Interim Results
29 March 2001 - 5:00PM
UK Regulatory
RNS Number:2427B
SWP Group PLC
29 March 2001
SWP Group plc
Interim Results
for the six months ended 31 December 2000
Chairman's Statement
Results
In the six months to 31 December 2000 your Company recorded a net profit of #
67,000 (#25,000) on turnover of #6,555,000 (#6,885,000). The net profit
equates to 0.02p (0.01p) per ordinary share.
Review of Operations
As has been the case for some while the Group's results have been
significantly affected by a poor performance on the part of DRC Polymer
Products. This subsidiary, which was acquired by the Group at the beginning
of 1998, has been a consistent loss-maker and although we implemented a
sizeable reduction in the Company's overhead last April, sales have generally
continued to fall well below break-even point.
Clearly this situation cannot be sustained indefinitely, no matter how
promising the Company's medium-term prospects appear, but at this time it
remains our view that it is in shareholders' interests for us to continue to
support the business and that our patience in this regard will be rewarded
sooner rather than later. In recent weeks two new partnership arrangements
have reached commercial fruition and both should now give rise to significant
levels of turnover. One of these products has genuine global sales potential
and the other will benefit from an existing distribution network spanning
Continental Europe: both offer the potential for considerable volumes of
repeat business. This increase in momentum has been reinforced by additional
sales of material for use as bootliners in the new Honda Civic.
Elsewhere in the Group both Fullflow and Crescent of Cambridge exceeded their
profit budgets for the period under review. Fullflow continued to develop its
operations in Continental Europe and within the next six months it is expected
that its recently formed European subsidiary, Fullflow BV, will obtain formal
approval for the Company's syphonic roof drainage system from the relevant
authorities in each of the countries which have been targeted initially. The
completion of this process will act as a catalyst for a major marketing
initiative in those markets and in this context it is encouraging that, even
in the initial absence of official product approvals, the Company has
succeeded not only in winning and fulfilling a number of major contracts but
also in developing excellent contacts with some of Europe's largest
contractors.
In the UK, Fullflow maintained its dominant market share whilst at the same
time developing new operating systems and controls intended to provide a sound
platform for future expansion both in the UK and abroad. We believe that
Fullflow has the potential to develop its operations throughout the developed
world and considerable effort is being expended to ensure that the planned
expansion of the Company's activities proceeds in a controlled and profitable
manner.
Plasflow, which operates as Fullflow Group's pipework supply subsidiary,
continued to generate sharply increased third party sales. Following a
substantial investment in new plant and machinery this operation is now able
to provide a rapid and reliable service to customers requiring large and small
diameter fittings and even at this relatively early stage strong levels of
demand have been experienced. Plasflow is well placed to exploit the sizeable
opportunities available to it and further significant growth is anticipated in
the period ahead.
With spiral and other feature staircases continuing to be a popular choice
amongst Architects in all sectors of the construction market, Crescent of
Cambridge has reinforced its position as market leaders in this field. A
recent advertising initiative which promoted Crescent's ability to provide
customised solutions for individual projects produced an encouraging response
and should lead to increased sales in due course.
Current trading and future prospects
Whilst Crescent has continued to produce robust results in the early part of
the new calendar year, the performances of both Fullflow and DRC have been
below expectations. Fullflow in particular has suffered from contract delays
arising as a result of the adverse weather conditions which prevailed in the
autumn and early winter but there are now positive signs that the backlog is
starting to clear.
Generally prospects for the last quarter of the financial year appear
promising. Order and enquiry levels at Crescent and Fullflow provide strong
support for healthy business levels during this period and at DRC there is a
real expectation that the extra impetus provided by the new partnership
arrangements referred to above will enable the Company to deliver a much
improved performance.
In the 2000 Annual Report we advised shareholders that, with a view to
underpinning and enhancing shareholder value, it was our intention to dispose
of the Group's existing businesses and seek alternative opportunities amongst
those sectors of the financial markets which benefit from higher ratings.
However, since the date of our announcement it will not have escaped the
notice of shareholders that there has been something of a sea change in
stockmarkets across the world and while our strategy remains entirely valid we
now anticipate that the timescale involved in implementing it is likely to be
somewhat longer than previously indicated.
The volatility which is currently prevalent in the financial markets does not
represent an ideal background against which to conclude transactions of the
sort we are planning and whilst we have received expressions of interest in
relation to each of our three subsidiaries we believe that, with a view to
securing proper value for the Group's assets, it is appropriate for us to
adopt a patient approach in this area. Other things being equal the progress
currently being achieved by the subsidiaries should mean that any delay will
operate to the advantage of shareholders.
Finally we wish to advise shareholders that the litigation issues to which we
have referred in previous reports remain ongoing and we will provide a full
update on these matters in the 2001 Annual Report.
R M Muddimer
Chairman
Consolidated Profit and Loss Account
Six months ended 31 Dec 2000
Six months Six months Year
ended ended ended
31.12.00 31.12.99 30.06.00
#'000 #'000 #'000
Turnover 6,555 6,885 13,548
Operating profit 268 160 321
Profit on ordinary activities
before interest and taxation 268 160 321
Net interest payable and (201) (135) (341)
similar charges
Profit/(loss) on ordinary 67 25 (20)
activities before taxation
Taxation - - -
Retained profit/(loss) 67 25 (20)
Basic earnings per share 0.02p 0.01p (0.01)p
(pence)
Consolidated Balance Sheet
As at 31 Dec 2000
As at As at As at
31.12.00 31.12.99 30.06.00
#'000 #'000 #'000
Fixed assets
Intangible assets 19 56 38
Tangible assets 3,025 2,825 2,953
3,044 2,881 2,991
Current assets
Stocks 1,376 888 1,295
Debtors 3,837 4,098 3,624
5,213 4,986 4,919
Creditors: amounts falling due (5,908) (5,412) (5,208)
within one year
Net current liabilities (695) (426) (289)
Total assets less current 2,349 2,455 2,702
liabilities
Creditors: amounts falling due 1,229 1,553 1,611
after more than one year
Provision for liabilities and 39 307 53
charges
Capital and reserves
Called up share capital 6,352 6,038 6,344
Share premium account 1,216 1,177 1,215
Capital reserve 41 41 41
Revaluation reserve 551 370 559
Profit and loss account (7,109) (7,131) (7,176)
1,051 495 983
Minority interests
Non equity 30 100 55
2,349 2,455 2,702
Consolidated Cash Flow Statement
Six months ended 31 Dec 2000
Six months Six months Year
ended ended ended
31.12.00 31.12.99 30.06.00
#'000 #'000 #'000
Net cash flow from (76) 191 492
operating activities
Returns on investments and servicing of finance
Net interest paid (146) (114) (282)
Hire purchase interest (20) (21) (70)
(166) (135) (352)
Investing activities
Payments to acquire (283) (350) (764)
tangible fixed assets
Receipts from sales of 21 42 268
tangible fixed assets
(262) (308) (496)
Acquisitions and disposals
Purchase of minority (25) (25) (70)
interest
(25) (25) (70)
Financing
Issue of ordinary share 9 - 344
capital
Bank loans received 500 100 500
Bank loan repayments (180) (131) (403)
Capital element of 5 (38) (127)
finance leases and
purchase payments
334 (69) 314
Net decrease in cash (195) (346) (112)
Consolidated Cash Flow Statement
1 Financial Information
The interim results are unaudited and do not constitute statutory accounts.
The comparative information contained in this report for the year ended 30th
June 2000 does not constitute the statutory accounts for that financial year.
Those accounts have been reported on by the Group's auditor and delivered to
the Registrar of Companies. The report of the Auditor was unqualified and did
not contain 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 fact
that the Group has sufficient tax capacity to absorb these through carry
forward losses.
3 Earnings per share
Earning per share is calculated on the basis of 317,292,390 shares (1999:
301,927,169) which is the weighted average of the number of shares in issue
during the period.
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. Further
copies are available from the Company's registered office at SWP Group plc,
4th Floor, Bedford House, 3 Bedford Street, London WC2E 9HD.
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