Half Yearly Results

SWP Group plc (the "Group")

Half Yearly Results

for the six months ended 31 December 2011

Chairman's Statement

Corporate Review

At the Group's Annual General Meeting on 10th January 2012 convened to consider and approve the results for the year to 30th June 2011 I highlighted the fact that the Group's activities are largely project dependent and as such we were experiencing periods of low as well as high activity levels due to the timing of product installations over which we have no direct control.

Central to our sales programme for the current year at Ulva was phase II of a large international project for a major oil company where we had successfully completed material supply to phase I back in 2008. Regrettably, due to the expansion of this large project Ulva's role as the specified supplier of materials to reduce Corrosion Under Insulation ("CUI") has been delayed until at least 2014. Whilst this is very frustrating for our Ulva team and is having a very significant impact on Ulva's profits this year there is some comfort that this project is destined to increase in volume terms when the installation gets underway as Ulvashield is specified by name. The supply of material has not been lost but merely deferred until 2014 and beyond when it will once again feature prominently as an important constituent of Ulva's sale programme at that time. In the meantime Ulva continues to be awarded new major projects on an ongoing basis and prospects remain good.

Financial Results

The results for the six month period under review to 31st December 2011 can only be described as disappointing. The economic difficulties faced in our key markets have been widely recognised in the media and have translated into reduced sales, intense competition on pricing as well as muted demand as infrastructure projects are either postponed or cancelled as a result of caution on the part of investors or funding problems due to the banking crisis. Sales in the period have fallen to £9,006,000 (2010 £12,702,000) partly due to the project delay at Ulva referred to above but also low demand in Fullflow UK, France and Spain where market conditions have deteriorated further. Operating profits amount to £164,000 (2010 £1,429,000) before exceptional expenses and the amortisation of acquired intangible assets. Losses before taxation amount to £81,000 as compared to profits of £1,154,000 for the comparable period of 2010.

Note 1. The calculation of earnings per share in respect of the six month period to 31 December 2010 has been restated to take account of the bonus issue declared in 2011 of 10 new ordinary shares for every ordinary share held in the Group ranking pari passu.

These results reflect the interim period between the completion of international projects by Ulva and the commencement of new projects under specification in March 2012. Pleasingly, the results at Crescent are much improved with a welcome return to profit and a significant increase in the profitability at Plasflow where we are a committed supplier to most of the nuclear installations in the UK. The increase in profitability at both these businesses is likely to continue for the remainder of this financial year.

Operational Highlights

Fullflow

The economic climate has not been conducive to the vibrancy of the construction industry where Fullflow is traditionally active. Our markets in Continental Europe have, like the UK, struggled as a consequence of low demand, competitive pressures and a dearth of large scale infrastructure projects where Fullflow tends to thrive.

Having taken steps to eliminate operating costs from the business back in 2010 Fullflow is in a strong position to respond to any improvement in market conditions. Following the recruitment of a new Fullflow Group Managing Director in November 2011 there has been further significant progress in terms of process controls, contract reviews and the management of risks within our entire European business model.

A considerable amount of work has been undertaken to maintain and improve operating margins within the business and focus is now being directed towards efficiencies on site. A series of product development initiatives is currently being researched as part of Fullflow's programme of continuous improvement to both customer service and product offering.

Of most importance within the entire Fullflow organisation, which is now benefitting from improved leadership, is a focused sales and marketing strategy in each of Fullflow's territories designed to improve sales penetration across the board. As a market leader, Fullflow is in an ideal position to innovate and work cohesively with a number of key customers on a project by project basis built on a mutual respect and recognition of what each party expects to derive from such beneficial relationships.

At Plasflow considerable progress has been made with this state of the art supplier to not only the water utility companies but also most of the nuclear installations which operate in the United Kingdom. For Health and Safety reasons, maintenance is an increasingly important driver within the UK and worldwide nuclear industry and Plasflow plays a pivotal role in finding technical solutions to the many engineering challenges which the nuclear plants encounter on a regular if not continuous basis.

Plasflow is on course to record its most profitable result in this financial year and with a strong order book there is every reason to expect this momentum to continue into 2013 and beyond.

Polymer Membrane Division

Ulva

As explained above the activity level for Ulva in this six month period has been below par purely and simply due to gaps between the conclusion and commencement of international projects. A greater level of transparency allied to the award of further nominated specifications by multinational oil and gas companies provides confidence that we are very much on the correct path to success. The number of multinational oil and gas companies who specify Ulva has and continues to grow as they recognise the technical benefits of using the Ulva system backed by a service package designed to ensure that the installed product fulfills customer expectations. This is designed with one aim in mind which is the extension of the useful operating life of the client's installed pipework. Ulva is in the process of expanding its international reach into new countries where on and offshore development features prominently.

DRC

Production of Ulva continues to be undertaken at DRC from where we also sell the Hylam range of polymer based products. We have significant spare capacity and will be able to respond to increased project activity from Ulva's international client base. Management has experienced a number of production difficulties arising from the demonstrable failure of an equipment supplier to install equipment in conformity with an agreed specification. This has called for creative solutions to maintain continuity of supply of our products albeit at increased cost. Plans are now at an advanced stage to procure permanent solutions to what has been a source of considerable inconvenience over an extended period of time.

Hylam Uniroof

In the period since the withdrawal of DuPont from the manufacture of Hypalon, with the resulting increase in the cost of our base material, CSPE, of 140% DRC had been attempting to develop an alternative lower cost mineral paper backed roofing membrane. Despite its best efforts, DRC has been unable to develop a product which aspires to DRC's quality standards. The modular build market, into which the product is supplied, albeit a declining market, is in most instances unable to bear the increased cost associated with the CSPE based product with the consequence that whilst DRC remains active in this market, volumes are now substantially reduced.

Hylam IQ

The spend by water utilities in the AMP5 period to date has been considerably lower than projected. Additionally, there has been evidence that with certain customers and competitors, DRC has not been competing on a level playing field. As a consequence Hylam IQ activity is at this time restricted.

Hylam FPA

The Drinking Water Inspectorate (DWI) approved product continues to enjoy good demand in potable water applications for tank lining and baffle curtains in service reservoirs. This niche product enjoys demand both in the UK and further afield in applications based in the Middle East.

Crescent

Crescent has endured extremely difficult market conditions over the past three years. In anticipation of the downturn in the construction sector and the consequential impact on the demand for steel stairs costs were significantly reduced so as to manage risk and improve the operational gearing of the business as markets begin to show signs of recovery. Whilst it has to be said that there are no perceptible signs of improvement in market conditions as a whole Crescent, under new leadership, has improved its performance considerably and has been restored to profit during the six months under review.

The management at Crescent has shown considerable skill and adaptability in facing the challenges in a market that is characterized by the demise of competitors as well as margin pressures arising from unrealistic pricing on the part of competitors chasing business at all cost. This is not a route which Crescent intends to follow. Further progress in terms of profitability is anticipated in the second half of this financial year and Crescent's prime focus will be in strengthening its sales and marketing initiatives in order to win market share within its targeted fields of broadening expertise.

Staff

In common with many Groups facing difficult challenges in market conditions which remain subdued the Board of SWP recognises the considerable amount of effort that has been, and continues to be, expended in the further development of the Group here in the UK and also abroad. We express our gratitude to all employees who remain dedicated to the delivery of our strategy which remains firmly in place for the future.

Current Trading and Prospects

The current financial year as a whole is destined to be one of disappointment as our two principal brands namely Fullflow and Ulva mark time in conditions which are not conducive to project led businesses which depend on levels of confidence and economic prosperity. In the case of Fullflow we need to see signs of economic growth which in turn lead to a return to public spending and available funding for infrastructure projects. On the other hand Ulva's trading pattern is fortunately very different and, notwithstanding the economic difficulties, Ulva's opportunities continue to excite as the pipeline of future international projects where Ulvashield is specified increases month on month. Specifications from the oil and gas majors remain at encouraging levels.

Strategically our focus has always been fixed very firmly on the achievement of medium to long-term growth and while we do not expect either the general economic environment or conditions in our specific markets to exhibit much improvement in the short term we remain confident that the plans we have for the future ongoing organic development of the Group are those which will deliver profitable growth for shareholders over time.

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 2010 has been restated to take account of the bonus issue declared in 2011 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 2011 and 31 December 2010 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 2011 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 2011 and which are expected to apply as at 30 June 2012.

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 203,275,006 shares (2010: 198,305,006) 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 191,980,006 shares (2010: 202,805,006) 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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