TIDMSWP
RNS Number : 1418W
SWP Group PLC
05 November 2014
SWP Group Plc
("SWP" or the "Group")
Final Results for the year ended 30 June 2014
SWP Group (AIM: SWP), the industrial engineering group, is
pleased to announce its final results for the year ended 30 June
2014.
Financial Highlights
n Turnover increased by 41.9% to GBP20.325M (2013:
GBP14.317M).
n Operating profits increased to GBP1.600M (2013: loss
GBP267K).
n Earnings per share increased to 0.60p (2013: loss 0.44p).
n Bank borrowings reduced to GBP868K from GBP2.334M or 62% but
counterbalanced by increased hire purchase obligations of GBP1,160M
(2013: GBP21K) to finance capital expenditure at ULVA.
n Bank gearing reduced to 5.8% (2013: 16.9%) of shareholders
funds as at 30(th) June 2014.
n Increase in dividend by 20% to 0.090p per share from 0.075p
per share.
n Increase of 7.6% in shareholders' funds to GBP14.877M (2013:
GBP13.821M).
Operational Highlights
n Improved trading performance from Fullflow Group particularly
as a result of sales success in international territories.
n Record profits recorded at ULVA with improved margins arising
out of efficiency and effectiveness gains in the Telford
factory.
n Successful installation of new ULVAShield process line adding
significant productivity gains and increased operating capacity.
Investment in a new GRP process line approved by the Board.
n Improved performance from Crescent of Cambridge who have moved
back into profit post the financial year end.
n Continuation of tight financial controls and management of
costs in all operating businesses facilitating improved use of
working capital.
n Consistent levels of innovation through targeted Research
& Development. Fusion Butt Welder patented subsequent to year
end by Fullflow.
n Development of international markets for ULVA and Fullflow
continuing according to strategic plan.
Alan Walker, Executive Chairman, commented:
"I am pleased with the financial performance of the Group this
year. Improved economic conditions and a restoration of confidence
will help in the development of our medium to long term strategy in
international markets where our principal brands, Fullflow and
ULVA, have gained enviable reputations for product design, quality
and service reliability. The reduction and elimination of bank debt
remains an objective. The Group is entering a new phase in its
development as we invest heavily for the future in order to deliver
significant growth."
Chairman's Statement
Corporate & Business Review
For the year to 30th June 2014 the momentum referred to in my
interim statement was maintained through to the end of the
financial year. This allowed the Group to record strong financial
results at a time when the pace of economic recovery accelerated
and our internationally acclaimed brands consolidated their
position in existing territories and penetrated new ones. ULVA
enjoyed a strong performance recording record profits whilst at one
and the same time managed to successfully deliver its capital
expenditure programme of a new process line at a cost of GBP1.6M
which will be the cornerstone to the expansion and development of
the business over many years to come. The benefits which will
accrue from improved manufacturing efficiency, quality assurance
and increased capacity allows our team at ULVA to face with
confidence the increasing challenges in the highly specialised
Corrosion Under Insulation ("CUI") market which supplies insulation
systems to the oil, gas and petrochemicals majors all over the
world.
Our other significant brand Fullflow, a leading supplier of
rainwater management solutions designed to offer high level
drainage systems to large industrial and commercial buildings
recorded improved results overall. This business has been designing
rainwater management systems based on syphonic technology for close
to 25 years across a diverse range of buildings including retail
shopping centres, supermarkets, distribution warehouses, schools,
sports stadia, energy for waste plants, airport terminals and car
manufacturing & assembly plants. Fullflow International
achieved considerable success in new markets such as Brazil, where
in conjunction with carefully selected strategic partners we
successfully installed a new system at the complex Fiat factory as
well as an airport close to São Paulo. In France Fullflow Systeme
achieved profitable growth ahead of the economic downturn for that
economy which has been anticipated for some time but which is
likely to be deep and painful as with other Eurozone countries. In
the United Kingdom market conditions remained somewhat subdued for
Fullflow Group despite the undoubted economic upturn which has
proved beneficial to the construction sector. Whilst volumes have
generally increased price competition remains intense at the less
technically demanding end of the market with main contractors
driving prices lower oblivious to compliance with best practice,
warranties and/or adherence to British Standards. New leadership
was introduced into the business post year end and significant
benefits are expected in the near term as process controls are in
place and plans are underway to augment the sales team to achieve
better national coverage particularly in South East England where
the concentration in economic activity is most prevalent.
As part of the Fullflow division Plasflow which specialises in
providing customers with pipe solutions generally of large scale
diameter experienced a number of frustrations mainly as a result of
project delay over which they had no direct influence or control.
As a key supplier to the nuclear industry in the UK Plasflow is
dependent on gaining access to nuclear facilities when "outages"
permit strategic maintenance to be carried out. Postponement of key
projects reduced expectations but will have a positive impact on
results for the current financial year to 30th June 2015. Plasflow
also plays an increasingly important role as the fabricator of
choice for all of Fullflow's projects in the UK, France and
internationally.
As a peripheral activity to the two principal brands referred to
above Crescent has enjoyed a better year financially despite market
conditions remaining fragmented and stagnant. Crescent enjoys an
enviable reputation for quality and the ability to engineer
straight, spiral and/or helical metal staircases to customer
specification but generally suffers from the lack of volume
associated with our other main brands. Significant time resources
and effort have been channelled into improving the efficiency and
effectiveness of management performance and the team's ability to
deliver installations to specification on a timely basis. A feature
during this year has been the challenges associated with the award
of a contract for a large "signature" helical staircase which is
currently being installed in an institutional building in the City
of London, design and manufacture having largely taken place before
30th June 2014 with installation after that date. This is a highly
creative and prestigious project of which Crescent is justifiably
proud to be associated and there is no better showcase to
demonstrate the abilities of the team at Crescent who support this
highly respected brand. A key requirement for the business going
forward is to concentrate on larger bespoke complex projects which
are ideally suited to the technical expertise which Crescent has to
offer and to work and communicate more closely with the company's
demanding customer base.
Results
2014 2013
GBP'000 GBP'000
Turnover 20,325 14,317
Operating profit/(loss) (after
exceptional expenses) 1,600 (267)
Profit/(loss) before tax
from continuing operations 1,422 (454)
Earnings per share 0.60p (0.44)p
======== ==========
Improved Operating Profits of GBP1.600M were achieved in the
year compared to Operating Losses in 2013 arising from the
exceptional costs associated with the closure of the Spanish
operations at that time. Under IFRS accounting rules these figures
are stated after adjustments relating to the amortisation of
intangible assets GBP165K (2013: GBP165K) and non-cash related
share options GBP80K (2013: GBP80K). After financial interest and
related derivative charges for Letters of Credit and Performance
Bonds of GBP178K (2013: GBP187K) pre tax profits increased to
GBP1.422M from a loss of GBP454K in the corresponding period of
2013 which was mainly attributable to the closure of Fullflow's
Spanish operation.
Earnings per share recovered strongly to 0.60p per share (2013:
loss 0.44p).
Based on an Asset Sale Agreement entered into with the
liquidator of Ulva Ltd when SWP acquired the business in November
2007 SWP is entitled to any excess funds arising from the
liquidation beyond 100p/GBP. The liquidator has confirmed that all
creditors have now been discharged and he is currently collecting
the final funds due. The timing and quantity of any receipt is
uncertain but will be clarified over the course of the next twelve
months.
Borrowings
Through the teeth of the recession it has been your Board's
ambition to eliminate exposure to bank debt. This process has
continued relentlessly during the year in which mortgage facilities
over a freehold property have been repaid and the five year term of
loan of EUR5.5M has been repaid in full. Increased levels of
profitability and stringent cash management within each business
has seen bank debt reduce to GBP868K from GBP2.334M one year
earlier. This is a substantial reduction by any measure but is
somewhat counterbalanced by the funding associated with the GBP1.6M
capital expenditure programme at ULVA which has been partly funded
by cash generated in the business and partly through lease purchase
arrangements secured solely on the assets which they are deemed to
finance.
It is anticipated that bank debt will continue to decline during
the remainder of 2014 albeit that a new capital project of similar
proportions to the last one (GBP1.3M) is now underway at ULVA which
is designed to enhance ULVA's product offering through the
introduction of a complementary range of products and components
fabricated in GRP (Glass Reinforced Polyester). This project which
offers ULVA extensive opportunities in global markets will be
funded in a similar manner as previously, namely partly through
cash resources earned in the business and partly through lease
purchase over a relatively short period of time.
The Consolidated Statement of Financial Position reflects a
balance sheet of strength which underscores the specialist nature
of businesses contained therein and the quality of earnings derived
from the activities of the Group. Retained earnings after tax have
advanced to GBP13.376M against GBP12.394M one year earlier and
gearing has fallen to 5.8% of shareholders funds from 16.9% at 30th
June 2013. The arrival of the new process line at ULVA has
facilitated greater control over working capital primarily as a
result of being able to reduce and optimise the levels of stock
required to service the marketplace.
Dividend
Along with your Board's determination to eliminate bank debt as
a major plank in our strategy throughout the recession it has also
been our stated aim to maintain a progressive dividend policy to
reward shareholders for their loyalty in line with increasing
levels of profitability. Bank debt continues to decline towards
elimination but at the same time hire purchase obligations have
been assumed to assist in the purchase of the new process line for
ULVAShield in Telford. This will improve margins through efficiency
gains with a rapid return on investment. In addition the Group is
now investing in the plant and equipment associated with the new
process line for the manufacture of UV Curable GRP. For this reason
your Board recommends only a nominal increase through the
declaration of a dividend of 0.090p per share (2013: 0.075p per
share) which still represents an increase of 20% on this time last
year. As earnings improve in subsequent years and the investments
we are making at this time bear fruit we anticipate being in a
position to review this dividend policy upwards in light of results
at that time.
Taxation
Details of the impact of taxation in the year are presented in
Note 8 of the Annual Report. At the reduced rate of corporation tax
this amounts to a net charge of GBP246K (2013: net credit of
GBP98K) All carry forward losses have been fully utilised and the
Group is fully tax paying. The timing of ULVA's extensive capital
expenditure programme have coincided with the introduction by the
Government in the UK of increased levels of Investment Allowances
designed to encourage and stimulate investment in plant and
machinery in order to boost the economy. An increase in these
allowances to GBP500,000 per annum runs from the period April 2014
to 31st December 2015 at which time it will reduce to GBP25,000 per
annum. ULVA's investment in both process lines and associated
equipment is captured within this period of time. The effect of
this is to accelerate the relief from taxation so as to reduce the
amount of corporation tax actually payable without reducing the
charge overall through the provision for deferred taxation arising
from timing differences.
Research and Development
There are a number of important R&D projects running within
the Group at this time. Both ULVA and Fullflow are committed to the
innovation of new techniques in line with their aspirations for
leadership in their respective fields of expertise. Fullflow has
for example patented a new fusion butt welding machine for
application at height on site which aids efficiency at reduced cost
whilst ULVA has already invested in a new complimentary range of
tools in GRP which will be used in conjunction with the second new
process line which will be manufactured to ULVA's specification
following the product launch in Korea in November 2014 and in
anticipation of full scale production by April 2015. Here again the
UK Government has provided stimulus to investment in R&D by
providing additional taxation credits to those companies who invest
directly in projects of an innovative nature. Most if not all of
our projects qualify for such relief including Patent Box Relief.
We anticipate there will be no let up in the requirement to
innovate techniques and solutions in the future in order to ensure
competitive advantage at a time of international expansion of both
brands.
Corporate Governance
The Group remains highly committed to the principles set out in
the UK Corporate Governance Code. Whenever relevant and to the
extent that these extend to a business of our size we attempt to
comply. The Remuneration and Audit Committees meet and/or discuss
twice per annum whilst monthly management meetings take place at
the principal subsidiary companies supported by Group Board
Meetings held on a quarterly basis or as required.
The Board is also in the process of considering carefully the
appointment of suitably qualified advisors as we head into a new
phase in the development of the Group's activities with particular
emphasis on international expansion.
Strategy
Fullflow. In terms of the development of this business our
strategic plans revolve around greater effectiveness in the sales
process. This is best exemplified by the manner in which our
experienced and resourceful General Manager in Fullflow
International has penetrated new markets and created a pipeline of
potential projects in a number of territories based on the key
advantages of installing a system designed by Fullflow whose
respected brand has gained widespread acceptance. We will endeavour
to support the development of Fullflow's business model
internationally with technical, human and financial resources as
the brand continues to build its reputation abroad.
Margin pressure is a permanent feature of the construction
market in the UK where Fullflow is at its best with major
infrastructure projects. Design and installation complexities are
where our UK team are able to perform to their optimum. A
rationalisation of our UK market strategy is planned for the
current year now that new leadership has been injected into the
business.
We will maintain a watchful eye on the development of Fullflow
in France against a background of deteriorating economic well
being. This market is dominated by large scale infrastructure
projects which are likely to be fewer going forward but where we
have the experience to perform well as in the case of the Stade de
Lyon, a complex project which commenced only recently and which
will need all the skill and expertise of our team to execute.
At Plasflow the strategic opportunities are many and varied.
They need careful consideration where the exploitation of a
pre-eminent position in the delivery of pipe solutions to the
nuclear sector gives Plasflow a competitive advantage in addition
to its important role as fabricator to Fullflow in the UK and
internationally. Sharper focus on targeted selling will be the
order of the day for Plasflow in 2015 and beyond.
ULVA. This exciting business with its dynamic and energetic
management team continues to please and is the principal driver of
profits and cash generator within our Group. One is tempted to say
"same again please" but market dynamics change constantly and the
specialism of CUI development is no exception to this where change
is ever prevalent and the needs of customers dictate the strategic
direction of the business. The successful delivery of the new
process line for the manufacture of ULVAShield in Telford which
will promote efficiency as well as effectiveness will permit our
team to move forward and build a parallel and complimentary range
of GRP products for delivery from April 2015 onwards. This will
allow our business to develop along well recognised non metallic
lines in both soft jacketing and GRP(Glass Reinforced Polyester)
fully certified and accredited to the highest quality standards to
meet the expectations of the specifications as laid down by the oil
& gas major corporations all over the world.
Crescent. Has striven to return to profitability in 2014 and
would have achieved this objective had it not been for delays in
being able to install a major project in the City of London until
after the financial year end. This business which produces bespoke
metal staircases to a fragmented market is peripheral to the
Group's core activities but its highly respected brand is ideally
positioned for higher end projects involving a complexity of design
where Crescent is able to excel. There has been a need for
proactive management within this business which has in the past let
itself down through bottlenecks and delays through lack of
consultation and communication with its customers. More focus on
active sales process management will feature prominently at
Crescent going forward.
People
One of the principal assets in any business has to be the
quality, talent and dedication of the staff who represent all
aspects of a Group's activities at every level. We are fortunate in
having a great many hard working employees whose energy and
specialist knowledge has helped to promote our brands to achieve
wide acclaim in an increasing number of international
territories.
However, leadership in a number of key areas of our businesses
has been an issue and we continue to look to recruit talented
managers with the capacity to grow with the business both in the
domestic but particularly international markets.
Increased emphasis will be placed on employee appraisals so that
performance can be evaluated and assessed against agreed targets of
attainment at most levels within the Group.
Continuity and succession planning will also feature as will a
policy of bringing younger employees into the Group via
apprenticeships to learn the basic skills required to make a real
contribution to the continuing welfare of each of the business
units.
As in previous years many of our senior executives have
journeyed far and wide in support of ULVA and Fullflow with many
trips to the Middle East, Far East, Pacific Rim and North America
as well as Russia, Brazil, Chile and a number of far flung European
destinations. To all of our employees I offer the grateful thanks
of our Board for the selfless devotion to duty and the sacrifices
that have been and are made on a regular basis. We greatly
appreciate the efforts made on the Group's behalf.
Prospects
The year ended on 30th June 2014 was successful on a number of
levels. Fullflow recorded improved results and expanded
internationally whilst Crescent performed significantly better
although not quite reaching break even at the operating level.
ULVA's trading results were the best ever achieved whilst at one
and the same time the new process line for ULVAShield was
commissioned and installed providing greater efficiency and
capacity for years to come.
The current year commenced slowly over the summer months as per
usual and has started to build encouragingly for Fullflow
internationally and at Plasflow where delayed nuclear orders have
now been received and are in the process of being delivered. In
France our team is heavily engaged with the Stade de Lyon. Crescent
has moved into profit and their task is to maintain this progress
through focused selling. ULVA by its own high standards has
recorded sound results without the benefit of major new individual
projects at this time. Our business remains project led,
transparency over which ULVA can see a rich seam of projects where
ULVAShield is specified by choice in the period 2016-2018. Add to
this the complementary nature of the launch of ULVAGRP in 2015 and
the prospects going forward are most exciting. The platform that
has and continues to be created at ULVA will stand the Group in
good stead for many years to come. This current year will see
consolidation on most fronts particularly with the introduction of
the GRP process line which will lead to invoiced sales in the 4th
and final quarter of this financial year. Thereafter the business
is expected to grow strongly from its existing position of
strength.
Shareholders are entitled to feel kindly disposed towards the
momentum created by the brand awareness in ULVA and Fullflow that
has been stimulated in international markets. Your Board intends to
exploit this wherever and whenever possible and views the future
with considerable confidence in line with expectations of further
improvements to financial performance.
Alan Walker
Chairman
Operational Review
Operating Review
Overall the year under review delivered a performance that was
much more representative of the value in the ULVA, Fullflow and
Plasflow brands, when compared with what we were able to report in
the prior year. That being said, not every business unit is yet
firing on all cylinders and the Board is keen to continue the
progress that has been made and build momentum behind the
development activities in the business units with the emphasis on
international development.
Recruitment and retention of key employees has been and remains
the single most important contributor to our success. The impact
and difference that single individuals can make to the business was
superbly demonstrated by both the manager of Fullflow
International, with the success that she has delivered in Brazil
and ULVA's technical director, with the management of the major
investment in the new process line to manufacture the ULVAShield
range.
ULVA
ULVA manufactures non-metallic cladding systems for application
in the oil, gas and petrochemical sectors which deliver the benefit
of substantially reducing Corrosion Under Insulation (CUI) on
process pipe-work and equipment. The business is uniquely focussed
on this activity and has accumulated substantial experience and
specialism.
In terms of revenues, ULVA enjoyed its best year to date in the
year under review although when taken in context with the prior
four years it is clear that management's aspirations for growth are
greater than what has been delivered to date. The year under review
has been an important one in the development of the ULVA business
with a number of solid foundations laid that will become a platform
for growth.
The investment in a new process line at ULVA's Telford facility
was completed in the year and has been a tremendous success. The
project team and project leader are to be congratulated on their
achievement and the employee team at ULVA have embraced the
increased complexity of operating a large process line. The line
manufactures the ULVAShield product range and has delivered
improvements in capability, capacity and efficiency. The Telford
team now has the benefit of taking the ULVAShield system from raw
material through to quality assured installed systems and the
business has the capacity to accommodate substantial growth.
The ULVAShield product range has been further developed during
the year. The number of moulding tools to form all of the bends,
elbows, T-pieces and end caps etc. now stands at well over 2000 and
an enhanced range of end-caps has been introduced affording both a
more secure and robust seal at the interface to the pipe and
effective accommodation of heat tracing cables. A range of tested
and certified acoustic insulation systems has been developed and
introduced during the year. ULVAShield's soft jacketing system
offers advantages acoustically when compared to rigid systems such
as metal or GRP and the introduction of the ULVASound range not
only offers a range of systems to meet various international
standards but significantly, offers the thinnest and lightest
system in the world for "Class C" applications (the more demanding
end of the acoustic scale) which is advantageous for offshore
applications where weight is key and piping systems can be
congested.
During the year, application was completed on Conoco Phillips
Eldfisk II platform in Norway and Chevron's Jack St Malo platform
for the Gulf of Mexico with application work undertaken on the Gulf
Coast. First oil was produced from both SBM's Cidade de Paraty
(application in Brazil), and BP's West Chirag platform in the
Caspian with application in Baku, Azerbaijan. The largest project
currently in the construction phase is ENI Norge's Goliat FPSO
which will be the most northerly FPSO in the world when it enters
service in the Barents Sea and as such the requirements for
insulation are considerable. The ULVAShield system is being applied
for CUI prevention on all thermal insulation systems and the
ULVASound system is being applied for acoustic systems.
The development of the new and complementary ULVAGRP system
(Glass Reinforced Polyester) has progressed to plan. Bespoke
production machinery to manufacture the ULVAForm range of pre-cured
fittings and pipe sections has been completed as have a large
proportion of the mould tools required to manufacture the
components. Independent testing and certification is targeted to be
completed before the product launch at the Offshore Korea
exhibition in November 2014. First deliveries are expected to
commence in April 2015. Considerable effort was expended
collaboratively with the manufacturer of the process lines to
manufacture the UV curable ULVAGRP "wet sheet" to meet the very
specific requirements for the product. Excellent results have been
obtained and the full scale production lines were placed into
manufacture following investment approval by the Board of SWP.
The pipe-line of projects targeted for the ULVAShield, ULVAGRP
and ULVASound systems gives management cause for optimism that its
aspirations for further growth can be met.
Fullflow
The Fullflow Group designs, manufactures and installs engineered
to order solutions for the evacuation of rainwater from large
roofs. Fullflow is a brand leader with decades of experience and
more than 30,000 installations world-wide. Fullflow's home markets
are becoming mature and are populated with "me too" competition
positioned on price whilst considerable opportunities for growth
exist in international markets.
Fullflow UK
The UK market strengthened somewhat in volume terms during the
year particularly in the South of England, although price levels
showed little recovery. Price competition on larger projects, where
there has been little design complexity, has been severe. Fullflow
has continued to win business at the technically demanding end of
the market with notable success in the energy from waste and
automotive manufacturing sectors for some prestigious brands.
The technical competence and expertise within the business
remains strong and continues to attract the more demanding projects
but the lack of a dedicated leader has held the UK business back
during the year. The effectiveness of the leadership of the UK
business has been an ongoing theme for a number of years, the
resolution of which is key to the delivery of growth in a
strengthening market. Post year-end an appointment has been made
for the role of Managing Director and his early focus is on
building the strength and capability within the sales team.
A key skill to be enhanced within the sales team will be its
ability to communicate the value in its offer to the customer. This
is becoming ever more important as competitors have been observed
cutting corners in system designs to the point where they are not
compliant with good practice or the British Standard and as such
pose a risk of failure. Fullflow will not compromise on its design
which is always to best practice and fully compliant but the
contractor placing the order often does not have the specialist
expertise necessary to know whether solutions offered are compliant
or not and this is an important message for Fullflow to convey in
its offer.
Fullflow has completed the development of an innovative portable
welding machine, which has been protected by patent. The device
allows pipes to be butt fusion welded at height and in-situ during
the installation activity reducing the number of costly
electro-fusion couplers that are currently used. This innovation
will deliver competitive advantage by reducing the material content
of sales on projects allowing Fullflow to be more cost competitive
and enhancing margins.
Fullflow France
Fullflow Systeme delivered its best year to date, generating
operating profits of EUR168K on sales of EUR3.503M. This is quite a
departure from previous years which have by and large been loss
making.
In addition, the team has also secured a major and prestigious
project in the year for the new Stade de Lyon although the project
had little influence on revenues with the main thrust of the
project commencing after the year end. Despite these successes the
French market remains a challenging one and the present outlook for
the economy contains some uncertainties.
A careful watch is being kept on the dynamics of the French
market which will inevitably drive the shape of the business in the
near to mid-term.
Fullflow International
It has been a long held personal ambition to see Fullflow active
in Brazil. Unlike other international projects where installation
teams have mobilised from the UK or France for the duration of a
project, it was recognised that success in Brazil would be
dependent upon forging a long-term relationship with the right
partner. Fullflow International's manager achieved this during the
year and completed two high-profile projects, the first for Fiat in
Goiana and the second for the International Airport of Viracopos
Campinas close to Sao Paulo. Fullflow provided the project
management, design services and material supply and the local
partner provided the installation labour and services. Both
projects were very effectively completed on a timely basis, to a
high standard and with a high level of customer satisfaction. The
Fiat factory was particularly challenging due to the scale of the
project (being the largest construction project in Latin America)
and the technical challenges of designing the system around the
various elements of the vehicle manufacturing process but the
result was world class.
A pipe-line of projects is being pursued in Brazil, including a
number of Olympic venues, and attention is additionally being given
to establishing a presence in a number of other Latin American
countries.
The model of combining Fullflow's expertise in system design and
project management, with local partners that can supply capable and
cost effective installation labour is one that can be applied in
other territories to good effect.
Fullflow was also active on prestigious projects in a number of
European countries and in South Korea and work is underway to
extend Fullflow's international reach further.
Plasflow
Within the Fullflow Group, Plasflow specialises in the
fabrication of large diameter and complex plastic pipe spools for a
number of sectors, the most significant being nuclear power
generation and water utilities.
Plasflow continues to be influenced by the peaks and troughs
associated with working on a small number of large projects.
Slippage on one major project towards the end of the year deprived
the business of a record profit performance, the upside of this is
that the business has enjoyed a strong start to FY15.
In order to grow the business and reduce the feast and famine
effect of supporting the small number of UK projects, it will be
necessary to extend its core competencies into new geographic
markets and apply its expertise into new sectors. Whilst serving
its existing markets well, the team at Plasflow has struggled with
this business development challenge. The new managing director of
Fullflow UK is also overseeing Plasflow and will assist
particularly in the area of business development.
Plasflow extended its role in the year under review to become
the centre of excellence for the fabrication of all Fullflow
systems. At one time, Fullflow systems were fabricated in Spain,
France, Sheffield and at Plasflow, however, with the obvious
replication of cost at each location a decision was taken to
consolidate all fabrication at Plasflow's Rotherham site.
Crescent
Despite the fact that Crescent recorded a much improved result
during the period under review activity levels were still not
enough to return the business to profitability.
The team has focused on the quality end of the sector where
Crescent's strong brand, technical competence and core skills can
be best rewarded especially if market conditions become more
favourable.
Much work continues to improve operational efficiencies as
demonstrated by the business working towards attaining the
accreditation which will allow all Crescent stairs to carry the CE
Mark.
Colin Stott
Group Managing Director
Consolidated Statement of Comprehensive Income
Year ended 30 June 2014 2014 2013
GBP'000 GBP'000
Continuing operations
Revenue 20,325 14,317
Cost of sales (12,358) (7,430)
---------- --------
Gross profit 7,967 6,887
Operating expenses (6,100) (6,126)
---------- --------
1,867 761
Profit attributable to associate 41 38
Exceptional operating expenses (63) (821)
Amortisation of intangible
assets acquired through
business combinations net
of deferred tax (165) (165)
Share based payment (80) (80)
---------- --------
Operating profit/(loss) 1,600 (267)
Financial costs (178) (187)
---------- --------
Profit/(loss) on ordinary
activities before taxation 1,422 (454)
Income tax (charge)/credit (246) 98
---------- --------
Profit/(loss) for the year
for continuing operations 1,176 (356)
Loss for the year from discontinued
operations - (543)
---------- --------
Profit/(loss) for the year 1,176 (899)
========== ========
Total comprehensive income
Net gain on revaluation
of land and buildings - 42
Deferred tax on revaluation
of land and buildings - (61)
---------- --------
Other comprehensive income
for the year - (19)
---------- --------
Profit/(loss) for the year
and total comprehensive
income attributable to equity
holders of the Company 1,176 (918)
========== ========
Earnings per share from
continuing and discontinued
operations attributable
to the equity holders of
the company during the year
Basic earnings per share
From continuing operations 0.60p (0.17)p
From discontinued operations - (0.27)p
---------- --------
0.60p (0.44)p
========== ========
Diluted earnings per share
From continuing operations 0. 59p (0.17)p
From discontinued operations - (0.27)p
---------- --------
0.59p (0.44)p
========== ========
Revenue and operating profit all derive from continuing
operations.
There were no recognised gains and losses for 2014 or 2013 other
than those included in the Group Income Statement.
Consolidated Statement of Changes in Equity
Called Other Revaluation Retained Total
up share reserves reserve earnings Equity
capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June
2012 1,016 121 229 13,479 14,845
Result for
the year - - - (899) (899)
Revaluation - - (19) - (19)
Dividend - - - (151) (151)
Share based
payment - 80 - - 80
Purchase of
treasury shares - - - (35) (35)
At 30(th)
June 2013 1,016 201 210 12,394 13,821
Result for
the year - - - 1,176 1,176
Revaluation - - (6) - (6)
Dividend - - - (151) (151)
Share based
payment - 80 - - 80
Purchase of
treasury shares - - - (43) (43)
---------- ---------- ------------ ---------- --------
At 30 June
2014 1,016 281 204 13,376 14,877
========== ========== ============ ========== ========
Consolidated Statement of Financial Position
At 30 June 2014 2014 2013
GBP'000 GBP'000
Non current assets
Intangible assets 7,860 8,083
Property, plant and equipment 6,579 5,159
Trade and other receivables 246 301
Deferred tax assets 237 422
Investment 129 88
-------- --------
15,051 14,053
-------- --------
Current assets
Inventories 2,382 3,239
Trade and other receivables 5,793 4,823
8,175 8,062
-------- --------
Total assets 23,226 22,115
-------- --------
Current liabilities
Trade and other payables (4,308) (3,794)
Current tax liabilities (298) (127)
Obligations under finance
leases (361) (13)
Bank loans and overdrafts (868) (2,030)
-------- --------
(5,835) (5,964)
-------- --------
Non current liabilities
Bank loans - (304)
Deferred tax liabilities (1,715) (2,018)
Obligations under finance
leases (799) (8)
-------- --------
(2,514) (2,330)
-------- --------
Total liabilities (8,349) (8,294)
-------- --------
Net assets 14,877 13,821
======== ========
Equity
Called up share capital 1,016 1,016
Other reserves 281 201
Revaluation reserve 204 210
Retained earnings 13,376 12,394
-------- --------
Equity attributable to
shareholders of the parent 14,877 13,821
======== ========
Consolidated Statement of Cash Flows
Year ended 30 June 2014
2014 2013
GBP'000 GBP'000
Profit/(loss) after tax 1,176 (899)
Adjustments for:
Net finance costs 178 191
Corporation tax charge/(credit) 303 (61)
Depreciation of property,
plant and equipment 243 313
Revaluation of properties - 383
Amortisation of intangible
assets 237 236
Profit/(loss) on disposal
of plant and equipment 4 (1)
---------- ---------
Operating cash flows before
movement in working capital 2,141 162
Decrease/(increase) in
inventories 857 (256)
(Increase)/decrease in
receivables (915) 3,825
Increase/(decrease) in
payables 437 (1,960)
Interest paid (186) (197)
Corporation tax paid (132) (185)
---------- ---------
Net cash inflow from operating
activities 2,202 1,389
---------- ---------
Cash flow from investing
activities
Purchase of property,
plant and equipment (1,721) (352)
Purchase of intangible
assets (14) (9)
Proceeds from disposals
of property, plant and
equipment 54 5
---------- ---------
Net cash outflow from
investing activities (1,681) (356)
---------- ---------
Cash flow from financing
activities
Dividend paid (151) (151)
Bank loans repaid (1,341) (925)
Purchase of treasury shares (43) (35)
New hire purchase loans 1,198 -
Finance lease and hire
purchase repayments, net (59) (1)
---------- ---------
Net cash outflow from
financing
activities (396) (1,112)
---------- ---------
Net decrease/(increase)
in cash and bank
overdrafts 125 (79)
Cash, cash equivalents
and bank overdrafts at
beginning of year (993) (914)
---------- ---------
Cash, cash equivalents
and bank overdrafts at
end of year (868) (993)
========== =========
Notes to the Financial Statements
1. BASIS OF PREPARATION
Whilst the information included in this final results
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards ("IFRSs") 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 to
comply with IFRSs.
The final results announcement for the 12 months to 30 June 2014
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 2014.
2. SEGMENTAL REPORTING
BUSINESS SEGMENTS
Rainwater Metal Polymer Corporate Total
management staircases membrane year year
year ended year year ended ended
2014 30 June ended ended 30 June 30 June
2014 30 June 30 June 2014 2014
2014 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External revenues 11,195 1,677 7,453 - 20,325
InterGroup sales 2,637 30 50 - 2,717
------------ ------------ ---------- ---------- ---------
Total revenues 13,832 1,707 7,503 - 23,042
Cost of sales (10,473) (1,326) (3,276) - (15,075)
------------ ------------ ---------- ---------- ---------
Gross profit 3,359 381 4,227 - 7,967
Operating expenses (2,798) (451) (1,771) (1,080) (6,100)
------------ ------------ ---------- ---------- ---------
561 (70) 2,456 (1,080) 1,867
Profit attributable
to associate - - - 41 41
Exceptional operating
expenses (49) - - (14) (63)
Amortisation of
intangible assets
acquired through
business combinations
net of deferred
tax - - - (165) (165)
Share based payment - - - (80) (80)
InterGroup royalty
(charge)/income - - (1,482) 1,482 -
InterGroup management
fees - - (203) 203 -
InterGroup rent
(charges)/income - - (72) 72 -
Operating profit 512 (70) 699 459 1,600
Financial income - - - - -
Financial costs (3) - (6) (169) (178)
InterGroup financial
charges (27) - - 27 -
------------ ------------ ---------- ---------- ---------
Profit on ordinary
activities before
taxation 482 (70) 693 317 1,422
Income tax (charge)/credit (106) - (170) 30 (246)
------------ ------------ ---------- ---------- ---------
Profit for the
year attributable
to equity holders
of the Company 376 (70) 523 347 1,176
============ ============ ========== ========== =========
2014 Rainwater Metal Polymer Corporate IntraGroup Total
management staircases membrane year year year
year ended year year ended ended ended
30 June ended ended 30 June 30 June 30 June
2014 30 June 30 June 2014 2014 2014
2014 2014
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Other information
Capital expenditure 67 - 1,654 14 - 1,735
Depreciation
and amortisation 39 6 173 261 - 479
Segmental assets 8,801 2,172 7,265 15,404 (10,416) 23,226
Segmental liabilities (5,454) (1,352) (5,052) (6,907) 10,416 (8,349)
------------- ------------ ---------- ---------- ----------- ---------
Net assets as
at 30 June 2014 3,347 820 2,213 8,497 - 14,877
============= ============ ========== ========== =========== =========
Rainwater Metal Polymer Corporate Total
management staircases membrane year year
year ended year year ended ended
30 June ended ended 30 June 30 June
2013 2013 30 June 30 June 2013 2013
2013 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
External revenues 7,572 1,381 5,364 - 14,317
InterGroup sales 1,716 - 1,598 - 3,314
------------ ------------ ---------- ---------- ---------
Total revenues 9,288 1,381 6,962 - 17,631
Cost of sales (5,974) (1,151) (3,619) - (10,744)
------------ ------------ ---------- ---------- ---------
Gross profit 3,314 230 3,343 - 6,887
Operating expenses (2,906) (575) (1,657) (988) (6,126)
------------ ------------ ---------- ---------- ---------
408 (345) 1,686 (988) 761
Profit attributable
to associate - - - 38 38
Exceptional operating
expenses (391) 9 (21) (418) (821)
Amortisation of
intangible assets
acquired through
business combinations
net of deferred
tax - - - (165) (165)
Share based payment - - - (80) (80)
InterGroup royalty
(charge)/income - - (1,036) 1,036 -
InterGroup management
fees - - (228) 228 -
InterGroup rent
(charges)/income - - (72) 72 -
Operating profit 17 (336) 329 (277) (267)
Financial income - - - - -
Financial costs (7) - - (180) (187)
InterGroup financial
charges (27) - - 27 -
------------ ------------ ---------- ---------- ---------
Profit on ordinary
activities before
taxation (17) (336) 329 (430) (454)
Income tax (charge)/credit (1) 55 (77) 121 98
------------ ------------ ---------- ---------- ---------
Profit for the
year attributable
to equity holders
of the Company (18) (281) 252 (309) (356)
------------ ------------ ---------- ---------- ---------
Loss for the year
from discontinued
operations (543) - - - (543)
------------ ------------ ---------- ---------- ---------
(Loss)/profit for
the year (561) (281) 252 (309) (899)
============ ============ ========== ========== =========
Rainwater Metal Polymer Corporate IntraGroup Total
management staircases membrane year year year
year ended year year ended ended ended
30 June ended ended 30 June 30 June 30 June
2013 2013 30 June 30 June 2013 2013 2013
2013 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Other information
Capital expenditure 7 6 321 18 - 352
Depreciation
and amortisation 57 23 147 265 - 492
Segmental assets 8,451 1,842 7,340 17,151 (12,669) 22,115
Segmental liabilities (5,365) (925) (5,436) (9,237) 12,669 (8,294)
------------- ------------ ---------- ---------- ----------- ---------
Net assets as
at 30 June 2013 3,086 917 1,904 7,914 - 13,821
============= ============ ========== ========== =========== =========
The Board 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 is 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 certain entities within the Group
constitute 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.
There were no Clients or contract representing more than 10% of
Group revenue in the current year.
The accounting policies note for revenue gives further
information about the classifications of revenue between the
business segments for this and the comparative year. The rainwater
management segment is construction contract based in nature and its
revenue is accounted for in accordance with IAS11, Construction
Contracts, additionally certain contracts included in the Polymer
Membrane segment are accounted for as construction contracts. The
staircases and polymer membrane segments relate principally to the
supply of goods, accounted in accordance with IAS18, Revenue. The
supply of services for these segments is incidental to the supply
of goods.
The aggregate amount of costs incurred on construction contracts
in progress at the balance sheet date is GBP500,000 (2013:
GBP631,000).
The aggregate amount of recognised profits incurred on
construction contracts in progress at the balance sheet date is
GBP394,000 (2013: GBP243,000).
GEOGRAPHICAL SEGMENTS
The Group's operations are located in the UK and France.
The following table provides an analysis of the Group's sales by
geographical market, irrespective of the origin of the
goods/services
Year ended Year ended
30 June 30 June
2014 2013
GBP'000 GBP'000
UK 8,199 6,711
Rest of Europe 5,194 4,021
Far East 4,743 1,566
Africa and Middle East 565 1,184
USA 625 472
Australasia 79 127
South America 920 236
----------- -----------
20,325 14,317
=========== ===========
The following is an analysis of the carrying amount of segment
net assets and additions to property, plant and equipment and
intangible assets, analysed by the geographical area in which the
assets are located.
Carrying Additions to
amount of property, plant
segment assets and equipment
and intangible
assets
Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
UK 14,094 13,070 1,719 352
France 783 751 16 -
14,877 13,821 1,735 352
=========== =========== =========== ===========
3. 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.
Diluted 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
shares plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential
ordinary shares into ordinary shares.
Treasury shares are deducted from total shares in issue for the
purposes of calculating earnings per share.
The basic profit per share is 0. 60p (2013: loss 0.44p).
The diluted profit per share is 0.59p (2013: loss 0.44p).
The basic earnings per share calculation for the year ended 30
June 2014 is based on the weighted average of 195,773,636 (2013:
203,275,006) ordinary shares in issue during the year and the
profit of 1,176,000 (2013: - 899,000).
The diluted earnings per share calculation for the year ended 30
June 2014 is based on the weighted average of 197,954,467 (2013:
loss therefore no dilution) ordinary shares in issue during the
year and the profit of 197,954,467 (2013: - 899,000).
A copy of the financial report and accounts will be dispatched
to shareholders by no later than 10 December 2014 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
Chairman Finance Director
SWP Group plc SWP Group plc
Tel office: 01353 723270 Tel office: 01353
Mobile: 07800 951151 723270
Mobile: 07940 523135
Ranald McGregor-Smith Richard Kauffer/Daniel
Corporate Finance Advisors Harris
Whitman Howard Nominated Advisor
Tel office: 0207 087 4555 & Broker
Peel Hunt LLP
Tel office: 020 7418
900
This information is provided by RNS
The company news service from the London Stock Exchange
END
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