10th Apr 2008 17:25
Treatt PLC10 April 2008 FOR IMMEDIATE RELEASE 10 April 2008 TREATT PLC ("Treatt") TRADING UPDATE - YEAR ENDING 30 SEPTEMBER 2008 AND ACQUISITION OF REMAINING 50% OF EARTHOIL Trading Update Treatt PLC (the 'Group'), the manufacturer and supplier of conventional, organicand ethically-traded ingredients for the flavour, fragrance and cosmeticindustries today provides an update on trading for the year ending 30 September2008. The Group's two main operating subsidiaries, R.C. Treatt & Co. Limited andTreatt USA Inc have performed well in the first half of the financial year, withboth companies respectively achieving record sales in February and March 2008.Whilst margins have remained under pressure, this has been more than compensatedfor by significant sales growth across the broad range of products. With respect to the Group's joint venture in Earthoil, the results for the firstsix months have been disappointing. Treatt's share of Earthoil's pre tax lossesfor the five months ended 29 February 2008 totalled £235,000. As is explainedbelow, the Group has now arranged to take full control of Earthoil. Prospects for the second half of the financial year are good, with Group orderbooks at an all-time high with R.C. Treatt's order book up 65% year on year,whilst Treatt USA has seen an increase of 60% year on year in their order book. The Group therefore remains on course to meet the Board's expectations for theyear ended 30 September 2008. However, in accordance with IFRS, the Group isrequired to carry out a fair value impairment review of Earthoil, and it shouldbe noted that this statement excludes the potentially material impact of such areview. Acquisition of remaining 50% of organic and fair trade joint venture partners,Earthoil Treatt plc, one of the world's leading independent ingredients suppliers to theflavour and fragrance industries, also announces today that it has acquired theremaining 50% of the issued share capital of each of Earthoil PlantationsLimited and Earthoil Kenya Proprietary EPZ Limited (together known as"Earthoil"). In February 2007, Treatt acquired 50% of Earthoil in order to enterinto the organic and fair trade markets for essential and vegetable oils for theflavour and fragrance market where Treatt already has a significant presence, aswell as for the cosmetics industry. The organic market represents a new area forTreatt with high growth potential. The entire consideration for the remaining50% is contingent on the future profitability of the Earthoil business and ispayable in 2012, and will be subject to shareholder approval if required. Financial Information on Earthoil Previously, under the terms of the February 2007 joint venture, Treatt had anoption to acquire the remaining 50% of Earthoil in 2012. However, the Board hasdecided to review its position following disappointing results sinceestablishment of the joint venture. In the five months ended 29 February 2008,Treatt's share of Earthoil losses totalled £235,000. Under the previous jointventure, the Treatt Board was only able to exercise 'non-executive' andstrategic direction over Earthoil with no involvement in the day to day runningof the business. The Board believes that by gaining full control and ownershipof the Earthoil companies, it will be better able to ensure that Earthoilachieves its potential, both in terms of sales and profitability. The total aggregated gross assets of the Earthoil companies as at 31 December2007 were £2.8 million (unaudited). The aggregate (unaudited) losses of theEarthoil companies for the financial year ended 31 December 2007 were £459,000. Details on the consideration The consideration for the acquisition of the remaining 50% of Earthoil is anearn-out equal to 50% of eleven times the average audited pre-tax profits of theEarthoil businesses of the two years ending 31 December 2011, capped at £5million, and subject, if required, to shareholder consent. An advance on theearn-out of £250,000 is being paid by Treatt on completion which is eitherrecoverable against the earn-out or, if that is not sufficient, against the loanstock payable to the original Earthoil shareholders in 2015. For further information, please contact: Treatt plc Tel: +44 (0)1284 714820Hugo Bovill, Managing DirectorRichard Hope, Finance Director Investec Bank (UK) Ltd Tel: +44 (0)20 7597 5000James Grace Or visit: www.treatt.com ---------------- www.earthoil.com ------------------ BRIEFING NOTES About Treatt plc Treatt is a global supplier of ingredients to the flavour and fragranceindustries. These ingredients are mainly based on essential oils, which aredistilled or blended. Aroma chemicals and a range of TreattaromeTM naturaldistillates, manufactured from the named food, are also supplied. Typicalproducts including a Treatt ingredient could range from air fresheners,cosmetics, shampoos and soaps to soft drinks, confectionery and basicpharmaceutical products. Treatt is a world leader in the supply of essentialoils for these uses. There are hundreds of different essential oils extracted from many differentorganic materials. Some examples of common oils are peppermint, lime, lavender,orange and eucalyptus. Essential oils have been used as flavour, fragrance andcosmetic ingredients for centuries. About Earthoil Established in 2001 and with its headquarters in Lichfield, Staffordshire,Earthoil is a specialist in its field, growing, manufacturing, sourcing andtrading high quality, organically certified essential oils and vegetables oils(also known as "nut" or "seed" oils) as well as other natural extracts. AllEarthoil's organic products are certified by the Soil Association and otherbodies approved by IFOAM, (the International Federation of Organic AgricultureMovements), the worldwide body for organic agriculture. Earthoil grows its own products in plantations in southern Africa and has anetwork of well-established relationships with organic farmer groups throughoutthe world from whom it purchases products at fair and sustainable prices.Earthoil is therefore able to offer a broad range of organic essential oils andvegetable oils, including: tea tree oil, peppermint oil, lemon oil, apricotkernel oil, sweet almond oil, rosehip oil, cocoa butter and papaya seed oil. Ithas operating facilities in both the UK and Kenya, with its manufacturing baselocated just outside Nairobi within an Export Processing Zone, which offersfavourable trading terms, including certain tax exemptions. Earthoil has established a strong, reputable brand name and distributes tocustomers requiring 100% organic products in the UK, Europe, the US, Australiaand Asia. Customers include The Body Shop, Aveda and Neal's Yard Remedies.Currently, its products are principally used by the cosmetics industry. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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