Treatt Plc · LSE:TET
Treatt — FY2020 Earnings Presentation
30 slides from Treatt's earnings presentation, November 2020
Slide 1: Results for the Year Ended 30 September 2020
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2020 A TREATT
Slide 2: Strong, Resilient Performance
STRONG, RESILIENT PERFORMANCE FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2020 © Strong results despite COVID-19 related demand disruption Profit before tax and exceptional items increased by 11.3% to £14.8m Gross margin increased by 380bps Dividend for full year increased by 9.1% to 6.00p ® Propo
Slide 3: Delivering Sustainable Growth for Our Stakeholders
DELIVERING SUSTAINABLE GROWTH FOR OUR STAKEHOLDERS © Investing in our core categories Diversifying into new categories * Category management fully embed Pursuing opportunities aligned with our capabilities: ¢ Further align R&D with core categories — bringing New opportunities in hard seltzers - deve
Slide 4: Delivering Sustainable Growth for Our Stakeholders
DELIVERING SUSTAINABLE GROWTH FOR OUR STAKEHOLDERS © Investing in our culture Reducing our environmental impact @ Prot staff with robust health and safety protocols and 74% of our portfolio is natural supporting them with mental health initiatives 92% of our purchased KGs are natural Developing form
Slide 5: Financial Review
FINANCIAL REVIEW
Slide 6: Final Results at a Glance
FINAL RESULTS AT A GLANCE Revenue! £112.2m £112.7m £109.0m £1013m Profit Before Tax'? +11.3% £14.8m Revenue! -3.3% £109.0m 2017 2018 2019 2020 gH 12 Profit Before Tax'2 £148m £13.3m et17m £127m Full Year Dividend +9.1% 6.00p Earnings per Share? +10.7% 19.72p £8.9m £0.0m
Slide 7: 2020 Financial Review
2020 FINANCIAL REVIEW Year ended 30 September Revenue Gross profit Gross profit % Administrative expenses Operating profit Operating profit % Other gains Net finance costs Adjusted profit Exceptional items Profit before taxation Taxation Profit for the year Loss from discontinued operations Profit f
Slide 8: Product Category Performance
PRODUCT CATEGORY PERFORMANCE 4 % GROWTH IN SALES! - 2020 v 2019 20 +16.1% Citrus Health & Wellness Fruit & Vegetables Herbs, Spices & Florals Aroma & HICs 2019 2020 % of Revenue 1 From continuing operations
Slide 9: Sales
SALES 3% 2% 3% 4% r \. a0 4% 3% 9% 25% Flavour Houses m Beverage m Personal Care = Trader/Distributor Food m Chemicals Other GEOGRAPHICAL BREAKDOWN’! = North America w United K ermany
Slide 10: Cash Flow
A CASH FLOW Ty £35.0m £15.9m (£0.2m) £30.0m £25.0m £20.0m £15.0m £10.0m (£20.3m) £5.0m (£3.4m) (£0,1m) (£0,1m) Financing & ; Sth Net Cash! VE 2020 5, £1im Pe UK Site Relocation Capex Operating coh rloy Working Capital Net Cash YE 2019 Other Capex Tax Dividend FX
Slide 11: Financial Metrics
FINANCIAL METRICS Net Operating Margin Increased from 10.8% to 13.8% over the last 4 years Target: 15% Return On Investment (ROI) on UK Relocation Will report ROI from FY2022 Return On Capital Employed (ROCE) 10% placing dilution in 2017 ROCE for FY 2020 - 16.7% Target: 20-25% (post infrastructure i
Slide 12: Market Overview & Strategic Priorities
MARKET OVERVIEW & STRATEGIC PRIORITIES
Slide 13: Partnership Model
PARTNERSHIP MODEL Ranking by Type of No. FY20_ Ranking by \ Revenue Rae Years Categories v Revenue KEY FY20 Traded FYI5—-FY15 1 25 AA ry SaA 6% 1 Type of Products: 2 25 AASOAD 10% 2 3 ro A 66 A 905% 19 4 25 AOSOAS 270% 12 ributor 5 0 A AA 4% 3 6 25 AA 66 AA 19% 4 . AA 7 25 AA 66 44% 6 WN A A Fruit &
Slide 14: Added-Value Solutions
ADDED-VALUE SOLUTIONS Strong growth in margins driven by fruit & vegetables and health & | Driving Gross Margin wellness categories Citrus becoming a more added-value category - reduced dependency on traded and minimally-processed citrus Leveraging existing key customer relationships — cross-selling
Slide 15: Consumer Trends
CONSUMER TRENDS *» Clean-label alcoholic seltzers - driven by health-conscious consumers * Low and no alcohol - increasing as consumer cuts back on alcohol *» Non-alcoholic beverage - $250.5bn in 2021, growing annually by 6.9% (CARG 2020-2025) ® Innovation in Ready-To-Drink (RTD) market drives categ
Slide 16: Alcoholic Seltzer: Significant Growth Opportunity
ALCOHOLIC SELTZER A SIGNIFICANT GROWTH OPPORTUNITY marx Alcoholic, naturally fruit-flavoured sparkling water Low calories - 100 calories or fewer Alcohol volume of around 5% Low calorie Aimed at lifestyle drinkers — increased health carbonated consciousness water with alcohol and Global hard seltzer
Slide 17: UK Site Relocation
UK SITE RELOCATION £36m project -ROI 10-15% - 3 years after completion On budget - remaining spend of £14.6m! Includes £17m investment in plant & machinery, laboratories and new technologies Building construction finished — fit-out underway @ Built to ‘BREEAM Very Good’ standard Completion delayed d
Slide 18: Slide 18
Slide 19: Benefits of UK Relocation
BENEFITS OF UK RELOCATION IMPROVED CLIENT INTERACTION Significantly enhanced customer experience Significantly higher volumes possible Science-led business immediately obvious on arrival - } Modular design - future expansion available customer to see into multiple laboratories from throughout recept
Slide 20: Environmental, Social, Governance - It's in Our DNA
ENVIRONMENTAL - A SOCIAL - GOVERNANCE IT's INOUR DNA © Environmental performance and strategy Governance * Engaged specialist independent consultant to assist with Board strengthened during year development of sustainability strategy and embed throughout business ¢ Sustainable sourcing - natural, tr
Slide 21: Current Trading & Outlook
CURRENT TRADING & OUTLOOK U NEAR TERM °* % Strong start to the new financial year ® COVID-19 disruption expected into 2021 Strong opportunities in North American and China markets @ New Chinese subsidiary planned for next twelve months ® Relocation to new UK Headquarters commencing mid-2021 & Whilst
Slide 22: Medium Term Opportunities
v v v v v MEDIUM TERM OPPORTUNITIES Well placed to capitalise on growing consumer trends around health & wellness - 74% of revenue from natural products Focus on leveraging the advantages of the new UK facility Continue to build on strategic opportunities — providing added value solutions to growing
Slide 23: Appendices
APPENDICES TREATT
Slide 24: Product Categories
Herbs. Spices & Florals Citrus 100% natural ingredients made from the 1 eee ood Treatt’s largest product category 4 Both natural and synthetic offerings create significant market opportunities q D Building on know-how and technical expertise for customer benefit Source, manufacture and supply over 5
Slide 25: 2020 Cash Flow
2020 CASH FLOW Year ended 30 September Operating cash flow Decrease/(Increase) in inventories Decrease/(Increase) in trade and other receivables Other working capital Cash generated from operations Taxation paid Net cash from operating activities Purchase of property, plant & equipment Purchase of i
Slide 26: 2020 Balance Sheet
2020 BALANCE SHEET As at 30 September 2020 £52.7m 1) Fixed asset spend on capital investment programme continues lrieceatetes eset 2) Working capital neutral in the year despite tougher global market conditions site 3) Net cash* remains positive despite £24.8m capital spend in the year 4) IAS 19 pen
Slide 27: Earnings per Share
EARNINGS PER SHARE! a 14.00p 12.00p mwHl mw H2
Slide 28: Dividend per Share
DIVIDEND PER SHARE 7.00p 6.005 5.00) Io 3.50p 3.35p 3.00p 4,00p 2.765 2.60p ; 2.60p 3.00p 2.089 1.94 1.78 2.00p 170p 1.00p 0.00p 2010 2011 2012 2013 2014 2016 2017 2018 2019 2020 nD oo)
Slide 29: Investment Infrastructure
INVESTMENT INFRASTRUCTURE PHASE TIMELINE ® 2017 - initiated £48m Capital Investment Programme Treatt USA Equity fund raise £20m * 2019 - US $15m expansion complete Doubles our capacity for Health & Wellness, Fruit & Vegetables and Tea - currently 20% of Group revenue * 2020 - UK build complete (fit-
Slide 30: Treatt
uw TREATT