Interim Results

Treatt PLC 23 May 2005 23 May 2005 Treatt PLC (the 'Group') Interim Results for the six months ended 31 March 2005 CHAIRMAN'S STATEMENT 'Group profits increased sharply to £1.3m due to one-off stock gains' The Group had a highly profitable result for the six months to 31st March 2005, despite Group turnover falling by 2% to £14,713,000 (2004: £15,073,000). As a result of substantial one-off stock gains from citrus oils, EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) rose by 34% to £1,823,000 (2004: £1,363,000) and profit before tax increased to £1,303,000 (2004: £792,000). Earnings per share have consequently increased to 8.9 pence per share (2004: 5.1 pence per share). The Board has decided to restore the split between the final and interim dividends to an approximate 2:1 ratio. Consequently the Board has declared an increase in the interim dividend of 14.8% to 3.1 pence per share (2004: 2.7 pence per share) which will be payable on 3rd October 2005 to all shareholders on the register at close of business on 2nd September 2005. This should not be seen as an indication of a substantial increase in the total dividend for the year. In comparison to last year, the results for the period were significantly influenced by one-off orange oil and grapefruit oil stock gains and the absence of last year's orange stock losses. The orange oil and grapefruit oil gains arose as a result of price increases following last year's exceptionally poor Florida weather patterns. After the sharp falls in orange oil prices experienced last year, the market price of this product firmed in October following the Florida hurricanes. This, coupled with lower than expected production volumes in Brazil, leads us to expect that prices will remain firm during 2005. Treatt USA again performed well, despite turnover falling by 7% in US Dollar terms, generating a 21% increase in profit before tax. This continues the strong performance of Treatt USA over the last two years following the move to the Lakeland premises. As expected, in order to build the infrastructure to support Treatt USA's current and future growth potential, payroll, overhead and depreciation costs rose significantly by 32% to $1.6m (£0.8m). The first half saw sales of the specialty TreattaromeTM 'From the Named Food' range of products remain steady, whilst there were strong sales and margins across a broad range of manufactured citrus products. Treatt USA was also well placed to take advantage of some significant raw material price increases during the first six months of the year. R.C. Treatt, the Group's UK operating subsidiary, experienced a 1% rise in sales, but had higher margins compared to the same period last year, which had been very weak. Whilst the weak US Dollar continues to put pressure on prices and margins, the price of orange oil firmed during the period which contributed to the increase in profits. The combined effect of stronger orange margins and one-off gains contributed more than £250,000 of additional profits to R.C. Treatt during the period. Once these one-off profits are removed, the R.C. Treatt results remain steady in a very competitive climate. Following the £1.2m investment in a new Enterprise Resource Planning system, progress continues to be made to both improve lead times and provide improved service as a 'one-stop shop' for flavour and fragrance ingredients. During the period there was a net cash outflow of £931,000 due to increased investment in stock and the purchase of 200,000 shares in Treatt plc by the Treatt Employee Benefit Trust. As a result, net debt (including the Treatt USA Industrial Development Loan) increased to £2.5 million and gearing was 15% (2004: 18%), with short term gearing remaining low at just 2%. Prospects Treatt USA is expected to perform well in the second half of the year, and profitability at R.C.Treatt will benefit from orange oil prices remaining firm. The Board, therefore, believe that Group profits in the second half will remain strong and now expect that, due in part to the one-off stock gains, full year profit before tax will be in excess of £3 million. Edward Dawnay Chairman 20 May 2005 TREATT PLC INTERIM STATEMENT For the six months ended 31 March 2005 GROUP PROFIT AND LOSS ACCOUNT Six months ended Year ended 31 March 31 March 30 September 2005 2004 2004 (Unaudited) (Unaudited) (Audited) Notes £'000 £'000 £'000 Turnover 1 14,713 15,073 31,809 Cost of Sales (10,314) (11,382) (23,354) ______ ______ ______ Gross profit 4,399 3,691 8,455 Net operating costs Exceptional items - - (70) Other Operating costs (3,042) (2,791) (6,025) ______ ______ ______ Operating profit 1,357 900 2,360 Exceptional profit on sale of fixed assets - - 131 ______ ______ ______ Profit on ordinary activities before interest 1,357 900 2,491 Net interest payable and similar charges (54) (108) (123) ______ ______ ______ Profit on ordinary activities before taxation 1,303 792 2,368 Tax on profit on ordinary activities 2 (408) (270) (669) ______ ______ ______ Profit on ordinary activities after taxation 895 522 1,699 Dividends (308) (278) (893) ______ ______ ______ Transfer to reserves 587 244 806 ______ ______ ______ Dividends per share 3.1p 2.7p 8.8p Earnings per share - Basic - after exceptional items 3 8.9p 5.1p 16.6p - before exceptional items 3 8.9p 5.1p 16.0p - Diluted 3 8.8p 5.1p 16.6p 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 2004 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 2005 and 2004 are unaudited. This interim report was approved by the Board on 20 May 2005. GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSE Six months ended Year ended 31 March 31 March 30 September 2005 2004 2004 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Profit for the period before dividends 895 522 1,699 Currency translation differences on foreign currency net investments (160) (479) (431) ______ ______ ______ Total recognised gains and losses 735 43 1,268 ______ ______ ______ GROUP BALANCE SHEET As at As at As at 31 March 31 March 30 September 2005 2004 2004 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Tangible fixed assets 9,142 9,797 9,536 Current assets Stocks 9,774 9,278 8,355 Debtors 6,224 5,606 6,007 Cash at bank - restricted 70 - 67 - unrestricted - 578 809 67 648 809 ______ ______ ______ 16,065 15,532 15,171 Creditors: amounts falling due within one year Loan (135) (139) (141) Bank overdrafts (291) (1,221) - Other creditors (4,788) (4,244) (4,451) ______ ______ ______ (5,214) (5,604) (4,592) ______ ______ ______ Net current assets 10,851 9,928 10,579 Total assets less current liabilities 19,993 19,725 20,115 Creditors: amounts falling due after more (2,175) (2,375) (2,271) than one year Deferred taxation (511) (357) (519) ______ ______ ______ Net assets 17,307 16,993 17,325 ______ ______ ______ Share capital 1,029 1,029 1,029 Share premium account 2,143 2,143 2,143 Own shares in share trust (723) - (278) Profit and loss account 14,858 13,821 14,431 ______ ______ ______ Shareholders' funds 17,307 16,993 17,325 ______ ______ ______ GROUP CASH FLOW STATEMENT Six months ended Year ended 31 March 31 March 30 September 2005 2004 2004 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Cash inflow from operating activities 918 2,039 4,952 Returns on investments and servicing of finance (54) (108) (123) Taxation (352) (99) (312) Capital expenditure and financial investment (234) (394) (646) Equity dividends paid (881) (282) (861) ______ ______ ______ Cash (outflow)/inflow before financing (603) 1,156 3,010 Financing - Decrease in debt - - (142) - Acquisition of own shares in (445) - (278) share trust ______ ______ ______ (Decrease)/increase in cash in the period (1,048) 1,156 2,590 ______ ______ ______ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (Decrease)/increase in cash in the period (1,048) 1,156 2,590 Cashflow from change in net debt - - 142 Exchange and other non-cash movements 117 295 203 ______ ______ ______ (Decrease)/increase in net funds in the period (931) 1,451 2,935 Net debt at 1 October 2004 (1,603) (4,538) (4,538) ______ ______ ______ Net debt at 31 March 2005 (2,534) (3,087) (1,603) ______ ______ ______ NOTES TO THE INTERIM STATEMENT Six months ended Year ended 31 March 31 March 30 September 2005 2004 2004 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 (1) Turnover by destination United Kingdom 2,907 3,410 6,725 Rest of Europe 4,092 4,042 8,674 The Americas 3,941 4,298 8,756 Rest of the World 3,773 3,323 7,654 ______ ______ ______ 14,713 15,073 31,809 ______ ______ ______ (2) Taxation Taxation has been provided at 31.31 per cent (2004: 34.09 per cent) which is the effective group rate currently anticipated for the financial year ending 30 September 2005. (3) Earnings per share (a) Basic earnings per share for the six months ended 31 March 2005 are based on the weighted average number of shares in issue and ranking for dividend in the period of 10,109,727 (2004: 10,292,089) and earnings of £895,000 (2004: £522,000) being the profit on ordinary activities after taxation. (b) Diluted earnings per share for the six months ended 31 March 2005 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 10,127,653 (2004: 10,292,665) and the same earnings as above. (4) Accounting Policies The interim financial statements have been prepared on the basis of the accounting policies set out in the Group's 30 September 2004 annual report. This information is provided by RNS The company news service from the London Stock Exchange

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