Final Results

SWP Group Plc

("SWP" or the "Group")

Final Results for the year ended 30 June 2015

SWP (AIM: SWP), the industrial engineering group, is pleased to announce its final results for the year ended 30 June 2015.

Financial Highlights

n Turnover reduced by 15.2% to £13.189M (2014: £15.548M).

n Elimination of loss making businesses at Fullflow in France and Crescent with write off of £2.083M (2014: £NIL).

n Operating profits of continuing businesses reduced by 2.3% to £1.508M (2014: £1.544M).

n Profit after tax for continuing businesses increased by 44.7% to £1.680M (2014: £1.161M).

n Earnings per share for continuing businesses increased by 45.8% to 0.86p (2014: 0.59p).

n Bank borrowings reduced by 15.1% to £0.737M (2014: £0.868M) resulting in bank gearing reducing to 5.1% (2014: 5.8%) of shareholders' funds. Hire purchase obligations reduced by 13.8% to £1.000M (2014: £1.160M).

n Capital expenditure in the year of £0.974M, primarily at ULVA.

n Recommended dividend reduction to £NIL pending the successful launch of ULVAGRP and the elimination of external bank borrowings.

n Reduction of 3.8% in shareholders' funds to £14.312M (2014: £14.877M) notwithstanding one time write-off and losses of £2.083M (2014: £NIL) in respect of Fullflow in France and Crescent.

Operational Highlights

n Further improved trading performance from Fullflow Group including Plasflow in the UK market and internationally.

n Margins in continuing businesses at both ULVA and Fullflow holding up well in competitive markets.

n Excellent performance of process line installed in Telford to manufacture ULVAShield. High levels of efficiency, quality and customer service.

n Elimination of loss making businesses at Fullflow in France and Crescent which have been time consuming to senior management.

n Significant progress in targeted research & development in both ULVA and Fullflow. Fusion Butt Welder machines now fully operational on Fullflow sites.

n Greater emphasis on health & safety throughout all operating entities in the Group. Training at all levels within the Group improved.

n Preparation for the introduction of ULVAGRP at an advanced stage in terms of tooling, process for mouldings and fittings, trimming and finishing jigs all in readiness for the arrival of a process line to produce sheet of merchantable quality. This is the subject of unforeseen delay.

n Strengthening of the sales department within Fullflow with an increased emphasis on technical selling.

n Continued tight financial controls and effective management of working capital and inventories.

n Greater emphasis on "risk management" at all levels within the business.

Alan Walker, Executive Chairman, commented:

"This has been a very challenging year but one during which we have taken decisive action in order to focus management's full attention on the two principal brands and products ULVA and Fullflow. The actions taken will stand the Group in good stead in the short to medium term and will underscore profitability going forward. The frustrations from the delay in bringing ULVAGRP to the market have been immense but a course of action has been put in place to bring this new business to market as soon as practicable. Our brands have worldwide appeal."

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Chairman's Statement

Corporate & Business Review

The financial year to 30 June 2015 has been both engaging and challenging whilst resulting in structural change which we believe will provide the Group with a more robust business model going forward.

At the interim stage to 31 December 2014 we reported modest operating profits consistent with the project-led nature of our principal activities at ULVA and Fullflow but indicated that the second half of the year would show improvement. That in fact is how the trading year unfolded with both ULVA and Fullflow operating by and large to expectation. This provided the SWP Board with the confidence to "bite the bullet" in respect of the peripheral staircase business at Crescent which has been loss making in three of the last four years and into curtailing and closing Fullflow's French business which has been traditionally loss making in favour of an international business model which has been tried and tested over the last two to three years and which has delivered good returns with a much more attractive risk profile. Whilst it was an option to persist with the staircase business in Crescent and in the French market in the hope that both would stage a recovery, both businesses were closed down in the second half of the year giving rise to one-time closure and impairment write downs as detailed in Note 3 to the Financial Statements and classified as discontinued operations. In both cases any improvement in performance was far from certain and would have required substantial input in terms of senior management time and working capital.

The restructured Group now operates through two distinct business areas encompassing on the one hand the "ULVA" brand and on the other the "Fullflow" brand together with its affiliate "Plasflow".

Fullflow, based in Sheffield, remains a leading supplier of rainwater management systems across a number of sectors including industrial factories, motor car plants, leisure facilities and stadia, energy for waste, distribution warehouses, schools, hospitals, airports, railway stations, retail shopping centres and even listed buildings. The systems are based on syphonic technology which facilitates the evacuation of water from large roof areas at far greater speed than by simple gravity and in line with rainfall intensity. In the UK Fullflow strengthened its market position during the second half of the financial year through increased levels of productivity and improved execution of contracts. The sales team has been strengthened with an increased customer focus on value engineering and technical innovation in an attempt to deliver good value and service on a timely basis in line with customer expectation.

Fullflow International has become a successful entity providing design and specification services, material supply and project management within our specialist areas of expertise, far beyond our traditional French and Spanish markets into the likes of Brazil, Mexico and Chile. Our business model, unlike in the UK, is restricted to the supply of goods and services to agreed specification whilst our locally based partners are charged with the responsibility of installation and commissioning on their own account.

Plasflow provides a full scale fabrication service to Fullflow as well as servicing the third party specialist construction and nuclear sectors with high density polyethylene pipe spools of all shapes, sizes and dimensions and enjoyed a strong trading performance in the year under review. This business, based in Rotherham, is also project-led, the timing of which is not within Plasflow's control, but it has a diverse range of discerning and supportive third party customers, works closely with Fullflow and has strong technical and commercial links to the nuclear sector led by EDF and their nominated contractors. Plasflow has developed into a provider of technically innovative solutions and has been closely involved with all of the nuclear plants in the UK at various stages of their development, remediation and routine repair and maintenance. This industry is destined for UK Government and foreign investment support on a grand scale in the next decade and Plasflow is well positioned to benefit from this in the years to come.

ULVA, based in Telford, continues to be our leading manufacturing business as a provider of non-metallic cladding systems which reduce Corrosion Under Insulation ("CUI") to the oil, gas and petrochemical sectors. This niche business has for years been our principal profit earner delivering significant levels of cash which has allowed the Group to reduce bank borrowings to nominal proportions. The improvement in the results for the second half of the year has delivered profits for the financial year as a whole in line with expectation. The new process line which was installed in Telford last year has fully lived up to expectations in terms of operating efficiency, available capacity and return on investment.

Following on from this successful capital expenditure programme, our management team at ULVA has attempted to replicate the procedure by commissioning the manufacture of a bespoke process line in Germany in order to facilitate ULVA's focused entry into the glass reinforced plastic ("GRP") market. ULVAGRP is designed to be a complementary brand to our existing ULVAShield brand so as to broaden the base of the business and provide customers with greater choice determined by specification preferences. Regrettably the specialised OEM supplier in Germany failed to deliver the machine to specification and at the stage of wet pre-acceptance trials the machine turned out to be unfit for purpose.

This was a big disappointment not only to our team who have worked so tirelessly on the project but also to our customers who have been eagerly awaiting the arrival of ULVAGRP to a market which is poorly served at this time. The natural consequence of the machine supplier's failure to deliver to contractual terms is one of delay to the launch of ULVAGRP which could be up to one year later than anticipated. In all other respects the ULVA business remains in rude health with increased levels of market penetration backed by a demonstrable record of successful installation internationally.

There has been much media speculation about the difficulties currently faced by the oil and gas industry with oil prices depressed to levels that make exploration uneconomic in certain circumstances. Postponement and cancellation of capital investment programmes is an inevitable consequence of such a dramatic fall in the price of oil at a time when fracking, particularly in the United States, has risen to an all-time high. To this end we are monitoring our portfolio of projects going forward with our key customers whilst remaining vigilant and conscious that the essence of the product we provide is to offer long term protection to the assets of the oil and gas majors they are not only investing in but also those currently operating all over the world. There remains a very sizeable market for ULVA to explore and cultivate.

Results

The above results reflect the improved trading performance in the second half of the year. Direct comparison with FY2014 is difficult due to the elimination of the turnover and asset write down for those businesses classified as discontinued. In accordance with IFRS accounting rules the figures are stated after adjustments relating to the amortisation of intangible assets £165K (2014: £165K) and non-cash share options £80K (2014: £80K). After bank and hire purchase interest and related derivative charges for Letters of Credit and Performance Bonds of £218K (2014: £178K) pre-tax profits for continuing businesses fell to £1,290K (2014: £1,366K). The write-off in respect of discontinued operations as per Note 3 of the Financial Statements results in a loss for the year of £403K (2014: profit of £1,176K).

Earnings per share from continuing businesses rose strongly to 0.86p (2014: 0.59p) due to the elimination once and for all of these losses incurred in both Fullflow France and Crescent.

As mentioned in earlier reports, based on an Asset Sale Agreement entered into with the liquidator of Ulva Ltd when SWP purchased the business on 28 November 2007, SWP remains entitled to any excess funds arising from the liquidation beyond 100p/£. All creditors have now been paid out the requisite 100p/£ and the liquidator has acknowledged the efficacy of his legal obligations (with the assistance of the Court). The liquidator has stated that he is continuing to collect the proceeds of asset realisations which we are monitoring. The exact timing and quantum of any receipt remains uncertain but appears to be advancing towards a conclusion. This will be accounted for as and when payment is virtually certain as per IAS37.

Borrowings

Shareholders are fully aware that a major plank in the Group's strategy has been to achieve a debt free banking status whilst also promoting the focussed capital investment programme at ULVA which has run to almost £3M at the ULVAShield and ULVAGRP factories. The impact of the closures at Fullflow in France and at Crescent has necessitated the use of cash resources albeit to a limited extent as mitigated by asset sales. At the same time capital expenditure in the business (mainly ULVA) has amounted to £974K all of which has been funded from cash generated by the businesses and through efficient and effective working capital management.

Overall therefore Group bank debt at 30 June 2015 has fallen by 15.1% to £737K (2014: £868K). At the same time lease purchase arrangements secured solely on the assets over which they are financing have fallen by 13.8% to £1,000K (2014: £1,160K).

The Board will continue to push for a bank debt free status in the near term.

Real Estate

A positive consequence of the restructuring and rationalisation which has taken place in the recent past has been to free up freehold property assets that are no longer required by the operating companies. I refer to the factory in Soham, Cambridgeshire no longer occupied by DRC Polymer Products Ltd whose business relocated to Telford at the time of the process line purchase from Italy and to the factory originally occupied by Crescent of Cambridge Ltd in St Ives in Cambridgeshire. These valuable freehold assets now form part of the Group's property portfolio over which we have a number of strategic options to rent, sell for cash and/or redevelop pursuant to a planning permission which has already been secured in the case of the St Ives property.

It is the Board's intention to make these assets provide the Group with either a lucrative yield or capital receipts that eliminate all or any debt at a stroke.

Consolidated Statement of Financial Position

As at 30 June 2015 the balance sheet of the Group has a robust feel notwithstanding the write-off and impairment arising out of the elimination of the French and Crescent businesses. In particular the capital expenditure programme to which we remain committed at ULVA has reached an advanced stage whilst the working capital model and long term liabilities continue to reduce. The real estate assets to which I refer above are in effect surplus to our continuing business requirements and will over time assist greatly in the continuous improvement of the Group's financial standing.

Dividend

As a result of the restructuring and the unforeseen failure of the German supplier to deliver a machine to specification, we face a significant delay to the launch of the new ULVAGRP product line into the oil and gas market. As a result and after much discussion the Board has decided not to recommend the payment of a dividend in favour of using cash to exploit considerable opportunities and invest in the future of our two flagship businesses. It is of prime importance that we are in a position to manufacture ULVAGRP to the highest possible standard and in compliance with all current regulations and certifications.

In the natural course of events, with a more structured core business based on two principal brands namely ULVA and Fullflow, the Group should be in a position to move to a progressive dividend policy in the near term just as soon as ULVAGRP has been successfully introduced to a receptive marketplace. The continuing businesses operate in global markets and will benefit from the absence of the drag effect of loss making subsidiaries.

Taxation

Shareholders' attention is directed to Note 8 of the Annual Report which summarises the Group's current tax position. There are a number of factors which come into play in reducing the Group's corporation tax liability to £NIL for the year to 30 June 2015.

(1) The profits recorded by the Group have been offset by the significant losses and impairment write offs arising from the discontinued trades at Crescent and in France.

(2) The Group has benefitted from new reliefs introduced by the Government in respect of research and development tax incentives available for qualifying research and development expenditure. Both Fullflow and ULVA in their respective fields of expertise are in the forefront of R&D and have a number of innovative projects which fit neatly into this beneficial tax regime.

(3) The continuing policy of Government is to reduce corporation tax on a sliding scale which has a positive effect on the Group's overall tax position including, inter alia, deferred tax.

The Group's tax plan means that the annual tax charge for the year to 30 June 2015 is a credit of £390K (2014: charge £205K) and takes into account the accelerated Investment Allowances which arise from ULVA's capital expenditure programme. Whereas those allowances were to fall from £500,000 annually to £25,000 by 31 December 2015 the latest budget by the Chancellor of the Exchequer has revised the annual Investment Allowances up to a maximum of £200,000 notwithstanding the need for deferred tax provisions arising out of implicit timing differences.

Research and Development

Both ULVA and Fullflow are technically driven businesses. As leaders in their respective fields of expertise, it is incumbent on both to innovate and to share the benefits which accrue from new techniques and methods with customers who use and rely on both brands. The Government has recognised the need to encourage investment in capital expenditure and has in effect sponsored companies such as ULVA and Fullflow to invest in R&D in an effort to stimulate the British economy. There is a continuous stream of projects at both businesses which are designed to ameliorate performance, efficiency and effectiveness in the field and provide a competitive edge which differentiates our brands from our competitors. Where appropriate patent applications will provide valuable protection with positive taxation advantages accruing in future years.

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 at 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. 

Strategy

Following a short period of restructuring the Group's activities have now been simplified as a result of the elimination of the loss making businesses and the focus of attention is geared totally towards the growth of both the ULVA and Fullflow brands including its subsidiary Plasflow. The strategic focus can be summarised as follows:-

- Continue the development and market penetration of ULVAShield in global markets across a wide range of projects and repeat business with discerning loyal customers.

- Prepare for the launch of ULVAGRP notwithstanding the delay which has occurred arising out of the failure of the German supplier to deliver a machine that was fit for purpose. There is a growing market eager to embrace ULVAGRP's product offering.

- Develop the Fullflow brand both in the United Kingdom and internationally with business models that are tailored to the market profiles in which we operate. Continue to innovate and be at the forefront of technical development in the syphonic industry.

- Encourage Plasflow to follow its strategic path by supporting Fullflow with fabrications whilst continuing to expand its third party customer base and expertise in the nuclear sector as an innovator and provider of technical solutions as a partner of choice.

- Strengthen the Group's financial standing through the elimination of bank debt and the maximisation of the returns from the Group's real estate portfolio of freehold assets that are considered to be surplus to operating requirements.

People

The Group is smaller and more concentrated on its profitable brands than at any time in the past. It is a feature of our continuing businesses that senior managers have grown into their roles and assumed greater levels of responsibility than in the past. Our team benefits from having many years of experience and this has helped as we grow from a solid base and recruit particularly when expanding our sales team.

On behalf of the Board and our shareholders I wish to express my gratitude to all of our hard working employees for their energy and enthusiasm as well as professionalism and commitment as we shape the Group's strategic focus of our leading brands going forward.

Prospects

It is never easy to commit to a fundamental restructuring but in this case the Board considers that the decisive actions taken to eliminate loss making businesses whilst at the same time improving the risk profile of the continuing businesses in both the short to medium term in the best interests of the Group as a whole. The Group is meaner and leaner and ready for profitable growth.

The current year has started slowly at ULVA as it did last year but momentum is building in Q2 as projects go live and order flow through to 30 June 2016 looks encouraging. ULVA will continue to prepare for the launch of ULVAGRP next year when we hope successful entry into that segment of the market will complement the strong profits achieved by ULVAShield in the past.

Fullflow has started the current financial year positively with profits up significantly on the previous year and order books both in the UK and internationally looking healthy and stronger than they have been in recent years. Plasflow will not repeat the level of success that it achieved in the nuclear field last year, but is performing well whilst supporting its third party customer base and the growth in fabrications as Fullflow in the UK continues to increase market share.

Much will depend on the timing of the launch of the ULVAGRP business which is unlikely to have much impact on the numbers for the financial year to 30 June 2016. As all other areas of the Group are trading profitably and generating cash this eagerly anticipated launch is likely to permit a stronger period of growth.

Alan Walker

Chairman

Operational Review

Operating Review

The regrettable but very necessary restructuring of the Group has brought focus to the operating units that generate the profit and the cash whilst eliminating the "problem" business units which inevitably consumed management time and Group resource with little or no return or benefit.

The leaner and fitter Group is focussed on profitable and cash generative business units, under the ULVA, Fullflow and Plasflow brands, with reduced levels of risk and enhanced overall leadership and management.

The issue of "people" has received much attention across the Group. It has been pleasing and rewarding to observe the growth and development of many individuals within the operating units. These talented people are stepping forward in their own personal development as well as the development of the business and the objective is to grow a talent pool with succession planning across the business units thereby reducing the dependency on external recruitment. That being said, there have been a number of successful appointments from external sources that are already having a positive and beneficial impact upon the business.

The remaining "people" gap is in the leadership of Fullflow, where the track record of those attempting it in recent years has been poor. For the interim, the Chairman is acting as Managing Director of Fullflow, with support from the Group Managing Director in developing the selling capabilities of the business. Results are much improved and the Board is impressed by the upbeat and confident attitude of the employee teams. For the longer term, a dedicated leader is needed for the business but the process of finding such an individual of the right calibre is not proving to be a straightforward task.

ULVA Insulation Systems

ULVA manufactures non-metallic cladding systems which substantially reduce CUI in the oil, gas and petrochemical sectors. Adopters of the system benefit from lower operating costs as a result of reduced maintenance, higher plant up-time and extended plant life.

Sector activity is oil price dependent and the sustained price below seventy dollars is having a substantial short to medium-term impact. A number of medium term projects have been cancelled but the most significant impact to ULVA has been delays to both projects already under construction and to the final investment decisions for future projects. There is little drive to bring oil out of the ground at prices below fifty dollars when the alternative is to extract later, at higher prices. Operators have reduced operating expenditure and are performing only essential maintenance. For the downstream activities, capital cost is taking precedent over life cost. This presents a challenging background against which to deliver growth.

Efforts to develop the U.S. downstream market have yielded little success, where capital spend is paramount and the ULVAShield system is considered expensive when compared to the traditionally applied aluminium cladding. Focus will, therefore, be on the more receptive upstream, offshore market where CUI is more critical and ULVAShield's cost is similar to the traditionally applied stainless steel cladding. ULVA will reduce its U.S. operating costs accordingly. 

ULVAShield

Against the background of these challenging market conditions, the ULVAShield system continues to deliver proven performance at reducing CUI and the system has been further enhanced during the year with additional moulded components designed to make it easier for the applicator to ensure waterproofing integrity with longevity. The range of testing and certification has been further extended with particular focus on liquid natural gas ("LNG") applications.

A non-destructive system integrity test by thermography, on a major asset in the Norwegian sector of the North Sea, was undertaken five years after the application of the ULVAShield system, which was done partially in Korea and partially in Norway. In total, 42,000 linear metres of process pipe-work and equipment were inspected in just three days, identifying only ten anomalies. This speaks volumes for the robustness of the ULVAShield system over time and its ease of application on a world-wide basis. The asset's fabric maintenance contractor was able to rapidly address the anomalies on a targeted basis following which the operator was assured of 100% waterproofing integrity with the benefit of the reduction in CUI that is delivered. 

Key project activity in the year included:

· Talisman's Montrose platform for the North Sea which is under construction in Heerema's yard in Holland

· SBM's sister FPSO's Cidade de Marica and Cidade de Saquerame with topside construction and consolidation in yards close to Rio de Janeiro, Brazil

· MODEC's FPSO Cidade de Caraguatatuba topside module construction in China

· ENI Norge's FPSO Goliat construction in Hyundai Heavy Industries Korean yard and commissioning and hook-up in the Barents Sea

· Inpex's Naoetsu LNG terminal extension, Japan

In addition, specifications were finalised for the FPSO's Catcher and Kraken, both under construction in Asia, and both destined for the North Sea. ULVA's supply to these projects commenced at the end of the financial year with the bulk of supply to take place in quarter two and three FY2016.

The operational effectiveness of the ULVAShield factory is close to optimal. The process line which was the subject of a major investment in the last financial year is operating with high levels of efficiency and minimal waste, overall quality and customer service is very good.

ULVASound

ULVA's competence and capability in the highly specialised area of acoustic insulation continues to grow. Competition is predominantly from the manufacturers of flexible elastomeric foam ("FEF") insulation, which are largely constrained to supply insulation of their own manufacture. This places them at a disadvantage when compared to ULVA which is able to select and combine insulation from differing manufacturers to deliver thinner and lighter solutions which are beneficial to offshore projects. During the year under review ULVA further enhanced its offering for hot acoustic systems and launched complementary solutions for cold and cryogenic applications.

ULVASound offers considerable advantage over FEF systems in cryogenic applications where the combination of the thermal properties of the insulation can be combined with the acoustic properties much more effectively which reduces cost, weight, space, complexity and application time. Collaboration with Sheffield University in this area of innovation has proven to be beneficial and ULVA has consequently sponsored a PhD student to work on specific further system developments.

ULVAGRP

The ULVAGRP system is designed to be complementary to the ULVAShield system affording the opportunity for the business to more comprehensively satisfy the preferences of individual end user clients and engineers, which will deliver a stepped increase in activity levels.

The system has been under development for several years. In July 2014, successful trials for the manufacture of the "wet sheet" (which is the raw material from which the factory pre-cured pipe sections and moulded components are made) were held on the pilot plant of a reputable German manufacturer of the specialised process line necessary to manufacture the product. Following comprehensive testing and evaluation of the material form the pilot line, a lump-sum contract was negotiated for the supply of a full production scale version with delivery and commissioning scheduled for early April/May 2015.

All necessary third party independent testing and certification has been completed and the system is fully compliant and ready for launch. The system performs well and in some cases substantially outperforms anything currently available, an example of which is a jet-fire rating in excess of two hours as a system in combination with Foamglass® and Chartek5® intumescent.

In parallel, the process for moulding the many fittings (bends, elbows, tees and end-caps etc.) has been developed and a comprehensive manufacturing programme instigated with more than 1,100 moulding tools completed together with the associated trimming and finishing jigs. The mouldings produced are substantially better and more consistent than anything currently available.

A new factory was leased in early 2015 and readied for the arrival of the process line from Germany. The factory is located in Birmingham in an area that is well known for its employee base skilled in working with GRP materials and processes. It was anticipated that first shipments would take place before the end of the financial year. However, during the "wet pre-acceptance trials" for the process line, held in Germany, it was found that the process line did not produce material of an acceptable quality. A second attempt at pre-acceptance was aborted when the line was still found to be defective. The manufacturer of the line has refused to remedy the defects and the contract has subsequently been repudiated with an ongoing dispute between the parties.

Post year-end, a contract has been entered into with an alternative process line manufacturer. As with any design/engineer to order a process line, delivery time is significant.

The attitude and behaviour of this German company (which is in stark contrast to the professional approach of the Italian supplier of the Telford based process line for the production of ULVAShield) has resulted in a launch delay of more than one year which is a great disappointment to the Group's management, its shareholders and ULVA's customers. However, ULVA's brand is synonymous with consistently high quality, which will flow into its ULVAGRP system without compromise.

Fullflow Group

Rainwater Management

Fullflow's rainwater management business evacuates large roof areas by means of syphonic drainage. The business was an early innovator of the technology and to date has an installed base of over thirty thousand systems world-wide with a correspondingly strong brand.

Some years ago the business had become fragmented with replication of operating activities in the UK, France and Spain. Looking at the longer term picture, neither the Spanish nor the French activities contributed to profit or cash and it became evident that the international model that was being operated by Fullflow was not the most appropriate. The severe recession in Spain made the operation of a full turnkey operation there non-viable, with an exit in FY13. Similarly, conditions in France evolved during the year under review whereby the persistently loss making business unit "hit the buffers".

In contrast, the UK business, post-recession, and with effective leadership has begun to deliver more strongly again. The business offers a full turnkey package including design, manufacture, installation and warranty and is now more selective on the projects that it is targeting based upon a clear sector focus. The ineffective leadership of the business in recent years allowed it to drift into a reactive mode of blindly pursuing any business that arrived at its door, whether or not it was a good fit, which resulted in challenges associated with executing a profile of business dominated by many small projects. In contrast, Fullflow is now applying the pedigree of its strong engineering and execution skills to undertake a fewer number of much larger and more prestigious projects for more discerning customers.

Projects are being executed well with minimum risk as a result of effective project management, resulting in profit and cash generation for the business and satisfied customers. The remodelled sales team, containing a blend of recent recruits and long serving employees, and a balance of engineering and selling skills is beginning to deliver good volume, of the right type of project, whist focussing on developing meaningful key-account relationships. There is a level of energy, enthusiasm and optimism in the UK business that has not been felt for some time and the quality of projects being undertaken for a series of high profile discerning customers is impressive.

During the year under review, key projects included:

· Jaguar Land Rover - Wolverhampton i54

· Jaguar Land Rover - Halewood LCB2 extension

· Westfield - Bradford shopping centre

· Gatwick South Terminal Pier 1

· Old College, Sandhurst

· Aero Engines Controls (Rolls Royce) Birmingham

· 10 Trinity Square, London (listed building refurbishment)

· Exeter Rugby Club

· RAF Waddington

· Project Utopia Warrington 

The business has, furthermore, stepped-up its activity in the area of innovation. Having delivered the patented butt-fusion welding technology during the last financial year the business has gone on to target further innovations that will enhance the overall product offering and technology available to complex and challenging roof designs whilst also reducing the costs associated with simple "shed" roofs.

The International business unit performed well in the year, with a good contribution to profit and cash. Unlike the UK, the International business unit does not offer full turnkey systems but rather partners with local companies. Fullflow International offers design, materials supply (including factory pre-fabrication) and project management, whilst the local partner performs the installation. This model has been proven to work well. In the previous year, activity was dominated by a mega-project for Fiat in Brazil, whilst in the year under review the profile of business was characterised by a greater number of projects. Whilst each was substantial in its own right, they were not of the scale of the huge Fiat project. Within these projects were a number for Spain, which were transacted under the International model with good contributions. By way of contrast with the previous challenges of operating a full turnkey business in Spain, this has proven to be a significantly better approach and is likely to be extended to incorporate France in due course. Activity in the period under review included:

· Olympic Training Centre and stadia - Rio de Janeiro 2016 Olympic Games - including the velodrome, aquatic park and tennis stadia

· Mercat de San Antoni - Spain (Historical Building 1882) - integrating state of the art syphonic rainwater management within some of the most prestigious historic architecture for world renowned architect Antoni Rovira i Trias

· Fira Reus - Tarragona Spain - luxury shopping centre and event/meeting point

· Volkswagen manufacturing plant - Pamplona Spain

· Hyundai manufacturing plant - México

· Kia manufacturing plant - México

Plasflow

The Plasflow business is specialised in the fabrication of polyethylene piping systems up to a diameter of 1200mm and operates three key areas of business; Fullflow, the nuclear sector and the specialist contracting sector.

All factory pre-fabrication of Fullflow syphonic systems was consolidated into Plasflow as a centre of excellence during the last financial year and tangible progress was made during the year under review towards a goal of delivering project kits 100% complete and 100% right first time. Success in this objective allows the Fullflow installation teams the opportunity to install systems in line with, or ahead of programme, resulting in high levels of customer satisfaction and repeat business.

The UK nuclear sector has now completed a number of refurbishment projects, replacing corroding ferrous pipe spools with high density polyethylene spools manufactured by Plasflow. There is an ongoing programme of planned work as outages occur which is planned for several years in advance but inevitably subject to timing. The small number of large projects exposes the business to peaks and troughs of activity and the year under review represented a peak, further supported by the delay of a project from the end of FY14, which helped to deliver an overall strong performance. Plasflow transacted this business well, translating it to profit and cash, with a high level of customer satisfaction, receiving a letter of commendation for a project at EDF Tourness.

The specialist contracting or third party activity, serving power generation, water utilities and general contracting, remained fairly static in terms of overall revenue levels but the mix and quality of the business was improved with the benefit of stronger margins.

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 2015 or 2014 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 2015

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 2015 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 2015.

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 £739,000 (2014: £500,000).

The aggregate amount of recognised profits incurred on construction contracts in progress at the balance sheet date is £435,000 (2014: £394,000).

GEOGRAPHICAL SEGMENTS

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. DISCONTINUED OPERATIONS

The analysis of the result on discontinued operations is as follows:-

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.

Treasury shares are deducted from total shares in issue for the purposes of calculating earnings per share.

The basic loss per share is (0.21p) (2014: profit 0.60p).

The basic earnings per share calculation for the year ended 30 June 2015 is based on the weighted average of 194,930,006 (2014: 195,773,636) ordinary shares in issue during the year and the loss of £403,000 (2014: profit £1,176,000).

A copy of the financial report and accounts will be dispatched to shareholders by no later than 8 December 2015 and a copy will also be available on the Group's website, www.swpgroupplc.com.