DRIVING GROWTH - Pental · DRIVING GROWTH - FY15 INVESTOR PRESENTATION I 03 STRATEGIC ACHIEVEMENTS CONT. Total dividend for FY15 is 2.58* cents, at 60.9% of underlying NPAT • Proposed

DRIVING GROWTH

FY15 INVESTOR PRESENTATION

YEAR ENDED 28 JUNE 2015

Charlie McLeish – Chief Executive Officer

Albert Zago – Chief Financial Officer

Bleach production Line B (stage

1) completed SIGNIFICANT

EFFICIENCY improvements

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

CAPITAL INVESTMENT OF

$5.3M

STRATEGIC ACHIEVEMENTS

Ranging of

NEW

PRODUCTS Commenced May/June 2015

announced at HY is

ON SCHEDULE

& will be operational by

third quarter of FY16

I 02 DRIVING GROWTH - FY15 INVESTOR PRESENTATION

Underlying

Profit Before

Tax up 15.6%

on LY

Continuous

Improvement and

Profit Delivery

Project initiatives

mitigated many of

the raw material cost

increases

Share

consolidation 1

share for every

15 Shares was

completed on 1

December 2014

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

No gearing

and substantial

capacity - Cash

at bank of

$11.040 million


STRATEGIC ACHIEVEMENTS CONT.

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. 2015

* Based on number of shares issued at 28 June 2015

BUILDING STRONGER BUSINESS FY12 FY13 FY14 2016 AND ONWARDS FY15

CAPEX $0.3m $2.2m $4.6m $4.1m Bulk, High Speed Liquid Line

and Soap automation

Cash /(Debt) $(60.9)m $(8.2)m $Nil $11.0m Strong Balance Sheet

with substantial capacity

Underlying

EBITDA $5.4m 9.6m $9.7m $10.3m

Focused on growing

underlying earnings

Underlying

Profit before

Tax/(Loss)

$(5.2)m* $4.2m $6.9m $8.0m

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

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 3rd

Qtr FY16

• Drive “Power” Brands

• Asia & bulk channels

• Becoming a low cost producer

• Expansion may include

acquisition in new growth

channels

Restructured

Group

RESTRUCTURE BUILDING EXPANDING


FINANCIAL HEADLINES

$’000 FY15 FY14 Change %

Gross Sales 111,150 109,376 1,774 1.6%

Underlying

EBITDA (i)

10,287 9,690 597 6.2%

Underlying EBITDA to

gross sales (i) 9.26% 8.86%

Depreciation (2,113) (1,793)

Underlying EBIT (i)

8,174 7,897 277 3.5%

Underlying EBIT to

gross sales (i) 7.35% 7.22%

Underlying NPBT 8,020 6,937 1,083 15.6%

NPAT 5,087 5,336 (249) -4.7%

Basic EPS (cents) 4.08 5.10

Working Capital 16,147 18,568 (2,421) -13.0%

Net Cash/ (Debt) 11,040 25 11,015 +100%

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 - $11.040 million in cash.

(i) Before one-off significant items - 2015: Refer to commentary; 2014: relates to sale of Close Up Brand $0.4m profit.


UNDERLYING NET PROFIT BEFORE TAX UP 15.6%

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

Trade spend at

27.0% of Gross

Sales up 0.78%

on LY


Quality Australian Brands

*Source: Aztec, Australian Grocery Scan MAT 28/06/15

White King Brand TV commercial

ran from October to December 2014.

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

BRAND HIGHLIGHTS


INVESTING IN KEY BRANDS

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.

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


2015 NEW PRODUCTS

Moving into high volume, high growth segments...


MARKETING STRATEGY

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

SUPPORTED BY “AUSTRALIAN MADE & OWNED” CREDENTIALS

INNOVATION

Building category

strategy to deliver

growth with our

Power Brands

STRATEGY

Investing in marketing

communication on our

key brands

COMMUNICATION


DIGITAL STRATEGY “IT’S A DIGITAL WORLD”

OUR OBJECTIVE

• Drive brand awareness

• Increase Sales

• Talk to Customers

Directly

• Increase Customer

Retention

• Increase Margin


HOW WE WILL ACHIEVE THIS

HOW WE ACHIVE THIS

BUILD A 18 MONTH

DIGITAL STRATEGY

SOCIAL

MEDIA

FEEDS

FORUMS

CHARITY

TIPS

SHOP

WEBSITE ONLINE STORE

APP ONLINE

ADVERTISING

WELL

- BEING

PRODUCTS

FACTS

HEALTH

COMMUNICATIONS

LIFESTYLE


TRANSFORMATION CONTINUES

CULTURAL CHANGE IMPROVING PRODUCTIVITY

Disciplines around production floor meetings

Site communication

RESTORE

BASIC

CONDITIONS

Continuous Improvement is the way forward

CREATE

THE NEW

“NORMAL”

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


BUILD & DELIVER “ BEST IN CLASS”

Bleach Plant relocation & upgrade completed in FY14

Improve speed and capacity of Bleach Line B –

completed August 14

*Line A new bottle filler and Line B back end automation to – improved efficiency

& reduce trade waste

Ongoing review of High Speed Liquid & Bulk Lines – market

opportunities

Business case FY16

Execute CAPEX

Soap plant Modernisation

*SWING Plant – will reduce

operating costs

Consolidation of 5 soap lines and

back end automation

* Part of $5.3m capital investment announced at the December 2014 half year. Will be operational by 3rd Qtr FY16

BEC

OM

ING

A LO

W C

OS

T P

RO

DU

CER


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

DELIVERING ON MAJOR CAPITAL PROJECTS


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

DRIVING GROWTH STRATEGY

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

Drive innovation

ACCELERATE

OUR CAPABILITY

TO GROW THE

EXPORT

BUSINESS

DRIVE

YEAR ON

YEAR REAL

PRODUCTIVITY

SAVINGS

3

4

5 2 1


DRIVE GROWTH THROUGH:

INDUSTRIAL

& COMMERCIAL

• Distributors

• Office supplies

• Commercial cleaning companies

• Defence dept.

• White King

• Little Lucifer

• Velvet

• Softly

• Janola (NZ)

• Sunlight (NZ)

NEW PRODUCT

DEVELOPMENT

• Asia Pacific

EXPORT


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 value-

creating 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


APPENDIX FINANCIAL

PERFORMANCE


DELIVERING GROWTH

UNDERLYING EBITDA UNDERLYING NET PROFIT BEFORE TAX

GROSS SALES UNDERLYING EBIT


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

PROFIT & LOSS

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

$’000 FY 15 FY 14 % Change

Gross Sales 111,150 109,376 1.6%

Trade rebates and discounts (29,987) (28,654) -4.7%

Net Sales 81,163 80,722 0.5%

Gross margin (incl. trade

rebates) 39,656 37,563 5.6%

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 9,690 6.2%

Depreciation & amortisation (2,113) (1,793) -17.8%

Underlying(1) EBIT 8,174 7,897 3.5%

% 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%


BALANCE SHEET

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

$’000 FY 15 FY 14

Net Assets 81,734 73,015

Net Cash/(Debt) 11,040 25

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

$’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


CASH FLOW

KEY POINTS Strong cash profit

No tax paid in FY15 due to carried

forward tax losses – now fully

utilised

Improved working capital by

$2.499m

Unused multi-option debt facility

of $16m

• Facility expires 28 February 2017

• Line fee of 0.9% line fee plus

interest

of 2.09%

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

CASH FLOW

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

$’000 FY 15 FY 14 % Change

Gross Sales 111,150 109,376 1.6%

Trade rebates and discounts (29,987) (28,654) -4.7%

Net Sales 81,163 80,722 0.5%

Gross margin (incl. trade

rebates) 39,656 37,563 5.6%

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 (5,019) (4,329) -15.9%

Underlying(1) EBITDA

10,209

9,690 5.4%

Depreciation & amortisation (2,113) (1,793) -17.8%

Underlying(1) EBIT 8,096 7,897 2.5%

% 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%

$’000

FY 15

FY 14

Cash in flow from

operating activities 11,810 6,991

Capital expenditure (4,138) (4,415)

Net Proceeds from issue of

shares 6,656 5,661

Net Repayment of borrowings - (12,556)

Dividend paid (3,313) -

Net increase/(decrease) in Cash 11,015 (4,319)

Net cash position at end of year 11,040 25


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 2015. Further details are provided in the Company’s

half year accounts and results announcement released on 24 August 2015.

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


Documents

DRIVING GROWTH - Pental · DRIVING GROWTH - FY15 INVESTOR PRESENTATION I 03 STRATEGIC ACHIEVEMENTS CONT. Total dividend for FY15 is 2.58* cents, at 60.9% of underlying NPAT • Proposed