Final Results

18th Nov 2009 07:00



SWP Group Plc

("SWP" or the "Group")

Preliminary Results for the year ended 30 June 2009

SWP Group (LSE: SWP), the industrial engineering group, is pleased to announce its preliminary results for the year ended 30 June 2009.

Highlights

Group sales decline restricted to 1.2% at £24.75M (2008 - £25.06M).

 

Gross margins increased to 40.3% (2008 - 36.0%).

 

Operating profits1 increased by 14.1% to £2.29M (2008 - £2.01M).

 

Pre-tax profits2 ahead by 15.2% at £1.63M (2008 - £1.42M).

 

Underlying earnings per share2 advanced by 2.5% to 9.02p (2008 - 8.80p).

 

Challenging market conditions particularly in the UK for Fullflow and Crescent countered by strong revenue growth at DRC-Ulva where sales advanced 44.4% and operating profits increased by 32.5%.

 

Overhead structure of each business within the Group tailored to the change in market conditions brought about by the downturn in economic activity. 

 

Successful implementation of international strategy at Fullflow with orders received from a number of different countries.

 

Substantial order received by Fullfow Sistemas for enhancement works at Barajas Airport, Madrid

 

1 before adjustment for negative goodwill credit and amortisation of intangible assets acquired through business combinations net of deferred tax

2 before adjustment for negative goodwill credit

 Chairman's Statement

Corporate Review

At the commencement of the financial year on 1st July 2008 there were already signs that a significant slowdown in economic activity was about to take place. The drama which subsequently unfolded in terms of global recession triggered by a total collapse of the world's banking system was of unprecedented proportions and against such an unpromising background your Group has produced a set of highly resilient results. Your Board of Directors considers this to be strong testament to the quality of the Group's brands which generally enjoy market-leading positions in the construction, oil, gas and petrochemical industries on an increasingly international basis. 

Most of our businesses operate in a project driven environment which is very sensitive to the investment climate in the markets into which we sell. Not surprisingly the general lack of confidence which prevailed throughout the year meant that many projects were cancelled or postponed and this led directly to a decline in activity at both Fullflow Group (rainwater management systems) and Crescent of Cambridge (fabricated metal staircases). However the resulting revenue shortfall was substantially offset by the increased international success of our recently acquired Ulva brand which sells specialised polymer membranes to the oil, gas and petrochemical majors around the world to provide pipework protection systems designed to reduce Corrosion Under Insulation (CUI).

Despite the impact of the recession the Group has continued to build momentum across its increasingly international base and our management teams are working hard to counter the difficult market conditions by developing new strategic alliances and strengthening relationships with key customers based on the provision of consistently high levels of service and product quality combined with innovation and attention to detail.

Results

Group sales for the year ended 30th June 2009 were down 1.2% at £24.75M (2008 - £25.06M) although due to a favourable mix of business biased towards Ulva, gross margins increased to a highly respectable level of 40.3% (2008 - 36.0%). Operating profits (before amortisation of intangible assets under IFRS accounting) increased by 14.1% to £2.29M (2008 - £2.01M) and profit before tax by 15.2% to £1.63M (2008 -£1.42M before the negative goodwill credit). Basic earnings per share rose by 2.5% to 9.02p per share (2008 - 8.80p per share).

Last year I explained in some detail the requirement to adopt the rules associated with International Financial Reporting Standards (IFRS) and this task has now been completed. The principal issue which remains material to our numbers is the requirement for us to carry the Ulva brand (which was acquired on 29th November 2007) at an independently assessed "fair value" whereas our other valuable brands such as Fullflow, Plasflow, Crescent and Hylam IQ continue to be carried in our balance sheet (under GAAP accounting standards) at their historic book values or at their value when originally acquired.

During this difficult year your Board has applied considerable attention to the specific needs of each business within the Group. For example in the case of both Fullflow and Crescent it has been necessary to reduce the operational cost base to reflect the decline in market activity, although where possible we have endeavoured to retain enough resources to allow us to take advantage of the opportunities which will emerge when markets once again regain their composure. On the other hand there has been the need for us to authorise significant levels of investment in the Ulva operation to facilitate penetration into specific key market areas. These issues are explained in more detail below in the Operational Review of each of the businesses. The challenges and risks associated with each business differ enormously due to the nature of the sectors within which they operate but it is certainly the case that the Group's increasing diversity, in terms of products, customers and geographical spread, has helped to protect us from the worst effects of the recession.

Finance

The Group's consolidated balance sheet continues to grow with Shareholders Funds increasing by 14.2% to £12,473,000 from £10,922,000 in 2008. One of our priorities is to reduce bank debt and in the medium term we aim to be debt free. Whilst bank debt at 30th June 2009 (£6,727,000) was actually higher than a year earlier (2008 - £6,475,000) the subsequent receipt of ILC's (Irrevocable Letters of Credit) in respect of June 2009 export sales has kick started the debt reduction process which we believe will continue for the remainder of the current financial year and beyond. This positive trend will lead to substantially reduced interest charges which will contribute to the future earning capacity of the Group.

Shareholders will note that the deficit at Retained Earnings has now reduced to a modest £420,000 (2008 - £1,971,000 restated). In anticipation of further profits being earned in the current year your Board intends to take the necessary steps to reconstruct the Group balance sheet so as to simultaneously eliminate the Share Premium Account and boost Called Up Share Capital and Retained Earnings. Our aim is to increase the Group's Distributable Reserves which is a prerequisite to allow us to consider the possibility of declaring a dividend. We hope and indeed anticipate that we will be in a position to propose such a dividend to shareholders a year from now.

The Group's working capital model is under constant review particularly in these difficult times when credit insurance is almost a thing of the past and credit terms are often under strain. Almost all of our export business is conducted through the use of ILC's which provides a positive level of assurance (on a bank to bank basis) allied to the ability to predict accurately when cash will be received. 

Review of Operations

Fullflow Group (Rainwater Management Division)

The year under review was almost certainly the most difficult in Fullflow's history. In some market sectors, such as industrial warehousing and offices, construction activity slowed dramatically as the confidence of developers collapsed and the availability of finance for new projects dried up in the wake of the credit crunch. A trend which started in the UK quickly spread to Spain and then France with the result that enquiry levels from the private sector in all our principal markets reduced sharply. Overall, the value of tenders submitted fell by around 20% but this figure does not show the true extent of the problem since many projects for which we tendered were delayed indefinitely or cancelled. Against such an unpromising background we consider that Fullflow has produced a highly respectable result for the year, even though both turnover and profit were lower than in the previous year. Third party sales fell by 4.1% to £15,389,000 (2008 - £16,048,000) and operating profits by 15.6% to £801,000 (2008 - £949,000). 

The dire market conditions meant that in each of Fullflow's three main rainwater drainage businesses it was necessary to implement redundancy programmes and we believe that in each case the lower cost base reflects more accurately the changed circumstances in which we are operating. Although our overall wish has been to ensure that the businesses remain profitable, we have taken a deliberate decision to retain a number of experienced people whose input will be vital if we are to make the most of those opportunities which arise in the months ahead. It is a major irony of this recession that more than ever there is a need for things to move very quickly indeed on those projects which do proceed to the construction phase.

On a more positive note, Fullflow began to see some benefit from its planned strategy of exporting its knowledge and expertise into new territories across the world. Strong contacts now exist in Australia, India, Korea, Singapore, Saudi Arabia and South America and orders have started to come through from some of these countries. Fullflow has also won a large contract for the new terminal at Doha Airport, although this contract is being fulfilled almost entirely by the UK operations team. The increasing importance of Fullflow's position in international markets has led to the creation of a new company within Fullflow Group - Fullflow International.

Closer to home, Fullflow has also been successful on two of the projects being overseen by the Olympic Delivery Authority for the London Olympics in 2012 - the main Media Hub and the Basketball Arena. We are hopeful that further orders will follow in the coming months as construction activity in this area increases in the run up to this spectacular event.

Elsewhere in the Fullflow organisation, Plasflow enjoyed a very encouraging year, with third party sales increasing by more than 80%. Plasflow is now widely recognised as one of the UK's leading manufacturers of specialist plastic pipe fabrications and its proven ability to achieve consistently high standards of quality and service, as well as offering innovative design solutions which reduce on-site labour input, means that it enjoys high levels of repeat business from its customers. Year by year Plasflow's customer base is being expanded and with activity levels in its main markets likely to remain fairly healthy there is every reason for us to be optimistic about Plasflow's capacity to achieve further strong growth in the current year and beyond.

All in all we believe that Fullflow Group has responded well to the hostile market conditions which it has encountered in the wake of the credit crunch and this bodes well for the future, no matter how long it takes for economic recovery to produce a revival in the fortunes of the construction industry as a whole.

Crescent of Cambridge (Metal Staircase Division)

The Crescent brand remains strong and well respected as a leading supplier of structural steel staircases to the UK construction industry. However Crescent's revenues during the year under review were significantly impacted by the collapse of the market sectors which it serves. Sales fell by 37.9% to £2,757,000 (2008 - £4,440,000) and after taking into account redundancy costs and some significant bad debts, the business recorded an operating loss of £350,000 (2008: £157,000 profit). 

This is the first loss recorded at Crescent in over 10 years and the management has responded decisively to restore the company to profit on a much reduced overhead base. Indeed the business has been substantially re-engineered, a move which has been substantially driven by the benefits arising from the strategic investment we have made in design automation during the last two years. The re-configured Crescent is far more flexible and responsive than before: it has a core team of long-serving experienced employees, and with the current cost structure and realistic planned revenues, it should return to profit this year.

However key investment continues, particularly in relation to the further integration of design and manufacturing and the planned recruitment of a small number of key people to enhance the company's sales and marketing capability. In the face of a declining market and fiercely competitive pricing, Crescent's ability to offer fast response times and peerless service levels to its customers will be essential to its success.

DRC - Ulva (Polymer Membrane Division)

Shareholders will recall that we established this new division last year by combining the Group's existing polymer manufacturing business with the newly acquired Ulva brand whose products service the oil, gas and petrochemical sectors for the management of Corrosion Under Insulation (CUI). As forecast the Ulva acquisition has proved to be highly successful with the division exporting more than 65% of its output to installations located in territories including the Far East, Middle East, the Caspian Sea, Continental Europe, Scandinavia and the USA. Third party sales for the division rose to £6,599,000 (2008 - £4,570,000) an increase of 44.4% whilst operating profits advanced by 32.5% to £616,000 (2008 - £465,000) after the application of management charges and product royalties due to the Group.

DRC Polymer Products

Effectiveness is the most appropriate word to describe the progress achieved by DRC during the year under review. The business in now manufacturing product with a higher level of process control than at any time in its history, delivering not only high product quality at tighter tolerances but also with a substantially reduced level of waste.

DRC continues to hold a dominant share of the UK modular build roofing market through its Hylam Uniroof product. The overall size of this niche market is dependent upon the health of the construction sector and DRC experienced an approximate 30% decline in activity compared to the previous year. However DRC enjoys a longstanding relationship with a loyal customer base and should benefit from higher volumes as soon as market conditions improve for its customers.

DRC's acclaimed Hylam IQ product has now been used by four of the UK's twenty five water utilities to ensure the integrity of the roofs which protect reservoirs of treated drinking water from pollution. As well as being the only available system which can offer such assurance to the owners of such assets, the Hylam IQ system has the capability to electronically pinpoint the location of potential leaks, substantially reducing the time and cost of repairs. Overall expenditure in the sector has been relatively low in the run up the start of the new Asset Management Programme (AMP5) in April 2010 but the commencement of the new programme should boost sales and ensure that our long-term investment in the development of this unique system is rewarded. The recent appointment of an electronics specialist has allowed the system to be further developed to improve the ease of installation by reducing the systems susceptibility to the varying conditions which exist at different sites across the country.

Efforts to increase DRC's activity in the area of Special Engineered Membranes have begun to bear fruit with a fairly robust year for its Drinking Water Inspectorate (DWI) approved Hylam FPA membrane for tank lining and baffle curtains, including a significant order for Oman. A product development programme is underway in an attempt to produce a variant of this product which will have enhanced market potential. Overall, the basket of products in this area performed ahead of expectation and it is anticipated that at least one of the new product prototypes currently being evaluated will become a commercial reality within the foreseeable future.

The plan to re-commence manufacture of Ulvashield at DRC was delayed considerably by the failure of a contractor to effectively complete an upgrade to key plant on time. The problem was finally resolved towards the mid-point of the financial year but the delay had a material effect on the profitability of the business for the year as a whole. However Ulvashield is now in full effective production at DRC and growth in the Ulva business will lead to a direct and proportionate increase in production at DRC.

Ulva Insulation Systems Ltd.

Back in the 1990's, when Ulvashield was first introduced into the North Sea oil sector, it represented a radical departure from the traditional methods of cladding insulation on process pipework and vessels which were based on the use of various types of metal.

The early adopters of the product have been rewarded with substantially extended service life which has significantly reduced the requirement for ongoing maintenance and delivered a much reduced full life cost for those projects. Critically, where Ulvashield has been applied, the incidence of Corrosion Under Insulation (CUI) has been substantially reduced. Subsequently, those early Ulvashield adopters, reassured by the performance of the product in the harsh environment of the North Sea, have specified Ulva as their product of choice and today Ulvashield protects many prestigious assets, both onshore and offshore, in all areas of the world. 

Even so 80% of new installations across the world still utilise metallic cladding and this shows the size of the potential market available to Ulva. The passage of time has produced a compelling body of evidence testifying to the advantages of non-metallic cladding systems, and at a time when the management of corrosion is a major issue for most operators, Ulva is well positioned to take advantage of the likely swing in favour of the type of system which it offers. 

During the year, new offices were established in Houston, Texas and Kuala Lumpur, Malaysia. The role of the Houston office is to provide technical support to the numerous end users and design houses which are based in that locality but specify solutions for projects being undertaken all over the world. The South-East Asia sales office provides local support in a key region of the world for Ulva. The appointment of dedicated individuals to work out of these offices has added to the strength of Ulva's existing team and has already opened up some exciting opportunities.

Ulva's sister company DRC Polymer Products employs rigorous quality control in the manufacture of the base Ulvashield product, an approach which continues through the conversion process in Ulva's factory. However, in common with any weather proofing system, metallic or non-metallic, the integrity of the system is only as good as its application. In this regard, Ulva has continued to invest during the year in the development of the system as a whole in order to further improve its ease of application. This has resulted in additional investment in tooling to extend the range of moulded fittings and components, and the extension of the product range to simplify the on-site installation process and improve the effectiveness of sealing around penetrations.

Revenue growth will continue to be influenced by the peaks and troughs associated with the timing of major projects, but overall the number of such projects is planned to increase which should promote a trend of consolidated growth. Revenue growth from increased project activity will be underpinned by the steady increase in the application of Ulvashield as best practice for in-field maintenance for both the growing installed base of Ulvashield and to replace aging metallic cladding. Management's focus for the development of the Ulva business is long-term. Projects typically have long gestation periods with those currently in the Front End Engineering Design (FEED) stage unlikely to be in the construction yards for three to four years.

It is pleasing for us to report that Ulva's present facilities and operations are sufficient to meet the level of growth planned for the next five years with only a modest level of investment.

Earnings per share.

In respect of ordinary trading activities underlying EPS have increased by 2.5% to 9.02p against 8.80p in 2008.

Employees

On behalf of the Board and our shareholders I wish to express my sincere gratitude to all of the Group's employees for their dedication, commitment and energy during what has been an exceptionally difficult period. We recognise that the contribution of employees at every level is fundamental to the long-term success of the Group. 

Future Prospects 

Your Group has made a solid start to the new financial year. Within our DRC - Ulva division we are developing a long term plan which is designed to deliver revenue growth across a number of key markets into which we sell our range of Ulvashield products. Order levels are highly encouraging and this business remains the principal driver in terms of generating increased profit levels and positive cash flows for the Group. Prospects for increased sales of Hylam IQ are also most encouraging.

Within Fullflow Group order levels have picked up strongly in our international business which is entirely consistent with the plan to globalise the Fullflow brand and its range of offerings. Within the last month Fullflow's Spanish operation has secured a very substantial order for the enhancement of the rainwater management systems at Barajas Airport in Madrid but elsewhere the market remains very challenging.

At Crescent of Cambridge the reshaped business has achieved some notable project wins in its traditional markets and higher revenues should restore the company once again to the route of profitable growth which we hope to sustain as market conditions improve. 

Overall, we remain cautiously optimistic that the dynamics of this Group have the potential to deliver substantial increases to both revenues and maintainable profits. Whilst the year under review has been one of containment and measured response to changing market conditions we anticipate that the current year will see us reap the reward for a lot of the hard work we have engaged in during the last twelve months and before. Despite the continuing impact of the recession on many of our principal markets we believe that we are on course to deliver considerable enhancement to shareholder value in the coming years.

J A F Walker

Chairman

 

Group Income Statement

Year ended 30 June 2009		2009	2008
	Notes	£'000	£'000
Revenue	2	24,745	25,058
Cost of sales		(14,764)	(16,038)
Gross profit		9,981	9,020
Operating expenses		(7,558)	(7,014)
		2,423	2,006
Exceptional operating expenses		(134)	-
Amortisation of intangible assets acquired through business combinations net of deferred tax		(165)	-
Operating profit before negative goodwill arising on acquisition	2	2,124	2,006
Negative goodwill		-	6,175
Operating profit		2,124	8,181
Financial income		42	50
Financial costs		(534)	(639)
Profit on ordinary activities before taxation		1,632	7,592
Income tax (charge)/credit		(37)	86
Profit for the period attributable to equity holders of the parent	2	1,595	7,678
Basic earnings per share (pence)	3	9.02p	45.05p
Diluted earnings per share (pence)	3	9.02p	45.05p

Turnover and operating profit all derive from continuing operations.

There were no recognised gains and losses for 2009 or 2008 other than those included in the Group Income Statement.

 

Group Statement of Changes in Equity

	Called up share capital	Share premium account	Capital reserve	Revaluation reserve (as restated)	Profit & loss account (as restated)	Total Equity (as restated)
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2007	85	11,878	41	-	(9,420)	2,584
Issue of share capital	4	656	-	-	-	660
Result for the year	-	-	-	-	7,678	7,678
Reinstatement of revaluation reserve  (see note 4)	-	-	-	229	(229)	-
At 30 June 2008	89	12,534	41	229	(1,971)	10,922
Result for the year	-	-	-	-	1,595	1,595
Purchase of treasury shares	-	-	-	-	(44)	(44)
At 30 June 2009	89	12,534	41	229	(420)	12,473

 

Group Balance Sheet

At 30 June 2009	2009		2008 as restated
	£'000		£'000
Non current assets
Intangible assets	9,045		9,293
Property, plant and equipment	5,114		5,165
Trade and other receivables	655		549
Deferred tax assets	1,150		888
	15,964		15,895
Current assets
Inventories	3,972		3,783
Trade and other receivables	9,866		9,459
	13,838		13,242
Total assets	29,802		29,137
Current liabilities
Trade and other payables	(7,410)		(8,418)
Current tax liabilities	(309)		(271)
Obligations under finance leases	(117)		(163)
Bank loans overdrafts	(4,127)		(6,475)
	(11,963)		(15,327)
Non current liabilities
Bank loans	(2,600)		-
Deferred tax liabilities	(2,719)		(2,771)
Obligations under finance leases	(47)		(117)
	(5,366)		(2,888)
Total liabilities	(17,329)		(18,215)
Net assets	12,473		10,922
Equity
Called up share capital	89		89
Share premium account	12,534		12,534
Capital reserves	41		41
Revaluation reserve	229		229
Retained earnings	(420)		(1,971)
Equity attributable to shareholders of the parent	12,473		10,922

The consolidated financial statements were approved and authorised for issue by the Board of Directors on 17 November 2009 and were signed on its behalf by 

D.J. Pett

Director of Finance

 Group Cash Flow Statement 

Year ended 30 June 2009

	Note		2009 £'000	2008 £'000 as restated
Profit after tax			1,595	7,678
Adjustments for:
Negative goodwill			-	(6,175)
Net finance costs			492	589
Corporation tax charge			269	271
Depreciation of property, plant and equipment			414	334
Amortisation of intangible assets			243	15
Profit on disposal of plant and equipment			(6)	-
Operating cash flows before movement in working capital			3,007	2,712
Increase in inventories			(189)	(507)
Increase in receivables			(735)	(3,276)
(Decrease)/increase in payables			(967)	1,972
Interest paid			(612)	(589)
Interest received			2	-
Corporation tax paid			(231)	(44)
Net cash inflow from operating activities			275	268
Cash flow from investing activities
Purchase of property, plant and equipment			(384)	(308)
Purchase of intangible assets			(10)	(28)
Acquisition of business, net of cash			-	(628)
Proceeds for disposals of property, plant and equipment			27	-
Net cash outflow from investing activities			(367)	(964)
Cash flow from financing activities
Issue of ordinary shares			-	660
Purchase of treasury shares			(44)	-
Finance lease repayments			(116)	(123)
Net cash inflow from financing  activities			(160)	537
Net decrease in cash and bank  overdrafts			(252)	(159)
Cash, cash equivalents and bank overdrafts at beginning of period	4		(3,225)	(3,066)
Cash, cash equivalents and bank overdrafts at end of period	4		(3,477)	(3,225)

 

Notes to the Financial Statements 

1. BASIS OF PREPARATION

Whilst the information included in this preliminary 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 preliminary announcement for the 12 months to 30 June 2009 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 2008, with the exception of a change in accounting estimate in respect of the amortisation of certain Intangible Assets. The Directors are of the opinion that expected economic life of trade names is indefinite and the expected economic life of all other intangible assets is between 5 and 20 years, depending upon the asset. In the prior year, the Directors assessed that the useful economic life of intangible assets was between 5 and 15 years.

2. SEGMENTAL REPORTING

BUSINESS SEGMENTS

2009	Rainwater management year ended 30 June 2009	Metal staircases year ended 30 June 2009	Polymer  membrane  year ended  30 June  2009	Corporate year ended 30 June 2009	Total year ended 30 June  2009
	£'000	£'000	£'000	£'000	£'000
Revenue
Total external revenue	15,389	2,757	6,599	-	24,745
Result
Segment result	801	(350)	616	1,057	2,124
Negative goodwill on acquisition					-
Operating profit					2,124
Finance costs, net					(492)
Profit before tax					1,632
Income tax (charges)/credit					(37)
Profit for the year					1,595
Other information
Capital expenditure	111	101	105	77	394
Depreciation and amortisation	164	126	82	285	657
Segmental assets	12,242	2,480	5,835	9,245	29,802
Segmental liabilities	(8,421)	(705)	(5,172)	(3,031)	(17,329)
Net assets as at  30 June 2009	3,821	1,775	663	6,214	12,473

2008	Rainwater management year ended 30 June 2008	Metal staircases year ended 30 June 2008	Polymer   membrane year ended  30 June  2008	Corporate year ended 30 June 2008	Total year ended 30 June 2008
	£'000	£'000	£'000	£'000	£'000
Revenue
Total external revenue	16,048	4,440	4,570	-	25,058
Result
Segment result	949	157	465	435	2,006
Negative goodwill on acquisition					6,175
Operating profit					8,181
Finance costs, net					(589)
Profit before tax					7,592
Income tax credit					86
Profit for the year					7,678
Other information
Capital expenditure	109	89	584	9,279	10,061
Depreciation and amortisation	172	96	76	5	349
Segmental assets	11,537	3,140	4,130	10,330	29,137
Segmental liabilities	(8,765)	(987)	(3,810)	(4,653)	(18,215)
Net assets as at  30 June 2008	2,772	2,153	320	5,677	10,922

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

	Year ended  30 June 2009	Year ended  30 June 2008
	£'000	£'000
UK	12,421	13,147
Europe	8,972	11,139
Far East	2,847	603
Africa and Middle East	501	153
USA	4	16
	24,745	25,058

 The following is an analysis of the carrying amount of segment net assets and additions to property, plant and equipment and intangible assets, analysed by the geographical area in which the assets are located.

 

	Carrying amount of segment assets		Additions to property, plant and equipment and intangible assets
	Year ended 30 June 2009	Year ended 30 June 2008	Year ended 30 June 2009	Year ended 30 June 2008
	£'000	£'000	£'000	£'000
UK	12,314	11,546	368	10,008
France	444	(209)	7	7
Spain	(285)	(415)	19	46
	12,473	10,922	394	10,061

 

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 excluding ordinary shares purchased by group companies and held as treasury shares.

The basic and diluted earnings per share is 9.02p (2008 - 45.05p). There is no difference between basic and diluted earnings per share.

The underlying earnings per share calculation for the year ended 30 June 2009 is based on the weighted average of 17,687,354 (2008 - 17,042,888) ordinary shares in issue during the year and the profit of £1,595,000 (2008 - £1,503,000).

The total earnings per share calculation for the year ended 30 June 2009 is based on the weighted average of 17,687,354 (2008 - 17,042,888) ordinary shares in issue during the year and the profit of £1,595,000 (2008 - £7,678,000).

4. COMPARATIVE INFORMATION

Reinstatement of revaluation reserve

On 18 July 2007, the property owned by one of the subsidiaries, Crescent of Cambridge Limited was valued on 18 July 2007 by D. H. Barford & Co., Chartered Surveyors and the open market valuation was £229,000 higher than the carrying value in the financial statements.

Although the valuation took place after the group's 2007 financial year, because the valuation date was so close to the year end the Directors were of the opinion that the valuation reflected the market value of the property at 30 June 2007 and they adjusted for the revaluation in the 2007 financial statements. Under the group's first time adoption of IFRS, the Directors elected to use the previous UK GAAP revaluation of their properties (including the revaluation of Crescent of Cambridge Limited's premises) at the date of transition to IFRSs as deemed cost and the entire revaluation reserve was transferred to retained earnings.

IFRS 1, First-time Adoption of International Financial Reporting Standards, only permits first-time adopters to restate the deemed cost of property to reflect property revaluations taking place on or before the date of transition to IFRSs. As the valuation of Crescent of Cambridge Limited's premises took place after this date, a revaluation reserve of £229,000 should have been created. The comparative figures have been amended to reinstate the revaluation reserve and correct the value of retained earnings.

Amendment to the Group Cash Flow Statement

Cash, cash equivalents and bank overdrafts at the beginning and end of the 2008 financial year have been restated. Bank loans of £3,250,000 were incorrectly included in the cash, cash equivalents and bank overdrafts figures in the prior year financial statements.

The financial information set out above does not constitute the group's statutory accounts for the years ended 30 June 2009 or 2008. Statutory accounts for 2008 have been delivered to the Registrar of Companies. The auditors have reported on the 2008 accounts; their reports were (i) unqualified (ii) did not include references to any matters which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2009, which are being prepared under IFRSs as adopted by the EU will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.

A copy of the financial report and accounts will be dispatched to shareholders by no later than 7th December 2009 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 Chairman SWP Group plc Tel office: 01353 723270 Mobile: 07800 951151

D.J. Pett Finance Director SWP Group plc Tel office: 01353 723270 Mobile: 07940 523135

Richard Kauffer Nominated Advisor & Broker KBC Peel Hunt Tel office: 0207 418 8900

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