Final Results

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 £20.325M (2013: £14.317M).

n Operating profits increased to £1.600M (2013: loss £267K).

n Earnings per share increased to 0.60p (2013: loss 0.44p).

n Bank borrowings reduced to £868K from £2.334M or 62% but counterbalanced by increased hire purchase obligations of £1,160M (2013: £21K) to finance capital expenditure at ULVA.

n Bank gearing reduced to 5.8% (2013: 16.9%) of shareholders funds as at 30th 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 £14.877M (2013: £13.821M).

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 £1.6M 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

Improved Operating Profits of £1.600M 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 £165K (2013: £165K) and non-cash related share options £80K (2013: £80K). After financial interest and related derivative charges for Letters of Credit and Performance Bonds of £178K (2013: £187K) pre tax profits increased to £1.422M from a loss of £454K 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/£. 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 €5.5M has been repaid in full. Increased levels of profitability and stringent cash management within each business has seen bank debt reduce to £868K from £2.334M one year earlier. This is a substantial reduction by any measure but is somewhat counterbalanced by the funding associated with the £1.6M 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 (£1.3M) 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 £13.376M against £12.394M 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 £246K (2013: net credit of £98K) 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 £500,000 per annum runs from the period April 2014 to 31st December 2015 at which time it will reduce to £25,000 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 €168K on sales of €3.503M. 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

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

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Year ended 30 June 2014

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

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 £500,000 (2013: £631,000).

The aggregate amount of recognised profits incurred on construction contracts in progress at the balance sheet date is £394,000 (2013: £243,000).

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

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.

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

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