total third party sales increased by 27 % to #11,652,000 (2005: #9,193,000) and this healthy level of revenue growth helped to deliver an operating profit of #719,000 (2005: loss #438,000). Generally the market sectors in which Fullflow operates exhibited considerable strength during the year, with an increase in the quantity of imported goods and economies of scale combining to produce a burgeoning demand for large distribution warehouses on the part of logistics operators and retailers alike. Even the most casual observer must have noticed the pace at which these huge buildings are being constructed along the motorway networks of the UK and France in particular and this sector of the construction industry accounts for a significant element of Fullflow's revenues. However it is in this sector, where entry costs are low and contractors tend to hold the key to decision-making, that competitive pressures are greatest, particularly in the UK, and Fullflow has had little option but to accept business at lower margins to protect its market share. Fortunately Fullflow's technical design and project management skills enable it to acquire work in other, more challenging sectors such as airports, offices, rail terminals, stadia and shopping centres and while the work involved in designing and installing systems in such buildings tends to be much more demanding, margins do tend to be somewhat higher. It is of critical importance that the balance between the two types of work is managed to ensure an efficient and profitable deployment of resources. In France our decision to ride out the period of poor trading experienced in 2005 was fully vindicated, with sales more than doubling and the losses replaced by a small profit. During the period under review much effort was expended in improving and streamlining the company's operations and the results of this input are now becoming evident in the form of higher margins and enhanced customer satisfaction levels. At a time when business levels have been increasing rapidly this represents a considerable achievement. With enquiry levels continuing to increase, there is considerable scope for Fullflow to achieve further growth in this important market and action is in hand to increase the sales and marketing resource. In Spain revenues also increased significantly, bolstered by an influx of new customers and a growing appreciation on the part of existing customers of the extent of the benefits offered by Fullflow's syphonic system compared to the gravity systems which they have employed historically. In brief those benefits include significantly reduced underground drainage runs, enhanced aesthetics (on account of there being no external downpipes), programme savings and a greater compatibility with rainwater harvesting systems which allow rainwater to be stored and used for "grey" applications such as toilet flushing and vehicle washing. With more and more attention being focused on sustainability issues, this last area is one which Fullflow will seek to exploit in all its markets in the future. The year also saw further progress at Plasflow whose operations continue to be heavily reliant on internal demand generated by Fullflow's syphonic businesses but whose third party sales are now beginning to gain some real momentum. Plasflow has one of the most modern and best equipped facilities of any polyethylene pipework fabricator in Europe and although the bulk of its output is destined for use in the water industry, both in the UK and further afield, sales have also been achieved in the nuclear and petrochemical industries and we anticipate further growth arising from these sectors., where Plasflow's well established quality and service standards are particularly important. In previous reports we have highlighted the potential for Fullflow to extend its reach beyond its existing markets and we are pleased to report that in recent months we have begun to forge links in both India and the Middle East, both of which markets would appear to offer strong potential for Fullflow systems. In both cases it is likely that Fullflow's role will be restricted to design coupled with the supply of specialist components but by adopting this approach we can move much more quickly than would otherwise be feasible and at the same time both reduce risk and avoid the substantial costs associated with establishing an overseas operation. Obviously the choice of local partner is of paramount importance. Another significant achievement during the year was the wholesale redevelopment of the company's website and literature, together with the relaunch of the Fullflow brand to better reflect its forward thinking, professional approach. In the construction industry it is becoming increasingly important to have an informative, professional internet presence designed to optimise search engine recognition and it is pleasing to report that, on the back of some web-focused PR and advertising, traffic to Fullflow's UK website has increased by a factor of 15, with a reasonable proportion of that traffic emanating from abroad. We are now intent on achieving the same sort of progress in France and Spain and success in this regard ought to underpin strong enquiry flow across our European markets in the months ahead. Crescent of Cambridge Crescent produced an outstanding result for the year under review. Following the 7% sales increase in 2005, sales in the year to June 2006 rose by a further 5% and broke through the #4 million mark for the first time. Despite a competitive marketplace, margins were maintained and with overhead costs continuing to be the subject of rigorous control Crescent recorded an operating profit of #379,000, over 40% above the level of the previous year. Having for many years focused almost exclusively on the production of spiral staircases, where its reputation was first established, Crescent is now making significant inroads into the market for straight staircases which now account for nearly 40% of turnover. This particular sector of the market is served by a wide range of suppliers, ranging from small operators to large steel fabricators who manufacture staircases as a sideline, but Crescent has been able to identify and successfully court a number of sizeable customers who value the service and quality levels which Crescent provides. One of Crescent's strengths is that it serves more or less every sector of the market meaning that it is less vulnerable to the vagaries of individual sectors such as residential and commercial. There is currently a huge wave of construction investment occurring in the education, health and defence sectors and Crescent is well placed to take advantage of this positive trend and build on its market-leading position. Crescent is well equipped and has a design competence which is both sophisticated and flexible enough to give Crescent a competitive advantage in rapidly changing market conditions where greater levels of efficiency are increasingly required. DRC Polymer Products Disappointingly DRC was unable to sustain the improved trading performance referred to in the Interim Report. Contractual and payment issues with a major customer led to the termination of the relevant supply agreement and while the company did not suffer any direct financial loss as a consequence of this action it proved impossible to make up the resultant sales shortfall. Accordingly what had appeared to be a profitable outcome for the year as a whole quickly turned into an operating loss this time one of #94,000. DRC has proven over time that this particular product has widespread appeal with high levels of customer satisfaction. Long term benefits are likely to accrue as a result of distributing this product line in a more effective way. On a more positive note further significant progress was achieved with regard to the development of Hylam IQ. This material, which enables water companies to detect the precise location of leaks in reservoir roofs, appears to have enormous potential and many expressions of interest in it have been received. Following the successful completion of two installations for United Utilities a third, very substantial, order is awaited although the timing of contracts in this sector is never easy to predict. Development work continues in other areas and in at least one instance it is likely that, as is the case with Hylam IQ, DRC will be in a position to offer a product with significant sales potential directly to distributors rather than, as has often been the case in recent years, simply manufacturing products developed and "owned" by third parties. Finance Despite the significant growth in Group sales, and the consequent pressure on working capital requirements, net bank borrowings at 30 June 2006 were #6,918,000, a reduction of #86,000 on the level at 30 June 2005 (#7,004,000). This borrowing level was well within the limit agreed with our Bankers. We expect borrowings to reduce again during the current year. Employees The Group's most valuable asset is the commitment, energy and resourcefulness of its employees and we thank them for their considerable role in returning the Group to profit. They as much as anyone have been affected by the stresses arising from the Group's well documented problems in recent years and we are delighted that they can now look to the future with considerably more confidence than before. Current Trading The new financial year has started promisingly. Crescent's strong performance has been maintained and Fullflow's recovery has accelerated with all four of its businesses trading profitably. Only DRC continues to act as a drag on the Group's overall performance but this situation is expected to change as Hylam IQ sales increase and other products are brought to market both within the UK and internationally. Future Prospects The strategic and organisational changes which we have introduced in recent years have left our businesses well placed to achieve further success. Each operation has a clear vision of where it is heading and we believe that our management teams have the skills, commitment and experience to achieve the short and medium term goals which we have agreed with them. Naturally we are dependent to some extent on the strength of the markets which we serve and we cannot pretend that the recent increases in UK interest rates represent a positive development for us. However, if the experts are to be believed, base rates are unlikely to increase by any more than a small amount in the months ahead and against this background it is our view that our markets will continue to provide sufficient opportunities for us to achieve the sales growth we aspire to in the current year and beyond. In the wake of a sustained period of losses we are determined to restore shareholder value as rapidly as possible and we will continue to work diligently and energetically to this end. Once again we would express the hope that shareholders will find the time to attend the Group's Annual General Meeting which will take place in London on 24 January 2006. We welcome constructive dialogue with those who have invested in the Group and as well as the formal business of the day there will be plenty of time for shareholders to ask questions of the Directors. J.A.F. Walker Chairman Consolidated Profit and Loss Account Year ended 30 June 2006 2006 2005 Notes #'000 #'000 Turnover 2 18,521 16,007 Cost of sales (12,071) (10,591) -------- -------- Gross profit 6,450 5,416 +------------------------------------------------------------------------------+ | | |Administrative expenses before exceptional items (5,702) (5,741)| | | |Exceptional items 3 - 373 | +------------------------------------------------------------------------------+ Total administrative expenses (5,702) (5,368) -------- -------- +------------------------------------------------------------------------------+ |Operating profit/(loss) before exceptional items 748 (325)| |Exceptional items 3 - 373 | +------------------------------------------------------------------------------+ Total operating profit 748 48 Interest receivable 2 2 Interest payable and similar charges (518) (571) -------- -------- Profit/(loss) on ordinary activities before taxation 2 232 (521) Taxation on profit/(loss) on ordinary activities - - -------- -------- Profit/(loss) on ordinary activities after taxation being loss for the financial year 232 (521) ======== ======== Basic profit/(loss) per share (pence) 4 1.43p (3.30)p ======== ======== Diluted profit/(loss) per share (pence) 4 1.43p (3.30)p ======== ======== The results are wholly derived from continuing operations in both years. Statement of Total Recognised Gains and Losses Year ended 30 June 2006 The Group 2006 2005 #'000 #'000 Profit/(loss) for the financial year 232 (521) Revaluation of fixed assets - 828 -------- -------- Total profit recognised since last annual report 232 307 -------- -------- Note of Historical Cost Profit and Losses Year ended 30 June 2006 The Group 2006 2005 #'000 #'000 Profit/(loss) on ordinary activities before taxation 232 (521) -------- -------- Difference between a historical cost depreciation charge and the actual depreciation charge of the year calculated on the revalued amount 20 20 -------- -------- Historical cost profit/(loss) on ordinary activities before taxation 252 (501) ======== ======== Historical cost profit/(loss) for the financial year 252 (501) ======== ======== Reconciliation of Movements in Shareholders' Funds Year ended 30 June 2006 The Group 2006 2005 #'000 #'000 Profit/(loss) for the financial year 232 (521) Revaluation of fixed assets - 828 New share capital subscribed, net of expenses 750 - -------- -------- Net increase to shareholders' funds 982 307 Opening shareholders' funds 864 557 -------- -------- Closing shareholders' funds 1,846 864 -------- -------- Consolidated Balance Sheet At 30 June 2006 2006 2005 #'000 #'000 #'000 #'000 Fixed assets Intangible assets 42 19 Tangible assets 4,411 4,423 -------- -------- 4,453 4,442 Current assets Stocks 2,969 2,829 +------------------------------------------------------------------------------+ |Debtors falling due within one year 5,795 5,482 | |Debtors falling due after more than one 755 337 | |year | +------------------------------------------------------------------------------+ Total debtors 6,550 5,819 -------- -------- 9,519 8,648 Creditors: amounts falling due within one year (8,984) (9,123) -------- -------- Net current assets/(liabilities) 535 (475) -------- -------- Total assets less current liabilities 4,988 3,967 ======== ======== Financed by: Creditors: amounts falling due after more than one year 3,345 3,306 Provision for liabilities and charges (203) (203) Capital and reserves Called up share capital 85 79 Share premium account 11,878 11,134 Capital reserve 41 41 Revaluation reserve 1,459 1,479 Profit and loss account (11,617) (11,869) -------- -------- Equity shareholders' funds 1,846 864 -------- -------- 4,988 3,967 ======== ======== The financial statements were approved by the Board of Directors on 12 December 2006 and were signed on its behalf by D.J. Pett Director of Finance Consolidated Cash Flow Statement Year ended 30 June 2006 2006 2005 #'000 #'000 #'000 #'000 Net cash inflow/(outflow) from operating activities 378 (614) Returns on investments and servicing of finance Interest received 2 2 Bank and loan interest paid (498) (476) Hire purchase interest (18) (37) ------- ------- (514) (511) Capital expenditure and financial investment Payments to acquire tangible fixed assets (152) (110) Payments to acquire intangible fixed assets (45) (5) ------- ------- Receipts from sales of tangible fixed 32 assets 20 ------- ------- (165) (95) ------- ------- Net cash outflow before financing (301) (1,220) Financing Issue of ordinary share capital net of expenses 750 - Bank loan repayments - (129) Other loan repayments (95) - ------- ------- Capital element of finance lease and hire purchase payments (268) (260) ------- ------- 387 (389) ------- ------- Increase/(decrease) in cash after financing 86 (1,609) ======= ======= Parent Company's Balance Sheet At 30 June 2006 2006 2005 #'000 #'000 #'000 #'000 Fixed assets Tangible assets 1,129 1,120 Investments 8,151 8,151 -------- -------- 9,280 9,271 Current assets Debtors 8,555 7,691 -------- -------- Creditors: amounts falling due within one year (4,980) (4,466) -------- -------- Net current assets 3,575 3,225 -------- -------- Total assets less current liabilities 12,855 12,496 -------- -------- Financed by: Creditors: amounts falling due after more than one year 2,925 2,925 Capital and reserves Called up share capital 85 79 Share premium account 11,877 11,134 Revaluation revenue 500 500 Profit and loss account (2,532) (2,142) -------- -------- Equity shareholders' funds 9,930 9,571 -------- -------- 12,855 12,496 ======== ======== The financial statements were approved by the Board of Directors on 12 December 2006 and signed on its behalf by D.J. Pett Director of Finance Notes to the Financial Statements 1. ACCOUNTING POLICIES The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the group's financial statements, except as noted below: In these financial statements the following new standards have been adopted for the first time: * FRS 21 'Events after the balance sheet date'; * the presentation requirements of FRS 25 'Financial instruments: presentation and disclosure'; and * FRS 28 'Corresponding amounts'. The accounting policies under these new standards are set out below together with an indication of the effects of their adoption. FRS 28 'Corresponding amounts' has had no material effect as it imposes the same requirements for comparatives as hitherto required by the Companies Act 1985. Furthermore, there has been no material impact from the adoption of FRS 21 and 25. The corresponding amounts in these financial statements are restated in accordance with the new policies. Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules modified to include the revaluation of certain fixed assets. 2. 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: 2006 2005 Profit/ Profit/ (loss) (loss) Turn- before Net Turn- before Net over taxation assets over taxation assets #'000 #'000 #'000 #'000 #'000 #'000 Syphonic drainage 11,652 719 1,102 9,193 (438) 74 Staircases 4,020 379 1,457 3,826 267 1,334 Polymer sheet materials 2,849 (94) (276) 2,988 (122) (125) ------- -------- ------- ------- ------- ------- 18,521 1,004 2,283 16,007 (293) 1,283 ------- ------- Operating exceptional (costs)/income - 373 Other charges/liabilities (256) (437) (32) (419) -------- ------- Profit before interest 748 48 Net interest payable (516) (569) -------- ------- Profit/(loss) before taxation 232 (521) -------- ------- ------- ------- Total net assets 1,846 864 ======= ======= The Group operates predominantly within the United Kingdom. The geographical analysis of the Group's turnover by destination is as follows:- 2006 2005 #'000 #'000 United Kingdom 12,857 12,962 Europe 5,651 3,009 Africa and Middle East 13 36 ---------- ---------- 18,521 16,007 ---------- ---------- 3. EXCEPTIONAL ITEMS Exceptional items comprise the following: 2006 2005 #'000 #'000 Net proceeds from litigation against Group's former advisors - 373 ------- ------- - 373 ======= ======= 4. PROFIT / (LOSS) PER SHARE The profit/(loss) per share calculation for the year ended 30 June 2006 is based on the weighted average of 16,189,199 (2005: 15,769,546) ordinary shares in issue during the year and the profit of #232,000 (2005: loss of #521,000). The company's share options are not dilutive for loss per share calculations. 5. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (a) Reconciliation of operating profit to net cash inflow/(outflow) from operating activities 2006 2005 #'000 #'000 Operating profit 748 48 Depreciation charges 366 473 Amortisation of trade names and patents 22 13 Profit on sale of tangible fixed assets (5) (11) (Increase) in stocks (140) (98) (Increase) in debtors (731) (804) Increase/(decrease) in creditors 118 (235) -------- ------- 378 (614) ======== ======= (b) Reconciliation of net cash flow to movement in net debt 2006 2005 #'000 #'000 Increase/(decrease) in cash in period 86 (1,609) Cash outflow from increase in debt 1,549 and lease financing 389 ------- ------- Change in net debt resulting from cash flows 1,635 (1,220) New finance leases (229) (61) ------- ------- Movement in net debt in period 1,406 (1,281) Net debt at 30 June 2005 (8,518) (7,237) ------- ------- Net debt at 30 June 2006 (7,112) (8,518) ======= ======= (c) Analysis of net debt At 30 June Cash Non cash At 30 2005 Flow changes June 2006 #'000 #'000 #'000 #'000 Overdrafts (3,754) 86 - (3,668) Debt due within one year - - - - Debt due after one year (3,250) - - (3,250) Finance leases and hire purchase (233) 268 (229) (194) --------- ------- -------- -------- Total (7,237) 354 (229) (7,112) ========= ======= ======== ======== The 2006 figures have been abridged from the audited statutory accounts for the year which will be posted to shareholders on 19th December 2006. The figures for 2005 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: D.J. Pett Director of Finance Tel Office: 020 7379 7181 Mobile: 07940 523135 This information is provided by RNS The company news service from the London Stock Exchange END FR BRBDDUDBGGLD
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