Todays Agenda Pental Overview Performance Update Operational - - PowerPoint PPT Presentation

Half Year Investor Presentation

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Pental Overview Performance Update Operational Update Outlook Appendix

• Detailed Profit & Loss
• Cash Flow

Today’s Agenda

Half Year Investor Presentation

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Pental Overview

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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.

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Half Year Investor Presentation

Who we are

House- Hold Cleaning Laundry Fire needs Kitchen Personal Care NZ NZ

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Half Year Investor Presentation

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%

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Half Year Investor Presentation

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 Independent Director

Kimberlee Wells

Non Executive Independent Director

Oliver Carton

Company Secretary

Senior Management

Charlie McLeish

CEO

Albert Zago

CFO

(1) As at 6 January 2017

Half Year Investor Presentation

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Financial Update

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Half Year Investor Presentation

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

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Half Year Investor Presentation

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

675 675 16.0%

EBITDA to gross sales

8.5%

7.8% Depreciation

(1,594)

(1,145)

(449)

EBIT

3,306

3,080

226 226 7.3%

EBIT to GSV

5.7%

5.7% NPAT

2,303

5,087 318 16.0% Basic EPS (cents)

1.69

1.46 16.0% Dividend Per Share (cents) 1.15 1.00 15.0%

• Australia gross sales

up 7.7% (Net Sales up 6.2%)

• New Zealand gross

sales down 3.3% (net Sales up 1.2%)

• Steady gross sales

into Asia with $664k in H1

• Targeted trade spend

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

• Increased depreciation

as a result of Shepparton capital investment

• Underlying EBIT

(excluding FX losses was $3.583 million

• EBIT up 7.3%
• NPAT up 16.0%

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Half Year Investor Presentation

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 NPAT HY Dec 15 Gross margin before Trade Spend Trade rebates & discounts Employee expenses Freight & distribution Marketing Depreciation & Amortisation Other Expenses & Revenue Finance costs Tax NPAT 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%

• n 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
• n 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

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Half Year Investor Presentation

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

• Net cash position of $9.427m
• $8.0 million on short term deposit
• Nil debt and substantial borrowing capacity
• Operating cash flow down $3.520 million
• $3.2 million in income tax paid relating to FY16

financial year ($2.3 million) and normal monthly tax installment payments (PAYG)

• Increased inventory of $0.372 million vs. Dec 15
• Shareholders approved repurchase of Shepparton

properties estimated cost ~ $7.3m (incl. transaction cost & taxes) – settlement expected July/August 2017

• Working capital down $0.598 million on June 16

Half Year Investor Presentation

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Operational Update

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Half Year Investor Presentation 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
• ther 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

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Half Year Investor Presentation

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

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Half Year Investor Presentation

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

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Half Year Investor Presentation

Investing in brands

Sponsorship White King sponsor of the Western Bulldogs Consumer Giveaway Online

Country Life Escape promotion

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Half Year Investor Presentation

Investing in brands

White King Soakers continue to grow strongly in Woolworths through the implementation of a new key pricing strategy

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Half Year Investor Presentation

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

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Half Year Investor Presentation

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

• n consumers.

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Half Year Investor Presentation

Investing in brands

Pental is the

• ne 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

• uts 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

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Half Year Investor Presentation

Investing in brands in NZ

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Outlook

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Half Year Investor Presentation

Entering New Domestic Sales Channels

 New range of industrial-sized cleaning products: 5 to 15 litres  Over 1000 potential customers contacted and solid expression

• f 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

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Half Year Investor Presentation

Exporting to New Markets

• Sales to Asia $0.664 million for the Half Year –

change to Chinese customs import regulations had slowed down clearance process

• Direct relationships with Chinese retailers
• Using Free Trade Zones for Warehousing and

Distribution

• Distribution channels

– Bricks & Mortar: Bailian Century Mart, InTime and Choice Supermarkets – E-commerce: FTZmall.com.cn, yhd.com, Kaola.com, – Pharmacy

• Launched into Eastern China
• Sales enquires continue to be solid

Brands into Asia include:

• Country Life & Velvet Soaps
• White King Products
• Softly Laundry Products

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Half Year Investor Presentation

Exporting to New Markets

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Half Year Investor Presentation

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

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Half Year Investor Presentation

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
• ther 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

Half Year Investor Presentation

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Appendix

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Half Year Investor Presentation

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 purchasing raw materials and consumables.

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Half Year Investor Presentation

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:

• $3.2m in income tax paid relating for FY16 financial year ($2.3 million) and normal

monthly tax installment payments (PAYG)

• Increased inventory of $0.372 million vs. Dec 15

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Half Year Investor Presentation

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