Interim Results

Swallowfield PLC
26 February 2004


                                Swallowfield plc

           Interim Results for the 28 weeks ended 10 January 2004

Chairman's Statement

Results

In our trading update of 7 January 2004, we highlighted a number of reasons why
trading during the first half of the financial year was not as robust as we had
originally expected.  Turnover for the first 28 weeks of the year decreased by
29%, from £32.9m last year to £23.4m this year.  The improvements we have made
in our cost base, cash and net debt levels however, have limited the impact of
this reduction and, consequently, profit before tax over the same period was
£0.4m, compared with £0.7m last year.

Turnover in the Cosmetics business decreased by 21% from £8.0m to £6.3m, but
encouragingly, the operating loss was reduced from £0.5m to £0.3m. In the
Aerosols business, turnover decreased 31% from £24.9m to £17.2m, and operating
profit decreased from £1.4m to £0.8m.

Both the general economic picture and the market background for our products
have remained weak and, outside the retail food sector, this is reflected in the
patchy Christmas trading updates from the major retailers. These factors,
together with the significant customer delays noted in our trading update and
the work we have undertaken to reduce our dependency on low value added
products, have had an adverse impact on turnover.

Despite these weak trading conditions, we have been successful in our recent
efforts to reduce overhead costs, improve operating efficiencies and increase
margins.  We have reduced net operating expenses by £0.3m compared with the same
period last year and increased overall gross profit by 2.8 percentage points.
We expect these actions to have a greater positive impact on the results as the
trading background begins to improve in our second half.


Cash and Net Debt

Net debt was reduced significantly during the period, from £8.8m at 30 June
2003, to £5.2m at 10 January 2004.  Encouragingly, net debt was also £1.8m lower
than at the same point last year and gearing improved to 44% compared with 59%
at the same time last year.  The net cash inflow of £3.6m, which has driven the
improvement in net debt, is a result of the reduction in turnover, improved
working capital management and the expected reduction in the high levels of
capital investment undertaken in recent years.

During the period under review, we have worked with our bankers to restructure
our financing arrangements to better align our facilities with the Group's
funding requirements. As a result of this refinancing, we have replaced our £6m
term loan with a £6m revolving term loan, and increased our overdraft facility
from £3.8m to £5.5m.  The new facilities provide much better flexibility for our
working capital cycle and have allowed us to obtain a reduction of 0.25% in the
interest rate margin we pay.


Strategy Update

We are in the process of completing our strategic review of the business, and
anticipate this being complete by the end of the first quarter of this calendar
year. Part of our strategy will be to make greater use of Far Eastern sourcing
routes as a means of reducing direct product costs, and we are in the process of
setting up our own representative office in the People's Republic of China. We
expect to make significant permanent savings in the medium and long term but
there will be additional, one-off costs during the first 12 to 18 months of
operation.


Outlook

The global economic environment appears to be improving, although the European
economy and consumer spending are predicted to remain weak for some time.
Accordingly, we anticipate consumer demand for our products to remain flat and
pricing will remain under some pressure throughout the next 12 months.  It is
thus vital that we continue to improve our trading position through the
development of innovative products and particularly the creation of products
that give our customers a competitive advantage.  In addition, we continue to
examine ways to reduce costs and improve operating efficiencies.

Against this background, we remain positive for the Group's prospects in the
second half and expect trading to be close to current expectations.  Recent
contract wins and delivery of the delayed sales mentioned in our last trading
update should enable the Aerosols business to show an improvement in trading
performance compared to the same period last year.  We also expect the Cosmetics
business to have a much stronger trading performance in the second half of the
current trading year. This expectation is supported by an order book, which is
substantially higher than at the same time last year and we will continue to
benefit from the overhead reductions made in the fourth quarter of last year.

Given the nature of the sales pattern in the second half of the year, taken
together with the structure of one of the main contracts we will fulfil during
the same period, we expect to see a significant increase in working capital
requirements between now and the year end.  On this basis, we anticipate gearing
levels at the end of the year to be broadly similar to those at the end of last
year and our new financing arrangements have taken this into account.


Dividend

The Board is declaring an interim dividend of 2.8p per share, which is unchanged
from that declared at the same time last year.  Whilst this dividend is not
fully covered, the approach of the Board is to maintain prudently the dividend
payment in recognition of the reasonably good level of retained reserves and our
confidence in the future of the business.  The dividend will be paid on    27
May 2004 to shareholders on the register on 23 April 2004, and the shares will
go ex dividend on 21 April 2004.


J S Espey
Chairman
26 February 2004



GROUP PROFIT & LOSS ACCOUNT


                                                                 28 weeks          28 weeks            12 months
                                                                    ended             ended                ended
                                                              10 Jan 2004       11 Jan 2003          30 Jun 2003
                                                              (unaudited)       (unaudited)
                                             Notes                  £'000             £'000               £'000

Turnover                                       1                   23,433            32,888              54,663

Operating profit                               1                      588               904               1,419
Interest payable                                                    (218)             (219)               (444)

Profit on ordinary activities before
taxation                                                              370               685                 975
Tax on profit on ordinary activities                                (107)             (205)               (257)

Profit attributable to shareholders                                   263               480                 718
Dividends                                                           (316)             (316)               (541)

Retained profit                                                      (53)               164                 177

Dividend per ordinary share                    3                     2.8p              2.8p                4.8p

Earnings per ordinary share
- Basic                                        4                     2.3p              4.3p                6.4p
- Diluted                                      4                     2.3p              4.3p                6.4p



GROUP BALANCE SHEET
                                                                    As at              As at                 As at
                                                              10 Jan 2004        11 Jan 2003           30 Jun 2003
                                                              (unaudited)        (unaudited)
                                                                    £'000              £'000                 £'000

Tangible fixed assets                                              12,682             13,568                13,174

Stocks                                                              7,570              7,889                 7,616
Debtors                                                             5,632              7,882                 9,267
Cash at bank and in hand                                              483                 30                    21

                                                                   13,685             15,801                16,904
Creditors: amounts falling due within one
year                                                              (8,474)           (10,813)              (11,032)
                                                                  
Net current assets                                                  5,211              4,988                 5,872

Creditors: amounts falling due after more
than one year                                                     (5,313)            (6,003)               (6,413)
                                                                  
Provisions for liabilities and charges                              (844)              (770)                 (844)

                                                                   11,736             11,783                11,789

Share capital                                                         563                563                   563
Share premium                                                       3,796              3,796                 3,796
Reserves                                                            7,377              7,424                 7,430

Equity shareholders' funds                                         11,736             11,783                11,789




GROUP STATEMENT OF CASH FLOWS


                                                           28 weeks ended     28 weeks ended       12 months ended
                                                              10 Jan 2004        11 Jan 2003           30 Jun 2003
                                                              (unaudited)        (unaudited)
                                                                    £'000              £'000                 £'000

Net cash inflow from operating activities (note I)                  4,512              1,918                 1,069

Returns on investments and servicing of finance                     (218)              (219)                 (444)

Corporation tax paid                                                 (92)              (532)                 (534)

Capital expenditure:
Purchase of tangible fixed assets                                   (368)            (3,055)               (2,740)
Sale of tangible fixed assets                                          40                 25                    53

Equity dividends paid                                               (225)              (225)                 (541)

Net cash inflow/(outflow) before financing                          3,649            (2,088)               (3,137)

Financing:
(Decrease)/increase in long and short-term loans                  (1,532)                837                   803
Capital element of finance lease rentals                            (200)              (185)                 (406)
                                                                  (1,732)                652                   397

Increase/(decrease) in cash                                         1,917            (1,436)               (2,740)




NOTES TO THE STATEMENT OF CASH FLOWS


                                                                 28 weeks           28 weeks      12 months ended
                                                                    ended              ended          30 Jun 2003
                                                              10 Jan 2004        11 Jan 2003                £'000
                                                                    £'000              £'000

I.    Reconciliation of operating profit to net cash inflow from operating activities

Operating profit                                                      588                904                1,419
Depreciation                                                          822                614                1,492
(Profit) on disposal of fixed assets                                  (2)               (10)                 (17)
Decrease in stocks                                                     46                737                1,010
Decrease/(increase) in debtors                                      3,638                619                (763)
(Decrease) in creditors                                             (580)              (946)              (2,072)

Net cash inflow from operating activities                           4,512              1,918                1,069


II.  Analysis of net debt

Net cash at bank and in hand                                          483                 30                   21
Overdraft                                                               -              (160)              (1,455)
Short-term loans                                                      (3)              (669)                (635)
Long-term loans                                                   (4,500)            (5,400)              (5,400)
Finance leases                                                    (1,165)              (766)              (1,365)

                                                                  (5,185)            (6,965)              (8,834)


III.  Reconciliation of net cash flow to movement in net debt


Net debt at start of the period                                   (8,834)            (4,877)              (4,877)
Increase/(decrease) in cash                                         1,917            (1,436)              (2,740)
Decrease/(increase) in borrowings and finance
leases                                                              1,732              (652)              (1,217)
                                                                    
Net debt at end of the period                                     (5,185)            (6,965)              (8,834)




NOTES TO THE FINANCIAL INFORMATION

1.     Turnover & segmental analysis

                              28 weeks ended                28 weeks ended                12 months ended
                               10 Jan 2004                   11 Jan 2003                    30 Jun 2003

Class of business           Turnover    Operating         Turnover      Operating       Turnover      Operating
                               £'000       Profit            £'000         Profit          £'000         Profit
                                            £'000                          £'000                          £'000

Aerosol products              17,158          845          24,913          1,439          40,835          2,223
Cosmetic products              6,275        (257)           7,975          (535)          13,828          (804)

                              23,433          588          32,888            904          54,663          1,419



2.  The results for the twenty-eight weeks ended 10 January 2004 and the summary 
    balance sheet on that date are unaudited.  The results for the 12 month 
    period ended 30 June 2003 do not constitute full accounts within the
    meaning of section 240 of the Companies Act 1985.  Full accounts for that
    period together with an unqualified audit report thereon have been filed 
    with the Registrar of Companies.

3.  The dividend comprises an ordinary dividend of 2.8p (2003: 2.8p) per 
    ordinary share payable on 27 May 2004 to shareholders on the register on 23
    April 2004.



4.  The calculation of basic earnings per share is based on 11,256,416 
    (2003: 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 £263,000 (2003: £480,000).

    The diluted earnings per share is based on the profit for the period of 
    £263,000 (2003: £480,000) 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 11,266,316 (2003: 
    11,275,959) ordinary shares which include 9,900 (2003: 19,543) 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.




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