Investor Presentation FY14
Investor Presentation FY14
Charlie McLeish – Chief Executive Officer
Albert Zago – Chief Financial Officer
Strategic Achievements
A year of consolidation – On target with strategy
Relocation & upgrade of bleach plant (stages 1 & 2) completed
Cemented our position as No.1 supplier of liquid bleach
New packaging launched reinforcing “Australia Made and Owned”
Velvet soap successfully repositioned as a beauty bar
Invested in people and systems to deliver future growth
R&D on new high speed liquid line completed • Installation planned for end FY15 -> to drive future growth
Closure of Speciality Chemicals business completed
2
Financial Overview
NPAT increased by $3.4m to $5.3m
Early exercise of Loyalty Options raised $5.705m (net of costs & tax)
Net Debt reduce to effectively zero – from June 2012 of $61m
Strong Balance Sheet - no gearing - substantial capacity
New normalised and competitive banking arrangement
Reinstatement of interim and final dividend payments
– full year dividend of 0.12 cents per share (fully franked)
• record date of 12 September 2014 (i.e. after expiry of Loyalty Options)
• payable on 30 September 2014
– Approximately 40% of NPAT
3
Financial Headlines $’m FY14 FY13 (ii) Change %
Gross Sales 109.4 107.9 1.5 1.39%
Underlying EBITDA (i) 9.7 9.6 0.1 1.04%
Underlying EBITDA to gross sales (i)
8.9% 8.9% - -
Depreciation & Amortisation
(1.8) (1.1) (0.7)
Underlying EBIT (i) 7.9 8.5 (0.6) -7.06%
Underlying EBIT to gross sales (i)
7.2% 7.9%
Profits after Tax 5.3 1.9 3.4 +100%
Basic EPS (cents) 0.34 0.24 41.67%
Net Cash/ (Debt) 0.0 (8.2) (8.2) +100%
Key Points Focused on maintaining/growing margins rather
than participating in aggressive price reduction campaigns
Underlying EBITDA marginally above LY, after absorbing: • rental cost of $0.8m – Shepparton sale &
leaseback & relocated corporate office
• increased cost of raw materials not recoverable through price increases
• One off costs $0.5m: o bed down relocated/upgraded bleach plant o phasing in new private label bleach business
from Feb 14 o outsourced some of bleach production during
the relocation/upgrade EBIT down on LY due to additional depreciation
from new capital investment Finance costs down $4.7 million to $1.0 million
(incl. $0.15m to exit GE facility)
NPAT increased by $3.4m to $5.3m
(i) Before significant items (ii) Based on continuing operations – Consumers Products business
4
Improved Net Profit Before Tax (Continuing Operations)
One off income includes sale of Close-Up brand & Sunlight trademark (Pacific Islands only): Profit $0.4m
5
Source: Aztec data - market share in the major grocery channel
MANUAL TOILET CLEANER FIRELIGHTERS
Maintaining Solid Market Share BLEACH WOOL WASH BAR SOAPS
White King Bleach
79%
Coles Smart Buy Bleach
10%
Homebrand Bleach
11%
Dollars Share
Martha Gardener Woolmix
20%
Softly Wool Wash 36% Australian
Pure Wool Wash
8%
Earth Choice
Wool Wash 27%
Coles Smart Buy Wool
Wash 7%
Homebrand Wool Wash
2%
Dollars Share Pental Products P/L
17%
Colgate Palmolive
20%
Johnson & Johnson
2% Pz Cussons
8%
Reckitt Benckiser
4%
Unilever 34%
Other Mfrs 9%
Private Label 6%
Dollars Share
White King 23%
Duck 18%
Harpic 41%
Earth Choice 7%
Domestos 1%
Ecostore 1%
Coles 5%
Coles Smart Buy 1%
Homebrand 1% Woolworths
Select 2%
Dollars Share Total Jiffy
Cubes 25%
Total Little Lucifier Cubes 14%
Total Coles Cubes 10%
Total Homebrand
Cubes 14%
Total Redheads
Cubes 37%
Dollars Share
Sunlight 21%
Morning Fresh 21%
Palmolive 46%
Down To Earth
6%
Ecostore 6%
DISHWASH - NZ
6
New Product Launches 2014
7
White King - New Look
8
9
Building Growth via Robust Innovation Process
Marketing Strategy
10
3 Year innovation
pipeline focused
on delivering
brand growth
• Targeting younger
consumers
• Tailoring products for
new channels
• Improving and adding
value on current best
sellers
Investing in
marketing
communication
on our key
brands
Building
category
strategy to
deliver growth
on the fabric
care portfolio
Supported by “Australian Made & Owned” credentials
Investing in Key Brands - 2015
White King Brand TV Commercial to run from October-December 2014
White King Community partnership with Western Bulldogs
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
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. 11
12
Sales Strategy
Re-aligned sales structure
Strong business plans with key
customers
Best practise planning system
Industry Best Practice Sales structure to build Brands and Private Label growth opportunities
Private label growth plans with Coles & Aldi
New Pharmacy Sales Partner with aggressive growth targets
Brand focused business plans in Metcash with all Banners Groups
New sales/trade spend planning/forecast system implemented late June 2014 streamline processes improving return on investment of
promotional spend
Manufacturing Strategy
13
Bleach Plant relocation &
upgrade completed in FY14
Improve speed and capacity of Bleach Line B – completed
August 14
Foundations completed with growth & cost
reductions forecast in FY15
R&D on new High Speed Liquid Line
completed
Installation by late FY15
Allows for growth in new product
categories & reduce costs in FY16
Soap plant evaluation underway
Modernisation and consolidation of
soap lines
Reduces cost to produce, grow Private label &
reduces operational risks
Safety comes first Lean Manufacturing Program – Reduce
Waste
Working with industry experts to deliver the
right solutions
Supply Chain Strategy
14
Lowest Cost & Mitigation of
Supply Risk
Bench- marking in Australia
and globally
Working with
suppliers to ensure
minimal or no cost
increase
Ensure processes &
costs are continually evaluated
Flexibility in raw materials & to achieve
customer needs
Example: Soap
produced from
either tallow or
sustainable palm
raw materials
Interstate & New
Zealand freight
review being
targeted to deliver
savings
Outlook Solid pipeline of innovative new products to drive growth
Evolving our key brands into new categories and channels
Growth expected through increasing demands of private label
Investing in manufacturing capability for future growth:
• High speed liquid line
o Installed during FY15 -> drive future growth
• Modernisation & consolidation soap manufacturing plant
o Reduce costs & maintain niche position of being Australia’s largest soap
manufacturer
Conversion of options and strong cash flows will fund CAPEX
investment
15
Outlook
Increased marketing planned for FY15 to grow our key brands
Trading conditions expected to remain consistent with the past year
Pursuing all avenues of growth that will improve shareholder
returns
• including value-creating acquisitions or distributorship opportunities
Plan to reinstate a position of paying regular interim & final
dividends
• subject to performance and outlook of the business
Share consolidation - Subject to shareholder approval at AGM
16
Appendix • Financial Performance for the year (52 weeks) ended 29 June
2014 • Summary of Loyalty and Piggy back Options
17
Profit and Loss Key Points Sales up 1.38%
• focused on maintaining/growing margins rather than participating in aggressive price reduction campaigns
Gross margin improved on last year by 0.26% to 34.1%
Prior year initiatives from consolidation of distribution arrangements embedded in the business
Employee costs increased as a result of enhancement to leadership team - R&D, procurement/supply chain and private label management
Depreciation up on LY mainly from relocation/upgrade of bleach plant
$’m FY 14 FY 13 % Change
Gross Sales 109.4 107.9 1.38%
Trade rebates and discounts (28.7) (28.8) 0.61%
Gross margin (incl. trade rebates)
37.6 36.8 2.17%
Freight expenses (8.8) (9.1) 3.04%
Employee expenses (11.6) (10.9) -6.37%
Marketing expenses (3.2) (2.9) -7.36%
Other expenses & other revenue
(4.3) (4.2) -2.13%
Underlying(1) EBITDA 9.7 9.6 0.74%
Depreciation & amortisation (1.8) (1.1) -67.63%
Underlying (1) EBIT 7.9 8.55 -7.62%
% to Gross Sales:
Sales rebates and discounts 26.20% 26.72%
Gross Margin (incl. trade rebates)
34.34% 34.08%
Freight and distribution costs 8.04% 8.41%
Marketing costs 2.89% 2.73% (1) Underlying result excludes significant one-off items - in FY14 this
was the profit ($0.4m) on sale of Close Up brand
18
Balance Sheet
Key Points
Successful equity raising of net $5.7m (net of
cost) via options schemes
Net debt reduced to nil – Cash of $0.025m
Borrowings:
• Repayment of fixed terms debt
• Changed to a multi-option facility of $16m
• Facility expires 28 February 2017
• Interest rate of 3.82% plus 0.9% line fee
• GE receivable finance facility discontinued
Reduction in working capital of $0.6m due to improved working capital management.
$’m FY 14 FY 13
Net Assets 73.0 62.1
Net Debt - 8.2
Working Capital 18.6 19.2
Property, Plant and Equipment 13.7 10.7
Goodwill 25.1 25.1
Other Intangibles: Brand Names & Software
15.2 15.2
Net Debt / Equity 0.0% 13.2%
19
Cash Flow Key Points
Capital expenditure included:
• Relocation/upgrade of the bleach plant
• Upgrade of ERP system and new promotional planning/forecasting system
• Packaging equipment for individually wrapped firelighters
• Bottle sleeve equipment for bleach line
Sale of Close-Up brand & Sunlight trademark (Pacific Islands only) $0.6m
LY’s net cash position in the “Statement of Cash Flows” does not included $12.6m of debt
(1) Consumers Products and Specialty Chemicals businesses
$’m FY 14 FY 13(1)
Cash in/(out) flow from operating activities 7.0 (2.9)
Capital expenditure (5.0) (2.4)
Proceeds from sale of brand name & property, plant
and equipment 0.6 30.0
Net Proceeds from issue of shares 5.7 18.0
Net Repayment of borrowings (12.6) (42.1)
Net increase/(decrease) in Cash (4.3) 0.6
Net cash position at end of year - 4.3
20
Loyalty Options
Loyalty Options expire on 11 September 2014
Options traded on ASX as PTLO (traded at $0.013 on 21 August 2014)
Exercise price $0.02
Early exercise of the Loyalty Options raised $5.7m (net of costs and tax)
Options exercised between 29 June 2014 and 29 August 2014 - $0.5m
Options in the money, but not exercised at 29 August 2014 amount to $1.2m
21
Piggy Back Options
• Exercise period: 6 December 2013 – 6 June 2015 (expiry date)
• Exercise price $0.03
• Options traded on ASX as PTLOA (traded at $0.005 on 21 August 2014)
• As at 29 June 2014 - 287million piggy back options on issue – valued at $8.6m
22
Disclaimer The material in this presentation is a summary of the results of Pental Limited (Pental) for the year (52 weeks) ended 29 June 2014 and an update on Pental’s activities and is current at the date of preparation, 29 August 2014. Further details are provided in the Company’s full year accounts and results announcement released on 22 August 2014.
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
23