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20 th AGM 2 nd November 2006 swallowfield AGM 2006 swallowfield plc.

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Presentation on theme: "20 th AGM 2 nd November 2006 swallowfield AGM 2006 swallowfield plc."— Presentation transcript:

1 20 th AGM 2 nd November 2006 swallowfield AGM 2006 swallowfield plc

2 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc SHENA WINNING Chairman Welcoming Address and Opening Remarks

3 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc  The Fire Exits are situated behind you and to your left. If the fire alarm sounds please leave by your nearest exit and members of staff will show you to the assembly point.  Please ensure your mobile phones are switched off.  Questions will be taken after the presentations.  Buffet lunch will be served in this room at the end of the meeting.  There will an opportunity for a factory tour after lunch. More details at the end of the meeting.  Bags with product samples will be handed out at Reception, by the car park, as you leave. Housekeeping

4 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Voting on the proposed resolutions  Corporate Presentation FY2006 Background Financial Results FY2006 Sales & Marketing Update Looking Forward  Questions from the floor Order of the Day

5 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc

6 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To receive and adopt the annual report and accounts for the year ended 30 June 2006 RESOLUTION 1

7 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc 4,155,786 For Against Abstain No Instruction     RESOLUTION 1

8 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To approve the Directors’ Remuneration Report for the year ended 30 June 2006 RESOLUTION 2

9 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,125,716 27,175 3,000 0     RESOLUTION 2

10 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To re-elect S J Winning as a Director RESOLUTION 3

11 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,144,286 1,605 10,000 0     RESOLUTION 3

12 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To re-elect I A Mackinnon as a Director RESOLUTION 4

13 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,140,421 5,470 10,000 0     RESOLUTION 4

14 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To re-elect R T Organ as a Director RESOLUTION 5

15 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,151,286 1,605 3,000 0     RESOLUTION 5

16 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To re-elect P R V Houston as a Director RESOLUTION 6

17 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,140,316 12,575 3,000 0     RESOLUTION 6

18 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To authorise the Directors to determine the remuneration of the auditors RESOLUTION 7

19 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,144,891 10,000 1,000 0     RESOLUTION 7

20 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc To appoint RSM Robson Rhodes LLP as auditors RESOLUTION 8

21 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,147,891 7,000 1,000 0     RESOLUTION 8

22 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc As an Ordinary Resolution, to authorise the Directors to allot relevant securities RESOLUTION 9

23 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,140,671 15,     RESOLUTION 9

24 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc As a Special Resolution, to authorise the Directors to issue equity securities for cash, subject to limitations RESOLUTION 10

25 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,143,041 12,     RESOLUTION 10

26 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc As a Special Resolution, to authorise the Company to purchase its own shares, subject to limitations RESOLUTION 11

27 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc For Against Abstain No Instruction 4,153,691 2,     RESOLUTION 11

28 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc IAN MACKINNON Chief Executive Officer FY2006 Background

29 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Background To FY2006 Results Weak retail environment  Weak market – recognised by industry  Customer pressures remain Inflationary pressures  Oil & Gas based derivatives plus metals  Utility costs – gas & electricity, in particular  Payroll inflation – driven by minimum wage  But early signs of change – customers more interested in new ideas Background to Results

30 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Positives During st phase - “Strategic Positioning”:  Underpin profitability  Strengthen balance sheet  Rebuild confidence  H2 profit > H1 and H2 last year  Net Debt down £1.3m from 30 June 2005  Confidence improving But recognise need for speed and momentum First Phase of Turnaround is Underway

31 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Summary of Progress Since end December 2005 (1). Restructure of Board and Toiletries saves £0.8m pa Moved listing to AIM - reduce future costs Achieved expectations in a still challenging market Recruited new FD Changed bankers to Barclays as part of a competitive tender Restructured Toiletry division functionally based front-end to project defined delivery mechanism New management team in place

32 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Summary of Progress Since end December 2005 (2). Major new cosmetics account up and running Renegotiated employee benefit levels in Toiletry division Continuous improvement activities adding to cost reductions Long-term Chinese manufacturing agreement reached Far East – majority of gift packs; components; first shipments of accessories to UK customers New web-site

33 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Peter Houston Group Finance Director Financial Results FY2006

34 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Full Year Slightly Ahead of Expectations – but More To Do Revenue +13% to £49m Gross profit -2% to £6.2m EBITDA* +14% to £2.1m Operating profit* £0.6m Pre-tax loss £0.45m Loss per share 2.4p No dividend *Pre exceptional items of £563k

35 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Group Performance Pressure on gross margins Focus on efficiencies Overhead savings starting to take effect Full impact in FY2007 Operating profit £0.6m

36 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Toiletries Slow H2 but significant improvement over 2005 Restructuring enhancing profitability for FY2007 Continuous improvement making a positive impact Focus on improving margins and reducing costs

37 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Cosmetics Improved H2 but not consistently profitable Major new customer on board Overheads cut by £0.3m pa since 2006 year-end See later slide for strategy/approach

38 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Net Debt Third year of net debt reduction New bankers (Barclays) with improved facilities Gearing down 10% to 73% Further debt reduction anticipated in FY2007

39 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc JANE FLETCHER Group Sales & Marketing Director Sales & Marketing

40 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc 2006 Review Hard year – increasing margin pressure Continued growth of branded business Development of key new accounts Focused redevelopment of own label Exploiting the Far East office  95% of gift packs sourced via Shanghai Reducing dependency on clothing retail business

41 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Customer Segmentation – move to Brands Customer Segments Reduced dependency on Fashion Retail accounts in 2006 Development of branded business % of Sales Value

42 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Product Segmentation Driving our core skills % of Sales Value

43 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Even Greater Customer Focus Strengthened sales resource ensuring we are driving ‘customer intimacy’ Redeveloped and simplified the product development procedure across all disciplines ensuring the sales team are externally facing Evaluated the existing customer base / targets and rebalanced the business focus:  Drive, Develop, Manage, Service

44 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Product Development Build upon our technical and product strengths:  bag-in-can aerosols, aerosols  pencils  bespoke packaging & gift development Exploit further new product development across the customer base  restructured marketing and creative design centrally Exploit market trends e.g. self-tan

45 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc FY 2007 Strategy Focus on margins and product capabilities Driving added value own label Maximising new opportunities with key accounts Building a portfolio that lessens the impact of seasonal peaks & troughs Continue to reduce our dependency on clothing retail accounts: exploit niche brand opportunities  New accounts in work

46 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc IAN MACKINNON Chief Executive Officer Ongoing Strategy & Looking Forward

47 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Creating and Delivering Solutions for our Customers’ Success Values: Being customer oriented in all our activities Innovation as the key to our success Our people and working together as a team Continuous improvement in everything we do The maintenance of high standards of integrity Accountability The Environment and working safely within it Mission 3 – Vision

48 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Themes to Drive Strategy Profitable Sales Growth People Safety

49 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Cosmetics’ Action Plan Has not earned its cost of capital  Year-end net operating assets of £6.4m  Unlikely to realise by trade sale or wind-up Return on Net Assets - Hurdle rate of 12% before corporate overheads Specific contract opportunities in negotiation  Vigorously pursue combination of profitability improvement & asset realisation to maximise shareholder value  End of Jan set to categorically decide on future plans

50 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Looking Forward Focus on margins and product capabilities will reduce sales in the coming year Profit enhancements coming through to improve operating results – will continue to drive this Next phase of turnaround to start in earnest:  Training and building of team for the future  Looking to extend product capabilities in China from “manufacturing to sourcing”  Focus on profitable sales growth Continue to review balance sheet and operations to reduce net debt and enhance shareholder value

51 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc Questions ?

52 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc

53 20 th AGM – 2 nd November 2006 Creating and Delivering Solutions for Our Customers’ Success AGM 2006 swallowfield plc  All mobile phones, watches, cigarette lighters, jewellery must be removed before entry into the factory.  Safe boxes will be available for storage.  Personal protective equipment must be worn at the times indicated by your guide.  No open-toed shoes permitted in factory Factory Tour Information


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