Interim Results

Swallowfield PLC
2 August 2001



                               Swallowfield plc

      Announcement of interim results for the period ended 16 June 2001



Chairman's Statement


Results

As reported in our trading update on 9 May, we anticipated and have
experienced a weak start to the year. During the first half turnover increased
5% to £18m. Profit before tax and restructuring credit decreased from £0.8m to
£0.4m. This was primarily an effect of an unfavourable product mix together
with margin pressures in European export markets caused by the relative
strength of sterling.  Against a background of cautious optimism for the
year-end, the Board is declaring an interim dividend of 1.7p, a 13% increase
over the previous year.



Outlook

As is usual with a business of this nature, the full year performance will
depend on increased consumer spending over the Christmas season. We remain
positive about the full year and this confidence is underpinned by the volume
of new enquiries we are receiving together with the number of new launches
that are planned for the second half. For example, we have been involved in
the development of and are filling an innovative sunflower and butter oil
spray for New Zealand Milk which has recently been launched to the catering
trade in the UK under the Anchor brand. Trading patterns in our business
however, continue to favour the second half and this pattern is becoming more
pronounced.



On 9 May we announced that we had signed a letter of intent with Laboratoire
Europeen de Creation Cosmetique (LECC), a subsidiary of the Yves Rocher Group
in France. LECC will supply us with technically sophisticated skincare
products on an exclusive basis for sale into the UK retail market. Whilst we
do not expect a significant impact on the current year's results, this is an
important step in the future development of the Group and should enable us to
increase our footprint with own label retail customers.



Trading Update

Turnover in the Cosmetics division was 7% lower than the same period last
year, reflecting weak sales post Christmas and de-stocking in the retail
supply chain. This decrease in turnover resulted in an operating loss of £0.2m
compared to break-even last year.



In the Aerosols division, turnover increased by 10% but operating profit
decreased by £0.3m. Sales within the UK have decreased by £0.2m on broadly
flat margins. Despite an increase of £1.4m (+62%) in export sales, severe
price pressure due to the continued weakness of the Euro resulted in a gross
profit decline of £0.1m in the export markets. We believe, however, that it is
strategically important for us to continue to build our sales base in overseas
markets and we constantly review this position.



Overall the market place remains highly competitive. Margins, for lower value
added and commodity products, are declining and the current trend towards the
use of Internet auctions for commodity products gives greater transparency and
further increases the pressure on prices.



However, we intend to tackle this weak market environment by an increased
focus on better procurement and improved manufacturing efficiencies.
Importantly our long-term strategy continues to focus on reducing response
times and the development of innovative, quality products. Continuously
improving customer service will enable us to expand our business in the higher
value-added end of our market whilst remaining competitive overall.



Financing

Gearing levels have improved from 58% last year to 43% this year, helped by
improvements in cash collection over the last 12 months. A change in the mix
of our business towards customers for whom we provide a committed stock
holding service has contributed to a £0.9m increase in stock levels.



In addition, we achieved further improvements in our financing arrangements.
Term loans have been increased by £1.2m and the repayment profile has been
extended by consolidating the pre-existing 5 and 10-year loans into a single
10-year loan. At the same time, our overdraft facility has been effectively
increased by £1.0m. Taken together, these changes continue to strengthen our
financial resources and allow us to meet our medium term capital investment
plans.



Dividend

The interim dividend of 1.7p will be paid on 26 October 2001 to shareholders
on the register on 5 October 2001 and the shares will go ex-dividend on 3
October 2001.



J Espey

Chairman


Group Profit and Loss Account

                                      24 weeks       24 weeks   Financial year
                                         ended          ended            ended
                          Notes   16 June 2001   17 June 2000      31 Dec 2000
                                         £'000          £'000            £'000

  Turnover                    1         18,054         17,205           39,576
  Operating profit            1            507          1,031            2,701
  Fundamental                                -             54               74
  restructuring credit                                                        
  Profit on ordinary                       507          1,085            2,775
  activities before                                                           
  interest and taxation                                                       
  Interest payable                       (145)          (216)            (425)
  Profit on ordinary                       362            869            2,350
  activities before                                                           
  taxation                                                                    
  Tax on profit on                       (104)          (187)            (527)
  ordinary activities                                                         
  Profit attributable                      258            682            1,823
  to shareholders                                                             
  Dividends                              (191)          (169)            (450)
  Retained profit                           67            513            1,373
  Dividend per                3           1.7p           1.5p             4.0p
  ordinary share                                                              
  Earnings per                                                                
  ordinary share                                                              
  - Basic                     4           2.3p           6.1p            16.2p
  - Basic excluding           4           2.3p           5.6p            15.0p
  fundamental                                                                 
  restructuring credit                                                        
  - Diluted                   4           2.3p           6.0p            16.2p



Group Balance Sheet

                                            As at          As at         As at
                                     16 June 2001   17 June 2000   31 Dec 2000
                                            £'000          £'000         £'000

  Tangible fixed assets                    10,228         10,516        10,194
  Stocks                                    7,133          6,280         5,899
  Debtors                                   6,357          6,545         6,176
  Cash at bank and in hand                  1,851            988         2,419
                                           15,341         13,813        14,494

  Creditors: amounts falling due          (8,731)        (8,667)       (9,127)
  within one year                                                             
  Net current assets                        6,610          5,146         5,367
  Creditors: amounts falling due          (5,669)        (5,243)       (4,452)
  after more than one year                                                    
  Provisions for liabilities and            (160)          (310)         (160)
  charges                                                                     
                                           11,009         10,109        10,949

  Share capital                               563            563           563
  Share premium                             3,796          3,796         3,796
  Reserves                                  6,650          5,750         6,590
  Equity shareholders' funds               11,009         10,109        10,949




Group Statement of Cash Flows         
                                      24 weeks       24 weeks   Financial year
                                         ended          ended            ended
                                  16 June 2001   17 June 2000      31 Dec 2000
                                         £'000          £'000            £'000

  Net cash (out)/inflow from             (100)          (607)            3,242
  operating activities (note I)                                               
  Returns on investments and             (145)          (216)            (425)
  servicing of finance                                                        
  Corporation tax paid                   (175)          (372)            (678)
  Capital expenditure:                                                        
  Purchase of tangible fixed             (691)          (331)            (868)
  assets                                                                      
  Sale of tangible fixed assets              -            969            1,007
  Equity dividends paid                  (281)              -            (394)
  Net cash (out)/inflow before         (1,392)          (557)            1,884
  financing                                                                   
  Financing:                                                                  
  Increase/(decrease) in long              979            305            (230)
  and short-term loans                                                        
  Capital element of finance             (155)          (159)            (338)
  lease rentals                                                               
                                           824            146            (568)
  (Decrease)/increase in cash            (568)          (411)            1,316



Notes to the Statement of Cash Flows

                                      24 weeks       24 weeks   Financial year
                                         ended          ended            ended
                                  16 June 2001   17 June 2000      31 Dec 2000
  I.Reconciliation of                                                    
  operating profit to net cash                                                
  (out)/inflow from operating                                                 
  activities                                                                  
                                         £'000          £'000            £'000
  Operating profit                         507          1,031            2,701
  Depreciation                             657            686            1,530
  (Profit) on disposal of                    -              -             (21)
  fixed assets                                                                
  (Increase) in stocks                 (1,234)        (1,168)            (846)
  (Increase)/decrease in                 (194)          (241)              125
  debtors                                                                     
  Increase/(decrease) in                   164          (778)             (92)
  creditors                                                                   
  Fundamental restructuring                  -          (137)            (155)
  costs                                                                       
  Net cash (out)/inflow from             (100)          (607)            3,242
  operating activities                                                        

  II.  Analysis of net debt              £'000          £'000            £'000
  Net cash at bank and in hand           1,851            692            2,419
  Short-term loans                       (694)          (940)            (994)
  Long-term loans                      (5,379)        (4,690)          (4,101)
  Finance leases                         (555)          (887)            (710)
                                       (4,777)        (5,825)          (3,386)
  III. Reconciliation of                                                 
  net cash flow                                                               
  movement to net debt                  £'000          £'000            £'000
  Net debt at start of the             (3,386)        (5,226)          (5,226)
  period                                                                      
  (Decrease)/increase in cash            (568)          (411)            1,316
  (Increase)/decrease in                 (823)          (188)              524
  borrowings and finance leases                                               
  Net debt at end of the period        (4,777)        (5,825)          (3,386)


Notes to the Financial Information

1.      Turnover & segmental analysis

                     24 weeks ended       24 weeks ended  Financial year ended
                       16 June 2001         17 June 2000      31 December 2000
  Class of       TurnoveR Operating  Turnover  Operating   Turnover  Operating
  business                   Profit               Profit                Profit
                                                                        
                    £'000     £'000     £'000      £'000      £'000      £'000
  Aerosol          13,089       720    11,846      1,018     27,637      2,698
  products                                                                    
  Cosmetic          4,965     (213)     5,359         13     11,939          3
  products                                                                    
                   18,054       507    17,205      1,031     39,576      2,701


2.    The results for the twenty-four weeks ended 16 June 2001 and the summary
balance sheet on that date are unaudited. The results for the financial year
ended 31 December 2000 do not constitute full accounts within the meaning of
section 240 of the Companies Act 1985. Full accounts for that year together
with an unqualified audit report thereon have been filed with the Registrar of
Companies.


3.    The dividend comprises an ordinary dividend of 1.7p (2000: 1.5 p) per
ordinary share payable on 26 October 2001 to shareholders on the register on 5
October 2001.


4.    The calculation of basic earnings per share is based on 11,256,416
(2000: 11,256,416) ordinary shares of 5.0p each, being the weighted average
number of ordinary shares in issue during the period, and the profit on
ordinary activities after taxation of £258,000 (2000: £682,000).


Basic earnings per share is also shown excluding the fundamental restructuring
credit of £ nil (2000: £54,000) giving a profit for the period of £258,000
(2000: £628,000), in order to show the effect of the fundamental restructuring
credit on earnings per share.



The diluted earnings per share is based on the profit for the period of £
258,000 (2000: £682,000) and on the weighted average number of shares in issue
for the period adjusted for shares held under unexercised options. The
adjusted number of shares for the period was 11,287,147 (2000: 11,326,199)
ordinary shares which include 30,731 (2000: 69,783) dilutive potential
ordinary shares from executive share options.



5.    The Interim Report will be sent to shareholders and is available to
members of the public at the Company's Registered Office at Swallowfield
House, Station Road, Wellington, Somerset TA21 8NL.



Independent Review Report to Swallowfield plc


Introduction


We have been instructed by the Company to review the financial information set
out on pages 3 to 7 and we have read the other information contained in the
Interim Report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.



Directors' Responsibilities


The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors.  The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.



Review of Work Performed


We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board.  A review consists principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed.  A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions.  It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit.  Accordingly we do not express an audit opinion on
the financial information.



Review Conclusion


On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 24 week
period ended 16 June 2001.



Ernst & Young LLP

Bristol

2 August 2001