DRIVING GROWTH FY15 INVESTOR PRESENTATION. Charlie McLeish Chief Executive Officer Albert Zago Chief Financial Officer YEAR ENDED 28 JUNE 2015

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1 DRIVING GROWTH FY15 INVESTOR PRESENTATION YEAR ENDED 28 JUNE 2015 Charlie McLeish Chief Executive Officer Albert Zago Chief Financial Officer

2 STRATEGIC ACHIEVEMENTS Gross branded sales in Australia GREW 5.7% & tactically defended its position in New Zealand White King advertising campaign SUCCESSFULLY strengthened Pental s CORE BRAND Refresh of manufacturing team has delivered significant improvement in its operations Refreshed sales and marketing team to accelerate GROWTH OPPORTUNITIES Ranging of NEW PRODUCTS Commenced May/June 2015 Bleach production Line B (stage 1) completed SIGNIFICANT EFFICIENCY improvements CAPITAL INVESTMENT OF $5.3M announced at HY is ON SCHEDULE & will be operational by third quarter of FY16 I 02

3 STRATEGIC ACHIEVEMENTS CONT. Underlying Profit Before Tax up 15.6% on LY Further strengthened Balance Sheet: $6.644 million (net of costs and tax) capital raising via Loyalty and Piggy Back options holders All options have now expired Continuous Improvement and Profit Delivery Project initiatives mitigated many of the raw material cost increases No gearing and substantial capacity - Cash at bank of $ million Share consolidation 1 share for every 15 Shares was completed on 1 December 2014 Total dividend for FY15 is 2.58 * cents, at 60.9% of underlying NPAT Proposed final fully franked dividend of 1.80 cents. Payable on 30 Sept.2015, with a record date 11 Sept * Based on number of shares issued at 28 June 2015 I 03

4 BUILDING STRONGER BUSINESS FY12 FY13 FY14 FY AND ONWARDS RESTRUCTURE BUILDING EXPANDING Restructured Group Relocation of bleach plant and commenced new bleach private label production Key bleach products previously outsourced brought in house $5.3m of capital projects announced & on target for completion 3 rd Qtr FY16 Drive Power Brands Asia & bulk channels Becoming a low cost producer Expansion may include acquisition in new growth channels CAPEX $0.3m $2.2m $4.6m $4.1m Cash /(Debt) $(60.9)m $(8.2)m $Nil $11.0m Bulk, High Speed Liquid Line and Soap automation Strong Balance Sheet with substantial capacity Underlying EBITDA Underlying Profit before Tax/(Loss) $5.4m 9.6m $9.7m $10.3m $(5.2)m* $4.2m $6.9m $8.0m Focused on growing underlying earnings Focused on sustainable earnings in existing and new channels Dividends - - Recommenced, with full year dividend paid Dividends 60% of underlying NAPT Future dividends 60% of NPAT * FY12: Consolidated net loss before tax $53.0m including discontinued operations I 04

5 FINANCIAL HEADLINES $ 000 FY15 FY14 Change % Gross Sales 111, ,376 1, % Underlying EBITDA (i) 10,287 9, % Underlying EBITDA to gross sales (i) 9.26% 8.86% Depreciation (2,113) (1,793) Underlying EBIT (i) 8,174 7, % Underlying EBIT to gross sales (i) 7.35% 7.22% Underlying NPBT 8,020 6,937 1, % NPAT 5,087 5,336 (249) -4.7% Basic EPS (cents) Working Capital 16,147 18,568 (2,421) -13.0% Net Cash/ (Debt) 11, , % KEY POINTS Australian Brands sales up 5.7% New Zealand sales down 0.65%, impacted by aggressive pricing, but tactically defended Pressure to increase trade spend even when some retailers are under performing Increased gross margins in both dollars & percentage terms 1.34% basis points Advertising spend rate to sales up LY: 3.02% vs 2.89%, following tactical increase in first half One off costs: Employee restructure $0.432 million Plant & equipment impairment $0.553 million Finance costs down $0.806 million to $0.154 million EPS down due to shares issued from Loyalty & Piggy back Options All options have now expired No Debt - $ million in cash. (i) Before one-off significant items : Refer to commentary; 2014: relates to sale of Close Up Brand $0.4m profit. I 05

6 UNDERLYING NET PROFIT BEFORE TAX UP 15.6% Trade spend at 27.0% of Gross Sales up 0.78% on LY Freight & Dist. 8.54% of Gross Sales up 0.5%. 20% increase in pallet volume Marketing 3.55% of Gross Sales vs LY 3.50% Net change on LY: FX (currency) $0.3m Water treatment & occupancy $0.2m Consultants $0.1m I 06

7 BRAND HIGHLIGHTS White King Brand TV commercial ran from October to December The White King TV campaign produced a noticeable increase in the sale of featured products: 3.1% * increase in White King Toilet Cleaners 8% * increase in White King Household Cleaners *Source: Aztec, Australian Grocery Scan MAT 28/06/15 Quality Australian Brands I 07

8 INVESTING IN KEY BRANDS White King Brand TV Commercial ran from October - December 2014 Velvet PR Campaign, Print Ad & Consumer promotion Win $10,000 or $100 Swarovski voucher every day with Velvet from 27th October to 21st December 2014 White King Community partnership with Western Bulldogs Pental is the official sponsor of the Prostate Cancer Foundation Australia Big Aussie Barbie event - to be communicated on our Little Lucifer packs and included in all the Big Aussie Barbie launch events and PR releases as well as their website and all participants sponsorship pages. I 08

9 2015 NEW PRODUCTS Moving into high volume, high growth segments... I 09

10 MARKETING STRATEGY INNOVATION 3 Year innovation pipeline focused on delivering brand and category growth Tailoring products for new markets and channels Investment in research and insights to better understand consumer needs and market opportunities Improving on current best selling products through ongoing existing product development COMMUNICATION Investing in marketing communication on our key brands STRATEGY Building category strategy to deliver growth with our Power Brands SUPPORTED BY AUSTRALIAN MADE & OWNED CREDENTIALS I 10

11 DIGITAL STRATEGY IT S A DIGITAL WORLD OUR OBJECTIVE Drive brand awareness Increase Sales Talk to Customers Directly Increase Customer Retention Increase Margin I 11

12 HOW WE WILL ACHIEVE THIS BUILD A 18 MONTH DIGITAL STRATEGY WEBSITE ONLINE STORE APP ONLINE ADVERTISING CHARITY FACTS SOCIAL MEDIA FEEDS PRODUCTS COMMUNICATIONS HEALTH WELL - BEING SHOP FORUMS LIFESTYLE TIPS I 12

13 TRANSFORMATION CONTINUES CULTURAL CHANGE IMPROVING PRODUCTIVITY RESTORE BASIC CONDITIONS CREATE THE NEW NORMAL Disciplines around production floor meetings Site communication Continuous Improvement is the way forward STEP CHANGE - Safety - Quality - Production - Capability - Performance Team approach winning together Improve systems & measurement will drive better decision making Proactively drive process change & capital program LOW COST PRODUCER I 13

14 BUILD & DELIVER BEST IN CLASS Bleach Plant relocation & upgrade completed in FY14 Ongoing review of High Speed Liquid & Bulk Lines market opportunities Soap plant Modernisation Improve speed and capacity of Bleach Line B completed August 14 Business case FY16 *SWING Plant will reduce operating costs *Line A new bottle filler and Line B back end automation to improved efficiency & reduce trade waste Execute CAPEX Consolidation of 5 soap lines and back end automation BECOMING A LOW COST PRODUCER * Part of $5.3m capital investment announced at the December 2014 half year. Will be operational by 3 rd Qtr FY16 I 14

15 DELIVERING ON MAJOR CAPITAL PROJECTS BEFORE: BLEACH LINE B PRODUCTION Throughput rate of 50 bottles per minute Labour intensive, manual handling & process bottleneck AFTER: AUTOMATED SOLUTION (Wrap around case packer, robotic palletiser & stretch wrapper) Reduction of 3.5 units of labour Minimum throughput rate of 70 bottles per minute I 15

16 DRIVING GROWTH STRATEGY 1 CREATE A SOLID PLATFORM FOR GROWTH: Nail the basics: Safety, People Engagement, Environment, Quality & customer Service Install world class back end capability - bleach line, bulk line, high speed liquid & Soap plant automation DRIVE GROWTH THROUGH NON RETAIL: COMMERCIAL & INDUSTRIAL CHANNELS 2 OPTIMISE VALUE GROWTH FROM THE CURRENT PORTFOLIO: Focus on and over invest in Growth categories and our Power brands Build strategic alliances with global category leaders to access customer insights and innovation pipeline Optimise pack and price in the right Channel 3 Drive innovation 5 DRIVE YEAR ON YEAR REAL PRODUCTIVITY SAVINGS 4 ACCELERATE OUR CAPABILITY TO GROW THE EXPORT BUSINESS I 16

17 DRIVE GROWTH THROUGH: EXPORT Asia Pacific INDUSTRIAL & COMMERCIAL Distributors Office supplies Commercial cleaning companies Defence dept. NEW PRODUCT DEVELOPMENT White King Little Lucifer Velvet Softly Janola (NZ) Sunlight (NZ) I 17

18 OUTLOOK Consistent trading conditions anticipated highly competitive Private label continues to be an important growth channel, but as with brand products, we will compete on value rather than price alone Growth opportunities driven via multiple paths: Expanding existing channels through product innovation Export Bulk industrial and commercial New distributorships Pental will continue pursuing any valuecreating acquisition opportunities in in conjunction with its capital investment program Strong product innovation, a continued focus on driving manufacturing costs down and tight cost controls will improve shareholder returns over the long term I 18

19 APPENDIX FINANCIAL PERFORMANCE I 19

20 DELIVERING GROWTH GROSS SALES UNDERLYING EBIT UNDERLYING EBITDA UNDERLYING NET PROFIT BEFORE TAX I 20

21 PROFIT & LOSS $ 000 FY 15 FY 14 % Change Gross Sales 111, , % Trade rebates and discounts (29,987) (28,654) -4.7% Net Sales 81,163 80, % Gross margin (incl. trade rebates) 39,656 37, % Freight expenses (9,487) (8,794) -7.9% Employee expenses (11,588) (11,588) - Marketing expenses (3,353) (3,162) -6.0% Other expenses & revenue (4,941) (4,329) -14.1% Underlying (1) EBITDA 10,287 9, % Depreciation & amortisation (2,113) (1,793) -17.8% Underlying (1) EBIT 8,174 7, % % to Gross Sales: Sales rebates and discounts 26.98% 26.20% Gross Margin (incl. trade rebates) 35.68% 34.34% Freight and distribution costs 8.54% 8.04% Marketing costs 3.02% 2.89% KEY POINTS Sales Australian brand sales up $5.7% New Zealand down 0.65% - aggressive pricing campaign aimed at Sunlight, tactically defended Private label down focus on growing business at acceptable margins Additional investment in trade spend brands sales carton volume up 7.9%. Retailer pressure to maintain dollar contribute, even when some retailers are underperforming Increased gross margin both on dollars and percentage (1.34 basis points) increased raw material cost mitigated Increase in freight cost due to higher volume of low view sales 20% increase in pallets Employee costs flat with restructure of operational team and some back office positions (1) Underlying result excludes significant one-off items I 21

22 BALANCE SHEET $ 000 FY 15 FY 14 Net Assets 81,734 73,015 Net Cash/(Debt) 11, $ 000 FY 15 FY 14 Trade & other receivables 24,118 24,726 Inventories 7,400 8,945 Trade & other payables (15,371) (15,103) Working Capital 16,147 18,568 Working Capital 16,147 18,568 Property, Plant and Equipment 15,252 13,745 Goodwill 25,084 25,084 Other Intangibles: Brand Names & Software 15,202 15,237 Net Debt / Equity 0.0% 0.0% Issued Capital 90,658 84,014 KEY POINTS No Debt, cash at bank $11.040m Substantial capacity Capital raising of $6.644m via Loyalty and Piggy Back options now all concluded Working capital improved by $2.4m: Inventory management forecast & planning systems Refocused management of debtors I 22

23 CASH FLOW CASH FLOW $ 000 FY 15 FY 14 % Change $ 000 FY 15 FY 14 Gross Sales 111, , % Trade rebates and discounts (29,987) (28,654) -4.7% Cash in flow from Net Sales 81,163 11,81080,722 6,991 operating activities 0.5% Gross margin (incl. trade 39,656 37, % Capital rebates) expenditure (4,138) (4,415) Freight expenses (9,487) (8,794) -7.9% Net Employee Proceeds expenses from issue of (11,588) (11,588) - 6,656 5,661 shares Marketing expenses (3,353) (3,162) -6.0% Other expenses & revenue (5,019) (4,329) -15.9% Net Repayment of borrowings - (12,556) Underlying (1) EBITDA 9, % 10,209 Depreciation & amortisation (2,113) (1,793) -17.8% Dividend paid (3,313) - Underlying (1) EBIT 8,096 7, % % to Gross Sales: Net increase/(decrease) in Cash 11,015 (4,319) Sales rebates and discounts 26.98% 26.20% Gross Margin (incl. trade 35.68% 34.34% rebates) Net Freight cash and position distribution at end costs of year 8.54% 11, % 25 Marketing costs 3.02% 2.89% KEY POINTS Strong cash profit No tax paid in FY15 due to carried forward tax losses now fully utilised Improved working capital by $2.4m Capital expenditure (some overlapping financial years): WIP $2.0m of $5.3m capital projects Stage 1 Bleach Line B bottle unscrambler Chilling equipment in the bleach plant Replacement of soap roller Additional warehouse racking Refresh of IT infrastructure Continued work on planning & forecasting systems (1) Underlying result excludes significant one-off items I 23

24 DISCLAIMER The material in this presentation is a summary of the results of Pental Limited (Pental) for the year (52 weeks) ended 28 June 2015 and an update on Pental s activities and is current at the date of preparation, 24 August Further details are provided in the Company s half year accounts and results announcement released on 24 August No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the presentation ( forward-looking statements ). Such forward looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Pental and its Directors) which may cause the actual results or performance of Pental to be materially different from any future results or performance expressed or implied by such forward-looking statements. This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Due care and consideration should be undertaken when considering and analysing Pental s financial performance. All references to dollars are to Australian Dollars unless otherwise stated. To the maximum extent permitted by law, neither Pental nor its related corporations, Directors, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it. This presentation should be read in conjunction with other publicly available material. Further information including historical results and a description of the activities of Pental is available on our website, I 24