Final Results

SWP Group Plc

("SWP" or the "Group")

Preliminary Results for the year ended 30 June 2010

SWP Group (LSE: SWP); the industrial engineering group, is pleased to announce its preliminary results for the year ended 30 June 2010.

Highlights

n Group sales increased by 7.4% to £26.58M (2009 - £24.75M).

n Favourable sales mix allowing gross margins overall to increase by 4.2% (2009 - 4.3%).

n Operating profits (before exceptional costs and amortisation of intangible assets) increased by 34.9% to £3.27M (2009 - £2.42M).

n Operating profits (after exceptional costs and amortisation of intangible assets) increased by 25.3% to £2.66M (2009 - £2.12M).

n Pre-tax profits increased by 39.3% to £2.27M (2009 - £1.63M).

n Underlying earnings per share before tax advanced by 35.5% to 1.14p (2009 restated - 0.84p)

n Market conditions in the United Kingdom remained subdued for both Fullflow and Crescent due to the economic downturn. This was once again countered by revenue growth at DRC-Ulva (the Polymer Membrane segment) where sales advanced by 34.3.% and gross profit increased by 25.8%

n Fullflow's profits were sharply ahead in the year following a particularly strong performance by Fullflow Sistemas in Spain where despite a weakening economy Fullflow delivered its strongest ever results having completed the enhancement works at Barajas Airport, Madrid during the year.

n Due to the severity of the economic recession, a stringent review of the group's overhead base was undertaken to ensure that cost containment is maximised for 2010/2011 during an extended period of economic uncertainty.

n Potential for Crescent to restore profitability after two disappointing years where demand has been highly muted as a consequence of the recession within the construction sector.

n Product development challenges intensified for DRC in the year and have been appropriately resourced internally and externally.

n Current year has started positively for all businesses in the Group with order books at satisfactory levels notwithstanding the challenging market conditions faced across the board.

n The Group's aspirations on debt reduction have been met with debt reduced by 39.2% as compared to 30th June 2009. The Board's target is to eliminate debt by 31st December 2011 and achieve a debt free status. The capital reorganisation, bonus issue and elimination of Share Premium Account were approved by the Court in early 2010.

n The Board of Directors is pleased to be in a position to propose a maiden dividend of 0.2p to be paid on all shares ranking pari passu on 4th January 2011 subject to approval at the forthcoming Annual General Meeting which is scheduled to take place on 15th December 2010.

Chairman's Statement

Corporate Review

Shareholders may recall that when we delivered our Annual Report and Accounts for the year ended 30th June 2007, just after we had acquired the Ulva brand on 29th November 2007, I expressed the view and/or fervent hope that this important strategic acquisition would prove pivotal to the future of our Group with the expectation that it could have a transformational impact on our financial results. It is therefore gratifying to report to shareholders just short of three years after this acquisition that we are reporting for the year ended 30th June 2010 the most successful year in the Group's trading history notwithstanding that these results have been achieved against a background of deep economic recession in a number of the sectors in which we operate and that generally challenging market conditions continue to exist at this time without material signs of abatement.

The Group is today a highly focused provider of industrial engineering products operating within niche markets through highly respected brands to a discerning range of internationally based customers operating on a global basis in the Middle East, the UK, Continental Europe, Asia, Scandinavia and North America.

Our various management teams are very focused in these difficult market conditions in developing strong relationships and alliances with a growing range of customers based on improved levels of service and product quality as well as innovative solutions designed to ensure that our product is specified in future as the "product of choice".

Results

In the year to 30th June 2010 Group sales increased by 7.4% to £26.58M (2009 - £24.75M). Consistent with earlier years as a result of favourable sales mix and improved operating efficiencies on larger scale projects, margins advanced by 4.2% in line with the improvement recorded in 2009 of 4.3%. Operating profits before exceptional costs increased by 34.9% to £3.27m (2009 - £2.42M) whilst operating profits after exceptional costs and after amortisation of intangible assets under IFRS accounting increased by 25.3% to £2.66M (2009 - £2.12M).

Profits at the pre-tax stage increased by 39.3% to £2.27M (2009 - £1.63M) and represent a solid year of progress against a background of difficult economic market conditions where there has been little evidence of growth, a lack of optimism and a continuous stream of project delays, cancellations and postponements to which we refer below.

During the year further seeds have been planted in a number of Ulva's targeted international markets, where the gestation period to gain full product accreditation leading to specification by the oil and gas multinational companies can take a number of years. Considerable benefit is expected to accrue from our commitment to invest in these international territories where we believe top line sales can be driven in the future. It is early days in the globalisation of the Ulva brand and we are pleased with our progress to date but far from complacent given the significant growth potential which exists and the massive amount of work still to be undertaken. The DRC-Ulva alliance, representing the Polymer Membrane segment, is the cornerstone to our Group's future in terms of international expansion and our success in terms of growth in profits recorded, and cash generated bodes most encouragingly for the future. Your attention is drawn to the Operational Review below which further amplifies our aspirations for the Ulva branded range of products.

Similar global ambitions exist within the Fullflow Group in terms of penetrating international markets where increasingly discerning customers recognise the value of a tailored approach when seeking solutions to the greater awareness of rainwater management.

It has been a difficult year for Fullflow UK due in simple terms to the downturn in construction activity in the United Kingdom whereas in Europe the results achieved particularly by Fullflow Spain have been most welcome at a time of depression within the wider Spanish economic market.

Plasflow has sustained solid results without achieving the type of growth of which we know they are capable whilst at Fullflow France a solid performance was recorded once we addressed the leadership issues which have held this subsidiary in check for the last few years. The Fullflow brand is widely respected and routinely endorsed by some of the world's most famous architects in the guise of Lords Foster & Rogers. Their endorsement of the modern techniques used to dispose of water from large scale roofs has helped to identify customers in markets further afield who wish to benefit from improvements in technical development where climate changes have alerted many to the increased risks and demands placed on rainwater management systems when faced with torrential downpours of tropical proportions. This is a modern day feature of weather conditions worldwide - torrential rain.

The Fullflow team remain focused on product innovation and the development of techniques which will easily export into jurisdictions as widely spread as Oman, Quatar, New Zealand, Morocco, India and Singapore which we intend to serve through our newly established subsidiary Fullflow International Limited. We envisage the pace of international expansion of the Fullflow brand will gather pace through the internal establishment of an "International Committee" and the external development of selected strategic alliances with local partners who have expertise in the areas of installation and access allowing Fullflow to concentrate on its design capability and the manufacture as well as distribution of outlets and associated products.

Losses in Crescent have reduced year on year even though they continue to suffer the rigours of a construction market which has been to all intents and purposes "closed for business". Progress has been made throughout the business from sales and marketing to production effectiveness but there remains much to do in terms of achieving installation improvements on a "right first time" basis and to extracting much of the investment benefit contained within our Solid Works Design capability which is now functioning on line for the benefit of our in-house design team and our valued customers.

Borrowings

Shareholders will recognise that one of the Board's key objectives has been the retirement of debt with a residual ambition to become debt free as a matter of priority. The capital restructuring to which we made reference last year has been completed and approved by the Court whereby we added to our issued Share Capital through a bonus issue (10 for 1) whilst also eliminating our Share Premium Account so as to enhance the Retained Earnings and Distributable Reserves thereby facilitating the payment of a dividend which is covered at least 4 times by current year earnings.

Debt has fallen to £4.09M (2009 - £6.73M) or by 39.2% during the year notwithstanding the fact that we took the opportunity to acquire the freehold of the Ulva factory on advantageous terms back in April 2010 for a consideration of a little less than £800,000 after associated costs and refurbishment.

The Group's balance sheet grows ever stronger with net shareholders funds advancing to some £14.5M (2009 - £12.5M) a far cry from the highly geared balance sheet back in 2004/2005. It remains a key objective of the Board to continue to retire debt at every opportunity and our target is to be debt free on or around 31st December 2011.

Dividend

The strength of our results and a measure of the confidence with which your Board of Directors views the future of the Group, permits the recommendation of the payment of a maiden final dividend of 0.2p per share. This final dividend is subject to approval by shareholders at the Annual General Meeting to be held on 15th December 2010. Your Board of Directors anticipates a progressive dividend policy in future years and is particularly pleased to be able to join the dividend list at this time.

Taxation

Shareholders will realise that the Group has benefitted from the utilisation of losses sustained in earlier years against profits recorded in the various businesses more recently. The tax charge of £591,000 (2009 - £37,000) represents current taxation due and payable of £108,000 whilst the balance of £483,000 equates to the release of the deferred tax asset created in earlier years in compliance with the provisions of IFRS accounting standards and as such does not fall to be paid in cash.

Earnings per share

Earnings per share before the tax charge have increased to 1.14p (2009 as restated 0.84p) an increase of 35.5%. After tax and the amortisation of the deferred tax asset earnings per share have risen more modestly to 0.84p per share (2009 as restated 0.82p) an increase of 2.6%.

Outlook

Your Board of Directors have every reason to be pleased with the results which have been achieved in the year to 30th June 2010. These have been recorded notwithstanding the harsh and difficult trading conditions which have been prevalent for the past two to three years. We are making significant progress in international markets in creating both demand for and increased levels of interest in both the Ulva and Fullflow brands which both enjoy enviable reputations at home and abroad. A difficulty which we have to take in our stride is the fact that a high proportion of sales to both Fullflow and Ulva are dependent upon product specification within large scale projects, the award and timing of which is not under our direct control. This makes budgeting and forecasting more difficult than in a normal trading environment where demand can be more easily assessed. The challenges which lie before us are considerable and we remain excited by the potential which our product offering appears to have on a global basis as and when the economic climate improves.

As a Group we have come a long way in a short period of time. We have built a highly profitable and cash generative Group from humble origins and our management remains dedicated to achieving sustainable growth given the momentum we have created these past two years. We view the future with considerable optimism.

J A F Walker

Chairman

Operational Review

Group Management

Recruitment, retention and development of key management and staff has, and continues to be a key focus for the Group which has been strengthened through the year where key talent has been encouraged and seen to blossom, some positions have been filled through recruitment and those in the business that could not meet the Group's increasing standards and aspirations have departed. Much headway has been made down this particular road but there is still some distance to travel. Recruitment, retention and management development remains a key objective for the coming year.

Crescent

Crescent continues to be held back by the poor state of its market place which is showing little signs of recovery in the short term. Revenues further declined in the year by 29% to £1,944K with the operating loss reducing by 64% to (£125K). Investment in the sales team is delivering a satisfying outcome, with increased volumes now being achieved despite the static market. Investment has continued in order to further enhance the capabilities of the business to service its customers with ISO9001 being achieved during the year together with further development in design automation which will substantially benefit the business and its customers as the market begins to recover and demand increases. With a strong brand, long serving loyal employees and new leadership, the business is anticipating a return to profit in FY 2010/11 and growth beyond.

Polymer Membrane Division

Global base polymer price increases have introduced new product development challenges into the business which are consuming much management attention and focus and will continue well into the 2010/11 financial year. Specialist external expertise has been engaged and results are encouraging, but the projects are lengthy given the technically differentiated nature of the product range. The impact of the polymer price increases has impacted on margins, so whilst external revenues have increased by 34.3% to £8,865K, gross profit is ahead by 25.8%.

Ulva has been active on a number of major flagship projects for both onshore and offshore Oil & Gas applications in the management of Corrosion Under Insulation (CUI) and the business can be proud of the high standards attained. The strength of Ulva's management and employee teams continues to support the development of the business and the team was expanded in the year to include the provision of site based quality assurance personnel to assist applicators to deliver best practice for the end customer. International development continues with the Houston and Kuala Lumpur based teams beginning to become well established, and partners in other territories likewise gaining traction. The number of end users specifying Ulva increased in the year. Bespoke solutions, developed to meet individual customers' technically demanding applications together with three major projects and a strong base load of specification driven new project business and in-field maintenance delivered good volumes for Ulva in the year. The visibility of a good flow of new major projects provides confidence of further growth over the year under review in the near term, 2010/11, however, will be an opportunity to pause for breath.

DRC's Hylam Uniroof construction related products have remained stable in a static market but the customer base has proven itself to be resilient and like DRC, eagerly awaits a recovery in the market. A number of important Hylam IQ projects have been completed with an enhanced design and the system for sealing service reservoir roofs in the water utilities sector, with in-built electronic leak detection, is now more user-friendly and consistent between sites. Activity under the industry's Asset Management Programme AMP 5, which commenced in April 2010, has got off to a slow start but DRC remains ready, willing and able when the programme gets underway in earnest. Hylam FPA is a specialised product for the water utilities sector being Drinking Water Inspectorate (DWI) approved for contact with potable water. The FPA range was successfully extended in the year and continues to perform well with a growing international content.

Fullflow Group

Fullflow entered the year under review equipped for growth in the core UK, French and Spanish businesses at a time when the underlying construction market remained in no fit state to reward this strategy. The successful execution of a number of key projects in Spain and international markets underpinned the Group's performance whilst it underwent a substantial reorganisation to bring operating costs into line with current market conditions. The reorganisation was completed in the year without impacting upon the organisation's ability to deliver quality turnkey systems with a high level of customer satisfaction. The combination of strong management and cost control across the group, its recognised technical leadership and its critical mass has meant that Fullflow has fared significantly better than its competition through the recession.

The Group has entered the 2010/11 year a slimmer, fitter and hungrier business and it is not unreasonable to anticipate a good performance in difficult market conditions. The major Barajas T4 project in Spain was well executed with night working by rope access in a live airport with zero disruption to the terminal's operations and an on-time quality completion. Early success in the initiative to develop the international business has resulted in the application of increased focus and resource. This has been rewarded with the receipt of a number of key projects, building further upon the success in the year of projects such as the new Doha international airport and a new Renault factory which is being built in Morocco. Sales in the year increased by 2.5% to £15,769K and operating profit increased by 91% to £1,584K.

Health and Safety

A long standing key priority within the operating units, health and safety has taken an enhanced prominence at Group level to provide the cooperation and drive to turn it from a position of compliance to one of competitive advantage.

C A Stott

Managing Director Consolidated Statement of Comprehensive Income

The comparative earnings per share figures have been restated to enable better comparison following the bonus issue of shares in the year (see note 4).

Consolidated Statement of Changes in Equity

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Year ended 30 June 2010

Notes to the Financial Statements

1. BASIS OF PREPARATION

Whilst the information including in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") as adopted for use in the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information comply with IFRS.

The preliminary announcement for the 12 months to 30 June 2010 has been prepared on a consistent basis with the financial accounting policies set out in the Accounting Policies section of the SWP Group Plc Annual Report and Financial Statements 2009, with the exception of the adoption of IFRS 8 Operating Segments and IAS 1 Presentation of Financial Statements, which had no impact on results or financial position, impacting on presentation and disclosure only.

2. SEGMENTAL REPORTING

BUSINESS SEGMENTS

2. SEGMENTAL REPORTING (CONTINUED)

BUSINESS SEGMENTS (continued)

2. SEGMENTAL REPORTING (CONTINUED)

BUSINESS SEGMENTS (continued)

Management has determined the operating segments based on the reports reviewed by the board that are used to make strategic decisions. The board reviews the results of each entity within the group on a regular basis and accordingly each entity is deemed to be an operating segment. The operating segments have been aggregated into the reportable segments disclosed above in accordance with IFRS 8 Operating Segments.

The Board are provided with financial reports for each of the reportable segments above on a regular basis. The United Kingdom is the home country of the group.

The directors consider that each entity within the group is an operating segment as information about each company is regularly presented to the board.

Sales between segments are carried out at arm's length. The revenue from external parties reported to the board is measured in a manner consistent with that in the statement of comprehensive income.

The amounts provided to the board with respect to total assets and total liabilities are measured in a manner consistent with that of the consolidated financial statements. Assets are allocated based on the operations of the segment and the physical location of the asset. Liabilities are allocated based on the operations of the segment.

Information in respect of revenues from external customers and detailed splits of revenues between individual foreign countries has not been disclosed. This type of information is not presented to the board when making strategic decisions and is not readily available.

One contract in the year generated revenues of £3.3m (2009: £Nil) in the rainwater management segment, which represents more than 10% of group income. Other than this contract, there were no other major clients or contracts representing more than 10% of group revenue.

2. SEGMENTAL REPORTING (CONTINUED)

GEOGRAPHICAL SEGMENTS

The Group's operations are located in the UK, France and Spain. 

The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods/services

3. EXCEPTIONAL ITEMS

Exceptional items in the current and prior year relate to redundancy payments, payments in lieu of notice and associated costs.

4. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by group companies and held as treasury shares.

The basic and diluted earnings per share is 0.84p (2009 - 0.82p) the comparative is restated following bonus issue of 10 new shares for every 1 share hold.

There is no difference between basic and diluted earnings per share.

The underlying earnings per share calculation for the year ended 30 June 2010 is based on the weighted average of 200,065,417 (2009 - 194,560,894) ordinary shares in issue during the year and the profit of £1,683,000 (2009 - £1,595,000).

The total earnings per share calculation for the year ended 30 June 2010 is based on the weighted average of 200,065,417 (2009 - 194,560,894) ordinary shares in issue during the year and the profit of £1,698,000 (2009 - £1,595,000).

A copy of the financial report and accounts will be dispatched to shareholders by no later than 19th November 2010 and a copy will also be available on the Group's website, www.swpgroupplc.com

For further information or enquiries please contact:

J.A.F Walker D.J Pett R. Kauffer/ D. Harris

Chairman Finance Director Nominated Advisor & Broker

SWP Group plc SWP Group plc KBC Peel Hunt

Tel office: 01353 723270 Tel office: 01353 723270 Tel office: 0207 418 900

Mobile: 07800 951151 Mobile: 07940 523135