Information  X 
Enter a valid email address

Swallowfield PLC (BAR)

  Print          Annual reports

Thursday 09 September, 2004

Swallowfield PLC

Final Results

Swallowfield PLC
09 September 2004


                                   SWALLOWFIELD PLC
      ANNOUNCEMENT OF PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2004


CHAIRMAN'S STATEMENT

Results

I am very pleased to report that trading in the second half of the year was in
line with the expectations I presented in my report of 26 February 2004 and,
shows a healthy turnaround from last year's results.

In our strategic update of 6 April 2004, we presented a restructuring plan aimed
at increasing annual profit before tax during 2005 by £0.4m at a cost of £0.4m.
Accordingly, we have now charged this year's profit and loss account with £0.4m
of restructuring costs, as predicted.  Excluding these costs, profit before tax
increased by 60% from £1.0m to £1.6m on an 11% reduction in turnover.  Including
restructuring costs, profit before tax increased by 19% to £1.2m.

The objectives that we set ourselves for the financial year were to improve
operating margins, reduce overhead costs and to drive a big improvement in the
profitability of the cosmetics business.  We have achieved these objectives,
against a background of a weak market and continued pricing pressure, by
concentrating on our product development strengths, cost efficiencies, improved
pricing control and improved customer service.

Turnover in the Cosmetics business reduced by 11% from £13.8m to £12.2m but last
year's operating loss of £0.8m was improved to a break-even position.  This
represents a very creditable turnaround of £0.8m in terms of operating profit
during the year.  The business was profitable before the impact of corporate
overheads.

Turnover in the Aerosol business declined by 11% from £40.8m to £36.5m whilst
operating profit fell by 11% from £2.2m to £2.0m.  During the year, we launched
a new bag-on-valve product and produced significant volumes of this for a major
customer.  Our investment in plant and machinery made during 2003 helped to
ensure the success of this project.

Cash and Net Debt

Net debt at the year end was broadly unchanged on the previous year even though
trade working capital increased significantly.  This increase, arising from
debtors, was primarily due to a single customer contract with extended payment
terms, offset in part by extended supplier terms on components purchased for
this same contract.

As outlined in our interim report, during the year we restructured our financing
arrangements to better align our facilities with the Group's funding
requirements, and to reduce our interest rate margin by 0.25%.

Corporate Governance

We continue to strengthen our approach to Corporate Governance and, in
accordance with best practice, have described our approach to the new Combined
Code within this year's Corporate Governance statement contained in the
published Report and Accounts 2004.  We have also published terms of reference
for the Audit, Remuneration and Nomination Committees on our web site and have
issued a whistle-blowing policy to our employees.

Strategic Update

As announced on 6 April 2004, we have completed the first phase of our strategic
review of the business, which was directed at actions to increase the
profitability of the Cosmetics business, and improve the total profitability of
the Group.  The long-term target we have set ourselves is to achieve a return on
shareholders' equity of 12% by 30 June 2006, and 15% by 30 June 2009.  Excluding
restructuring costs, the return on shareholders equity for the current year was
9%.

On the same date, we announced that we would be opening a procurement office in
the Peoples' Republic of China.  I am pleased to say that this office is now
operational, and we plan to increase the resources directed to this office, in
order to speed up the benefits we expect to receive.  Whilst the cost of this
office will be in the region of £0.4m per annum, we anticipate the investment
should begin to break even in the 4th quarter of our 2005 financial year and to
generate net savings in the year ended 30 June 2006.

In our strategic plan, we include the acquisition of businesses that have
complementary product capabilities, and that provide us with the opportunity to
obtain synergistic benefits with our current customer base.  As ever, we
continue to be discerning in terms of the financial returns required form any
such acquisition, and whilst we have examined a number of opportunities,
financial prudence mitigated against further action.

Looking Forward

We do not anticipate any improvement in the market for personal care products
over the next 12 months and expect consumer spending on our products to remain
subdued.  The pricing pressure we have experienced over the past few years is
likely to continue in most areas of our business, as retailer competition
continues to squeeze the supply chain and the impact of Far Eastern sourcing
intensifies.

Despite this background, we plan to raise shareholder returns by driving down
total input costs, improving manufacturing efficiencies, presenting new and
exciting product ranges and improving our pricing strategies.

Following the high levels of the previous two years, we have significantly
reduced our expenditure on fixed assets in the year just ended.  During the
coming year, we expect an affordable increase in capital expenditure as we
restart our longer term investment plans aimed at cost reduction and the
enhancement of good manufacturing practices across the Group.

We expect that the split of profitability between the first and second halves of
the current financial year will be more balanced than the year just ended, but
as ever, this is dependent on the final dates for new product launches.  The
first two months of the new financial year have been slightly ahead of last year
and, despite our expectations for an unhelpful market background, we are
positive for the future as we continue to use our acknowledged skills to best
advantage.

Dividend

Our policy over the last 18 months has been to maintain dividend payments,
notwithstanding short-term reductions in the level of dividend cover.  We
continue to believe that our medium-term aim of pursuing a progressive dividend
policy is correct, but recognise that in the short term we must continue to
rebuild the level of dividend cover and increase the strength of our balance
sheet.  Therefore, the Board is proposing to pay a final dividend of 2.0p per
share making a total dividend of 4.8p per share for the year, unchanged from
that paid in the previous year.  If approved at the Annual General Meeting, the
final dividend will be paid on 29 October 2004 to shareholders on the register
at 15 October 2004.  The shares will go ex-dividend on the 13 October 2004.

The past year has been one of great challenge in our business.  These results
are a credit to all of our employees and managers and would not have been
possible without their hard work and commitment.  We would like to extend our
thanks to them.


J S Espey
Chairman
9 September 2004




GROUP PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2004
                                                         Operations
                                                             before
                                                        exceptional   Exceptional
                                          Notes               costs         costs         2004         2003
                                                               £000          £000         £000         £000

Turnover                                       1             48,763             -       48,763       54,663
Cost of sales                                              (40,722)             -     (40,722)     (46,701)

Gross profit                                                  8,041             -        8,041        7,962
Net operating expenses                         2            (6,061)         (396)      (6,457)      (6,543)

Operating profit                                              1,980         (396)        1,584        1,419
Interest receivable                                               -             -            -           10
Interest payable                                              (419)             -        (419)        (454)

Profit on ordinary activities before                          1,561         (396)        1,165          975
taxation
Tax on profit on ordinary activities                          (467)           118        (349)        (257)

Profit attributable to shareholders                           1,094         (278)          816          718
Dividends                                                     (541)             -        (541)        (541)

Transferred to reserves                                         553         (278)          275          177

Earnings per share
- basic                                        3               9.7p                       7.2p         6.4p
- diluted                                      3               9.7p                       7.2p         6.4p





GROUP STATEMENT OF RECOGNISED GAINS AND LOSSES
for the year ended 30 June 2004
                                                                                     2004                 2003
                                                                                     £000                 £000
Profit for the financial year                                                         816                  718



There are no gains or losses other than the profit for the financial year, or in
the previous year.






GROUP AND COMPANY BALANCE SHEETS
as at 30 June 2004
                                                           Group                           Company
                                                         2004         2003                2004         2003
                                                         £000         £000                £000         £000

Fixed assets
Tangible assets                                        12,382       13,174              12,382            -
Investments                                                 -            -               2,494        6,072

Current assets
Stocks                                                  7,982        7,616               7,982            -
Debtors                                                14,219        9,267              15,155        8,255
Cash at bank and in hand                                   94           21                   7          608
                                                       22,295       16,904              23,144        8,863
Creditors: amounts falling due within one year       (14,998)     (11,032)            (18,502)      (3,928)

Net current assets                                      7,297        5,872               4,642        4,935

Total assets less current liabilities                  19,679       19,046              19,518       11,007

Creditors: amounts falling due after more than        (6,668)      (6,413)             (6,668)      (5,400)
one year
Provisions for liabilities and charges                  (947)        (844)               (947)            -
                                                       12,064       11,789              11,903        5,607

Capital and Reserves
Called up share capital                                  563          563                  563           563
Share premium                                          3,796        3,796                3,796         3,796
Revaluation reserve                                      124          138                    -             -
Capital reserve                                            -            -                  467           467
Profit and loss account                                7,581        7,292                7,077           781
Equity shareholders' funds                            12,064       11,789               11,903         5,607





GROUP STATEMENT OF CASH FLOWS
for the year ended 30 June 2004
                                                                                           2004          2003
                                                                        Notes              £000          £000

Net cash inflow from operating activities                                4(a)             1,897         1,069

Returns on investments and servicing of finance
Interest received                                                                             -            10
Interest paid                                                                             (364)         (404)
Interest element of finance lease rentals                                                  (55)          (50)
                                                                                          (419)         (444)
Corporation tax paid                                                                      (190)         (534)

Capital expenditure
Purchase of tangible fixed assets                                                         (696)       (2,740)
Sale of tangible fixed assets                                                                 2            53
                                                                                          (694)       (2,687)
Equity dividends paid                                                                     (541)         (541)
Net cash inflow/(outflow) before financing                                                   53       (3,137)

Financing
New loans                                                                                     -           900
Repayment of loans                                                                         (32)          (97)
Capital element of finance lease rentals                                                  (351)         (406)
                                                                                          (383)           397
Decrease in cash                                                                          (330)       (2,740)




RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
                                                                     Notes                2004          2003
                                                                                          £000          £000

Decrease in cash                                                                         (330)       (2,740)
Cash outflow/(inflow) from changes in debt and lease financing                             383         (397)
Change in net debt resulting from cash flows                                                53       (3,137)
New finance leases                                                                           -         (820)
Movement in net debt in the year                                                            53       (3,957)
Net debt at 1 July                                                                     (8,834)       (4,877)
Net debt at 30 June                                                     4(b)           (8,781)       (8,834)




NOTES:
     
1.   Turnover and Segmental Analysis
                                                  2004                                     2003
                                                   Profit                                   Profit
                                               before tax                               before tax
                                                           Net assets                              Net assets
                                      Turnover                                 Turnover
                                          £000       £000        £000              £000       £000       £000
Class of business
Aerosol products                        36,520      1,986      14,820            40,835      2,223     13,923
Cosmetic products                       12,243        (6)       6,398            13,828      (804)      6,780
                                        48,763                 21,218            54,663                20,703
Operating profit before                             1,980                                    1,419
exceptional costs
Exceptional costs                                   (396)                                        -
Net interest payable                                (419)                                    (444)
Profit before tax                                   1,165                                      975

Unallocated net liabilities                                   (9,154)                                 (8,914)

Group net assets                                               12,064                                  11,789

Geographic segment
By destination:
UK                                      34,049                                   40,410
Continental Europe                      12,545                                   12,043
North America                            1,393                                      980
Far East                                   407                                      872
Other                                      369                                      358
                                        48,763                                   54,663



Unallocated net liabilities comprise bank loans, overdrafts, finance leases,
taxation and proposed dividend.

     
2.   Exceptional Costs

An analysis of exceptional costs incurred in the year ended 30 June 2004, and
their effect upon the taxation charge for the year is summarised below:

                                                                Exceptional             Tax       Exceptional
                                                                      costs          credit  costs net of tax
                                                                       £000            £000              £000

Aerosol products                                                        285            (85)               200
Cosmetic products                                                       111            (33)                78
                                                                        396           (118)               278


Exceptional costs mainly comprise fees to professional advisors and redundancy
costs.

     
3.   Earnings per Share
     
(a)  Basic                                                                                 2004          2003

Profit on ordinary activities after taxation                                           £816,000      £718,000
Weighted average number of ordinary shares in issue during the year                  11,256,416    11,256,416
Earnings per share                                                                         7.2p          6.4p
     
(b)  Diluted
Profit on ordinary activities after taxation                                           £816,000      £718,000
Basic weighted average number of ordinary shares in issue during the year            11,256,416    11,256,416
Dilutive potential ordinary shares:
executive share options                                                                   9,285        11,424
                                                                                     11,265,701    11,267,840
Diluted earnings per share                                                                 7.2p          6.4p
     
(c)  Basic excluding exceptional costs
Profit on ordinary activities after taxation                                           £816,000      £718,000
Exceptional costs (Note 2)                                                             £396,000             -
Tax credit on exceptional costs                                                      (£118,000)             -
Profit on ordinary activities after taxation excluding exceptional costs             £1,094,000      £718,000
Weighted average number of ordinary shares in issue during the year                  11,256,416    11,256,416
Earnings per share                                                                         9.7p          6.4p
     
(d)  Diluted excluding exceptional costs
Profit on ordinary activities after taxation excluding exceptional costs             £1,094,000      £718,000
Basic weighted average number of ordinary shares in issue during the year            11,256,416    11,256,416
Dilutive potential ordinary shares:
Executive share options                                                                   9,285        11,424
                                                                                     11,265,701    11,267,840
Diluted earnings per share                                                                 9.7p          6.4p

     
4.   Notes to Statement of Cash Flows

(a)  Reconciliation of operating profit to net cash inflow from operating
     activities:
                                                                                        Group
                                                               Operations
                                                                   before
                                                              exceptional   Exceptional
                                                                    costs         costs       2004      2003
                                                                     £000          £000       £000      £000

Operating profit                                                    1,980         (396)      1,584     1,419
Depreciation                                                        1,488             -      1,488     1,492
Profit on disposal of fixed assets                                    (2)             -        (2)      (17)
(Increase)/decrease in stocks                                       (366)         (366)      (366)     1,010
(Increase) in debtors                                             (4,952)             -    (4,952)     (763)
Increase/(decrease) in creditors                                    3,886           259      4,145   (2,072)
Net cash inflow from operating activities                           2,034         (137)      1,897     1,069

     
(b)  Analysis of net debt
                                                                                        Group
                                                                                          Non-cash   30 June
                                                            1 July 2003        Cashflow    changes      2004
                                                                    £000           £000       £000      £000
                                                                                   
Cash at bank and in hand                                              21             73          -        94
Bank overdraft                                                   (1,455)          (403)          -   (1,858)
Cash                                                             (1,434)          (330)          -   (1,764)
Loans                                                            (6,035)             32          -   (6,003)
Finance leases                                                   (1,365)            351          -   (1,014)
Total                                                            (8,834)             53          -   (8,781)

     
5.   Five Year Summary

The following five year summary has been produced to allow improved comparisons
to be made between the current results and those of prior years.

                                                 audited      audited    unaudited    unaudited    unaudited
                                               Financial    Financial    Financial    Financial    Financial
                                                    Year         Year         Year         Year         Year
                                                    2004         2003         2003         2001         2000
                                     Notes          £000         £000         £000         £000         £000

First day of financial year           (a)    1 July 2003  1 July 2002 17 June 2001 18 June 2000 20 June 1999
Last day of financial year            (a)   30 June 2004 30 June 2003 30 June 2002 16 June 2001 17 June 2000
Number of weeks in financial year     (b)             52           52           54           52           52

Profit and Loss Account
Turnover                                          48,763       54,663       44,404       40,425       37,600
Adjustment to 52 week basis           (b)              -            -      (1,088)            -            -
Adjusted turnover                                 48,763       54,663       43,316       40,425       37,600
Operating profit                                   1,980        1,419        2,628        2,177        2,205
(Exceptional costs)/income                         (396)            -            -           20           54
Interest                                           (419)        (444)        (296)        (354)        (454)
Profit before taxation                             1,165          975        2,332        1,843        1,805
Taxation                                           (349)        (257)        (645)        (444)        (501)
Profit attributable to shareholders                  816          718        1,687        1,399        1,304
Dividends                                          (541)        (541)        (541)        (472)        (394)
Retained earnings                                    275          177        1,146          927          910

Balance Sheet
Fixed assets                                      12,382       13,174       11,142       10,228       10,516
Net current assets                                 7,297        5,872        6,427        6,610        5,146
Total assets less current                         19,679       19,046       17,569       16,838       15,662
liabilities
Long-term creditors:
Loans and lease finance                          (6,668)      (6,413)      (5,187)      (5,669)      (5,243)
Deferred tax                                       (947)        (844)        (770)        (716)        (720)
Provision for liabilities                              -            -            -            -        (146)
Equity                                            12,064       11,789       11,612       10,453        9,553
Net debt                                           8,781        8,834        4,877        4,777        5,825

Segmental Analysis
Aerosol products:
Turnover                                          36,520       40,835       31,783       28,880       25,041
Operating profit                                   1,986        2,223        2,710        2,400        2,470
Cosmetic products:
Turnover                                          12,243       13,828       11,533       11,545       12,559
Operating loss                                       (6)        (804)         (82)        (223)        (265)


Statistics
Weighted average number of shares             11,256,416   11,256,416   11,256,416   11,256,416   11,256,416
in issue
Undiluted earnings per share                        7.2p         6.4p        15.0p        12.4p        11.6p
Earnings per share excluding                        9.7p         6.4p        15.0p        11.7p        11.1p
(exceptional costs)/income
Gearing                                              73%          75%          42%          46%          61%
Dividends per share                                 4.8p         4.8p         4.8p         4.2p         3.5p



Notes:
     
(a)  For 2002 and prior years the five year summary is based on previously 
     reported interim and full year reports as adjusted for the retrospective 
     implementation of FRS19, Deferred Tax.  The results for each of these 
     financial years comprised the interim results for the first half of the
     calendar year in which the financial year ended, together with the second 
     half of the previous calendar year.  The balance sheet and net debt numbers 
     are those reported at the last day of the financial year.

(b)  Except for turnover, where the relevant adjustment has been shown above, no 
     material changes would be required to the profit and loss account to adjust 
     the financial year 2002 numbers to a 52 week basis.

     
6.   Statutory Accounts

     The financial information does not constitute statutory accounts as defined 
     in section 240 of the Companies Act 1985, but has been extracted from the 
     statutory accounts for the year ended 30 June 2004, on which an unqualified 
     audit report has been issued and which will be delivered to the Registrar 
     of Companies following their adoption at the Annual General Meeting.

     The statutory accounts for the financial period ended 30 June 2003 have 
     been delivered to the Registrar of Companies with an unqualified audit 
     report thereon.

     The restated five year summary in Note 5 above which has been produced to 
     allow comparisons to be made between the current results and those of prior 
     years, is unaudited.

     
7.   Annual General Meeting

     The Annual General Meeting will be held on Thursday 14 October 2004 at the
     Castle Hotel, Taunton, Somerset at 12.00 noon.




                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                                                                                                                 

a d v e r t i s e m e n t