Slide 1: Preliminary Results for Year Ended 30 September 2017
PRELIMINARYRESULTS FOR YEAR ENDED 30 SEPTEMBER 2017 November 2017
Slide 2: Introduction
INTRODUCTION • Full year results in line with upwardly revised market expectations – Revenue up 25% to £109.6m (+19% in CC) – PBT* up 46% to £12.9m (+32% in CC) – EPS* up 42% to 18.29p • Positive trading since year end – order book up year-on-year • Renewed strategic focus on 3 core product areas of
Slide 3: What We Do
WHAT WE DO • We are a science-led ingredients solutions provider in the Flavour & Fragrance market • We predominantly provide added-value products which represent at least 65% of our revenues, with the remainder generated by successfully trading in raw materials • Half of our total sales are direct
Slide 4: Added-Value Solutions
ADDED-VALUE SOLUTIONS Moving up the value chain • Leveraging existing key customer Know-how Driving Gross Margin relationships 25.0% 24.5% • Technical capability and know-how to 24.0% 23.5% 24.5% deliver value-add products and 23.0% 23.2% 22.5% solutions 22.0% 21.5% 22.1% • Changing customer engagem
Slide 5: Geographical Breakdown of Sales and Routes to Market
GEOGRAPHICAL ROUTES TO MARKET BREAKDOWN OF SALES Direct Indirect 3% 2% 2% 4% 48% 33% 22% 39% 5% 19% 7% 9% 7% Indirect via Flavour Houses Personal Care Beverage Chemicals Trader or Distributor Food Other US UK Germany Ireland China Other 5
Slide 6: Product Categories
PRODUCT CATEGORIES Citrus Sugar Reduction • Treatt’s largest product category • Natural flavour of sugar – without carbs or calories • Both natural and synthetic offerings create significant market • Sugar tax / obesity agenda leading opportunities to strong customer demand and growth in size of mar
Slide 7: Income Statement
INCOME STATEMENT 2017 2016 Change Key Points Year ended 30 September £'000 £’000 % 1. Increase across all principal product categories. Revenue 109,627 88,040 +24.5% Growth of 19% in constant currency. Gross Profit 26,808 20,401 2. Stronger margins through increased added-value and Gross Profit %
Slide 8: Cash Flow
CASH FLOW 2017 2016 Key Points Year ended 30 September £'000 £'000 Operating cash flow 16,017 11,076 1. £13m increase in inventory driven by growth in the Increase in inventories (13,607) (2,501) business, higher raw material prices, FX and order books Other working capital 2,273 2,229 Cash genera
Slide 9: Current Trading & Outlook
CURRENT TRADING & OUTLOOK • Order books up year-on-year • Continuing to take market share • Significant new business wins in tea and sugar reduction • Trading in line with Board expectations 9
Slide 10: Investment for the Future
INVESTMENT fer the future y_N uw TREATT
Slide 11: Strategic Focus
STRATEGIC FOCUS Backing Winners • Treatt’s 2020 Strategic 5-year Plan was delivered 3 years early • New 2022 growth plan now in place, driven by citrus, sugar reduction and tea - backing winners: 1. Capital investment is key to support our growth strategy 2. Performance culture and employee engageme
Slide 12: Modernising and Transforming Through Capital Investment
MODERNISING AND TRANSFORMING THROUGH CAPITAL INVESTMENT Investing total of approx. £46m US$14m UK £35m net Capacity-driven investment Once in a generation step-change 12
Slide 13: Meeting International Demand
MEETING INTERNATIONAL DEMAND Treatt USA • New production capacity needed to meet demand and support future growth • Focused on core growth areas of citrus, sugar reduction and tea • Opportunity to upgrade to a more scientific front end • Modular design leaves ability to add further capacity in the f
Slide 14: Expansion: Treatt USA
EXPANSION Treatt USA Investment of US$14m to fund new capital equipment and office and technical facilities Breakdown of Costs* US Expansion Capex Timeline* Land and Buildings US$8.8m Plant and Machinery US$2.9m FY18 $10.8m Contingency US$2.3m FY19 $3.2m Total budget US$14.0m * Estimate 14
Slide 15: Relocation & Expansion: Treatt UK
RELOCATION & EXPANSION Treatt UK • Current site since 1971 – no longer fit for purpose, high regulatory cost and many operational inefficiencies • Completed on new 10-acre site in June 2017 • Located on new Suffolk Business Park which has received government funding and support – outline permission
Slide 16: Enhanced Capabilities
ENHANCED CAPABILITIES Treatt UK Improved client interaction Multiple operational efficiencies • Technical/Technical collaboration • Site logistics • Heightened customer experience of Treatt • Automated warehousing • Collaborative hub space, driving customer • Computer-controlled stills interaction,
Slide 17: Relocation & Expansion: From This to This
RELOCATION & EXPANSION Treatt UK From this: To this*: * Architect’s impression FP to 18
Slide 18: Relocation & Expansion: Cost Breakdown
RELOCATION & EXPANSION Treatt UK Breakdown of Costs* UK Site Capex Timeline* FY17 £4.0m New site acquisition and build cost £26.0m FY18 £14.0m Plant, machinery and technical £13.0m capability enhancements FY19 £21.0m Relocation expenses £1.0m FY20 £1.0m Disposal of current site following (£5.0m) com
Slide 19: Financing
FINANCING • Renewed and extended working capital facilities • Commitment letters* in place: – UK RCF - £15m, 5 year commitment, 1.2% over LIBOR – US construction loan - $11.0m, 10 year term, 1.25% to 2.0% over LIBOR • Equity placing of £21.6m • Net debt to EBITDA leverage expected to peak at 1.8x in
Slide 20: Summary
SUMMARY Backing Winners • Strong track record of growth over last 5 years • Building on positive current trading • New 2022 growth plan driven by continued focus on citrus, sugar reduction and tea • Mix of capacity driven and fit-for-purpose investment 19
Slide 21: Thank You, Any Questions?
THANK YOU “tay Qeestiona? uw TREATT
Slide 22: Appendix
APPENDIX
Slide 23: Flavour Ingredients
FLAVOUR INGREDIENTS • Citrus Oils • Sugar Reduction • Tea Distillates • Other Essential oils • Treattarome® natural distillates • Natural Isolates • Natural Cosmetic Ingredients • Aroma/Specialty Chemicals • Fragrance Ingredients 22
Slide 24: Results at a Glance
RESULTS AT A GLANCE 25% 46% 42% 10% £110m £12.9m 18.29p 4.8p Revenue Profit Before Earnings Dividend Tax* per share* Net Operating Margin* / Revenue £'m Profit Before Tax* £'m £109.6m Return on Capital Employed* 110 15 30.0% £57.8m 14 100 £12.9m 13 24.6% £88.0m 25.0% 24.3% £7.4m 90 £85.9m 12 £47.1m
Slide 25: Balance Sheet
BALANCE SHEET As at 30 September 2017 2016 Key Points Goodwill £2.7m £2.7m 1. Fixed asset increase – land purchase Fixed Assets £15.4m £12.0m 2. Inventory levels higher – growth in business, raw Inventories £42.9m £30.0m material prices and FX Debtors £20.0m £17.9m 3. Pension deficit reduced to
Slide 26: Interim/Final Earnings Per Share
INTERIM/FINAL EARNINGS PER SHARE* 2013-2017 “Consistent Profitable Growth” 20 18 10.60p 16 14 12 8.12p 7.51p 10 6.07p 8 5.78p 7.69p 6 4 4.72p 3.88p 4.21p 2 2.82p 2013 2014 2015 2016 2017 1H 2H * Excludes exceptional items 25
Slide 27: Interim / Final Dividends
INTERIM / FINAL DIVIDENDS 2008-2017 “Progressive Dividend Policy” 6 5 3.35p 3.00p 4 2.76p 2.60p 2.60p 3 2.08p 1.94p 1.78p 1.66p 2 1.52p 1.35p 1.45p 1 1.24p 1.28p 1.02p 1.10p 0.96p 0.72p 0.74p 0.82p 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H 2H 26
Slide 28: Disclaimer
DISCLAIMER This presentation contains confidential information regarding Treatt plc (“Treatt”) including in relation to Treatt's results for the This Presentation is strictly confidential and is being provided to you solely for your information and for use at a presentation to be held financial year
Slide 29: Treatt
u TREATT