Interim Results
March 29 2007 - 9:38AM
UK Regulatory
RNS Number:9950T
SWP Group PLC
29 March 2007
SWP Group PLC
Interim Report 2006
for the six months ended
31 December 2006
Chairman's Statement
Results After reporting a return to profit during the
financial year which ended in June 2006, we are
disappointed to have to advise shareholders that we
incurred a loss for the first six months of the new
financial year.
On sales of #10,050,000 (2005: #9,472,000) we recorded
an operating profit of #120,000 (2005: #302,000) but
this was not sufficient to cover net interest costs of
#276,000 (2005: #260,000), the overall result being a
loss of #156,000 (2005: #42,000 profit).
Review of Operations The above figures reflect a mixed performance on the
part of our three subsidiaries, with Fullflow
recording a marked increase in sales and profits,
Crescent achieving modest progress on both fronts and
DRC suffering a significant setback following a period
which had appeared to mark the start of a long-awaited
improvement in its results.
Fullflow Group Fullflow produced a strong set of results for the
period under review. Overall sales increased by 19%
with its mainland European operations once again
accounting for the bulk of this growth. In a business
where the majority of sales are derived from teams of
installers fitting specially designed lengths of
fabricated pipe on sites which are commonly a long way
from base, and at heights of up to 35 metres from the
ground, the fact that significant levels of revenue
growth have been attained reflects much credit on the
resourcefulness and organisational capability in each
of Fullflow's management teams.
In both France and Spain the increasing acceptance of
syphonic drainage systems as an alternative to the
traditional gravity option has worked very much in our
favour and we remain confident that we have the
necessary resources and ambition to exploit this trend
whilst at the same time improving the efficiency of
our operations and the quality of our service. Success
in this respect will create a strong platform for
future growth.
In the UK the market remains extremely competitive but
we retain the belief that the majority of developers
and contractors are intent on seeking out the best
value in the market as opposed to the cheapest price
and for this reason we are continuing to invest
additional resource in areas such as product quality
and project delivery. Fullflow is the only company of
its kind in the UK which operates an externally
audited QA system and has the benefit of British Board
of Agreement certification as well.
Fullflow is also in the process of establishing a
partnering agreement with a company specialising in
the provision of rainwater harvesting or rainwater
recovery systems which involve the collection of
rainwater and its subsequent use in "grey"
applications such as toilet flushing, vehicle washing
and irrigation. Such systems offer the users of
buildings significant savings in relation to water
consumption and at the same time provide a positive
environmental impact. Needless to say they are
becoming an increasingly popular option among
forward-thinking developers and it is a very natural
progression for Fullflow to include this option in its
product portfolio.
At Plasflow much effort has been expended in seeking
out new third party business opportunities and
although the results for the first six months were not
spectacular order intake since the end of the period
has increased significantly and the business is set
for a period of substantial growth.
Crescent of Cambridge Crescent's performance during the period under review
was broadly in line with expectations. Sales increased
by just under 10% but one particularly difficult low
margin contract resulted in operating profit
increasing by only 4%. However as with Plasflow these
results do not entirely reflect what has been
happening behind the scenes.
A number of new initiatives have been adopted right
across the main functions of the business - sales,
design, manufacturing and installation - and the
result is that Crescent is now not only equipped to
handle significantly higher levels of business but has
also gone out into the marketplace and won some large
new orders which are filling the extra capacity. The
dynamics of the business have changed fundamentally
and we expect this to show through very clearly in the
next few months - and hopefully for a long time
thereafter. As is the case with Fullflow, it is
increasingly evident that the UK's largest and most
successful contractors prefer to deal with reliable,
professional subcontractors who deliver consistent
quality and service as opposed to chasing the
short-term savings offered by some of the smaller but
less reliable operators. Crescent has entered the
second leg of the year with its order book at an all
time high.
DRC Polymer Products In recent years this company has suffered from a
variety of setbacks and problems but at every
crossroads there has seemed to be the prospect of a
significant new opportunity just around the corner:
and sure enough last year DRC finally appeared to be
on the cusp of achieving the long-awaited breakthrough
to higher sales and a regular profit stream.
However all such hopes were dashed when DRC's
relationship with its biggest single customer broke
down around the middle of last year. This matter is
now before the Courts, but while DRC is optimistic of
securing some level of financial recompense for its
customer's alleged breach of contract, the lost
turnover will have a material impact on DRC's short
and medium term results. The management team continues
to seek alternative routes to market for product lines
which have become demonstrably acceptable to the oil
and petrochemical industries over an extended period
of time. This is a big challenge and inevitably is
taking time to establish new distribution channels
where product integrity and specification remains all
important.
Sales of some other products have either slowed or
failed to grow as expected and although the company's
flagship "Intelligent Membrane" product has generated
a lot of positive interest, sales to date have been
lower than hoped for, at least partly because the
timescale between initial enquiry and product delivery
is often frustratingly long.
Overall DRC's sales in the six months fell
substantially and are running at a level which is
financially unsustainable with the present
organisational structure. Accordingly following a
strategic review we are in the process of reducing the
company's cost base so as to align this with the
current revenue streams to ensure that DRC does not
continue to act as a drag on what would otherwise be
an expanding and successful Group.
Current Trading Trading in the second half of the year has begun very
positively, with Crescent in particular producing
exceptional returns in the first two months. Turnover
and profits are also well up at Fullflow and would
have been even higher had it not been for a number of
large projects in France being delayed. All Fullflow's
businesses have enjoyed strong levels of order intake
and these should underpin sales and profit in the
coming months. Only DRC is currently underperforming
and it is receiving considerable attention from the
Group's senior management.
Future Prospects Despite our disappointment at having to report losses
at the interim stage we retain our confidence that the
Group is on course to deliver significantly improved
results in both the short and medium terms. Both
Crescent and Fullflow have the necessary skills,
experience and market position to benefit from the
favourable conditions which are likely to prevail in
the markets which they serve and we are determined
that by one means or another we will stem the
significant losses which have once again emerged at
DRC.
We look forward to reporting positive news to
shareholders later in the year
J.A.F. Walker
Chairman
29th March 2007
Consolidated Profit and Loss Account
+------------+-------------------------------+--+--------+--+---------+--+--------+
| Six months| | | Six| | Six| | |
| ended| | | months| | months| | |
| | | | ended| | ended| | Year|
| 31 December| | |31.12.06| | 31.12.05| | ended|
| 2006| | | | | | |30.06.06|
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | #'000| | #'000| | #'000|
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| |Turnover | | 10,050| | 9,472| | 18,521|
| | | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | 120| | 302| | 748|
| | | | | | | | |
| |Operating profit | | | | | | |
| | | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| |Net interest payable and | | (276)| | (260)| | (516)|
| |similar charges | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| |(Loss)/profit on ordinary | | (156)| | 42| | 232|
| |activities before taxation | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| |Taxation | | -| | -| | -|
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | (156)| | 42| | 232|
| | | | | | | | |
| |Retained (loss)/profit | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| | | | (0.92)p| | 0.27p| | 1.43p|
| | | | | | | | |
| |Basic (loss)/profit per share | | | | | | |
| |(pence) | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
| |Diluted (loss)/profit per share| | (0.92)p| | 0.27p| | 1.43p|
| |(pence) | | | | | | |
+------------+-------------------------------+--+--------+--+---------+--+--------+
Consolidated Balance Sheet
+------------+--------------------------------+--+--------+--+--------+--+--------+
| As at| | | | | | | |
| | | | | | | | |
| 31 December| | | As at| | As at| | As at|
| 2006| | |31.12.06| |31.12.05| |30.06.06|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | #'000| | #'000| | #'000|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Fixed assets | | | | | | |
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Intangible assets | | 39| | 19| | 42|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Tangible assets | | 4,554| | 4,272| | 4,411|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 4,593| | 4,291| | 4,453|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Current assets | | | | | | |
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Stocks | | 3,218| | 2,783| | 2,969|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Debtors | | 6,094| | 5,423| | 6,550|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 9,312| | 8,206| | 9,519|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Creditors: amounts falling due | | (8,903)| | | | (8,984)|
| |within one year | | | | | | |
| | | | | | (8,521)| | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 409| | | | 535|
| | | | | | | | |
| |Net current assets/(liabilities)| | | | (315)| | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 5,002| | | | 4,988|
| | | | | | | | |
| |Total assets less current | | | | 3,976| | |
| |liabilities | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 3,312| | | | 3,142|
| | | | | | | | |
| |Creditors: amounts falling due | | | | | | |
| |after more than one year | | | | | | |
| | | | | | 3,069| | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Capital and reserves | | | | | | |
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Called up share capital | | 85| | 79| | 85|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Share premium account | | 11,878| | 11,134| | 11,878|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Capital reserve | | 41| | 41| | 41|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Revaluation reserve | | 1,459| | 1,479| | 1,459|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Profit and loss account | |(11,773)| |(11,826)| |(11,617)|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 1,690| | 907| | 1,846|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 5,002| | 3,976| | 4,988|
+------------+--------------------------------+--+--------+--+--------+--+--------+
Consolidated Cash Flow Statement
+------------+--------------------------------+--+--------+--+--------+--+--------+
| Six months| | | Six| | Six| | |
| ended| | | months| | months| | |
| | | | ended| | ended| | Year|
| 31 December| | |31.12.06| |31.12.05| | ended|
| 2006| | | | | | |30.06.06|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | #'000| | #'000| | #'000|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Net cash inflow from operating | | 54| | 468| | 378|
| |activities | | | | | | |
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Returns on investments and | | | | | | |
| |servicing of finance | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Net interest paid | | (257)| | (231)| | (496)|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Hire purchase interest | | (9)| | (16)| | (18)|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | (266)| | (247)| | (514)|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Investing activities | | | | | | |
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Payments to acquire fixed assets| | (66)| | (56)| | (197)|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Receipts from sales of tangible | | 47| | 7| | 32|
| |fixed assets | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | (19)| | (49)| | (165)|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Financing | | | | | | |
| | | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Issue of ordinary share capital | | -| | -| | 750|
| |net of | | | | | | |
| | | | | | | | |
| |expenses | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Other loan repayments | | -| | -| | (95)|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| |Capital element of finance | | 215| | (105)| | (268)|
| |leases and purchase payments | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | 215| | (105)| | 387|
+------------+--------------------------------+--+--------+--+--------+--+--------+
| | | | (16)| | 67| | 86|
| | | | | | | | |
| |Net (decrease)/increase in cash | | | | | | |
+------------+--------------------------------+--+--------+--+--------+--+--------+
Notes to the Interim Report
1 Financial information The interim results are unaudited and do not
constitute statutory accounts. The comparative
information contained in this report for the year
ended 30th June 2006 does not constitute the statutory
accounts for that financial year. Those accounts have
been reported on by the Group's auditor and delivered
to the Registrar of Companies. The report of the
Auditor was unqualified and did not contain a
statement under Section 237(2) or (3) of the Companies
Act.
2 Taxation There is no charge in the profit and loss account for
taxation due to the fact that the Group has tax loss
capacity to shelter the profits in the period under
review.
3 Earnings per share Earnings per share is calculated on the basis of
shares 17,019,546 (2005: 16,189,199), which is the
weighted average of the number of shares in issue
during the period.
The Company's share options are not dilutive for
earnings per share calculations because the share
options' exercise prices are greater than the current
market price.
4 Dividends The Directors are not recommending the payment of an
interim dividend
5 Copies of interim Copies of the interim report are being circulated to
report shareholders. Further copies are available from the
Company's registered office at SWP Group plc, 4th
Floor, Bedford House, 3 Bedford Street, London WC2E
9HD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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