Interim Results

Treatt PLC 24 May 2004 CHAIRMAN'S STATEMENT 'Treatt USA's first six months were excellent with US Dollar turnover increasing by 54%' The Group saw contrasting fortunes for the US and UK businesses for the six months to 31st March 2004, with Group turnover down by 1% to £15,073,000 (2003: £15,216,000) and profit before tax falling to £792,000 (2003: £955,000). As previously reported, depreciation costs for the Group are now significantly higher, and there was a 3% fall in EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) to £1,363,000 (2003: £1,409,000). Earnings per share have consequently decreased to 5.1 pence per share (2003: 6.5 pence per share). The Board has declared an unchanged interim dividend of 2.7 pence per share (2003: 2.7 pence per share) which is payable on 4th October 2004 to all shareholders on the register at close of business on 3rd September 2004. Treatt USA's first six months were excellent with turnover increasing by 54% in US Dollar terms and profit before tax increased by $744,000, with a widely spread customer base. There was significant growth in our specialty Treattarome(TM) 'From the Named Food' range of products with Treatt USA being particularly well placed to benefit from the high demand for low carbohydrate products. The first half year saw continued investment in Treatt USA with further expenditure on plant and equipment in order to facilitate increased specialty production. It is therefore pleasing to see such a substantial improvement in turnover and profitability only 18 months after moving to the new facilities in Lakeland, Florida. R C Treatt, the Group's UK operating subsidiary, experienced a 9% fall in sales and profits and margins were lower. This was because of the combined impact of the lower US Dollar and weakening orange oil prices which reduced profit before tax by about £500,000, although there was a 15% increase in the volume of orange oil sales. Bearing these factors in mind, the Board believe the performance of R C Treatt was satisfactory, especially in view of the successful implementation of its new Enterprise Resource Planning (ERP) computer system which went live on 1st January this year. The introduction of ERP did result in a great deal of extra work for our employees, and initially there was an impact on our customer service levels, but the company is already seeing significant benefits from the system in terms of improving efficiency and better management information. As we predicted, orange oil prices have fallen over the last six months and are expected to continue to do so following the new Brazilian orange crop beginning in June 2004. Orange oil, however, represents just 22% of the Group's activity. Cash flow for the first half year was strong with Group borrowings falling by £1.5m which was principally due to a reduction in inventory. Net debt was £3.1m and gearing was 18% (2003: 31%), with short term gearing reducing to just 4%. Based upon our current projections the cash flow in the second half should further reduce the overall debt position. Prospects The Board believe that Treatt USA will continue to perform well above original expectations in the second half of the year, and that there will be an improvement in the profitability of R C Treatt. The Group will continue to be affected by volatile orange oil prices. It is, however, too early to confirm confidently that the Group will meet its original forecast for the full financial year. Edward Dawnay Chairman 24th May 2004 TREATT PLC INTERIM STATEMENT For the six months ended 31 March 2004 GROUP PROFIT AND LOSS ACCOUNT Six months Six months Year ended ended ended 31 March 31 March 30 September 2004 2003 2003 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Turnover 1 15,073 15,216 31,683 Cost of Sales (11,382) (11,101) (23,035) ______ ______ ______ Gross profit 3,691 4,115 8,648 Net operating costs Exceptional items - - (139) Other Operating costs (2,791) (3,033) (6,352) ______ ______ ______ Operating profit 900 1,082 2,157 Net interest payable and similar charges (108) (127) (208) ______ ______ ______ Profit on ordinary activities before taxation 792 955 1,949 Tax on profit on ordinary activities 2 (270) (287) (545) ______ ______ ______ Profit on ordinary activities after taxation 522 668 1,404 Dividends (278) (278) (865) ______ ______ ______ Transfer to reserves 244 390 539 ______ ______ ______ Dividends per share 2.7p 2.7p 8.4p Earnings per share - Basic -after exceptional items 3 5.1p 6.5p 13.6p -before exceptional items 3 5.1p 6.5p 14.6p - Diluted 3 5.1p 6.5p 13.6p The financial information set out in this document does not constitute statutory accounts within the meaning of the Companies Act 1985. The figures for the year ended 30 September 2003 are an abridged version of the Group's audited financial statements which have been delivered to the Registrar of Companies. These statements received an unqualified audit opinion. The figures for the six months ended 31 March 2004 and 2003 are unaudited. This interim report was approved by the Board on 21 May 2004. TREATT PLC INTERIM STATEMENT For the six months ended 31 March 2004 GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Six months Six months Year ended ended ended 31 March 31 March 30 September 2004 2003 2003 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Profit for the period before dividends 522 668 1,404 Currency translation differences on foreign currency net investments (479) (16) (246) ______ ______ ______ Total recognised gains and losses 43 652 1,158 ______ ______ ______ TREATT PLC INTERIM STATEMENT For the six months ended 31 March 2004 GROUP BALANCE SHEET As at As at As at 31 March 31 March 30 September 2004 2003 2003 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Tangible fixed assets 9,797 10,098 9,911 Current assets Stocks 9,278 11,144 10,987 Debtors 5,606 6,432 5,439 Cash at bank - restricted 70 227 - - unrestricted 578 219 304 648 446 304 ______ ______ ______ 15,532 18,022 16,730 Creditors: amounts falling due in one year Loan (139) - (150) Bank overdrafts (1,221) (2,838) (2,061) Other creditors (4,244) (4,697) (4,209) ______ ______ ______ (5,604) (7,535) (6,420) ______ ______ ______ Net current assets 9,928 10,487 10,310 Total assets less current 19,725 20,585 20,221 liabilities Creditors: amounts falling due after more (2,375) (3,084) (2,631) than one year Deferred taxation (357) (193) (362) ______ ______ ______ Net assets 16,993 17,308 17,228 ______ ______ ______ Share capital 1,029 1,029 1,029 Share premium account 2,143 2,142 2,143 Profit and loss account 13,821 14,137 14,056 ______ ______ ______ Shareholders' funds 16,993 17,308 17,228 ______ ______ ______ TREATT PLC INTERIM STATEMENT For the six months ended 31 March 2004 GROUP CASH FLOW STATEMENT Six months Six months Year ended ended ended 31 March 31 March 30 September 2004 2003 2003 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Cash inflow from operating activities 2,039 74 2,263 Returns on investments and servicing of finance (108) (127) (208) Taxation (99) (82) (355) Capital expenditure and financial investment (394) (592) (819) Equity dividends paid (282) (277) (860) ______ ______ ______ Cash inflow/outflow before financing 1,156 (1,004) 21 Financing - Decrease in debt - - (162) - Issue of ordinary share capital - 3 4 ______ ______ ______ Increase/(decrease) in cash in the period 1,156 (1,001) (137) ______ ______ ______ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase/(decrease) in cash in the 1,156 (1,001) (137) period Cash outflow from change in net debt - (331) (383) Exchange and other non-cash movements 295 14 141 ______ ______ ______ Increase/(decrease) in net funds in the period 1,451 (1,318) (379) Net debt at 1 October 2003 (4,538) (4,159) (4,159) ______ ______ ______ Net debt at 31 March 2004 (3,087) (5,477) (4,538) ______ ______ ______ TREATT PLC INTERIM STATEMENT For the six months ended 31 March 2004 NOTES TO THE INTERIM STATEMENT Six months Six months Year ended ended ended 31 March 31 March 30 September 2004 2003 2003 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 (1) Turnover by destination United Kingdom 3,410 3,313 6,918 Rest of Europe 4,042 4,626 9,441 The Americas 4,298 3,477 7,649 Rest of the World 3,323 3,800 7,675 ______ ______ ______ 15,073 15,216 31,683 ______ ______ ______ (2) Taxation has been provided at 34.09 per cent (2003: 30.05 per cent) which is the effective group rate currently anticipated for the financial year ending 30 September 2004. (3) (a) Basic earnings per share for the six months ended 31 March 2004 are based on the weighted average number of shares in issue in the period of 10,292,089 (2003: 10,289,970) and earnings of £522,000 (2003: £668,000) being the profit on ordinary activities after taxation. (b) Diluted earnings per share for the six months ended 31 March 2004 are based on the weighted average number of shares in issue in the period, adjusted for the effects of all dilutive potential ordinary shares of 10,292,665 (2003: 10,289,970) and the same earnings as above. (4) The interim financial statements have been prepared on the basis of the accounting policies set out in the Group's 30 September 2003 annual report This information is provided by RNS The company news service from the London Stock Exchange

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