Treatt Plc · LSE:TET
Treatt — FY2022 Earnings Presentation
36 slides from Treatt's earnings presentation, November 2022
Slide 1: Final Results for the Year Ended 30 September 2022
FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2022 Daemmon Reeve — Chief Executive Officer Ryan Govender — Chief Financial Officer
Slide 2: Disclaimer
DISCLAIMER This presentation has been prepared for information purposes only, and does not constitute an offer of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Treatt plc or any of its subsidiary companies
Slide 3: Summary of the Year
2022 SUMMARY OF THE YEAR STRONG revenue growth +12.8% GROWTH in 6 out of 7 categories MARGIN decrease due to Hard Tea, FX and direct inflation COMPLETED 95% of UK site relocation POSITIVE progress in our sustainability agenda
Slide 4: August Update
AUGUST UPDATE REASONS FOR THE DOWNGRADE ADJUSTED PROFIT BEFORE TAX! FY22 (£M) <> eee (£2.5m) (£2.5m) FY Consensus Hard Tea FX Losses Input Costs China FY Revised Trading FY Reported (previous) (not passed on) Lockdown Consensus Actual 1 Exch exceptional items
Slide 5: August Update — Key Learnings & Actions
AUGUST UPDATE — KEY LEARNINGS & ACTIONS INCREASED rigor in sales pricing to support margin discipline ENHANCED business performance & forecasting information SUSTAINABLE supply chain performance IMPROVE FX controls
Slide 6: Re-establish Return
RE-ESTABLISH RETURN GROWTH PLATFORM To GROWTH
Slide 7: Financial Review 2022
op TREATT FINANCIAL REVIEW 2022
Slide 8: 2022 Financial Review: Income Statement
2022 FINANCIAL REVIEW INCOME STATEMENT 2022 2021 Change Year Ended 30 September £'000 £'000 % Key Points: Revenue 140,185 124,326 12.8% Gross profit 39,084 42,223 (7.4%) . . . —— REVENUE growth encouraging in all categories Gross profit margin ce 1% EN0bPs) (except hard tea). Ahead 9% on constant Ad
Slide 9: Sales Performance
SALES PERFORMANCE REVENUE GROWTH IN ALL CATEGORIES (EXCEPT HARD TEA) : Espace “3 ind : & =EE TREAT —S m 2021 m 2022 Iced Tea growth +9% Hard Tea decline (78%) £12.6m _£13.7m e11.6m £12.8m coon £11.0m £13.1m 1 Citrus Synthetic Aromas Fruit & Vegetables Herbs, Spices & Health & Wellness Tea Coffee 9 F
Slide 10: Gross Margin
GROSS MARGIN REVERTS TO MORE NORMALISED LEVELS Gross Margin 2018 - 2022 2022 Gross Margin Analysis 34.0% 29.2% 279% 25.4% j a 2018 2019 2020 2021 2022 2021 Hard Tea —_— FX Losses Direct 2022 Inflation
Slide 11: Administrative Expenses — Investment in Future Growth
ADMINISTRATIVE EXPENSES — INVESTMENT IN FUTURE GROWTH 2022 Admin Expenses £0.6m £23.3m EMPLOYMENT COSTS increases with +10% £0.8m | headcount in 2022 INFLATION relating to salaries and overheads DEPRECIATION higher following investment in innovation and capacity OUTLOOK we do not anticipate signific
Slide 12: Investment in Capex and Inventory
INVESTMENT IN CAPEX AND INVENTORY £17.2m WORKING CAPITAL increase in inventory to strategically manage longer lead-times and inflationary pressures £0.0m NET CAPEX includes relocation project and disposal of old UK site cxErT) Net debt to EBITDA = 1.2x (covenant <2.5x) (£18.5m) Interest cover = 30.5
Slide 13: 2023 Guidance
2023 GUIDANCE RETURN TO GROWTH GUIDANCE SALES GROSS MARGIN ADMIN & OTHER EXPENSES BALANCE SHEET Continued focus on higher margin value-add categories Higher minimum order value Full year effect for depreciation for UK site Normalised capex spend Sales price increase to Margin discipline Maintaining
Slide 14: Medium Term Financial Metrics
MEDIUM TERM FINANCIAL METRICS NET OPERATING MARGIN’ Net Operating Margin 2022 impacted by lower gross margins Medium term target range: 15% - 20% 2018" 2019" 2020' 2021 2022 RETURN ON AVERAGE CAPITAL EMPLOYED! Return On Average Capital Employed 2022 return impacted by decline in profits Investment i
Slide 15: Return to Growth
TREATT RETURN TO GROWTH
Slide 16: Return to Growth: Improving the Foundations
2023 Nw RETURN TO GROWTH IMPROVING THE FOUNDATIONS
Slide 17: Market Insight: Drivers of Growth
MARKET INSIGHT DRIVERS OF GROWTH NATURAL Expanding to incorporate positive sustainability credentials PREMIUM ‘Buying better’ where value is added through increased functionality or other perceived benefits BETTER FOR YOU Sugar/calorie avoidance, positive nutrition, functional benefits, and holistic
Slide 18: Good, Better, Best: Investment in Team
INVESTMENT IN TEAM OVER THE LAST YEAR — ie ail & Innovation Coffee Innovation Coffee Category Coffee Process Coffee cientific Di 4 Officer irector Manager Manager Engineer x2 Buyer UNDERPINNED with internal coffee programme of excellence STRENGTHENING quality of premium product and sourcing CREATING
Slide 19: Coffee
COFFEE NN US COLD BREW coffee in-store category alongside soft drinks, iced tea and energy drinks EXPECTED TO GROW over the next 5 years
Slide 20: Encouraging start to the year
Encouraging start to the year
Slide 21: Thank You
THANK YOU Any QUESTIONS? A u TREATT
Slide 22: Appendices
TREATT APPENDICES
Slide 23: Financial Highlights
FINANCIAL HIGHLIGHTS Le £140.2m 27.9% £15.3m Revenue Gross Margin Profit Before Tax! +12.8% -610bps -27.1% 19.80p 7.85p Earnings Per Share’ Dividend -26.8% +4.7% 23
Slide 24: Record Revenue
RECORD REVENUE £140.2m £124.3m £112.2m £112.7m £109.0m £101.2m e776 £79.5m £72.1m £67.7m £68.0m £73.9m 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 mH mH2
Slide 25: Reversion to Historic H1/H2 Split
REVERSION TO HISTORIC H1/H2 SPLIT PROFIT BEFORE TAX‘? £20.9m 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 mH mH2 Evolution continuing from Traded to Added-Value > sts for FY22 profit before tax and exc
Slide 26: Dividend Per Share 2022
DIVIDEND PER SHARE 2022: +4.70% 7.85p 7.50p 6.00p 5.50p 5.10 4.80p i 4.04 4.35p 04p 3.70p 3.84p 3.10p 5.35p 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 gH mH2
Slide 27: Earnings Per Share
EARNINGS PER SHARE” 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 gH mH2 12018 - 2020 EPS is shawn from cont
Slide 28: 2022 Cash Flow
2022 CASH FLOW Key Points WORKING CAPITAL - outflow driven by investment in inventory; higher year-end receivables with later sales phasing CAPEX £12.8m — including £5.0m of new UK site capex DISPOSAL of Northern Way premises with proceeds of £5.6m NET TAX refunds in year due to capital-related tax
Slide 29: 2022 Balance Sheet
2022 BALANCE SHEET As at As at 30 September 2022 30 September 2021 Fixed assets £77.9m £65.0m Inventories £68.4m £47.3m, Receivables £37.1m £26.4m Payables (£22.9m) (£17.0m) Working capital £82.6m £56.6m Taxation (£4.9m) £1.3m Net (debt)/cash (£22.4m) (£9.1m) Pension asset/(deficit) £1.8m (£6.8m) Ot
Slide 30: Product Categories
i Spices & Fi ci [A Botanical ingredients are growing in With a strong and established - popularity in several markets as background in citrus, our range of | ‘naturalness’ continues to be an natural and synthetic products are _ increasing priority @ # well aligned with consumer tastes Synthetic Aro
Slide 31: Collaboration Model
COLLABORATION MODEL a BUILDING LONG-TERM RELATIONSHIPS FOR ORGANIC GROWTH WITH CUSTOMERS Ranking by Tr f No. Years Ranking by Revenue eee os asa Categories Revenue KEY FY22 0 Customer FYI7 4 4 6 6 4 Type of Products: 44664 © Foor D ‘vesrence 2 «44664 18 YL Atcoroic Beverage — Yl NonAtcohoc Beverage
Slide 32: Revenue Analysis
REVENUE ANALYSIS ROUTES TO MARKET MAJOR TERRITORIES! 40.9% « United States J Europe fi Rest of World —i Flavour Houses fj Direct to Brand Owners i The Americas fj United Kingdom jm China 32 "From continuing activities The Americas (excluding the US) (17 countries) / Rest of the World (35 countries)
Slide 33: Strategic Evolution: Moving Up the Value Chain
STRATEGIC EVOLUTION MOVING UP THE VALUE CHAIN fo Sales: Added-Value v Traded CONTINUED progress in shift away from traded activities REDUCTION on dependency of traded and minimally- processed citrus continues DELIVERING added-value products and solutions through Science & manufacturing technologies
Slide 34: Investment Infrastructure Phase Timeline
INVESTMENT INFRASTRUCTURE PHASE TIMELINE NS 2017 + Equity fund raise £20m our capacity for Health Fruit & Vegetables 2020 TREATT USA 2021 + Potential to treble capacity inuK ©2022 subject to product mix
Slide 35: Sustainability Agenda - Positive Progress
SUSTAINABILITY AGENDA - POSITIVE PROGRESS ESG STRATEGY AND ASSOCIATED KPIS APPROVED BY THE BOARD PEOPLE INTRODUCTION of Labour & Human Rights policy APPOINTED Worldwide Wildlife Fund as global charity COLLABORATED for Great Big Green Week SUPPORTED wages for cost of living COMPLETED US and UK energy
Slide 36: Treatt
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