Half Yearly Report

RNS Number : 0379H

Treatt PLC

23 May 2011

 



TREATT PLC

HALF YEAR RESULTS ANNOUNCEMENT

SIX MONTHS ENDED 31 MARCH 2011

Treatt PLC, the manufacturer and supplier of conventional, organic and fair traded ingredients for the flavour, fragrance and cosmetic industries announces today its half year results for the six months ended 31 March 2011.

SUMMARY

·   Group revenue increased by 29% to £36 million (2010: £28 million)

·   EBITDA increased by £2.3m to £4.5m (2010: £2.2m)

·   Profit before tax for the period up by £2.2m to £3.7m (2010: £1.5m)

·   Earnings per share increased by 173% to 25.7 pence (2010: 9.4 pence)

·   Interim dividend raised by 17% to 4.8p (2010 interim dividend: 4.1p)

·   Pension deficit down by £1.2m to £0.4m (2010: £1.6m)

Enquiries:

Treatt plc                  Tel: [phone]

Hugo Bovill               Managing Director

Richard Hope            Finance Director

 

CHAIRMAN'S STATEMENT

"Group half year profits more than doubled to £3.7m"

The Group had a very strong first six months of the year, with Group revenue increasing by 29% to £36m (2010: £28m).  EBITDA increased by £2.3m to £4.5m (2010: £2.2m) and profit before tax rose by £2.2m to £3.7m (2010: £1.5m). Earnings per share have consequently risen by 173% to 25.7 pence per share (2010: 9.4 pence per share).

Following a strong end to the 2010 financial year, the Group has maintained momentum with demand remaining strong across the broad product portfolio.  A combination of new business wins, continuing growth in the Americas and Asia, together with the well documented increase in global raw material prices has resulted in a significant increase in both revenues and profits for the Group. 

As previously reported in the pre close period trading update, all three operating companies have performed well, with the high orange oil price (having increased from $2/kg to an all-time high of around $8/kg in less than a year) being a significant contributory factor towards these results.  Treatt USA has continued the strong growth it showed last year into the first half of this year and has become a significant contributor to the Group's results.  RC Treatt's global business, based in the UK and exporting to almost 100 countries, has  maintained its steady growth and Earthoil, the Group's organic and fair trade business, doubled sales (in volume as well as value) and the business made a positive contribution overall in the first six months of the year.

In order to maintain an approximate 2:1 split between the final and interim dividends,  the Board has declared an increase in the interim dividend of 17% to 4.8 pence per share (2010: 4.1 pence per share) which will be payable on 21 October 2011 to all shareholders on the register at close of business on 16 September 2011.

Final Salary Pension Scheme

The UK final salary pension scheme, which was closed to new entrants in 2001 and with final salaries having been capped at 2003 levels in real terms, had an accounting deficit at the start of the financial year of £1.6m.  Following the government's decision to change from the use of RPI to CPI for increases in deferred pensions and pensions in payment, there has been a 'one-off' reduction in the deficit of £0.9m.  This combined with better than expected investment returns and other deficit repayments has reduced the pension liability on the balance sheet by £1.2m to £0.4m.  This overall actuarial gain of £1.1m is shown in the Statement of Comprehensive Income on page 4.

Risks and uncertainties

Group risk is regularly reviewed at Board level to ensure that risk management is being implemented and monitored effectively, details of which can be found in note 8.

Going concern

In determining whether the Group's half year condensed consolidated financial statements can be prepared on a going concern basis, the Directors considered the Group's business activities, together with the factors likely to affect its future development, performance and position. The review also included the financial position of the Group, its cash flows, and borrowing facilities. The key factors considered by the Directors were:

·      the implications of the challenging economic environment and future uncertainties on the Group's revenues and profits by undertaking forecasts and projections on a regular basis;

·      the impact of the competitive environment within which the Group's businesses operate;

·      the potential actions that could be taken in the event that revenues are worse than expected, to ensure that operating profit and cash flows are protected;

·      the Group has access to overdraft facilities and committed bank facilities to meet day-to-day working capital requirements.   Since the period end all the Group's banking facilities have been renewed on either existing or improved terms, with $9 million of committed facilities having been converted from a short term one year facility, to a longer term three year facility last year, and in the current year a $4m US line of credit has also been converted from a one year to three year facility.

As at the date of this report, the Directors have a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. Accordingly, the half year results have been prepared on the going concern basis.

Prospects

The Group has continued to perform well in Q3 with order books remaining strong across the Group.  The Board believes that although results in the second half of the year may not be as strong as those in the first half, full year results remain on course to meet its revised expectations.  However, there is always the possibility that some raw material prices may have peaked, in particular orange oil, and that there may therefore be some impact on margins if prices begin to fall. 

James Grace

Chairman

20 May 2011

TREATT PLC
UNAUDITED HALF YEAR RESULTS
For the six months ended 31 March 2011
CONDENSED GROUP INCOME STATEMENT
									Six months ended				Year ended
									31 March		31 March		30 September
									2011		2010		2010
										(Unaudited)		(Unaudited)	(Audited)
								Notes	£'000		£'000		£'000
Revenue								3	35,799		27,719		63,298
Cost of sales									(26,630)		(20,832)		(47,759)
									______		______		______
Gross profit									9,169		6,887		15,539
Administrative expenses									(5,282)		(4,932)		(10,427)
									______		______		______
Operating profit before foreign exchange gain/(loss)									3,887		1,955		5,112
Foreign exchange gain/(loss)									44		(302)		(208)
									______		______		______
Operating profit after foreign exchange gain/(loss)									3,931		1,653		4,904
Loss on disposal of subsidiary									-		-		(88)
Finance revenue									43		40		77
Finance costs									(254)		(206)		(390)
									______		______		______
Profit before taxation and goodwill impairment									3,720		1,487		4,503
Goodwill impairment									-		-		(2,432)
									______		______		______
Profit before taxation									3,720		1,487		2,071
Taxation								4	(1,088)		(528)		(1,417)
									______		______		______
Profit for the period									2,632		959		654
									______		______		______
Attributable to:
Owners of the Parent Company									2,625		960		653
Non-controlling interests									7		(1)		1
									______		______		______
									2,632		959		654
									______		______		______
Earnings per share
			- Basic before goodwill impairment					5	25.7p		9.4p		30.3p
			- Basic after goodwill impairment					5	25.7p		9.4p		6.4p
			- Diluted					5	25.6p		9.4p		6.4p
All amounts relate to continuing operations

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
									Six months ended				Year ended
									31 March		31 March		30 September
									2011		2010		2010
										(Unaudited)		(Unaudited)	(Audited)
									£'000		£'000		£'000
		Profit for the period							2,632		959		654
		Other comprehensive income/(expense):
		Currency translation differences on foreign currency net investments							(154)		396		139
		Current taxation on foreign currency translation differences							(3)		(11)		(28)
		Deferred taxation on foreign currency translation differences							3		(7)		-
		Actuarial gain/(loss) on defined benefit pension scheme							1,090		(459)		172
		Deferred tax on actuarial gain or loss							(251)		129		(41)
									______		______		______
		Other comprehensive income for the period							685		48		242
									______		______		______
		Total comprehensive income for the period							3,317		1,007		896
									______		______		______
	Attributable to:
	Owners of the Parent Company								3,310		1,008		895
	Non-controlling interests								7		(1)		1
									______		______		______
									3,317		1,007		896
									______		______		______

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

		Share capital	Share premium	Own shares in share trust	Employee share option reserve	Foreign exchange reserve	Retained earnings	Total	Non-controlling interests	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
	1 October 2009	1,048	2,757	(692)	23	741	18,860	22,737	(1)	22,736
	Net profit for the period	-	-	-	-	-	960	960	(1)	959
	Other comprehensive income:
	Exchange differences net of tax	-	-	-	-	396	(18)	378	-	378
	Actuarial loss on defined benefit    pension scheme net of tax	-	-	-	-	-	(330)	(330)	-	(330)
	Total comprehensive income	-	-	-	-	396	612	1,008	(1)	1,007
	Transactions with owners:
	Dividends	-	-	-	-	-	(1,222)	(1,222)	-	(1,222)
	Share-based payments	-	-	-	11	-	-	11	-	11
	Movement in own shares in    share trust	-	-	9	-	-	-	9	-	9
	1 April 2010	1,048	2,757	(683)	34	1,137	18,250	22,543	(2)	22,541
	Net profit/(loss) for the period	-	-	-	-	-	(307)	(307)	2	(305)
	Other comprehensive income/(expense):
	Exchange differences net of tax	-	-	-	-	(257)	(10)	(267)	-	(267)
	Actuarial gain on defined benefit    pension scheme net of tax	-	-	-	-	-	461	461	-	461
	Total comprehensive    income/(expense)	-	-	-	-	(257)	144	(113)	2	(111)
	Transactions with owners:
	Dividends	-	-	-	-	-	-	-	-	-
	Share-based payments	-	-	-	10	-	-	10	-	10
	Movement in own shares in    share trust	-	-	81	-	-	-	81	-	81
	Loss on release of shares in    share trust	-	-	-	-	-	(3)	(3)	-	(3)
	Exercise of options previously    charged	-	-	-	(24)	-	24	-	-	-
	1 October 2010	1,048	2,757	(602)	20	880	18,415	22,518	-	22,518
	Net profit for the period	-	-	-	-	-	2,625	2,625	7	2,632
	Other comprehensive income/(expense):
	Exchange differences net of tax	-	-	-	-	(154)	-	(154)	-	(154)
	Actuarial gain on defined benefit    pension scheme net of tax	-	-	-	-	-	839	839	-	839
	Total comprehensive    income/(expense)	-	-	-	-	(154)	3,464	3,310	7	3,317
	Transactions with owners:
	Dividends	-	-	-	-	-	(1,330)	(1,330)	-	(1,330)
	Share-based payments	-	-	-	10	-	-	10	-	10
	Movement in own shares in    share trust	-	-	20	-	-	-	20	-	20
	Shares acquired from non-    controlling interest	-	-	-	-	-	-	-	(7)	(7)
	31 March 2011	1,048	2,757	(582)	30	726	20,549	24,528	-	24,528

CONDENSED GROUP BALANCE SHEET
						As at  31 March 2011	As at 31 March 2010	As at 30 September 2010
						(Unaudited)	(Unaudited)	(Audited)
						£'000	£'000	£'000
ASSETS
Non-current assets
	Goodwill					1,057	4,272	1,051
	Other intangible assets					338	241	250
	Property, plant and equipment					10,091	10,192	10,250
	Deferred tax assets					101	712	418
	Trade and other  receivables					586	586	586
						______	______	______
						12,173	16,003	12,555
						______	______	______
Current assets
	Inventories					20,569	17,831	20,174
	Trade and other receivables					15,207	12,651	12,502
	Corporation tax receivable					-	-	51
	Cash and cash equivalents					951	2,370	1,584
						______	______	______
						36,727	32,852	34,311
						______	______	______
Total assets						48,900	48,855	46,866
						______	______	______
LIABILITIES
Current liabilities
	Borrowings					(5,513)	(12,722)	(5,217)
	Provisions					(30)	-	(415)
	Trade and other payables					(9,552)	(7,102)	(8,213)
	Corporation tax payable					(540)	(411)	(447)
						______	______	______
						(15,635)	(20,235)	(14,292)
						______	______	______
Net current assets						21,092	12,617	20,019
						______	______	______
Non-current liabilities
	Deferred tax liabilities					(430)	(391)	(437)
	Borrowings					(7,224)	(1,869)	(7,348)
	Trade and other payables					-	(789)	-
	Post-employment benefits					(408)	(2,355)	(1,596)
	Redeemable loan notes payable					(675)	(675)	(675)
						______	______	______
						(8,737)	(6,079)	(10,056)
						______	______	______
Total liabilities						(24,372)	(26,314)	(24,348)
						______	______	______
Net assets						24,528	22,541	22,518
						______	______	______

CONDENSED GROUP BALANCE SHEET (continued)
										As at  31 March 2011	As at 31 March 2010	As at 30 September 2010
								(Unaudited)			(Unaudited)	(Audited)
										£'000	£'000	£'000
EQUITY
	Share capital									1,048	1,048	1,048
	Share premium account									2,757	2,757	2,757
	Own shares in share trust									(582)	(683)	(602)
	Employee share option reserve									30	34	20
	Foreign exchange reserve									726	1,137	880
	Retained earnings									20,549	18,250	18,415
										______	______	______
Equity attributable to owners of the Parent Company										24,528	22,543	22,518
	Non-controlling interests									-	(2)	-
										______	______	______
Total equity										24,528	22,541	22,518
										______	______	______

CONDENSED GROUP STATEMENT OF CASH FLOWS
									Six months ended			Year ended
									31 March	31 March		30 September
									2011	2010		2010
								(Unaudited)		(Unaudited)		(Audited)
									£'000	£'000		£'000
Cash flow from operating activities
Profit before taxation									3,720	1,487		2,071
Adjusted for:
			Foreign exchange (loss)/gain						(89)	198		109
			Depreciation of property, plant and equipment						490	500		1,042
			Amortisation of intangible assets						52	95		174
			Loss on disposal of property, plant and equipment						2	-		3
			Loss on disposal of subsidiaries						-	-		88
			Impairment of goodwill						-	-		2,432
			Net interest payable						227	202		387
			Share-based payments						10	11		21
			Decrease in post-employment benefit obligation						(97)	(104)		(232)
									______	______		______
									4,315	2,389		6,095
Changes in working capital:
			Increase  in inventories						(394)	(1,786)		(4,169)
			Increase in trade and other receivables						(2,704)	(2,750)		(2,614)
			Increase  in trade and other payables						954	1,497		3,049
									______	______		______
Cash flow from operations									2,171	(650)		2,361
			Taxation paid						(885)	(568)		(1,312)
									______	______		______
Net cash from operating activities									1,286	(1,218)		1,049
									______	______		______
Cash flow from investing activities
		Disposal or acquisition of investments in subsidiaries							(13)	-		(38)
		Purchase of property, plant and equipment							(410)	(628)		(1,437)
		Purchase of intangible assets							(140)	(46)		(134)
		Interest received							27	4		3
									______	______		______
									(536)	(670)		(1,606)
									______	______		______

CONDENSED GROUP STATEMENT OF CASH FLOWS (continued)
									Six months ended				Year ended
									31 March		31 March		30 September
									2011		2010		2010
										(Unaudited)		(Unaudited)	(Audited)
									£'000		£'000		£'000
Cash flow from financing activities
		Repayment of bank loans							(93)		(3)		(163)
		Amounts converted to non-current borrowings							-		-		5,711
		Interest payable							(254)		(206)		(390)
		Dividends paid							(1,330)		(1,222)		(1,222)
		Net sale of own shares by share trust							20		9		87
									______		______		______
									(1,657)		(1,422)		4,023
									______		______		______
Net (decrease)/increase in cash and cash equivalents									(907)		(3,310)		3,466
Cash and cash equivalents at beginning of period									(3,471)		(6,962)		(6,962)
Effect of foreign exchange rate changes									(25)		88		25
									______		______		______
Cash and cash equivalents at end of period									(4,403)		(10,184)		(3,471)
									______		______		______

Cash and cash equivalents comprise:
Cash and cash equivalents					951	2,370	1,584
Bank borrowings					(5,354)	(12,554)	(5,055)
					______	______	______
					(4,403)	(10,184)	(3,471)
					______	______	______

Responsibility statement

We confirm that to the best of our knowledge:

(a) the half year results announcement for the six months ended 31 March 2011 'the announcement' has been prepared in accordance with IAS 34

(b) the announcement includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year)

(c) the announcement includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

Financial Director

R.A. Hope

20 May 2011

NOTES TO THE UNAUDITED HALF YEAR RESULTS ANNOUNCEMENT
1.      Basis of preparation
	The Group is required to prepare its half year results in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards (IFRS)).  The Group has adopted the reporting requirements of IAS 34 'Interim Financial Reporting'.
	The consolidated half year results are prepared on the basis of all International Accounting Standards (IAS) and IFRS published by the International Accounting Standards Board (IASB) that are currently in issue. New interpretations may be issued by the International Financial Reporting Interpretations Committee (IFRIC) on existing standards and best practice continues to evolve. It is therefore possible that the accounting policies set out below may be updated by the time the Group prepares its full set of financial statements under IFRS for the year ending 30 September 2011.
	The information relating to the six months ended 31 March 2011 and 31 March 2010 is unaudited and does not constitute statutory accounts. The statutory accounts for the year ended 30 September 2010 have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 of the Companies Act 2006.  These half year results for the six months ended 31 March 2011 have neither been audited nor reviewed by the Group's auditors.

2.      Accounting policies
	The half year results have been prepared on the basis of the same accounting policies and presentation set out in the Group's 30 September 2010 annual report.
	The following new standards and amendments to standards are mandatory and relevant to the Group for the first time for financial years beginning on or after 1 October 2010: ·      Annual Improvements 2008-2009 - published April 2009.  The effective dates vary from standard to standard but most are effective from January 2010.  These amendments do not have a material impact on these condensed financial statements. ·      IFRS 2 Share-based payments (amendment) - Group cash-settled share-based transactions - published June 2009.  The amendment clarifies the accounting for group cash-settled share based transactions and has not have a material effect on these condensed financial statements. ·      IAS 32 Financial instruments: Presentation - Classification of rights issues - published October 2009.  This standard, in the absence of any rights issues, will not have any effect on the financial statements for the foreseeable future. ·      IFRIC2 19 Extinguishing financial liabilities with equity instruments - published November 2009. IFRIC 19 provides accounting guidance where a financial liability is extinguished by the issue of equity instruments and does not have a material effect on the condensed financial statements. The following new standards, revised standards and interpretations, considered potentially relevant to the Group, were in issue but not yet effective and have not been applied in these condensed financial statements: 1IAS 24 Related party transactions (revised) - published November 2009   IFRS 7 Financial instruments: Disclosures - Transfer of financial assets - published October 2010   IFRS 9 Financial instruments: Classification and measurement - published November 2009   Annual improvements 2010 - published May 2010   IFRIC2 14 Prepayments of a minimum funding requirement - published November 2009 1 EU endorsed 2 International Financial Reporting Interpretations Committee The Directors anticipate that the adoption of these standards and interpretations in future periods will not have a material impact on the financial statements of the Group.

NOTES TO THE HALF YEAR RESULTS ANNOUNCEMENT (continued)
3.      Segmental information
(a) Business segments The Group has adopted IFRS 8 'Operating segments'. IFRS 8 requires operating segments to be identified on the basis of internal financial information reported to the Chief Operating Decision Maker (CODM).  The Group's CODM is deemed to be the Managing Director who is primarily responsible for the allocation of resources to the segments and for assessing their performance.  The disclosure in the Group accounts of segmental information is consistent with the information used by the CODM in order to assess profit performance from the Group's operations. The Group has identified two operating segments as follows: Segment                                                                  Major product category Manufacturing                                                       Distilled, extracted, and other manufactured essential and vegetable oils; natural                                                                                   distillates. Aromatic chemicals & other products               Aroma and speciality chemicals, standardised essential oils, concretes,                                                                                   absolutes, oleoresins & isolates. These reportable segments were identified as they are managed separately as the products supplied, and the processes used in order to produce the products, differ. A significant proportion of the Group's resources, assets and liabilities are shared by both business segments and therefore, necessarily, the segment net income, assets and liabilities shown below include apportionments in relation to each segment's contribution to Group profits.  This is considered the most reasonable basis upon which to present business segmental information.

	Six months ended 31 March 2011
	Manufacturing	Aroma chemicals & other	Un-allocated	Total
	£'000	£'000	£'000	£'000
Revenue	18,181	17,618	-	35,799
Segment profit	2,744	1,187	-	3,931
Net finance costs	-	-	(211)	(211)
Profit before taxation	2,744	1,187	(211)	3,720
Taxation	-	-	(1,088)	(1,088)
Profit after taxation	2,744	1,187	(1,299)	2,632
Segment assets	28,651	20,249	-	48,900
Segment liabilities	(11,943)	(12,021)	(408)	(24,372)
Net segment assets	16,708	8,228	(408)	24,528
Segment capital expenditure	347	210	-	557
Segment depreciation and amortisation	341	201	-	542

NOTES TO THE HALF YEAR RESULTS ANNOUNCEMENT (continued)

3.   Segmental information - (a) business segments (continued)

	Six months ended 31 March 2010
	Manufacturing	Aroma chemicals & other	Un-allocated	Total
	£'000	£'000	£'000	£'000
Revenue	12,178	15,541	-	27,719
Segment profit	711	942	-	1,653
Net finance costs	-	-	(166)	(166)
Profit before taxation	711	942	(166)	1,487
Taxation	-	-	(528)	(528)
Profit after taxation	711	942	(694)	959
Segment assets	25,956	22,899	-	48,855
Segment liabilities	(9,464)	(14,495)	(2,355)	(26,314)
Net segment assets	16,492	8,404	(2,355)	22,541
Segment capital expenditure	340	334	-	674
Segment depreciation and amortisation	332	263	-	595

	Year ended 30 September 2010
	Manufacturing	Aroma chemicals & other	Un-allocated	Total
	£'000	£'000	£'000	£'000
Revenue	29,919	33,379	-	63,298
Segment profit	3,414	1,402	-	4,816
Goodwill impairment	-	-	(2,432)	(2,432)
Net finance costs	-	-	(313)	(313)
Profit before taxation	3,414	1,402	(2,745)	2,071
Taxation	-	-	(1,417)	(1,417)
Net segment income	3,414	1,402	(4,162)	654
Segment assets	26,587	20,279	-	46,866
Segment liabilities	(9,997)	(12,755)	(1,596)	(24,348)
Net segment assets	16,590	7,524	(1,596)	22,518
Segment capital expenditure	812	761	-	1,573
Segment depreciation and amortisation	699	517	-	1,216

NOTES TO THE HALF YEAR RESULTS ANNOUNCEMENT (continued)

3.   Segmental information (continued)

(b) Geographical segments

The following table provides an analysis of the Group's revenue by geographical market, irrespective of the origin of the goods or services:

				Six months ended		Year ended
				31 March	31 March	30 September
				2011	2010	2010
				(Unaudited)	(Unaudited)	(Audited)
				£'000	£'000	£'000
	United Kingdom			4,354	3,942	8,950
	Rest of Europe			10,172	8,429	18,551
	The Americas			12,822	7,608	19,238
	Rest of the World			8,451	7,740	16,559
				______	______	______
				35,799	27,719	63,298
				______	______	______

4.      Taxation
	Taxation has been provided at 29.2% (six months ended 31 March 2010: 35.5%) which is the effective group rate currently anticipated for the financial year ending 30 September 2011.

5.      Earnings per share
	(a) Basic earnings per share for the six months ended 31 March 2011 are based on the weighted average number of shares in issue and ranking for dividend in the period of 10,232,546 (2010: 10,194,372) and earnings of £2,632,000 (six months ended 31 March 2010: £959,000) being the profit after taxation.
	(b) Diluted earnings per share for the six months ended 31 March 2011 are based on the weighted average number of shares in issue in the period, adjusted for the effects of all dilutive potential ordinary shares of 10,281,841 (2010: 10,219,732) and the same earnings as above.

NOTES TO THE HALF YEAR RESULTS ANNOUNCEMENT (continued)
6.      Dividends
				Six months ended		Year ended
				31 March	31 March	30 September
				2011	2010	2010
				(Unaudited)	(Unaudited)	(Audited)
				£'000	£'000	£'000
	Equity dividends on ordinary shares:
	Interim dividend for year ended 30 September 2009 - 3.7p			-	376	376
	Final dividend for year ended 30 September 2009 - 8.3p			-	846	846
	Interim dividend for year ended 30 September 2010 - 4.1p			419	-	-
	Final dividend for year ended 30 September 2010 - 8.9p			911	-	-
				______	______	______
				1,330	1,222	1,222
				______	______	______
	The declared interim dividend for the year ended 30 September 2011 of 4.8p was approved by the Board on 20 May 2011 and in accordance with IFRS has not been included as a deduction from equity at 31 March 2011.  The dividend will be paid on 21 October 2011 to those shareholders on the register at 16 September 2011 and will, therefore, be accounted for in the results for the year ended 30 September 2012.

7.      Related party transactions Treatt Plc, the Parent Company, entered into the following material transactions with related parties:
					31 March	31 March	30 September
					2011	2010	2010
					(Unaudited)	(Unaudited)	(Audited)
Interest received on loan notes from:
Earthoil Plantations Limited					7	7	14
Earthoil Kenya PTY EPZ Limited					3	3	6
Dividends received from:
R.C.Treatt & Co Limited					1,331	1,223	4,723
Redeemable loan notes receivable:
Earthoil Plantations Limited					950	950	950
Earthoil Kenya PTY EPZ Limited					400	400	400
Amounts owed to/(by) parent undertaking:
Earthoil Plantations Limited					122	79	(123)
Earthoil Kenya PTY EPZ Limited					-	-	-
Earthoil South Africa Pty Limited					-	-	-
R.C.Treatt & Co Limited					1,237	(73)	180

NOTES TO THE HALF YEAR RESULTS ANNOUNCEMENT (continued)
7.      Related party transactions (continued)
The redeemable loan notes are redeemable in full on 31 December 2015 or from 31 March 2009 on request from the issuer.  Interest is receivable at 1% above UK base rate.  Amounts owed to the Parent Company are unsecured and will be settled in cash.  During the period, the Group acquired the remaining 20% of Earthoil India Private Limited ("Earthoil India").  As a wholly owned subsidiary there is no longer a requirement to disclose related party transactions between Earthoil India and other Group companies.  In the comparative periods, the value of goods purchased by Earthoil Plantations Limited from Earthoil India Private Limited and amounts outstanding were as follows:
				31 March	31 March	30 September
				2011	2010	2010
				(Unaudited)	(Unaudited)	(Audited)
Purchases by Earthoil Plantations from Earthoil India				N/A	177	603
Amount owed by Earthoil India to Earthoil Plantations				N/A	281	934
8.      Risks and uncertainties

The operation of a public company involves a series of risks and uncertainties across a range of strategic, commercial, operational and financial areas. The principal risks and uncertainties that could have a material impact on the Group's performance over the remaining six months of this financial year (for example, causing actual results to differ materially from expected results or from those experienced previously) are detailed below:

·        foreign exchange risk, particularly with regard to the US Dollar, as the Group trades with approximately one hundred countries around the globe. This is controlled through the implementation of a foreign exchange hedging policy;

·        credit risk in ensuring payments from customers are received in full and on a timely basis. Appropriate payment terms are agreed with customers including, where necessary, payment in advance or by securing payment through bank letters of credit;

·        legislative and regulatory risk as new requirements are being imposed on business and the industries with which the Group is involved, for example the new European REACH (Registration, Evaluation and Authorisation of CHemicals) legislation.  The Group takes a pro-active and leading role in ensuring that its systems and procedures are adapted to ensure compliance with new or changing legislative or regulatory requirements; and

·        movements in commodity and essential oil prices often caused by unpredictable weather patterns or other sudden changes in supply or demand, for example the impact of the 2004 Florida hurricanes on grapefruit oil prices, and particularly the impact of the current global recession.  This is managed by ensuring that Group purchases of raw materials are based upon a well researched understanding of the risks involved and ensuring that appropriate inventory balances are held in order to meet future demand, whilst not holding excessive levels which may expose the Group to unnecessary risk.

 

END

 

 

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