29th Mar 2006 07:02
SWP Group PLC29 March 2006 SWP Group PLC Interim report 2005 for the six months ended 31 December 2005 Highlights • Sales for 6 months to 31st December 2005 up by 22% compared to last year. • Operating profits of £302,000 for 6 months to 31st December 2005 compared to operating losses of £325,000 a year ago. • Order books in all three businesses at record levels with growth likely to be maintained. • Fully integrated management teams at Fullflow in the UK, Spain and France focused on top line growth and enhanced service delivery • Crescent of Cambridge has strengthened its market position as the UK's leading manufacture of spiral and straight steel staircases. • The successful introduction of DRC's patented leak detection system for use by the water utilities offers great potential for DRC's future growth aspirations. • Cost base very much under control and aligned to the assessed needs of each business. • Successful financial restructuring completed. Strong future cash flows in each business area should lead to rapid reduction of debt. • Group management anticipates strong growth in terms of sales and operating profits going forward. "In recent years each of our businesses has had to wrestle with major problemsand challenges of one sort or another. Now, however, they are all wellpositioned in their respective markets with clearly defined growth plans inplace and the dedicated management and resources with which to achieve them. We look forward to reporting further significant progress later in the year." Alan WalkerChairman Chairman's Statement Results As presaged in the Annual Report and Financial Statements published in December,the first half of the new financial year witnessed a continuation of therecovery programme which has been under way since the middle of 2004.Accordingly we are pleased to report that on sales of £9,472,000 (2004:£7,748,000) we recorded an operating profit of £302,000 which compares veryfavourably with the operating loss of £335,000 which we reported in 2004. Withinterest costs reducing slightly to £260,000 (2004: £273,000) the overall resultwas a net profit of £42,000 (2004: £188,000 loss after exceptional items), thefirst for some time. Review of Operations The most important feature of our results was the 22% increase which we achievedin turnover. This significant rate of growth serves to demonstrate the momentumwhich we are building throughout the Group and this is a trend which we expectto continue. In each of our businesses the delivery of top line growth is thesingle most important objective and we believe that there is plenty ofadditional scope for us to exploit the opportunities which we have identified inthe markets which we serve. Fullflow Group Nowhere is this potential more evident than at Fullflow Group. Here progress wasachieved on all fronts, with the French and Spanish operations both deliveringsales growth in excess of 80% and Plasflow more than doubling its sales to thirdparties. Even the UK syphonic business, which is the leading company in what isan increasingly competitive market sector, managed to produce sales growth ofover 12%. In each of the markets in which it operates, Fullflow is continuing to build areputation for professionalism, quality and reliability, and with developers,architects, engineers and contractors continually striving to achieve designefficiencies, programme acceleration and high quality standards from theirchosen specialist subcontractors, Fullflow is well placed to achieve furthergrowth. From time to time Fullflow will of course encounter an element ofprice-based competition but in what is an increasingly fast-paced andprofessional industry it is service levels and overall value which will be thedeterminants of success and Fullflow will continue to focus hard on achievingthe highest possible standards in these areas, as well as further improvementsin process efficiencies and margin levels. Fullflow is now a well-established, organized business with a clearly-definedmanagement structure, efficient systems and, most importantly, a team of young,resourceful managers and we are in no doubt that they have the drive, andcommitment and ambition to take the company forward to the next level. Crescent of Cambridge The strong trading performance of this sector leader has continued throughoutthe period with sales ahead by more than 8%. Operating profits were ahead ofbudget expectations primarily due to higher margins which were derived partlyfrom improved production efficiencies and partly from reduced overheadsfollowing the streamlining of the management structure within the business. The Company has continued to increase its share of the market for straightstaircases where the sophistication of Crescent's CNC machines offerssubstantial scope for achieving productivity gains. The potential for further increases in activity levels remains very positive andalthough price-based competition will continue to make it difficult to achievefurther margin improvement, there is every reason to believe that Crescent willmaintain and possibly even enhance its position as market leader. DRC Polymer Products Longstanding shareholders will be aware that ever since DRC was acquired by theGroup, it has struggled to achieve both critical mass and underlyingprofitability. However at long last there are definite signs that this situation is about tochange. In the six months to December sales exhibited an increase of nearly 5%but based on what we now regard as the major potential of DRC's patented HylamIQ product we believe that the company is on the threshold of much moresignificant success. Since its initial introduction to the market last year thisproduct has generated considerable interest on the part of specifiers in thewater industry and it is increasingly being seen as the most cost-effectiveoption for lining reservoir roofs. DRC's management is now intent on marketingthe product to a much wider audience both within the United Kingdom and abroadand there is every reason for us to be confident that this process will create anumber of major new business income streams. The remainder of DRC's core business is operating broadly in line withexpectations. Much of DRC's output is accounted for by a series of strategicalliances where DRC's production and technical expertise is complemented by itspartners' sales and marketing reach in what can best be described as globalniche markets. DRC has significant spare production capacity and is therefore well placed tocope with the extra demand which we anticipate Hylam IQ will generate. Indeed ifthis demand reaches the levels which we consider to be realistically achievablethe Company's prospects will be transformed. Financial Shareholders will be aware that in May 2004 we raised £3,091,000 net of expensesby way of an open offer. Whilst this fund-raising exercise was essential for theGroup's survival our level of borrowing has remained at a higher level than webelieve is appropriate for a Group of our size. Last month, therefore, wedecided in to take advantage of the recent strength in our share price to raisea further £750,000 net of expenses by way of a placing. The new shares weresubscribed for at a price of 60p per share compared to 37.5p in May 2004 and thenew equity will be used to reduce debt and fund the increased working capitalrequirements associated with our planned expansion. Current Trading As is generally the case, trading in the second half of the year has begun on arelatively quiet note with seasonal factors contributing to lower activitylevels. However across the Group order intake has continued to exhibit apositive trend which augurs well for the period ahead. Future Prospects Whilst we are pleased by the recovery which we have managed to effect in theGroup's performance we believe that in each of our business areas there arefurther significant opportunities for us to exploit. Importantly we now have in place the management structures and systems which areessential if growth is to be efficiently managed and our management teamscontain the right blend of experience, energy and ambition. At Group level wewere pleased to announce the appointment of Martin Bell and David Pett to theBoard and their collective initiative and experience will provide furthersupport to the implementation of our expansion plans. Accordingly we believe that we are well placed to realise the potential whichexists throughout the Group and we look forward to reporting further significantprogress later in the year. J.A.F. WalkerChairman 28th March 2006 Consolidated Profit and Loss Account Six months ended 31 December 2005 +-------------------------------------------+--------+--------+----------+| | Six| Six|Year ended|| | months| months| 30.06.05|| | ended| ended| || |31.12.05|31.12.04| |+-------------------------------------------+--------+--------+----------+| | £'000 | £'000 | £'000 |+-------------------------------------------+--------+--------+----------+| | | | |+-------------------------------------------+--------+--------+----------+|Turnover | 9,472 | 7,748 | 16,007 || |--------|--------| --------|+-------------------------------------------+--------+--------+----------+| | | | |+-------------------------------------------+--------+--------+----------+|Operating profit/(loss) before exceptional | 302 | (335) | (325) ||items | | | || | | | |+-------------------------------------------+--------+--------+----------+|Net operating income - exceptional items | - | 420 | 373 || |--------|--------| --------|+-------------------------------------------+--------+--------+----------+|Operating profit | 302 | 85 | 48 || | | | |+-------------------------------------------+--------+--------+----------+| | | | |+-------------------------------------------+--------+--------+----------+|Net interest payable and similar charges | (260) | (273) | (569) || |--------|--------| --------|+-------------------------------------------+--------+--------+----------+| | | | |+-------------------------------------------+--------+--------+----------+|Profit/(loss) on ordinary activities before| 42 | (188) | (521) ||taxation | | | |+-------------------------------------------+--------+--------+----------+|Taxation | - | - | - |+-------------------------------------------+--------+--------+--------+-+| | | | | || |--------|--------|--------| |+-------------------------------------------+--------+--------+--------+-+|Retained profit/(loss) | 42 | (188) | (521) || |--------|--------| --------|+-------------------------------------------+--------+--------+--------+-+|Earnings/(loss) per share -basic | 0.27p | (1.19)p| (3.30)p| || |--------|--------|--------| |+-------------------------------------------+--------+--------+--------+-+| -diluted | 0.27p | (1.19)p| (3.30)p|| |--------|--------| --------|+-------------------------------------------+--------+--------+----------+| | | | |+-------------------------------------------+--------+--------+----------+ Consolidated Balance Sheet As at 31 December 2005 +----------------------------------------------+--------+--------+--------+| | As at| As at| As at|| |31.12.05|31.12.04|30.06.05|+----------------------------------------------+--------+--------+--------+| | £'000 | £'000 | £'000 |+----------------------------------------------+--------+--------+--------+| | | | |+----------------------------------------------+--------+--------+--------+|Fixed assets | | | || | | | |+----------------------------------------------+--------+--------+--------+|Intangible assets | 19 | 25 | 19 |+----------------------------------------------+--------+--------+--------+|Tangible assets | 4,272 | 3,739 | 4,423 || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+| | 4,291 | 3,764 | 4,442 || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+| | | | |+----------------------------------------------+--------+--------+--------+|Current assets | | | || | | | |+----------------------------------------------+--------+--------+--------+|Stocks | 2,783 | 2,668 | 2,829 |+----------------------------------------------+--------+--------+--------+|Debtors | 5,423 | 5,348 | 5,819 || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+| | 8,206 | 8,016 | 8,648 |+----------------------------------------------+--------+--------+--------+| | | | |+----------------------------------------------+--------+--------+--------+|Creditors: amounts falling due within one year|(8,521) |(8,259) |(9,123) || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+|Net current liabilities | (315) | (243) | (475) || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+|Total assets less current liabilities | 3,976 | 3,521 | 3,967 || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+|Creditors: amounts falling due after more than| 3,069 | 3,152 | 3,103 ||one year |--------|--------|--------|+----------------------------------------------+--------+--------+--------+| | | | |+----------------------------------------------+--------+--------+--------+|Capital and reserves | | | || | | | |+----------------------------------------------+--------+--------+--------+|Called up share capital | 79 | 79 | 79 |+----------------------------------------------+--------+--------+--------+|Share premium account |11,134 |11,134 |11,134 |+----------------------------------------------+--------+--------+--------+|Capital reserve | 41 | 41 | 41 |+----------------------------------------------+--------+--------+--------+|Revaluation reserve | 1,479 | 671 | 1,479 |+----------------------------------------------+--------+--------+--------+|Profit and loss account |(11,826)|(11,556)|(11,869)|| | | | || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+| | 907 | 369 | 864 || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+| | | | |+----------------------------------------------+--------+--------+--------+| | 3,976 | 3,521 | 3,967 || |--------|--------|--------|+----------------------------------------------+--------+--------+--------+| | | | |+----------------------------------------------+--------+--------+--------+ Consolidated Cash Flow Statement Six months ended 31 December 2005 +---------------------------------------------+---------+---------+--------+| | Six| Six| Year|| | months| months| ended|| | ended| ended|30.06.05|| | 31.12.05| 31.12.04| |+---------------------------------------------+---------+---------+--------+| | £'000 | £'000 | £'000 |+---------------------------------------------+---------+---------+--------+| | | | |+---------------------------------------------+---------+---------+--------+|Net cash inflow/(outflow) from operating | 468 | (503) | (614) ||activities | --------| --------|--------|| | | | |+---------------------------------------------+---------+---------+--------+| | | | |+---------------------------------------------+---------+---------+--------+|Returns on investments and servicing of | | | ||finance | | | |+---------------------------------------------+---------+---------+--------+|Net interest paid | (231) | (249) | (474) |+---------------------------------------------+---------+---------+--------+|Hire purchase interest | (16) | (36) | (37) || | --------| --------|--------|+---------------------------------------------+---------+---------+--------+| | (247) | (285) | (511) || | --------| --------|--------|+---------------------------------------------+---------+---------+--------+| | | | |+---------------------------------------------+---------+---------+--------+|Investing activities | | | || | | | |+---------------------------------------------+---------+---------+--------+|Payments to acquire fixed assets | (56) | (51) | (115) |+---------------------------------------------+---------+---------+--------+|Receipts from sales of tangible fixed assets | 7 | - | 20 || | --------| --------|--------|+---------------------------------------------+---------+---------+--------+| | (49) | (51) | (95) || | --------| --------|--------|+---------------------------------------------+---------+---------+--------+| | | | |+---------------------------------------------+---------+---------+--------+| | | | |+---------------------------------------------+---------+---------+--------+|Financing | | | || | | | |+---------------------------------------------+---------+---------+--------+|Bank loan repayments | - | (27) | (129) |+---------------------------------------------+---------+---------+--------+|Capital element of finance leases and | (105) | (118) | (260) ||purchase payments | --------| --------|--------|+---------------------------------------------+---------+---------+--------+| | (105) | (145) | (389) || | --------| --------|--------|+---------------------------------------------+---------+---------+--------+|Net increase/(decrease) in cash | 67 | (984) |(1,609) || | --------| --------|--------|+---------------------------------------------+---------+---------+--------+| | | | |+---------------------------------------------+---------+---------+--------+ Notes to the Interim Report 1 Financial information The interim results are unaudited and do not constitute statutory accounts. Thecomparative information contained in this report for the year ended 30th June2005 does not constitute the statutory accounts for that financial year. Thoseaccounts have been reported on by the Group's auditor and delivered to theRegistrar of Companies. The report of the Auditor was unqualified and did notcontain a statement under Section 237(2) or (3) of the Companies Act. 2 Taxation There is no charge in the profit and loss account for taxation due to the factthat the Group has tax loss capacity to shelter the profits in the period underreview. 3 Earnings per share Earnings per share is calculated on the basis of shares 15,770,000 (2004:15,770,000), which is the weighted average of the number of shares in issueduring the period. The Company's share options are not dilutive for earnings per share calculationsbecause the share options' exercise prices are greater than the current marketprice. 4 Dividends The Directors are not recommending the payment of an interim dividend 5 Copies of interim report Copies of the interim report are being circulated to shareholders. Furthercopies are available from the Company's registered office at SWP Group plc, 4thFloor, Bedford House, 3 Bedford Street, London WC2E 9HD. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SWP.L