Pental OverviePTL)...FINAL_150317.pdf · Half Year Investor Presentation 7 Pental people...

Half Year Investor Presentation 2

Pental Overview

Performance Update

Operational Update

Outlook

Appendix • Detailed Profit & Loss • Cash Flow

Today’s Agenda


Pental Overview

4 Half Year Investor Presentation

About Pental

Pental brands deliver quality and expertise in home and hygiene products for today’s lifestyle.

• Household products that are efficient and quality-tested to help families live better.

• Wherever you go in an Australian home today it would be odd not to find at least one Pental product.

• The Pental tradition of providing our customers with products of superior quality continues with constant product innovation and improvements.

• Pental – trusted by families for generations.


Who we are

House- Hold

Cleaning

Laundry

Fire needs

Kitchen

Personal Care

NZ

NZ


Gross Sales by Region

• Shepparton – 90% of products

- Soap plant

- Bleach plant

- Liquids plant

- Firelighters plant

- New Bulk Plant

• Supplemented by 3rd party contract

manufacturing in NZ

• Warehouses: Shepparton (Vic),

Christchurch (NZ), Auckland (NZ),

Shanghai FTZ (China) and Ningbo

FTZ (China)

• ~4,000 supermarkets

• ~700 pharmacies

• ~300 petrol & convenience,

corner and hardware stores

Our business

Manufacturing facilities

Distribution channels

Warehousing

Australia 80%

Market Cap: $80 Million(1) Pental Limited (ASX:PTL) Headquartered in Melbourne Established 62 years ago

(1) As of 6 January 2017

Australia

81%

New Zealand

18%

Asia

1%


Pental people

Substantial Shareholders(1)

Alan Johnstone - 21.9%

Allan Gray Australia - 13.5%

John Homewood - 13.0%

Elevation Capital Management - 8.2%

Board of Directors & Company Secretary

Peter Robinson Non Executive

Independent Chairman

Mel Sutton Non Executive

Vice Chairman

John Rishworth Non Executive

Independent Director

John Etherington Non Executive


Kimberlee Wells Non Executive


Oliver Carton Company Secretary

Senior Management

Charlie McLeish CEO

Albert Zago CFO

(1) As at 6 January 2017


Financial Update


Bulk Liquid Line

commissioned

Expansion

into China

continues to

grow

NPAT up

15.8% to

$2.3 million

Successful

launch of

Country Life

Liquids

Strong growth

with White

King cleaning

ranges

EBITDA up

16.0% to

$4.9

million

Scoping

Soap

Automation

project

Net Sales

up 6.8%

(Gross Sales

up 6.6%)

Overview


Key financial results

$’000 Dec 16 Dec 15 Change %

Gross Sales (GSV) 57,588 54,046 3,542 6.6%

Net Sales 41,650 38,990 2,660 6.8%

EBITDA 4,900 4,225 675 16.0%

EBITDA to gross sales 8.5% 7.8%

Depreciation (1,594) (1,145) (449)

EBIT 3,306 3,080 226 7.3%

EBIT to GSV 5.7% 5.7%

NPAT 2,303 1,985 318 16.0%

Basic EPS (cents) 1.69 1.46 16.0%

Dividend Per Share (cents) 1.15 1.00 15.0%

o Australia gross sales up 7.7% (Net Sales up 6.2%)

o New Zealand gross sales down 3.3% (net Sales up 1.2%)

o Steady gross sales into Asia with $664k in H1

o Targeted trade spend investment including launch of Country Life liquids and on ongoing support for expanding White King range

o Increased depreciation as a result of Shepparton capital investment

o Underlying EBIT (excluding FX losses was $3.583 million

o EBIT up 7.3%

o NPAT up 16.0%


-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

NP

AT

HY

Dec

15

Gro

ss m

argi

n be

fore

Tra

deS

pend

Tra

de r

ebat

es &

dis

coun

ts

Em

ploy

ee e

xpen

ses

Fre

ight

& d

istr

ibut

ion

Mar

ketin

g

Dep

reci

atio

n &

Am

ortis

atio

n

Oth

er E

xpen

ses

& R

even

ue

Fin

ance

cos

ts

Tax

NP

AT

HY

Dec

16

1,985 2,442 (882) (289) 256 (52) (449) (800) 20 72 2,303

$'000

Net profit After tax

Trade spend increase in line with

sales growth. At 27.68% of Gross

Sales – down 0.18% on LY H1

• Aust. gross sales up 7.7%

• NZ gross sales down 3.3%

• Asia export Sales solid: $664k

Continuous Improvement

Engineer, Sales support for new

channels & manning for consolidated

warehousing

Ongoing improvement in

logistics

• FX loss $277k vs $201k gain LY H1

• Occupancy costs on consolidation of warehouses from January 16

• Repairs & Maintenance

Effective tax rate 29.9% vs LY H1

34.7% - R&D adjustment

Additional depreciation from capital investment


Working capital & balance sheet

$’000 Dec 16 Jun 16

Cash 9,427 12,335

Net assets 83,072 83,177

Net debt / equity 0% 0%

Key balance sheet items

$’000 Dec 16 Jun 16

Trade & other receivables 20,768 23,582

Inventories 8,289 8,866

Trade & other payables (13,866) (16,659)

Working Capital 15,191 15,789

Working capital

o Net cash position of $9.427m

o $8.0 million on short term deposit

o Nil debt and substantial borrowing capacity

o Operating cash flow down $3.520 million

o $3.2 million in income tax paid relating to FY16 financial year ($2.3 million) and normal monthly tax installment payments (PAYG)

o Increased inventory of $0.372 million vs. Dec 15

o Shareholders approved repurchase of Shepparton properties estimated cost ~ $7.3m (incl. transaction cost & taxes) – settlement expected July/August 2017

o Working capital down $0.598 million on June 16


Operational Update


Delivering on Strategy - 5 key pillars

MANUFACTURING CONTINUOUS

IMPROVEMENT

• Enhance preventative maintenance processes

• Drive Out Costs

1

3

Export Growth

• Continue the Growth in China.

• Commence Exporting into other Asian Countries

2

Brands and Development of New Products

• Price Increase Recovery

• Brand Protection

• Private Label Opportunities

5

IMPLEMENTATION OF NEXT PHASE

OF CAPITAL WORKS

•Modernise and increase capacity of the soap plant

and liquid lines

4

New Domestic Sales Channels.

•Commercial

•Industrial

•Foodservice


Source: Aztec Scan data, Value, MAT to 11/12/2016

White King has a strong hold on bathroom cleaning and is outpacing growth in all major cleaning categories

Bathroom Cleaning ranges continue to be the star performers for White King

White King brand is

performing strongly as

Bathroom products,

Toilet cleaners and Stain

Removers experience

significant dollar growth

(+6.7% vs YA)

Investing in brands

Future innovation in the cleaning range will expand

White King’s footprint

For example:

New non bleach cleaning products

Increased

distribution and shelf

presence for toilet gels has facilitated

sales growth


New White King Cleaning Range

Positioning:

- Non bleach formulation for frequent use

- Contains an advanced polymer:

- repels dirt, grease & soap scum

- makes ongoing cleaning easier

- Antibacterial – kills 99.9% of germs

- Comparative product testing indicates

high efficacy

In Store

- March 2017


Investing in brands

Sponsorship White King sponsor of the

Western Bulldogs

Consumer Giveaway Online

Country Life Escape promotion


Investing in brands

White King Soakers

continue to grow

strongly in Woolworths

through the

implementation of a

new key pricing

strategy


Country Life campaign

Message:

• Escape Everyday with Country Life

Campaign objective:

• Drive awareness and consumer engagement,

incentive trial and purchase

Media:

• Social media – 600,000 impressions (1,253

Facebook likes)

• Digital presence – 600,000 impressions

• Consumer giveaways

• Sampling campaign – 100,000 person reach


Investing in brands

Instore &

Off location Dedicated retailer support has lead to

primary shelf positioning and Brand blocking,

ensuring Pental's brands

have maximum impact on consumers.


Investing in brands

Pental is the

one and only

firelighter

manufacturer

in Australia

Little Lucifer driving category growth via innovation through

individually wrapped firelighters (+9.9%; Dollar

growth vs YA)

Simplified Jiffy pack design to focus on key call

outs and differentiation from imported competition:

• No Kerosene • Burn Time

• Odourless • Ease of Use

Source: Aztec Scan data, Value, MAT to 11/12/2016

Little Lucifer

re-positioned to

target the ‘Foodie’

trend allowing for

extensive NPD

pipeline for FY17

and beyond


Investing in brands in NZ


Outlook


Entering New Domestic Sales Channels

New range of industrial-sized cleaning products: 5 to 15 litres

Over 1000 potential customers contacted and solid expression

of interest

Long-term expansion objective into new channels with our power brands on target

Bulk filling line

commissioned in

September 2016

Hospital Grade

Lemon Scent Spotless

Drying

Streak Free

Non Caustic

Non Ammonia

Suitable for all

Floors

Non Caustic

Suitable Ovens /

Grills Streak Free

Gloss

Retention

Thick Bleach Gel

Hospital Grade

Biodegradable

Lemon Scent

Streak Free

Antibacterial

Plant Based

With Aloe Vera

Automatic

Dishwashing


Exporting to New Markets

o Sales to Asia $0.664 million for the Half Year – change to Chinese customs import regulations had slowed down clearance process

o Direct relationships with Chinese retailers

o Using Free Trade Zones for Warehousing and Distribution

o Distribution channels

– Bricks & Mortar: Bailian Century Mart, InTime and Choice Supermarkets

– E-commerce: FTZmall.com.cn, yhd.com, Kaola.com,

– Pharmacy

o Launched into Eastern China

o Sales enquires continue to be solid

Brands into Asia include:

• Country Life & Velvet Soaps

• White King Products

• Softly Laundry Products


Exporting to New Markets


What's in the Pipeline

• NPD – Bars & Liquids

• In-store activation

• Social Media

• New Fragrances

• Consumer Promo

• Export

• NPD – Toilet, Bathroom and

Household

• In-Store Activation

• Export

Opening New

Channels

• NPD Liquids – Fragrance

• Tactical Support Sales

• NZ Distribution Push

• Push into new ranges

• Industrial & Commercial

• Expanding Pharmacy

• New Export Range

• In-store Activation

• NPD – Bars & Washes

• NPD – Firelighters, Woodchips

• Strengthening Positioning

• NZ Distribution Push


Summary: Strategy Moving Forward - 5 key pillars

MANUFACTURING CONTINUOUS

IMPROVEMENT

• Enhance preventative maintenance processes

• Drive Out Costs

1

3

Export Growth

• Continue the Growth in China.

• Commence Exporting into other Asian Countries

2

Brands and Development of New Products

• Price Increase Recovery

• Brand Protection

• Private Label Opportunities

5

IMPLEMENTATION OF NEXT PHASE

OF CAPITAL WORKS

•Modernise and increase capacity of the soap plant

and liquid lines

4

New Domestic Sales Channels.

•Commercial

•Industrial

•Foodservice


Appendix


Profit & loss $’000 Dec 16 Dec 15 % Change

Gross sales (GSV) 57,588 54,046 6.6%

Trade spend (15,938) (15,056) 5.9%

Net Sales 41,650 38,990 6.8%

Raw materials, consumables &

change in inventory(1) (21,994) (20,894) 5.3%

Freight out & distribution(1) (3,147) (3,403) -7.5%

Employee expenses (6,404) (6,115) 4.7%

Marketing expenses (1,617) (1,565) 3.3%

Other expenses (3,455) (3,134) 10.2%

Other revenue 147 145 1.4%

FX gain/(loss) (280) 201 -100%

EBITDA 4,900 4,225 16.0%

Depreciation & amortisation (1,594) (1,145) 39.2%

EBIT 3,306 3,080 7.3%

% to Gross Sales

Trade spend 27.7% 27.9% -0.2%

Freight-out & distribution costs 5.5% 6.3% -0.8%

Marketing costs 2.8% 2.9% -0.1%

(1) Previous corresponding period figures have been adjusted to include “freight in” costs and exclude selling expenses as part of purchas ing raw materials and consumables.


Cash flow

$’000 Dec16 Dec 15 Increase/ (Decrease)

Operating activities (before tax) cash flow 5,185 5,670 (485)

Income tax paid (3,179) (144) (3,035)

Cash flow from operating activities 2,006 5,526 (3,520)

Capital expenditure (2,257) (2,911) 654

Dividend paid (2,657) (2,453) (204)

Net increase/(decrease) in cash (2,908) 162 (3,070)

Net cash position at end of year 9,427 11,202 (1,955)

Operating cash flow down $3.520 million mainly due to:

o $3.2m in income tax paid relating for FY16 financial year ($2.3 million) and normal monthly tax installment payments (PAYG)

o Increased inventory of $0.372 million vs. Dec 15


Disclaimer

The material in this presentation is a summary of the results of Pental Limited

(Pental) for the year (52 weeks) ended 25 December 2016 and an update on

Pental’s activities and is current at the date of preparation, 20 February 2017.

Further details are provided in the Company’s full year accounts and results

announcement released on 20 February 2017.

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, www.pental.com.au

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Pental OverviePTL)...FINAL_150317.pdf · Half Year Investor Presentation 7 Pental people...

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