Treatt Plc · LSE:TET
Treatt — FY2016 Earnings Presentation
20 slides from Treatt's earnings presentation, November 2016
Slide 1: Treatt plc Preliminary Results
Treatt plc Preliminary Results for the year ended 30 September 2016 Daemmon Reeve - Chief Executive Officer Richard Hope - Finance Director
Slide 2: Agenda
Agenda • Executive Summary • Results at a glance • Financial Review • Our Strategy • Commercial Review • Future Developments • Current Trading & Outlook 2
Slide 3: Executive Summary
Executive Summary • 2020 strategic plan on track • Improved margins • Better Q1 than prior year and strong momentum in Q4 • Adverse FX impact of £0.5m • Year on year cash flow improvement • Growth in sales of Citrus and Sugar Reduction products 3
Slide 4: Results at a Glance
Results at a Glance Year ended 30 September 2015 2016 Revenue £'m 90 £85.9m £88.0m Revenue £85.9m £88.0m 80 £74.0m £74.1m £79.2m £44.5m £47.1m £42.1m 70 £38.0m £40.5m 2H EBITDA* £10.1m £11.0m 60 50 1H Profit before tax * £8.0m £8.8m 40 £41.4m £40.9m 30 £36.0m £33.6m £37.1m Earnings per share * 11.94
Slide 5: Key Performance Indicators
Key Performance Indicators 11% 7.5% 2016 £8.8m 2016 12.84p 2015 £8.0m 2015 11.94p Profit Before Tax Earnings per share 2015 2016 Net operating margin 10.1% 10.8% Return on capital employed 22.1% 24.6% Average net debt to EBITDA 0.78 x 0.35x 5
Slide 6: 2016 Financial Review: Income Statement
2016 Financial Review Income Statement 2015 Change 2016 Key Points £'000 % £'000 1. Increase in value-added revenue offset by Revenue 85,934 +2.45% 88,040 reduction in traded business Gross Profit 18,979 20,401 2. Stronger margins through increased added- value and process improvement Gross Profit
Slide 7: 2016 Financial Review: Balance Sheet
2016 Financial Review Balance Sheet As at 30 September 2015 2016 Key Points Goodwill £1.1m £2.7m 1. Increase in Goodwill following Earthoil settlement Fixed Assets £11.7m £12.0m 2. Inventory levels higher due to raw Inventories £25.8m £30.0m materials prices and FX Debtors £17.6m £17.9m 3. Pensi
Slide 8: 2016 Financial Review: Cash Flow
2016 Financial Review Cash Flow 2015 2016 Key Points £'000 £'000 1. Strong operating cash flow with improved Net cash from operating activities 7,198 8,782 cash conversion Cash flow from investing activities 2. Lowest net debt since 2005 Investments in subsidiaries - (752) Purchase of property, plan
Slide 9: Cash Performance
Cash Performance Net Debt £'m 14 12 10 • Free Cash Flow £8.0m (2015: £6.2m) 8 • Cash Conversion 84% 6 (2015: 71%) 4 2 0 2012 2013 2014 2015 2016 9
Slide 10: Interim/Final Earnings per Share
Interim/Final Earnings per Share 2012-2016 “Consistent Profitable Growth” 14p 8.12p 12p 7.73p 10p 6.07p 8p 5.78p 4.88p 6p 4p 4.72p 4.21p 3.88p 2p 2.82p 2.02p p 2012 2013 2014 2015 2016 1H 2H 10
Slide 11: Interim / Final Dividends
Interim / Final Dividends 2007-2016 “Progressive Dividend Policy” 5p 3.00p 4p 2.76p 2.60p 2.60p 3p 2.08p 1.94p 1.78p 1.66p 2p 1.46p 1.52p 1.28p 1.35p 1p 1.24p 1.02p 1.10p 0.96p 0.74p 0.82p 0.70p 0.72p p 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H 2H 11
Slide 12: Growth Map
Growth Map Sugar Reduction R&D Insight Citrus Ingredient Solutions Sales Unlocking Giving & Further Customer Marketing Opportunities Advantage Imitating Nature Natural Applications Distillates 12
Slide 13: 2020 Strategic Plan
2020 Strategic Plan “To deliver sustainable growth in profits in the flavour, fragrance and FMCG markets” COLLABORATIVE CULTURE 13
Slide 14: Product Innovation
Product Innovation • Major drive to reduce sugar in soft drinks • Launching new tea varietals in global ready to drink market • Expanding High Impact Chemical uses • Launching new Natural Aqueous Distillates • Process reviews to further enhance innovation 14
Slide 15: Commercial Review
Commercial Review • Growth in margins driven by strategic focus • Increase investment in R&D and Technical capabilities – Sugar Reduction and Citrus • China expansion – enhanced capabilities and strong team • Emphasis on people, staff engagement and culture - key drivers of business success • Eartho
Slide 16: Customer Industry Sectors
Customer Industry Sectors Sales Sales Trader or Distributor 2% Chemicals Food Other Beverages 4% 2% 3% 19% Personal Care Flavour & Fragrance 19% 51% 16
Slide 17: Future Developments
Future Developments Key drivers of growth: • UK site relocation • Targeting strong growth in China • Enhanced customer facing technical infrastructure in US • Increased headcount investment in revenue driving areas 17
Slide 18: UK Site Relocation
UK Site Relocation • 10 acre site in Bury St Edmunds • Planning and regulatory consent expected to take 6-9 months • We will update shareholders as plans progress • Total project costs of: Land, buildings, and move costs £20m - £26m Capital projects held back over the last three years £3m - £5m Upgr
Slide 19: Current Trading & Outlook
Current Trading & Outlook • Q1 momentum continues with solid revenues • Further margin gains • Order books up year on year • Positive FX impact of stronger US Dollar • Significant increase in sales from China • Earthoil growth to continue following increased capacity • Improved cash performance to c
Slide 20: www.treatt.com
www.treatt.com