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Swallowfield PLC (BAR)

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Thursday 07 September, 2000

Swallowfield PLC

Interim Results

Swallowfield PLC
7 September 2000


CHAIRMAN'S STATEMENT

I am very pleased to present this first set of interim results since my
appointment as Chairman on the 1st June 2000.

The first half of 2000 has seen a further improvement in the Group's fortunes.
We are continuing to build on the turnaround achieved in 1999 with a growth in
turnover of 6% to £17.2m and a 71% increase in operating profit to £1.0m.
Profit before tax increased by 122% to £0.9m with an improvement in earnings
per share from 2.4p last year to 6.1p this year. After stripping out
fundamental restructuring income, profit before tax increased 108% to £0.8m
and earnings per share increased 133% to 5.6p.

At Bideford during the first half we have seen dramatic improvements in the
standard of customer service, on time deliveries and quality resulting in a
return to breakeven profitability. The second half of the year will see a
number of major new product launches and although pencil sales remain weak we
are now seeing the benefit of our new product developments coming through,
particularly plastic case pencils and softer formulations.

The aerosols business continues to grow with sales up 33% on a year ago.
Economic activity is improving in Continental Europe and we are experiencing
an increase in both sales and enquiries for such business. To win and maintain
this business requires keen pricing and we have been affected by the strength
of Sterling. However, our core products such as shaving and shower gels
continue to enjoy double digit growth across Europe. Similarly, we are
experiencing growth in the personal care sector in Eastern Europe. 

The sale of the manufacturing building in Belgium was finalised during the
period and we realised a price above our own target. This, together with
movements on other closure provisions, enabled us to show fundamental
restructuring income of £54k during the period. The proceeds of the sale of
the building have been used to reduce our borrowings.

Gearing levels were 58% at the period end compared to 68% at the same time
last year and 55% at the end of 1999. On a cash flow basis working capital has
increased by £2.2m since the end of 1999, of which  £1.2m reflects the build
of stocks necessary to meet the Autumn/Winter product launches and £0.2m from
an increase in debtors resulting from higher sales.

The senior management team is currently creating a new strategy for
Swallowfield intended to drive the Group forward in the 21st century. The
vision for the future developed by the team has gained group-wide ownership
and will lead to the preparation of a detailed 5 year strategic plan.
 
The last few months have also seen the first stage in the development of the
Swallowfield web site. The initial phase, consisting of investor relations'
information, is launched today and can be found at www.swallowfield.com.

Considering the trading outlook for the second half we remain optimistic, but
it should be stressed that once again the full year performance will depend on
improved consumer spending in the run up to Christmas.

The Board is declaring an interim dividend of 1.5p against 1.0p in the
previous year. Future dividend policy will be consistent with our strategy for
growing the business and will take into account the investments required to
achieve this strategy. The dividend will be paid on 27th October 2000 to
shareholders on the register on 6th October 2000.

The Company also announces that Teresa White, Sales and Marketing Director,
will be leaving the Company in three months time on 8th December to take up
another business opportunity.  The Board thanks her for her contribution to
the turnaround in the Company's performance.  In the short term,
responsibility for the sales and marketing function will revert directly to
Tony Wardell pending the appointment of a suitable replacement.

On behalf of the Company, I would like to thank Richard Organ for undertaking
the interim Chairman's role over the last nine months.  

Finally, on behalf of the Board, I would like to thank the employees of
Swallowfield who have made such a valuable contribution to the Group's
improved position. 

J Espey
Chairman



GROUP PROFIT AND LOSS ACCOUNT
                                     24 weeks        24 weeks      Financial
                                        ended           ended     year ended
                         Notes   17 June 2000    19 June 1999    31 Dec 1999
                                        £'000           £'000          £'000

Turnover                   1           17,205          16,178         36,573
                                       ------          ------         ------
Operating profit           1            1,031             602          1,776
Fundamental restructuring 
income                                     54               -              -
                                       ------          ------         ------
Profit on ordinary 
activities before 
interest and taxation                   1,085             602          1,776
Interest payable                         (216)           (211)          (449)
                                       ------          ------         ------
Profit on ordinary 
activities before 
taxation                                  869             391          1,327

Tax on profit on 
ordinary activities        2             (187)           (126)          (392)
                                       ------          ------         ------
Profit attributable 
to shareholders                           682             265            935

Dividends                                (169)           (113)          (338)
                                       ------          ------         ------
Retained profit                           513             152            597
                                       ------          ------         ------
Dividend per ordinary 
share                      4              1.5p            1.0p           3.0p
                                       ------          ------         ------
Earnings per ordinary 
share
-  Basic                   5              6.1p            2.4p           8.3p
-  Basic excluding 
   fundamental             
   restructuring income    5              5.6p            2.4p           8.3p
-  Diluted                 5              6.0p            2.4p           8.3p


GROUP BALANCE SHEET
                                   17 June 2000   19 June 1999   31 Dec 1999
                                          £'000          £'000         £'000
                     
Tangible fixed assets                    10,516         11,972        11,587
                     
Stocks                                    6,280          6,078         5,231
Debtors                                   6,545          6,174         6,286
Cash at bank and in hand                    988            325         1,282
                                         ------         ------        ------
                                         13,813         12,577        12,799
Creditors: amounts falling due 
within one year                          (8,667)       (12,998)      (13,270)
                                         ------         ------        ------
Net current assets/(liabilities)          5,146           (421)         (471)

Creditors: amounts falling due          
after more than one year                 (5,243)        (1,211)       (1,123)

Provisions for liabilities and charges     (310)        (1,109)         (417)
                                         ------         ------        ------
                                         10,109          9,231         9,576
                                         ------         ------        ------
Share capital                               563            563           563
Share premium                             3,796          3,796         3,796
Reserves                                  5,750          4,872         5,217
                                         ------         ------        ------
Equity shareholders' funds               10,109          9,231         9,576
                                         ======         ======        ======


GROUP STATEMENT OF CASH FLOWS
                                        24 weeks      24 weeks     Financial
                                           ended         ended    year ended
                             Notes  17 June 2000  19 June 1999   31 Dec 1999
                                           £'000         £'000         £'000

Net cash (out)/inflow from 
operating activities           7            (607)       (1,251)          793

Returns on investments and 
servicing of finance                        (216)         (211)         (449)

Corporation tax paid                        (372)          (62)         (242)

Capital expenditure:
Purchase of tangible fixed assets           (331)         (203)         (551)
Sale of tangible fixed assets                969             -            28

Equity dividends paid                          -             -          (113)
                                          ------        ------        ------
Net cash (outflow) before financing         (557)       (1,727)         (534)

Financing:
Increase/(decrease) in long 
and short-term loans                         305          (164)         (410)
Capital element of finance 
lease rentals                               (159)         (141)         (297)
                                          ------        ------        ------
                                             146          (305)         (707)
                                          ------        ------        ------
(Decrease) in cash                          (411)       (2,032)       (1,241)
                                          ======        ======        ======

NOTES:

1.  Turnover and segmental analysis

                       24 weeks            24 weeks          Financial      
                        ended               ended            year ended
                    17 June 2000        19 June 1999         31 Dec 1999
 
                          Operating            Operating            Operating
                Turnover     Profit  Turnover     Profit  Turnover     Profit
                   £'000      £'000     £'000      £'000     £'000      £'000

Class of business
Aerosol products  11,846     1,018      8,937        596    22,132      2,048
Cosmetic products  5,359        13      7,241          6    14,441       (272)
                  ------    ------     ------     ------    ------     ------
                  17,205     1,031     16,178        602    36,573      1,776
                  ------    ------     ------     ------    ------     ------

2.  The effective tax rate for the twenty-four weeks ended 17 June 2000 was
    21.5% (1999: 32.2%) as profits from the disposal of the factory and other
    income in Belgium will be offset against brought forward losses in
    Belgium.

3.  The results for the twenty-four weeks ended 17 June 2000 and the summary
    balance sheet on that date are unaudited. The results for the financial
    year ended 31 December 1999 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 1.5p (1999: 1.0 p) per
    ordinary share payable on 27 October 2000 to shareholders on the register
    on 6 October 2000.

5.  The calculation of basic earnings per share is based on 11,256,416 (1999:
    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 £682,000 (1999: £265,000).        

    Basic earnings per share is also shown excluding fundamental restructuring
    income of £54,000 (1999: nil) giving a profit for the period of £628,000
    (1999: £265,000), in order to show the effect of fundamental restructuring
    income on earnings per share.  

    The diluted earnings per share has been calculated based on the profit on
    ordinary activities after taxation of £682,000 (1999: £265,000) 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 11,326,199 (1999: 11,276,269) ordinary shares which include
    69,783 (1999: 19,853) dilutive potential ordinary shares from executive
    share options.         

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.

7.  Reconciliation of operating profit to net cash (out)/inflow from operating
    activities                            
                                       24 weeks       24 weeks      Financial
                                          ended          ended     year ended
                                   17 June 2000   19 June 1999    31 Dec 1999
                                          £'000          £'000          £'000

Operating profit                          1,031            602          1,776
Depreciation                                686            767          1,576
(Profit) on disposal of fixed assets          -              -             (7)
(Increase)/decrease in stocks            (1,168)          (736)           207
(Increase) in debtors                      (241)        (1,089)        (1,138)
(Decrease)/increase in creditors           (778)           489            429
                                         ------         ------         ------
Net cash (out)/inflow from 
operating activities before 
fundamental restructuring costs            (470)            33          2,843
                                         ------         ------         ------
Cash (outflow) relating to prior 
year fundamental restructuring costs       (137)        (1,284)        (2,050)
                                         ------         ------         ------
Net cash (out)/inflow from 
operating activities                       (607)        (1,251)           793
                                         ======         ======         ======

8.  Analysis of net debt
                                          £'000          £'000          £'000

    Net cash at bank and in hand            692            325          1,103
    Short-term loans                       (940)        (5,117)        (4,880)
    Long-term loans                      (4,690)          (451)          (445)
    Finance leases                         (887)        (1,042)        (1,004)
                                         ------         ------         ------
                                         (5,825)        (6,285)        (5,226)
                                         ------         ------         ------

9.  Reconciliation of net cash flow movement to net debt       

                                          £'000          £'000          £'000

    Net debt at start of the period      (5,226)        (4,626)        (4,626)
    (Decrease) in cash                     (411)        (2,032)        (1,241)
    (Increase)/decrease in 
    borrowings and finance leases          (188)           305            589
    Translation difference                    -             68             52
                                         ------         ------         ------
    Net debt at end of the period        (5,825)        (6,285)        (5,226)
                                         ------         ------         ------

INDEPENDENT REVIEW REPORT TO SWALLOWFIELD PLC

Introduction 

We have been instructed by the Company to review the financial information set
out on pages 4 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 17 June 2000.

Ernst & Young 
Bristol
7 September 2000



                                      

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