Interim Results
Treatt PLC
22 May 2006
TREATT PLC INTERIM RESULTS ANNOUNCEMENT - SIX MONTHS ENDED 31 MARCH 2006
Treatt PLC, the manufacturer and supplier of flavour and fragrance ingredients,
primarily from essential oils, announces today its interim results for the six
months ended 31 March 2006.
SUMMARY
• Profit before tax for the period up 26% to £1,621,000 (2005: £1,288,000)
• Group turnover up by 18% to £17,322,000 (2005: £14,713,000)
• EBITDA increased by 18% to £2,164,000 (2005: £1,835,000)
• Interim dividend raised by 10% to 3.4p (2005: 3.1p)
• Absence of last year's one-off stock gains on citrus oil
• Group borrowings up by £1.8m, gearing of 25% (2005: 16%)
Edward Dawnay, Chairman commented:
'The Group has performed excellently over the last six months with both the UK
and US subsidiaries replacing last year's one-off orange and grapefruit profits
with strong sales growth across the Group's highly diversified product range.
The prospects for the remainder of the year are good with Treatt USA expected to
continue its growth with Group profits in the second half expected, as usual, to
be stronger than the first half.'
CHAIRMAN'S STATEMENT
'The Group performed excellently with profits increasing by 26% to £1.6m across
broad product portfolio, in spite of the absence of last year's substantial
one-off stock gains'
The Group had a strong result for the six months to 31 March 2006, with Group
turnover growing by 18% to £17,322,000 (2005: £14,713,000). In spite of the
absence of last year's substantial stock gains from citrus oils, EBITDA
(Earnings before Interest, Tax, Depreciation and Amortisation) rose by 18% to
£2,164,000 (2005: £1,835,000) and profit before tax increased by 26% to
£1,621,000 (2005: £1,288,000). Earnings per share have consequently increased to
11.1 pence per share (2005: 8.7 pence per share).
The Board has declared an increase in the interim dividend of 9.7% to 3.4 pence
per share (2005: 3.1 pence per share) which will be payable on 2 October 2006 to
all shareholders on the register at close of business on 1 September 2006.
The first six months of this financial year saw the Group enjoy increased
profits as a result of sales growth across the broad product range, both in
terms of sales value and volume, as well as an increase in order activity
levels. Margins held up well in spite of the absence of last year's one-off
stock gains from orange and grapefruit oil. Overall, the Group benefited from
increasing prices in both essential oil and aroma chemical products as well as a
slowly strengthening US Dollar, which has moved by 9% compared to the same
period last year. During the period orange oil prices remained firm, well above
their long term historical average, whilst demand for grapefruit oil products
has weakened.
Treatt USA performed well with turnover growing by 22% in US Dollar terms,
although with lower margins profits are slightly down on last year. As
expected, overheads increased compared to the same period last year, which
reflects the impact of last year's investment in Treatt USA's infrastructure in
order to provide the platform for continued growth. Sales of the unique
specialty TreattaromeTM 'From the Named Food' range of products continued to
drive Treatt USA's growth, whilst sales and margins across the broad range of
manufactured citrus products remained steady.
R.C. Treatt, the Group's UK operating subsidiary, had an excellent first six
months with sales growing by 14%, but with slightly lower margins compared to
the same period last year due to the absence of the one-off citrus stock gains
referred to earlier. The main factors contributing to this success were the
continuing process improvements flowing from the Enterprise Resource Planning
(ERP) system, generally increasing commodity prices underpinned by higher energy
prices and increased competitiveness following the introduction of flexible
employee contracts last year. Again, a stronger US Dollar was also advantageous
although this trend has reversed since the end of the period.
During the period there was a net cash outflow for the Group of £2,291,000
largely as a result of increased investment in stock as a consequence mainly of
higher prices. As a result, net debt (including the Treatt USA Industrial
Development Loan) increased to £4.5 million and gearing was 25% (2005: 16%),
with short term gearing of 12% (2005: 2%). Based upon our current projections
the cash flow in the second half is expected to be neutral.
International Financial Reporting Standards (IFRS)
As previously announced, the results for the year ended 30 September 2006 are
the first set of results to be published by Treatt Plc in accordance with IFRS.
Following the publication of restated results for the year ended 30 September
2005, these results confirm that, to date, IFRS has not had a material impact on
the Group's Income Statement and that, as expected, the most significant impact
flows from recognising a pension liability of £2.3m (2005: £2.1m) which has been
offset by a reduction in dividends payable of £0.3m (2005: £0.3m).
Prospects
The Board is of the view that the breadth of the Group's diversified product
range and customer base will result in Treatt USA and R.C. Treatt continuing to
perform well in the second half of the year although US Dollar volatility may
have a negative impact. In the absence of any unforeseen circumstances, the
Board believes that Group profits in the second half will, as usual, be stronger
than in the first half of the year.
Edward Dawnay
Chairman
19 May 2006
TREATT PLC
INTERIM STATEMENT
For the six months ended 31 March 2006
GROUP INCOME STATEMENT
Six months ended Year ended
31 March 31 March 30 September
2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
Notes £'000 £'000 £'000
Revenue 3 17,322 14,713 32,521
Cost of Sales (12,178) (10,314) (21,952)
______ ______ ______
Gross profit 5,144 4,399 10,569
Administrative expenses (3,405) (3,030) (7,020)
______ ______ ______
Operating profit 1,739 1,369 3,549
Finance revenue 99 - 176
Finance costs (217) (81) (319)
______ ______ ______
Profit before taxation 1,621 1,288 3,406
Taxation 4 (508) (405) (1,070)
______ ______ ______
Profit for the year attributable to equity 1,113 883 2,336
shareholders
______ ______ ______
Earnings per share
- Basic 5a 11.1p 8.7p 23.3p
- Diluted 5b 11.1p 8.7p 23.2p
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
Six months ended Year ended
31 March 31 March 30 September
2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
Notes £'000 £'000 £'000
Profit for the period 1,113 883 2,336
Currency translation differences on foreign 99 (160) 123
currency net investments
Actuarial gain/(loss) on defined benefit - - (257)
pension scheme 2b
Deferred tax on actuarial gain/(loss) - - 77
______ ______ ______
Total recognised net income for the period 1,212 723 2,279
______ ______ ______
GROUP BALANCE SHEET
As at As at As at
31 March 31 March 30 September
Notes 2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
Notes £'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 2f 640 840 730
Property, plant and equipment 8,700 8,302 8,644
Deferred tax 521 375 521
______ ______ ______
9,861 9,517 9,895
______ ______ ______
Current assets
Inventories 12,727 9,774 11,395
Trade and other receivables 6,448 6,224 5,718
Cash and cash equivalents 110 67 297
______ ______ ______
19,285 16,065 17,410
______ ______ ______
LIABILITIES
Current liabilities
Bank loans and overdrafts (2,251) (426) (144)
Trade and other payables (3,505) (4,165) (3,934)
Corporation tax payable (420) (315) (589)
______ ______ ______
(6,176) (4,906) (4,667)
______ ______ ______
______ ______ ______
Net current assets 13,109 11,159 12,743
______ ______ ______
Non-current liabilities
Bank loans (2,222) (2,175) (2,179)
Post-employment benefits 2b (3,254) (2,952) (3,239)
______ ______ ______
(5,476) (5,127) (5,418)
______ ______ ______
______ ______ ______
Net assets 17,494 15,549 17,220
______ ______ ______
GROUP BALANCE SHEET (continued)
As at As at As at
31 March 31 March 30 September
Notes 2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
£'000 £'000 £'000
SHAREHOLDERS' EQUITY
Called up share capital 1,029 1,029 1,029
Share premium account 2,143 2,143 2,143
Own shares in share trust (625) (723) (625)
Employee share option reserve 2c 25 9 14
Foreign exchange reserve 2e (600) (982) (699)
Profit and loss account 15,522 14,073 15,358
______ ______ ______
Shareholders' equity 17,494 15,549 17,220
______ ______ ______
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Six months ended Year ended
31 March 31 March 30 September
2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
Notes £'000 £'000 £'000
Total recognised net income for the period 1,212 723 2,279
Dividends 6 (949) (893) (881)
Share based payments 2c 11 7 12
Movement in own shares in share trust - (445) (347)
______ ______ ______
Increase/(decrease) in shareholders' equity 274 (608) 1,063
Shareholders' equity at 1 October 17,220 16,157 16,157
______ ______ ______
Shareholders' equity at period end 17,494 15,549 17,220
______ ______ ______
GROUP CASH FLOW STATEMENT
Six months ended Year ended
31 March 31 March 30 September
2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
£'000 £'000 £'000
Cash flow from operating activities
Profit before taxation 1,621 1,288 3,406
Adjusted for:
Foreign exchange gain/(loss) 64 (100) 104
Depreciation of property, plant and equipment 425 466 963
Loss on disposal of property, plant and equipment - - 135
Share option charge 11 7 12
Pension funding 15 8 38
______ ______ ______
2,136 1,669 4,658
Changes in working capital:
Decrease/(increase) in inventories (1,332) (1,419) (3,040)
Decrease/(increase) in trade and other (730) (217) 288
receivables
Increase/(decrease) in trade and other (429) 846 642
payables
______ ______ ______
Cash generated from operations (355) 879 2,548
Tax paid (677) (352) (812)
______ ______ ______
Net cash from operating activities (1,032) 527 1,736
______ ______ ______
Cash flow from investing activities
Purchase of property, plant and equipment (310) (234) (862)
______ ______ ______
Cash flow from financing activities
Repayment of bank loans - - (144)
Dividends paid (949) (881) (895)
Net acquisition of own shares by Share Trust - (445) (347)
______ ______ ______
(949) (1,326) (1,386)
______ ______ ______
Net decrease in cash and cash equivalents (2,291) (1,033) (512)
Cash and cash equivalents at beginning of period 297 809 809
______ ______ ______
Cash and cash equivalents at end of period (1,994) (224) 297
______ ______ ______
NOTES TO THE INTERIM STATEMENT
(1) Basis of preparation
Prior to 2006 the Group prepared its audited financial statements under UK Generally Accepted
Accounting Principles (UK GAAP). For the year ended 30 September 2006 the Group is required to prepare
its annual consolidated financial statements in accordance with accounting standards adopted for use in
the European Union (International Financial Reporting Standards (IFRS)).
These interim financial statements have been prepared in accordance with the accounting policies set
out below, taking into account the requirements and options in IFRS 1 'First-time adoption of
International Financial Reporting Standards'. The Group has not adopted the reporting requirements of
IAS 34 'Interim Financial Reporting'. The transition date for the Group's application of IFRS is 1
October 2004 and the comparative figures for 31 March 2005 and 30 September 2005 have been restated
accordingly. Reconciliations of the income statement (previously profit and loss account), balance
sheet and cash flow statement from previously reported UK GAAP to IFRS are shown in note 7.
The consolidated interim statements are prepared on the basis of all International Accounting Standards
(IAS) and IFRS published by the International Accounting Standards Board (IASB) that are currently in
issue. An element of uncertainty still surrounds the application of IFRS as the EU may not endorse all
IASB pronouncements, new interpretations may be issued by the International Financial Reporting
Interpretations Committee (IFRIC) on existing standards and best practice continues to evolve. It is
therefore possible that the accounting policies set out below may be updated by the time the Group
prepares its first full set of financial statements under IFRS for the year ending 30 September 2006.
The information relating to the six months ended 31 March 2006 and 31 March 2005 is unaudited and does
not constitute statutory accounts. The comparative figures for the year ended 30 September 2005 are not
the company's statutory accounts for that financial year. The statutory accounts for the year ended 30
September 2005, prepared under UK GAAP, have been reported on by the company's auditors and delivered
to the Registrar of Companies. The report of the auditors was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985. The interim financial statements are
unaudited but have been reviewed by the auditors and their report to the Board of Treatt PLC is set out
at the end of this document.
(2) Accounting Policies
The interim financial statements have been prepared on the basis of the accounting policies set out in
the Group's 30 September 2005 annual report other than the following changes which reflect the
implementation of International Financial Reporting Standards (see note 1):
(a) Presentation of Financial Statements
The primary statements within the financial information contained in this document have been presented
in accordance with IAS 1, 'Presentation of Financial Statements'.
(b) Defined Benefit Pension Scheme
In accordance with IAS 19, 'Employee Benefits', the deficit, net of deferred tax, in the defined
benefit pension scheme for certain UK employees is recognised as a liability of the Group under
non-current liabilities. This was previously disclosed as a note to the financial statements under the
transitional arrangements under FRS17 in accordance with UK GAAP.
In addition, the service cost and expected return on assets net of interest on scheme liabilities is
reflected in the income statement for the period, in place of the actual cash contribution made. All
experience gains or losses on the assets and liabilities of the scheme, together with the effect of
changes in assumptions, is reflected as a gain or loss in the Statement of Recognised Income and
Expense (previously the Statement of Total Recognised Gains and Losses).
(2) Accounting Policies (continued)
(c) Share-based Payments
IFRS 2, 'Share-based Payments', requires that an expense for equity instruments granted be recognised in
the financial statements based on their fair value at the date of grant. This expense, which is in
relation to employee share option schemes for staff in the UK and US, is recognised over the vesting
period of the scheme.
IFRS 2 has been applied to all options granted after 7 November 2002 and not fully vested by 31 March
2006. The Group has adopted the Black Scholes model for the purposes of computing fair value of options
under IFRS.
(d) Post Balance Sheet Events and Dividends
IAS 10, 'Events after the Balance Sheet Date' requires that final dividends proposed after the balance
sheet date should not be recognised as a liability at that balance sheet date, as the liability does not
represent a present obligation as defined by IAS 37, 'Provisions, Contingent Liabilities and Contingent
Assets'. Instead, final dividends for Treatt Plc should only be recognised as a liability once formally
approved at the Annual General Meeting. Furthermore, interim dividends, in accordance with ICAEW
Technical Release 57/05, are no longer recognised as a liability until paid.
The interim and final dividends in relation to the financial years ended 30 September 2004 and 2005 of
£893,000 and £949,000 have, therefore, been reversed in the respective balance sheets and the interim
dividend for the year ended 30 September 2006 of £340,000 (2005: £310,000) will be accounted for in the
results for the year ended 30 September 2007.
(e) Effect of Changes in Foreign Exchange Rates
Under IAS 21, 'The Effects of Changes in Foreign Exchange Rates', cumulative translation differences,
which are recognised in the Statement of Recognised Income and Expense, are separately accounted for
within reserves and are transferred from equity to the income statement in the event of the disposal of a
foreign operation. All such foreign exchange differences arising on the net investment in the Group's US
subsidiary, Treatt USA, since its formation in 1990, have been transferred from the 'Profit and Loss
Reserve' to this newly created 'Foreign Exchange Reserve'.
(f) Computer Software
In accordance with IAS 38 'Intangible Assets' computer software is now required to be disclosed as a
class of intangible assets rather than be included as part of tangible fixed assets, as was the case
under UK GAAP.
(g) Cash Flow
The cash flow statement has been restated to explain the movement in short term cash and cash
equivalents, instead of the movement in total short and long term cash.
(h) IFRS Comparatives
For a reconciliation from UK GAAP to IFRS for prior period comparatives see note 7.
(3) Turnover by destination Six months ended Year ended
31 March 31 March 30 September
2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
£'000 £'000 £'000
United Kingdom 3,118 2,907 6,314
Rest of Europe 4,998 4,092 9,331
The Americas 5,420 3,941 8,816
Rest of the World 3,786 3,773 8,060
______ ______ ______
17,322 14,713 32,521
______ ______ ______
(4) Taxation
Taxation has been provided at 31.3% (2005: 31.4%) which is the effective group rate currently anticipated
for the financial year ending 30 September 2006.
(5) Earnings per share
(a) Basic earnings per share for the six months ended 31 March 2006 are based on the weighted average
number of shares in issue and ranking for dividend in the period of 9,991,890 (2005: 10,109,727) and
earnings of £1,113,000 (2005: £883,000) being the profit after taxation.
(b) Diluted earnings per share for the six months ended 31 March 2006 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 10,041,628 (2005: 10,127,653) and the same earnings as above.
(6) Dividends Six months ended Year ended
31 March 31 March 30 September
2006 2005 2005
(Unaudited) (Unaudited - (Audited -
restated) restated)
£'000 £'000 £'000
Equity dividends on ordinary shares:
Interim dividend for year ended 30 September 2004 - 2.7p - 278 278
Final dividend for year ended 30 September 2004 - 6.1p - 615 615
Interim dividend for year ended 30 September 2005 - 3.1p 310 - -
Final dividend for year ended 30 September 2005 - 6.4p 639 - -
Over accrual from previous year - - (12)
______ ______ ______
949 893 881
______ ______ ______
The declared interim dividend for the year ended 30 September 2006 of 3.4p was approved by the Board on
19 May 2006 and in accordance with IFRS has not been included as a deduction from equity at 31 March
2006. The dividend will be paid on 2 October 2006 to those shareholders on the register at 1 September
2006 and will, therefore, be accounted for in the results for the year ended 30 September 2007.
(7) IFRS reconciliation of prior period comparatives
(a) Income Statement for the six months ended 31 March 2005
UK GAAP IFRS IFRS
Notes 31/03/2005 Adjustments 31/03/2005
£'000 £'000 £'000
Revenue 14,713 14,713
Cost of sales (10,314) (10,314)
Gross profit 4,399 - 4,399
Administrative expenses 2b,c (3,042) 12 (3,030)
Group operating profit 1,357 12 1,369
Finance revenue - -
Finance costs 2b (54) (27) (81)
Profit before tax 1,303 (15) 1,288
Taxation (408) 3 (405)
Profit for the year attributable to equity shareholders 895 (12) 883
Earnings per share - basic 8.9p 8.7p
Earnings per share - diluted 8.8p 8.7p
(7) IFRS reconciliation of prior period comparatives (continued)
(b) Statement of recognised income and expense for the six months ended 31 March 2005
UK GAAP IFRS IFRS
Notes 31/03/2005 Adjustments 31/03/2005
£'000 £'000 £'000
Profit for the period 895 (12) 883
Currency translation on foreign currency net investment (160) (160)
Total recognised net income for the period 735 (12) 723
(c) Income Statement for the year ended 30 September 2005
UK GAAP IFRS IFRS
Notes 30/09/2005 Adjustments 30/09/2005
£'000 £'000 £'000
Revenue 32,521 32,521
Cost of sales (21,952) (21,952)
Gross profit 10,569 - 10,569
Administrative expenses 2b,c (7,023) 3 (7,020)
Group operating profit 3,546 3 3,549
Finance revenue 176 176
Finance costs 2b (266) (53) (319)
Profit before tax 3,456 (50) 3,406
Taxation (1,082) 12 (1,070)
Profit for the year attributable to equity shareholders 2,374 (38) 2,336
Earnings per share - basic 23.7p 23.3p
Earnings per share - diluted 23.6p 23.2p
(d) Statement of recognised income and expense for the year ended 30 September 2005
Profit for the financial year 2,374 (38) 2,336
Currency translation on foreign currency net investment 123 123
Actuarial loss on defined benefit pension 2b - (257) (257)
scheme
Deferred tax on actuarial loss - 77 77
Total recognised net income for the period 2,497 (218) 2,279
(7) IFRS reconciliation of prior period comparatives (continued)
(e) Balance Sheet for the six months ended 31 March 2005
UK GAAP IFRS IFRS
Notes 31/03/2005 Adjustments 31/03/2005
£'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 2f - 840 840
Property, plant and equipment 9,142 (840) 8,302
Deferred tax 2b - 375 375
9,142 375 9,517
Current assets
Inventories 9,774 9,774
Trade and other receivables 6,224 6,224
Cash and cash equivalents 67 67
16,065 0 16,065
LIABILITIES
Current liabilities
Bank loans and overdrafts (426) (426)
Trade and other payables 2d (4,473) 308 (4,165)
Corporation tax payable (315) (315)
(5,214) 308 (4,906)
Net current assets 10,851 308 11,159
Non-current liabilities
Bank loans (2,175) (2,175)
Post-employment benefits 2b - (2,952) (2,952)
Deferred tax liabilities (511) 511 -
(2,686) (2,441) (5,127)
Net assets 17,307 (1,758) 15,549
SHAREHOLDERS' EQUITY
Called up share capital 1,029 1,029
Share premium account 2,143 2,143
Own shares in share trust (723) (723)
Employee Share Option Reserve 2c - 9 9
Foreign Exchange Reserve 2e - (982) (982)
Retained earnings 2b,c,d,e 14,858 (785) 14,073
Total Shareholders' Equity 17,307 (1,758) 15,549
(7) IFRS reconciliation of prior period comparatives (continued)
(f) Balance Sheet for the year ended 30 September 2005
UK GAAP IFRS IFRS
Notes 30/09/2005 Adjustments 30/09/2005
£'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 2f - 730 730
Property, plant and equipment 9,374 (730) 8,644
Deferred tax 2b - 521 521
9,374 521 9,895
Current assets
Inventories 11,395 11,395
Trade and other receivables 5,718 5,718
Cash and cash equivalents 297 297
17,410 0 17,410
LIABILITIES
Current liabilities
Bank loans and overdrafts (144) (144)
Trade and other payables 2d (4,883) 949 (3,934)
Corporation tax payable (589) (589)
(5,616) 949 (4,667)
Net current assets 11,794 949 12,743
Non-current liabilities
Bank loans (2,179) (2,179)
Post-employment benefits 2b - (3,239) (3,239)
Deferred tax liabilities (451) 451 -
(2,630) (2,788) (5,418)
Net assets 18,538 (1,318) 17,220
SHAREHOLDERS' EQUITY
Called up share capital 1,029 1,029
Share premium account 2,143 2,143
Own shares in share trust (625) (625)
Employee Share Option Reserve 2c - 14 14
Foreign Exchange Reserve 2e - (699) (699)
Retained earnings 2b,c,d,e 15,991 (633) 15,358
Total Shareholders' Equity 18,538 (1,318) 17,220
(7) IFRS reconciliation of prior period comparatives (continued)
(g) Cash Flow for the six months ended 31 March 2005
UK GAAP IFRS IFRS
Notes 31/03/2005 Adjustments 31/03/2005
£'000 £'000 £'000
Cash flow from operating activities
Profit before taxation 1,303 (15) 1,288
Adjusted for:
Foreign exchange gain/(loss) 2g 2 (102) (100)
Depreciation of property, plant and equipment 466 466
Share option charge - 7 7
Pension funding - 8 8
1,771 (102) 1,669
Changes in working capital:
Decrease/(increase) in inventories (1,419) (1,419)
Decrease/(increase) in trade and other (217) (217)
receivables
Increase/(decrease) in trade and other 846 846
payables
Cash generated from operations 981 (102) 879
Tax paid (352) (352)
Net cash from operating activities 629 (102) 527
Cash flow from investing activities
Purchase of property, plant and equipment (234) (234)
Cash flow from financing activities
Dividends paid (881) (881)
Net acquisition of own shares by share trust (445) (445)
(1,326) 0 (1,326)
Net decrease in cash and cash equivalents (931) (102) (1,033)
Cash and cash equivalents at beginning of 2g (1,603) 2,412 809
period
Cash and cash equivalents at end of period (2,534) 2,310 (224)
The effect of transition on the cash flow noted above relates to changes in the 31/03/2005
composition of cash and cash equivalents as detailed below: £'000
Reconciliation of cash flow for period to 31 March 2005
Net debt under UK GAAP (2,534)
Long term loans excluded from cash and cash equivalents 2,310
Cash and cash equivalents under IFRS (224)
Cash and cash equivalents consist of:
Cash at bank 67
Bank overdraft (291)
(224)
(7) IFRS reconciliation of prior period comparatives (continued)
(h) Cash Flow for the year ended 30 September 2005
UK GAAP IFRS IFRS
Notes 30/09/2005 Adjustments 30/09/2005
£'000 £'000 £'000
Cash flow from operating activities
Profit before taxation 3,456 (50) 3,406
Adjusted for:
Foreign exchange gain/(loss) 2g 49 55 104
Depreciation of property, plant and equipment 963 963
Loss on disposal of property, plant and equipment 135 135
Share option charge - 12 12
Pension funding - 38 38
4,603 55 4,658
Changes in working capital:
Decrease/(increase) in inventories (3,040) (3,040)
Decrease/(increase) in trade and other 288 288
receivables
Increase/(decrease) in trade and other 642 642
payables
Cash generated from operations 2,493 55 2,548
Tax paid (812) (812)
Net cash from operating activities 1,681 55 1,736
Cash flow from investing activities
Purchase of property, plant and equipment (862) (862)
Cash flow from financing activities
Repayment of bank loans 2f (144) (144)
Dividends paid (895) (895)
Net acquisition of own shares by share trust (347) (347)
(1,242) (144) (1,386)
Net decrease in cash and cash equivalents (423) (89) (512)
Cash and cash equivalents at beginning of 2g (1,603) 2,412 809
period
Cash and cash equivalents at end of period (2,026) 2,323 297
The effect of transition on the cash flow noted above relates to changes in the 30/09/2005
composition of cash and cash equivalents as detailed below: £'000
Reconciliation of cash flow for period to 30 September 2005
Net debt under UK GAAP (2,026)
Long term loans excluded from cash and cash equivalents 2,323
Cash and cash equivalents under IFRS 297
Cash and cash equivalents consist of:
Cash at bank 297
INDEPENDENT REVIEW REPORT TO TREATT PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 March 2006 which comprises the Consolidated Income
Statement, Consolidated Balance Sheet, Consolidated Statement of Changes in
Shareholders' Equity, Consolidated Cash Flow Statement, Consolidated Statement
of Recognised Income and Expense and the related notes 1 to 7. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report, including the conclusion, has been prepared for, and only for, the
company for the purpose of the Listing Rules of the Financial Services Authority
and for no other purpose. We do not, therefore, in producing this report,
accept or assume responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come, save where expressly
agreed by our prior consent in writing.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority.
As disclosed in note 1, the next annual financial statements of the group will
be prepared in accordance with those IFRSs adopted for use by the European
Union. This interim report has been prepared in accordance with the
requirements of IFRS 1, 'First Time Adoption of International Financial
Reporting Standards'.
The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the disclosed accounting policies have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit and therefore
provides a lower level of assurance. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2006.
BAKER TILLY
Registered Auditor
Chartered Accountants
Abbotsgate House
Hollow Road
Bury St Edmunds
Suffolk
IP32 7FA
19 May 2006
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