Strategic Review Update

Swallowfield PLC
06 April 2004

                                    Swallowfield plc

Update on Strategic Review



We have completed the first phase of our strategic review of the business, which
we discussed at the time of our interim announcement.



This phase of the review focused on actions intended to raise the level of
return generated by the Cosmetics business, and improve the overall
profitability of Swallowfield plc. We have set ourselves a strategic target to
improve return on shareholders equity, measured as profit after tax divided by
year-end shareholders equity, from 6.1% in the last financial year, to a minimum
of 12% in our financial year ending 30th June 2006, with this target increasing
to 15% at the end of the current five-year planning horizon in June 2009.



We operate in an intensely competitive global market place and, the Cosmetics
business in particular, has been subjected to price pressures driven by customer
consolidation, weak global markets and low cost producers based in the Far East.
We have, therefore, concluded that we should reposition Swallowfield plc as a
truly international supplier of contract outsourcing services to the toiletry,
household and cosmetics markets.



To achieve this will require increased concentration on providing customers with
high quality, innovative products by using our design creativity, management and
production skills, in a more cost effective manner. In the past, the Aerosols
and Cosmetics businesses have been managed independently and, consequently, each
business has independent sales and technical functions. In order to improve the
effectiveness of our sales departments and increase the output from our
technical and creative teams, we will combine both businesses into a single
customer-facing organisation.



Production facilities will be maintained at Bideford, for the manufacture of
high quality, short run length and complex cosmetic products. Over the next two
years we will develop a network of partners in lower cost locations to
manufacture less complex products and thereby reduce our UK infrastructure and
total production costs. To facilitate this and increase direct access to sources
of low cost components, we are opening a procurement office in the Peoples
Republic of China. This office, which will operate in partnership with our UK
based procurement teams, will cost approximately £0.2m pa, but is expected to
begin to make a significant net contribution to the Group's results in 18 months
time.



The creation of this single business unit, together with other overhead savings,
should generate savings of £0.4m in the next financial year, and annual savings
of £0.5m thereafter. The cost of making these changes will be approximately
£0.4m and the majority of these costs will be charged against this year's profit
and loss account.



For further information:

Tony Wardell, Chief Executive, Swallowfield plc Tel: [phone]
Barrie Newton, Managing Director, Rowan Dartington & Co. Limited, 
Tel: [phone]




                      This information is provided by RNS
            The company news service from the London Stock Exchange