Treatt, the manufacturer and supplier of innovative ingredient solutions for the flavour, fragrance, beverage and consumer product industries, is pleased to announce the conditional sale of Earthoil Plantations, a wholly owned subsidiary of Treatt, which specialises in the supply of pure, organic, fair trade essential and cold pressed vegetable seed oils for the personal care and cosmetic industries, to Univar Limited(the “Buyer”) (the “Sale”). Subject to the satisfaction of certain conditions, the Sale is expected to complete on 31 May 2018 (“Completion”).
The consideration of £11m (subject to an adjustment based on Earthoil Plantations' actual trading performance in April and May 2018), is receivable in cash in two stages; 90% on Completion and a deferred payment of 10% twelve months after Completion.
The Group launched its updated five-year strategic plan in 2017. The new strategic plan, to drive the business through to 2022, is clearly focused on the Group's key product categories of citrus, sugar reduction and tea. Given that strategy, the Board considered personal care ingredients as non-core and this sale is the result of a process undertaken to realise value for the Group.
The Sale does not include the Kenyan subsidiaries which will continue to supply Earthoil Plantations under a three-year supply agreement. Transitional services arrangements with Earthoil Plantations have also been agreed for an initial limited period of up to six months from completion.
The Group intends to use the proceeds from the Sale to strengthen its balance sheet, and thereby increasing debt capacity for future growth and investment in the Group's key product categories. The Sale is expected to be slightly earnings dilutive for the current financial year ending 30 September 2018.
The audited financial results of Earthoil Plantations for the year ended 30 September 2017 showed revenues of £7.7m (2016: £7.9m) and pre-tax profit of £1.18m (2016: £1.05m). The gross assets of Earthoil Plantations were £7.0m as at 31 March 2018.
Commenting on the Sale, Group CEO, Daemmon Reeve, said:
“As Treatt continues to grow and we embark on our revised 2022 strategy, Earthoil Plantations has become non-core to the Group. This sale will allow us to focus our efforts and resources on developing our business in the global supply of innovative ingredient solutions to the flavour, fragrance, beverage and consumer product industries.
May I take this opportunity to thank everyone at Earthoil Plantations for the contribution they have made to Treatt over the past ten years. I am proud to have seen the business develop under Treatt's ownership and wish the company and its employees a bright future under new ownership.”