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Swallowfield PLC (BAR)

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Monday 19 September, 2005

Swallowfield PLC

Final Results

Swallowfield PLC
19 September 2005


                               SWALLOWFIELD PLC

      ANNOUNCEMENT OF PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2005


CHAIRMAN'S STATEMENT

The last financial year was a difficult one for the Company, but it also proved
to be a time of positive change. Immediately below is a commentary on our
current results but I describe later how we have laid a number of building
blocks for the future and how our long-term plans are now much clearer.

Results

During the year to 30 June 2005, profit after tax decreased from £0.8m to £0.1m
and earnings per share declined from 7.2p to 0.7p.

The Aerosols business suffered during the second half of the year, due to the
weak retail environment post Christmas 2004 and a gap in the order book, before
the start of the new manufacturing agreement with PZ Cussons. As a consequence,
operating profit in the Aerosols business decreased from £2.0m to £0.3m and
turnover fell by 13% from £36.5m to £31.8m.

The Cosmetics business has continued to improve following the efforts we have
made over the last few years. Although it too suffered from the general weak
retail environment, it posted a full year profit for the first time in more than
5 years. Operating profit in the Cosmetics business was £0.2m against a
break-even situation a year ago.

As stated in our recent trading updates, sales during the second half of the
year were weaker than expected, exacerbated by a short term gap in our order
books caused by customer cancellations and contract timings. Notwithstanding
these short term issues, we maintained our operational capability to enable us
to respond to new business contracted from June, resulting in additional costs.

The restructuring plan announced last year was completed on time and to budget
and the expected savings of £0.4m were achieved.

Our new operation in the Peoples' Republic of China is working well and we have
a team of seven in place with plans to increase staffing levels as our business
develops. The net cost of this operation for the year was approximately £0.3m,
although the operation was self-financing towards the end of the year.

At the year-end, net debt stood at £8.4m, a reduction of 4.3% from the previous
year-end level of £8.8m. Expenditure on capital equipment was increased during
the year to £1.2m and working capital improved due to the completion of a large
contract shipped in the second half of last year.

International Accounting Standards

The Group will adopt International Accounting Standards for the year ending 30
June 2006. The impact of this is further described in the financial review and
the notes on pages 47 and 48 of the Annual Report and Accounts. In summary, we
expect a reduction of approximately £1.4m to shareholders' equity as a result of
capitalisation of the IAS19 pension deficit, offset, in part, by an increase in
the value of land at Wellington and a number of other smaller changes. We also
expect that the impact of IAS 19 will reduce the level of profit after tax by
around £0.1m, although as explained below, this should not change the current
cash funding requirements of the defined benefit pension scheme.

Pension Funds

The Group's main defined benefit plan - the Aerosols International Limited
defined benefit scheme - underwent its triennial actuarial valuation as at 5
April 2005. I am pleased to report that the results of this valuation indicate
that the scheme is 99.4% funded on a continuing basis and that the future
Company contribution rate requires no increase during the next three years. This
is testament to the cost containment and asset allocation strategies put in
place over the last 3 years. We have reassessed the position under FRS 17 based
on this latest triennial valuation and, accordingly, have reduced the overall
pension liability to £1.9m compared with £2.5m reported last year.

Looking Forward

The retail environment remains tough with customers still demanding price
reductions that are becoming extremely difficult to achieve. We do not
anticipate any improvement in the retail background during the next 12 months
and have taken this into account in our current thinking. We are also seeing
large cost increases in certain areas, notably this year in the supply of gas,
electricity and steel.

On the positive side, a number of strategic moves planned over the last 18
months are now coming to fruition. The 3-year manufacturing contract with PZ
Cussons, announced earlier in the year, is up and running and should provide us
with a sound production platform going forward. The procurement office in China
is developing well and will be a net contributor to the result for the year to
30 June 2006. At the same time, we have a number of good enquiries and
possibilities from our existing customer base, which leave us more optimistic
for next year. Overall therefore, we expect an improved performance over the
next year.

Our strategic review is close to finalisation and the new strategy has taken
into account our view that, over the next few years, our traditional markets
will remain highly competitive. In summary, we will complement our existing key
technical strengths with improved procurement and offshore sourcing and a wider
geographic reach to customers outside of the UK. At the same time, we will seek
potential acquisitions that could either create synergistic benefits with our
existing operations and/or provide new product or technical capabilities.

Dividend

In the recent past, we have maintained dividend payments even during years when
dividend cover fell below what we consider to be a sensible long-term average
level. Although the proposed dividend for this year will be uncovered, the
planned improvements and contract described above give the Board confidence in
proposing that the final dividend be maintained at the same level as last year.
This would bring the total dividend payment for the year to 4.8p per share,
unchanged on the previous year. If approved at the Annual General Meeting, a
final dividend of 2.0p per share will be paid on 11 November 2005 to
shareholders on the register at 28 October 2005 and the shares will go
ex-dividend on 26 October 2005.

J S Espey
Chairman
19 September 2005


GROUP PROFIT AND LOSS ACCOUNT
For the year ended 30 June 2005

                                                                                2005               2004
                                                      Notes                    £'000              £'000

Turnover                                                1                     43,539             48,763
Cost of sales                                                               (37,227)           (40,722)

Gross profit                                                                   6,312              8,041
Net operating expenses                                 2b                    (5,808)            (6,457)

Operating profit                                       2a                        504              1,584
Interest receivable                                                                7                  -
Interest payable                                                               (458)              (419)

Profit on ordinary activities before taxation                                     53              1,165
Tax on profit on ordinary activities                                              23              (349)

Profit attributable to shareholders                                               76                816
Dividends                                                                      (541)              (541)

Transferred (from)/to reserves                                                 (465)                275


Earnings per share
    - basic                                             3                       0.7p               7.2p
    - diluted                                           3                       0.7p               7.2p





GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

For the year ended 30 June 2005


                                                                                   2005               2004
                                                                                  £'000              £'000

Profit for the financial year                                                        76                816

There are no gains or losses other than the profit for the financial year, in
either the year ended 30 June 2005 or the year ended 30 June 2004.


GROUP AND COMPANY BALANCE SHEETS
As at 30 June 2005

                                                        Group                            Company
                                                    2005              2004             2005            2004
                                                   £'000             £'000            £'000           £'000

Fixed assets
Tangible assets                                   12,138            12,382           12,138          12,382
Investments                                            -                 -            2,494           2,494

Current assets
Stocks                                             9,312             7,982            9,312           7,982
Debtors                                            8,896            14,219            8,896          15,155
Cash at bank and in hand                              25                94               25               7
                                                  18,233            22,295           18,233          23,144

Creditors: amounts falling due within           (11,398)          (14,998)         (13,890)        (18,502)
one year
Net current assets                                 6,835             7,297            4,343           4,642

Total assets less current liabilities             18,973            19,679           18,975          19,518

Creditors: amounts falling due after             (6,379)           (6,668)          (6,379)         (6,668)
more than one year
Provisions for liabilities and                     (995)             (947)            (995)           (947)
charges

                                                  11,599            12,064           11,601          11,903
Capital and reserves
Called up share capital                              563               563              563             563
Share premium                                      3,796             3,796            3,796           3,796
Revaluation reserve                                  110               124                -               -
Capital reserve                                        -                 -              467             467
Profit and loss account                            7,130             7,581            6,775           7,077
Equity shareholders' funds                        11,599            12,064           11,601          11,903


GROUP STATEMENT OF CASH FLOWS
For the year ended 30 June 2005
                                                                                   2005               2004
                                                                                  £'000              £'000

Net cash inflow from operating activities                                         2,799              1,897

Returns on investments and servicing of finance
Interest received                                                                     7                  -
Interest paid                                                                     (405)              (364)
Interest element of finance lease rentals                                          (53)               (55)
                                                                                  (451)              (419)
Corporation tax paid                                                              (232)              (190)

Capital expenditure
Purchase of tangible fixed assets                                               (1,204)              (696)
Sale of tangible fixed assets                                                         4                  2
                                                                                (1,200)              (694)
Equity dividends paid                                                             (541)              (541)
Net cash inflow before financing                                                    375                 53

Financing
Repayment of loans                                                                  (3)               (32)
Capital element of finance lease rentals                                          (345)              (351)
                                                                                  (348)              (383)
Increase/(decrease) in cash                                                          27              (330)


RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

                                                                                    2005               2004
                                                                                   £'000              £'000

Increase/(decrease) in cash                                                           27              (330)
Cash outflow from changes in debt and lease financing                                348                383

Change in net debt resulting from cash flows                                         375                 53
Net debt at 1 July                                                               (8,781)            (8,834)
Net debt at 30 June                                                              (8,406)            (8,781)



NOTES:
     
1.   Turnover and Segmental Analysis


                                             2005                                      2004
                                Turnover       Profit           Net     Turnover       Profit           Net
                                           before tax        assets                before tax        assets
Class of business                  £'000        £'000         £'000        £'000        £'000         £'000

Aerosol products                  31,788          319        13,586       36,520        1,986        14,820
Cosmetic products                 11,751          185         7,565       12,243          (6)         6,398
                                  43,539                     21,151       48,763                     21,218

Operating profit before                           504                                   1,980
exceptional costs

Exceptional costs                                   -                                   (396)
Net interest payable                            (451)                                   (419)

Profit before tax                                  53                                   1,165

Unallocated net liabilities                                 (9,552)                                 (9,154)

Group net assets                                             11,599                                  12,064

Geographic segment
By destination:

    UK                            35,394                                  34,049
    Other Europe                   7,379                                  12,545
    North America                    278                                   1,393
    Far East                         296                                     407
    Other                            192                                     369
                                  43,539                                  48,763


All turnover is derived from operations established in the UK.

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



2.         Operating Profit
                                                                                    2005               2004
                                                                                   £'000              £'000
(a)       This is stated after charging:
Depreciation of tangible fixed assets:
Leased assets                                                                        273                274
Purchased assets                                                                   1,147              1,214
Research and development                                                             686                756
Operating leases:
Hire of plant and machinery                                                           57                 60
Rent of buildings                                                                     87                112
Auditors' remuneration:
Audit services                                                                        51                 71
Non-audit services                                                                    98                 55
Exceptional costs: predominantly redundancy costs and fees to                          -                396
professional advisors

(b)       Net operating expenses are analysed as follows:
Distribution costs                                                                 2,282              2,309
Administrative expenses                                                            3,526              4,148
                                                                                   5,808              6,457

3.         Earnings per Share
                                                                                    2005               2004
(a)       Basic
Profit on ordinary activities after taxation                                     £76,000           £816,000
Weighted average number of ordinary shares in issue during the                11,256,416         11,256,416
year
Earnings per share                                                                  0.7p               7.2p

(b)       Diluted
Profit on ordinary activities after taxation                                     £76,000           £816,000
Basic weighted average number of ordinary shares in issue during              11,256,416         11,256,416
the year
Dilutive potential ordinary shares:
executive share options                                                           14,970              9,285
                                                                              11,271,386         11,265,701
Diluted earnings per share                                                          0.7p               7.2p
     
4.   Notes to Statement of Cash Flows

(a)       Reconciliation of operating profit to net cash inflow from operating
activities:

                                                                                    Group
                                                                             2005               2004
                                                                            £'000              £'000
Operating profit                                                              504              1,584
Depreciation                                                                1,420              1,488
Loss/(profit) on disposal of fixed assets                                      24                (2)
(Increase) in stocks                                                      (1,330)              (366)
Decrease/(increase) in debtors                                              5,397            (4,952)
(Decrease)/increase in creditors                                          (3,216)              4,145
Net cash inflow from operating activities                                   2,799              1,897

     
(b)  Analysis of net debt
                                                                     Group                
                                                                                          Non-cash   30 June
                                                              1 July 2004      Cashflow    changes      2005            
                                                                    £'000         £'000      £'000     £'000
                                                                                            
Cash at bank and in hand                                               94          (69)          -        25
Bank overdraft                                                    (1,858)            96          -   (1,762)
Cash                                                              (1,764)            27          -   (1,737)
Loans                                                             (6,003)             3          -   (6,000)
Finance leases                                                    (1,014)           345          -     (669)
Total                                                             (8,781)           375          -   (8,406)
     
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
                                                   2005         2004         2003         2002         2001
                                    Notes         £'000        £'000        £'000        £'000        £'000
First day of financial year          (a)    1 July 2004  1 July 2003  1 July 2002 17 June 2001 18 June 2000
Last day of financial year           (a)   30 June 2005 30 June 2004 30 June 2003 30 June 2002 16 June 2001
Number of weeks in financial year    (b)             52           52           52           54           52

Profit and Loss Account

Turnover                                         43,539       48,763       54,663       44,404       40,425
Adjustment to 52 week basis          (b)              -            -            -      (1,088)            -
Adjusted turnover                                43,539       48,763       54,663       43,316       40,425
Operating profit                                    504        1,584        1,419        2,628        2,197
Net interest                                      (451)        (419)        (444)        (296)        (354)
Profit before taxation                               53        1,165          975        2,332        1,843
Taxation                                             23        (349)        (257)        (645)        (444)
Profit attributable to                               76          816          718        1,687        1,399
shareholders
Dividends                                         (541)        (541)        (541)        (541)        (472)
Retained earnings                                 (465)          275          177        1,146          927

Balance Sheet

Fixed assets                                     12,138       12,382       13,174       11,142       10,228
Net current assets                                6,835        7,297        5,872        6,427        6,610
Total assets less current                        18,973       19,679       19,046       17,569       16,838
liabilities
Long-term creditors:
Loans and lease finance                         (6,379)      (6,668)      (6,413)      (5,187)      (5,669)
Deferred tax                                      (995)        (947)        (844)        (770)        (716)
Equity                                           11,599       12,064       11,789       11,612       10,453
Net debt                                          8,406        8,781        8,834        4,877        4,777

Segmental Analysis
Aerosol products:
Turnover                                         31,788       36,520       40,835       31,783       28,880
Operating profit                                    319        1,986        2,223        2,710        2,400
Cosmetic products:
Turnover                                         11,751       12,243       13,828       11,533       11,545
Operating profit                                    185          (6)        (804)         (82)        (223)


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                       0.7p         7.2p         6.4p        15.0p        12.4p
Gearing                                             72%          73%          75%          42%          46%
Dividends per share                                4.8p         4.8p         4.8p         4.8p         4.2p


Notes:      (a)    For 2001 and 2002 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 2005, on which an unqualified audit report
has been issued and which will be delivered to the Registrar following their
adoption at the Annual General Meeting.

The statutory accounts for the financial year ended 30 June 2004 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.         Copies of the 2005 Annual Report and Accounts will be posted to
shareholders on the 23 September 2005.   Further copies may be obtained by
contacting the Company Secretary at Swallowfield plc, Swallowfield House,
Station Road, Wellington, Somerset, TA21 8NL.

8.         Annual General Meeting

The Annual General Meeting will be held on Monday 24 October 2005 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                                                                                                                                                        

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