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Swallowfield PLC (BAR)

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Thursday 16 September, 1999

Swallowfield PLC

Interim Results

SWALLOWFIELD PLC
16 September 1999


                               Swallowfield plc                               
                                                                              
                             Chairman's Statement                             

We are pleased to report a profit before tax of £391,000 which, although below
the equivalent period last year of £524,000, was generated against a
background of poor Christmas sales, high stock carryovers and low consumer
spending levels in the high street.  Many of our major customers are still
experiencing low trading volumes from important world markets.

Our overall operating profit margin was maintained, despite a reduction in
turnover, due to tight control over costs and the elimination of losses in our
cosmetics division.  This, together with the reduced funding costs associated
with both lower interest rates and average net debt during the period, has
reduced earnings per share by only 0.4p to 2.4p.  Consequently, and in view of
the improving levels of current trading, your Board is pleased to announce the
restoration of a dividend which has been set prudently at 1.0p per ordinary
share.

During this first half we have ceased trading at our Brussels factory and some
£1,937,000 of sales turnover is attributable to residual trading from Brussels
during this period.  We have successfully assimilated a greater proportion of
the customer base into our Bideford operation than we originally planned.

The cosmetics business has seen a definite increase in volumes as the year has
progressed.  We see this continuing into the second half with the usual build
up of cosmetic products for Christmas and restocking of shops as consumer
spending in the high street improves.  Our  Bideford factory in the first half
returned a profit of £175,000 compared to a loss of £354,000 in the equivalent
period last year, showing improvements resulting from last year's overhead
reductions. We are also pleased to report that with tight cost control the
trading losses in Belgium, until its closure in the second quarter, have been
kept below prior year levels.

At our Aerosols International business in Wellington, we are now beginning to
see volumes restored after the completion of a major contract in the last
quarter of 1998 which has resulted in a reduction of turnover against last
year. We have again seen the benefits of last year's restructuring and have
also seen growing demand for anti-perspirant sticks and bag-in-can products
which continues into the second half of the year.  Your Board feels that the
Aerosols International business is in similarly good shape to prosper from
increased consumer spending as the economy improves towards the New Year and
it is encouraging to see our previous investments in bag-in-can capacity in
particular, bringing rewards.   

Working capital normally builds up during the year to a seasonal peak in the
second half, however, tight control has enabled working capital to be kept at
just over half last year's levels.  The result is net debt at the half year
point being £1,446,000 below the same period last year and only £1,659,000 up
on the year end position even after £1,284,000 of expenditure in relation to
the closure of our Brussels factory.

Prospects for the Group for the full year as always depend on consumer
spending levels during the run up to Christmas.  Your Board feels the Company
is in a much improved position, following last year's restructuring, to
benefit from more buoyant consumer spending.  

Against this improving background and after serving your Board for thirteen
years, I am notifying the shareholders of my intention to step down as
Chairman of Swallowfield plc during October 1999; a statement will be made
about my successor in due course.   Similarly, Colin Jenner, who is currently
recovering from a prolonged period of ill health, is also confirming his
retirement from the main Board after being with the Group for thirteen years.


N W Otley
Chairman




GROUP PROFIT AND LOSS ACCOUNT

                          Notes      24 weeks      24 weeks         Financial
                                        ended         ended        year ended
                                 19 June 1999  20 June 1998  31 December 1998
                                        £'000         £'000             £'000

Turnover                    1          16,178        23,090            46,643
Operating profit before                ------        ------            ------
exceptional costs           1             602           798             1,729


UK redundancies                             -             -              (616)
Fundamental restructuring
costs                                       -             -            (3,302)
                                       ------        ------            ------
Exceptional costs                           -             -            (3,918)
                                       ------        ------            ------
Profit/(loss) on ordinary 
activities before interest 
and taxation                              602           798            (2,189)
Interest payable                         (211)         (274)             (566)
                                       ------        ------            ------
Profit/(loss) on ordinary 
activities before taxation                391           524            (2,755)

Tax charge on profit before 
exceptional costs            2           (126)         (212)             (701)
Tax credit on exceptional 
costs                                       -             -               370
                                       ------        ------            ------
Taxation                                 (126)         (212)             (331)
                                       ------        ------            ------
Profit/(loss) attributable
to shareholders                           265           312            (3,086)
Dividends                                (113)         (248)             (248)
                                       ------        ------            ------
Retained profit/(loss)                    152            64            (3,334)
                                       ------        ------            ------
Dividend per ordinary share  4            1.0p          2.2p              2.2p
                                       ------        ------            ------
Earnings per ordinary share  5            2.4p          2.8p           (27.4)p


NOTES:

                 24 weeks ended        24 weeks ended     Financial year ended
                  19 June 1999          20 June 1998        31 December 1998

                        Operating             Operating             Operating
               Turnover    Profit    Turnover    Profit    Turnover    Profit
                  £'000     £'000       £'000     £'000       £'000     £'000

1. Turnover & segmental analysis

Class of business

Aerosol 
products          8,937       596      13,819     1,551      26,553     2,987

Cosmetic 
products          7,241         6       9,271      (753)     20,090    (1,258)
                 ------    ------      ------    ------      ------    ------
                 16,178       602      23,090       798      46,643     1,729
                 ------    ------      ------    ------      ------    ------

Geographic by source         

UK               14,241       771      19,145     1,197      39,397     2,516

Europe            1,937      (169)      3,945      (399)      7,246      (787)
                 ------    ------      ------    ------      ------    ------
                 16,178       602      23,090       798      46,643     1,729
                 ------    ------      ------    ------      ------    ------


GROUP BALANCE SHEET


                                    19 June 1999   20 June 1998   31 Dec 1998
                                           £'000          £'000         £'000

Tangible fixed assets                     11,972         12,278        12,474

Stocks                                     6,078          8,953         5,461
Debtors                                    6,174         10,310         5,236
Creditors                                 (6,963)        (9,644)       (6,818)
                                          ------         ------        ------
Working capital                            5,289          9,619         3,879

Net debt                                  (6,285)        (7,731)       (4,626)

Net liabilities for dividends and tax       (636)        (1,759)         (478)

Provisions for liabilities and charges    (1,109)          (195)       (2,274)
                                          ------         ------        ------
Total net assets                           9,231         12,212         8,975
                                          ------         ------        ------
Share capital                                563            563           563
Share premium                              3,796          3,796         3,796
Reserves                                   4,872          7,853         4,616
                                          ------         ------        ------
Equity shareholders' funds                 9,231         12,212         8,975
                                          ------         ------        ------

Notes:

2. The effective tax rate for the twenty-four weeks ended 19 June 1999 was
   32.2% (1998 40.5%) as no relief is obtained for the losses in Belgium

3. The results for the twenty-four weeks ended 19 June 1999 and the summary
   balance sheet on that date are unaudited. The results for the financial
   year ended 31 December 1998 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.

4. The dividend comprises an ordinary dividend of 1.0p (1998; 2.2p) per
   ordinary share payable on 29 October 1999 to shareholders on the register
   on 1 October 1999.

5. The calculation of earnings per share is based on 11,256,416 (1998;
   11,256,416) ordinary shares of 5.0p each and the profit on ordinary
   activities after taxation of £265,000 (1998; £312,000).

6. 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.


GROUP STATEMENT OF CASH FLOWS
                                                                    Financial
                            24 weeks ended   24 weeks ended        year ended
                     Notes    19 June 1999     20 June 1998  31 December 1998
                                     £'000            £'000             £'000
Net cash (out)/
inflow from 
operating activities   7            (1,251)            (368)            6,080
                                    ------           ------            ------
Returns on investments 
and servicing of finance              (211)            (274)             (566)

Taxation                               (62)             (93)           (1,281)

Capital expenditure                   (203)          (1,496)           (2,830)

Equity dividends paid                    -             (530)             (778)
                                    ------           ------            ------
Net cash (out)/inflow before 
financing                           (1,727)          (2,761)              625

Financing                                                 -                 -

(Decrease)/increase in long and 
short-term loans                      (164)           1,686             1,715

Finance leases                        (141)            (102)             (169)
                                    ------           ------            ------
                                      (305)           1,584             1,546
                                    ------           ------            ------
(Decrease)/increase in cash in 
the period                          (2,032)          (1,177)            2,171
                                    ------           ------            ------

Notes

7. Reconciliation of Operating Profit to Net Cash Inflow from Operating
   Activities                         
                                     £'000            £'000             £'000

Operating profit                       602              798             1,113
Depreciation                           767              765             1,677
Loss on disposal of fixed assets         -                -                 3
(Increase)/decrease in stocks         (736)            (293)            2,942
(Increase)/decrease in debtors      (1,089)          (1,314)            3,838
Increase/(decrease) in creditors       489             (324)           (3,493)
                                    ------           ------            ------
Net cash (out)/inflow from 
operating activities before 
restructuring provision outflows        33             (368)            6,080
                                    ------           ------            ------
Cash outflow relating to previous 
year restructuring provision        (1,284)               -                 -
                                    ------           ------            ------
Net cash (out)/inflow from 
operating activities                (1,251)            (368)            6,080
                                    ------           ------            ------
   

                              19 June 1999     20 June 1998  31 December 1998
8. Analysis of net debt              £'000            £'000             £'000

Cash at bank/(overdraft)               325           (1,017)            2,349
Short-term loan                     (5,117)          (2,632)           (3,934)
Long-term loan                        (451)          (3,068)           (1,858)
Finance leases                      (1,042)          (1,014)           (1,183)
                                    ------           ------            ------
                                    (6,285)          (7,731)           (4,626)
                                    ------           ------            ------

9. Reconciliation of net cash flow movement to net debt

                                     £'000            £'000             £'000

Net debt at start of the period     (4,626)          (4,637)           (4,637)
(Decrease)/increase in cash         (2,032)          (1,177)            2,171
Decrease/(increase) in borrowings 
and finance leases                     305           (1,992)           (2,088)
Translation difference                  68               75               (72)
                                    ------           ------            ------
Net debt at end of the period       (6,285)          (7,731)           (4,626)
                                    ------           ------            ------

Year 2000

The Group's proposals to address the Year 2000 issue were discussed fully in
the 1998 Annual Report and Accounts. Implementation of solutions to these will
be substantially completed in the next few months. Testing will continue
through December 1999 and contingency plans are being developed for all
potentially affected aspects of the business.


Independent Review Report to Swallowfield plc

Introduction
We have been instructed by the Company to review the financial information set
out on pages 1 to 4 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 London Stock Exchange 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
final 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 19 June 1999.



Ernst & Young
Bristol

                                                                                                                                                                                                                                                    

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