Treatt Regulatory News (TET)

TREATT PLC

UNAUDITED HALF YEAR RESULTS

For the six months ended 31 March 2014

CONDENSED GROUP INCOME STATEMENT

Six months ended

Year ended

31 March

31 March

30 September

2014

2013

2013

(Unaudited)

(Unaudited)

(Audited)

Notes

£'000

£'000

£'000

Revenue

5

37,106

33,572

74,097

Cost of sales

(28,691)

(25,967)

(56,510)

______

______

______

Gross profit

8,415

7,605

17,587

Administrative expenses

(5,268)

(5,253)

(10,649)

______

______

______

Operating profit

3,147

2,352

6,938

Loss on disposal of subsidiaries

-

(24)

(60)

Finance revenue

1

43

85

Finance costs

(352)

(363)

(736)

______

______

______

Profit before taxation and exceptional items

2,796

2,008

6,227

Exceptional items

6

(236)

-

(1,093)

______

______

______

Profit before taxation

2,560

2,008

5,134

Taxation

7

(809)

(566)

(1,655)

______

______

______

Profit for the period attributable to owners of the Parent Company

1,751

1,442

3,479

______

______

______

Earnings per share

Basic

8

3.41p

2.82p1

6.80p1

Diluted

8

3.39p

2.81p1

6.77p1

Adjusted basic

8

3.87p

2.82p1

8.64p1

Adjusted diluted

8

3.85p

2.81p1

8.60p1

All amounts relate to continuing operations

The notes on pages 10 to 14 form part of this half year results announcement

1 restated following five for one sub-division of share capital - see note 9

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

Six months ended

Year ended

31 March

31 March

30 September

2014

2013

2013

(Unaudited)

(Unaudited)

(Audited)

£'000

£'000

£'000

Profit for the period

1,751

1,442

3,479

Other comprehensive income/(expense):

Items that may be reclassified subsequently to profit or loss:

Currency translation differences on foreign currency net investments

(367)

681

(180)

Current tax on foreign currency translation differences

3

4

30

Fair value movement on cash flow hedge

(16)

84

546

Deferred tax on fair value movement

(2)

(29)

(135)

______

______

______

(382)

740

261

______

______

______

Items that will not be reclassified subsequently to profit or loss:

Actuarial loss on defined benefit pension scheme

(112)

(594)

(1,058)

Current tax credit on actuarial loss

25

-

72

Deferred tax credit on actuarial loss

-

131

158

______

______

______

(87)

(463)

(828)

______

______

______

______

______

______

Other comprehensive (expense)/income for the period

(469)

277

(567)

______

______

______

Total comprehensive income for the period attributable

to owners of the Parent Company

1,282

1,719

2,912

______

______

______

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

Share capital

Share

premium

Own shares in share trust

Hedging

reserve

Foreign

exchange

reserve

Retained earnings

Total equity

£'000

£'000

£'000

£'000

£'000

£'000

£'000

1 October 2012

1,048

2,757

(736)

(1,033)

635

23,332

26,003

Net profit for the period

-

-

-

-

-

1,442

1,442

Exchange differences net of tax

-

-

-

-

681

4

685

Fair value movement on cash

flow hedge net of tax

-

-

-

84

-

(29)

55

Actuarial loss on defined benefit

pension scheme net of tax

-

-

-

-

-

(463)

(463)

Total comprehensive income

-

-

-

84

681

954

1,719

Transactions with owners:

Dividends

-

-

-

-

-

(1,585)

(1,585)

Share-based payments

-

-

-

-

-

11

11

1 April 2013

1,048

2,757

(736)

(949)

1,316

22,712

26,148

Net profit for the period

-

-

-

-

-

2,037

2,037

Exchange differences net of tax

-

-

-

-

(861)

26

(835)

Fair value movement on cash

flow hedge net of tax

-

-

-

462

-

(106)

356

Actuarial loss on defined benefit

pension scheme net of tax

-

-

-

-

-

(365)

(365)

Total comprehensive income

-

-

-

462

(861)

1,592

1,193

Transactions with owners:

Share-based payments

-

-

-

-

-

11

11

Movement in own shares in share trust

-

-

114

-

-

-

114

Loss on release of shares in

share trust

-

-

-

-

-

(23)

(23)

1 October 2013

1,048

2,757

(622)

(487)

455

24,292

27,443

Net profit for the period

-

-

-

-

-

1,751

1,751

Exchange differences net of tax

-

-

-

-

(367)

3

(364)

Fair value movement on cash

flow hedge net of tax

-

-

-

(16)

-

(2)

(18)

Actuarial loss on defined benefit

pension scheme net of tax

-

-

-

-

-

(87)

(87)

Total comprehensive income

-

-

-

(16)

(367)

1,665

1,282

Transactions with owners:

Dividends

-

-

-

-

-

(565)

(565)

Share-based payments

-

-

-

-

-

15

15

31 March 2014

1,048

2,757

(622)

(503)

88

25,407

28,175

CONDENSED GROUP BALANCE SHEET

As at

31 March 2014

As at

31 March

2013

As at

30 September 2013

(Unaudited)

(Unaudited)

(Audited)

£'000

£'000

£'000

ASSETS

Non-current assets

Goodwill

1,075

1,075

1,075

Other intangible assets

627

763

684

Property, plant and equipment

11,302

12,044

11,718

Deferred tax assets

313

354

278

Trade and other receivables

586

586

586

______

______

______

13,903

14,822

14, 341

______

______

______

Current assets

Inventories

27,127

24,884

23,669

Trade and other receivables

16,234

14,028

13,207

Current tax assets

20

3

128

Derivative financial instruments

-

-

219

Cash and cash equivalents

531

448

1,117

______

______

______

43,912

39,363

38,340

______

______

______

Total assets

57,815

54,185

52,681

______

______

______

LIABILITIES

Current liabilities

Borrowings

(4,634)

(10,851)

(522)

Provisions

(49)

-

(49)

Trade and other payables

(13,028)

(7,155)

(11,292)

Current tax liabilities

(920)

(173)

(621)

______

______

______

(18,631)

(18,179)

(12,484)

______

______

______

Net current assets

25,281

21,184

25,856

______

______

______

Non-current liabilities

Deferred tax liabilities

(958)

(939)

(1,001)

Borrowings

(7,262)

(5,926)

(8,889)

Trade and other payables

(23)

(23)

(23)

Post-employment benefits

(1,588)

(1,346)

(1,589)

Derivative financial instruments

(503)

(949)

(577)

Redeemable loan notes payable

(675)

(675)

(675)

______

______

______

(11,009)

(9,858)

(12,754)

______

______

______

Total liabilities

(29,640)

(28,037)

(25,238)

______

______

______

Net assets

28,175

26,148

27,443

______

______

______

CONDENSED GROUP BALANCE SHEET (continued)

As at

31 March 2014

As at

31 March 2013

As at

30 September 2013

(Unaudited)

(Unaudited)

(Audited)

£'000

£'000

£'000

EQUITY

Share capital

1,048

1,048

1,048

Share premium account

2,757

2,757

2,757

Own shares in share trust

(622)

(736)

(622)

Hedging reserve

(503)

(949)

(487)

Foreign exchange reserve

88

1,316

455

Retained earnings

25,407

22,712

24,292

______

______

______

Total equity attributable to owners of the Parent Company

28,175

26,148

27,443

______

______

______

CONDENSED GROUP STATEMENT OF CASH FLOWS

Six months ended

Year ended

31 March

31 March

30 September

2014

2013

2013

(Unaudited)

(Unaudited)

(Audited)

£'000

£'000

£'000

Cash flow from operating activities

Profit before taxation

2,560

2,008

5,134

Adjusted for:

Foreign exchange loss

-

358

-

Depreciation of property, plant and equipment

614

600

1,219

Amortisation of intangible assets

84

89

181

Loss on disposal of property, plant and equipment

7

1

3

Loss on disposal of subsidiaries

-

24

60

Net finance costs

351

350

714

Share-based payments

15

11

22

Decrease/(increase) in fair value of derivatives

129

-

(129)

Decrease in post-employment benefit obligation

(113)

(86)

(307)

______

______

______

Operating cash flow before movements in working capital

3,647

3,355

6,897

Changes in working capital:

Increase in inventories

(3,728)

(1,980)

(789)

(Increase)/decrease in trade and other receivables

(3,141)

(99)

876

Increase/(decrease) in trade and other payables, and provisions

1,844

(1,737)

2,266

______

______

______

Cash generated from operations

(1,378)

(461)

9,250

Taxation paid

(420)

(47)

(649)

______

______

______

Net cash from operating activities

(1,798)

(508)

8,601

______

______

______

Cash flow from investing activities

Disposal of subsidiaries

-

(10)

(9)

Proceeds on disposal of property, plant and equipment

-

-

2

Purchase of property, plant and equipment

(385)

(735)

(1,433)

Purchase of intangible assets

(28)

(134)

(147)

Interest received

1

13

22

______

______

______

(412)

(866)

(1,565)

______

______

______

CONDENSED GROUP STATEMENT OF CASH FLOWS (continued)

Six months ended

Year ended

31 March

31 March

30 September

2014

2013

2013

(Unaudited)

(Unaudited)

(Audited)

£'000

£'000

£'000

Cash flow from financing activities

(Decrease)/increase in bank loans

(363)

680

(2,223)

Interest paid

(352)

(363)

(736)

Dividends paid

(565)

(1,585)

(1,585)

Net purchase of own shares by share trust

-

-

91

______

______

______

(1,280)

(1,268)

(4,453)

______

______

______

Net (decrease)/increase in cash and cash equivalents

(3,490)

(2,642)

2,583

Cash and cash equivalents at beginning of period

1,095

(1,341)

(1,341)

Effect of foreign exchange rates

(15)

33

(147)

______

______

______

Cash and cash equivalents at end of period

(2,410)

(3,950)

1,095

______

______

______

Cash and cash equivalents comprise:

Cash and cash equivalents

531

448

1,117

Bank borrowings

(2,941)

(4,398)

(22)

______

______

______

(2,410)

(3,950)

1,095

______

______

______

The notes on pages 10 to 14 form part of this half year results announcement

NOTES TO THE UNAUDITED HALF YEAR RESULTS ANNOUNCEMENT

1. Basis of preparation

The Group is required to prepare its half year results in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards (IFRS)). The Group has adopted the reporting requirements of IAS 34 'Interim Financial Reporting'.

The consolidated half year results 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. 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 full set of financial statements under IFRS for the year ending 30 September 2014.

The information relating to the six months ended 31 March 2014 and 31 March 2013 is unaudited and does not constitute statutory accounts. The statutory accounts for the year ended 30 September 2013 have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 of the Companies Act 2006. These half year results for the six months ended 31 March 2014 have neither been audited nor formally reviewed by the Group's auditors.

2. Accounting policies

These half year results have been prepared on the basis of the same accounting policies and presentation set out in the Group's 30 September 2013 annual report, other than for the adoption of IAS 19 (Revised) 'Employee Benefits'.

There were no new standards and amendments to standards which are mandatory and relevant to the Group for the first time for the financial year ending 30 September 2014, including IAS 19 (Revised), which have had a material effect on these half year results.

3. Going concern

As at the date of this report, the Directors have a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. Since the period end all the Group's expiring banking facilities have been renewed on existing or improved terms. Accordingly, the half year results have been prepared on the going concern basis.

The operation of a public company involves a series of risks and uncertainties across a range of strategic, commercial, operational and financial areas. The principal risks and uncertainties that could have a material impact on the Group's performance over the remaining six months of this financial year (for example, causing actual results to differ materially from expected results or from those experienced previously) are the same as those detailed on page 17 of the 2013 Annual Report and Financial Statements.

5. Segmental information

(a) Business segments

IFRS 8 requires operating segments to be identified on the basis of internal financial information reported to the Chief Operating Decision Maker (CODM). The Group's CODM has been identified as the Board of Directors who are primarily responsible for the allocation of resources to the segments and for assessing their performance. The disclosure in the Group accounts of segmental information is consistent with the information used by the CODM in order to assess profit performance from the Group's operations.

The Group operates as one global business segment. The Group is engaged in the manufacture and supply of ingredient solutions for the flavour, fragrance and consumer goods markets with manufacturing sites in the UK, US and Kenya. Many of the Group's activities, including sales, purchasing, manufacturing, technical, IT and finance are now being managed globally on a Group basis.

Six months ended

Year ended

31 March

31 March

30 September

2014

2013

2013

(Unaudited)

(Unaudited)

(Audited)

£'000

£'000

£'000

United Kingdom

4,744

5,130

10,016

Rest of Europe

10,928

8,763

19,837

The Americas

13,136

11,548

26,661

Rest of the World

8,298

8,131

17,583

37,106

33,572

74,097

6. Exceptional items

The exceptional items referred to in the income statement can be categorised as follows:

The exceptional items in the year all relate to non-recurring items. The legal and professional fees relate to the Earthoil earnout contract dispute.

7. Taxation

Taxation has been provided on pre-exceptional profits at 28.9% (six months ended 31 March 2013: 28.2%) which is the effective group rate currently anticipated for the financial year ending 30 September 2014.

NOTES TO THE HALF YEAR RESULTS ANNOUNCEMENT (continued)

NOTES TO THE HALF YEAR RESULTS ANNOUNCEMENT (continued)

9. Dividends

Dividend per share for six months

ended 31 March

20142

20131

20121

2014

2013

Pence

Pence

Restated3

Pence

Restated3

Equity dividends on ordinary shares:

Interim dividend

1.24p

1.10p

1.02p

565

521

Final dividend

N/A

2.60p

2.08p

-

1,064

N/A

3.70p

3.10p

565

1,585

1 Accounted for in the subsequent year in accordance with IFRS.

2 The declared interim dividend for the year ended 30 September 2014 of 6.2 pence was approved by the Board on 16 May 2014 and in accordance with IFRS has not been included as a deduction from equity at 31 March 2014. The dividend will be paid on 17 October 2014 to those shareholders on the register at 12 September 2014 and will, therefore, be accounted for in the results for the year ended 30 September 2015.

3 Following a resolution approved by shareholders on 16 May 2014, the share capital of the Company has been sub-divided on a five for one ratio (i.e. five new 2 pence ordinary shares replacing each existing 10 pence ordinary share) and accordingly, the above numbers have been restated on the basis of the new share capital.

10. Contingent liabilities

As disclosed in note 27 of the 2013 annual report and accounts, the sellers of the Earthoil Group, which was acquired by the Group in April 2008, have filed a claim in the Chancery Division of the High Court against the Group for £1.8m which has subsequently been extended to £2.3m. Following the determination of some preliminary issues in hearings held in November 2013 and February 2014, certain points of law are to be determined by the Court of Appeal towards the end of 2014. Thereafter, hearing of the substantive matters, in respect of the quantum of the claim, will continue. The costs of resolving the dispute currently total £883,000, of which the current year's costs of £236,000 have been included in exceptional items. The total eventual legal and professional fees of the dispute are currently unknown, but are likely to exceed £1m.

11. Related party transactions

Treatt Plc, the Parent Company, entered into the following material transactions with related parties:

31 March

31 March

30 September

2014

2013

2013

(Unaudited)

(Unaudited)

(Audited)

Interest received on loan notes from:

Earthoil Plantations Limited

7

7

14

Earthoil Kenya PTY EPZ Limited

3

3

6

Dividends received from:

R.C.Treatt & Co Limited

563

520

948

Treatt USA Inc

-

654

654

Redeemable loan notes receivable:

Earthoil Plantations Limited

950

950

950

Earthoil Kenya PTY EPZ Limited

400

400

400

Amounts owed to/(by) parent undertaking:

Earthoil Plantations Limited

1,009

127

157

R.C.Treatt & Co Limited

(997)

(524)

297