Pental Limited Investor Presentation. Charlie McLeish, CEO Josephine De Martino, CFO. Trusted Brands Since 1856 Pental Limited 1

Transcription

1 Pental Limited 2018 Investor Presentation Charlie McLeish, CEO Josephine De Martino, CFO Trusted Brands Since 1856 Pental Limited 1

2 Agenda Pental Overview Business Review Financial Performance Business Outlook Trusted Brands Since 1856 Pental Limited 2

3 Pental Overview Trusted Brands Since 1856 Pental Limited 3

4 Our Vision To be a leading supplier of shelf stable products to its chosen markets, built around a reputation of delivering quality, innovation and sustainability to the satisfaction of customer needs whilst enhancing shareholder value. We are active in developing new products to grow market share and building strong, ongoing relationships with our customers and suppliers. Trusted Brands Since 1856 Pental Limited 4

5 Pental People Peter Robinson Non Executive Independent Chairman Mel Sutton Non Executive Vice Chairman John Rishworth Non Executive Independent Director John Etherington Non Executive Independent Director Kimberlee Wells Non Executive Independent Director Oliver Carton Company Secretary Senior Executive Management Substantial Shareholders (1) Alan Johnstone % John Homewood % Allan Gray Australia Pty Ltd (2) % Elevation Capital Management LTD 8.28 % Charlie McLeish CEO Josephine De Martino CFO (1) As at 22 August 2018 (2) Allan Gray Australia Pty Ltd has a relevant interest in shares held by a number of investment institutions including Citicorp Nominees Pty Limited, JP Morgan Nominees Australia Limited and National Nominees Limited amounting to 13.43% of the total issued capital of Pental Ltd. Trusted Brands Since 1856 Pental Limited 5

6 PEOPLE Trust & Development Compassion, honesty and consistency Empower, trust and support others Encourage positive can-do attitudes Work as one team, communication Foster personal growth and career development, success QUALITY Quality Control Immensely proud of our quality Accountability for achieving business objectives Agile, flexible and welcome change Long-term focus and plan for a sustainable future INNOVATION Embracing New Ideas Dare to be different Challenge the status quo Encourage fresh ways of working Maximise consumer insights SAFETY #1 Priority Core Values Zero harm objective Proactive in hazard identification Maintain clean and safe equipment CUSTOMERS Heart of Our Business Build trusted and recognised brands Develop lasting relationships Responsive to their needs Provide outstanding value Pride in delivering the best products on time Trusted Brands Since 1856 Pental Limited 6

7 FY18 Business Review Financial Performance Business Outlook Trusted Brands Since 1856 Pental Limited 7

8 What we said Delivering the FY18 Strategy 1 Driving Sales Growth Value Add Promotions Defend our position Strong Customer Relationships SKU Review 2 Develop New Products and Sales 3 Value Added Projects Explore New Agencies New Product Categories What We Said Channels 5 Key Focus Areas Fill the pipeline Brand Protection Grow Margin Contribution 4 Export Market Grow New Zealand China Strategy Enter Vietnam Explore other Market Opportunities 5 Manufacturing Continuous Improvement Enhance preventative maintenance processes. Drive Out Costs. Trusted Brands Since 1856 Pental Limited 8

9 Business Scorecard No.1 Position Net Working Capital down $2.665 million on FY17 90% Average Production Line Efficiency up 6% on FY 17 Debt Free Trusted Brands Since 1856 Pental Limited White King Liquid Bleach 2.5 litre Lemon Bleach 97% DIFOT/Fill Rates up 6% on FY17 No. 2 Position White King Power Toilet Gels $7.045 M Closing Net Cash Position $576k Profit Delivery Projects 95% Production Labour Efficiency up 7% on FY 18 *Aztec ranking report summary AUD$ MAT to 24/6/18 9

10 FY18 Sales and Marketing Sales Performance Brand and Product Strategy We Invested in defending our market share and shelf space within the Household Cleaning Category. FY18 was a year of cementing and aligning top to top strategies and relationships with key customer management and their teams. New pack designs and formats developed for the Asia market Requirements. (Smaller, Compact) Ensured all Trade Promotions were effective. Continued Pental Brand consolidation strategy with the plan to focus on Core brands. This Strategy will result with Pental having 4 key Retail Brands to support with Advertising and Promotion White King/Janola Country Life Softly Sunlight Strengthen our R&D Technical Resources who are developing new products for the market as well as enhancing our current product range. Trusted Brands Since 1856 Pental Limited 10

11 FY18 Operation Performance Distribution Improvements Warehouse improvements Manufacturing Improvements Delivery Accuracy Up 6% on previous year 12% Savings in renegotiating sea freight cost for exports Productivity Up 5% on previous year 100% Picking Accuracy Warehouse controls Line Efficiency up 6% and Labour efficiency up 7% on previous year Quality issues 11% Reduction on previous year Best in Class Trusted Brands Since 1856 Pental Limited 11

12 Business Review FY 18 Financial Performance Business Outlook Trusted Brands Since 1856 Pental Limited 12

13 Financial Performance Key Consolidated Income Statement Items $ 000 FY 18 FY 17 Change % Gross Sales (GSV) 108, ,660 (9,233) (7.85%) Trade Spend & Rebates (32,760) (32,536) (224) (0.69%) Net Sales 75,667 85,124 (9,457) (11.11%) Trade Spend & Rebates to GSV 30.21% 27.65% (2.56%) (9.26%) Underlying EBITDA 7,342 11,923 (4,581) (38.42%) Underlying EBITDA to GSV 6.77% 10.13% (3.36%) Depreciation (3,559) (3,376) (183) (5.42%) Underlying EBIT 3,783 8,547 (4,764) (55.74%) Underlying EBIT to GSV 3.49% 7.26% (3.78%) Underlying net profit after tax 2,602 5,962 (3,360) (56.36%) Significant items (net of tax)* (30,441) (112) Reported (Loss) / Profit after tax (27,839) 5,850 (33,689) (100.00%) Underlying basic earnings per share in cents (2.47) (56.36%) Reported basic (loss) / earnings per share in cents (20.43) 4.29 (24.73) (100.00%) Total Dividend (interim & final) Per Share in cents (1.75) (53.85%) Gross Sales down 7.85% Market has undergone a significant transformation Deep and overlapping price reduction campaigns 9.03 % increase in Trade spend to Gross sales ratio. Invest to defend market share & shelf space Rigorous Cost Control $0.576 million profit delivery projects $1 million annualised savings generated from employee restructure undertaking over the second half of FY18 to be realised in FY19 Goodwill Impairment $ Million (Non Cash) Changing market trading environment Resolution of ACCC Dispute (Net of Tax) $995k Penalty $700k & Legal Fees $295k FY 18 full year Dividend payout ratio 78.5% on Underlying net profit after tax ** FY18 Dividend payout ratio greater than full year FY17 (74.3%) and FY16 (71.4%) dividend payout ratio s on underlying net profit after tax. *FY18 Significant items include impairment of goodwill $ million and costs relating to resolution of ACCC dispute $1.121 million (penalty and legal fees) adjusted for income tax. Impairment of goodwill $ million and ACCC penalty $0.700 million are not tax deductible. Trusted Brands Since 1856 Pental Limited 13

14 Financial Performance Key Statement of Financial Position Items $ 000 FY 18 FY 17 Change ASSETS Cash 7,045 11,660 (4,615) Trade and other receivables 19,280 23,613 (4,333) Inventories 10,970 10, Property, plant and equipment 23,688 18,865 4,823 Goodwill and other intangible assets 14,728 44,311 (29,583) Other Total Assets 76, ,081 (32,867) LIIABILITIES Trade and other payables 16,247 17, Current tax payable Employee and other provisions 1,855 1, Cash movement refer to Cash flow analysis. Acquisition of Shepparton Site out of existing cash funds. Pental remains Debt Free. Key Brand Values sustained due to Trade Spend Investment.eg White King Renewed focus on Debtor and Inventory Management. Deferred Tax Liabilities 4,357 4, Total Liabilities 22,507 24,121 1,614 NET ASSETS 53,707 84,960 31,253 Trusted Brands Since 1856 Pental Limited 14

15 Financial Performance Key Consolidated Statement of Cash Flows Items $ 000 FY 18 FY 17 Change (Loss) / Profit after Tax (27,839) 5,850 (33,689) Add non cash items (impairment of goodwill, depreciation, amortisation and employee share options expense) Change in net working capital & other balance sheet movements 32,983 3,409 29,574 2,166 (2,644) 4,811 Operational Cash Flow up 10.5% to $7.3 million. Focussed Working Capital management, generating $2.2 million. Net Cash provided by Operating Activities 7,310 6, Capital Expenditure (8,246) (3,066) (5,180) Acquisition of Shepparton site $7.3 million, from existing cash funds. Dividend Paid (3,679) (4,224) 545 Net increase/(decrease) in cash (4,615) (675) (3,939) Dividend payout ratio at 78.5% of Underlying NPAT. Net cash position at the beginning of the period 11,660 12,335 (675) Net cash position at the end of the period 7,045 11,660 (4,614) Trusted Brands Since 1856 Pental Limited 15

16 Business Update Financial Performance Business Outlook Trusted Brands Since 1856 Pental Limited 16

17 Recap 5 Key Strategic Pillars Driving Sales Growth Develop New Product and Sales Channels Value Added Projects Export Market Manufacturing Continuous Improvement Defending our position Investing in Field Support Promotional Effectiveness Review Product Contributions Building Strong Trade Support Launch New Products Fill the ideation pipeline Brand Protection Grow Margin Contribution Creating Partnerships Brand Consolidation New Technology New Agencies New Segments Grow New Zealand China Strategy Vietnam Explore other International Market Opportunities Cost Savings CAPEX to drive business growth Delivering Quality Products Enhance preventative maintenance processes Trusted Brands Since 1856 Pental Limited 17

18 Innovation Trusted Brands Since 1856 Pental Limited 18

19 Beyond FY18 Marketing Targeted consumer NPD New Soap Bar Formats Specialised Formulations Premiumisation for expanded reach Market gap product development First to Market NPD In-Store Activation Export Revamp of existing lines Maintain Market Leadership. Strengthening Positioning NZ Distribution Push Brand Consolidation White King & Janola Softly Master Brand Country Life Velvet Specialised formulations for extra gentle care Luxe Beauty Bars Expand Export Ranges Build on heritage of Velvet NPD Fragrance & Form, First to Market Tactical Support NZ Distribution Push Trusted Brands Since 1856 Pental Limited 19

20 Beyond FY18 Australia FY18 one of the most competitive years within the Grocery Industry. Pental has consolidated its position for future sustainable profitable growth. Trading conditions remain very price competitive, however FY19 has commenced with the successful advertising and promotional outcomes with White King Coles Little Shop Promotion in July/August. Sales objectives for White King Toilet Gel Bottles in Coles during this Promotion exceeding expectations. New distribution partnership in the Pharmacy Channel contributing to growth. Pental Branded firelighters maintain No1 position in Grocery. Development of new branded products that have been accepted for ranging in Coles and IGA. Initiated Sales Support structure to support our brands and products at store level. Partnership with Pears continues with Pental moving into the 5 th year of the arrangement as Australian distributor for this highly recognised International brand. With the success of the Unilever Distribution Partnership with the Pears Brand, Pental has embarked upon investigating opportunities with other well established and recognised imported Brands and Products. Our partnerships continue in supplying Private Label to the major retailers. Trusted Brands Since 1856 Pental Limited 20

21 Beyond FY18 New Zealand Continue strong arrangement with our NZ based Distributor, 6 year strong partnership. Grocery market in NZ experiencing price deflation on the back of significant competitive landscape. Pental brands remain strong in key segments. Innovation strategies expected to provide incremental growth through increased ranging in market. Key drivers for growth based around category expansion through alternative trade opportunities hardware & independent accounts. China Vietnam Thailand Continue journey with expansion into Asia. Sales growth slower than anticipated. Pental retains relationships with our smaller China Distributors. Commenced negotiations with a large National Distributor who supplies products in the personal and household cleaning categories throughout China. This strategy will simplify and provide significant growth moving forward. Export project into Vietnam has materialised with the engagement of a key distribution company based in Ho Chi Min City. Making progress with the potential export of White King, Softly and Country Life brands into Thailand and Hong Kong. Trusted Brands Since 1856 Pental Limited 21

22 Beyond FY18 Operations New Steam Boiler to Reduce Energy Costs. New Trade Waste System to Reduce Chemical Usage Continue to Drive costs out and Waste Reduction Value Added CAPEX Ongoing Productivity and Efficiency Improvement Targets Robust preventative maintenance program Reduce production line downtime and increase asset utilisation Trusted Brands Since 1856 Pental Limited 22

23 Business Outlook In Summary Retail market continues to remain highly competitive Margin Pressure Strong Retailer Relationships Brand Protection Effective Promotions Costs Out/ Down Initiatives in FY18 to flow through Outlook Strong Team Environment New Distribution Opportunities Innovation Continued focus on productivity Trusted Brands Since 1856 Pental Limited 23

24 Thank You Trusted Brands Since 1856 Pental Limited 24