FINANCIAL HIGHLIGHTS:
|
|
Financial year ended 30 September 2017 |
Financial year ended 30 September 2016 |
Change |
|
Revenue |
£109.6m |
£88.0m |
+24.5% |
|
Gross Margin |
24.5% |
23.2% |
+130bps |
|
Operating profit* |
£13.8m |
£9.5m |
+44.6% |
|
Adjusted profit before tax* |
£12.9m |
£8.8m |
+45.7% |
|
Adjusted basic earnings per share* |
18.29p |
12.84p |
+42.4% |
OPERATIONAL HIGHLIGHTS:
· New business wins with global FMCG businesses
· 2020 strategic plan delivered three years early
· New five-year strategy now in place
· Continued focus on key growth drivers of citrus, tea and sugar reduction solutions
· Good progress made in regard to our UK site relocation and US expansion
PLACING ANNOUNCEMENT:
· Placing to raise £21.6m through the issue of 5,265,500 new ordinary shares of 2p each in the Company announced 28 November 2017
· Net proceeds of placing to be used to accelerate US expansion and help deliver new UK facilities for the future
Commenting on the results, CEO Daemmon Reeve said:
“Treatt has enjoyed a very strong year with material wins in important growth categories. Once again the team have performed with exceptional skill and determination to deliver a set of results which mark another year of sustainable profitable growth. With our new five-year strategy now in place, colleagues across the Treatt Group are approaching the new financial year with passion and determination.”
Prospects:
The Group has had an encouraging start to the new financial year ending 30 September 2018 with both the UK and US tracking on plan. Furthermore, with order books up compared with the same time last year, the Group continues to perform in line with the Board's expectations for the full year.
CHAIRMAN'S STATEMENT
“This has been an outstanding year for Treatt, with adjusted* profit before tax up by 46%”
Strategic overview
Over the last five years we have reshaped our business and our clear strategic direction has resulted in a consistently strong financial performance. The Group's focus on the key growth drivers in the beverage sector, including innovative citrus, tea and sugar reduction solutions, as well as growth markets such as China and North America, is showing clear signs of success.
As previously reported, 2017 saw the delivery of the financial objectives in our 2020 strategic plan some three years early. The Board has now approved a new five-year strategy which is evolutionary by nature and builds on the success and focus of the business over the past five years.
Notwithstanding our strong growth and market position, we operate in a highly competitive global market, and to build on our success we must continue to invest in our capabilities. As such, and to support the new growth strategy, the Board considers that appropriate levels of capital investment will be required to modernise the Group's operations. Accordingly, the Group plans, as previously announced, to undertake a capital investment programme to expand the Group's US operations and to invest in the Group's UK relocation and expansion plan.
Results
2017 was an outstanding year for Treatt with significant milestones achieved in both sales and profits. For the first time in our history sales exceeded £100m at £109.6m with profit before tax reaching double figures at £12.9m.
Revenue increased in the year by 24.5% to £109.6m (2016: £88.0m) whilst gross profit margin improved by 130bps from 23.2% to 24.5% as our product mix continued to move towards higher value products and services. In constant currency, revenue increased by 18.5% and adjusted* profit before tax grew by 31.5% on a like-for-like basis.
Adjusted* profit before tax of £12.9m grew by 45.7% compared with £8.8m last year, resulting in adjusted* basic earnings per share growth of 42.4% at 18.29p (2016: 12.84p).
Dividends
The Directors propose to pay a final dividend of 3.35p per share (2016: 3.00p), increasing the total dividend for the year by 10.3% to 4.80p (2016: 4.35p). If approved by shareholders at the forthcoming AGM, the final dividend will be payable on 22 March 2018 to all shareholders on the register at the close of business on 9 February 2018. Shareholders who wish to participate in the dividend re-investment plan for this and future dividends should elect to do so by 1 March 2018.
UK site relocation
Outline planning permission for the new ten-acre site at the Suffolk Business Park, Bury St Edmunds, has been granted, the land acquired, and the detailed planning application submitted with approval expected in early 2018. Once the tendering process has taken place, work is expected to commence on the build of the new site in summer 2018 with completion in late 2019.
The site will be a purpose-built, science-led facility designed to drive further growth with domestic and international fast-moving consumer goods companies, as well as to increase our production capacity, thereby creating a scalable business for the longer term.
US site development
Due to its success in recent years, Treatt USA is reaching the limits of its current production capacity. We last expanded capacity at this site in 2011/2012. The Board has now approved further investment in the existing site in Lakeland, Florida which will involve an extension to the manufacturing facilities to accommodate the installation of additional speciality stills. These will allow us to meet customer demand, particularly for two of our fastest growing product categories – tea and sugar reduction. We are also expanding our technical and office facilities to create a more efficient and technical workplace. Construction is underway with completion scheduled for late 2018.
Placing
To part fund this investment programme, we have separately announced an equity placing to raise approximately £21.6m with new and existing institutional investors which is subject to shareholder approval at a general meeting on 18 December 2017.
Corporate governance
We believe strongly in the principles of good corporate governance and regularly undertake reviews to ensure that these are embedded throughout the organisation. This includes making sure that the Board has the breadth of skills and experience needed to optimise the Group's prospects and our responsibilities to all our shareholders, staff, the communities with which we work, the environment, society at large and all stakeholders. A key area of the Board's focus includes defining and communicating our risk appetite and conducting a broad assessment in respect of our business risks in the shorter, as well as the longer term. Significant risks, which are identified by their size of impact and probability of occurrence, are detailed on the Group risk register, which is regularly reviewed by the Board.
People – our strength
We believe adapting to change is essential for the continued growth of our Group, which is why our culture sits firmly at the heart of our strategy. Over time our people continue to adapt to an ever-evolving landscape, whilst never losing sight of our core values. I would like to take this opportunity to thank them for all their hard work and enthusiasm without which I would not be able to report this truly exceptional year for Treatt.
Prospects
The Group has had an encouraging start so far to the new financial year ending 30 September 2018 with both the UK and US tracking on plan. Furthermore, with order books up compared with the same time last year, the Group continues to perform in line with the Board's expectations for the full year.
TIM JONES
Chairman
28 November 2017