Half Yearly Report

Half Year Results

for the six months ended 31 December 2010

SWP Group plc (the "Group")

Half Year Results

for the six months ended 31 December 2010

Chairman's Statement

Corporate Review

SWP has developed its core activities to become a global specialist provider of engineering solutions across the building, construction, oil, gas and utility sectors based upon branded products used within niche markets on an increasingly global basis. Positive results have been achieved despite market conditions remaining difficult and challenging throughout the period. The economies in a number of key markets particularly Spain and the UK remain depressed for construction related projects. It may be some time before sustained growth returns to these damaged economies which have been so adversely affected by recession which combined with the banking crisis has made the funding of projects much more difficult. Despite this Fullflow and Ulva which together represent some 85% of our turnover have performed robustly whilst the poor trading environment has continued to affect volume at both DRC (membranes) and Crescent of Cambridge (metal staircases).

Financial Results

Against a background of depressed market conditions we consider that the results recorded for the six month period to 31st December 2010 are highly resilient and very much in line with the strategic direction in which we are driving this Group forward. Sales revenues have been maintained at £12,702,000 (2009 £12,349,000) an increase of 2.9% in line with expectations. Operating profits before exceptional expenses and the amortisation of acquired intangible assets have remained steady at £1,429,000 (2009 £1,410,000), whilst profits before taxation of £1,154,000 compare with £1,178,000 for the same period in 2009.

Profits attributable to shareholders amounted to £841,000 (2009 £858,000) after the application of a full tax charge which comprises current corporation tax (see Note 4) of £220,000 and the release of deferred tax assets of £93,000 booked in earlier years in compliance with IAS 12.

Note 1. The calculation of earnings per share in respect of the six month period to 31 December 2009 has been restated to take account of the bonus issue declared in 2010 of 10 new ordinary shares for every ordinary share held in the Group ranking pari passu.

Operational Highlights

Fullflow

Challenging domestic markets have not prevented Fullflow's Rainwater Management Division from delivering a respectable result, flowing from a combination of further improvements in operating performance and continued success in international markets.

The re-organisation in the second half of FY 2010 has reduced operating costs without in any way hampering the group's ability to serve its customers. The combination of fresh management attention and leaner operations will continue to deliver improvements in operational effectiveness going forward.

Fullflow UK continues to provide its syphonic rainwater management systems to the higher end of the specification driven market, which is well illustrated in the UK by the upcoming London Olympics in which spectators arriving by air into London Heathrow, or by Eurostar into St Pancras will pass through Fullflow reference sites before continuing on to their Olympic venues, which incorporate Fullflow's systems including Stratford Shopping Centre (Westfield), International Broadcasting Centre, Media Press Centre and ODA Basketball Arena. In addition, another prestige development will be unveiled on a world stage when Silverstone reveals its prestigious new pits complex for the 2011 British Grand Prix where Fullflow's expertise has been utilised and installed.

The number of such large projects has diminished in the current economic climate presenting the businesses with the challenge of handling a higher number of smaller projects, which it has proven to be adept at adjusting to with the accent on operational effectiveness.

The French business, which for a long time found it difficult to generate profit, has blossomed under new leadership and its employee team is now enjoying contributing well in a market that has been somewhat less affected by the recession than Spain or the UK.

The Spanish business has witnessed the greatest downturn in its domestic market and following the completion of the T4 project at Barajas airport has relied upon its success in international markets, including the construction of the new Renault facility in Morocco which is being transacted jointly with the French business. International business development is now very much focused upon Brazil for stadia, airport and railway station projects in the build up to the football World Cup in 2014 and the Olympic Games in 2016.

Some exceptional costs (£66,000, 2009 £nil) were incurred in July and August 2010 when we closed the manufacturing facility in Paris to allow the capacity utilisation of our manufacturing facility in Madrid to rise closer to full capacity thereby increasing our operating efficiency and effectiveness on a Group basis.

Patience at Plasflow is beginning to be rewarded as long pursued projects for the electrical utilities, particularly in the nuclear sector, are starting to flow and augment the steady state base load business. Plasflow is beginning to show the latent potential that has long been anticipated for its highly specialised and proficient service offering in the fabrication of large diameter plastic pipes through its state of the art production facility in Rotherham.

Polymer Membrane Division

Ulva

Ulva's volume is in line with expectation at levels similar to FY2010 as the business reaches the tail end of a number of major oil and gas projects and anticipates the commencement of the next multi-year prospects.

Each of these major projects can be considered as worthy reference sites representing best practice in the management of Corrosion Under Insulation (CUI) on process pipe work and vessels as a result of the professionalism of the Ulva certified applicators together with end user decisions to employ Ulva's site services team to assist with the delivery of best practice. The discerning oil & gas majors that have specified the system are fully satisfied that by working collaboratively, we have ensured that precisely the level of protection envisaged within the project specifications has been delivered without compromise.

Ulva has a strong prospect list for major projects, a number of which are now on the starting blocks.

Investment in a direct Houston based presence is beginning to contribute and expectations are high. Similar investment in South East Asia has not produced the same return and the operation has been discontinued in favour of an alternative approach to that market.

Hylam Uniroof

DRC manufactures a specialised paper backed roofing laminate which has particular application in the modular build sector of the construction industry. The product is fabricated into bespoke sized roofing blankets and sold in roll form to other fabricators. Despite DRC's high market share, volumes have declined to 25% of the level enjoyed in 2008 as a result of the modular build sector being hit particularly hard by the downturn in the construction industry. At that level, the overhead cost associated with the fabrication of blankets could not be recovered and a decision was taken to exit the blanket fabrication market and its associated cost in order to focus on supplying the product in roll form to the network of existing blanket fabricators. The reorganisation will ensure that the DRC business operates profitably in the current environment.

Hylam FPA

This product, which is now the only unqualified material accepted for contact with potable water by the Drinking Water Inspectorate (DWI) in the UK for tank lining, baffle curtains and floating covers continues to perform ahead of expectation both within the domestic market and for key projects in the Middle East, supported by a very competent UK based fabrication and installation partner.

Hylam IQ

A key project was completed in the period under review for an asset in the North West of England which delivered not only the benefit of electronic leak detection within the roof sealing membrane of a key service reservoir, but also the benefit of continuous monitoring and alarming of the roof. DRC's capability and pedigree in this niche and technical product area has not been fully rewarded due to lower than anticipated expenditure by the water utilities in the first year of the Asset Management Programme AMP 5 period. It remains to be seen whether maintenance expenditure will increase as we penetrate deeper into the AMP period.

Crescent

As in previous reports the decline within the Construction Industry has hit our Crescent operation hard as manufacturers continue to chase a declining volume of work particularly in the commercial sector. This has adversely affected the operations of a number of larger customers whose turnover has fallen dramatically over the past two or three years. By contrast the decline in Crescent's core business has been significantly less than with that of its larger customers reflecting the strength of the brand.

Good levels of repeat business continue to be enjoyed from the national and regional contractors but the substantial reduction in supply to the modular build sector has resulted in a disproportionate affect on the Crescent business. The strategy of cost reduction and containment, new leadership and new enthusiastic sales professionals is the approach that will help Crescent round the curve and return to profit but during the period under review it has remained stubbornly loss making.

Earnings Per Share

Shareholders have benefitted from the declaration of a maiden dividend which was paid on 4th January 2011. On a comparative basis earnings per share for the six months to 31st December 2010 remain at similar levels of 0.42p (2009 0.43p) after recalculation for the bonus issue of 10 new ordinary shares for every ordinary share held in the Group ranking pari passu. It is anticipated that if the results to the financial year ended 30th June 2011 continue to meet the Board's expectations a similar level of dividend will be declared to that of last year.

Staff

As in previous years the quality of the Group's earnings is dependent upon a lot of hard work and effort by the Group's employees who collectively and individually have demonstrated by their loyalty, dedication and commitment that our Group is in capable hands for the future. We are grateful to our employees for their efforts as our management teams have been reshaped and focused towards difficult and changing market conditions.

Current Trading and Prospects

Despite the severity of the downturn in market conditions as well as the uncertain and volatile economic outlook which are of constant concern we consider that the prospects for the Group remain in line with the Board's expectations. Whilst many challenges remain, not the least of which is the "project" led nature of both Fullflow's and Ulva's respective businesses, we are confident that our products remain in demand internationally and that we will grow organically in accordance with the strategic plans which we put in place some time ago. We look forward to more favourable market conditions but at the same time continue to focus on profitable growth with active control over costs within each and every business area. With greater levels of specification of our products internationally we look forward to the remainder of 2011 and beyond with confidence.

J A F Walker

Chairman

Unaudited Consolidated Statement of Comprehensive Income

Note 1 Turnover and operating profit all derive from continuing operations.

Note 2. The calculation of earnings per share in respect of the six month period to 31 December 2009 has been restated to take account of the bonus issue declared in 2010 of 10 new ordinary shares for every ordinary share held in the Group ranking pari passu.

Unaudited Consolidated Statement of Changes in Equity

Unaudited Consolidated Statement of Financial Position

Unaudited Consolidated Statement of Cash Flows

Notes to the Interim Report

1. Basis of Preparation

The Interim Financial Statements have been prepared using accounting policies consistent with International Financial Reporting Standards as adopted in the European Union and in accordance with International Accounting Standards (IAS) 34 Interim Financial Reporting.

The financial information for the six month periods ended 31 December 2010 and 31 December 2009 has not been audited by the Group's auditors and does not constitute accounts within the meaning of s240 of the Companies Act 2006. The financial information for the year ended 30 June 2010 is an abridged version of the Group's accounts which received an unqualified auditors' report and did not contain a statement under s237(2) or (3) of the Companies Act 2006 and have been filed with the Registrar of Companies.

The same accounting policies, presentation and methods of computation are followed in these interim financial statements as were applied in the preparation of the Group's financial statements for the year ended 30 June 2010. In addition the Directors adopted a new accounting policy in respect of share based payments which is stated below.

Share-based payments

The Group operates an equity-settled, share-based payment compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the company. The fair value of the employee service received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.

Where options are exercised if the company issues new shares the proceeds received net of any directly attributable transactions costs are credited to share capital (nominal value) and share premium.

2. Taxation

Interim period income tax is accrued based on the estimated average annual effective income tax rate.

3. Segmental Reporting

4. Income Tax Expense

Recognised in the income statement

5. Earnings Per Share

Earnings per share is calculated on the basis of 198,305,006 shares (2009: 197,277,256) which is the weighted average of the number of shares in issue during the period.

The diluted earnings per share is calculated on the basis of 202,805,006 shares (2009: 197,277,256) which is the weighted average of the number of shares in issue during the period.

6. Copies of Interim Report

Copies of the interim report are available to shareholders electronically via the Group's website or are available on request from the Group head office at Bedford House, 1 Regal Lane, Soham, Ely, Cambridgeshire, CB7 5BA or at http://www.swpgroupplc.com.

For further information or enquiries:

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

Chairman Director of Finance Peel Hunt LLP

Nominated Adviser & Broker

Tel: 01353 723270 Tel: 01353 723270 Tel: 0207 418 8900

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