Swallowfield's revenue rises due to new product launches

Beauty and cosmetic products manufacturer Swallowfield’s full year revenue increased due to new product launches and said it was well placed to deal with any economic uncertainty following Brexit.

For the year ended 25 June, revenue grew 10.1% to £54.5m, compared to the previous year, due to product launches where the company partnered with major global brand owners which required the initial launch volumes be produced and sold in the second half of the year.

A stronger euro against the pound reduced sales revenue by £500,000, which was offset by a £400,000 gain on the US dollar, so net revenue growth would have been 10.5% higher than the prior year on a constant currency basis.

Non-executive chairman Brendan Hynes, said: “We have delivered a strong performance in the last financial year and we are confident that our clear strategy leaves us well placed to navigate any potential macro uncertainty in the UK following the result of the referendum on membership of the European Union.

Direct contribution margins increased by 310 basis points to 31.9% due to product category prioritisation, the introduction of a number of new products and the growing contribution from Swallowfield owned brands.

Adjusted operating profit increased by 79% to £1.79m, and profit before tax more than doubled to £1.63m.

Earnings per share rose by 91% to 12.6p.

Net debt narrowed by 20.3% to £4.3m due to absorbing growth from investments in equipment and inventory to support owned brands.

The strategic investment of a 19% shareholding in Shanghai Colour Cosmetics Technology Company was re-valued up by £170,000 based on SCCTC's June 2016 net assets. The initial cost of investment was £140,000 and is now valued at £560,000, which is in addition to the £50,000 dividend income received.

The company's defined benefit pension scheme closed to future accrual and generated a one-off gain of £650,000.

During the year the company raised £8.6m through a share placing on AIM to buy Brand Architekts, which owns and manages premium beauty and personal care brands such as Argan, Happy Natural and DrSalts, on 27 June.

Swallowfield expects the acquisition to provide further opportunities for accelerated growth as it has a pipeline of new products.

The company also said it has successfully integrated The Real Shaving Company brand bought in May 2015 and launched the Bagsy and MR brands in Debenhams and Boots respectively.

Hynes added: “Over the course of the year we have strengthened both sides of our business with an improved ability to deliver the innovation, quality and service requirements of our core business customers alongside the progress made on our owned brands.

“This, combined with the acquisition post year-end of Brand Architekts, which is transformational for our owned brands, gives us confidence that we are well positioned to continue building shareholder value in the short, medium and long term.”

The company proposed a final dividend of 2.3p per share, in addition to the interim dividend of 0.8p already paid, to give a full year dividend of 3.1p, an increase of 55%.

Shares in Swallowfield were up 1.78% to 257p at 0900 BST.