ANNUAL REPORT & ACCOUNTS 2022
We deliver long-term sustainable growth by strategically increasing our relevance to the growing global
markets we serve. Our natural extracts and synthetic ingredients are used by the world’s leading
avour and fragrance houses, and beverage manufacturers, to turn good products into great ones.
TREATT
OUR JOURNEY
A new chapter
FLAVOUR
FRAGRANCE HEALTH
WHAT’S IN OUR REPORT
Overview
Welcome 2
Highlights 3
At a Glance 4
Strategic Report
Our Business Model 6
Chairman’s Statement 8
Market Overview 10
Our Ambition and Strategy 14
Chief Executive’s Review 20
Key Performance Indicators 22
Sustainability 24
Stakeholder Engagement 50
Financial Review 54
Principal Risks and Uncertainties 62
Going Concern and
Viability Statement 68
Corporate Governance
Board of Directors 70
Corporate Governance Statement 72
Nomination Committee Report 79
Audit Committee Report 81
Directors’ Remuneration Report 84
Directors’ Report 100
Statement of Directors’
Responsibilities 103
Financial Statements
Independent Auditor’s Report
to the Members of Treatt Plc 104
Group Income Statement 110
Group Statement of
Comprehensive Income 111
Group Statement of Changes
in Equity 112
Parent Company Statement
of Changes in Equity 113
Group and Parent Company
Balance Sheets 114
Group and Parent Company
Statements of Cash Flows 116
Group Reconciliation of
Net Cash Flow to Movement
in Net Debt 118
Notes to the Financial Statements 120
Other Information
Notice of Annual General Meeting 150
Parent Company Information
and Advisors 157
Financial Calendar 158
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TREATT PLC Annual Report & Accounts 2022
Why we’re here
TREATT
OUR PURPOSE-DRIVEN ORGANISATION
STRENGTHENING OUR FOUNDATIONS
What we do How we do it
‘If purpose is the input, then passion is our output.’
We EXTRACT EXCELLENCE and ENHANCE EVERY DAY making the
world TASTE BETTER through the manufacture and supply of AUTHENTIC
NATURAL EXTRACTS and IMPACTFUL SYNTHETIC INGREDIENTS for the
beverage, and avour and fragrance industries with PRIDE and PASSION,
INTEGRITY, RESPECT and TRUE TEAMWORK.
REALISE OPERATIONAL EFFICIENCIES
Our ongoing transition to a new site in the
UK, coupled with the recent expansion in
North America, has been the catalyst for truly
transformative operational eciencies that will
benet, not only our growing customer base,
but also our people.
FOCUS ON OUR CULTURE
One cannot underestimate the impact that
the last two and a half years have had on all
organisations across all industries. The last
year has shown us the strength of our people
but has also importantly reminded us of the
constant need to invest in and prioritise our
culture, as it is central to our ability to create
value for all our stakeholders.
DEEPEN OUR MARKET INSIGHTS
Increasing our relevance to the growing
markets we serve remains a key aspect
of our ve-year plan, making our recent
investments in market insights and
customer research more prudent than ever.
DRIVE SUSTAINABLE COMMERCIAL GROWTH
We are recalibrating the business around the
needs of our customers, focusing on how we
can accelerate growth in key territories, such
as China, in such a way that will improve the
protability of our organisation.
Becca Day, People Business Partner
Having navigated an extraordinarily challenging year, we move into the next phase of growth with a heightened sense of focus on
our strategy and a deepened appreciation for what we know our people can deliver. Over the next ve years, we will continue to:
TREATT PLC Annual Report & Accounts 2022 2
Revenue1
£140.2m
£112.2m
£112.7m
£109.0m
£124.3m
£140.2m
12.8%
2021 20222018 2019 2020
Prot Before Tax And Exceptional Items1
£15.3m
£12.6m
£13.3m
£14.8m
£20.9m
£15.3m
(27.1%)
20222018 2019 2020 2021
Adjusted Net Operating Margin2,3
11.3%
12.0%
12.4%
13.8%
17.2%
11.3%
(590bps)
202220192018 2020 2021
Prot Before Tax1
£16.2m
£16.2m
£11.5m
£13.7m
£19.6m
(17.5%)
2018 2018 2020 2021 2022
£12.5m
2019
Adjusted Return on Average Capital Employed3,4,5
11.6%
21.9%
18.8%
18.5%
20.9%
11.6%
(930bps)
20222018 2019 2020 2021
Dividend Per Share6
7.85p
5.10p
5.50p
6.00p
7.50p
7.85p
4.7%
20222018 2019 2020 2021
HIGHLIGHTS
FINANCIAL
1 Excluding discontinued operations in 2018, 2019 and 2020. There were no discontinued operations in 2021 and 2022.
2 Operating prot is calculated as prot before net nance costs and taxation.
3 Excludes exceptional items, details of which are provided in note 8 of the nancial statements.
4 The methods of calculating nancial key performance indicators are shown on page 22.
5 Return on average capital employed is considered to be an alternative performance measure, details on these and the equivalent statutory measures are provided in note 31 of the nancial statements.
6 The dividend per share relates to the interim dividend declared and nal dividend proposed in the corresponding nancial year, details of which are provided in note 10 of the nancial statements.
PRODUCTION COMMENCED AT
OUR NEW UK FACILITY
Majority of our UK manufacturing
transitioned to the new site during
the third quarter, with a record sales
month reported for the UK business
in August 2022.
INVESTMENT IN OUR PEOPLE
INFRASTRUCTURE
Execution of planned investment in
the knowledge, talent and capability
of our people resources, supported by
the creation of an experienced global
executive leadership team.
INFLATIONARY PRESSURES
ACROSS THE SUPPLY CHAIN
Planned mitigation of the impact
of risings costs through measures
including sales price increases,
margin discipline, strengthened cost
controls and strategic inventory build
to maintain supply.
CONTINUING TO DRIVE AND EMBED
OUR SUSTAINABILITY STRATEGY
Introduced our people, planet and
performance pillars to clarify our
strategy and progress, working
with colleagues across the business
on key priorities to ensure our
collective eorts make for positive,
measurable change.
OPERATIONAL
A PROMISING FIRST YEAR
FOR OUR CHINA ENTITY
First full year of trading by our
China business, overcoming further
lockdown restrictions to deliver
revenue growth and win new
and promising opportunities in
this market.
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Global
AT A GLANCE
MAKING THE WORLD TASTE BETTER EVERY DAY
Our natural extracts and synthetic ingredients are used to dierentiate products across the
food and beverage, and personal care sectors the world over.
WHO WE ARE AND WHERE WE OPERATE
IMPACTFUL SYNTHETIC INGREDIENTS
Our high impact and synthetic aroma ingredients are predominantly
manufactured in the UK, minimising risk and ensuring a consistently high
quality for our customers, no matter what scale. Our impeccable customer
service and unrivalled regulatory expertise are relied upon by customers
across the globe, as is the breadth of our product portfolio.
AUTHENTIC NATURAL EXTRACTS
We have been a key player in the natural extracts industry for over a century
and bring our inimitable wealth of knowledge to every interaction with our
customers. The strength and diversity of our supplier relationships ensure we
deliver consistently high quality and cost-eective products at scale. Whether
we are working with citrus, tea, coee, fruit & vegetables, herbs, spices, &
oral ingredients, or sugar reduction products, we enable our customers to
achieve their commercial goals.
Products sold In 75+
countries
1,700
People
425
Locations worldwide
3
Split of natural extracts
and synthetic ingredients
79%
Sales
£140.2m
Number of charities
supported
12
Customers
786
“Our position in the value system is a huge
advantage. We know these raw materials
like no one else, consistently capturing the
best of nature so that our lemon tastes
the same, whether it’s being enjoyed in
Edinburgh or Ecuador.”
Melanie Cooksey-Stott,
Chief Supply Chain Ocer
TREATT PLC Annual Report & Accounts 2022 4
A YEAR IN PICTURES
A YEAR IN
Pictures
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OUR BUSINESS MODEL
WELCOME TO OUR WORLD
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TREATT PLC Annual Report & Accounts 2022
OUR BUSINESS MODEL CONTINUED
OUR CHANNEL MIX
FLAVOUR HOUSES
We forge relationships with the key avour house companies in each of our territories, developing strong connections shaped by our
unrivalled ingredient knowledge and dedication to outstanding customer service.
BEVERAGE BRANDS
Our authentic natural extracts and ingredients are sought after for
their ability to bring the ‘real deal’ to a nished beverage by the
world’s biggest brands, as well as start-ups tipped for success.
Customers continue to choose us because we:
• Always put them rst
• Have a broad and market-driven product range
• Are world-class technical experts
• Service diverse routes to growing markets
• Proudly take a responsible approach to sourcing
• Mitigate risk with dual-site manufacturing in strategic locations
OUR ADDRESSABLE MARKET
The global alcoholic beverage market will increase in value to over
USD 1.98 trillion by 2025, with the global non-alcoholic beverage
market expected to reach a valuation of USD 1.3 trillion by 2030.
Adult millennials and GenZ consumers make up almost 50%
of the world’s population, representing a potential four billion
health-conscious consumers aligned with our oering.
2022 CUSTOMER
PERCEPTION SURVEY
In this year’s survey, we sought
to understand how our brand was
perceived by our customers in
each of our key territories.
The ndings showed that our
customers universally value our
quality, the trust we have earned,
and our ingredient expertise.
38
NPS score
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TREATT PLC Annual Report & Accounts 2022
CHAIRMAN’S STATEMENT
A YEAR OF PROGRESS
Tim Jones
Chairman
Culture
As I step down as Chairman after eleven years,
I believe the Company has made signicant
progress this year, notwithstanding some
disappointment around protability. We have
completed a period of substantial transition and
consolidation, which enables us to expand our
production capacity, launch new products, attract
new customers and develop new markets and
territories for years to come.
A YEAR OF PROGRESS
Many years of planning have come to fruition
this year as we transferred operations to our
new UK premises, grew our revenues, enhanced
our Board and nalised our new global executive
leadership team.
The new UK site oers many benets, from
increased capacity and eciency to more
advanced systems, technology and sustainability
benets. Moving operations into Skyliner Way
was a challenge, but our teams rallied to keep our
customers on board and came together to get
goods out of the door. The strength of our culture
was evident as we overcame the teething issues
and ensured we delivered on our substantial order
book, with a record month in August.
To make the most of our investments in both the
UK and US sites, we know that we needed to
enhance and expand our people infrastructure. We
needed to build a global leadership team of senior
people to work with Daemmon and I am delighted
with the talent we have brought in.
These infrastructure updates and changes to the
team are undoubtedly vital to our ability to deliver
on the exciting market opportunities we have long
perceived and are the reason I have remained as
Chairman to see them through.
PERFORMANCE
In many ways, the performance of the Group has
been strong. We have seen good growth across all
categories, aside from hard tea. That such growth
has not been fully reected in the bottom line is
frustrating, and caused by a number of factors,
including the margin impact in hard tea, the impact
of foreign exchange, input cost increases and
lockdowns in Shanghai – the home of our China
facility. I am condent that learnings are being
taken forward in all of these areas.
The new executive leadership team is rmly
focused on optimising our increased capacity
and sales through to the bottom line over coming
years. With sales volumes going up, strong existing
customer relationships, new customer wins,
expanded market presences and vibrant new
categories like coee, there are, in my view, many
reasons to be optimistic about Treatt’s performance
and potential.
It’s a new chapter for Treatt in many ways, with new UK premises, a new Executive Leadership Team
and a new Chairman ready to hit the ground running.
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TREATT PLC Annual Report & Accounts 2022
Our values
Our values are the fuel that drives the culture and
success of our growing business. They are the
cornerstones of our organisation as they were
created, owned and are championed by all our
employees over three continents.
INTEGRITY
We are committed to excellence at
every turn whilst working to the
highest possible standards across
the business.
TEAMWORK
Working in partnership is how we
best serve our customers, exceed
their expectations and meet their
needs, no matter how ambitious.
CHALLENGE
We strive for progress across the
business and always work to nd a
better way to improve our service.
PRIDE & PASSION
Our people love what they do and
are driven by the desire to delight
everyone they work with.
BOARD CHANGES
We have enhanced the Board over the year, with
the addition of Christine Sisler and Philip O’Connor.
Christine brings direct beverage experience
from one of our key clients. She understands
the business and our markets, particularly in the
US, and brings key skills in development and
commercialisation amongst many others.
Philip brings substantial experience, having been a
CEO and Finance Director within the food industry.
He founded two successful start-up businesses
and has expertise in high growth businesses and
in M&A.
I am also delighted that Vijay Thakrar will be
my successor. Vijay has developed an extensive
knowledge of Treatt which will complement his
signicant experience from a broad business and
non-executive career covering a number of large
international organisations.
DIVIDEND
The Directors are pleased to propose a nal
dividend of 5.35p per share (2021: 5.50p), which
represents an increase in the total dividend for the
year of 4.7% to 7.85p (2021: 7.50p). If approved by
shareholders at the Annual General Meeting, the
nal dividend will be payable on 16 March 2023
to all shareholders on the register at the close of
business on 3 February 2023.
OUTLOOK
The foundations of the Group are stronger than
ever. Following the signicant work completed over
the last couple of years, Treatt is well placed to
maximise the opportunities presented by its new
premises in Skyliner Way, and take the business
to the next level in terms of customer attraction,
innovation and growth across our markets.
On a personal level, to see the business grow and
develop into what it is today over the 11 years I
have spent with Treatt has been a career highlight.
The dierence in premises, infrastructure, capacity,
people, culture and strategy from then to now is
extraordinary. Treatt has made huge leaps in so
many aspects of what we do and is now perfectly
poised for bigger things. I am enormously proud
of what the business has accomplished across the
last decade and wish Daemmon, Vijay, everyone at
Treatt and all my fellow shareholders good fortune
for the future.
Tim Jones
Chairman
29 November 2022
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TREATT PLC Annual Report & Accounts 2022
Douglas Rash
Chief Commercial
Ocer
“ Whether it’s a vitamin-infused super fruit
smoothie someone drinks rst thing in
the morning, the nitro cold brew coee
that gives the mid-morning caeine hit,
or the canned ready to drink cocktail
enjoyed on the commute home, beverages
increasingly need to be better for us and
the world we live in.”
Adult millennials and GenZ consumers make up
almost 50% of the world’s population, representing
a potential four billion health-conscious consumers
aligned with our oering.
MARKET OVERVIEW
OUR ADDRESSABLE MARKET
The global alcoholic beverage market will increase in value to over USD 1.98 trillion by 2025, with
the global non-alcoholic beverage market expected to reach a valuation of USD 1.3 trillion by 2030.
“ Understanding the macro environmental trends impacting beverage
innovation is very much part of the modern skillset at Treatt.”
MARKET OVERVIEW
Understanding the macro environmental trends
impacting beverage innovation is very much part
of the modern skillset at Treatt. Our insights
team work closely with our innovation, product
management, applications, and sales colleagues to
ensure we maintain our relevance to the dynamic
and challenging markets we all serve.
We use these insights to shape our own new
product development, as well as support our
customers’ innovation strategies as they
seek to dierentiate themselves in rapidly
changing environments.
While the pace of innovation in our industry
quickens, we continue to see very strong signals
that suggest consumer interest in Health &
Wellbeing has morphed from being a trend to a way
of life. It remains a key motivator for consumers
globally as it continues to evolve, sparking new
opportunities for beverage innovation.
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TREATT PLC Annual Report & Accounts 2022
Top ve
Environmental/ethical claims feature in
the top ve claims across all new product
launches in all regions globally
76%
of global consumers are actively trying to
reduce or moderate consumption of sugar
USD 849.7bn
The global organic food and beverage market is
expected to grow from USD255.2 billion in 2020
and reach USD 849.7 billion in 2028, growing at
a CAGR of 16.4% during the forecast period
(Source: Organic Food and Beverages Market by Organic Food,
By Organic Beverages, By Distribution Channel, Region, Global
Industry Analysis, Market Size, Share, Growth, Trends, and
Forecast 2021 to 2028 – Fior Markets)
Six-in-10
The degree to which a product or service is
enjoyable or unique is routinely inuential for
around six-in-10 global consumers, which shows
an increase of +6% since 2021
MACROTREND: HEALTH FOR ALL
As the Health & Wellbeing movement evolves, we
are seeing increasing interest in consumer goods
and services that are designed for everyone,
and every occasion. This trend speaks to a
growing interest in mental wellbeing, as well as
one’s physical health, and now crucially, also
encompasses health of the planet.
TRENDBITES
We go beyond the macro to understand how
megatrends like this evolve – and work with our
internal teams, as well as our customers, to best
understand how all of this creates opportunities for
dierentiation in our industry.
SUSTAINABILITY AND ETHICS
This trend was born from the increasing desire
to feel good about consumption choices in
everyday life. There is mounting awareness and
concern surrounding the scale, complexity and
interdependence of social and environmental
challenges globally.
MODERATION AND AVOIDANCE
Consumers exhibit restraint as a means of
supporting or improving their wellbeing. In doing
so, they are moderating ‘villain’ ingredients, such
as sugar and articial ingredients for the good
of their long-term health. The ‘no added sugar’
positioning is valued and increasingly embraced by
manufacturers as one of the most prominent on
pack claims across beverage categories.
FRESH AND NATURAL
A growing population of global consumers continue
to shun highly processed products and articial
ingredients, in favour of those with stronger natural
credentials. Such qualities are often perceived as
healthier, cleaner, more authentic, and ultimately
better quality.
SENSORY AND INDULGENCE
Consumers are seeking enjoyment beyond
tangible products themselves. They are becoming
increasingly experience-driven and are willing to
pay more for an enhanced brand experience. It is
therefore becoming more important for brands to
perform at an experiential level, and oer, varied,
novel, and complex sensations for optimal enjoyment.
MARKET OVERVIEW CONTINUED
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TREATT PLC Annual Report & Accounts 2022
MARKET OVERVIEW CONTINUED
DRIVERS
Health
RTD alcohol (which includes hard seltzers) has
grown faster than any beverage category since
2018. The category was valued at USD 32.94
billion last year, and is expected to reach USD
85.5 billion by 2030, growing at a CAGR of 11.2%.
North America lead the market and accounts
for a signicant revenue share due to the high
demand for on-the-go oerings. North America
represents 40% of the global market, and with
the hard seltzer market feeling saturated, brands
are looking to dierentiate themselves in this
space as consumers continue to look for ‘better-
for-you’ options.
Fastest growing avours:
• Cherry
• Guava
• Kiwi
WHAT’S DRIVING GROWTH?
Flavour impact
RTD cocktails are all about the sensorial benets
they bring – think taste, avour, or texture.
Research from International Wines and Spirits
Record shows that avour is the number one
reason why people drink RTD cocktails.
It’s no surprise that premium products
with natural ingredients are the
driving force in this category.
MARKET OPPORTUNITIES BY BEVERAGE CATEGORY
READY TO DRINK (RTD) ALCOHOL
“ Sustainability is no longer a ‘nice to have’
as consumers expect brands to move at
the speed of societal change by making a
genuine commitment to being transparent
about progress”
WHO’S DRIVING INNOVATION?
GenZ and Millennials are the dominating cohorts
in a complex, ve generation consumer landscape.
Transparency, accountability, and trust are key to
engaging with these two key demographics, as
their inuence over innovation will only intensify.
The state of the climate and the move towards a
green economy are also high on the agenda.
Quality innovation
The RTD space is ripe for creativity. Most new
product launches in the past 12 months have
had a premium slant and, in the US, spirit-based
cocktails such as vodka, tequila and rum are
driving the growth, pushing ahead where most
products are still malt based.
Occasion variety
It seems there is an RTD option for everyone and
every lifestyle, oering a way for consumers to
experiment with dierent avours and spirits.
In North America, COVID-19 saw this category
explode and that growth continues as brands
look to reach consumers through non-traditional
o premise channels that oer a broad range
of dierent consumption opportunities
and occasions.
WHAT’S NEXT?
Whisky-based cocktails and high proof spirit-
based cocktails are growing, with a world of
spirits to be explored and endless avour pairing
options available. Experts also expect to see
growth in non-alcoholic spirit-based cocktails too.
4bn
GenZ and Millennial
consumers represent a
potential of four billion
end consumers aligned
with our oering
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TREATT PLC Annual Report & Accounts 2022
FUNCTIONAL DRINKS READY TO DRINK COFFEE
With an increased emphasis on how to improve
and protect one’s wellbeing, has come a
proliferation of innovation in this category, as
more and more drinks are brought to market with
claims relating to the product’s performance.
This broad category encompasses everything
from sports and energy drinks to vitamin-
enhanced avoured waters, and kombucha.
This market is predicted to grow at a CAGR of
9.38% to reach a value of USD 265.9 billion
by 2030.
Fastest growing avours:
• Citrus
• Tea
• Ginger
WHAT’S DRIVING GROWTH?
Heightened awareness
While there is a vast range of health supplements
on the market, consumers are increasingly
looking to get their vitamins from food and
beverage. The increased knowledge around
the power of functional ingredients has had
a signicant impact on this thriving category.
The rise of functional beverages and fermented
drinks bringing a new era for innovation and
popularisation.
Ecient consumption
As younger consumers seek to maximise every
drinking occasion, they are looking for ways to
improve or boost products that are already part
of their daily routine. Fruit juices with enhanced
vitamin C levels, avoured waters that have
additional protein for a post workout refuel, and
an RTD kombucha that supports good gut health
are all common place.
Category hybridisation
The demand for beverages with functionality
beyond hydration spans all categories, both
alcoholic and non-alcoholic. As consumers
expect this characteristic across all consumption
occasions, there is an increasing uidity across
traditional pillars in our industry.
WHAT’S NEXT?
Nootropics are supplements that claim to improve
cognitive functions such as mood, memory,
creativity, or motivation in healthy individuals.
The two most common products on the market
currently are aimed at improving focus and
calming the mind, so there is still potential for
this area to grow.
While the pandemic had an impact on the out-
of-home coee market, demand picked up again
quickly as the economy reopened and interest
in the category continued to grow. It is still seen
as a personal luxury – a deeply personal ritual –
and isn’t something that consumers will readily
or willingly go without.
WHAT’S DRIVING GROWTH?
Clean indulgence
Cold brew coee speaks to the desire for a
healthy beverage that is not only superior in taste
but is also free of articial ingredients. Cold brew
coee market size is over USD 674.26 million
this year and is expected to grow at a CAGR of
25.13% until 2027.
Continued premiumisation
As naturalness, provenance, and the product’s
ability to deliver on taste all continue to grow in
importance, the shift towards better quality coee
will continue moving one way. As consumers’
tastes continue to become more sophisticated,
brands must ensure products keep pace and
deliver that all important experience.
Flexible ingredient
Whether it’s coee-infused water, or espresso
martini, coee is one of the most broadly used
ingredients across functional drinks, carbonates,
bottled water, and concentrates, as well as
RTD alcohol.
WHAT’S NEXT?
As technology in this space advances,
at-home consumption is likely to evolve
as consumers look to enjoy the ‘coee
shop experience’ without having to
leave the house, as well as on the go.
Sources:
• Global Data
• Mintel
• Beverage Daily
• National Coee Association
MARKET OVERVIEW CONTINUED
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TREATT PLC Annual Report & Accounts 2022
WE WILL DO THIS BY:
OUR AMBITION AND STRATEGY
DELIVERING LONG-TERM SUSTAINABLE GROWTH
We will deliver long-term sustainable growth by increasing our relevance to growing global markets.
By focusing on increasing our relevance, and therefore our sustainable competitive advantage,
we will continue to grow our business in all key territories.
EMPOWERING
PEOPLE
They are the heart of all we do, and
development in this area will unleash
the value of our greatest opportunities
through exceptional people
TRANSFORMING
TECHNICAL
We will treble our spend on R&D over
the next ve years
EMBEDDING
SUSTAINABILITY
One of the lenses through which we view
business decisions
DRIVING
OPERATIONAL
EXCELLENCE
We are maximising our incredible
facilities and will double capacity
by 2028
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TREATT PLC Annual Report & Accounts 2022
STRATEGY IN ACTION
1. EMPOWERING PEOPLE
1Ä
Our culture has long been cited as an integral part of why some of the industry’s brightest minds join our team,
and the world’s biggest brands partner with us time and time again.
This year we appointed a diverse team of Culture
Ambassadors, representing all business functions
across each territory. They are working with
our internal communications department, our
People Team and Executive Leadership Team, to
understand how our culture is evolving and what
needs to be done to ensure we are living up to the
high standards we set ourselves.
“ While others may see this as progressive,
putting ourselves under the microscope
to understand how and where we need to
improve is very much part of our DNA at
Treatt. We have a great culture, but don’t
take it for granted.”
Steven Catanzaro
Sales Associate and Culture Ambassador, USA
At Treatt, keeping our culture on track is everyone’s
responsibility. We invest in it, prioritise it, and
recognise that our work is never done. Far from
being a xed concept, our culture evolves with our
business, and the people that work here.
The last two years have been hugely challenging
for all organisations the world over, irrespective of
size or industry. We would be remiss to not look to
understand the impact this period has had on our
culture, and as an organisation fully committed to
continuous improvement, we are working on doing
just that.
“Our people have a purpose, passion,
and drive that you don’t experience all
that often – they truly are our ‘not so
secret’ secret ingredient.”
Jo Mapston,
Interim Chief People Ocer
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TREATT PLC Annual Report & Accounts 2022
WHAT OUR PEOPLE AND OUR CUSTOMERS THINK
“ Part of the reason I joined
Treatt was because of the
emphasis they put on doing
the right thing for people,
and the planet. It’s important
to me to work somewhere
that stands for something.”
Kesha Allen
Marketing, UK
“ Sustainability is at the heart of
our business strategy. We have
set stretching targets as part of
our Healthier People, Healthier
Planet strategy and we
recognise that we cannot meet
these without our suppliers.
It is great to see Treatt is
proactively playing its part
through eciency and process
improvement programmes, as
well as driving transparency in
its own supply chain.”
Leading British soft drinks producer
STRATEGY IN ACTION CONTINUED
2. EMBEDDING SUSTAINABILITY
Sustainability is one of the lenses through which we proudly make key business decisions.
Our Global Sustainability Manager, and our
global Sustainability Working Group, have made
great progress on the implementation of our
sustainability strategy. A strong emphasis has been
placed on the importance of ensuring our global
workforce understand our plans and have a clear
sense of focus as to the part they play in improving
our understanding of, and ultimately lessening, the
impact our organisation has on the planet.
You can learn more about our work on
sustainability on pages 24 to 49.
16
TREATT PLC Annual Report & Accounts 2022
STRATEGY IN ACTION CONTINUED
3. TRANSFORMING TECHNICAL: INVESTING IN INNOVATION
‘What is going to be dierent?’ is the burning question people ask Dr Wolfgang Tosch, who joined Treatt
as our Chief Technical and Scientic Ocer in December 2021.
Wolf, having held several senior positions at
very successful global beverage and ingredient
businesses, throughout his career, brings a
wealth of experience in our industry, as well
as big ambitions for Treatt’s future. Creating
and maintaining value for our customers and
shareholders remains the cornerstone of
everything Wolf and his team are building and
embedding in Technical.
When asked what will be dierent (or the same)
to deliver the big ambitions for Treatt, Wolf is clear
on the focus and direction required, having pulled
together a series of interconnected ‘pillars’ that
give shape to our aligned priorities; Empower
People, Enhance Quality, Operate Eciently and,
critically, Innovation Implementation.
“One thing that will remain unchanged is the value
of our people. One of Treatt’s biggest and most
competitive assets is undoubtedly the quality and
breadth of our technical expertise and knowledge.
Curating and continuing to build our knowledge and
capability is critical.”
As we move forward, empowering our people and
continuing to invest in their success remains a
strong focus as we embed our performance-driven
culture; this enables clear accountability, creates
a supportive and collaborative environment where
people can thrive, fosters a growth mindset and,
ultimately, creates the positive cultural habits of
successful organisations. This, coupled with strong
internal relationships enables us to deliver a great
experience for our customers.
Dr Wolfgang Tosch
Chief Technical and
Scientic Ocer
Empower
People
Operate
Eciently
Enhance
Quality
Innovation
Implementation
Quality
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 17
TREATT PLC Annual Report & Accounts 2022
Quality is everything to us and at the heart of our
business. It underpins our values. The emphasis on
quality is not new for Treatt; it is a core part of how
our brand is perceived by our customers across all
product categories, in every territory.
The dierence going forward will be the leadership
emphasis on ‘right rst time’ across the value
chain and our commitment to upholding the correct
processes, tools, and governance, embedding this
deeply across all areas of the organisation.
This provides clarity that empowers our people to
deliver, drives consistency in decision making and
execution and continues to give our customers
condence that we are both delivering, and holding
ourselves accountable, to the highest standards.
This too will transcend our operations and our
operational excellence programme. Over the last
ve years, we have made signicant investments
in our operational infrastructure; our landmark
UK facility and our expanded US facility. The
benets are far-reaching, including everything
from signicantly increased capacity and space
to grow, to more ecient ways of working for
our operators.
By establishing globally aligned ways of working,
self-directed teams and eectively managing cost
we are harmonising our eorts across technical
and manufacturing in powerful and creative ways
that will drive sustainable business success. The
dierence is that this streamlining will have a
transformative impact on our ability to identify and
respond to opportunities for improvement on a
global scale, while being exible enough to respond
to market and business changes – which is
very exciting.
Innovation is also critical to our future growth
and transcends across our product portfolio, new
processes and technologies. However, dening
‘innovation’ and what this means for Treatt has
been an important part of the work we have done
this year to align our global teams, our approach
and our execution.
Being able to innovate is something we take
pride in and we have had great success in the
past. The dierence here is how we ensure the
long-term viability of our innovation capability
and partnerships and, importantly, successful
implementation. The way in which we are going
to manage this will be through the development of
a series of new processes and tools that support
how we innovate with our customers, focusing on
the right opportunities and, ultimately, create value.
With dedicated resources allocated to improving
the ways in which we innovate, we are excited to
feel the benets of this as we look to the future.
We would be remiss not to consider our impact
on the planet, and people, as part of this process.
Sustainability is critical to our future success and
will become an increasing part of how we create
value for our stakeholders.
My rst year has been incredible. Getting to know
the people behind the products has been the
highlight, it’s rare to see such a diverse group of
‘builders’ so invested in a company’s success. Even
during challenging times, we have pulled together,
and that camaraderie and pride is very special, and
is very Treatt.
STRATEGY IN ACTION CONTINUED
3. TRANSFORMING TECHNICAL: INVESTING IN INNOVATION
“ For Treatt, innovation is the
process by which we remain
commercially relevant,
through the implementation
of new ideas.”
Increasing
investment from
2% to 5%
of revenue by 2028
18
TREATT PLC Annual Report & Accounts 2022
STRATEGY IN ACTION CONTINUED
4. DRIVING OPERATIONAL EXCELLENCE
“Moving to Skyliner Way will bring about
short, mid, and long-term transformational
eciencies that will have a lasting impact
on the protability of our business.”
Babette Norman,
Manufacturing Director, UK
“ The potential
you have now
could not be
clearer.”
Customer
“ This place is
incredible!
It must feel
brilliant getting
to work here
every day.”
Customer
“ Can I stay
forever?!”
Customer
258
people under one roof
100%
renewable electricity in
the UK
6
buildings’ worth of
storage take up a fraction
of our new warehouse
Digital
Moving from manual
manufacturing to digital
automation
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 19
TREATT PLC Annual Report & Accounts 2022
There have been many positives this year,
including strong top line growth and the successful
transition of almost all UK operations to our new
site at Skyliner Way. However, we have also faced
a number of challenges that have aected our
protability; we are, however, determined to take
learnings from these challenges and ensure we
have greater resilience moving forwards.
Fundamentally, we remain optimistic and
encouraged by the performance of the Group,
our enhanced capabilities and the signicant
opportunities across our markets. We feel that
the business is strategically sound and we’re
determined to reinvigorate the growth path we’ve
been on for the past nine years.
PERFORMANCE
As reported in August 2022, we saw a
disappointing performance from our higher margin
tea category this year. In the rst half of 2021,
we were involved in a large and very protable
hard tea product launch that did not repeat to
anywhere near the level we had anticipated. It was
a niche product and an unusually sized win for the
category, meaning its subsequent lack of success
had a disproportionate eect on our margins. The
vast majority of our tea business remains stable
and reliable, reecting the diversied nature of
our wider portfolio, which sells a multitude of
ingredients that go into a wide variety of brands,
meaning we’re typically not highly exposed to such
volatility in margins.
We have also reported on the adverse impact of
increasing volatility in FX movements during the
second half of the year. In response to this situation,
we have taken measures to improve controls and
ensure this is not an issue we face again. For more
information on measures taken around FX, see the
Financial Review below.
Finally, our China subsidiary has been heavily
impacted by extended COVID-19 related restrictions
which have led to the loss of some higher margin
revenue in the year. Though it’s unfortunate to still
be faced with such restrictions, we have built high
quality relationships with a number of signicantly
sized customers in China and remain very
optimistic about the potential of the region.
These challenges have been in stark contrast to
much of our performance. We’ve seen a strong top
line performance across the portfolio, with double
digit growth in almost every category apart from
hard tea, with a particularly good performance
across citrus, synthetic aroma and health &
wellness. Some of that growth has come from
new product and customer wins across multiple
categories and geographies, and some of it has
come from growing existing customers whilst
passing on selected input cost increases. Coee
is a particularly exciting category for us at the
moment, and one we have high hopes for with our
new team now in place.
CHIEF EXECUTIVE’S REVIEW
A TRUE PERFORMANCE CULTURE
It’s been a mixed year for the business, with very encouraging performance across
many categories and signicant infrastructure progress dampened
by short-term protability headwinds.
Daemmon Reeve
Chief Executive
Ambition
20
TREATT PLC Annual Report & Accounts 2022
SKYLINER WAY
Undoubtedly, the highlight of the year is that
manufacturing is up and running at Skyliner Way.
As a result, within several months of the move,
we achieved record levels of sales from the UK in
August 2022. It is very gratifying that we are already
seeing the potential for eciencies from the site and
this speaks well to our ambition for the future.
On top of the obvious short and long-term
eciency and capacity benets of the new site,
it’s also a game changer for us when it comes to
customer attraction. We’ve been able to onboard a
number of signicant target customers already and
are condent we are changing the way the market
sees the business. Initial customer feedback is
positive on the new modern site, facilitating greater
collaboration on developing avours and fragrance
solutions for end consumers.
We’re proud of how everyone at Treatt came
together to make the transition a success. During
a time of great change for the business, including
the biggest move for the business in 50 years,
I’m hugely grateful to the team for their exibility
and dedication. It’s been a real testament to the
strength of our culture of collaboration and agility.
STRATEGY
As presented at our Capital Markets Day in May
2022, we have nessed how we communicate our
strategy though, as before, we remain very much
focused on delivering long-term sustainable growth.
PEOPLE
Following substantial investment in our people in
the past two years, we believe we now have the
right team in place to seize the multiple growth
opportunities available. We have created a new
executive leadership team to help us reach the next
level, and I’m very pleased with the strength of
the individuals we have brought in. Our new CFO
Ryan Govender has also brought a lot of relevant
experience to the role and has very quickly bedded
into the business.
Board changes are often bittersweet as we
lose trusted voices but gain fresh thinking and
challenge. As Tim Jones retires, it feels like
another sign that we’re at the end of a chapter
for Treatt. He has been a great mentor to me for
the last 11 years and he will be greatly missed by
all as an enthusiastic and passionate supporter
of the business. I would like to personally thank
him for the immense role he has played in Treatt’s
development over the past decade. We have
an excellent replacement for our next chapter
in Vijay Thakrar, who has already built a great
understanding of the business and will bring new
entrepreneurial thinking to the role of Chair.
SUSTAINABILITY
We are seeing signicant benets of having
appointed a dedicated in-house Global
Sustainability Manager who is driving and
embedding our sustainability strategy throughout
our business and collaborating closely with
our customers.
During 2022, we have conducted energy audits
at our facilities in the US and the UK and have
committed investment to ensure we optimise
energy eciency and reduce our emissions; we
have collected our Scope 3 emissions for the
rst time in order to gain better visibility of our
total carbon footprint and we have considered
the possible physical and transitional impacts of
climate change on our business. We have also
launched our responsible sourcing policy and are
working with our suppliers to ensure that our
supply chain is resilient. I am proud of how the
business is adapting in support of both people
and planet.
OUTLOOK
Looking ahead, we are greatly encouraged by
the growth opportunities from new and existing
customers, particularly in the US and China and,
our ongoing progress in coee.
The key challenges for the year will be
macroeconomic driven. We are very cognisant
that there are pressures from multiple angles,
whether it’s interest rates, ination or the cost
of living crisis. However, as demonstrated most
People with purpose,
expertise and passion
425
Employees
recently during the pandemic, beverages are seen
as aordable luxuries and provide great resilience
in dicult economic times, and the market trends
towards healthier, natural products continue to
support our strategy.
Having taken learnings from the challenges which
impacted the business over the past twelve months,
we feel we can look forward with optimism. We
know our markets well and the premium quality
and authenticity we bring to the table are still in
high demand by consumers. As such, I’m condent
we have the right people and infrastructure in
place to reach more customers and consumers
than ever before.
Daemmon Reeve
Chief Executive Ocer
29 November 2022
CHIEF EXECUTIVE’S REVIEW CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 21
TREATT PLC Annual Report & Accounts 2022
KEY PERFORMANCE INDICATORS
FINANCIAL KPIs
RETURN ON AVERAGE
CAPITAL EMPLOYED1,2
11.6%
NET CASH/
(DEBT) TO ADJUSTED EBITDA1,2
(1.21)
GROWTH IN PROFIT BEFORE
TAX AND EXCEPTIONAL ITEMS1
(27.1%)
GROWTH IN ADJUSTED1
BASIC EARNINGS PER SHARE
(26.8%)
21.9%
2018 2019
18.8%
2020
18.5%
2021
20.9%
2022
11.6%
9.8%
(1.1%)
10.7%
37.2%
(26.8%)
Return on average capital employed is
an important measure used to assess the
protability of the Group relative to the
capital being utilised.
Net cash/(debt) is used to ensure that the
level of debt is appropriate relative to the
prots generated by
the business.
Prot before tax and exceptional items is
considered the most appropriate measure
of the underlying performance
of theGroup.
Adjusted earnings per share is considered
the most appropriate measure of
performance which is aligned with
shareholder value.
Return on average capital employed enables
stakeholders to see the protability of the
business as a function of how much capital
has been invested in the business.
It is important to ensure that the level of
borrowings can be supported by the cash
ow in the business. EBITDA is widely
recognised as a good indicator of the cash
generative performance in year.
Prot before tax shows the underlying
performance of the business for the year.
We have a clear policy on exceptional items
to ensure that only items (both positive and
negative) which would otherwise distort the
reported performance areexcluded.
Earnings per share is widely considered
one of the most important metrics used
by investors in order to place a value on a
company and therefore in turn impact upon
the share price. It lets shareholders know
how much prot was made for
each share they own.
We divide operating prot from continuing
operations (as shown in the Group income
statement) by the average capital employed in
the business, which we calculate as total equity
(as shown in the Group balance sheet) plus
net debt or minus net cash (as shown in
the Group reconciliation of net cash ow to
movement in netdebt), averaged over the
opening, interim andclosing amounts.
We divide the closing net cash or debt at
the year-end date by adjusted EBITDA.
Adjusted EBITDA is calculated as operating
prot before exceptional items (as
shown in the Group income statement)
plus depreciation and amortisation from
continuing operations as shown in note 5 to
the nancialstatements.
As shown in the Group
income statement.
As shown in the Group
income statement.
Why we measure it
Calculation
The Group has nancial KPIs which
it monitors on a regular basis at
Board level and, where relevant, at
operational executive leadership
meetings. The key performance
indicators shown here cover
a period of ve years which
is reective of the Board’s
long-term thinking.
8.1% 5.2%
11.3%
41.3%
(27.1%)
0.69
1.07
0.03
(0.39)
(1.21)
1 All KPIs are calculated excluding exceptional items (see note 8). They also exclude discontinued operations in 2018, 2019 and 2020.
2 Return on average capital employed is considered to be an alternative performance measure, details on these and the equivalent statutory measures are provided in
note 31 of the nancial statements.
2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
22
TREATT PLC Annual Report & Accounts 2022
PEOPLE
Our employees are central to our business and having happy, safe and engaged people, supported to deliver their full potential, is a key priority:
We have a number of
non-financial operational
KPIs, which are aligned
with our strategic
themes and measure
our progress against a
number ofpriorities.
TOTAL TRAINING
HOURS
VOLUNTARY EMPLOYEE
TURNOVER
WORKFORCE
DIVERSITY
REPORTABLE
ACCIDENTS
AVERAGE SICK DAYS
PER EMPLOYEE
5,508 9.4% male 61% female 39% 2 4
7,205 16.5% male 59% female 41% 1 4
Year to
2022
Year to
2022
Year to
2022
Year to
2022
Year to
2022
Year to
2021
Year to
2021
Year to
2021
Year to
2021
Year to
2021
Employee turnover refers to the
proportion of employees who have
voluntarily left Treatt over the last
year, expressed as a percentage
of total workforce numbers.
PLANET
We are committed to assessing the impact of our operations on the environment, to drive improvements:
SCOPE 1 AND 2 CO2
EMISSIONS (TONNES)
TOTAL WATER USED
(M³)
SUSTAINABLE
SHIPMENTS1
4,234 49,030 61%
4,546 53,149 79%
Year to
2022
Year to
2022
Year to
2022
Year to
2021
Year to
2021
Year to
2021
SEDEX REGISTERED
SUPPLIERS2
35%
46%
Year to
2022
Year to
2021
PERFORMANCE
Driving improvements in ethical and responsible business practices in our global supply chain is a priority:
1 See page 46
2 See page 48
KEY PERFORMANCE INDICATORS
NON-FINANCIAL KPIs
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 23
TREATT PLC Annual Report & Accounts 2022
SUSTAINABILITY
OUR APPROACH
Pillar Further details Sustainable development goalsAreas of focus
SUSTAINABLE ACTION
Everything we do has an impact on both people and the planet, so it’s essential we perform in an ethically, socially and environmentally responsible way.
Over the last twelve months we have made strong progress alongside our Environment, Social and Governance (ESG) consultants to deliver our sustainability strategy, working with colleagues across the business on
key priorities to ensure our collective eorts make for positive, measurable change.
• Embedding sustainability into our culture
• Reviewing our purpose, values and behaviours
• Reviewing our corporate giving and community relations strategy
• Living Wage Employer (UK)
• New labour and human rights policy
• 72% of our employees are shareholders
• Carbon emissions data collection and analysis, including Scope 3
• Carbon reduction strategy and incremental targets
• Committing to investing £200,000 p.a over next three years on energy
saving projects (USA)
• Task Force on Climate-Related Financial Disclosures (TCFD) disclosure
• Renewable electricity – 100 % UK (38% of global electricity consumption)
• Tree planting to help mitigate necessary business travel
• Reviewing waste streams
• Improving water monitoring
• Reviewing governance of sustainability
• Determining and reviewing non-nancial KPIs
• Creating a responsible and sustainable supply chain
• Improving sustainability disclosure
Page 26
Page 26
Page 26
Page 28
Page 28
Page 28
Page 35 and 37
Page 35 and 38
Page 36
Page 38 to 41
Page 36 to 37
Page 37
Page 42 to 45
Page 46
Page 47
Page 23 and 47
Page 47 to 48
Page 23 and 49
PEOPLE
PLANET
PERFORMANCE
Introducing our people, planet and performance pillars to clarify our strategy and progress.
24
TREATT PLC Annual Report & Accounts 2022
SUSTAINABILITY CONTINUED
OUR APPROACH CONTINUED
Our strategy focuses on nine priorities which
address the material issues, support our business
strategy and are aligned with identied UN
Sustainable Development Goals (SDGs). As it
evolves our strategy will challenge us and address
all those material issues, whilst continuing to
deliver positive change.
HOW WE MEASURE AND REPORT
We report with reference to the Global Reporting
Initiative (GRI) Sustainability Reporting Standards
2016. GRI is an independent international
organisation that has pioneered sustainability
reporting since 1997 and a GRI Standards index
used for referencing is available on our website.
NON-FINANCIAL INFORMATION
The following information complies with the
relevant non-nancial reporting regulations and
is intended to help stakeholders understand our
position on key non-nancial matters. We have
several Group policies and standards which govern
our approach in these areas. Further details can be
found referenced in this table or on our website.
Reporting requirement and additional information
Environmental matters
Environmental policy
Social matters
Equal opportunities policy
Description of business model
Business model – pages 6 to 7
Principal risks
Principal risk and uncertainties – pages 62 to 67
Employees
Board composition and diversity – page 80
Board diversity policy
Anti-bribery and corruption
Supplier code of conduct (revised in 2022)
Anti-bribery and corruption policy
Human rights
Slavery and human tracking statement
Supplier code of conduct (revised in 2022)
Labour and human rights (new policy 2022)
PERFORMANCE
PLANET
PEOPLE We have focused on four key strategic
themes, considering the 18 material
issues identied in our 2021 materiality
assessment. Recognising that a clear and
concise framework is essential to the
success of our sustainability strategy,
we have also dened three pillars of
People, Planet and Performance to provide
structure and clarity in our communications
to all stakeholders.
PEOPLE, PLANET, PERFORMANCE
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 25
TREATT PLC Annual Report & Accounts 2022
PEOPLE
SUSTAINABILITY CONTINUED
PEOPLE
PRIORITY: EMBEDDING
SUSTAINABILITY INTO OUR
CULTURE
Our focus
For sustainability to be successfully embraced and
adopted within our culture, it is essential that our
teams understand the wider implications. As such
ESG training sessions and communication have
continued for all employees.
We have developed custom communication tools
to keep sustainability front of mind. Managers have
received workshop-based training, with a focus on
how they can empower their teams to consider the
part they play in our journey. Our interactive global
newsletter provides an in-depth review of our
progress, with case studies, stories, and personal
experiences bringing our strategy to life.
In the UK, we have partnered with local business
Save Money Cut Carbon who have educated us
on our personal carbon footprints, as well as
supporting employees – through their online store
- in making easy swaps to being more sustainable
with their everyday consumables and homeware,
from water-saving shower heads to re-usable
kitchen roll.
Looking ahead
Sustainability is integral to our culture. Our
Sustainability Working Group is supporting
initiatives across the business that create a positive
impact, working with marketing to align all internal
and external messaging with our strategy.
PRIORITY: REVIEW OUR PURPOSE,
VALUES AND BEHAVIOURS
Our focus
As a business that continues to evolve we have
revisited our values and the expected behaviours
that support them to ensure sustainability continues
to be at the heart of our purpose. Our holistic
approach, driven from within the organisation,
has ensured there is enhanced support of our
environmental and social ambitions in our values,
which will be relaunched in the coming months.
Looking ahead
We will continue to integrate sustainability into our
employee training and engagement programmes
and promote our purpose and values to employees,
customers, suppliers and communities to ensure
our sustainability strategy is rmly understood. Our
values are embedded in our performance review
process which will further accelerate our progress
around sustainability as it will be an integral part of
everyone’s personal objectives.
PRIORITY: REVIEWING OUR
CORPORATE GIVING & COMMUNITY
RELATIONS STRATEGY
Our focus
We began the year with a review of our localised
community matters programme and corporate
giving to ensure our approach is aligned with our
sustainability strategy. Alongside those charities we
support locally, our UK, US and China community
voted to support the World Wildlife Fund (WWF) as
our global charity.
Looking ahead
Our global approach continues to evolve, whilst
harnessing localised community strategies for
the UK, US and China, engaging with our local
communities and WWF to identify projects linked
to our values and strategy. As part of our strategic
thinking we will be identifying how our products
and services can support social development in
local regions.
Our people and the culture we create are what makes our business a
success. We know for this to continue, the values and behaviours we live by
need to evolve with the business. In addition to supporting our workforce,
our commitment to people extends to the communities in which we operate
and serve.
RELEVANT UN SDGs
26
TREATT PLC Annual Report & Accounts 2022
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
Caring for our people
Our people are critical to everything we achieve,
and promotion of our people’s health and wellbeing
are vital to our success, with the need greater than
ever following the impact of the pandemic.
Our established exible working policy, which
enables employees to work remotely as far as their
roles permit, supports a balance between their role
and their responsibilities outside work. We seek out
a harmonious relationship between work and life.
DEVELOPING OUR PEOPLE
LinkedIn training continues to provide a valuable
resource, which is accessible for all sta and
complements a whole range of development
opportunities. This year we increased our level
of investment in training, with 7,205 hours of
sta training (2021: 5,508 hours). A wide range
of courses were oered covering subjects
and qualications such as health, safety and
compliance, coaching, transport regulations and
specialist commercial skills. Training hours in the
USA decreased during the year, due to reduced
appetite for training and increased focus on
transitioning for new starters. However, plans are
in place to improve and establish a learning culture
with more training and development opportunities
moving forward.
We continue to work on strengthening the Group’s
links with schools and universities, developing
relationships with the next generation of
talented candidates.
Our talent management process continues to
support improvements in employee performance.
Work is underway to promote the continual focus
on performance, to enhance opportunities for our
people to ourish.
DIVERSITY AND INCLUSION
We are committed to an environment that values
and respects dierences. It is important that
everyone feels welcome and accepted and has
access to the same opportunities.
Political and social movements across the globe
have rightly raised the prole of equality, inclusion
and diversity, presenting an opportunity for everyone
to self-reect. We have spent time considering what
this should mean to us, and how we can ensure
that we are doing the right thing. In 2023, with the
help of a specialist consultant, we will be working to
develop our equality, inclusion and diversity strategy.
Our ethnicity pay gap, whilst not formally reported,
has been regularly reviewed. Whilst obtaining
meaningful data remains a challenge, we have
identied opportunities for improvement, ensuring
that everyone has an equal opportunity for
development and progression. A more proactive
focus will enable us to identify talented colleagues
and actively drive their career aspirations and
progression. We will continue to develop our
understanding of why we are not attracting
sucient diversity, considering all touch points,
including our employer brand.
Gender diversity across the Group is reected
in the representation of women in management
and senior roles. We recognise the importance of
improving opportunities within the business. In
response to our gender pay gap data, a proactive
programme of support has been put in place
including mentoring, coaching, physical health
support and programmes to empower our female
colleagues.
Position Male Female Total
Group Directors 202
Group Executive Team 213
Direct reports of Group
Executive Team 91423
Other employees 236 161 397
Total employees1249 176 425
1 Actual number of employees at the year-end date. This
diers to the headcount in note 6 to the nancial statements
which is the average number of employees during the year.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 27
TREATT PLC Annual Report & Accounts 2022
72%
of permanent
Group employees
are shareholders.
HUMAN RIGHTS & LIVING WAGE
We have assessed our policies that provide the
important governance we need around people and
planet. We recognised that a comprehensive policy
covering labour and human rights was required
to dene standards for all employees across the
group, covering a range of aspects from equality
and diversity to harassment and working hours;
this has now been introduced.
All our salaries should at a minimum, meet living
costs. In the UK we are proud to have continued
to be a Living Wage Employer, accredited to the
UK Living Wage Foundation. In the US we complete
salary benchmarking yearly to ensure we are
competitive and paying employees comparable to
the market rate.
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
6,218
(2021: 3,524)
Male
2022 2021
2,804 Male 1,904
Female 3,414 Female 1,620
TOTAL UK TRAINING HOURS
Male
2022 2021
20.0 Male 13.3
Female 28.9 Female 14.5
24.1
(2021: 13.8)
AVERAGE UK TRAINING HOURS PER EMPLOYEE
Male
2022 2021
707 Male 1,574
Female 267 Female 410
974
(2021: 1,984)
TOTAL US TRAINING HOURS
Male
2022 2021
6.8 Male 14.2
Female 4.9 Female 8.0
6.1
(2021: 12.2)
AVERAGE US TRAINING HOURS PER EMPLOYEE
INTEGRITY PRIDE & PASSION
TEAMWORK CHALLENGE
VALUES BASED CULTURE
Our values underpin the very core of who we
are, they provide a framework by which we
behave and operate our business. Our people
are supported to ensure the right behaviours
are demonstrated and encouraged to celebrate
those values.
28
TREATT PLC Annual Report & Accounts 2022
HOW THE BOARD MONITORS CULTURE
1 Compared to an average participation rate of 41% (Proshare SAYE & SIP report 2021).
2 Compared to an average participation rate of 28% (Proshare SAYE & SIP report 2021).
Investing in
our culture
All-employee share
scheme take-up
A good indicator of employee
commitment to Treatt, its strategy,
performance and culture:
– UK partnership shares take-up
December 2021: 65%1 (2021: 65%)
– Group share save scheme take-up
in July 2022: 56%2 (2021: 60%)
Results of cultural exploration
with our colleagues in the US,
by an independent third party
This was an opportunity for employees
to engage anonymously and provide
honest feedback on their experience,
enabling actions to be taken to
improve matters
Cultural indicators
Good governance is driven not just from
the operation of the Board but also from
the culture of the organisation and the way
in which employees conduct themselves on
a day-to-day basis:
– health and safety metrics
– employee turnover
– whistleblowing incidents
– breach of Group policies
Feedback from
Employee Voice
Participants welcomed the
opportunity to interact with Board
members during the course of
the year. Further details are
on pages 51 and 57
LinkedIn Learning
This platform provides a whole range
of learning and highlights where
employees are keen to further their
knowledge. 679 engagement hours
recorded from across the business
Appointment of cultural
ambassadors
31 employees applied for
15 global positions
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
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Corporate GovernanceStrategic Report
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TREATT PLC Annual Report & Accounts 2022
Physical
Health
Relationships
Emotional
Health
Purpose
Financial
Health
PEOPLE CONTINUED
SUSTAINABILITY CONTINUED
HEALTH, WELLNESS AND WELLBEING
All employees are invited to open sessions on
personal health topics, wellbeing and subjects
such as nancial information on pensions and
shares. Sessions are accessible for all, utilising
multiple methods to share content. We focus
on supporting the ‘whole person’ via our
wellbeing pillars. These were updated this
year to provide a more comprehensive
picture of what helps to create a good
level of wellbeing, understanding that
this will mean dierent things for
dierent people.
Our mission continues, to ‘think well,
live well and be well’ and the Group
remains committed to providing everyone
with eective education, support and
signposting, to help them understand
their own wellbeing and the positive part
they can play in supporting their colleagues.
We actively encourage and educate our
managers to look for signs of mental health
concerns including depression, stress and
anxiety, so support can be put in place.
We work hard to create an environment where our
people can have fun and believe this is important
in supporting their motivation. We look for
opportunities for teams to socialise together, with
activities on oer in the workplace and after work.
KNOW YOUR NUMBERS
• Session with occupational health (OH) expert
covering mental health, exercise, healthy eating
and hydration
SUPPORTING DURING WORLD CRISIS
• Providing support and guidance on wellbeing
during key world events such as the conict in
Ukraine, cost of living crisis and the passing of
Her Majesty The Queen Elizabeth II
TIME TO TALK AND WELLBEING
TEAM CHECK-INS
• Held sessions to encourage employees
to come and chat with the wellbeing team
CONTINUED GLOBAL
COFFEE CONNECTIONS
• Enabling colleagues to
come together for a coee
on a monthly basis and make
new connections across
the business
RECOGNITION OF ANNUAL
WELLBEING EVENTS
• Providing resources and support to
our employees during events such as:
– Stress awareness month
– Mental health awareness week
– World sleep day
– Eating disorders awareness
week and many more…
CONTINUED MENOPAUSE SUPPORT GROUP
• Providing a safe space for employees to share
experiences and advice to help each other
WALKING WEDNESDAYS AT ONE
• Treatt wide walking group
launched during the summer
to encourage connection whilst
supporting physical health
FINANCIAL WELLBEING CLINICS
• Benet providers delivered
workshops to employees on
pensions and other benets
• Financial advisory company
St. James’s Place ran sessions
to provide tips for being
nancially t
WELLBEING RESOURCES
• Created a digital wellbeing pack to
include a wealth of resources for
employees to access at any time
• Used our Linkedin Learning
resource to provide wellbeing
related content to support our
employees with their wellbeing
READY, STEADY, MOVE FOR SUFFOLK MIND
• Event to support local charity which involved as
many employees as possible to walk, dance or
run their way to moving 150,000 minutes in May
TREATT WELLBEING EVENTS IN 2022
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TREATT PLC Annual Report & Accounts 2022
THE PHYSICAL WORKING ENVIRONMENT
We continue to enjoy the numerous benets of
our new working environments at all our facilities
globally, with more of our UK team moving into
our new facilities during the year.
In the UK, as more of our colleagues have moved
over to the new site, the popular ground oor ‘Hub’
area is providing a welcoming, inclusive, bright and
fun environment, giving our community and visitors
a exible space that enhances their wellbeing.
The Hub’s subsidised catering facility provides
locally-sourced, freshly prepared, nutritious food
and drinks, and is proving popular with both our
community and visitors. Food waste has been
kept to a minimum with catering requirements for
visitor meetings made to order. Menus are created
weekly but are adaptable to create recipes mindful
of waste. We have instigated conversations with
various food waste re-purposing services,
so at any time we have excess, we can utilise
their services.
KEEPING PEOPLE SAFE
We have eectively managed the risks associated
with chemical manufacturing and processing for a
long time and seek to improve our performance to
achieve manufacturing and operational excellence.
In addition to reporting incidents and accidents
we encourage near miss/concern reporting.
These are opportunities to identify events that,
under dierent circumstances, could lead to an
incident or accident and are leading indicators
which, if actioned and resolved can prevent them
occurring. The way employees work and behave
can greatly inuence the way they operate within
the workplace. The human factors encompassed in
the work environment, including temperature, pace
of work, stress, health, distraction, training and
competency, instrument layout and ergonomics
are all considerations and our employees are very
much enjoying the benets of these considerations
in the design of our new facilities.
BEHAVIOURAL APPROACH TO HEALTH
& SAFETY
Although behavioural safety is a common approach
in organisations with lower accident and incident
rates and positive employee engagement in safety,
we have continued working hard to ensure we
identify human factors within accident and incident
investigation. To further reduce accidents to a
minimal level (Target Zero) there must be a positive
safety culture and a willingness from all employees
to want to protect themselves and their colleagues.
This behavioural safety approach starts with one
of our values – challenge – by ensuring we all
understand why certain ways of working may
increase the chance of an injury or incident. We
help individuals reect on why they did something
and do not just adopt a policing approach. The
behavioural safety model builds on inherent human
factors and encourages an open and positive
dialogue about safety.
Our mission
continues, to
‘think well,
live well &
be well’.
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
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TREATT PLC Annual Report & Accounts 2022
OCCUPATIONAL HEALTH AND SAFETY
TRAINING
We work with a third-party occupational health
service in the UK to monitor workers’ health,
identifying risks and carrying out regular screening
and surveillance. Support services extend to
providing advice and guidance for long-term
health cases and those employees needing
health advice and assistance. This service also
carries out statutory medical examinations (for
example COSHH). Our training meets regulatory
requirements reecting our belief that training is an
essential part of our safety and health programme
for protecting our employees from injuries and
illnesses. Employees undergo general health,
safety, and environmental training upon starting
and receive training related to specic hazards
as required.
ENGAGING STAKEHOLDERS
The most important feature in safety is an
organisational culture that involves all employees
and promotes the benets of working responsibly
and diligently. It is important that employees
feel involved in the development of standards,
procedures and policies and are consulted with
any changes. Discussing safety at health, safety,
and environment meetings, toolbox talks, team
meetings and shift handovers ensures they feel
both involved and responsible for safety. In the
US we have representatives from each of the
departments on our Safety Committee and are
reviewing our approach in the UK, to ensure there
is an appropriate ow of information between
individual departments and the safety team. All
Directors, managers and team leaders are aware
of their role in safety and where appropriate,
additional specic health and safety training
is given.
Top three categories of incidents –
chemical, human factor, equipment1
Top three categories of accidents –
human factor, equipment, chemical2
Total H&S training hours per Group employee:
5.6 (2021: 8.7)
Total H&S training hours: 2,391
Internal: 557 External: 1,834
2022 2021 2020 2019 2018
Number of reportable
accidents across Group3 12 154
Average number
of sick days 44333
PEOPLE CONTINUED
SUSTAINABILITY CONTINUED
1 Incidents – unplanned event that causes damage or loss to property, vehicles or product.
2 Accidents – unplanned event that causes injury or harm to people.
3 Reportable accidents – Reportable accidents are work-related accidents, which in the UK legally have to be reported to a
statutory body or, in the US, require hospitalisation, loss of limb, blindness in an eye or anything that leads to inability to work for
seven days plus.
32
TREATT PLC Annual Report & Accounts 2022
Pillar Goal
PEOPLE To improve mental
health in our community
To improve basic health
PLANET To contribute back to
our environment
Charity/Benefactor
Just as we take the wellbeing of our colleagues seriously, we also support local causes to improve mental health in the community.
In the UK we have supported Suolk Mind through fundraising initiatives as well as raising awareness of their services across the
workforce. In May we encouraged sta to get moving in a ‘Ready, Steady, Move’ initiative which raised £3,475.10 for the charity. In the
US, we work closely with the mental health charity, Peace River.
We support various charities across the Group, including MyWiSH Charity, Upbeat Heart Support, East Anglia’s Children’s Hospices
(EACH) and KidsPACK USA which help improve the basic health of those in our community. We do this through corporate fundraising,
sponsorships and sta volunteering opportunities.
In the year, signicant donations were also made to the Disasters Emergency Committee’s Ukraine Humanitarian Appeal.
As a business that takes its responsibility seriously, we support charities in all global locations, which support our planet.
These include Operation Honey Bee, a conscious movement worldwide that serves to protect honey bees and Ocean Conservancy, who
work with society to protect the ocean from today’s greatest challenges.
In the UK, our close partnership with Suolk Wildlife Trust has provided us with opportunities to educate our sta and their families about
the importance of pollinators including bees and other insects.
WWF, voted by sta to be our global environmental charity, has been and continues to be a charity we will support in the years ahead.
SDG alignment
To support future
working generation
We understand we have a role to play in ensuring the next generation is best equipped for the world of work. Taking this into
consideration we support various local schools with careers talks and assemblies. Two colleagues also volunteer their time as Enterprise
Advisors for Sybil Andrews Academy, based in Bury St Edmunds, to help them develop a strong careers programme and create more
opportunities for young people. We advised on a ‘Sustainable’ library design and partnered on a ‘Treatt Sales Task’; setting students the
challenge of designing a beverage from scratch. Students were given the time to carry out market research, explore beverage trends and
avour combinations, before designing, with more support currently being planned for the year ahead.
SUPPORTING CHARITIES AND OUR COMMUNITY
We have a responsibility to the communities in which we operate, to support them both nancially and with resource. We also recognise that by enabling our sta to support the community in which they live and work,
it will add to a greater sense of purpose and community spirit. As a result of our focused community matters strategy we’ve made £54,417 in donations, and also contributed our time and support to charities and local
community, summarised here:
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
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TREATT PLC Annual Report & Accounts 2022
PEOPLE CONTINUED
CASE STUDY – GREAT BIG GREEN WEEK
‘People’ and ‘Planet’ have been and will continue
to be a focus of the community and charity projects
we support. This year we have built on this with
our global community voting to support the WWF
- the world’s leading independent conservation
organisation, working in the eld of wilderness
preservation and the reduction of human impact
on the environment. They felt this resonated
with them personally, our values and our
sustainability journey.
The Great Big Green Week supports the need
to draw attention to tackling climate change
and protecting nature. We worked with our
local community and our chosen charities on
joint initiatives. The week included plant-based,
plastic awareness, and ‘wear it wild’ days where
employees donated money to dress as wildlife;
a litter pick; and a visit from The Suolk Wildlife
Trust to talk about the importance of pollinators.
We wrapped the week up with a sustainable
travel day encouraging our people to take public
transport, car share or walk or bike into work,
inclusive of hiring mechanics for a bike x session
in the UK, to get people back on their bikes. All the
funds raised were in support of WWF’s mission to
create a world where people and wildlife can
thrive together.
SUSTAINABILITY CONTINUED
34
TREATT PLC Annual Report & Accounts 2022
PRIORITY: CARBON EMISSIONS
COLLECTION AND ANALYSIS
Our focus
Evaluation and validation of Scope 1 and 2 carbon
emissions data capture, and Scope 3 determination
and data collection.
Building on our long-standing reporting of Scope 1
and 2 carbon emissions and following workshops
on our specic circumstances, templates were
devised to report on a range of Scope 3 emissions.
We have since used these to capture our Scope 3
data for analysis, to better understand our overall
carbon footprint and to inform our consideration of
setting carbon reduction pathways and targets.
Looking ahead
We are investigating a carbon emissions reporting
platform to ensure eciencies in data capture, to
oer sophistication in monitoring progress and to
support verication and certication.
PRIORITY: CARBON REDUCTION
STRATEGY
Our focus
To set incremental emissions reduction targets
for Scope 1 and 2 in 2022 and start working on
emissions reduction strategy.
On completing Scope 1, 2 and 3 emissions
inventory, we can consider taking the rst steps
towards developing a coherent carbon emissions
reduction strategy. This will move towards a long-
term goal of achieving net zero emissions, in line
with UK Government policy.
We have worked with Clearlead Consulting to carry
out thorough energy, waste and water audits on
both our UK and US facilities. This has identied
various opportunities for energy, waste and water
saving projects that we have now committed to
invest in and deliver over the coming years.
Learn more regards these energy saving projects
and our carbon emissions on pages 36 to 38.
Looking ahead
We intend to deep dive into our green house
gas (GHG) inventory analysis to further assess
hotspots and specic initiatives identied in our
energy, water and waste audit report, including
draft reduction scenarios and impact quantication.
We also plan to carry out mapping reductions with
short, medium and longer-term targets; assess
monitoring and data collection methodologies; and
investigate recommendations regarding solutions
and technologies.
PRIORITY: TASK FORCE ON
CLIMATE-RELATED FINANCIAL
DISCLOSURES REPORTING
Our focus
An initial assessment of climate change risks,
using the TCFD methodology.
Recognising the medium to long-term potential
strategic risks posed by climate change to our
business model, we have worked with our
sustainability consultants to assess the climate-
related risks and opportunities that are relevant
to our business, allowing us to report on the four
areas of Governance, Strategy, Risk Management
and Metrics. As such, we have reported in
reference to the recommendations of TCFD to
understand the climate resilience of our business
through assessment (and management) of
transitional and physical risks, responding to the
11 disclosure recommendations.
The full TCFD disclosure report can be seen on
pages 38 to 41.
Looking ahead
We will endeavour to increase the level of
disclosure year-on-year.
PLANET
We drive positive environmental practices at every stage of our operations
and cascade this through our supply chain. Our business is reliant on the
sustainability of natural resources which means that environmental impacts,
such as climate change, are matters of deep concern not only to humanity
generally but particularly to Treatt.
RELEVANT UN SDGs
SUSTAINABILITY CONTINUED
PLANET
Financial Statements
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Overview Other Information 35
TREATT PLC Annual Report & Accounts 2022
CLIMATE CHANGE
Over the last year we have put systems in place
to further assess our operational impact along
with that of our supply chains. Our aim is to adopt
a systematic approach to setting environmental
targets and objectives and demonstrating that they
have been achieved.
Volatility in our supply chains is nothing new. We
are mindful of the factors that may inuence raw
material prices and supply challenges, with adverse
weather conditions and disease being two of the
main drivers. To ensure our production practices
and supply chain are sustainable, we need to
understand the resilience of our supply chain to the
potential impacts of climate change, allowing us in
turn to provide transparency to our customers.
ENERGY SAVING
Energy and environmental considerations were
integral in the design of the new UK facility
designed to a Building Research Establishment
Environmental Assessment Method (BREEAM)
‘very good’ rating which denotes a newly-built
asset which supports commercial success, whilst
also creating a positive environmental and social
impact. A number of eciencies feature throughout
our new UK facility, in relation to lighting, thermal
eciency of materials, incorporation of a building
management system and a HVAC system (heating,
ventilation and air conditioning). We will make a full
evaluation of energy eciencies on full completion
of the move.
In order for us to set our incremental targets on
page 37 we worked with specialist consultants
on energy waste and water audits at both our UK
and US facilities. This has provided numerous
opportunities for improvement for energy, waste and
water eciencies, some of which have already been
actioned for the coming year, such as additional
insulation to both ceilings in existing buildings
and pipework at our US facility. With the business
committing to investing in further energy saving
projects over the next three years at our US facility
whilst also exploring opportunities at our UK facility.
STREAMLINED ENERGY AND CARBON
REPORTING (SECR)
We report all our emission sources under the
Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013 as required
and have calculated and reported our emissions in
line with the GHG Protocol Corporate Accounting
and Reporting Standard (revised edition) and
emission factors from the UK Government’s GHG
Conversion Factors for Company Reporting 2022.
We continue to use 100% renewable electricity
in the UK, playing our part in stimulating growth
of the renewable energy market. This year we’ve
increased our accuracy with a more rigorous
approach by including location-based Scope 2
emissions for this renewable electricity usage in
the UK, in our global emissions. We also show
market-based emissions to align with 2021
reporting. Scope 1 & 2 emissions include all
mandatory manufacturing and non-manufacturing
related emissions.
In the UK, 100% of our
electricity is provided from
renewable resources. This
equates to 38% of our total
electricity consumption
(2021: 32%)
The business has committed
to investing £200,000 per
year over the next three
years to put energy saving
projects in place in our US
facility.
SUSTAINABILITY CONTINUED
PLANET CONTINUED
36
TREATT PLC Annual Report & Accounts 2022
SUSTAINABILITY CONTINUED
PLANET CONTINUED
ENERGY CONSUMED
2022 (MWh) 2021 (MWh)
Electricity
UK
US
–
4,750
–
4,609
Renewable
electricity
procured
UK
US
2,905
–
2,186
–
Natural gas
UK
US
2,503
5,769
2,510
6,729
Other fuel
UK
US
255
136
226
91
Group 16,318 16,351
GHG EMISSIONS
2022 2021
Scope 1 – Direct emissions (tonnes CO2e) 1,977 2,047
Scope 2 – Indirect emissions (tonnes CO2e) (location-based) 2,569 not stated
Scope 2 – Indirect emissions (tonnes CO2e) (market-based) 2,007 2,187
Scope 3 – Indirect emissions (tonnes CO2e)
Purchased goods and services (spend-based) 51,177 not measured
Fuel and energy related activities (average-data method) 832 not measured
Upstream transportation and distribution (distanced-based) 5,005 not measured
Waste generated in operations (waste-type specic) 838 not measured
Business travel (distance-based) 181 not measured
Upstream leased assets (average-data method) 14 not measured
Downstream transportation and distribution (distance-based) 4,797 not measured
Total Scope 3 emissions (tonnes CO2e) 62,844 not measured
Total Scope 1, 2 (location-based) emissions (tonnes CO2e) 4,546 4,234
Total Scope 1, 2 & 3 emissions (tonnes CO2e) 67,390 not measured
Intensity ratio Kg CO2 emissions (Scope 1 & 2) per kg of product shipped 0.52 0.43
SCOPE 3
We have collected Scope 3 carbon emissions data for the rst time in 2022. This has been
assessed using the GHG protocol guidance, applying methodologies (stated in the chart) to suit
the data available, to provide as much accuracy as possible. This information is pivotal in
providing us with the transparency we need to make sustainable decisions moving forward,
whilst also choosing to disclose this for full transparency to our stakeholders.
Notes
1. The Group has adopted a greenhouse gas reporting policy and a
management system based on the GHG Protocol.
2. As dened by the GHG Protocol, Scope 1 and 2 emissions relate
to emissions from activities within the operational control of the
Group. In general, the emissions reported are the same as those
which would be reported based on a nancial control boundary.
3. Emissions for previous years are retrospectively adjusted as and
when more accurate data is provided.
4. The sales oce in China is currently excluded on the basis that
emissions from utility consumption are estimated to be less than
a materiality threshold of 5% of overall Group emissions.
5. Data has been accurately recorded from invoices, meter and
mileage readings. GHG emissions detailed in the table have
been calculated using the appropriate 2022 DEFRA conversion
factors, except for overseas electricity which used the 2021 IEA
conversion factor for reporting consistency.
6. GHG Protocol chiller emissions are derived from those specied
under Kyoto Protocol. However, other greenhouse gas emissions
may be emitted that are not covered under GHG Protocol Scope 1
and are required to be reported separately. In FY2022, the Group
chiller emissions that fall outside of GHG protocol, namely those
identied under Montreal Protocol and others, totalled 9.5 tonnes
(2021: 8 tonnes).
BUSINESS TRAVEL AND TREE PLANTING
Following the pandemic and in recognition of the
need for urgent climate action, we have re-assessed
what we determine to be necessary travel. We have
also invested in an ongoing tree planting programme
to provide a more nature positive solution to
help mitigate the necessary air travel which still
needs to take place. The programme, managed by
Trees4Travel, involves planting ten trees for every
ight we book departing the UK. It is assumed each
tree will absorb 164.1kgs of CO2 in its rst ten years.
We have also invested in a United Nations Certied
Emissions Reduction renewable energy project, in
eect doubling this promise. So far 770 trees have
been planted as part of a reforestation project in
Haiti. The native species planted will in time provide
jobs and a much-needed source of revenue to the
local communities.
Image: courtesy of Eden Reforestation Projects
Financial Statements
Corporate GovernanceStrategic Report
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TREATT PLC Annual Report & Accounts 2022
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES (TCFD)
TCFD COMPLIANCE STATEMENT
This statement represents Treatt’s rst climate-
related nancial disclosures, all of which, we
consider, to be partially compliant in line with the
TCFD recommendations and eleven recommended
disclosures. This statement covers the nancial
year 1 October 2021 to 31 September 2022.
In terms of considering and assessing the potential
climate change risks and opportunities on our
business, we have made good progress. We
recognise that TCFD is an iterative process and
we will continue to increase our understanding,
consider dierent aspects and embed insights
within our business model, working towards
full disclosure.
OVERVIEW
We recognise that accountability and transparency
relating to climate-related disclosures is critical to
sustaining our relationship with our stakeholders.
Adopting and reporting against the TCFD
recommendations will allow both our stakeholders
and investors to better understand the possible
implications of climate change for Treatt. This is
an evolutionary process and we will continue to
consider the associated risks and opportunities of
climate change on our business on a regular basis.
We focus on Governance, Strategy, Risk
Management & Metrics. These headings align to
the TCFD’s recommended disclosures and discuss
how we aim to mitigate climate-related risks and
capitalise on opportunities.
With this disclosure we have taken the rst steps
on our TCFD journey and aim to build on these
recommendations to inform and drive our pathway
to becoming a net zero business.
OUR TCFD FRAMEWORK CONSIDERATIONS
A TCFD working group comprising senior
members from asset management, nance,
risk and the Executive Leadership Team was
established and have met regularly throughout the
year to understand the potential consequences
of global climate change; discuss the TCFD
methodology and associated governance; work
through a recommended scenario; and consider the
associated risk and nance implications.
INITIAL CLIMATE CHANGE SCENARIO
Initially, we considered a two-degrees warming
scenario, based on the Intergovernmental Panel on
Climate Change’s (IPCC) dened Representative
Concentration Pathway 4.5 (RCP 4.5), covering
short, medium and long-term (up to 2050) time
frames. RCP 4.5, as described by the IPCC, is
an intermediate scenario and the most probable
baseline scenario, considering the exhaustible
character of non-renewable fuels. Under
RCP 4.5, emissions peak around the year 2040,
then decline.
For our purposes, we have dened short-term as
ve years, medium-term as between 5 to 15 years
and long-term as beyond 15 years and up to 2050.
GOVERNANCE
The Board recognises the importance of climate
action and the direct link it has to our ongoing
success. The CEO is directly accountable to the
Board for sustainability and reports on the progress
of our sustainability strategy at every Board meeting.
The CEO is supported by the Executive Leadership
Team and the Global Sustainability Manager.
In 2021, we set up the TCFD Project Committee
which includes representatives from Treatt’s
Board and senior leadership, as well as members
from its operational, risk, nance, legal and
sustainability teams. During our consideration
of the TCFD methodology, the Board has been
regularly informed of the progress made by the
TCFD Committee, whom will report to the board
biannually. Climate risks will also be reviewed
at the Board’s Annual Risk session. The Non-
executive representative from the Board also
chaired the Audit Committee until 17 September
2022 and is Chairman Designate.
SUSTAINABILITY CONTINUED
PLANET CONTINUED
ENERGY SAVING PROJECTS AND TARGETS
In the UK, our distillation operations will move
to our new site over the course of 2023. Once
that move is complete we will be fully operational
on our new site and will be able to set emission
reduction targets globally based on actual
emissions from realistic energy consumption data.
In the meantime, and with a range of energy saving
projects planned such as compressed air eciency
upgrades, steam trap survey and pipe insulation
invertor options for well and glycol pumps, in the
rst instance, we have set the following interim
target at our US facility, from which, over the last
3 years generated an average of 82% of our total
scope 1 and 2 carbon emissions.
SCOPE 1 & 2 TARGET
REDUCE ABSOLUTE SCOPE 1 & 2 EMISSIONS IN
USA FACILITY BY 10% BY 2025 (BASELINE 2022)
LOOKING AHEAD
We hope to set science-based targets as a result of
increased visibility following more time in operation
at our new UK facility.
38
TREATT PLC Annual Report & Accounts 2022
STRATEGY
Our climate change strategy relies on a two-
pronged approach: managing and reducing our
own emissions and improving emissions across
our supply chain.
1. Our Emissions Reduction Strategy
During 2022 we have conducted energy, water
and waste audits of our manufacturing sites in the
US and UK; we have identied new technologies
and processes to reduce emissions over time; and
we have collected our Scope 3 emissions for the
rst time to allow us a better understanding of our
carbon footprint and to help us to model nancial
implications of potential future carbon pricing.
2. Improving supply chain emissions
With a supply chain that is spread out across the
globe, we want to leverage our position to set
expectations with our suppliers.
In 2022, we launched our responsible and
sustainable sourcing policy, which has been
distributed to all our global suppliers. Starting with
our citrus suppliers, we have requested information
regarding their Scope 1 and 2 emissions; their
targets to reduce these emissions, and strategy for
meeting those targets; the physical and transition
risks of climate change for their business and our
supply chain; and the measures taken to reduce
carbon emissions of agricultural production.
SUSTAINABILITY CONTINUED
PLANET CONTINUED
This year we have also worked closely with our
suppliers to encourage them to become members
of SEDEX to increase the transparency of our
supply chain and drive sustainable and ethical
practices. As such 81% of our citrus volume
procured during the year is from suppliers that are
SEDEX members.
RISK MANAGEMENT
Our risk management framework incorporates
a top-down approach, setting the risk appetite
and identifying our principal risks, together with
a bottom-up approach to ensure risk appetite is
understood and applied throughout the business
and that operational risks have been clearly
understood. Further information on our approach
to risk management can be found on pages
62 to 67.
As our business relies on products that are
extracted from natural sources, chronic risks such
as drought, increasing temperatures and drastic
changes in precipitation patterns and acute risks
such as tropical cyclones, heatwaves and wildres
may aect the availability and pricing of our raw
materials; produce lower crop yields; and impact
product quality. As a part of our contingency
measures, we closely monitor such market
conditions and identify alternative supply sources
to mitigate these risks.
In the reporting year we conducted a
comprehensive climate risk assessment of our
facilities in the US and UK. We engaged specialists
to identify potential hotspots and help draft our
mitigation measures. As suggested by the TCFD,
the risks are categorised into: (1) transition risks,
linked to the transition to a low-carbon economy as
a result of carbon policy and regulatory changes,
and (2) physical risks linked to climate change.
We analysed our sensitivity to physical risks and
our adaptive capacity to mitigate these risks and
subsequently identied vulnerable hotspots. The
results of the scenario analysis indicated higher
incidence of ooding, water stress, wildres and
heatwaves in the longer term. We held several
TCFD workshops with our senior leadership to
better understand our short, mid and long-term
physical and transition risks. We are in the process
of identifying key performance indicators to track
this more closely.
METRICS
We have been disclosing our Scope 1 and 2 GHG
emissions and energy consumption data since
2013. Scope 1 and 2 emissions data is calculated
as per the Greenhouse Gas Protocol Corporate
Standard and DEFRA Environmental Reporting
Guidelines. As of 2022, we are also reporting our
Scope 3 emissions data. We are working through
our net zero transition plans and including relevant
details in our 2023 annual reporting, in line with
UK Government guidance.
We disclose incremental emissions reduction
targets for Scopes 1 and 2 on page 38.
Financial Statements
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TREATT PLC Annual Report & Accounts 2022
SUSTAINABILITY CONTINUED
PLANET CONTINUED
Disclosure Commentary
Describe the climate-related
risks and opportunities the
organisation has identied
over the short, medium, and
long-term
Describe the impact of
climate-related risks
and opportunities on
the organisation’s
businesses, strategy
and nancial planning
The short and medium-term risks identied include: policy and legislation
changes resulting in increased carbon pricing; impaired quality of raw
materials due to extreme weather; extensive geographical location of
suppliers putting pressure on emissions performance; and increased capex
costs to facilitate improved environmental performance.
The short and medium-term opportunities identied include: ongoing
improved energy/water/waste eciency of existing processing facilities;
building climate resilience within our supply chain to ensure consistent
supply of high-quality raw materials and reduced transportation costs;
possible attractive funding opportunities; and third-party certication to
support marketing and competitiveness of products.
The medium to longer-term risks identied relate principally to physical risks
associated with the geographical location of our manufacturing plants and
local infrastructure and our supply chain. These include: extreme heat in
US and UK putting pressure on cooling processes and regional power grids,
aecting air quality and impacting employee health and wellbeing; drought
and water-stress resulting in a reduction of plant productivity or even
closure of manufacturing facilities; and extreme weather aecting key citrus
suppliers causing poor quality raw materials and supply chain disruption.
See Strategy on page 39 for further details.
Climate-related risks have been integrated within the Group’s principal
risks and therefore are reviewed and assessed biannually.
Budgeting for capital expenditure over the next three years has
incorporated the recommendations from the energy audits for improving
the environmental performance of our manufacturing plants.
Conversations have been held internally to consider including internal
carbon pricing within future budgets.
These initiatives are helping to inform our future strategy.
See Strategy on page 39 for further details.
TCFD’S RECOMMENDED DISCLOSURES
Disclosure Commentary
Describe the Board’s
oversight of climate-related
risks and opportunities
Describe management’s
role in assessing and
managing climate-related
risks and opportunities
The Board, supported by input from the TCFD Project Committee and
the Global Sustainability Manager, assumes overall responsibility
and accountability for the management of climate-related risks
and opportunities.
A TCFD Working Committee was established in 2021 and its progress and
ndings have been reported to the Board.
See Governance on page 38 for further details.
Management has undertaken a review of the Group’s risk management
approach and climate-related issues have been integrated into the core
risk management process as a principal risk.
25 risks and opportunities have been identied, discussed and qualitatively
assessed in terms of probability and consequence by the TCFD
Project Committee.
See Governance on page 38 for further details.
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TREATT PLC Annual Report & Accounts 2022
SUSTAINABILITY CONTINUED
PLANET CONTINUED
Disclosure DisclosureCommentary Commentary
Describe the resilience of
the organisation’s strategy,
taking into consideration
dierent climate-related
scenarios, including a 2oC
or lower scenario
Describe the organisation’s
processes for identifying
and assessing and managing
climate-related risks
Describe the organisation’s
processes for managing
climate-related risks
Describe how processes for
identifying, assessing, and
managing climate-related
risks are integrated into
the organisation’s overall
risk management.
We continue to review our exposure to climate-related risks. Having
mapped risks and opportunities associated with a 2oC warming scenario,
our Group strategy is considered resilient, and the risk rating is medium.
Short-term considerations are being incorporated into planning and
longer-term physical risks, linked to the geographical location of our
manufacturing plants and our suppliers, will continue to be assessed.
See Strategy on page 39 for further details.
Climate change has been identied and incorporated as a principal risk
within the risk register. As such, it is subject to assurance mapping each
year and the three levels of controls (management, oversight and audit)
put in place are scrutinised and risk ratings pre and post controls are
agreed. The ndings of this assurance are considered and discussed at
the Board risk meeting in October.
Findings from TCFD’s climate change scenario mapping and analysis feed
into the assurance process and are shared with the Board ahead of its
October risk meeting.
See page 64-65 for further details.
In addition to the governance steps outlined above, the following takes
place to manage and mitigate climate-related risks:
• constant communication between our buyers and suppliers to assess
weather conditions, yields and supply
• clear lines of communication between Procurement and CEO to respond
quickly to market conditions and make key strategic decisions
• forward purchasing contracts for medium to longer-term supply
• regular visits to existing and new suppliers for key product groups
• greater geographical spread of suppliers, where possible
• investment in production eciencies, new technologies and
product development
• ongoing collaboration with suppliers to understand and mitigate climate
change risks
See Risk Management on pages 62 to 67 and 39 for further details.
Disclose the metrics used
by the organisation to
assess climate-related risks
and opportunities in line
with its strategy and risk
management processes
Describe Scope 1, Scope 2
and if appropriate, Scope
3 greenhouse gas (GHG)
emissions, and the
related risks
Describe the targets used
by the organisation to
manage climate-related
risks and opportunities and
performance against targets
GHG emissions and energy consumption are disclosed on page 37.
Scope 1, 2 and 3 and are aligned to the Greenhouse Gas Protocol
Corporate Standard and DEFRA Environmental Reporting Guidelines.
We are reporting Scope 3 emissions for the rst time. Incremental
reduction target for Scopes 1 and 2 is disclosed on page 38.
See Metrics on page 39 for further details.
The Remuneration Committee will work towards the inclusion of climate
related objectives, where appropriate, when setting non-nancial
objectives for the Executive Directors.
The Board is aware that opportunity metrics can assist with increasing
the focus on climate-related matters and will look to implement this at an
appropriate time in the future.
Scopes 1 and 2 relate to our GHG emissions at our two manufacturing
plants in the US and UK.
Scope 3 emissions relate to our upstream and downstream activities,
purchased goods and services, fuel and energy services (not Scopes 1
and 2), waste transportation and employee and business travel.
GHG emissions and energy consumption are disclosed on page 37.
See Metrics on page 39 for further details.
We have collected Scope 3 emissions for the rst time and are now
gaining greater visibility of our direct and indirect carbon footprint. We
have included incremental emissions reduction targets for Scopes 1 and 2.
GHG emissions and energy consumption are disclosed on page 37.
See Metrics on page 39 for further details.
We adopt an integrated risk management framework for all categories
of risks, including climate-related risks. The Company keeps its risk
management framework under continual review as it considers and
incorporates climate-related priorities in greater detail.
See Risk Management on pages 39 and 62-67 for further details.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 41
TREATT PLC Annual Report & Accounts 2022
Our UK sites
continue to divert
100%
of waste from
landll
WASTE
We are responsible for our waste from the
point it is produced, until we have transferred
it to an authorised body. However, we strive to
be responsible along the entire chain of waste
management. We have a responsibility to ensure
we produce, store, transport and dispose of
business waste in ways which reduce our impact
on the environment.
Ways of working to use less resources and
produce less waste are always front of mind.
This year, we have recorded more granular
information on our waste streams to better
calculate our total waste volumes. Also for the
rst time we have analysed and reported the
Scope 3 carbon footprint of our waste detailed
on page 37.
Over the coming year we hope to use this
information to better understand the hot spots in
our waste streams, focusing on where we could
potentially re-use rather than compost food waste
for example, whilst staying on top of evolving
opportunities to further segment other streams
for re-use, recycling or recovery and support
the circular economy. All whilst continuing to
ensure the service providers accepting our waste
hold the relevant registrations and permits for
transportation and nal recovery or disposal.
TOTAL GLOBAL WASTE VOLUME: 17,755 MT
“Our drive for operational excellence
will mean continually assessing how we
can reduce our environmental impact in
production through process improvements.”
Wolfgang Tosch,
Chief Technical & Scientic Ocer
SUSTAINABILITY CONTINUED
PLANET CONTINUED
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Anaerobic
digestion
Composting Landll Recycling Re-useCombustion
0.03%
8.10%
85.14%
0.51%
6.15%
0.07%
Parameter
42
TREATT PLC Annual Report & Accounts 2022
New facilities, along with new ways of working and
evolving waste stream management from service
providers have all provided opportunities
to improve.
EXAMPLE 1
PRINT CARTRIDGE RECYCLING
“As part of process improvements at our new
UK facility, new label printers were installed.
Instead of using thermal transfer ribbons, which
had to go in our general waste with our previous
printers, our new ink cartridges are recycled by
the manufacturer. We estimate we will now recycle
650 ink cartridges a year. We have adopted a
global approach to this waste stream, as our US
facility also recycles some of its print cartridges.”
James Wood, IT Technical Support
Level 2
EXAMPLE 2
WATERMELON BOX RE-USE AND REGIONAL
SOURCING (USA)
“Ahead of starting the rst watermelon campaign
of the season, we contacted our supplier to explore
the option of reusing stocks of empty pallets that
we had on site and recycling the cardboard bins in
which they supply the raw material. As a result, we
now return the cardboard bins to the supplier, ready
to deliver our next load. This process continues for
the life of the bins, getting many more uses than
the previous single use. We have seen a signicant
reduction in cardboard recycling volume, generating
carbon emission savings and a reduction in costs
throughout the season as a result.
This year, we have once again needed signicant
watermelon to service our growing customer-
base. We have worked hard to obtain almost all of
the raw material locally from within Florida, some
as close as 30km from our facility, where they
are processed, saving on transportation carbon
emissions compared to suppliers further aeld.”
Hany Hosny, Treattarome Assistant Manager.
EXAMPLE 3
DRUM RE-USE & CLEANING (UK)
“We use drums to store product at the various
stages of production and identied where it was
appropriate to re-use drums. Some of our products
are more corrosive to metal over time, such as
cinnamon and clove so we are now dedicating
hardier galvanised drums to these products so
as not to degrade regular drums, which can be
cleaned and re-used. At our new site in the UK
we are also increasing our usage of stainless-
steel intermediate bulk containers (IBCs) for
intermediate storage with one IBC, which can be
cleaned and reused, holding the equivalent of
ve drums.”
Babette Norman, Manufacturing Director, UK
SUSTAINABILITY CONTINUED
PLANET CONTINUED
Financial Statements
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Overview Other Information 43
TREATT PLC Annual Report & Accounts 2022
CIRCULAR APPROACH –
HONEY TREATTAROME®
100% of our honey euent is placed
back in the totes we received it in,
ready for collection by the supplier
Pure honey is delivered in totes
to our US facility from
honey suppliers
The supplier collects the euent which then
goes into pet food supplies and as a food
source for bees during winter seasons to
reduce issues with colony collapse
Our team of experts apply
our proprietary technology
to result in a 100% natural
aqueous distillate
SUSTAINABILITY CONTINUED
PLANET CONTINUED
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TREATT PLC Annual Report & Accounts 2022
CIRCULAR APPROACH –
ORANGE OIL
SUSTAINABILITY CONTINUED
PLANET CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 45
TREATT PLC Annual Report & Accounts 2022
WATER EFFICIENCY
2022 2021
Total water used (m3)* 53,149 49,030
Water eciency
(litres per kg of product
shipped) 6.06 4.98
* We have seen a reduction in water eciency due to the
product mix during the year of more water intensive
products in the USA, together with the need for additional
water during commissioning of our new UK site. Our total
water used has historically been based on all water withdrawn.
For 2022 in the UK, water used is measured on our water
withdrawal minus our waste water volume, which is based
on a xed percentage by the water company, typical to the UK
water providers. Therefore, it is the most accurate measure
of water consumption we can determine. In the US we do
not have waste water volumes so usage is based purely on
withdrawal at this time. This also excludes the aquifer.
We are in the process of installing a wastewater
ow meter in our US facility. In the future this
metering together with waste water data in the UK,
will allow us to get a more accurate understanding
of our water consumption.
Our sustainable water drainage scheme in the
UK retains all surface and storm water in a large
aquifer system, a geological feature that sits under
the site acting as a containment system. It allows
900,000 litres of water to inltrate the aquifer and
be extracted as drinking water 400 days later.
Although we have always monitored and sought to
improve our water usage, as we adopt principles of
operational excellence within our processes, water
eciency and wastewater management will be an
integral factor.
Our energy, waste and water audit report
suggested water saving improvements to one
of our manufacturing processes. The proposed
water recovery and recirculation system would
reduce the amount of fresh water consumed and
volumes sent to drain, estimated to reduce water
consumption at this site by 2.5% per year (based
on 2021 volumes). We intend to invest in this
system over the next three years.
Our UK facility includes several water eciency
measures, from automatic leak detection to self-
closing push button taps, resulting in a scoring
of 78% for water eciency under BREEAM.
The energy, waste and water audit report for
our UK facilities is currently being assessed with
the intention to consider the implementation of
suggested water improvements in the future.
SUSTAINABLE SHIPPING
Considering our diverse product range of over
4,000 products, with movements across 75+
countries and shipment sizes ranging from
25 grams to 20 tonnes, this year has been a
challenging environment for Treatt, as well as many
others across our value chain.
Nevertheless, it is still our responsibility to continue
to improve the sustainability of our logistical
operations. During the year we have continued
to monitor the shipping methods used for export,
calculating total shipments by each carrier. In
addition, we have also assessed imports to provide
a more holistic approach across our logistics
operation. We are identifying and monitoring
those we consider as providing ‘sustainable
shipping’* methods.
When engaging with new carriers, we carry out
due diligence, assessing their sustainability policies
as part of our selection criteria. This allows us
to be condent that, when sending our products
around the world, we will be contributing to
sustainable and responsible business practices
within the global shipping industry.
PERCENTAGE OF SUSTAINABLE SHIPMENTS*
2022
2021 61%
79%
2020 23%
2019 13%
* A carrier is classied as being a ‘sustainable shipping’
carrier if they have conrmed to Treatt that they have an
established sustainability strategy and/or clear sustainability
objectives which are monitored, benchmarked, and reported
(for example published environmental goals like zero
carbon by a set date). Any carrier that does not have either
a sustainability strategy or any monitored and published
sustainability objectives will not be considered as being a
sustainable shipping carrier by Treatt.
67% of
shipments
by road
100% of
shipments
by sea
100% of
shipments
by air
Road shipments using 67%
sustainable carrier
Road shipments using 33%
non-sustainable carrier
Sea shipments using 100%
sustainable carrier
Sea shipments using 0%
non-sustainable carrier
Air shipments using 100%
sustainable carrier
Air shipments using 0%
non-sustainable carrier
SUSTAINABILITY CONTINUED
PLANET CONTINUED
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TREATT PLC Annual Report & Accounts 2022
PERFORMANCE
SUSTAINABILITY CONTINUED
PERFORMANCE
The availability of robust, high quality, aordable
and increasingly sustainably sourced produce, used
for our natural product portfolios, is critical to our
business success. Consumers are increasingly
interested in how ingredients have been grown
and how the people and planet are treated in the
process. Therefore, this year we have accelerated
our eorts to collaborate further with our suppliers
to increase insight and transparency via our
responsible and sustainable sourcing policy,
further details on this on page and page 48.
PRIORITY: REVIEW THE
GOVERNANCE OF SUSTAINABILITY
Our focus
Our CEO continues to be directly accountable to
the Board for sustainability, reporting on strategy
progress at every Board meeting. Our CEO is
supported by the Executive Leadership Team and
Global Sustainability Manager who continues to
work closely with our consultants in developing
and delivering our strategy in this area. Our Global
Sustainability Manager also leads our Sustainability
Working Group, comprised of employee
representatives, which co-ordinates and supports
sustainable practices across the business. As part
of our policy review process in this area, we have
introduced a new labour and human rights policy.
Looking ahead
We will continue to review, update and nalise all
sustainability related policies to ensure they are
supportive of Treatt’s ambitions and performance,
promoting our commitments as they evolve. We will
continue to oer clear oversight of sustainability
responsibilities at Board and executive level whilst
considering the introduction of environmental and
social objectives to performance objectives of
specic roles in the future.
PRIORITY: DETERMINING AND
REVIEWING RELEVANT NON-
FINANCIAL KPIS
Our focus
We are building on our non-nancial drivers,
supporting people and planet, gaining buy-in from
across the business, to ensure we have stretch
targets that are integral to our evolving strategy
from 2023 onwards. Embedding them into our
business strategy and ultimately linking them to
remuneration are key.
Looking ahead
Next year we intend to report on more of these
KPIs, disclosing our progress in key areas around
people, planet and performance, as we see
functions across the business pull together further
to enhance the way we work, for good.
PRIORITY: CREATING A
RESPONSIBLE & SUSTAINABLE
SUPPLY CHAIN
Our focus
This year, our working group has gained a better
understanding of the risks and opportunities
involved, agreed priority areas for eecting change,
developed performance measures, enhanced
our governance framework and given greater
consideration of monitoring and reporting tools.
We are committed to conducting our business in
a sustainable, ethical and responsible manner,
ensuring a positive impact on the communities
with which we deal and requiring that our
suppliers show integrity and respect for human
rights and the environment. To date, the strategy
has delivered a new responsible and sustainable
sourcing policy, which has been rolled out to
our global supply chain. In addition, starting with
our largest category of citrus, we have required
suppliers to commit to our enhanced supplier
code of conduct and completion of an enhanced
self-assessment questionnaire, inclusive of
environmental assessments, that further support
our commitments.
Looking ahead
Taking learnings from our work with our citrus
suppliers we will continue to roll out this approach
to our other categories over the coming months,
aiming to complete this during 2023. Also setting
ourselves KPIs in the coming year in this area,
across our supply chain. As we progress this will
enable us to work more closely with suppliers on
shared challenges and initiatives, while continuing
to provide our customers with a greater degree of
reassurance, traceability and transparency as well
as ensuring sustainable practices by our suppliers.
Strong governance is critical to business success, with an ever-
increasing focus on sustainability, driven both by wanting to be
responsible and by increasing stakeholder interest. We want to prove
we are making a dierence and are aware that non-nancial KPIs
will be key to both driving improvements and demonstrating
our progress.
RELEVANT UN SDGs
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 47
TREATT PLC Annual Report & Accounts 2022
SUSTAINABILITY CONTINUED
PERFORMANCE CONTINUED
Responsible and sustainable
supply chain
SUPPLY CHAIN STRATEGY
As markets continue to uctuate the importance
of retaining strong supplier relationships is
critical. During the year, our procurement team
visited citrus growers and suppliers across South
America, giving them the opportunity to reinforce
our sustainability programme in person and seeing
for themselves the approach these suppliers take.
They were encouraged with what they learnt.
PROCUREMENT – CIPS MEMBERSHIP
Most of our procurement team hold membership
of the Chartered Institute of Procurement and
Supply (CIPS), a professional body ensuring
that procurement and supply chain management
professionals have the knowledge and
capabilities to deliver sustainability goals for their
organisations. During 2023, it is our goal to have
the whole global procurement team CIPS qualied,
which includes signicant focus on ethical and
responsible sourcing.
CERTIFICATIONS, MEMBERSHIPS & RATINGS
A wide range of standards help provide
additional reassurance as to where we are on
our sustainability journey. These certications,
memberships and ratings not only provide a
benchmark for our performance but also enable
us to see where we can improve the sustainability
of our own business, as well as contribute to
collaborations to further the industry’s sustainability.
TRANSPARENCY THROUGH SEDEX
The Group is pleased to be both a supplier and
buyer member of SEDEX, a global membership
organisation dedicated to driving improvements in
ethical and responsible business practices in global
supply chains. They use a collaborative approach
to help buyers and suppliers share and exchange
data. Being both a supplier and buyer member
allows our customers to access our compliance
to SEDEX’s standards which are veried by
independent SEDEX Members Ethical Trade
Audits (SMETA 4-pillar). It also allows us to create
links to our suppliers to access their ethical and
sustainability data and audit reports, so that we can
monitor their compliance.
PERCENTAGE OF OUR SUPPLIERS THAT ARE
SEDEX REGISTERED
2022 2021
Percentage of our
suppliers that are
SEDEX registered: 46% 35%
The improvement in the number of suppliers
registered with SEDEX is a result of our
responsible and sustainably sourcing policy which
encourages our suppliers to become members. We
aim to see an acceleration in 2023 as we continue
to roll out our programme.
This year we have enhanced our assessment by
determining the number of members audited by
SEDEX’s standards and veried by independent
SMETA 4-pillar audits. As such 27% of our of
supplier members have been audited. Also, as
a result of our focused eorts with our supply
chain we are pleased to share that 81% of our
citrus volume procured in FY2021 was from
suppliers that are registered with SEDEX. We
aim to encourage those supplier members not yet
registered or audited across our supply chain to
do so.
Dealing with SEDEX members, or those registered
with similar third-party organisations, gives us
comfort that they are audited to a professional
standard and adhere to high standards of
governance and ethics.
SAI PLATFORM
SAI Platform is a non-prot network of over 170
members harnessing the collaborative power of
the global food and drink industry to accelerate
the widespread adoption of sustainable agriculture
practices and the transformation to sustainable
food systems. As members of SAI Platform,
we have key roles in a number of projects
including that of the SAI Platform Florida Orange
Sustainability Accelerator Project which by end of
2022 is set to hit its objective of FSA verication
in 90% of Florida orange production. Discussions
are underway in how this could roll out to core
markets such as Brazil, for which we’d be a key
intermediary in implementing this best practice.
We are also proud to be Founders in SAI Platform’s
Regenerating Together programme - building
the regenerative capacity of agriculture through
a global, farmer-centred, industry-led initiative,
to meet the urgent need for an industry aligned
approach to demonstrate regenerative outcomes
on farms.
RAINFOREST ALLIANCE
We are proud to hold Rainforest Alliance Supply
Chain certication and we are able to buy and
sell specic products with the Rainforest Alliance
(RFA) certication seal. RFA is an international
non-prot organisation working at the intersection
of business, agriculture and forest to make
responsible business normal. The RFA’s standards
not only enforce human rights, to reduce child
labour and human tracking, but also the reduction
of deforestation and greenhouse gas emissions,
as well as ensuring consumers and suppliers are
investing back into the environment in which the
certied crop is grown.
During the year we have increased our
procurement of RFA-certied tea and are exploring
opportunities with other raw materials.
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TREATT PLC Annual Report & Accounts 2022
RFA% OF TOTAL TEA RAW MATERIAL
2019
2020 30%
32%
2021 63%
2022 71%
ECOVADIS
We are proud to have retained our silver standard
from EcoVadis who provide a ratings platform
to assess corporate social responsibility and
sustainable procurement for tens of thousands
of companies, providing a common platform,
universal scorecard, benchmarks and performance
improvement tools. We have improved our silver
sustainability rating and are among the top 25% of
companies assessed by EcoVadis.
CARBON DISCLOSURE PROJECT (CDP)
Our 2021 CDP score for climate was D and for
water C- based on data from FY 2020. The scores
for 2022 will be released soon and will reect the
progress we made across our pillars of people,
planet and performance during FY 2021.
ETI
We are committed to maintaining adherence
to the Ethical Trading Initiative best practice
requirements. The Ethical Trading Initiative is a
leading alliance of companies, trade unions and
NGOs that promotes respect for workers’ rights
around the globe and whose vision is a world
where all workers are free from exploitation and
discrimination, and enjoy conditions of freedom,
security and equity.
IFRA/IOFI
To further our involvement with sustainability
initiatives, specically within our business sector,
Treatt is a signatory to the IFRA/IOFI Sustainability
Charter. Through this voluntary initiative, the
avour and fragrance industry seek to encourage
enhancements in the eld of sustainability,
providing a framework to enable sharing and
benchmarking of the industry’s commitment to
sustainable development.
SUSTAINABILITY CONTINUED
PERFORMANCE CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 49
TREATT PLC Annual Report & Accounts 2022
A The likely consequences of any decision
in the long-term
B The interests of the Company’s employees
See page 51
C The need to foster the Company's business
relationships with suppliers, customers
and others
See pages 51 and 52
D The impact of the Company's operations on
the community and the environment
See page 53
E The desirability of the Company maintaining
a reputation for high standards of
business conduct
See pages 25, 72 and 73
F The need to act fairly as between members
of the Company
See pages 51, 74 and 75
Understanding the needs of stakeholders is key
to the Company’s ability to create long-term
value. By understanding the perspectives of all its
stakeholders, the Board is able to ensure that it can
best promote the success of the Company, fully
aware of its impacts on them, on the environment
and ultimately, therefore, in the best interests of its
members as a whole. In the event that a decision
had to be made that not all stakeholder groups
found favourable, steps would be taken to mitigate
any negative impacts as far as possible.
At an operational level, engagement with
stakeholders is reported to the Board via the
Executive Leadership Team and managers. Reports
submitted to the Board highlight the impact of the
subject matter, both positive and negative, and
prospective impacts on key stakeholders. This
provides the Board with insight into the eect of
our business on our stakeholders. Board meetings
include time dedicated to discussion on dierent
stakeholder groups; we have listened carefully to
the views and feedback from various stakeholders
in respect of the Group’s approach to ESG. Further
details can be found on pages 51 to 53.
Section 172 of the Companies Act 2006 requires
Directors to act in the way which they consider,
in good faith, would be most likely to promote
the success of the Company for the benet of its
members as a whole, and in doing so have regard,
amongst other matters, to:
Employees
Shareholders
Customers
Suppliers
Communities
Environment
SECTION 172
STAKEHOLDER ENGAGEMENT
50
TREATT PLC Annual Report & Accounts 2022
WHY WE ENGAGE:
Our employees are essential to the success of
our business; our culture and our commitment
to our purpose and values drives our business
performance. We engage with our people regularly
and seek to create an environment in which all
employees feel happy and supported. Further
details on our culture can be found on pages
15, 26, 28 and 29.
HOW WE ENGAGED:
Our culture is supported by maintaining an open
and active dialogue across the business. Direct
engagement took place through open door
Employee Voice sessions led by the Chairman and
designated Non-executive Director. Social events
were held in the UK and US for all employees,
which the Board attended, to facilitate more
relaxed engagement.
The Executive Directors regularly communicate
across the business and engaged through results
presentations, at the half and full year. Indirect
engagement reported to the Board via the
Executive Leadership Team, included:
• Executive Leadership Team town hall meetings
with Q&A sessions
• Wellbeing workshops for mental health
awareness week and stress awareness month
• Seeking feedback from all employees
through a dedicated email address on
organisational design
• Manager workshops on sustainability and
bi-annual sustainability updates via a dedicated
newsletter to all employees
WHAT WE DISCUSSED:
Key topics of engagement:
• New ve-year strategy
• Information on customer wins and nancial
results
• Organisational design including culture and
leadership
• Sustainability at Treatt
• Mental, physical and nancial wellbeing
• Executive remuneration
BOARD DECISIONS:
• Feedback received from Employee Voice
sessions was discussed at subsequent Board
meetings and, if appropriate, action taken
by management
• Any feedback received on executive
remuneration was discussed by the
Remuneration Committee and considered in
the context of its discussions
• The Board approved changes to leadership
positions below Board level and the
introduction of a new Executive Leadership
Team, reporting to the CEO, to drive
future performance
• The importance of culture was discussed
in the context of managing change, the
importance of regular communication with all
employees to alleviate uncertainty that might
be felt and ensuring that change does not
negatively impact culture
• The Board approved free and matching share
awards under the SIP and a grant of options
under the share save schemes
WHY WE ENGAGE:
Shareholder views inform our decision-making and
engagement enables us to explain our strategic
goals; it is important that all shareholders have
condence in our business and how it is managed,
whether they are institutional investors, private
individuals or employee shareholders.
HOW WE ENGAGED:
We were able to hold an open Annual General
Meeting in January 2022 with webcast facility
enabling direct engagement with shareholders.
Our Executive Directors met with current and
prospective shareholders, providing an overview of
our business and the industry in which we operate
with particular focus on the implementation of
our strategy and our trading update, in which we
downgraded our prot expectation for the year.
They also presented annual and half year results
to institutional investors. These presentations and
webcasts were made available to all shareholders
through the Group website.
We held our rst capital markets days, with strong
attendance, providing institutional investors with
an opportunity to see our new site and learn more
about the business from our team.
Our Global Sustainability Manager has engaged
with several shareholders in respect of matters of
particular interest to them relating to sustainability.
In recent years we have consulted with our major
shareholders in relation to our remuneration policy
and Chairman’s tenure. Consultation provides us
with an opportunity to gauge shareholder opinion
and respond to any concerns raised.
WHAT WE DISCUSSED:
Key topics of engagement:
• Our nancial results and performance,
providing opportunities for our shareholders
to ask questions to better understand
our business
• Relocation to our new UK Headquarters
• The conict in Ukraine, sanctions against
Russia and impact on our business
• Global logistical issues
• Inationary pressures
• COVID-19 lockdowns in China
• Progress on sustainability
BOARD DECISIONS:
• The Nomination Committee undertook the
Chairman succession process, supported by
an independent executive search consultant,
ensuring that candidates were sought from
a pipeline of talent diverse in gender
and ethnicity
• The Board proposed a nal dividend for
FY2021 and approved an interim dividend for
FY2022. In deciding dividend levels, the Board
considered its dividend policy, the impact on
the Group’s cash position, investment needs
and relevant borrowing covenants
• Continued oversight of the site relocation
and approval of additional budget required
as a result of inationary cost pressures
and some higher than originally expected
commissioning expenses
Employees Shareholders
SECTION 172 CONTINUED
STAKEHOLDER ENGAGEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 51
TREATT PLC Annual Report & Accounts 2022
Customers
WHY WE ENGAGE:
It is important that we understand all our
customers’ requirements to allow us to deliver the
products and service they need and to inform our
research and development. Their feedback and
support are crucial to the success of our business.
HOW WE ENGAGED:
The CEO has met with a number of customers
during the course of the year both at their premises
and at Treatt. The Board indirectly engages with
customers at an operational level through members
of the Executive Leadership Team and their teams:
• Listening to our customers and their needs
through key account management relationships
• Working directly with relevant customer
departments on sustainability, technical,
regulatory and logistics matters of concern
to them
• Face to face visits and calls with customers,
with relevant Treatt specialists in attendance,
enables us to discuss a wide variety of matters
and seek feedback on our performance
WHAT WE DISCUSSED:
Key topics of engagement:
• Service levels and the impact of global logistics
issues on lead times
• The conict in Ukraine, sanctions against
Russia and any impact on our supply chain
• Customer needs and consumer trends, to
enable us to develop suitable products to meet
their needs
• Relocation of production to our new UK
Headquarters
• Our approach to sustainability
BOARD DECISIONS:
• Approval of capital expenditure projects to
increase product capacity and strengthen
product capability
• Approval of our ESG framework to further
develop and embed sustainability within our
business, ensuring that we continue to meet
the sustainability needs of our customers
• Continued oversight of the nancial position of
the business, including the level of inventory
required to be held by the Group to meet
customer demand
• Receipt of a report on customer engagement
Suppliers
WHY WE ENGAGE:
We have a strong supplier base located all over the
world with which, in order to grow sustainably, we
need to develop and maintain close relationships.
Our suppliers are fundamental to the quality
and sustainability of the products we oer our
customers. It is important to us to deal with
suppliers who are committed to Treatt and
our values.
HOW WE ENGAGED:
The CEO has been involved in a number of supplier
meetings during the course of the year. The Board
indirectly engages with suppliers through our
Procurement Team, who are responsible for our
supply chain relationships. They engaged with our
suppliers through:
• Regular virtual meetings and recommencement
of face-to-face meetings with the lifting of
travel restrictions
• Attendance at working groups as part of an
orange project run by the SAI Platform, a
global food and drink value chain initiative for
sustainable agriculture
• The supplier qualication and
requalication process
WHAT WE DISCUSSED:
Key topics of engagement:
• Continuity of the supply chain, business
continuity planning, global logistics issues and
lead time delays
• Launch of our new Responsible and
Sustainable Sourcing Policy in which we set
out our expectation of suppliers for sustainable
and responsible raw material sourcing
• Relaunch of our Supplier Code of Conduct,
which places greater environmental
expectation on our suppliers of raw materials
BOARD DECISIONS:
• Approval of our ESG framework, which
establishes further priorities related to
sustainable sourcing
• Receipt of a report on supplier engagement
including the latest payment practices
SECTION 172 CONTINUED
STAKEHOLDER ENGAGEMENT CONTINUED
52
TREATT PLC Annual Report & Accounts 2022
Communities
WHY WE ENGAGE:
We care deeply about the communities in which
we operate and have spent time developing
relationships to provide support and opportunities
where we are able to do so. We want to appeal
to the best talent, and it is important that Treatt
fosters the best possible reputation in the
communities where we operate and from which
we recruit.
HOW WE ENGAGED:
Community relationships are managed locally
with the involvement of the CEO and with each
subsidiary focusing on community groups, projects
and initiatives which are important to them.
Providing nancial and non-nancial donations to
community projects and charities.
Enterprise Advisors working closely with local
schools to support careers education through
virtual assemblies and collaborative projects.
Regular meetings with community, charity and
school contacts.
Group-wide charity fundraisers increasing
awareness of their causes whilst raising vital funds
to support their services.
Further details of our work with local communities
can be found on page 33.
WHAT WE DISCUSSED:
Key topics of engagement:
• How we can provide assistance to charity
partners
• Sponsorship
• Volunteering
• Donations
BOARD DECISIONS:
• The Board approved a donation to the
Disasters Emergency Committee’s Ukraine
Humanitarian Appeal
• Receipt of a report on community engagement
activities
Environment
WHY WE ENGAGE:
The natural environment is of considerable
importance to our business and the supply
of natural raw materials. We must make a
positive contribution to our environment and the
sustainability of our products.
HOW WE ENGAGED:
Continuing to work with consultants to further
develop and embed our sustainability strategy
throughout the Group and improve our
environmental performance.
Energy audit of our UK and US facilities to identify
energy saving opportunities.
Group-wide initiative for The Great Big Green Week
with various activities to ensure that the eect of
climate change remains a focus within Treatt.
WHAT WE DISCUSSED:
Key topics of engagement:
• Scope 3 emissions in the rst year of reporting
• TCFD scenario analysis and the impact of
climate change on our business
• Short and longer-term energy saving
opportunities and prioritisation of investment
• Increased expectations on our supply chain in
respect of environmental performance
BOARD DECISIONS:
• Approval of capital expenditure projects for
energy saving initiatives
• Approval of our ESG framework, which
establishes further priorities in respect of
environmental matters and climate change
• Receipt a report at every meeting on
progress against our ESG strategy and
an annual presentation from our Global
Sustainability Manager
This Strategic Report was approved by the Board
on 29 November 2022.
Ryan Govender
Chief Financial Ocer
SECTION 172 CONTINUED
STAKEHOLDER ENGAGEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 53
TREATT PLC Annual Report & Accounts 2022
FINANCIAL REVIEW
STRONG SALES GROWTH, WITH MARGIN DECLINE IMPACTING PROFITABILITY
Ryan Govender
Chief Financial Ocer
OVERVIEW
The Group performance reects a dicult set of
nancial results for the year ended 30 September
2022. Revenue grew 12.8% to £140.2m (9.1%
in constant currency) with growth across all
categories except tea, however gross margins
declined to 27.9% mainly due to lower hard tea
sales and FX losses. As a result, prot before tax
and exceptional items reduced by 27.1% to £15.3m.
The Group has reviewed how it can better limit
FX exposure in light of increasing volatility. This
resulted in the correction of previously over-
hedged FX contracts during the nancial year
and the implementation of new FX management
systems which will provide greater controls for the
Group in this area.
The year saw continued investment of £12.8m
in capital projects, including £5.0m on the new
UK facility with the majority of production now
transitioned and operational from the new site. Due
to the ongoing high levels of investment in capital
projects and strategic inventory holding, we ended
the year with net debt of £22.4m (2021: £9.1m)
and net debt to adjusted EBITDA1 of 1.21x which
is well within our target leverage range (statutory
measure: 1.16x net debt to EBITDA).
INCOME STATEMENT
Revenue
Revenue for the year increased by 12.8% to
£140.2m (2021: £124.3m). In constant currency
terms, revenue increased by 9.1% as the Pound
Sterling was weaker against the US Dollar in 2022,
as compared to 2021.
Revenue growth was broad-based, across all of
our categories, with the exception of tea where
sales declined on the back of an exceptional 2021
performance and lower than expected demand in
hard tea (ready-to-drink canned cocktail market)
in the US, which also materially impacted margins
for the year. Our overall revenue performance
was driven in particular by our citrus, synthetic
aroma and health & wellness categories, reporting
combined growth of 19.8%.
Citrus, which contributed 47.6% of Group revenue
(2021: 43.6%), grew by 23.2%, while margins
remained broadly in line. During the year we
implemented selected price increases to mostly
oset higher commodity prices, with our expertise
in citrus procurement and our robust supply chain
ensuring we mitigated our exposure as much as
possible to the rising market.
Whilst approximately 80.0% of the Group’s
revenue now comes from our natural and clean-
label product ranges, our synthetic aroma sales
increased by 13.6% (2021: 8.9%) with growth in
products used to avour alternative proteins and
savoury snack foods.
1. EBITDA is calculated as operating prot plus depreciation
and amortisation. The adjusted measure excludes
exceptional items
Strong revenue growth.
+12.8%
Growth
54
TREATT PLC Annual Report & Accounts 2022
Categories %
share of sales 2022 2021
Citrus 48% 44%
Tea 6% 11%
Health & wellness 8% 8%
Fruit & vegetables 10% 10%
Herbs, spices & orals 9% 9%
Synthetic aroma 18% 18%
Coee 1% –
Geographical %
share of sales 2022 2021
UK 7% 8%
Germany 6% 5%
Ireland 8% 6%
Rest of Europe 10% 11%
USA 38% 43%
Rest of the Americas 9% 8%
China 6% 6%
Rest of the World 16% 13%
Health & wellness, including sugar reduction, had
another strong year, growing by 15.3% (2021:
28.7%) with sustained consumer demand for
‘better for you’ products driving sales in our
specialist solutions, such as the reduction of
caloric content in beverages. This reects the
important IP, know-how and technical expertise
which Treatt possesses in this eld.
Despite a very strong prior year, fruit & vegetables
continued to grow by 8.3% (2021: 59.6%) with
mango, pineapple, strawberry and kiwi natural
extracts leading contributors to growth.
The Group’s traditional range of herbs, spices &
orals, many of which are traded, grew by 10.4%
(2021: 0.5%) in large part because of improved
on-trade consumption post-pandemic.
Coee sales of £1.1m are reported separately
for the rst time in our full year results as we
continued our investment in coee innovation
resources in the scal year.
Geographical analysis of revenues shows that the
UK, mainland Europe and The Americas maintained
performance despite a number of challenges. The
well-documented global supply chain issues and
site relocation created logistical challenges which
our very experienced supply chain teams across
the Group did a remarkable job in overcoming in
order to maintain customer service levels.
In the UK, revenues performed well in both citrus
and coee, with revenue ending the year up by
2.9% at £9.8m.
Sales to mainland Europe, which represented
24.3% of Group revenue (2021: 21.9%), performed
well reporting a 25.0% increase in revenue to
£34.0m (2021: £27.2m) driven by particularly
strong performance from both citrus and
synthetic aroma.
Revenue in the Group’s largest market, the US,
grew by a more modest 0.7% to £53.7m (2021:
£53.4m) representing 38.3% of the Group total
(2021: 42.9%). Within the US, the Group benetted
from particularly strong growth in orange products
where successful navigation of supply chain
challenges during the year enabled the business
to compete against those not so well positioned,
however this market also endured the signicant
downturn in tea demand.
The Group continued to focus on opportunities
in China, with our local subsidiary completing
its rst full year of trading in 2022. Despite the
well documented extended COVID-19 related
restrictions in large parts of China, reported
revenue to the country increased by 6.2% to £7.9m
(2021: £7.4m). We remain optimistic about the
opportunities in this market with a large proportion
of growth representing new business for Treatt.
The Rest of the World (excluding China) grew by
26.8% to £21.8m (2021: £17.2m) with a number of
customers and markets now recovering from the
prolonged eects of COVID-19 that continued to
impact 2021.
Prot
Gross prot declined by 7.4% with gross prot
margins reducing from 34.0% to 27.9%. The
decrease in margins resulted from three factors;
rstly the change in mix as a result of the growth
in lower margin citrus sales and the decline in
higher margin hard tea sales; secondly the Group
experienced signicant input cost ination and
whilst, in a number of cases, the business has been
able to pass this onto its customers, some longer-
term contracts have not yet allowed this to be
achieved across the full portfolio. Lastly, margins
were adversely aected by increasing FX losses
on over-hedged FX contracts, following the rapid
devaluation of Sterling against the US Dollar during
the second half of the year.
FINANCIAL REVIEW CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 55
TREATT PLC Annual Report & Accounts 2022
The impact of foreign exchange gains and losses
in 2022 was a total loss on foreign exchange
contracts of £2.3m (2021: £1.4m gain), the net gain
and loss on the re-translation of other currency
denominated balances, in aggregate, was £nil
(2021: £0.4m loss). During the second half of
the year, the Group corrected over-hedged FX
contracts and implemented new FX management
systems, including an internal FX Committee and
the use of third party FX advisors.
There was a foreign exchange gain of £11.5m
(2021: £1.8m loss) in the ‘Statement of
Comprehensive Income’ in relation to the Group’s
investment in Treatt USA.
FINANCE COSTS
The Group’s net nance costs increased to £0.5m
(2021: £0.4m) as net debt increased by £13.3m to a
closing position of £22.4m. In the year investment
in the UK facility was £5.0m and related capitalised
interest cost of £0.2m. As well as interest costs
there were a number of xed costs for maintaining
facilities for future use which were funded from
operating cash ows. Whilst still healthy, following
the decline in prots, interest cover for the year
before exceptional items decreased to 30.5 times
(2021: 50.0 times).
FINANCIAL REVIEW CONTINUED
Administrative expenses (excluding exceptional
items) grew by 11.7% in the year to £23.3m (2021:
£20.9m), driven by an increase in administrative
headcount, including investment in our new coee
team, overhead ination and increased travel post
pandemic. Average headcount numbers across
the Group have increased by 12.5%. A signicant
number of open vacancies in 2021 were lled in the
current year leading to the increase in headcount
in 2022. After substantial investment in our people
and production facilities to support the Group’s
next phase of expansion, we do not anticipate any
signicant increase in administrative expenses in the
short to medium-term, above the normal rate
of ination.
Adjusted net operating margin² decreased in the
year to 11.3% (2021: 17.2%), whilst net operating
margin decreased in the year to 11.9% (2021:
16.1%), both impacted by the decline in gross
prot, with administrative expenses (excluding
exceptional items) remaining consistent as a
proportion of revenue. Consequently, operating
prot excluding exceptional items decreased
26.1% to £15.8m (2021: £21.3m) whilst statutory
operating prot decreased 16.7% to £16.7m (2021:
£20.0m). Over the last ve years average adjusted
net operating margins have been 13.3%, whilst our
medium-term target range is 15-20%.
Adjusted return on average capital employed3
(ROACE) decreased to 11.6% (2021: 20.9%) as a
consequence of the decrease in operating prots
during the year whilst capital employed increased
(return on average capital employed decreased
from 19.2% (2021) to 11.9% over the year). As well
as growth in adjusted basic earnings per share,
ROACE has been included as a performance metric
for LTIPs. Our medium-term target for ROACE is to
deliver a range of 20-25%.
Exceptional items (see note 8 to the nancial
statements) include the gain on the sale of
the previous UK facility of £3.3m (2021: nil)
oset by one-o non-recurring costs of £2.4m
(2021: £1.3m). These comprised relocation
expenses (£1.8m) including project consultants,
manufacturing plant and machinery design and
installation specialists and commissioning costs
together with restructuring costs (£0.6m) incurred
as a result of a signicant change to the executive
leadership structure.
2 Operating margin is calculated by dividing operating prot by
revenue from continuing operations. The adjusted measure
excludes exceptional items.
3 Return on average capital employed is calculated by dividing
operating prot (as shown in the Group income statement)
by the average capital employed in the business, which is
calculated as total equity (as shown in the Group balance
sheet) plus net debt or minus net cash (as shown in the
Group reconciliation of net cash ow to movement in net
debt), averaged over the opening, interim and closing
amounts. The adjusted measure excludes exceptional items.
Adjusted earnings before interest, tax, depreciation
and amortisation (adjusted EBITDA1) for the year
decreased by 20.2% to £18.5m (2021: £23.1m)
whereas statutory EBITDA reports an 11.2%
decline to £19.4m (2021: £21.8m). Prot before tax
and exceptional items from continuing operations
declined by 27.1% to £15.3m (2021: £20.9m).
Reported prot after tax for the year of £13.3m
represents a decrease of 12.1% on the prior year.
FOREIGN EXCHANGE GAINS AND LOSSES
Whilst the Group’s functional currency is the
British Pound (Sterling), the majority of the Group’s
business is transacted in other currencies which
creates a foreign exchange exposure, particularly in
the US Dollar and, to a lesser extent, the Euro.
During the year Sterling weakened against the US
Dollar, ending the year 17.2% weaker at £1=$1.12
(2021: £1=$1.35); the average Sterling/US Dollar
exchange rate for the year was 6.5% weaker as
compared with the prior year.
The Group’s FX risk management policy is to
minimise its foreign exchange risk at our UK
business through the use of forward currency
contracts and options, as well as through managing
its US Dollar borrowings. This can result in timing
dierences in the short-term, giving rise to re-
translation gains or losses in the income statement.
More detail on the implementation of this policy
and changes made during the year can be found
in the foreign exchange risk management section
on page 59.
56
TREATT PLC Annual Report & Accounts 2022
FINANCIAL REVIEW CONTINUED
GROUP TAX CHARGE
After providing for deferred tax, the Group tax
charge decreased by £1.6m to £2.9m (2021: £4.5m);
an eective tax rate (after exceptional items) of
17.7% (2021: 22.8%). The decrease in eective tax
rate is driven largely by the tax treatment on the
disposal of Northern Way premises.
The sale of the Group’s former UK premises at
Northern Way in February 2022 is not expected to
be taxable as indexation allowances are available
which fully oset the taxable gain. The deferred tax
rate applicable in the UK has remained at 25.0%, in
the US the rate of corporation tax remains
at 21.0%.
EARNINGS PER SHARE
Basic earnings per share (as set out in note 11 to
the nancial statements) decreased by 12.5% to
22.04p (2021: 25.19p). Adjusted basic earnings
per share4 for the year declined by 26.8% to 19.80p
(2021: 27.05p). The calculation of earnings per
share excludes those shares which are held by the
Treatt Employee Benet Trust (EBT) and Treatt SIP
Trust (SIP), which are not benecially owned by
employees since they do not rank for dividend and is
based upon prot after tax.
DIVIDENDS
The proposed nal dividend of 5.35p per share
(2021: 5.50p) increases the total dividend per
share for the year to 7.85p, a 4.7% increase
on the prior year (2021: 7.50p), representing
dividend cover of 2.5 times pre-exceptional
earnings for the year and a rolling three-year cover
after exceptional items of 3.0 times. The Board
considers this to be appropriate at this stage of the
Group’s development.
BALANCE SHEET
Shareholders’ funds grew in the year by £27.6m
to £133.9m (2021: £106.3m), with net assets per
share increasing by 25.0% to £2.20 (2021: £1.76).
Over the last ve years net assets per share have
grown by 150.0%. The Board has chosen not to
avail itself of the option under IFRS to revalue
land and buildings annually and, therefore, all the
Group’s land and buildings are held at historical
cost, net of depreciation, on the balance sheet.
Inventory held at the year-end was £68.4m (2021:
£47.3m), an increase of £21.1m. This increase
was driven by three main factors; rstly higher
average raw material costs due to inationary
increases (notably orange oil which remains the
largest volume material held in inventory); secondly
the overall growth in sales and thirdly proactive
purchasing by our procurement team to protect
our customers from the eect of global supply
chain issues.
One factor in the success of the business is our
management of risks, such as geographic, political
and climatic, to ensure continuity of supply for
our customers. Consequently, the overall level of
inventory held by the Group is highly signicant in
cash terms.
NET DEBT
At the year-end date the Group’s net debt position
was £22.4m (2021: £9.1m) including leases
of £0.4m (2021: £1.1m), with available unused
facilities of £8.4m.
In order to support the Group’s growth plans for
the foreseeable future, the Group retains a mix of
secured and unsecured borrowing facilities totalling
£30.8m, of which £13.4m expires in one year
or less.
During the year the Group increased its UK
overdraft limit by £2.7m and increased its US
line of credit by $2.0m in order to provide further
headroom on its existing facilities. Furthermore, the
Group still retains with HSBC a £6.5m accordion
(pre-approved facility) and has access to an
uncommitted asset-backed credit facility of up to
$7.0m with Bank of America. Borrowing facilities
are undertaken to match some of the Group’s
borrowings to the assets which they have been
used to nance and working capital.
4 Adjusted earnings per share measures exclude exceptional
items and the related tax eect, details of which are given in
note 8.
All the Group’s borrowing facilities are held with
HSBC and Bank of America and are typically
held on three to ve-year terms with expiry dates
staggered to fall in dierent nancial years. The
Group continues to enjoy positive relationships with
its banks and expects all facilities to be renewed or
renanced when they fall due.
CASH FLOW
Net cash outow for the year was £4.1m (2021:
£5.0m outow) reecting the ongoing investment
in production and technical capabilities together
with a strategic build of specic inventory to
maintain supply and protect margins. During the
year the Group invested £12.8m (2021: £14.4m) on
capital projects, of which £5.0m was incurred on
the UK relocation project (more details of which
are set out on page 58). Total investments in the
Group’s US operations were £5.8m, this includes
£2.4m on a signicant new still and £2.2m on
other new processing equipment and technologies
to further support the Group’s growth plans and
ambition to increase the proportion of value-added
products. Capital spend was partially oset by the
sale of the Group’s former premises at Northern
Way for £5.8m in February 2022.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 57
TREATT PLC Annual Report & Accounts 2022
expect a further net cash outow of £5.0m over
the next year. The cash outows for the project are
expected to result in the rolling Group net debt to
adjusted EBITDA ratio remaining below 1.0x
during FY23.
It should be noted that in accordance with IAS 23
‘Borrowing costs’, and in addition to the above, the
interest charges incurred on funds utilised on the
relocation project prior to its completion fall to be
capitalised. In the year ended 30 September 2022
£187,000 was capitalised and a further £230,000
is expected to be capitalised in the year ending
30 September 2023.
TREATT EMPLOYEE BENEFIT TRUST AND
TREATT SIP TRUST
The Group has an HMRC-approved Share Incentive
Plan (SIP) for its UK employees, and as far as
practicable, also oers a similar scheme to its US
employees. All UK employees with a year’s service
were awarded £700 (2021: £700) of ‘Free Shares’
during the year as part of the Group’s employee
incentive and engagement programme as the
Board is rmly of the view that increased employee
share ownership is an important tool for driving
positive employee engagement in the business.
A similar scheme exists for US employees who
were awarded $1,000 (2021: $1,000) of Restricted
Stock Units during the year. These shares are
forfeited by employees who leave within three
years from the date of grant.
FINANCIAL REVIEW CONTINUED
There was an overall working capital outow in the
year of £18.5m (2021: outow £10.0m), principally
as a result of an outow of £14.4m in relation
to a tactical decision to build inventory levels in
response to increasing lead times and inationary
pricing pressures. There was a net increase in
receivables of £8.5m as a result of the strong sales
performance in the nal two months of the year,
partially compensated by an increase of £4.4m
in payables.
CAPITAL INVESTMENT PROGRAMME
UK relocation
The Group acquired a ten-acre greeneld site on
the new Suolk Park in Bury St Edmunds in mid-
2017 to relocate our UK business from its previous
site in Bury St Edmunds, to a brand-new purpose-
built facility. Construction of the new facility was
completed during 2021. In addition to delivering
operational eciencies and advanced capabilities,
the aim of the new facility was to bring together all
our UK-based sta into a single premises.
During 2022 the rst phase of installation and
commissioning of plant and machinery was
completed, inventory was physically transferred to
be managed by the new warehouse management
system and production began from the new facility
as equipment was successfully brought online.
All science and technical colleagues have now
transitioned to the new site where state-of-the-art
laboratories both support and promote product
innovation whilst also providing a truly exceptional
customer collaboration environment.
Following the sale of Northern Way premises in
February 2022, the Group agreed a leaseback
of our main manufacturing building for a period
of 19 months, with a break-clause at 12 months,
to maintain the continuity of its manufacturing
capability during the transition. In 2023 we will
commence phase two, which involves the transfer
and upgrade of highly complex manufacturing
equipment from our old site. We expect phase two
to be completed by the end of 2023 and we will
continue to manufacture some products at the old
site until the lease expires. Whilst there is a risk
of cost overruns, we have programmed a gradual
transfer from our old site to our new facility and
included approximately £0.5m of contingency
(approximately 10.0% of the remaining spend) in
order to mitigate that risk as far as practicable.
The respective total costs of each phase of the
relocation are broken down as follows:
£’000 Phase one Phase two Total
Capital expenditure 41,277 3,070 44,347
Existing site
disposal (5,592) – (5,592)
Exceptional items 4,820 2,290 7,110
Total costs 40,505 5,360 45,865
The total capital project costs, including proceeds
from the sale of the previous site, are expected to
be approximately £38.8m with exceptional costs
totalling £7.1m expected to be incurred. As the
relocation project moves into the nal phase, we
58
TREATT PLC Annual Report & Accounts 2022
FINANCIAL REVIEW CONTINUED
Under the SIP, UK employees are oered the
opportunity each year to purchase up to £1,800
(or 10.0% of salary, whichever is lower) of Treatt
shares out of gross income, which the Group
continues to match on a one and a half for one
basis. In the year, a total of 24,000 (2021: 30,000)
matching shares were granted.
The SIP currently holds 438,000 shares (2021:
477,000) and is administered by Link Asset
Services Trustees. All shares are allocated to
participants under the SIP. It is anticipated that
going forward the obligations under the SIP will
continue to be satised through the issue of
new shares.
In addition, the Group continued its annual
programme of oering share option saving
schemes to employees in the UK and US. Under
US tax legislation, employees at Treatt USA are
able to exercise options annually, whilst the UK
schemes provide for three-year saving plans.
Under the Long-Term Incentive Plan, which was
approved by shareholders at the 2019 Annual
General Meeting, Executive Directors and certain
key employees were granted 72,000 (2021:
127,000) nil cost share options during the year
which will vest after three years on a sliding
scale, subject to performance conditions. In
total, options were granted over 205,000 (2021:
197,000) shares during the year, whilst 278,000
(2021: 117,000) were exercised from options
awarded in prior years which have now vested.
During the year 400,000 (2021: 100,000) shares
were issued to the Employee Benet Trust (EBT)
at par (2 pence per share). The EBT currently
holds 270,000 shares (2021: 166,000) in order to
satisfy future option schemes. It is anticipated that
going forward, all-employee savings-related share
schemes will continue to be satised by shares
held within the EBT, to which further shares will be
issued as necessary.
FINAL SALARY PENSION SCHEME
The R C Treatt nal salary pension scheme (the
‘scheme’) has not been subject to any further
accruals since 31 December 2012 and instead
members of the scheme were oered membership
of the UK dened contribution pension plan with
eect from 1 January 2013. This means that the
dened benet scheme has been de-risked as far
as it is practicable and reasonable to do so.
The last three-year actuarial review of the scheme
was carried out as at 1 January 2021, the result of
which was that the scheme had an actuarial decit
of £4.9m (1 January 2018: surplus £0.5m) and a
funding level of 82.0%. Consequently, the Company
has agreed with the trustees to make contributions
of £0.5m (2021: £0.5m) per annum until the next
actuarial review date of 1 January 2024.
Under IAS 19, ‘Employee Benets’ a valuation of
the scheme is conducted at the year-end date
based on updating the valuation calculations from
the most recent actuarial valuation. In accordance
with this valuation, and having sought legal advice
as to the appropriateness of recognising a scheme
surplus, there is a pension surplus recognised on
the balance sheet, net of tax, of £1.3m (2021: £5.1m
liability). The decrease in the decit is driven by an
actuarial gain on changes to nancial assumptions
of £11.7m, due to signicantly higher discount rate
assumptions than prior years as a result of higher
government bond yields.
FOREIGN EXCHANGE RISK MANAGEMENT
The nature of Treatt’s activities is such that the
Group could be aected by movements in certain
exchange rates, principally between Sterling and
the US Dollar, but other currencies such as the
Euro can also have a material eect. This risk
manifests itself in a number of ways.
Firstly, the value of the foreign currency net
assets of Treatt USA (the Group’s main overseas
subsidiary) can uctuate with Sterling.
Secondly, with R C Treatt (the Group’s main
UK subsidiary) exporting throughout the world,
uctuations in the value of Sterling can aect both
the gross margin and operating costs. In addition
to Sterling, sales are principally made in US Dollar
and Euro, with the US Dollar being the most
signicant, typically accounting for around half of
the UK business’s sales.
Even if a sale is made in Sterling, its price may
be set by reference to its US Dollar denominated
raw material price which therefore can have an
impact on the Sterling gross margin. Raw materials
are also mainly purchased in US Dollars and bank
accounts are operated through which US Dollar
denominated sales and purchases ow. Hence it
is the relative strength or weakness of Sterling
against the US Dollar that is of prime importance.
As well as aecting the cash value of sales, US
Dollar exchange movements can also have a
signicant eect on the replacement cost of
stocks, which aects future protability and
competitive advantage.
The Group’s FX risk management policy is to
minimise its foreign exchange risk at our UK
business through managing its US Dollar cash
and borrowings and the use of forward currency
contracts and options. Foreign exchange contracts
are used to provide a hedge on the Group’s
margin exposure where purchases and sale are
made in the same currency. The value of these
contracts is determined through forward-looking
forecasts of expected sales and net margins in
foreign currencies.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 59
TREATT PLC Annual Report & Accounts 2022
Drive Growth
Momentum
Re-establish
Growth
Platform
Return to
Growth
I believe the top line growth in healthier value-
added categories, whilst maintaining ecient
operations and a stable cost base, will allow
improvement in operating margins over the next
few years.
At this early stage of FY2023, the business is on
track to meet market expectations.
Ryan Govender
Chief Financial Ocer
29 November 2022
An FX committee was formed in August 2022 in
order to monitor foreign exchange risks within the
business, work on renements to the existing FX
risk policy and provide a forum to challenge and
approve strategic actions such as hedging. The
committee meets monthly and there is an ongoing
focus to manage foreign currency debt balances,
ensure the ongoing eectiveness of hedges and
remove avoidable foreign exchange risk from
the business.
The Group now, as part of its FX risk management,
actively minimises its foreign currency debt and
cash balances where there is no immediate
expected oset. In regard to foreign exchange
contracts used for hedging, the Group regularly
reforecasts its exposure and amends its positions
according to any surpluses or shortfalls.
SUMMARY
Sales grew strongly by 12.8% to £140.2m during
the year, albeit the prot performance of the
Group has been disappointing, following nine
years of continuous growth in prot before tax
and exceptional items. The strength of our sales
growth across almost every category gives us
the condence to continue our focus on healthier
value-added categories and we saw a recovery
of our on-trade channels and the consequential
demand for our products, reecting the underlying
strength and resilience of our business.
FINANCIAL REVIEW CONTINUED
As we near the end of our capital investment
programme, manufacturing capacity is in place to
support organic growth over the next few years,
with the capability now to add further capacity
in a more modular and cost-ecient way. After
substantial investment in our people to support
the Group’s next phase of expansion, we do not
anticipate any signicant increase in administrative
expenses in the short to medium-term, above the
normal rate of ination.
I believe the top line growth in healthier value-
added categories, whilst maintaining ecient
operations and a stable cost base, will allow
improvement in operating margins over the next
few years.
As we near the end of our capital investment
programme, manufacturing capacity is in place to
support organic growth over the next few years,
with the capability now to add further capacity
in a more modular and cost-ecient way. After
substantial investment in our people to support
the Group’s next phase of expansion, we do not
anticipate any signicant increase in administrative
expenses in the short to medium-term, above the
normal rate of ination.
60
TREATT PLC Annual Report & Accounts 2022
GROUP FIVE YEAR TRADING RECORD
*2018, 2019 and 2020 show discontinued operations
separately. There were no discontinued operations in 2021
and 2022
2018*
£’000
2019*
£’000
2020*
£’000
2021
£’000
2022
£’000
Income statement
Revenue 112,163 112,717 109,016 124,326 140,185
Adjusted EBITDA1,2 14,577 14,871 16,982 23,144 18,464
Operating prot213,944 13,499 15,092 21,346 15,773
Prot before taxation and exceptional items 12,642 13,300 14,801 20,919 15,256
Growth in prot before taxation and exceptional items 8.1% 5.2% 11.3% 41.3% (27.1%)
Exceptional items (1,105) (755) (1,060) (1,302) 923
Prot before taxation 11,537 12,545 13,741 19,617 16,179
Taxation (2,284) (2,673) (2,896) (4,469) (2,864)
Discontinued operations 2,976 (1,084) (1,080) – –
Prot for the year attributable to owners of the
Parent Company 12,229 8,788 9,765 15,148 13,315
Balance sheet
Intangible assets 752 845 1,358 2,424 3,206
Property, plant and equipment 20,038 29,485 50,159 61,039 74,281
Right-of-use assets – – 1,173 1,556 375
Net deferred tax asset/(liability) 672 (319) (924) (1,383) (5,369)
Current assets 102,402 98,158 69,472 83,606 108,537
Current liabilities (35,781) (28,905) (15,989) (30,556) (46,329)
Non-current borrowings (3,001) (4,369) (3,450) (2,624) (2,342)
Post-employment benets (3,457) (7,788) (10,051) (6,806) 1,782
Non-current lease liabilities – – (628) (957) (291)
Total equity 81,625 87,107 91,120 106,299 133,850
*2018, 2019 and 2020 show discontinued operations
separately. There were no discontinued operations in 2021
and 2022
2018*
£’000
2019*
£’000
2020*
£’000
2021
£’000
2022
£’000
Cash ow
Cash generated from operations 3,581 20,544 15,677 13,892 (1,830)
Taxation paid (2,978) (2,208) (2,191) (4,874) 443
Net interest paid (610) (199) (191) (270) (382)
Dividends paid (2,876) (3,080) (3,378) (3,704) (4,834)
Additions to non-current assets net of proceeds (6,579) (10,570) (24,814) (14,373) (7,177)
(Acquisition)/disposal of subsidiaries 8,746 1,033 (136) – –
Net sale of own shares by share trust 586 526 547 630 621
Proceeds on issue of shares 20,833 14 2 3 9
(Increase)/reduction of lease liabilities – – (659) (394) 657
Other cash ows (419) (161) (388) (451) (812)
Movement in (debt)/cash 20,284 5,899 (15,531) (9,541) (13,305)
Total net (debt)/cash 10,059 15,958 427 (9,114) (22,419)
Ratios
Adjusted net operating margin2,3 12.4% 12.0% 13.8% 17.2% 11.3%
Return on average capital employed2,4 21.9% 18.8% 18.6% 20.9% 11.6%
Net (cash)/debt to adjusted EBITDA2,5 (0.69) (1.07) (0.03) 0.39 1.21
Adjusted basic earnings per share218.02p 17.82p 19.72p 27.05p 19.80p
Growth in adjusted basic earnings per share29.8% (1.1%) 10.7% 37.2% (26.8%)
Dividend per share65.10p 5.50p 6.00p 7.50p 7.85p
Dividend cover (adjusted to exclude exceptionals)73.42 3.22 3.28 3.60 2.51
Net assets per share 137.3p 144.8p 151.2p 176.0p 219.9p
Notes:
1 EBITDA is calculated as prot before interest, tax, depreciation and amortisation from continuing operations. See note 31 in the nancial statements.
2 All adjusted measures exclude exceptional items. See note 8 in the nancial statements.
3 Operating prot before exceptional items divided by revenue from continuing operations.
4 Prot before interest, taxation and exceptional items divided by the average of opening, interim and closing net debt. See note 31 in the nancial statements.
5 Net cash/(debt) at the year-end date divided by adjusted EBITDA1,2. See note 31 in the nancial statements.
6 The dividend per share shown relates to the interim dividend declared and nal dividend proposed for the corresponding nancial year.
7 Dividend cover is dened as prot for the year, less exceptional items and their related tax eect, divided by the total of interim dividend paid and nal dividend proposed.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 61
TREATT PLC Annual Report & Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES
RISK MANAGEMENT
THE BOARD
The Board has overall responsibility for
the management of risk at Treatt.
The Board monitors the actions required
to mitigate our risks and is responsible for:
Setting and communicating the Group’s risk appetite
Aligning the risk mitigation approach with the
Group’s strategic objectives
Reviewing and challenging the risk register
Embedding eective risk management
in the culture of the Group
Empowering people at all levels to engage with risk
management and internal control systems
EXECUTIVE DIRECTORS
Responsible for:
Day-to-day risk management
Reviewing and monitoring risk and mitigation strategies across the business
EXECUTIVE LEADERSHIP TEAM
Responsible for:
Identifying key risks facing the business
Compiling Group risk registers
Determining appropriate and proportionate risk mitigation strategies
COLLEAGUES
Responsible for:
Identifying key risks facing the business
Management of risk through applying appropriate controls, policies and processes
How we manage risks
The management of risk is embedded in the management and operational processes of the Group including:
A dedicated team reviewing adherence to internal procedures and operational controls, requiring action where non-conformances are identied
A clear understanding of market
conditions and raw material prices
Oversight of risk by the Board Regular dissemination of nancial and non-nancial information
and Key Performance Indicators (KPIs)
The quality of our people
and culture
Processes for identication, review
and monitoring of risk
Established policies, procedures
and internal controls
The process of strategy setting
62
TREATT PLC Annual Report & Accounts 2022
THE BOARD
The Board has overall responsibility for the
management of risk at Treatt. This includes
establishing an appropriate risk culture, setting
the Group’s risk appetite and overseeing its risk
management and internal control systems. Day-to-
day risk management is delegated to the Executive
Directors who work closely with the Executive
Leadership Team in reviewing and monitoring risk
and mitigation strategies across the business.
RISK APPETITE
Risk appetite is an expression of the type and
amount of risk we feel willing to accept to
achieve our strategic objectives. We operate in a
competitive market and recognise that strategic,
commercial and investment risks may be incurred
in seizing opportunities and delivering results.
Consequently, we are prepared to accept certain
risks in pursuit of our strategic objectives provided
that the potential benets and risks are fully
understood, and appropriate mitigation strategies
are in place to minimise the eects of the risks
should they materialise.
Our risk appetite has been dened and agreed
by the Board and helps frame decision-making
in determining how best to manage each of our
principal risks. It is communicated across the
business in our risk management framework.
Our risk appetite in relation to dierent categories
is summarised below.
RISK IDENTIFICATION
Risk identication is an integral part of the day-
to-day activities of people at every level; they
are empowered to manage risk through regular
communication channels and appropriate controls,
policies and processes.
The Executive Leadership Team is responsible
for compiling Group risk registers to identify key
risks facing the business, their potential eects
and determining appropriate and proportionate
risk mitigation strategies. Responsibility for
monitoring and reviewing each risk is taken by a
designated senior member of sta to ensure that
there is appropriate accountability. Risks included
in the register are rated on their probability and
impact and then re-rated after mitigation. Those
responsible for each risk will use a variety of
tools to monitor their risk at a more granular
level, including more detailed sub-registers and
pertinent KPIs.
Where signicant projects are undertaken, such
as the recent site relocation in the UK, specic
project risk registers are established to record all
risks that could have a signicant eect on the
success of the project. This ensures that there is
accountability for the mitigation strategies that are
put in place and enables regular monitoring of risk
identication and the eectiveness of mitigating
actions throughout the project.
All risks with a potential impact that remains
classied as high or medium post-mitigation form
the Board risk register, providing details of those
risks that may impact upon the performance of
the business and its strategic direction. The Board
formally reviews this register twice a year and
upon any material change, with any amendments,
control issues, accidents or commercial, nancial,
regulatory or reputational issues being reported to
the Board in the meantime.
OUR RISK APPETITE
• Strategic – we will actively seek to maximise
shareholder value whilst assessing and
managing strategic risks
• Financial – we are prepared to invest for
reward and minimise the possibility of
nancial loss by managing the risks to a
tolerable level
• Operational – we are prepared for adverse
operational performance in the short-term if
there is a clear business case with dened
benets in the medium to longer-term
• Health & safety – our priority is to ensure
that no harm comes to our colleagues
and customers
• Technology – we have a low appetite for
taking risks that may result in signicant
disruption or downtime in the business
• People – we are forward-thinking in
organisation and people development and
are prepared to make decisions if there is an
opportunity to gain a longer-term benet
• Regulatory compliance – we invest heavily
to ensure that there is a robust control
environment and framework to maintain a
high level of compliance
• Legal compliance – we are prepared to accept
a level of risk where supported by clear
legal advice
95%
of employees surveyed
understand the key risks
related to their role
RISK MANAGEMENT CONTINUED
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
RISK MANAGEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 63
TREATT PLC Annual Report & Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
RISK MANAGEMENT CONTINUED
BOARD REVIEW OF RISK
As well as reviewing risk registers and discussing
risk throughout the year, the Board holds a specic
meeting each year dedicated entirely to risk. At this
meeting the Board hears from members of sta
responsible for the risks being reviewed in greater
detail. This enables the Board to understand and
challenge the weighting and mitigation to satisfy
itself that appropriate action is being taken.
During the year the Board took a deep dive into
cyber risk, with the assistance of our insurance
brokers, and operational risks in the US. As a result
it was agreed that multi-factor authentication be
implemented for remote access to Treatt systems,
which has been completed, and additional cyber
training provided to all Group employees. It was
also agreed that enhanced training would be
provided to employees in Operations in the US,
providing a more immersive experience.
In October 2022 the Board reviewed ve risks,
where further action is required to bring the
net risk within the risk appetite. The Board is
comfortable that risk mitigation is inherent in the
Group’s policies and procedures and that those
responsible for risk understand their obligations
and explore ways of continuously improving our
internal systems to ensure that we work within the
risk appetite set by the Board.
The Board has also conducted a review of the
eectiveness of the Group’s system of internal
controls. The Board reviewed and discussed a
paper prepared by management on the Group’s
internal controls, covering all material controls,
including those which are nancial, operational and
compliance related. The Board has monitored and
reviewed the eectiveness of the Group’s overall
approach to risk management, including any control
failures and received a comprehensive report on
the review of the Group’s nancial controls, which
took place during the previous year.
EMERGING RISKS
The Executive Leadership Team, being closely
involved in day-to-day matters, has a breadth of
experience across commercial, nancial, supply
chain, operations and technical. Within their elds
of specialism, they consider emerging risks that
have the potential to adversely impact the business
or its stakeholders and take steps to ensure that
such risks are appropriately mitigated, as required.
One such example is COVID-19, which arose rapidly
and had a signicant eect on the day-to-day
operation of the business, requiring mitigation
strategies to be put in place quickly and eectively.
Signicant emerging risks are raised and discussed
at Board level.
In identifying emerging risks, senior management
have regular contact with customers and suppliers
to understand their needs and gain insight into
their businesses, as well as with other businesses,
trade bodies and professional organisations to
ensure that risk monitoring activities are as broad
as possible. Reports are also commissioned and
briengs arranged on wide-ranging, pertinent
topics to understand changes within the industry
and wider environment.
TASK FORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES
The Group considers ESG-related risks as part of
its risk management process. Climate change is
captured as a principal risk.
Our TCFD disclosures can be found on page 40
of our Sustainability Report.
0
20
40
60
80
2022 survey 2020 survey
0
20
40
60
2022 survey 2020 survey
% of managers stating that risk is
discussed at team meetings
% of managers that feel they could explain
Treatt’s risk appetite approach
PRINCIPAL RISKS
We have carried out a robust assessment of
the principal risks and uncertainties facing the
business, including those that would threaten the
business model, future performance, solvency
or liquidity. The following list of principal risks
and uncertainties are those which individually or
collectively might be expected to have the most
signicant impact on the long-term performance
of the business and its strategic priorities. It is not
intended to be an exhaustive list and additional
risks not presently known to management, or risks
currently deemed to be less material, may also
have potential to cause an adverse impact on
the business.
We have removed the commoditisation of
established Treatt products and the shortening
value chain as principal risks. As our business
continues to grow and we develop more
collaborative and enduring relationships with
our customers our diverse product categories
ensure that we are well-positioned. These risks
will continue to be monitored but are no longer
regarded as material.
We have increased our assessment of the
current risk climate for the movement of citrus
commodity raw material prices as the market has
increased signicantly during the year, although
that also brings opportunity. Treatt is particularly
experienced in managing volatility in raw material
prices and strategic decisions are regularly taken
to mitigate price movements, which, whilst not
eliminating risk, have a history of being eective.
EMPLOYEE INVOLVEMENT
During FY2021 the Board engaged KPMG
to assist with a review of risk appetite,
formalising the risk management framework
and undertaking manager and team leader
training, in order to improve the embedding
of risk management throughout the business.
Manager and employee risk management
surveys were undertaken during the year.
Compared to the same surveys in 2020, they
largely demonstrate an improvement in the
embedding of risk management across the
business, although it will remain a focus.
64
TREATT PLC Annual Report & Accounts 2022
Strategic impact key:
1 Engaging with our communities
2 Investing in our culture
3 Reducing our environmental impact
4 Investing in our core categories
5 Diversifying into new categories
6 Investing for future growth
FINANCIAL
1 Climate change
Risk and Impact
Severe volatility or loss of availability
and/or reduction of quality of some
natural ingredients as a result of
increased heat, water stress, crop
disease, wildres, hurricanes and
sudden climatic events
Operational disruption at production
facilities caused by longer-term
impacts of climate change (including
water stress and wildres)
Signicant amount of citrus raw
materials provided by Central and
South American suppliers
Volatility in market price of raw
materials and other eects on
supply chain
Reduced consumer demand over
time for certain products
Increasing demands from customers
to reduce emissions across the
supply chain and ensure supply chain
is resilient to climate change
Regulatory changes or restrictions
on our manufacturing facilities, nes
or penalties
Introduction of carbon taxes or
similar levies
Squeeze on margins
Mitigation
• Enhancing relationships with brokers and other supply
channels, combined with forward purchasing contracts for
medium to longer-term supply
• Ongoing implementation of TCFD to assess, manage and
mitigate climate change risks
• Greater geographical spread of suppliers, where possible
• Working with suppliers who recognise the risks of climate
change and are actively mitigating them
• Active auditing via SEDEX and ongoing collaboration with
suppliers through Treatt’s responsible and sustainable
sourcing policy
• Visits to existing and new suppliers for key product groups
• Attendance at industry conferences and seminars providing
opportunities to meet with potential new suppliers
• Strategic buying of core products
• Considering targets for the reduction of carbon emissions
for Scope 1, 2 and 3 to reduce our environmental impact
• Comprehensive energy, water and waste audits of US and
UK facilities
• Continued investment in production eciency, new
technologies and product development
2 Pandemic Decrease
Risk and Impact
Reduction in demand for
certain products, decrease
in new product development
briefs from customers, and
changes in consumer habits
Diculties within the supply
chain, production, incoming
and outgoing logistics
Adverse eect on the
welfare of our employees
Mitigation
• Continual monitoring of the situation and adopting a exible approach to
ensure appropriate response to support the business
• The health, safety and wellbeing of our employees is paramount and
our response has focused on our employees, customers and our
local communities
• Flexible work practices to enable everyone who can, to work from
home and to arrange our sites with safety in mind to ensure all vital
operations and projects remain on track. Adopting a staged approach to
the re-opening of facilities
• Working closely with customers to manage their immediate and longer-
term needs
• Maintaining regular contact with our supply chain to ensure continuity
of supply
• Monitoring the regulatory landscape and market conditions
• Managing cash and headroom to protect the Group’s liquidity
• Executive Leadership Team to provide regular updates to keep all sta
informed and maintain team spirit
No change
3 Overspend on UK site relocation and/or risk
of business disruption caused by the move No change
Risk and Impact
Increased costs, reduction
in working capital headroom
and a need to cut costs in
other areas
Inability to satisfy customer
orders
Mitigation
• Project specication agreed to achievable budget with suitable
contingency included before commencement of Phase 2
• Third-party experienced project managers appointed to run the project
• Appointment of a consultant to supervise the plant and machinery
element of the project
• Robust contracts in place with contractors and suppliers
• Regular meetings with Directors to ensure appropriate budgetary control
• Close monitoring of project through regular site meetings with the
project manager to ensure that the project is on track to complete within
time and budgetary constraints
• Internal control processes in place to fully evaluate any additions to the
schedule of works
• Distillation move phased over several months providing contingency
capacity on the existing site, appropriate levels of safety stock and
detailed planning on moving key production plant
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
RISK MANAGEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 65
TREATT PLC Annual Report & Accounts 2022
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
RISK MANAGEMENT CONTINUED
Strategic impact key:
1 Engaging with our communities
2 Investing in our culture
3 Reducing our environmental impact
4 Investing in our core categories
5 Diversifying into new categories
6 Investing for future growth
FINANCIAL CONTINUED
4 Movements in citrus commodity raw material price Increase
Risk and Impact
Can materially impact
revenue, contribution and
onerous stock provisions
Possible stock shortages
Mitigation
• Detailed inventory control procedures
• Monitoring and communication of market conditions and long-term raw
material contracts
• Maintaining close relationships with suppliers
• Continuing to identify new suppliers for key raw materials or those
where shortages exist
• Assisting our customers with managing price volatility or raw material
shortages as part of the Treatt service
• Citrus category team providing greater management across the Group
of Treatt’s other signicant raw materials
PEOPLE
5 Loss of critical staff through retention policy and
failure to manage succession
Risk and Impact
A lack of experienced and
engaged employees will have
a detrimental impact on all
areas of the business
Loss of skills may impact
our ability to deliver the best
service to our customers
Mitigation
• Ensure we enhance the employee experience and secure an emotional
attachment to the business, that remuneration packages are appropriate
to the position, that sta are empowered and have opportunities within
the business through training, enabling upskilling and providing career
development opportunities
• Continue to develop succession planning for positions across the Group
• Utilising engagement surveys and other employee voice mechanisms to
provide sta with an opportunity to provide feedback and ideas
• Ensure that employees receive regular performance reviews and
discussions throughout the year to enable any issues to be identied
and resolved in a timely manner
• Develop people managers to ensure that they are equipped with the
right skills to manage and motivate their teams
No change
7 Structural damage to production facilities from
storm or hurricane damage at Treatt USA, due to
its Florida location
Risk and Impact
Loss of use of buildings,
equipment and product
Danger to sta
Major incident due to type of
products stored
Mitigation
• Regularly inspect and maintain building components
• Implement hurricane action plan when necessary
• Sucient spread of inventory between production facilities in UK
and US
• Comprehensive maintenance programmes across the UK and US sites
• Improved capacity to withstand storm damage following expansion of
the US facility
No change
8 Inadequate documentation of processes
and/or non-adherence to required processes
Risk and Impact
Failure of BRC, HACCP or
regulatory audits
Damage to reputation as
problem-free supplier
Investment in rectication of
any on-compliances noted
Mitigation
• Strong Group-wide commitment to disciplined compliance with internal
quality programmes
• Commitment to permit third-party auditing by customers and for
certication and regulatory purposes
• Internal auditing of systems and processes against Standard Operating
Procedures and British Retail Consortium (BRC) requirements
No change
OPERATIONAL
6 Pressure on infrastructure for strategic business
Risk and Impact
Loss of revenue
Damage to reputation
Loss of key strategic
customer
Mitigation
• Ensure appropriate infrastructure through new UK Headquarters and
expansion in the US
• Keep close communication between sales and operations to determine
likelihood of large order and capacity constraints to manage customer
expectations
• Manage sub-contractor relationships
Decrease
66
TREATT PLC Annual Report & Accounts 2022
9 IT issues including network, hardware,
data and security
Risk and Impact
Loss of IT systems and/or
data, impacting on the
ability of the business to
function eectively
Reputational damage and
litigation in respect of
data protection
Mitigation
• Well-constructed IT infrastructure with failover capabilities, supported
by a comprehensive asset management database and best practice
maintenance processes
• Multi-layered security protection system in place including subscription
to Managed Threat Response service, which proactively searches for
suspicious activity in our network 24/7
• Security team continuously searches for and xes vulnerabilities,
including those reported by third-party security consultants
• Continued investment in infrastructure and particularly software
security
• Continued focus on raising of sta awareness of cyber security through
test scenarios
• Multi factor authentication enforced on all remote connections
• Board and employee cyber security training
• Ad hoc hacking attempts by third-party security consultants
No change
10 Product failure
Risk and Impact
Potential product recall
causing nancial and
reputational loss
Mitigation
• Strong supplier qualication process, intake testing and analysis
• Regular review of risk matrix for raw materials handled
• Use of barcode scanners on all orders to avoid mispicks
• Range of testing to detect contamination
• Obtain up-to-date information for all suppliers via Supplementary
Application Questionnaire documentation
• Supplier risk assessment to determine in-house test schedule
• Continuation of visits to suppliers
• Thorough investigation of errors leading to appropriate action such as
retraining or amendment of procedures
• Combination of self-insurance and recall insurance
• Annual desktop testing of product recall procedure
No change
11 Failure to comply with relevant UK and US
environmental, H&S and other applicable legislation
Risk and Impact
HSE and/or EA investigation
Probable enforcement action
involving nes, enforcement
notices
Risk of site closure
Mitigation
• Detailed understanding of legislative requirements with internal
involvement, consultative support and capital investment
• Proactive role in ensuring the Group’s systems and procedures are
adapted to ensure compliance
• Working closely with the Environment Agency and relevant authorities
in respect of Control of Major Accident Hazards
• Continuation of relevant training and assessment of employee skills
across the Group
No change
The Group regularly reviews its commercial insurance programme and maintains an appropriate portfolio
of insurance policies in line with the nature, size and complexity of the business, which provides further
mitigation in certain areas of risk.
During recent years, a full-scale review of the Group’s business continuity plans took place with the
assistance of an external consultant, the cost of which was covered by the Group’s insurers. A full
business impact analysis was conducted improving our understanding of the business’s resilience and
how to minimise the impact and disruption of an incident or crisis to both operations and reputation.
A more robust business continuity plan has been designed to incorporate emergency response, crisis
management and business recovery and strategic IT disaster recovery aligned with best principles set out
in ISO22301, the international standard for business continuity.
OPERATIONAL CONTINUED LEGAL AND REGULATORY
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
RISK MANAGEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 67
TREATT PLC Annual Report & Accounts 2022
The Group’s business activities, together with
the factors likely to aect its future development,
performance and position are set out in the
Strategic Report on pages 6 to 61. Information on
the principal risks and uncertainties and how
they are managed can also be found in the
Strategic Report.
In accordance with the 2018 UK Corporate
Governance Code, the Directors have assessed
the prospects of the Group over a longer period
than the 12 months required by the Code. The
Board conducted this review for a period of three
years, having previously reviewed for a period of
ve years, from the current nancial year end.
In the view of the Board, the change to a three
year viability period better reects the Group’s
immediate strategic vision, with the current global
geopolitical and economic environment creating
greater uncertainty in forecasting beyond
three years.
In determining the longer-term viability of the
Group, the Directors considered the Group’s
business activities, together with the factors likely
to aect its future development, performance and
position. The review also included the nancial
position of the Group, its cash ows, and available
sources of nance.
The process adopted to assess the viability of
the Group involved the modelling of a series
of theoretical ‘stress test’ scenarios linked to
the Group’s principal risks, most signicantly
severe business interruption like that which was
experienced during the pandemic, or that could
arise through the impact of climate change.
In assessing the Group’s prospects and resilience,
the Directors have done so with reference to
its current nancial position and prospects, its
credit facilities, its recent and historical nancial
performance, and forecasts. The Board’s risk
appetite and the principal risks and mitigating
factors are described on pages pages 62 to 67.
The key factors considered by the Directors within
the three-year review were:
• The implications of the challenging economic
environment, notably the domestic and
global uncertainties arising from the current
economic and geopolitical environment, the
ongoing pandemic and the wide-ranging
eects of climate change; and the potential
impact this could have on the Group’s revenues
and prots;
• The implications of uctuating prices of the
Group’s strategic raw materials;
• The implication of the ongoing UK
Headquarters relocation;
• The impact of the competitive environment
within which the Group operates;
• The eects of movement in foreign exchange
rates on the business, particularly the
US Dollar;
• The potential actions that could be taken in the
event that revenues are lower than expected,
to ensure that operating prot and cash ows
are protected;
• The Group’s cash balances;
• The Group’s access to short, medium and long-
term borrowing facilities to meet day-to-day
working capital requirements, as well as long-
term investment requirements;
• The Group’s ability to access equity as a
source of nance;
• A sensitivity analysis which involves exing
several of the main assumptions underlying
the three-year plan, and considering the
implications of a number of risks materialising
during a short-term period; and
• A reverse stress tests to determine the
scenario and circumstances that would need to
prevail to cause a breach in banking covenants
during the period.
These tests were assessed against the Group’s
current and projected liquidity position, in particular
the headroom on existing facilities and compliance
with banking covenants. During the viability period,
all of the Group’s current banking facilities will
expire, with facilities totalling $15.0m in value
expiring during the going concern period. Whilst
the Group believe that the nancial position of the
Group is suciently robust that the Group could
renew, increase and extend those facilities should
it wish to, it has excluded these facilities from its
review, notwithstanding that discussions are under
way to agree those facilities during the rst half of
the 2023 calendar year. All facilities coming up for
renewal in subsequent years have been assumed
to be renewed in the same amounts as they
currently are.
STRESS TESTING AND IMPACT ON GOING
CONCERN AND VIABILITY ASSESSMENT
The current global economic environment post-
pandemic is still uncertain in both domestic and
international markets. We have seen supply-side
challenges and economic slowdown due to China’s
lockdowns, together with higher-than-expected
inationary pressures, especially on raw material
prices and energy from Russia’s invasion of
Ukraine, all alongside a challenging labour market.
Considering this, the Directors have modelled
scenarios representing varying degrees of severity
and have considered the impact of changes in
working capital, foreign exchange rates, revenues
and margins. Using these assumptions, headroom
and covenant compliance have been assessed
throughout the going concern (12-month) and
viability (three-year) periods. These assumptions
are those that would arise from the aforementioned
uncertainties and that would adversely impact cash
generation and protability.
GOING CONCERN AND VIABILITY STATEMENT
THREE-YEAR REVIEW OF THE GROUP’S VIABILITY
68
TREATT PLC Annual Report & Accounts 2022
A further ‘reverse stress test’ scenario was
modelled to nd a sustained reduction in revenue
over the rst two-years of the viability period that
would give rise to a breach of the Group’s covenant
conditions in the period. This scenario was then
stress-tested further by overlaying the adverse
impact of a decline in prot margins.
OUTCOME OF STRESS TESTING
Under the tests that considered impacts of
working capital, exchange rates and margins it
was determined that a 10% worsening of working
capital days, and a failure to reduce inventory
by budgeted levels could cause headroom to fall
to £0.6m in May 2023 should the Group fail to
renance any facilities coming up for renewal. This
assumes all other budgeted overheads, capital
expenditure and dividends remain as budgeted,
and the Group doesn’t draw upon its supply
chain nance or non-committed asset nance
lines to fund its planned capital expenditure. The
impact of a 500bps downturn on margins was
also considered, and this did not give rise to any
breaches of banking covenants over the viability
period, although it would give rise to a headroom
breach in November 2024 provided that the
Group failed to renance all of its facilities that fall
for renewal in 2023 – the likelihood of which is
considered remote. Such a margin decrease
would be a result of failure to manage sales pricing
in an inationary environment and move up the
value chain.
A particularly severe scenario was determined in
which banking covenant requirements would be
breached during the next 24 months, the so-called
‘reverse stress testing scenario’. In this test, it was
determined that a continuous decline in sales of
greater than 12.5% per annum, or 8.0% per annum
alongside a 300bps decline in margin for two
consecutive years, with no mitigating measures
put in place, would result in a breach of nancial
covenants within the viability period and would
lead to a breach in headroom in May 2023 if the
Group fails to renance any of its facilities that fall
for renewal, does not draw upon its uncommitted
facilities and does not implement any of the cash
saving measures it has at its disposal.
The possibility of these severe scenarios
materialising is considered remote. In addition, it
is implausible that the Group would not act swiftly
and decisively to activate mitigations such as
drawing upon uncommitted facilities, operating
cost savings, reduction in capital expenditure, and
delaying or cancelling future dividend payments to
avoid a breach of its banking limits or covenants.
CONCLUSION ON GOING CONCERN AND
VIABILITY
Having considered the current cash and liquidity
position of the Group, the range of scenarios
discussed above and the Group’s proven ability to
adapt to and manage adversity, the Directors have
not identied any material uncertainties which
would aect the Group and Parent Company’s
ability to continue as a going concern for a period
of 12 months from the date of this Annual Report.
Accordingly, these nancial statements have been
prepared on a going concern basis. Furthermore,
the Directors have a reasonable expectation that
the Group has adequate resources available to it to
continue in business and meet its liabilities over the
three-year period of their viability assessment.
GOING CONCERN AND VIABILITY STATEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 69
TREATT PLC Annual Report & Accounts 2022
Tim Jones
Non-executive Chairman
Appointed to the Board:
February 2012
Skills & experience:
Tim has led Treatt’s Board since his appointment in 2012
and appointed Daemmon Reeve as the Group’s CEO
in the same year. A Member of the Chartered Institute
of Securities and Investments and an Associate of the
Chartered Insurance Institute, Tim had considerable
experience in international nancial services businesses
through roles in the Middle East, the US and Europe
before entering the beverage/water bottling sector in the
1990s – including the establishment of a joint venture
in the Balkans. He is Chairman of xed income broker
City and Continental, a subsidiary of the social impact
organisation Allia, an Honorary Fellow at Cambridge
Judge Business School and actively involved in the City
of London where he is a member of the Court of the
International Bankers Livery Company. Tim has informed
the Board of his intention to stand down as a Director at
the conclusion of the AGM in January 2023.
Key External Appointments:
• Chairman of Allia Group
• Chairman of Oximio Group
• Non-executive Director of Retail Charity Bonds plc
• Advisory Board member Carbon13
Daemmon Reeve
Chief Executive Ocer
Appointed to the Board:
May 2012
Skills & experience:
Daemmon joined the Group’s UK operating subsidiary
in 1991 and gained extensive industry experience and
knowledge from his time in technical, operational, sales
and purchasing disciplines. He was appointed CEO of
Treatt USA in 2010 and became Group CEO in 2012.
A key part of his role is to help provide the cultural
environment for the success of Treatt and its fantastic
team, making Treatt a fun place to work along the way.
It is the output of the engaged teams which is driving
the success of Treatt. In August 2019, Daemmon’s
contribution to Treatt and the wider community was
recognised by the award of an honorary doctorate by the
University of Suolk.
Key External Appointments:
• None
Ryan Govender
Chief Financial Ocer
Appointed to the Board:
July 2022
Skills & experience:
Ryan is an experienced CFO, having worked for
over 20 years in senior nance roles across global
FMCG businesses, particularly in the food sector. His
diverse experience includes strategy, FP&A, corporate
structuring, large capital projects, investor relations and
nance transformation.
For the past 12 years he has been working at Associated
British Foods, the FTSE 100 international food, ingredient
and retail group, most recently as CFO of SPI Pharma, a
provider of innovative solutions to global pharmaceutical
and nutritional customers. Before that he held nance
and management roles within other ABF businesses,
including Speedibake, Germains Seed Technology and
Illovo Sugar. He qualied as a Chartered Accountant at
PwC in South Africa.
Key External Appointments:
• None
Yetunde Hofmann
Non-executive Director
Appointed to the Board:
March 2019
Skills & experience:
Yetunde is a seasoned business leader with experience
gained in mergers and acquisitions, business operating
model transformation, organisational capability
development and growth and international expansion.
She has been named in the Craneld University FTSE
Board Report ‘100 Women to Watch’. She is a former
Non-executive Director and Chair of the Remuneration
Committee at the Chartered Institute of Personnel and
Development (CIPD). She is a Trustee of The Institute
of Business Ethics and a Visiting Fellow at Henley
Business School. Yetunde’s career began in Nigeria at
the International Institute of Tropical Agriculture (IITA)
and progressed through FTSE 100 global organisations
across a variety of industries such as Unilever, Northern
Foods, Allied Domecq and Imperial Brands. Yetunde has
informed the Board of her intention to stand down as a
Director at conclusion of the AGM in January 2023.
Key External Appointments:
• Board Trustee of the Institute of Business Ethics
• Managing Director of Synchrony Development
Consulting and The Enjoyable Life Series CIC
• Founder of Solaris Global Executive Leadership
Development
• Non-executive Director of Cranswick plc
Committee key:
Audit Committee Remuneration Committee Nomination Committee
Denotes Committee Chair Independent
BOARD OF DIRECTORS
ONE TEAM
70
TREATT PLC Annual Report & Accounts 2022
Committee key:
Audit Committee Remuneration Committee Nomination Committee
Denotes Committee Chair Independent
BOARD OF DIRECTORS
David Johnston
Non-executive Director
Appointed to the Board:
May 2011
Skills & experience:
David started his career working as a biochemist for
the UK Government prior to transferring to Switzerland
where he worked on an international programme to
enhance the resistance of plants to pathogens. He
then joined one of the leading avour and fragrance
companies, Firmenich SA, in a variety of commercial
and technical roles over 13 years. He nished his career
at Firmenich SA as global head of avour innovation.
David went on to start his own company, Natural Taste
Consulting SARL, which focuses on the development
and sale of taste modifying compounds. Since December
2019, David has been an independent member of the
Scientic Advisory Committee of Driscolls, a California-
based global leader in the production and sales of
fresh berries.
Key External Appointments:
• Independent Member of Driscolls
Scientic Advisory Committee
Vijay Thakrar
Non-executive Director*
Appointed to the Board:
September 2020
Skills & experience:
Having previously chaired the Audit Committee, Vijay
now chairs the Nomination Committee and is Senior
Independent Director. He will assume the role of Chairman
when Tim Jones steps down in January 2023.
Vijay qualied as a Chartered Accountant during the early
part of his career and has extensive strategy, commercial,
and governance experience in FMCG. He was previously a
partner with Deloitte and EY, and, since 2016, has served
as a Non-executive Director on various boards, including
Quorn Foods and The Quoted Companies Alliance.
Key External Appointments:
• Chairman of Alumasc Group plc
• Non-executive Director of Alpha FX Group plc
(Audit Committee Chair)
• Non-executive Director of RSM (Remuneration
Committee Chair and Public Interest Board)
* Senior Independent Director and Chairman Designate
Christine Sisler
Non-executive Director
Appointed to the Board:
February 2022
Skills & experience:
After driving the continual growth of PepsiCo’s iconic
brands, Christine launched Merchant’s Daughter
Ciderworks, a start-up craft beverage company. As
CEO of Merchant’s Daughter Ciderworks she leverages
more than three decades of research & development,
commercialisation and innovation expertise.
In the beverage start-up space Christine’s strategic and
commercial talents have helped entrepreneurs launch
exciting new health and wellness and ready-to-drink
alcohol products.
As PepsiCo’s Vice President of Global Innovation for
Product Development & Marketing Equipment, Christine
supported global research & development for carbonated
and non-carbonated beverage portfolios and spearheaded
the creation of the Beverage Culinary Innovation Center.
Key External Appointments:
• Treasurer, New York Cider Association
Executive Board
Philip O’Connor
Non-executive Director
Appointed to the Board:
February 2022
Skills & experience:
Philip is an experienced business leader in B2C and
B2B markets with substantial experience in high-growth
businesses, acquisition and post-acquisition integration,
transformation and change management and leading
diverse multi-functional teams.
Philip started his career with Kerry Group plc and
qualied as a Chartered Certied Accountant during the
early part of his career. He spent many years at Kerry
in senior roles in the USA and UK, including Finance
Director of Kerry Foods, the consumer foods division of
Kerry Group plc.
He was founder and CEO of two successful start-up
consumer foods businesses in the healthy food market
and more recently the President of Kerry Taste and
Nutrition for Europe & Russia, meat & plant-based
alternative markets.
Key External Appointments:
• None
ONE TEAM
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 71
TREATT PLC Annual Report & Accounts 2022
BOARD
The Board welcomed two new Non-executive
Directors during the year, Christine Sisler and
Philip O’Connor, who bring a wealth of experience
and knowledge, ensuring that we continue to have
a collegiate, eective, entrepreneurial and engaged
Board to oversee the strategy, governance, risk
and nancial frameworks across the organisation.
Richard Illek and Lynne Weedall stepped down
during the year and I thank them for the signicant
contribution they made during their time
at Treatt.
Richard Hope retired as Chief Financial Ocer at
the end of June, having served on the Board for 19
years and, having reached his nine years’ service
on 25 February 2022, Je Ilie stood down
from the Board as he was no longer considered
independent under the UK Corporate Governance
Code. I want to express the sincere thanks of the
Group and the Board to Richard and Je for their
dedication to Treatt and for the superb contribution
they made to the Board.
As previously announced, Yetunde Hofmann and
I will step down from the Board at the conclusion
of the 2023 AGM. In stepping down as Chairman,
I hand over to Vijay Thakrar, Chairman Designate,
with considerable optimism for the future. Vijay
is passionate about Treatt and has extensive
experience from a broad range of businesses and
large international organisations. He will guide
the business through the next part of its exciting
journey.
Thankfully, as COVID-19 restrictions were lifted in
the early part of the year, we have been able to
return to in person Board meetings, including being
able to hold our rst Board meeting at Treatt USA
since 2019 and re-engaging personally with our
US colleagues.
SUSTAINABILITY
As businesses continue to consider the
sustainability of their behaviours, their impact on
climate change and on wider stakeholders, we have
continued to lead from the front. The Board has
approved an ESG Framework designed to provide a
cohesive, eective and streamlined approach to the
achievement of our strategic goals.
The Board receives progress updates at every
meeting and engages directly with the Global
Sustainability Manager. We have continued to
work with our sustainability consultants on the
implementation of TCFD and the evaluation of
environmental risks. Further details can be found
on pages 38 to 41.
ANNUAL GENERAL MEETING
The Board is looking forward to welcoming
shareholders to the 2023 AGM on 27 January,
which is to be held at our registered oce. We
hope that you will be able to attend. Further details
are on pages 150 to 156.
Board Gender Diversity
Female 25%
Male 75%
Board experience
HR Industry
ESG
Operations Management
14
28
Finance 31
Board Independence
Independent 50%
Non-independent 50%
Length of Service
Over 10 years
0–5 years
37%
63%
Board meeting attendance
96%
Board meetings in the year
7
I AM PLEASED
TO PRESENT
THE CORPORATE
GOVERNANCE REPORT
Tim Jones
Chairman
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION FROM THE CHAIRMAN
72
TREATT PLC Annual Report & Accounts 2022
CORPORATE GOVERNANCE STATEMENT CONTINUED
CORPORATE GOVERNANCE
At Treatt our commitment to eective corporate governance is reected in our principles, policies and
practices. Our Board is united in the view that good governance, clear purpose, a values-based culture
and focusing on our responsibilities to our stakeholders, ultimately produces a better company with clear
accountability and reporting lines, providing greater resilience in challenging times.
The Company is subject to the 2018 UK Corporate Governance Code (the Code), which is issued by the
Financial Reporting Council (FRC) and is available at www.frc.org.uk. The Code is a guide to a number of
key components of eective board practice and is based on the underlying principles of good governance
and focus on the sustainable success of a company over the longer-term. Throughout the year the
Company has complied with the provisions of the Code with the exception of provision 19, which relates
to the Chairman remaining in post beyond nine years. Details in this respect are set out on page 77.
For further information on how we have complied with the Code please refer to the following table.
Page
Board leadership and company purpose
Promoting the long-term sustainable success of the Group 63
Alignment of our culture with our purpose, values and strategy 26 to 34
Framework of eective controls 75
Engagement with our stakeholders 50 to 53
Workforce policies and practices 23
Division of responsibilities
Role of the Chair 76
Division of responsibilities 76
Non-executive Directors 76
Information and support 74
Composition, succession and evaluation
Appointment, succession and diversity 79 to 80
Skills, experience and knowledge 79
Board evaluation 78
Audit, risk and internal control
Audit and internal control 83
Fair, balanced and understandable 82
Risk management 62 to 67
Remuneration
Remuneration policies and practice supporting strategy and promoting long-term sustainable success 84 to 86
Developing remuneration policy 87 to 92
Shareholder engagement on remuneration 92
Alignment of the policy to the workforce 87
Tim Jones
Chairman
LEADERSHIP AND PURPOSE
Role of the Board
The Board is accountable to shareholders for the eective and entrepreneurial leadership of the Group in
a way which promotes its long-term sustainable success for the benet of its shareholders, taking into
account the interests of the environment and all stakeholders. It sets the Group’s strategic objectives and
oversees their implementation by the Chief Executive Ocer.
Operation of the Board
The Board has a schedule of matters reserved to it for decision and the requirement for Board approval on
these matters is communicated widely throughout the senior management of the Group. These matters,
which are reviewed periodically, include strategy, material capital commitments, commencing or settling
major litigation, business acquisitions and disposals, appointments to subsidiary company boards, risk,
dividend policy and full and half year results.
Day-to-day management of the Group is delegated to the Executive Directors, who lead a newly formed
Executive Leadership Team, with members located in the UK and US.
AUDIT
COMMITTEE
Monitors the integrity of
the nancial reporting
and independence
and objectivity of the
external auditor
NOMINATION
COMMITTEE
Ensures that the Board
and committees have
the right balance of
skills, knowledge and
experience
REMUNERATION
COMMITTEE
Determines the policy for
Executive remuneration;
approves and monitors
remuneration and
incentive plans for the
Group
EXECUTIVE
LEADERSHIP TEAM
To assist the Executive
Directors in the day-
to-day operational
management of the
Group’s business
THE BOARD
Provides strategic leadership to the Group within a framework of strong
corporate governance, eective controls and a positive culture, which encourages
openness and transparency, to deliver long-term sustainable growth
EXECUTIVE DIRECTORS
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 73
TREATT PLC Annual Report & Accounts 2022
Attendance at meetings
The attendance of the members of the Board and its committees during the year, against the number of
scheduled meetings they were eligible to attend, are shown below:
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee Chair
Daemmon Reeve – Chief Executive
Ocer
7/7 N/A 5/5 N/A
Richard Hope – Chief Financial
Ocer (Retired 30 June 2022)
6/6 N/A N/A N/A
Ryan Govender – Chief Financial
Ocer (Appointed 1 July 2022)
1/1 N/A N/A N/A
Tim Jones – Non-executive Director
and Chairman
7/7 N/A N/A N/A Board
David Johnston – Non-executive
Director
7/ 7 N/A N/A N/A
Richard Illek – Non-executive
Director (Stepped down
31 December 2021)
1/2 N/A 2/2 N/A
Je Ilie – Non-executive Director
(Stepped down 25 February 2022)
3/3 1/1 N/A 1/1 Audit until 25 February 2022
Yetunde Hofmann – Non-executive
Director
7/7 1/1 5/5 4/4 Remuneration
Lynne Weedall – Senior Independent
Non-executive Director (Stepped
down 17 September 2022)
7/7 N/A 5/5 4/4 Nomination until
17 September 2022
Vijay Thakrar – Non-executive
Director and Chairman Designate
(Senior Independent Director from
17 September 2022)
7/7 4/4 2/2 3/3 Audit from 25 February 2022
until 17 September 2022
Nomination from
17 September 2022
Philip O’Connor – Non-executive
Director (Appointed
1 February 2022)
4/4 3/3 2/2 N/A Audit from 17 September 2022
Christine Sisler – Non-executive
Director (Appointed
1 February 2022)
4/4 3/3 2/2 N/A
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Information and support
Contact is maintained by the Board through email,
telephone and video calls with written updates
provided in respect of ongoing issues, enabling
regular input from all Board members. To enable
the Board to function eectively and Directors
to discharge their responsibilities, full and timely
access is given to all relevant information. In
the case of Board meetings, this consists of a
comprehensive set of papers, including regular
business progress reports and discussion
documents regarding specic matters. Board
meetings are of sucient duration to enable
debate and discussion, ensuring adequate analysis
of issues during the decision-making process.
The Board takes the opportunity to interact with
employees from across the business on an informal
basis when lunching in the shared eating areas.
If necessary, there is an agreed procedure for
Directors to take independent professional advice
at the Group’s expense. This is in addition to the
access which every Director has to the Company
Secretariat. The Secretariat is charged by the
Board with ensuring that Board procedures are
followed and that there are good information ows
within the Board and its committees and between
senior management and Non-executive Directors.
EMPLOYEE VOICE
During the year, Tim Jones and David Johnston,
our Non-executive Directors responsible for
workforce engagement (Employee Voice NEDs),
continued to engage with our people across
the Group.
The Board appointed Tim and David as Employee
Voice NEDs in 2018 in order to provide employees
with direct access to the Chairman to demonstrate
the importance the views of our employees are to
the Board.
David was the Senior Independent Director at
the time and was appointed as he has signicant
industry experience and, as the longest serving
Non-executive Director, was already known to
Group employees.
Role of our Employee Voice NEDs:
Our Employee Voice NEDs seek to ensure that:
• The interests and feedback of employees are
considered in Board decision making
• Feedback is provided to the Board, as a
standing agenda item, on all engagement
activity and any employee concerns raised
• They provide an open channel of
communication with the Board
• Employee voice reects the geography and
demographics of the workforce
• Management report to the Board on actions
they have taken as a result of employee
engagement
The sessions, held twice a year in person and
via video conference, provide an opportunity for
all Group employees to meet with either, or both,
Tim and David. Their direct contact details are
also shared with all employees to accommodate
those that would prefer to book an individual
appointment, rather than attend a drop-in session.
The sessions are reasonably well attended by a mix
of people across all functions.
Whilst the sessions are condential, the Board
receives feedback on key themes to enable them to
engage with management and address matters
as appropriate.
74
TREATT PLC Annual Report & Accounts 2022
Speaking up
The Group-wide speak up policy provides
employees with a direct means of contacting
the Chairman of the Board, the Audit Committee
Chairman or the Senior Independent Director, in
condence, if they feel unable to discuss a matter
with their line manager or a member of senior
management. Appropriate arrangements are in
place so that employees of the Group may seek
advice or raise concerns about possible illegal or
unethical practices or matters of integrity.
One concern was raised under the speak up policy
during the year regarding a potential regulatory
matter, which was investigated by a member of
the Executive Leadership Team and reported to the
Board. It was concluded that no regulations were
breached and actions have been taken to ensure
that reporting lines are appropriate to improve
internal communication.
Conicts of interest
The Group has procedures in place for managing
conicts of interest. If a Director becomes aware
that they, or a connected party, have a potential
conict of interest, or may be interested in
any contract or arrangement to which a Group
company is or may be a party, they should notify
the Company Secretariat as soon as possible. The
Board must consider and where appropriate give
clearance to such potential conicts of interest
(which would include directorships or other
interests in other companies and organisations)
following which, an entry is then made in the
register of conicts, which the Company maintains
for this purpose. In such cases, unless allowed by
the Articles of Association of the Company, any
Director with such an interest is not permitted to
participate in any discussions or decisions relating
to the contract or arrangement. Directors have
a continuing obligation to update any changes
to conicts and the Board formally reviews
them annually.
Details of other key directorships held by members
of the Board can be found in the Director proles
on pages 70 and 71.
Shareholder relations
The Group places a great deal of importance on
communication with shareholders and recognises
their role in safeguarding the Company’s eective
governance. The Board receives updates on the
views of our shareholders, expressed during our
interactions with them, and from our brokers.
In the event that shareholders have any concerns,
which they do not wish to address through the
CEO or CFO, the Chairman or Senior Independent
Director are available to address them. Both make
themselves available, as required, for meetings with
shareholders on issues relating to the Company’s
governance and strategy.
Details of how we engaged with shareholders
during the year can be found on page 51.
UK
• Treatt was viewed as a great employer and in
some cases the best employer ever
• A desire to further develop global operations
and automation
• Group organisational restructure taking time
to embed
• Onsite working increasing post COVID-19
restrictions enabling greater collaboration
• Positive views of the new site and enhanced
working conditions with further improvements
to come
US
• A welcome forum; due to the level of
engagement an additional session and private
one to ones were arranged
• Additional support required to maintain a
positive culture during very busy periods
• Adjusting to the Group organisational
restructure
• Positive views of the Company and environment
• Enhancements to plant and processes required
to improve eciencies
China
• The team has adopted an ‘everyone to sell’
approach and undertaken sales research in
support of this
• Local technical capacity could be an opportunity
for the future
• Concerns and opportunities around inventory
delays and shortages due to local restrictions
• Opportunities in China’s burgeoning night-time
economy
• Personal development training to support the
highly valued product and technical training
provided
• Shared desire within the small team to uphold
the culture and values of Treatt as headcount
increases
KEY THEMES FROM EMPLOYEE ENGAGEMENT
CORPORATE GOVERNANCE STATEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 75
TREATT PLC Annual Report & Accounts 2022
DIVISION OF RESPONSIBILITIES
Roles and responsibilities
Details of the Directors, the positions they hold, and the committees of which they are members are
shown on pages 70 and 71.The Board consists of the Non-executive Chairman, Tim Jones, and ve further
Non-executive Directors together with Daemmon Reeve, CEO, and Ryan Govender, CFO. There is a clear
and eective division of responsibility between the CEO and the Chairman; the roles of the Board team
can be generally dened as set out in the table below:
Chairman
• Ensures that the Board and its committees are eective
and operate under the highest standards of corporate
governance
• Ensures appropriate delegation of authority from the
Board to executive management and constructive, open
relations between them
• Chairs Board meetings and sets the agenda
• Enables adequate time for discussion and circulation of
timely and clear information
• Encourages constructive challenge and eective
communication between Directors
• Ensures that the Company maintains a dialogue with
its principal shareholders about strategy, direction,
Directors’ and senior managers’ remuneration and is
aware of shareholders’ issues or concerns
• Ensures that employees are able and encouraged to
maintain dialogue directly with the Board
• Ensures that the performance of individual Directors,
the whole Board and its committees are evaluated at
least annually
• Encourages Directors to update their skills, knowledge
and familiarity with the Company, its employees and all
stakeholders as required to full their role
• Agrees the CEO’s personal objectives
• Maintains regular contact with the Non-executive
Directors without the presence of the Executive
Directors
Chief Executive Ocer
• Develops and implements Group strategy
• In conjunction with the CFO, recommends the
annual budget
• Ensures strong leadership of the Group
• Sets and promotes the culture of the organisation
• Develops the Executive Leadership Team, plans for
succession and reviews organisational design
• Manages risk and appropriate mitigation strategies
• Advises and updates the Chairman and Board in
relation to key matters
• Maintains relationships with investors and advises the
Board accordingly
• Day-to-day running of the business
• Manages the operations and resources of the Group
Chief Financial Ocer
• Responsible for management of the Group’s nancial
aairs, including treasury and taxation
• In conjunction with the CEO, recommends the annual
budget
• Manages nancial risk and appropriate mitigation
strategies
• Oversees the Finance, Legal & Governance and
IT departments
• Promotes the culture of the organisation
Senior Independent Director
• Provides a sounding board for the Chairman
• Serves as an intermediary for the other Directors,
when necessary
• Chairs meetings in the absence of the Chairman
• Is available to shareholders to deal with concerns
which cannot otherwise be resolved
• Leads the performance evaluation of the Chairman
Non-executive Directors
• Provide independent oversight of the management and
governance of the business
• Provide constructive and objective challenge to
Executive management
• Assist with the development of strategy
• Provide advice to the Board and management and
share knowledge and experience
• Serve on Board committees
• Update and refresh their skills, knowledge and
familiarity with the business
• Appoint and remove Executive Directors
Company Secretary
• Is supported by a Deputy Company Secretary, who is
responsible for the day to day running of the Secretariat
and includes an Assistant Company Secretary
• Provides advice and support to the Board on
governance, compliance and legal matters
• Responsible for legal and compliance matters relating
to the Group
• Provides support for Board meetings and agendas to
enable ecient process and compliance with Board
procedures
• Ensures good information ows within the Board and
its committees and between senior management and
Non-executive Directors
• Oversees Governance department
CORPORATE GOVERNANCE STATEMENT CONTINUED
76
TREATT PLC Annual Report & Accounts 2022
Committees
The Board has three sub-committees: the
Nomination Committee chaired by Vijay Thakrar,
the Audit Committee chaired by Philip O’Connor
and the Remuneration Committee chaired by
Yetunde Hofmann. During the year the Board
reviewed the membership of these committees.
Although, to comply with Corporate Governance
Rules, the Chairman may not be a member of
the committees, he regularly attends committee
meetings as a guest at the invitation of the
committee Chair. Delegation of responsibilities to
these committees ensures that sucient time is
spent on matters within their responsibility. The
Board has decided that, due to their importance,
risk and sustainability should currently remain
as a matter for the full Board and should not be
delegated to a committee.
Further details of the committees can be found on
pages 79 to 99. The terms of reference of all the
committees can be found on the Treatt website at
www.treatt.com.
Independence
The Board considers that all of the Non-executive
Directors are independent of management and free
of any relationship which could materially interfere
with the exercise of their independent judgement;
but since Tim Jones and David Johnston have
served on the Board for more than nine years
they are no longer regarded as independent under
the 2018 UK Corporate Governance Code (Code).
Nonetheless, half of the Board are independent
Non-executive Directors, as dened by the Code.
The Chairman, Tim Jones, was independent on
appointment in February 2012. Though provision
19 of the Code provides that a Chairman should
not normally remain in post beyond nine years
from the date of their rst appointment, the Board
determined in 2020, as previously reported, that,
whilst the Company completed its largest ever
investment in the new UK Headquarters and dealt
with a number of senior succession changes, it
was in the best interests of the business and its
stakeholders if Tim Jones remained as Chairman
for a further period, subject to annual re-election.
That view was strongly supported by shareholders,
whose opinions were sought on this subject during
2020. As previously announced, Tim Jones will be
stepping down from the Board at the conclusion of
the 2023 AGM and handing over to Vijay Thakrar,
Chairman Designate.
On 20 May 2020, David Johnston reached nine
years’ service on the Board. Accordingly, the Board
can no longer consider him to be independent.
As previously reported, having consulted with
shareholders during 2019, the Board determined
and continue to believe that it is in the best
interests of the business and its stakeholders
for David Johnston to remain on the Board as a
Director given his signicant industry knowledge
and experience, which benets the Company,
subject to annual re-election.
Commitment
There are typically between six and ten scheduled
meetings each year and additional ad hoc meetings
where business needs require; generally, one
meeting a year is held at Treatt USA. Directors
are required to be available for meetings and the
Annual General Meeting with attendance in person
or if necessary, by video conference, except where
prior engagements exist. To facilitate this, meetings
are scheduled two years in advance. In addition,
contact is maintained between meetings to ensure
regular input from all Board members in respect
of ongoing matters. It is anticipated that the time
commitment required of Non-executive Directors is
up to 30 days a year and considerably more for the
Chairman. The service contracts of Non-executive
Directors do not permit them to accept other board
appointments without approval from the Chairman,
who will consider any potential conicts of interest
with the Group or potential constraints on time
required to full the commitment to the Company.
During the year, Lynne Weedall and Yetunde
Hofmann were permitted to accept other board
positions. The Board is satised that the other
commitments of Board members do not detract
from the extent or the quality of the time which
they are able to devote to the Group.
COMPOSITION, SUCCESSION AND EVALUATION
Board composition
The Board has been refreshed to ensure that it has
an appropriate balance of skills and experience
with nancial, technical, industry-specic and
general business disciplines being represented.
The structure of the Board ensures that no one
Director is dominant in the decision-making process
and that open debate and discussion is encouraged.
There is a suitable balance between the number of
Executive and Non-executive Directors.
The importance of Board diversity is very much
recognised. Our policy is to ensure that our Board
reects the markets we serve and to recruit the
best possible candidate for each individual role
having regard to qualications, experience and
personality, without prejudice to a candidate’s
gender, ethnicity, age, sexual orientation, disability
and other characteristics. Further details on the
Group approach to diversity are given on page 80.
All Non-executive Directors receive a xed
fee for their services. However, in exceptional
circumstances, where signicant additional time
commitment is required, a Non-executive Director
may, if approved by the Board or Remuneration
Committee, be paid an additional fee in accordance
with the remuneration policy.
Appointments to the Board
A formal process is undertaken for the search
and selection of appropriate candidates for Board
vacancies, details of which are set out in the
Nomination Committee Report on pages 79 and 80.
Induction and development
On appointment Directors are provided with access
to relevant training and advice in respect of their
role and duties as a public company director. All
new Directors receive an induction to acquaint
them with the Group. This takes the form of
site tours, meetings with other Board members
and senior management and the provision of a
comprehensive induction pack, which contains
general information about the Group, its structure
and key personnel, together with copies of relevant
policies and procedures, nancial information
and briengs on Directors’ responsibilities and
corporate governance.
The Chairman is responsible for ensuring that all
Non-executive Directors receive ongoing training
and development and our Directors understand
the need to keep themselves properly briefed and
informed about current issues. Regular updates
on regulatory and legislative developments are
provided to the Board by the Company Secretariat.
Re-election
All Directors oer themselves for re-election
annually. Following the annual evaluation of
the Board and its committees, the Nomination
Committee has determined that all Directors
standing for re-election at the Annual General
Meeting continue to be eective, hold recent and
relevant experience and continue to demonstrate
commitment to the role.
CORPORATE GOVERNANCE STATEMENT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 77
TREATT PLC Annual Report & Accounts 2022
CORPORATE GOVERNANCE STATEMENT CONTINUED
Evaluation
The Board is aware of the need to continually
monitor and improve performance and recognises
that this can be achieved through annual evaluation,
which provides a valuable feedback mechanism
for improving the Board’s eectiveness. During
the year an external evaluation was undertaken
by Bvalco Limited, an advisor with no other
connection to the Group.
The objectives of the evaluation were to review
the eectiveness of the Board and to develop an
agreed set of priorities to improve the functioning
of the Board, given the needs of the Group.
The process for the selection of the external Board
evaluator entailed shortlisting three independent
suppliers, who were identied and interviewed by the
Company Secretary. Written proposals were received
from the nal two suppliers and from that the
Chairman and Company secretary determined that
Bvalco be selected, for the rst time, to undertake
the Board evaluation for Treatt due to their reputation
for commercial and behaviourally focussed board
reviews. Bvalco have signed and adhere to the Board
Eectiveness Guild’s Code of Practice.
The evaluation involved high level research on
the business, its strategy and key risks, review of
Board papers and minutes, condential interviews
with members of the Board and other key
stakeholders, and observation of a Board meeting.
The evaluation report concluded that there is a lot
to commend the Board, from its entrepreneurial
spirit and its strong focus on people, to its thorough
discussion and energetic debate. A number of
recommendations were made for the Board to
discuss and the following key areas identied for
focus over the next 12 to 18 months:
• Gain strategic clarity
• Build the refreshed Board as a high-
performance team
• Consider how the Board will oversee the
transformation agenda
Strategy and business development
• Reviewed the progress of the Group’s
strategy throughout the year with
regular updates from the CEO
• Approved the strategic plan for the
next ve years
• Visited a US supplier and held
sessions with sales, operations and
technical to give the Board greater
understanding of the business
• Received regular updates on progress
of the sustainability strategy and work
with the sustainability consultants
Financial performance
• Regularly reviewed the trading
performance of the business and
updated the market as required
• On the recommendation of the Audit
Committee, reviewed and approved
the FY2021 Annual Report and the
FY2022 half year results
• Approved the FY2023 budget and
capital investment proposals
• Approved capital investment proposal
for enhanced sprinkler protection at
Treatt USA
• Reviewed the Group forecasts, net
debt levels, facility headroom and
covenants and working capital
• Approved nancing proposals,
relocation spend and bank facilities
• Approved the recommendation of the
nal dividend for FY2021 and payment
of the interim dividend for FY2022
Operational performance
• Maintained oversight of the
completion of the new UK
Headquarters and the move from the
previous premises
• Received reports and presentations
from management on the
performance of each of our product
categories and other matters of
material importance to the Group
• Reviewed the results of the customer
experience survey
• Received presentations from UK and
US sales on pipeline opportunities and
recent wins
Governance and risk
• Undertook an external Board evaluation
• Refreshed the Chair positions of the
Audit and Nomination Committees
and appointed a new SID
• Reviewed and approved the annual
modern slavery statement and other
Board policies
• Reviewed the risk register at six
monthly intervals
• Reviewed results of an internal risk
management survey to assess the
success of embedding the Group’s
risk management framework
• Held a meeting dedicated to the
discussion of risk and undertook a
deep dive into several key risk areas
and a review of the risk appetite
• Received reports on investor feedback
and stakeholder engagement
People
• Completed the recruitment process
for a new Chief Financial Ocer
• Completed the recruitment process
for a new Chairman and Non-
executive Directors
• Maintained oversight of the
introduction of a new Executive
Leadership Team and organisational
restructure
• Reviewed the actions taken by
management in response to Employee
Voice feedback
• Reviewed the results of pulse surveys
undertaken across the business and
other cultural indicators
• Approved the SIP, SAYE and ESPP
share awards
This report was approved by the Board on 29 November 2022.
Ryan Govender
Chief Financial Ocer and Company Secretary
A six-month review will be undertaken by the
evaluator and the Chairman during the course of
next year to review progress on these focus areas.
WHAT THE BOARD DID DURING THE YEAR
The Board met formally seven times this year.
Meetings are scheduled around events in the
corporate calendar such as the full and half
year results, year-end and the AGM. Standing
agenda items include updates from the CEO on
performance of the business against strategic
objectives, a review of the nancial and trading
position from the CFO, and updates on health and
safety, people and legal matters.
In addition to these regular items, specic areas of
focus for the Board during the year included:
78
TREATT PLC Annual Report & Accounts 2022
Nomination Committee
experience
Finance 2
HR 1
Management
ESG 1
Operations 1
Industry 2
NOMINATION COMMITTEE REPORT
A FOCUS ON BOARD COMPOSITION
I AM PLEASED
TO PRESENT OUR
NOMINATION
COMMITTEE REPORT
Vjjay Thakrar
Chair – Nomination Committee
Meeting attendance
100%
Committee meetings
in the year
5
NOMINATION COMMITTEE MEMBERS
Vijay Thakrar (Chair)
Non-executive Director
Daemmon Reeve
Chief Executive Ocer
Yetunde Hofmann
Non-executive Director
Philip O’Connor
Non-executive Director
Composition of the Board and succession
planning for the Board, its committees and senior
management are key activities.
INTRODUCTION
Our Nomination Committee Report explains
the committee’s focus and activities during the
year. The committee seeks to ensure that the
size, composition and structure of the Board is
appropriate for the delivery of the Group’s strategic
objectives and for our culture and values.
MEMBERSHIP AND MEETINGS
I succeeded Lynne Weedall as Chair of the
Nomination Committee when she stepped down
from the Board on 17 September 2022. I would
like to thank Lynne for her contribution to the
Board over the past few years and, in particular,
for her chairing of the Nomination Committee.
The committee takes succession planning and
Board composition very seriously and as such has
met formally ve times during the course of the
year with additional informal meetings taking place
as necessary.
ROLE AND RESPONSIBILITIES
The committee operates under terms of reference,
which are reviewed annually and are available on
the Group’s website. The main responsibilities of
the Nomination Committee are:
• To regularly review the structure, size and
composition (including the skills, knowledge,
experience and diversity) of the Board and its
committees and make recommendations to
the Board with regard to any changes that are
deemed necessary
• To identify and nominate candidates for
the approval of the Board to ll Board and
committee vacancies as and when they arise
• To oversee succession planning for the Board
and senior management, considering current
and future strategy, the challenges and
opportunities facing the Group and the skills and
expertise needed on the Board for the future
• To review the results of the Board and
committee performance evaluation process
that relate to the composition of the Board and
committees and to assess whether the Non-
executive Directors are providing appropriate
value in fullment of their duties
ACTIVITIES SINCE THE LAST REPORT
• Appointment of Ryan Govender as Chief
Financial Ocer
• Recruitment to the Board of Philip O’Connor
and Christine Sisler as Non-executive
Directors
• Appointment of Vijay Thakrar as Tim Jones’
successor as Board Chairman
• Reviewed the Board evaluation as it relates to
the composition of the Board
• Reviewed the time commitment required from
Non-executive Directors and determined
whether appropriate value is being provided to
the Company
• Board succession planning
• Reviewed the terms of reference of the
committee
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 79
TREATT PLC Annual Report & Accounts 2022
APPOINTMENTS
Appointments to the Board of both Executive
and Non-executive Directors are undertaken by
the Nomination Committee, which ensures that
a wide range of candidates are considered. The
committee reviews the skills mix of the Board to
identify potential gaps or areas where increased
strength and diversity is required. The skills matrix
requires Board members to rate the strength of
their experience in a range of skills across areas
such as strategy, industry experience, nance,
risk management, stakeholder engagement and
corporate governance and ethics. The skills
matrix is reviewed annually by each Director, the
Chairman and the Nomination Committee.
As reported last year, Pure Executive, an
independent search and selection agency, which
is a division of Pure Resourcing Solutions Limited,
were instructed to search for suitable candidates
for the role of Non-executive Director to provide
a list of suitable candidates to the committee. The
time commitment required for the role and existing
demands on a candidate’s time were considered
as part of the selection criteria as were relevant
skills and experiences taking into consideration our
skills matrix review and our diversity objectives.
Members of the committee were involved in the
initial interview process with Board members
meeting the nal shortlisted candidates.
Pure Executive also provided their expertise in
respect of the appointment of our new CFO
Ryan Govender and carried out a search process
which ultimately led to Ryan’s appointment.
Pure Executive have previously provided
recruitment services to Treatt but do not have
any other connection with the Company or
individual Directors.
During the year the committee engaged Egon
Zehnder, a global management consultancy and
executive search rm, as search partner for
Chair succession. The process was led by Lynne
Weedall who Chaired the committee until she
stepped o the Board on 17 September 2022. I
indicated my interest in the Chair position early
in the process and did not attend any meetings
where Chair succession was discussed. Following
a comprehensive and rigorous search over many
months which included the Nomination Committee
considering a “long-list” of external candidates
forwarded by Egon Zehnder as well as interviews
with those short-listed, I was appointed Chairman
Designate, as announced on 24 June 2022, and
will succeed Tim Jones at the conclusion of the
AGM on 27 January 2023.
Egon Zehnder do not have any connection with
the Company or individual Directors outside of
recruitment services.
Succession planning for the Board and senior
management will continue to be a focus of
the committee; alignment with Treatt’s culture
together with the right balance of insight, skills,
entrepreneurialism, diversity, approach to risk
and sustainability are key considerations in
its deliberations.
DIVERSITY
The Board recognises the benet of having an
appropriate level of diversity on the Board and in
management positions throughout the Group to
support the achievement of its strategic objectives.
The committee considers the benets of all aspects
of diversity including race, gender, disability, sexual
orientation, religion, belief, age and culture when
appointing both Executive and Non-executive
Directors; independence and ability to add
commercial insights are also key considerations
for Non-executive Director appointments.
Further details on gender diversity within the
Group are set out on page 27.
COMMITTEE EVALUATION
An external evaluation was undertaken in relation
to the Board and its committees as reported on
page 78. There were no actions recommended
relating specically to the Nomination Committee.
Vijay Thakrar
Chair – Nomination Committee
THIS YEAR’S ACHIEVEMENTS
• Appointments of CFO, Chairman Designate
and two Non-executive Directors
• External Board evaluation
FUTURE PLANS
• Board succession planning and composition
• Continuing development of leadership talent
• Oversight of senior management resilience
and succession plans
• Continuing review and development of
Board and committee memberships
NOMINATION COMMITTEE REPORT CONTINUED
80
TREATT PLC Annual Report & Accounts 2022
Operations 1
Industry 2
Audit Committee
experience
Finance 2
Management 3
ESG 1
AUDIT COMMITTEE REPORT
A FOCUS ON GOVERNANCE AND REPORTING
I AM PLEASED TO
PRESENT OUR AUDIT
COMMITTEE REPORT
Philip O’Connor
Chair – Audit Committee
Meeting attendance
100%
Committee meetings
in the year
4
AUDIT COMMITTEE MEMBERS
Philip O’Connor (Chair)
Non-executive Director
Christine Sisler
Non-executive Director
Vijay Thakrar
Non-executive Director
The Audit Committee focuses on eective
governance and nancial reporting.
MEMBERSHIP, INDEPENDENCE AND
EXPERIENCE
The Audit Committee’s membership was refreshed
during the year with Vijay Thakrar succeeding Je
Ilie as Chair of the committee when Je stepped
down from the Board in February 2022. Following
Vijay’s appointment as Chairman Designate Philip
O’Connor was appointed Chair of the committee
on 17 September 2022. Philip spent many years
in senior roles, including as Finance Director of
Kerry foods, and is a qualied Chartered Certied
Accountant deemed by the Board to have recent
and relevant nancial experience.
The committee acts independently of management
and the Board is satised that its members have
the appropriate skills, experience, knowledge
and professional qualications, with competence
relevant to Treatt’s business.
MEETINGS
The committee met formally four times during the
year. The auditor attended three of these meetings
other than when their appointment or performance
were being reviewed and the CEO, CFO and
other senior nance team members attended
as appropriate by invitation. The committee has
discussions at least twice a year with the auditor
without management being present. The committee
Chair also meets informally with, and has access
to, the CFO to discuss matters considered relevant
to the committee’s duties and maintains a regular
dialogue with the audit partner.
ROLE AND RESPONSIBILITIES
The committee operates under terms of reference,
which are reviewed annually and are available on
the Group’s website. The main responsibilities of
the Audit Committee are:
• To review the Group’s Annual Report and any
formal announcements relating to the Group’s
nancial performance and to report to the
Board on signicant nancial reporting issues
and judgements contained therein, having
regard to matters communicated to it by
the auditor
• To review the content of the Annual Report
and advise the Board on whether, taken as a
whole, it is fair, balanced and understandable,
and provides the information necessary
for shareholders to assess the Group’s
performance, business model and strategy
• To oversee the relationship with the auditor and
assess the eectiveness of the external audit
process, including making recommendations to
the Board on their appointment, remuneration
and terms of engagement. The committee also
monitors their independence and objectivity
• To make recommendations to the Board on the
requirement for an internal audit function
• To ensure that procedures are in place
whereby employees of the Group may, in
condence, raise concerns about possible
improprieties in matters of nancial reporting
or other matters. The Group has arrangements
in place for the proportionate and independent
investigation of such matters and for
appropriate follow-up action
ACTIVITIES SINCE THE LAST REPORT
• Reviewed and reported to the Board on the half
year report and trading updates
• Met with the audit partner to approve the audit
plan and identication of risks
• Reviewed the auditor’s ndings, management’s
responses and ensured robust challenge
• Reviewed the auditor’s performance and
the audit process to ensure that they remain
objective and independent, and to assess the
eectiveness of the audit, providing feedback
to the auditor in this respect
• Approval of the fees paid to the auditors for
the audit
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 81
TREATT PLC Annual Report & Accounts 2022
• Reviewed and reported to the Board on the
Group’s Annual Report for 2022 to ensure
that, taken as a whole, it was fair, balanced and
understandable. This included consideration of a
report from the auditor on their audit and review
of the nancial statements, signicant nancial
reporting issues and judgements contained
therein, and discussions with management
• Reviewed the clarity and completeness of the
treatment and disclosure of exceptional items
and alternative performance measures
• Received presentations from management on
nancial reporting matters
• Consideration of any Speak Up reports, of which
there was one during the year. Further details
can be found on page 75
• Reviewed the potential requirement for an
internal audit function
• Reviewed whether it was appropriate for there
not to be an external audit of the Company’s
half year results, as in previous years
• Reviewed the operation of the policy on the
provision of non-audit services by the
external auditor and approving any such
work undertaken
• Reviewed the performance of the
Audit Committee
• Reviewed the terms of reference of the
Audit Committee
FINANCIAL REPORTING
During the year the committee and the Board
monitor the integrity of any externally published
announcements relating to the Group’s nancial
performance. Reports are requested from
management on particular matters, especially
where a signicant element of judgement is
required. Additionally, the committee has regular
contact with the audit partner without the presence
of the Executive Directors.
In respect of the Annual Report, members of the
committee review early drafts to keep appraised of
its key themes and to raise any issues early in the
process. The 2022 Annual Report was reviewed at
a committee meeting in November 2022; after due
challenge and debate the committee was content
with the appropriateness of the accounting policies
adopted, and that the key judgements applied,
which where possible, are supported by external
advice or other corroborative evidence,
are reasonable and therefore agreed with
management recommendations.
Signicant judgements and issues
The committee receives reports from management
on the signicant accounting and nancial
reporting matters and judgements involved in the
preparation of the nancial statements. Amongst
the matters considered by the committee in relation
to the Group’s 2022 Annual Report were:
Global economic uncertainty and impact on
going concern basis of accounting
Despite the Group‘s resilient nancial performance
throughout the global pandemic, the committee
remains vigilant to the uncertainties arising both
domestically and internationally from the current
economic and geopolitical environment, as well as
the prospect of a future pandemic. The impact of
these various challenges is manifesting itself in
inationary price increases, supply-side challenges
and changing consumer tastes as well as impacting
the rate of economic recovery within our
key markets.
Appropriate nancial modelling has since been
undertaken with this in mind to support the
assessment of the business as a going concern
and its longer-term viability. The Group’s going
concern and viability statement is on pages 68
and 69 sets out the approach taken and the
conclusions reached.
Foreign exchange management
In light of the impact of foreign exchange on
the year’s nancial results, the committee has
reviewed the Group’s policy and strategy for foreign
exchange risk management and discussed with
management the appointment of specialist advisors
to support management, and provided guidance on
the implementation of an FX committee, whose role
is to monitor foreign exchange risk on a regular
basis. Details of which are set out in the Financial
Review on page 56.
Inventory valuation
Given the nature of the Group’s products and
the processes involved in their manufacture, a
degree of estimation and judgement is involved in
the valuation of inventory, including determining
the level of provisions required against obsolete,
slow moving and defective inventory, which are
likely to result in a loss to the Group. This involved
discussions with management, on the basis of
valuation and detailed exercises undertaken to
identify the relevant provision levels, and with the
auditors, on their ndings following their review
of the work done on inventory valuation and the
controls in place over the processes involved.
Dened benet pension scheme
The choice of discount rate, ination rate and life
expectancy basis could materially aect the level
of surpluses and decits in the dened benet
pension scheme. The valuation at the year-
end date revealed a funding surplus within the
scheme, the committee considered the choice of
assumptions used to calculate the Group’s pension
surplus in accordance with IAS 19, this included
conrming that they are in accordance with
advice received from the scheme actuary, Barnett
Waddingham, and that these assumptions had been
critically reviewed by the auditors.
The committee also reviewed the legal advice
obtained in relation to the circumstances in which
the company would have an unconditional right to
a surplus at some future date and concluded
that the recognition of the pension surplus was
therefore appropriate.
Audit quality review
The Audit Committee is aware that the external
auditor (BDO) has been subject to a review by the
FRC’s Audit Quality Review (AQR) team in respect
of the audit for the year ended 30 September
2021. The Audit Committee Chair shared the AQR
Inspection Report with the Audit Committee, and
also discussed the other nding directly with the
BDO partner. The Audit Committee noted the scope
of the review, the other nding raised, and area of
good practice identied, together with BDO’s plan
to address the nding. The Audit Committee is
satised with BDO’s response to address the other
nding raised which was implemented as part of
the audit for the year ended 30 September 2022.
FAIR, BALANCED AND UNDERSTANDABLE
In assessing whether the Annual Report, taken
as a whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy, the
committee seeks to ensure that:
• An experienced team is responsible for
co-ordination of content, which is subject to a
detailed cross-functional review
• Senior management conrm that the content
in respect of their areas of responsibility
is considered to be fair, balanced and
understandable
• The committee receives an early draft of
the Annual Report to enable timely review
and comment
AUDIT COMMITTEE REPORT CONTINUED
82
TREATT PLC Annual Report & Accounts 2022
These processes, together with its own review, allow
the committee to provide an assurance to the Board
to assist them in making the statement required by
the 2018 UK Corporate Governance Code.
The committee also reviewed compliance with
the disclosure requirements on Directors’
remuneration and the Strategic Report.
RISK MANAGEMENT AND INTERNAL CONTROLS
The committee continues to consider the
requirements of the 2018 UK Corporate
Governance Code and the FRC Guidance on Audit
Committees. Following recent reviews, the last of
which was in October 2022, responsibility for risk
management and monitoring the eectiveness
of internal controls remains with the full Board,
rather than being delegated to the Audit Committee.
Consistent with this approach, the Board also
retains responsibility for reviewing the assumptions
underlying both the going concern and longer-term
viability statements made in the Annual Report
as detailed on pages 68 and 69. As the Group
continues to grow, the delegation of these matters
will remain under review. The principal risks and
uncertainties are set out on pages 62 to 67.
The committee annually reviews the requirement
for an internal audit function. In recent years work
has been undertaken, with the assistance of KPMG,
to improve risk management across the Group, as
detailed on page 64. Given the size and structure
of the Group, and the level of control exercised
by the management team, the establishment
of a formal internal audit function was not
considered to be necessary at present. The Group
may however utilise the services of external
organisations to undertake specic exercises
where appropriate.
During the planning phase of the external audit the
auditors conrm their understanding of the internal
controls relevant to the external audit. Where they
plan to place reliance on internal controls, they
will test the operation of those controls and if
their examination of internal controls leads them
to believe there may be signicant deciencies
therein, they will report their ndings to the
Audit Committee.
EXTERNAL AUDIT
The Audit Committee is committed to ensuring
the independence, eectiveness and objectivity of
the external auditor, and reviews the performance
of the external auditor in respect of audit related
services and non-audit services every year.
APPOINTMENT AND RE-APPOINTMENT OF
EXTERNAL AUDITOR
The Group undertook a competitive external audit
tendering process in 2020 and BDO LLP (BDO)
was selected as the Group’s external auditor with
eect from 29 May 2020. For FY2022, BDO
continued to provide external audit services to
the Group. Tracey Keeble was the partner for
BDO on the audit of Treatt for the year ended 30
September 2022 and for the previous two years.
The level of non-audit fees and their eect on
the auditor’s independence or objectivity is also
considered on a regular basis. The split between
audit and non-audit fees for the year under review
appears in note 5 to the nancial statements. The
committee has a policy for the provision of non-
audit services by the Company auditor, which is
aligned with the requirements of the UK Financial
Reporting Council’s Ethical Standards (2016 and
2019); it ensures that objectivity and independence
are not compromised. Under the policy, all non-
audit services to be contracted with the external
auditor will require the approval of the committee.
Apart from other assurance services, as set out
in note 5 to the nancial statements, BDO has
not provided any non-audit services to the Group
and when considering the use of the auditor to
undertake such assignments, consideration will
be given at all times to the provisions of the FRC
Guidance on Audit Committees with regard to
the preservation of independence. BDO LLP has
indicated its willingness to continue in oce. The
Audit Committee recommended to the Board that
BDO be re-appointed and resolutions are to be
proposed at the Annual General Meeting for the
re-appointment of BDO LLP as auditors of Treatt
plc and its subsidiaries, and to authorise the Board
to x their remuneration. The remuneration of the
auditors for the year ended 30 September 2022 is
disclosed in note 5 of the nancial statements.
EXTERNAL AUDITOR ASSESSMENT
The committee has oversight of the relationship
with the external auditor and is responsible for
monitoring their independence, objectivity and
compliance with professional and regulatory
requirements. An annual assessment of the
eectiveness of the external auditor is undertaken
to facilitate continued improvement in the audit
process which incorporates the views of senior
management. This assessment considers:
• The delivery of an ecient, robust audit in
compliance with the agreed plan and timescale
which is underpinned by a thorough risk
identication process
• The provision of robust and perceptive
advice on key areas of judgement, and
technical issues
• The demonstration of a high level of
professionalism and technical expertise
• Continuity within the audit team
• Adherence to independence, policies and other
regulatory requirements
The committee was satised that these requirements
have been met and that BDO demonstrated
commitment to perform high-quality work.
EXTERNAL AUDITOR INDEPENDENCE
The committee has undertaken an assessment
of the eectiveness of BDO’s performance and
relationship with Treatt and is satised that BDO
delivered a robust audit and remain independent
of Treatt, having no previous connection with
the Company.
EFFECTIVENESS OF THE COMMITTEE
The eectiveness of the committee was considered
as part of the external Board evaluation and
reviewed as part of the committee’s own
processes. The committee received positive
feedback on the way it challenges the business
and it was agreed that the committee continued to
work eectively.
Philip O’Connor
Chair – Audit Committee
FUTURE PLANS
• Treatt is committed to developing a
business with strong ESG values at its
core. As reported elsewhere there are
various initiatives underway to deliver
this and the committee will be supporting
the development of processes for the
setting and reporting of targets to
measure progress
• Continue to monitor developments to
consider whether it is appropriate
the Group’s half year results to be
externally audited
AUDIT COMMITTEE REPORT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 83
TREATT PLC Annual Report & Accounts 2022
DIRECTORS’ REMUNERATION REPORT
A FOCUS ON REMUNERATION STRUCTURE
Meeting attendance
100%
Committee meetings
in the year
4
I AM PLEASED
TO PRESENT
OUR DIRECTORS’
REMUNERATION REPORT
Yetunde Hofmann
Chair – Remuneration Committee
REMUNERATION COMMITTEE MEMBERS
Yetunde Hofmann (Chair)
Non-executive Director
Vijay Thakrar
Non-executive Director
Christine Sisler
Non-executive Director
The Directors’ Remuneration Report for Treatt
for 2022, including both this Chair’s statement
and the Implementation Report, which details
the remuneration paid to the Directors during
the nancial year under review, will be put to an
advisory vote at the AGM on 27 January 2023.
WORK OF THE COMMITTEE IN 2022
As referenced throughout this year’s Annual
Report, Treatt has experienced challenges during
the year.
• Although we achieved revenue growth of
c.13% (9% in constant currency) in line with
our revised market expectations for FY2022,
our prot before tax and exceptional items
(PBT&E) of £15.3m was below our record
result for FY2021 of £20.9m.
• However, throughout the year the Group made
good progress on important strategic initiatives
which we believe will position the Group well
for a return to its positive growth trajectory.
These actions included:
– The opening of the new UK Headquarters
and production facility in which a further
£5.0m was invested in 2022.
– Transitioning the majority of production to
the new UK Headquarters. UK production
capacity will at least double once this
process is fully completed. Distillation
equipment is anticipated to move to the
new site in 2023.
• The business expects to generate good
levels of cash in future years and anticipates
lowering net debt, therefore the Board intends
to continue its progressive dividend policy.
The committee has supported the Board in taking
steps in relation to the pay of our people in 2022 to
address the pressures being felt on living standards
in a high ination environment. This has involved:
• A 5% pay review for the majority of US and
UK colleagues eective 1 October 2022.
• In addition to this we are also paying some
colleagues an additional temporary monthly
allowance to assist with the short-term cost of
living impacts our people are facing. This will
be reviewed quarterly from Jan 2023.
• To enable higher percentage increases
and payments to support those employees
across the Group most aected by cost of
living impacts, members of the newly formed
Executive Leadership Team have received an
increase to salary of 2% only for FY2023.
The policy is to ensure that remuneration
structures are transparent and proportionate.
The committee has supported the Board in taking
steps in relation to the pay of our people in 2023.
CHAIR’S STATEMENT
I am pleased to present the Directors’ Remuneration
Report for Treatt for 2022 and rstly would like
to thank my colleagues, Non-executive Directors
Je Ilie and Lynne Weedall, for their signicant
contributions as members of the committee
until they stepped o the Board in February and
September 2022 respectively.
This Chair’s statement summarises the main areas
of activity for the committee during the year.
2022 ANNUAL GENERAL MEETING: OUR NEW
DIRECTORS’ REMUNERATION POLICY
We proposed a new Directors’ Remuneration Policy
at our AGM held in January 2022, detailed on
pages 87 to 92, which received strong shareholder
approval with 96.81% of votes cast in favour. Our
Directors’ Remuneration Report for 2021 was
also approved at our 2022 AGM by over 99% of
shareholder votes cast. We are grateful for the
continuing support of our shareholders for the
work of the Remuneration Committee.
Operations 1
Industry 1
Finance 1
HR 1
Management 3
ESG 1
Remuneration Committee
experience
84
TREATT PLC Annual Report & Accounts 2022
• The non-nancial objectives for 2022’s annual
bonus are all matters which are important to
Treatt’s long-term development. Accordingly,
paying some element of annual bonus for
attainment of these is, in the committee’s view,
important to reinforce the integrity of having
such measures within our annual bonus plan
which, we believe, is strongly in shareholders’
best interests. It also acknowledges our
management team’s strong and robust
leadership in a year of challenging markets.
The committee does, however, support our
CEO’s action in waiving half of his bonus
for 2022 and we regard this as particularly
appropriate given all of the circumstances.
As we are required to conrm by the UK Directors’
Remuneration Report regulations, the committee
conrms that it exercised what it regards as
normal commercial judgement in respect of
Directors’ remuneration throughout the year (and
in all cases in line with the approved Directors’
remuneration policy) including in relation to:
• Setting performance metrics for normal course
annual bonuses and LTIPs in the year.
• Conrming the outcome of performance
metrics for annual bonuses and LTIPs in
the year.
There were no other exercises of judgement or
discretion by the committee save as detailed in
this report.
APPOINTMENT OF OUR CHIEF FINANCIAL
OFFICER
As announced in February, Ryan Govender was
appointed Chief Financial Ocer on 1 July 2022.
His salary and benets on appointment were
determined by the Remuneration Committee in
accordance with the Directors’ remuneration policy
and market conditions for the role.
LOOKING AHEAD TO 2023
In last year’s Directors’ Remuneration Report
I set out in detail our proposal to increase the
CEO’s salary on a phased basis over a two-year
period together with the rationale for this change.
These proposals were in line with our overall
pay principles which require a proportionate
approach to pay in Treatt, and accordingly the
two-year salary proposals were not above “market-
suggested levels” for the CEO of a company of
Treatt’s scale and complexity.
The second phase of the increase remained
dependent upon the Remuneration Committee’s
review of continued appropriateness, reecting
Group performance.
The committee has undertaken this review
thoroughly and in particular has taken into account
Daemmon’s continued exceptional leadership
during a period of transition for the business
(including the move to the new UK Headquarters
and production facility) and one in which the
Company has faced challenges from the macro-
economic environment. Daemmon’s leadership
was crucial in ensuring that our wider Treatt team
maintained the utmost focus on delivering for
our customers.
Accordingly, following our review, the committee
believes that making the proposed second phase
increase to CEO salary is appropriate and our
CEO’s salary for nancial year 2023 is as set out
overleaf. Although our prots for FY2022 fell
from the prior year’s record levels and our share
price fell by around 40% over the 2022 nancial
year, those results need to be set in the context of
Daemmon’s leadership of the Company since 2012
– as the chart on page 86 shows, in that period
the Company has still delivered an over 1,000%
total return to our shareholders, signicantly out-
performing the market.
• As has been our practice annually since 2014,
we will again oer all UK and US employees,
with a period of at least twelve months’
qualifying service, free shares to the value of
£700 and $1,000 respectively.
Turning to incentive pay outcomes for FY2022:
• In respect of the LTIPs granted to the Executive
Directors in 2019, the average earnings per
share growth performance targets set by the
Remuneration Committee at the time of grant
(average annual growth between 3.0% and
10.0% over three nancial years) were attained
at a level of 8.1% average annual growth and
consequently the awards vested at 76.3%
of award.
• The nancial measures for our 2022 annual
bonus (80% weighting on PBT&E) were not
attained, and nil is payable for this element.
The annual bonus element related to non-
nancial objectives (20% weighting) payable
to the CEO is determined by reference to key
objectives including the enhancement of our
equality, diversity and inclusion agenda, the
vision and creation of our Global Executive
Leadership Team, the continued improvement
of our culture along with the identication of
key outcomes to be achieved as we pursue our
strategy for the next ve years.
• The committee determined that 82% of the
bonus relating to the achievement of non-
nancial objectives should be paid. However,
in light of the current economic climate and the
challenges being faced our CEO has chosen to
forgo 50% of this payment and therefore 8.2%
of his maximum attainable bonus will be paid.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 85
TREATT PLC Annual Report & Accounts 2022
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total shareholder return 2012-2022
Treatt Plc FTSE All-Share
0%
200%
400%
600%
800%
1,000%
1,200%
1,400%
1,600%
1,800%
2,000%
In light of the disappointing impact on prots
this year the committee intends that the annual
LTIP award level for FY2023 will be scaled back
to 125% from 150% of base salary. We have
determined this to be a meaningful scale-back.
As for LTIP awards in FY2023, the awards will
have performance conditions based on growth in
earnings per share and return on average capital
employed over a three-year performance period,
and with any vesting shares subject to a two-year
holding period.
For completeness, the fees of the Chairman and
the Non-executive Directors were also reviewed
in 2021 phased over two years and, whilst the
fees of Non-executives are not matters for the
Remuneration Committee, the new fee levels,
which implement the second element of the review,
can be summarised as follows:
• Chairman: £123,000 p.a. (£113,000)
• Non-executives’ base fee: £51,000 p.a.
(£46,723)
• Fees for Audit Chair, Remuneration Committee
Chair and Senior Independent Director:
£10,000 for each role p.a. (£8,000)
DIRECTORS’ REMUNERATION REPORT CONTINUED
• Daemmon Reeve – £435,000 (£390,000)
As already explained, to enable higher percentage
increases and payments to support those
employees across the Group most aected by cost
of living challenges, members of the newly formed
Executive Leadership Team (including our CFO)
have received an increase to salary of 2% only for
FY2023. Accordingly, for FY2023, our CFO’s salary
is as follows:
• Ryan Govender – £234,600 (£230,000)
The CEO and CFO’s maximum bonus opportunity
for FY2023 will be 125% of base salary. The
performance measures for the annual bonus plan
for 2023 will operate on a basis consistent with
those for FY2022 with 20% of the maximum
attainable bonus being based on non-nancial
measures.
We are happy to receive feedback from
shareholders at any time in relation to our
remuneration policies and hope to receive your
support for the resolution to approve the Directors’
Remuneration Report at the forthcoming AGM.
I will be available at the AGM to answer any
questions you may have.
Finally, as announced on 1 November, I will be
stepping o the Treatt Board at the conclusion
of the AGM in January. I would like to extend my
thanks to my Board colleagues, to my current Chair
Tim Jones and the wider Treatt team for their
support and assistance during my tenure. It has
been a great experience.
Yetunde Hofmann
Chair – Remuneration Committee
86
TREATT PLC Annual Report & Accounts 2022
POLICY SECTION
Policy report: Provided for information
As approved at the AGM 2022; not subject to further approval at the 2023 AGM
This section provides, for information only, the Directors’ remuneration policy as approved at the 2022
AGM. The only contextual alterations from the policy as approved at the 2022 AGM are in the main Policy
Table where items which were required to be highlighted as changes from the previous 2019 policy are no
longer so highlighted.
Remuneration principles
The committee’s policy is to ensure that remuneration structures align with those of the wider workforce,
are simple, transparent and proportionate to the size and complexity of the business, whilst ensuring
that we pay people fairly, and recognise and reward good performance. The main principles of the
remuneration policy are:
• We will always aim to compete on salary and other benets, but executives should not be overpaid
when compared with external pay relativity and wider workforce remuneration and conditions
• We will recognise strong contribution from performance, experience and industry expertise as well as
demonstrating our culture and values
• All colleagues participate in a good pension plan, with the same pension contribution rates applying to
all employees in a country
• Remuneration packages should align with Treatt’s strategic objectives and the interests of shareholders
by using stretching performance metrics that provide a strong link to the creation of shareholder value
• Variable pay should incentivise delivery against performance in accordance with our culture where
employees are accountable and rewarded for their performance
• All employees can participate in a bonus, and we have high alignment of business-based targets for
bonus across all employees
• We aspire to give all employees the opportunity to participate in share plans and we believe it is right
that colleagues can share in value created for our shareholders
• Our Executive Directors retain shares from share plans and stay invested in our business journey
Changes from the previous policy
The committee is responsible for ensuring that the remuneration of Executive Directors and senior
management is aligned to the Group’s strategic objectives. It is key that the Group is able to attract
and retain leaders who are focused and also appropriately incentivised to deliver the Group’s strategic
objectives, in accordance with a remuneration policy which is aligned with the long-term interests of the
Company’s shareholders.
The current intention is that the framework of this remuneration policy will apply for three years from the
date of the 2022 AGM.
Executive Directors’ remuneration
The committee will continue to review its policy and the individual elements of the remuneration package
annually to ensure that they remain eective, in line with good practice and support delivery of the
strategy and long-term success of the Group.
The following table sets out a summary of each element of the Executive Directors’ remuneration, how it
operates, the maximum opportunity available, and applicable performance metrics:
Element: base salary
Purpose and
link to strategy
Helps recruit and retain high-calibre Executive Directors
Provides a competitive salary relative to the size of the Group
Operation Salary levels will relate to the nature of the role, skill and experience of the individual, market
positioning and pay and conditions in the Group
Salaries are reviewed annually by the committee with changes taking eect for 12 months
from 1 October, unless a change in responsibility requires an interim review
Any change in salary is inuenced by increases in the salaries of other Group employees,
changes to the complexity of the role, personal performance and a periodic review of market
conditions for similar roles in comparable organisations
Maximum opportunity Any salary increases are applied in line with the outcome of annual reviews
Annual increases should not normally exceed the average salary increase of employees
within the Group. Exceptions can be made when a review is required by a change in role
or responsibility, or where there is a signicant change in the role and/or size, value or
complexity of the Group which has resulted in material market misalignment
Performance metrics Not applicable
DIRECTORS’ REMUNERATION REPORT CONTINUED
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Corporate GovernanceStrategic Report
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TREATT PLC Annual Report & Accounts 2022
Element: benets
Purpose and
link to strategy
Helps recruit and retain high-calibre Executive Directors
Operation Entitlement to the following benets on the same terms as employees in the country in which
the Director is resident:
Private healthcare – please note that Daemmon Reeve also receives family cover; life
assurance; permanent health insurance; car allowance; all-employee share schemes
Life assurance for UK tax resident Directors will be provided by means of a Lifetime Plus policy
Any new benets introduced to employees generally shall be provided to Directors on equal
or comparable terms
Maximum opportunity Except as otherwise stated these are on the same terms as the benets received by other
employees in the country in which the Director is resident
Performance metrics Not applicable
Element: pension
Purpose and
link to strategy
Helps recruit and retain high-calibre Executive Directors and to provide a competitive package
Operation Entitlement to receive employer contributions into a dened contribution pension scheme
on the same terms as employees in the country in which the Director is resident. This can
be received as a cash amount where the lifetime allowance is reached (cash payments are
further reduced for the impact of employers’ NICs)
Maximum opportunity UK employees – 9% base salary contribution (no personal contribution required)
Performance metrics Not applicable
Element: annual bonus (notes 1 – 6)
Purpose and
link to strategy
Provides an element of at risk pay, which incentivises delivery of performance in the current
nancial year
Encourages and rewards actions consistent with the annual priorities of the Group
Aligns Directors’ interests with shareholders and other stakeholders
Operation The rules of the Executive Directors’ Bonus Scheme and the performance targets are
reviewed annually
Annual bonuses are calculated by reference to the achievement of performance targets for
the nancial year and each Director is entitled to a percentage of salary based upon this
calculation, subject to the maximum opportunity
Bonuses are subject to determination by the committee in accordance with scheme rules
after year-end:
• 75% of outcomes are paid in cash, with payments normally made in December
• 25% of outcomes are deferred in shares for two years (provided that if value to be
deferred is £10,000 or less, the whole outcome may be paid in cash)
Maximum opportunity 125% of salary per annum
Element: annual bonus (notes 1 – 6) continued
Performance metrics Bonuses are based on the growth in Group prot before tax and exceptional items compared
to the prior nancial year, which aligns with all employee bonus schemes across the Group
Up to 20% of bonus may be based on non-nancial performance measures
Bonus payments against nancial performance are based on a sliding scale.
No bonus is payable unless a minimum level of nancial performance is achieved
Dierent performance measures and/or weightings may be used for the annual bonus
in future years to help drive the strategy of the business during the period of this policy,
although the Remuneration Committee would expect to consult with major shareholders
before making material changes to the current performance measures (except for the
possible introduction of the non-nancial measures as described above)
DIRECTORS’ REMUNERATION REPORT CONTINUED
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TREATT PLC Annual Report & Accounts 2022
Element: Long Term Incentive Plan (LTIP) (notes 1 – 6)
Purpose and
link to strategy
Incentivises Directors to achieve returns for shareholders over a longer time frame
Aligns Directors’ interests with shareholders
Operation The committee will consider awards of shares under the LTIP annually and will review the
quantum of awards to ensure that they are in line with market rates
Awards will be made at nil cost, with vesting dependent on the achievement of performance
conditions over a period determined by the committee, which shall be a minimum of
three years
Awards will be subject to a two-year holding period following vesting, net of any tax liability
arising on either vesting or exercise
The committee may also exercise the specic discretions contained within the rules of the
scheme, as approved by shareholders
Maximum opportunity 125% of salary per annum based on market value of shares at date of grant
Performance metrics The vesting of the awards will normally be based on growth in appropriately selected
nancial performance metrics exceeding a minimum level during the period from date of
grant to date of vesting
Targets are set by the committee for each award on a sliding scale basis. No more than 25%
of awards will vest for threshold performance, with full vesting taking place for equalling or
exceeding maximum performance conditions
Dierent performance measures and/or weightings may be used for future LTIP awards
to help drive the strategy of the business during the period of this policy, although the
Remuneration Committee would expect to consult with major shareholders before making
material changes to the current performance measures applied
Awards lapse if performance criteria are not met at the end of the three-year
performance period
Element: shareholding requirement
Purpose and
link to strategy
Aligns Directors’ interests with shareholders
Operation Minimum shareholding requirements:
CEO – 200% of basic salary
CFO – 200% of basic salary
Directors are required to retain shares acquired under share-based incentive awards until
the shareholding requirements are met, save that they are permitted to sell sucient shares
to pay any exercise price and all applicable taxes due in respect of that award
Directors are subject to a post cessation shareholding requirement of 200% in year one and
100% in year two, with this requirement applicable to all shares acquired following approval
of the remuneration policy at the AGM in January 2022
Maximum opportunity Not applicable
Performance metrics Not applicable
Element: malus and clawback
Purpose and
link to strategy
To ensure Executive Directors do not benet from errors or misconduct
Operation Malus and clawback provisions are included in relation to LTIPs and bonus to enable an
award to be reduced or cancelled or to require the return of some or all of an award after
vesting, in the following circumstances:
• Material misstatement of the nancial results used to determine an award
• Error in the determination of the number of shares awarded
• Director’s misconduct
• Liquidation or administration of the Company
• To prevent serious reputational damage in the view of the committee
• To give eect to a provision for clawback under the LTIP or bonus scheme
Maximum opportunity Not applicable
Performance metrics Not applicable
DIRECTORS’ REMUNERATION REPORT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 89
TREATT PLC Annual Report & Accounts 2022
Minimum Minimum
0
200
800
400
600
2,000
1,400
1,600
1,800
1,200
1,000
£’000
On target On targetMaximum Maximum
Chief Executive Officer – Daemmon Reeve Chief Financial Officer – Ryan Govender
Maximum plus Maximum plus
34 34 34 34
19 19 19 19
15 15 15 15
15 15 15 15
Salary Benefits Pension Bonus Share options Share price growth
435 435 435
235
435
272
544 544272
544 544
272
435
235
147
147
147
293
293 293
293
235 235
Illustration of remuneration policy
The graph above provides estimates of the potential future reward for each of the Executive Directors
based on their current roles, the remuneration policy outlined on pages 87 to 89 and base salaries as at
1 October 2022.
The assumptions used in preparing the graph are as follows:
Minimum
• Basic salary, pension or cash in lieu of pension
and benets, no bonus and no vesting of the LTIP
On target
• Basic salary, pension or cash in lieu of pension, benets
• A bonus of 62.5% of basic salary and an LTIP of 62.5% of basic salary for the Executive Directors
(being notional vesting of 50% of LTIP award)
Maximum
• Basic salary, pension or cash in lieu of pension, benets
• A bonus of 125% of basic salary and an LTIP of 125% of basic salary for the Executive Directors
(being notional vesting of 100% of LTIP award)
Maximum plus
• As maximum plus eect of 50% share price growth compared to share price at the date of grant for
the LTIP value
DIRECTORS’ REMUNERATION REPORT CONTINUED
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Element: fees
Purpose and
link to strategy
Helps recruit high-calibre Non-executive Directors
Rewards additional responsibility by virtue of position as Chairman of the Board or Chair of
a committee
Operation Excluding the Chairman, subject to an aggregate limit within the Articles of Association (currently
£500,000 as approved by shareholders at the Annual General Meeting in January 2022)
Reviewed annually for each Non-executive Director with changes taking eect from
1 October
The Chairman’s fees are reviewed by the committee and the other Non-executives’ fees are
reviewed by the Board (excluding the Non-executives)
Any change in fees is inuenced by increases in the salaries of other Group employees,
personal performance and a periodic review of market conditions for similar roles in
comparable organisations
Additional fees may be paid in respect of increased responsibility or time commitment
required by the role or in respect of invoiced consultancy fees, where relevant
Maximum opportunity Any fee increases are applied in line with the outcome of annual reviews
Notes:
1 The committee considers that the forward-looking targets for the annual bonus are commercially sensitive and has, therefore, chosen
not to disclose them in advance. However, the committee considers that the level of performance required for the annual bonus is
appropriately stretching. All employee and senior management bonuses are restricted to a maximum of between 18% and 70% of base
salary depending on seniority, role and market conditions.
2 Performance targets for LTIP awards are set by the committee at the date of grant of the options to ensure that they are appropriately
stretching. The committee considers adjusted basic earnings per share (EPS) and adjusted return on average capital employed
(ROACE) to be appropriate measures of nancial performance, capturing revenue growth, operating margins and returns on capital.
EPS and ROACE targets are consistent with the Board’s strategy.
3 Subject to the achievement of the applicable performance conditions, Executive Directors are eligible to receive payment from any
award made prior to the approval and implementation of the Directors’ remuneration policy detailed in this report.
4 For both annual bonus and LTIP, while performance conditions will generally remain unchanged once set, the Remuneration Committee
has the ability to amend the measures, weightings and targets in exceptional circumstances (such as a major transaction) where the
original conditions would cease to operate as intended.
5 The committee retains discretion, consistent with market practice with regard to the operation and administration of the annual bonus
and LTIP, including:
– the timing and size of awards (within the overall limits of this policy);
– the determination of performance measures and targets and resultant vesting;
– when dealing with a change of control (e.g. the timing of testing performance conditions) or restructuring of the Group;
– determination of a good/bad leaver based on the rules of each plan and the appropriate treatment chosen; and
– adjustments in certain circumstances, such as rights issues, corporate restructuring events and special dividends.
6 Consistent with the latest Corporate Governance Code, the Remuneration Committee may apply discretion to override formulaic
outcomes for both annual bonus and LTIP if the outcomes are considered inconsistent with the underlying performance of the Group.
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TREATT PLC Annual Report & Accounts 2022
Comparison of Directors’ remuneration policy
with arrangements for employees
This policy sets out the remuneration structure
applicable to Directors of the Group. Salary levels
and incentive arrangements applicable to other
Group employees are determined by reference to
local employment conditions for comparative roles.
The committee receives regular updates on salary
and bonus levels across the Group and is aware
of how the remuneration of Directors compares to
employees. Budgeted salary increases for Group
employees are taken into consideration when
determining increases for the Executive Directors.
Employees are provided with a competitive benets
package including healthcare, life assurance and
pension. Consistent with Executive Directors,
employees are eligible to participate in an annual
bonus scheme with conditions linked to the
performance of their operating subsidiary and
the Group overall. Employee share ownership is
encouraged across the Group and participation,
particularly in the UK, is strong. The Share
Incentive Plan is designed to further encourage
employee share ownership. Eligible employees,
including Executive Directors, are able to
participate in the all-employee share schemes
on equal terms. Executive Directors and key
employees with the greatest potential to inuence
achievement of the Group’s strategic objectives
are provided with share options or long-term
incentives designed to encourage strong
Group performance.
The Group has not expressly sought the views of
employees when drawing up the remuneration
policy. However, engagement with employees
takes place across the business through open
door sessions held with the Chairman and the
designated Non-executive Director for employee
engagement. Further details can be found on
page 74 and 75. This enables the Board to
understand the views of employees on a variety
of subjects, including executive remuneration, and
allows the Board, where requested, to clarify how
executive pay aligns to and supports our overall
strategy and aligns to wider company pay policy.
Recruitment of Executive Directors
The committee expects any new Executive Director
to be engaged on terms that are consistent
with the policy. However, it cannot anticipate
the circumstances in which any new Executive
Director may be recruited and the committee may
determine that it is in the interests of the Company
and shareholders to secure the services of a
particular individual, which may require it to
take account of the terms of that individual’s
existing employment.
The committee will ensure that:
• Salary will be set to reect the skills and
experience of the incoming Director and the
market rate for the role to be undertaken
• Existing benets and incentives of the Group
will be used with participation on the same
basis as existing Directors using existing Treatt
performance conditions when appropriate
• Payment of relocation expenses, where
relevant, will be reasonable and detailed in
the relevant remuneration report (and will
be limited to a period of two years from
rst appointment)
• In the event of an internal promotion, any
commitments made prior to promotion may
continue to be honoured when they would
otherwise be inconsistent with this policy
• Discretion may be exercised in exceptional
circumstances and existing entitlements with
a current employer, such as bonus and share
schemes, may be bought out on a like-for-like
basis and subject to comparable performance
conditions and time vesting requirements,
where appropriate. Any buy-out awards
will be subject to the maximum value of any
outstanding awards forgone by the recruit
(but are not subject to a formal cap)
In determining the remuneration of a new
Director, the committee will balance shareholder
expectations, current best practice and the
circumstances of any new Director. It will strive
not to pay more than is necessary to recruit the
right candidate and will give full details in the next
Remuneration Report.
Directors’ contracts
Executive Directors
The committee reviews the contractual terms of
new and existing Executive Directors to ensure
that they reect best practice and are designed
to attract and retain suitable candidates. The
committee considers that a rolling contract
terminable on 12 months’ notice by either party
is appropriate.
Summary of Directors’ service contracts as at
30September 2022:
Date of contract Notice period
Daemmon Reeve 6 April 2016 12 months
Ryan Govender 23 May 2022 12 months
Summary of the key elements of Directors’ service
contracts:
Provision Summary
Notice period 12 months by either party
Termination payment No provision for payment in lieu
of notice
Salary Reviewed annually with eect
from 1October each year
Benets Private healthcare, life
assurance, permanent health
insurance, pension
Participation in discretionary
incentive arrangements
determined by the committee
The Directors’ contracts are available for inspection
at the Company’s registered oce during normal
business hours.
Future contracts are to provide for remuneration
obligations comparable to those set out above
taking into consideration role and responsibility.
Non-executive Directors
All Non-executive Directors are subject to the
same terms and conditions of appointment which
provide for the payment of fees for their services
in connection with Board and Board Committee
meetings and are terminable on three months’
notice by either party. In their non-executive
capacities they do not qualify for participation in
any of the Group’s bonus, share option or other
incentive schemes, and they are not eligible for
pension scheme membership.
The terms and conditions of the appointment of
Non-executive Directors are available for inspection
at the Company’s registered oce during normal
business hours.
DIRECTORS’ REMUNERATION REPORT CONTINUED
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Corporate GovernanceStrategic Report
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TREATT PLC Annual Report & Accounts 2022
Payments for loss of oce
In accordance with the 2018 UK Corporate Governance Code, notice periods shall not exceed a maximum
of 12months.
In normal circumstances, it is expected that termination payments for Executive Directors should not
exceed current salary, pension and benets for the notice period. When determining termination payments
in the event of early termination, the committee will take into account a variety of factors including length
of service, personal and Group performance, the Director’s obligation to mitigate their loss, statutory
compensation to which a Director may be entitled and legal fees and other payments which may be
payable under a settlement agreement. As part of a settlement agreement, the Company may reimburse
reasonable legal costs incurred in connection with a termination of employment and/or agree to make a
contribution towards outplacement services, if the committee considers it appropriate.
A Director who leaves will cease participation in annual bonus normally, although a ‘good leaver’ may be
eligible to continue participation in the bonus scheme at the discretion of the committee, and have a pro-
rata bonus for the part of the year worked. For a ‘good leaver’, the committee may use its discretion not to
defer part of the pro-rata bonus outcome in shares and also allow deferred shares to be retained and vest
after two years.
Directors have no entitlement to performance-related share-based incentives, the unvested portion
of which will generally lapse following termination of employment. However, where it is considered
appropriate to allow a Director ‘good leaver’ treatment, a time pro-rated proportion of outstanding share
plan awards (as determined by the committee) may be retained and can vest subject to attainment of the
performance conditions at the normal vesting time for the awards. Any originally specied holding periods
would normally continue to be applied to the vesting shares.
In certain circumstances, such as injury, disability, or death, a time pro-rated number of share awards may
vest subject to an assessment of the performance conditions and may be exercised within six months of
leaving the Group (and the committee may disapply holding periods).
External appointments
Whilst neither of the Executive Directors currently serve as Non-executive Directors on the boards
of other companies, it is recognised that such appointments would provide an opportunity to gain
broader experience outside of Treatt which would benet the Group. In the event that the Directors are
oered such positions and providing that they are not likely to lead to a conict of interest or signicant
constraints on time, Executive Directors may, with the prior approval of the Board, accept Non-executive
appointments and retain the fees received.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Shareholder views
The Remuneration Committee maintains a regular dialogue with its major shareholders and will continue
to monitor trends and developments in corporate governance and market practice to ensure that the
structure of executive remuneration remains appropriate. The views of shareholders were taken into
consideration in developing the remuneration policy approved at the 2022 AGM, and specically major
shareholders have been consulted on the revised remuneration package for the CEO. The committee will
also consult with major shareholders prior to any further material changes to the remuneration policy,
which might be necessary in the future.
IMPLEMENTATION REPORT
Membership and meetings
Je Ilie and Lynne Weedall stepped down from the Board and as members of the committee during the
year. Current membership is Yetunde Hofmann (Chair), Vijay Thakrar and Christine Sisler. All members of
the Remuneration Committee are considered to be independent.
The committee met four times during the course of theyear.
Role and responsibilities
The committee operates under terms of reference, which are reviewed annually and are available on the
Group’s website. The main responsibilities of the Remuneration Committee are to:
• Set the remuneration policy for all Executive Directors, the Chairman and Non-executive Directors
including, where appropriate, bonuses, share-based incentive schemes and post-retirement benets
• Determine the remuneration packages for the Executive Directors, the Chairman and senior
management, which includes the Company Secretary
• Approve the design of, and determine targets for, any performance-related incentive schemes operated
by the Group and approve the total annual payments made under such schemes
• Review the design of all share incentive plans requiring approval by the Board and shareholders. For
any such plans, the committee shall determine each year, taking into account the recommendations
of the CEO as appropriate, whether awards will be made and, if so, the amount of such awards to
the Executive Directors, senior management and other key members of sta, and any performance
targets to be used
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TREATT PLC Annual Report & Accounts 2022
Activities since the last report
• Approval of the 2022 Directors’ Remuneration Report
• Approval of the 2022 Remuneration Policy at our 2022 AGM
• Agreement of the bonuses payable for the 2022 nancial year
• Grant of options to Executive Directors, senior management and other business critical employees
under the Treatt LTIP and the setting of performance conditions
• Reviewing salary and fee levels for the Executive Directors and Chairman respectively, and agreement
of salary and fee increases for the 2023 nancial year
• Determination of the salary increases of members of the Executive Leadership Team for the 2023
nancial year
• Consideration of the award of free and matching shares to UK employees under the Share Incentive
Plan and equivalent awards of restricted stock units to US employees under the Long Term
Incentive Plan
• Reviewing the quality of the advice received from FIT Remuneration Consultants and whether it was
objective and independent
• Reviewing Executive Directors’ shareholdings against the requirements of the Share Retention Policy
• Reviewing the terms of reference of the Remuneration Committee
• Reviewing the performance of the Remuneration Committee
In addition, the committee has ensured that the new policy and the company’s remuneration practices are
consistent with the six factors set out in Provision 40 of the Code:
Clarity – Our policy is well understood by our senior executive team and has been clearly articulated to
our shareholders and representative bodies.
Simplicity – The committee is mindful of the need to avoid overly complex remuneration structures which
can be misunderstood and deliver unintended outcomes. Therefore, a key objective of the committee is
to ensure that our executive remuneration policies and practices are straightforward to communicate
and operate.
Risk – Our policy has been designed to ensure that inappropriate risk-taking is discouraged and will not
be rewarded via (i) the balanced use of both annual incentives and LTIPs, (ii) the signicant role played by
shares in our incentive plans (together with LTIP holding periods and in employment and post-cessation
shareholding guidelines) and (iii) malus/clawback provisions within all our incentive plans.
Predictability – Our incentive plans are subject to individual caps, with our share plans also subject to
market standard dilution limits. The weighting towards use of shares within our incentive plans means
that actual pay outcomes are highly aligned to the experience of our shareholders.
Proportionality – There is a clear link between individual awards, delivery of strategy and our long-term
performance. In addition, the signicant role played by incentive pay, together with the structure of the
Executive Directors’ service contracts, ensures that poor performance is not rewarded.
Alignment to culture – Our executive pay policies are fully aligned to Treatt’s culture through the
application of our developed remuneration principles which were widely reviewed by our Board before
being settled.
External advisors
During the year the committee continued to engage the services of FIT Remuneration Consultants LLP,
who were appointed in the latter stages of 2017 following a selection process led by the Chairman of
the Remuneration Committee at that time. FIT Remuneration Consultants are a founder member of the
Remuneration Consultants’ Group and adhere to its code of conduct and do not provide any other services
to Treatt. Fees totalling £12,293 (2021: £45,490) have been paid for their services during the year for
the provision of advice to the committee on various aspects of remuneration within the FTSE SmallCap
sector. The committee has reviewed the quality of the advice provided and whether it properly addressed
the issues under consideration and is satised that the advice received during the year was objective
and independent.
Eectiveness of the committee
The eectiveness of the committee was considered as part of the Board evaluation detailed on page 78
and reviewed as part of the committee’s own processes. The committee is regarded as eective, receives
good quality, timely information in respect of regulatory changes and best practice and communicates well
with the rest of the Board.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Financial Statements
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Overview Other Information 93
TREATT PLC Annual Report & Accounts 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
IMPLEMENTATION OF POLICY IN 2023
Element of remuneration policy Implementation of policy for 2023
Base salaries Daemmon Reeve – £435,000 (FY2022: £390,000)
Ryan Govender – £234,600 (FY 2022: £230,000)
Benets Unchanged from FY2022. Private healthcare (including family cover for
Daemmon Reeve); life assurance; permanent health insurance; car allowance;
all-employee share schemes
Pensions Daemmon Reeve – 9% of salary
Contributions are paid as cash and reduced for the impact of Employers’ NICs,
giving an actual contribution rate of 7.9% of salary
Ryan Govender – 9% of salary
Annual bonus Maximum is 125% of base salary for Executive Directors for FY2023 targets
which are based on:
• Group prot before tax and exceptionals calibrated by reference to the
performance of the Group in FY2022 (80% weighting)
• Non-nancial targets and objectives set by the Remuneration Committee
(20% weighting)
The bonus outcomes for FY2023 will be paid:
• 75% in cash after nalisation of the Group’s results for FY2023
• 25% subject to deferral in shares for two years (subject to £10,000 minimum
value of deferral)
The committee considers that the forward-looking targets for the annual bonus
are commercially sensitive and has, therefore, chosen not to disclose them
in advance
Details of the targets will be set out retrospectively in next year’s
Remuneration Report
Element of remuneration policy Implementation of policy for 2023
Long Term Incentive Plan (LTIP) Annual LTIP award to Executive Directors of shares worth 125% of base salary
(calculated using share prices at the time of award)
FY2023 awards will be subject to performance conditions measured over three
nancial years to FY2025
The performance condition will be:
• Based on average annual growth in adjusted basic earnings per share (‘EPS’)
(80% weighting) measured from FY2022 as the base point and with a
performance range as follows: Threshold average growth in EPS of 5.0%
(below which there is 0% vesting) through to maximum vesting at 14.0%
average annual growth
• Based on Return on average capital employed (‘ROACE’) (20% weighting)
with a performance range as follows: Threshold ROACE of 15.0% (below
which there is 0% vesting) through to maximum vesting at 25.0%
After performance vesting at three years, LTIP awards are subject to a further
two-year holding period
Share retention policy Daemmon Reeve – 200% of basic salary
Ryan Govender – 200% of basic salary
At 30 September 2022 Daemmon Reeve held shares worth 831% of
basic salary
Ryan Govender is yet to hold any Treatt shares due to his recent appointment
Malus and clawback Applies to all performance-related elements of Executive Directors’
remuneration
Chairman and Non-executive
Directors’ fees
The base fees for the Chairman and Non-executive Directors for FY2023 are
as follows:
• Chairman – £123,000 (FY2022: £113,020)
For all other Non-executive Directors:
• Base fee – £51,000 (FY2022: £46,723)
• Audit Committee Chair fee – £10,000 (FY2022: £8,000)
• Remuneration Committee Chair fee – £10,000 (FY2022: £8,000)
• Senior Independent Director – £10,000 (FY2022: £8,000)
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TREATT PLC Annual Report & Accounts 2022
Directors’ remuneration (audited)
The tables below report a single gure for total remuneration, and the proportion of xed and variable pay
is shown below for the Executive Directors and for each individual Executive and Non-executive Director
respectively.
Daemmon Reeve Richard Hope1Ryan Govender1
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Fixed pay:
Salary 390 340 174 227 83 –
Taxable benets216 16 12 16 4–
Pension331 45 14 18 7–
Total xed pay 437 401 200 261 94 –
Variable pay:
Annual bonus 40 340 35 227 ––
Share options vesting in the
nancial year4989 –649 11 ––
Total variable pay 1,029 340 684 238 ––
Total single gure of
remuneration 1,466 741 884 499 94 –
1 Richard Hope retired on 30 June 2022. Ryan Govender was appointed as an Executive Director on 1 July 2022.
2 Taxable benets provided to Executive Directors relate to private medical insurance and car allowances.
3 Pension contributions relate to pay in lieu of pension after deduction of employers’ NI.
4 Details of share options which vested in the year are shown on page 96. The percentage of the value which vested during the year
which related to share price growth was 64.8%.
Details relating to the annual bonus for Executive Directors
The total annual bonus award for Executive Directors is calculated based on the annual growth in prot
before tax, adjusted for exceptional items (PBT&E) with 80% weighting, and on the achievement of
non-nancial measures set by the Remuneration Committee with 20% weighting.
Bonus payments linked to nancial measures range from 2.5% of salary at threshold level, rising
incrementally to a maximum of 100%. The ranges are set out below in comparison to the actual achieved
growth in the year. The nancial measures for the 2022 annual bonus were not attained and £nil was
payable for that element.
The non-nancial objectives were determined with reference to key objectives including the enhancement
of the equality, diversity and inclusion agenda, creation of the Global Executive Leadership Team and
identifying key strategic outcomes for the business. The Remuneration Committee determined that 82%
of the bonus relating to the achievement of non-nancial objectives should be paid. However, as disclosed
in the Chair’s introductory statement to this report, Daemmon Reeve waived 50% of his annual bonus
outcomes for 2022.
Percentage
bonus attainable
2022 PBT&E
£’000
Threshold 2.5% 21,442
Maximum 100% 24,057
Actual achieved 0% 15,256
Percentage bonus awarded
The annual bonus, as a percentage of the maximum bonus achievable (125% of salary), was as follows:
2022 2021
Daemmon Reeve 8.2% 100.0%
Richard Hope116.0% 100.0%
Ryan Govender20.0% n/a
1 Richard Hope retired on 30 June 2022. His bonus was awarded pro-rata for his period of service during the year. The amount of
bonus payable relating to the achievement of nancial measures was £nil.
2 Ryan Govender was appointed as an Executive Director on 1 July 2022.
Share option schemes (audited)
The following share options were granted to Executive Directors during the nancial year:
Scheme Basis Date of grant
Share price at
date of grant
Face value
£’0001
Min
performance
award
Performance end
date
Daemmon Reeve LTIP 20222Executive 1 Feb 2022 £11.20 585 25% 30 Sept 2024
SAYE 20223All-sta 14 July 2022 £7.61 22 N/A N/A
1 Face value is calculated based upon share price at date of grant as shown above.
2 Executive LTIPs are granted at Nil cost, subject to performance conditions.
3 SAYE (Save As You Earn) share options are oered to UK employees (subject to tax exempt limits) at a discount of 20% of the average
share price for the three days preceding the date of grant and are exercisable after three years.
The following section of this report provides details of the implementation of the policy for the year ended 30September 2022.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 95
TREATT PLC Annual Report & Accounts 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
Performance conditions for Executive LTIP options
The 2022 LTIP awards had performance conditions linked to adjusted basic earnings per share (EPS) and
return on average capital employed (ROACE) as follows:
• 80% on average annual EPS growth; range between 5.0% p.a. (nil vesting) to 14.0% (full vesting)
• 20% on average annual ROACE; range between 15.0% (nil vesting) to 25.0% (full vesting)
For LTIP awards prior to these, performance conditions were entirely EPS-based and vested on a sliding
scale between 25% when average annual growth exceeded 3.0% p.a., and 100% where average annual
growth equalled or exceeded 10.0% p.a.
The share options of the Directors in oce during the year are as set out below:
Exercise dates
Exercise
price
At 1 Oct
2021
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
At 30
Sept
2022
Daemmon Reeve Sept 2022 – Feb 2023 361.0p 4,986 – (4,986) – –
Sept 2023 – Feb 2024 610.0p – 2,950 – – 2,950
Dec 2021 – Dec 2028 Nil 80,487 – (80,487) – –
Dec 2022 – Dec 2029 Nil 73,978 – – – 73,978
Dec 2023 – Dec 2030 Nil 45,571 – – – 45,571
Feb 2025 – Feb 2032 Nil – 52,232 – – 52,232
205,022 55,182 (85,473) – 174,731
Richard Hope1Sept 2022 – Feb 2023 361.0p 1,645 – (1,599) (46) –
Sept 2023 – Feb 2024 409.0p 1,496 – (955) (541) –
Sept 2024 – Feb 2025 932.0p 637 – – (637) –
Dec 2021 – Dec 2028 Nil 53,658 – (53,658) – –
Dec 2022 – Dec 2029 Nil 49,318 – – (3,282) 46,036
Dec 2023 – Dec 2030 Nil 30,381 – – (12,197) 18,184
137,135 – (56,212) (16,703) 64,220
1 Richard Hope retired on 30 June 2022, and the Board exercised its discretion to permit a proportion of shares under existing LTIP awards
to be retained, and for these shares to be capable of vesting at the originally specied vesting dates per the scheme rules.
The aggregate amount of gains made by the Directors on the exercise of share options in the year was
£1,638,000 (2021: £11,000).
There have been no further changes in the interests of the Directors to subscribe for or acquire shares
between 1 October 2022 and 22 November 2022, the latest date practicable to obtain the information
prior to publication of this document.
The market price of the shares at 30 September 2022 was £5.90 and the range during the nancial year
was £5.07 to £13.15. All market price gures are derived from the Daily Ocial List of the London
Stock Exchange.
Non-executive Directors (audited)
Fees (xed pay)
2022
£’000
2021
£’000
Tim Jones 113 103
Je Ilie123 50
Yetunde Hofmann 55 42
Richard Illek212 42
David Johnston 47 42
Lynne Weedall352 48
Vijay Thakrar 52 48
Philip O’Connor431 n/a
Christine Sisler432 n/a
417 375
1 Je Ilie stepped down on 25 February 2022.
2 Richard Illek stepped down on 31 December 2022.
3 Lynne Weedall stepped down on 17 September 2022.
4 Philip O’Connor and Christine Sisler were both appointed on 1 February 2022.
Pensions (audited)
The Chief Executive Ocer is a deferred member of the R C Treatt & Co Limited Pension & Assurance
Scheme following its closure to future accruals on 31 December 2012. The plan was a non-contributory,
HM Revenue & Customs approved, dened benet occupational pension scheme.
The pension entitlement is as follows:
Accrued total pension
Normal
retirement date
2022
£
2021
£
Daemmon Reeve 24 Sept 2036 14,855 14,404
The transfer values have been calculated on the basis of actuarial advice in accordance with Statutory
Instrument 2013 No 1981 – The Large and Medium-Sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013. Further details of the scheme are included in note 29.
96
TREATT PLC Annual Report & Accounts 2022
Contributions to dened money purchase pension plans were made as follows:
2022
£’000
2021
£’000
Daemmon Reeve 31 45
Richard Hope114 18
Ryan Govender17–
1 Richard Hope retired on 30 June 2022. Ryan Govender was appointed as an executive director on 1 July 2022.
Pension contributions include pay in lieu of pension after deduction of employers’ NI in order to be cost
neutral to the Group.
Directors’ interests (audited)
The Directors who held oce at 30 September 2022 had the following interests in the shares of the
Parent Company:
Shares held outright or vested
Unvested share options with
performance conditions
Unvested all-employee share
options
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Executive Directors
Daemmon Reeve 549,161 493,463 171,781 200,036 2,950 4,986
Ryan Govender1––––––
Non-executive Directors
Tim Jones 70,948 40,799 – – – –
Vijay Thakrar 6,144 1,641 – – – –
1 Ryan Govender was appointed on 1 July 2022.
Between 1 October 2022 and 22 November 2022, the latest date practicable to obtain the information
prior to publication of this document, there were no changes in the Directors’ interests.
The table below shows the value of Executive Directors’ interests in shares as at 30 September 2022 as
a percentage of their base salary:
Value of shares held1
outright or vested Base salary2
Value of interest as
% of base salary
2022
£’000
2021
£’000
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Target
% of
base
salary
Daemmon Reeve 3,240 5,009 390 340 831% 1,473% 200%
Ryan Govender3– – 235 –––200%
1 Based upon a share price of £5.90 as at 30 September 2022.
2 Base salary is the basic gross pay for the corresponding year.
3 Ryan Govender was appointed on 1 July 2022.
CEO remuneration (unaudited)
The following table provides historical data on remuneration in respect of the Director performing the role
of Chief Executive Ocer for each of the years covered by the performance graph:
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Total remuneration
(£’000) 1,466 741 1,219 1,501 1,757 603 580 470 436 405
Annual bonus as % of
maximum18.2% 100% 100% 62.5% 92.5% 100% 88% 92% 95% 85%
Share options vesting
as % of maximum 100% N/A1100% 100% 100% N/A1N/A1100%2100%2100%2
1 There were no options which vested during the year.
2 All share options vested in full as they were all-employee share options which were not subject to performance conditions.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 97
TREATT PLC Annual Report & Accounts 2022
Relative importance of spend on pay
Wages and salaries are the most signicant overhead cost in the Group. The following table sets out, in a
manner prescribed by the regulations, the relative importance of employee remuneration, as compared to
distributions to shareholders and other uses of prot, the most signicant of which, taxation, has therefore
been selected:
2022
£’000
2021
£’000 Movement
Total remuneration120,939 18,909 10.7%
Dividends24,834 3,704 30.5%
Current tax31,939 3,374 (42.5%)
1 Total remuneration includes wages, salaries and pension costs as disclosed in note 6.
2 Dividends paid in the nancial year as disclosed in note 10.
3 Current tax charge in respect of the nancial year as disclosed in note 9.
Chief Executive pay ratio reporting
The average number of UK employees in the current nancial year has exceeded 250 for the rst time,
and as such the Group are required to publish CEO pay ratio information. The CEO pay ratio information
for prior years is not in scope.
Set out below is the ratio of the Chief Executive’s single gure of total remuneration for 2022 of
£1,466,000 expressed as a multiple of total remuneration for UK employees.
The three ratios below are calculated by reference to the colleagues at the 25th, 50th and 75th percentile.
The total remuneration of these employees is also disclosed below.
Year 25th percentile 50th percentile 75th percentile
2022 48:1 44:1 31:1
Of the three options set out in legislation for calculating Chief Executive pay ratios, we have chosen
option B. This option utilises existing gender pay gap data from April 2022 to calculate the ratio, and was
chosen as it is the most accurate and comprehensive data currently available. This data has not signicantly
changed by the year-end date and so we consider this to be a reliable data set.
Comparison group
Total
remuneration
Base
salary
Employee A – 25th percentile £30,507 £21,590
Employee B – 50th percentile £33,033 £30,520
Employee C – 75th percentile £46,686 £41,929
Year to year movements in the pay ratio will largely be down to the Chief Executive’s variable pay outcome
which will signicantly outweigh any other changes to pay within the Group. Regardless of what the pay
ratio is, we will always continue to invest in competitive pay for all employees. The Group currently oer
participation in all-sta share schemes as well as share incentive plans in the UK, and similar schemes for
US colleagues. The Group is satised that the median pay ratio for this nancial year is consistent with the
Group’s wider pay, reward and progression policies aecting our employees.
We apply the same reward principles for all employees, that is overall remuneration should be competitive
when compared to other similar roles from where we recruit. The Chief Executive’s remuneration
is benchmarked against other similar sized listed companies, taking into account their size, business
complexity, scope and relative performance. Based on this information we are satised that the Chief
Executive’s pay is weighted at the correct level.
We expect the pay ratio to uctuate year on year and it may not always coincide with the underlying
performance of the business in a single year.
DIRECTORS’ REMUNERATION REPORT CONTINUED
98
TREATT PLC Annual Report & Accounts 2022
Change in remuneration of employees and Directors
The table below shows the percentage change in remuneration of the Directors and employees of the
business between the years ended 30 September 2020 and 30 September 2022.
% change from 2021 to 2022 % change from 2020 to 2021 % change from 2019 to 2020
Salary or
fees Bonus
Taxable
benets
Salary or
fees Bonus
Taxable
benets
Salary or
fees Bonus
Taxable
benets
Employees19.0% (58.6%)231.6% 4.2% 56.5% 10.3% 4.9% 22.9% 6.5%
Exec Directors:
Daemmon Reeve 14.7% (88.2%) 0.2% 1.0% 1.0% 0.1% 2.1% 63.6% 0.2%
Richard Hope32.5% (79.5%) 0.2% 1.0% 1.0% 0.1% 1.8% 62.3% 0.1%
Non-exec
Directors:
Tim Jones 9.7% n/a n/a 1.0% n/a n/a 2.0% n/a n/a
Yetunde
Hofmann 28.9% n/a n/a 1.0% n/a n/a 2.0% n/a n/a
Je Ilie410.1% n/a n/a 1.0% n/a n/a 2.0% n/a n/a
Richard Illek410.1% n/a n/a 1.0% n/a n/a 2.0% n/a n/a
David Johnston 10.1% n/a n/a (9.0%) n/a n/a (4.7%) n/a n/a
Lynne Weedall410.1% n/a n/a 5.4% n/a n/a 10.0% n/a n/a
Vijay Thakrar 8.0% n/a n/a 1.0% n/a n/a n/a n/a n/a
1 The employees used for comparison are those UK and US employees who, for the salary comparison, were employed for the whole of
the 2022 nancial year.
2 Employee bonuses are based on a combination of Group performance and the performance of the entity they are employed by.
US all-sta bonuses were 0.0% of salary (2021: 12.0%) and UK all-sta bonuses were 1.6% of salary (2021: 7.0%).
3 Richard Hope retired on 30 June 2022, the percentage change from 2021 to 2022 is shown pro-rated.
4 Richard Illek, Je Ilie and Lynne Weedall resigned on 31 December 2021, 25 February 2022 and 17 September 2022 respectively,
their percentage increases are calculated on a pro-rata basis.
5 Philip O’Connor and Christine Sisler were both appointed on 1 February 2022.
Statement of voting
At the Annual General Meeting held on 28 January 2022, the votes cast in respect of the resolution to
approve the Directors’ Remuneration Report, was as follows:
Directors’ Remuneration Report For 99.24% Against 0.76% Votes withheld 10,820
The remuneration policy was approved at the Annual General Meeting held on 28 January 2022 and the
votes cast in respect of the resolution to approve the remuneration policy, was as follows:
Remuneration Policy For 96.81% Against 3.19% Votes withheld 1,258,243
Audit notes
In accordance with Section 421 of the Companies Act 2006 and the Regulations, where indicated, certain
information contained within the Implementation Section of this report has been audited. The remaining
sections are not subject to audit.
This report was approved by the Board on 29 November 2022.
Ryan Govender
Chief Financial Ocer and Company Secretary
DIRECTORS’ REMUNERATION REPORT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 99
TREATT PLC Annual Report & Accounts 2022
The Directors present their report and the audited
nancial statements for the Group for the year
ended 30 September 2022.
This report is required to be produced by law.
The Disclosure, Guidance and Transparency Rules
and the Listing Rules also require us to make
certain disclosures.
The Corporate Governance Statement on
pages 72 to 78, including the Audit Committee
report, forms part of this Directors’ Report
and is incorporated by reference. Disclosures
elsewhere in the Annual Report and Accounts are
cross-referenced where appropriate.
OPERATIONS AND PERFORMANCE
Results and dividends
The results of the Group for the year are set out
on page 110. Reported prot before tax for the year
was £16.2m (2021: 19.6m). Prot before tax and
exceptional items from continuing operations was
£15.3m (2021: £20.9m).
The Directors recommend a nal dividend of 5.35p
(2021: 5.50p) per ordinary share. This, when taken
with the interim dividend of 2.50p (2021: 2.00p)
per share paid on 11 August 2022, gives a total
dividend of 7.85p (2021: 7.50p) per share for the
year ended 30 September 2022.
Events since balance sheet date
No important events aecting the Group have
occurred since year end.
Research and development
Product innovation and research and development
are a critical part of the Group’s strategy and
business model as outlined in the Strategic
Report on pages 17 to 18. The main research and
development activity undertaken by the Group is in
the area of new product development.
The Group utilises its strong technical capabilities
to develop innovative products that provide
solutions for customers, particularly in the food
and beverage sectors. In this way, it seeks to
make itself indispensable to a key group of major
global multi-national companies. In the opinion of
the Directors, continuity of investment in this area
is essential for the maintenance of the Group’s
market position and for future growth.
SHARES AND SHAREHOLDERS
Structure of share capital
The Parent Company’s share capital comprises
60,864,564 ordinary shares with a nominal value
of 2 pence each. All of the Parent Company’s
issued ordinary shares are fully paid up and rank
equally in all respects. The rights attached to them,
in addition to those conferred on their holders by
law, are set out in the Articles, a copy of which
can be found on the Treatt website or obtained on
request from the Company Secretary.
Details of the issued ordinary share capital of the
Parent Company and movements during the year
are set out in note 24 of the nancial statements.
Restrictions on transfer of securities
There are no restrictions on the transfer of
ordinary shares or on the exercise of voting rights
attached to them, except (i) where the Company
has exercised its right to suspend their voting
rights or to prohibit their transfer following the
omission of their holder or any person interested
in them to provide the Company with information
requested by it in accordance with Part 22 of the
Companies Act 2006 or (ii) where their holder
is precluded from exercising voting rights by the
Financial Conduct Authority’s Listing Rules or the
City Code on Takeovers and Mergers.
Rights and obligations of ordinary shares
On a show of hands at a general meeting, every
holder of ordinary shares present in person or by
proxy and entitled to vote shall have one vote and
on a poll, every member present in person or by
proxy and entitled to vote shall have one vote for
every ordinary share held. Subject to the relevant
statutory provisions and the Articles, holders of
ordinary shares are entitled to a dividend where
declared or paid out of prots available for
such purposes.
Treatt employee benet trust (EBT)
The EBT holds ordinary shares in the Company
in order to meet obligations under the Group’s
employee share option schemes. At 30 September
2022 the trustees, Apex Financial Services (Trust
Company) Limited held 270,140 shares (2021:
166,040). No shares (2021: nil) were purchased
by the EBT during the year ended 30 September
2022. During the year 400,000 (2021: 100,000)
shares were issued to the EBT under a block
listing application. The trustees have waived their
voting rights and their right to receive dividends in
respect of the ordinary shares held by the EBT.
Treatt share incentive plan
The Company outsources the administration of
the UK Share Incentive Plan to Link Asset Services
Trustees (the SIP Trust), who, at 30 September
2022, held 437,711 shares (2021: 477,305), all of
which are allocated to participants under the rules
of the SIP. Voting rights are waived on all shares
held in the SIP Trust. Dividends received by
the SIP Trust on behalf of participants are
reinvested in shares at market value on the date
of reinvestment.
Substantial shareholders
In accordance with Rule 5 of the Disclosure and
Transparency Rules of the Financial Conduct
Authority, the Company has been notied of
the following holdings of 3% or more of the
voting rights at 22 November 2022 (the latest
practicable reporting date prior to publication of
this document).
Group Number
Issued
%
Voting
%
abrdn plc 6,356,922 10.44 10.56
Blackrock Inc 3,334,321 5.48 5.54
Hargreaves
Lansdown Plc 2,904,162 4.77 4.83
Canaccord Genuity
Group Inc 2,703,969 4.44 4.49
Rights and Issues
Investment Trust Plc 2,500,000 4.11 4.15
Liontrust Asset
Management 2,480,805 4.08 4.12
Ameriprise Financial 2,273,941 3.74 3.78
James Sharp & Co 2,072,043 3.40 3.44
Invesco 1,850,343 3.04 3.08
DIRECTORS’ REPORT
OTHER STATUTORY INFORMATION
100
TREATT PLC Annual Report & Accounts 2022
GOVERNANCE
Articles of association
The powers of the Directors are conferred on them
by UK legislation and the Articles of Association.
Changes to the Articles must be approved by
shareholders passing a special resolution at a
general meeting.
Directors
The Directors of the Company are shown on pages
70 and 71.
Powers of Directors and purchase of own
shares
At the forthcoming Annual General Meeting in
2023, the Company will be seeking a renewal
of the shareholder authority for the Directors to
purchase up to 10% of the Company’s ordinary
shares, although at present the Directors have
no plans to buy back any shares. It is, however,
considered prudent to have the authority in place
so that the Company is able to act at short notice if
circumstances warrant.
A resolution will also be proposed at the 2023
Annual General Meeting to renew the power given
to the Directors to issue new shares up to an
aggregate nominal value, in line with the latest
Investment Association guidelines, of up to 10% of
the existing issued share capital by disapplying pre-
emption rights, of which 5% can only be issued for
the purposes of nancing an acquisition or other
capital investment.
It is the Directors’ intention to seek renewal
of these general authorities annually. Further
information is set out in the notice of Annual
General Meeting on pages 150 to 156.
Appointment and replacement of Directors
The appointment and replacement of Directors is
informed and governed by the Company’s Articles
of Association, the UK Corporate Governance
Code, the Companies Act and related legislation.
Directors can be appointed by the Company by
ordinary resolution at a general meeting or by
the Board. If a Director is appointed by the Board,
such Director will hold oce until the next Annual
General Meeting and shall then be eligible, subject
to Board recommendation, for election at that
meeting. All Directors will oer themselves for
re-election annually; further details are provided
in the Corporate Governance Statement on pages
72 to 78.
Details of the Executive Directors’ contracts
and notice periods are given in the Directors’
Remuneration Report on pages 91 to 92.
The Executive Directors’ contracts are terminable
by the Group giving the required notice period of
12 months. The appointments of the Non-executive
Directors can be terminated by the Company giving
three months’ notice at any time. The Company can
remove a Director from oce, either by passing
an ordinary resolution of which special notice has
been given or by notice being given by all the
other Directors.
Conicts of interest
No Director had an interest in any contract of
signicance during the year. The Group has
procedures in place for managing conicts of
interest, which are set out on page 75.
Directors’ and ocers’ liability insurance
The Group maintains Directors’ and ocers’
liability insurance which is reviewed annually.
The insurance covers the Directors and ocers
of the Company and its subsidiaries against the
costs of defending themselves in civil proceedings
taken against them in their capacity as a Director
or ocer of a Group company and in respect of
damages or civil nes or penalties resulting from
the unsuccessful defence of any proceedings.
Going concern and viability
The going concern and viability statement is set out
on pages 68 to 69.
Branch disclosure
The subsidiary, R C Treatt & Co Limited,
established a branch in China in July 2006,
which was closed during the course of the year.
A WOFE (wholly owned foreign enterprise) was
incorporated on 13 May 2021 and is a subsidiary
of Treatt plc. The WOFE engages directly with
customers in China.
Political donations
The Group made no political donations in 2022
(2021: £nil).
Signicant agreements
The Group’s main banking facilities contain
provisions that allow the lenders to require
immediate repayment of the facilities and cancel
commitments under the agreements where there is
a change of control of the Company’s subsidiaries.
Certain other commercial agreements, entered into
in the normal course of business, include change of
control provisions.
Annual General Meeting
The Annual General Meeting will be held at Treatt
plc, Skyliner Way, Bury St Edmunds, Suolk,
IP32 7FR on 27 January 2023. The Notice of
Meeting and explanatory notes are given on pages
150 to 156. The notice of any general meeting will
specify the deadline for exercising voting rights and
appointing a proxy or proxies to vote in relation to
resolutions to be proposed at a general meeting.
The number of proxy votes for, against or withheld
in respect of each resolution are announced and
published on the Treatt website after the meeting
(www.treatt.com).
Financial and internal control
The Board conrms that a process for the ongoing
identication, evaluation and management of
signicant risks faced by the Group has been
in place throughout the year and to the date of
approval of this report, which complies with the
‘Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting’
issued by the FRC in September 2014.
The Board has overall responsibility for ensuring
that the Group maintains a system of internal
controls and for reviewing its eectiveness. This
covers nancial, operational and compliance
controls including those in relation to nancial
reporting processes (including the preparation of
consolidated accounts). In addition to monitoring
reports received via the Executive Directors, the
Board considers whether the control systems are
appropriate and consults with those responsible
for environmental, insurance, legal and health and
safety compliance as appropriate. There were no
signicant internal control issues identied during
the year.
DIRECTORS’ REPORT CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 101
TREATT PLC Annual Report & Accounts 2022
Such a system can only provide reasonable, but not
absolute, assurance against material misstatement
or loss. The key procedures that the Directors have
established to provide eective internal controls
are asfollows:
Financial reporting
A detailed formal budgeting process for all Group
businesses culminates in an annual Group budget
and a three-year forecast which is approved by
the Board. Results for the Group and its main
constituent businesses are reported monthly
against the budget to the Board and revised
forecasts for the year are prepared quarterly.
The Group uses a standardised consolidation
system for the preparation of its monthly
management accounts, half year and annual
consolidated nancial statements, which is subject
to review by senior management throughout the
consolidation process.
The Board monitors the integrity of all nancial
announcements released by the Group, ensuring
that, among other things, appropriate accounting
standards and policies are applied consistently,
that all material information is presented and that
appropriate disclosures are made.
Financial and accounting principles
Financial controls and accounting policies are
set by the Board so as to meet appropriate levels
of eective nancial control. Compliance with
accounting policies is reviewed where necessary
as part of the externalaudit.
Information technology
The Group operates on a common centrally-
managed computer platform. This provides
common reporting and control systems and the
ability to manage and interrogate businesses
remotely. However, there are associated risks with
having the entire Group IT systems on a common
platform, such as IT security, access rights and
business continuity. These risks are mitigated by
an ongoing focus on IT security through a process
of continuous investment in IT facilities.
Capital investment
The Group has clearly dened guidelines for
capital expenditure. These include annual budgets,
appraisal and review procedures, and levels
of authority. Post-investment appraisals are
performed for major investments.
Further information in respect of the new UK
Headquarters is set out in the Financial Review
on page 58.
Risk management
Details of the risk management system and
the principal risks associated with the Group’s
activities are given in the Strategic Report on pages
62 to 67.
ADDITIONAL DISCLOSURES
Future business developments
Further details on these are set out in the Strategic
Report on pages 10 to 69.
Financial instruments
Information on the Group’s nancial risk
management objectives and policies and on the
exposure of the Group to relevant risks in respect
of nancial instruments is set out in note 29 of the
nancial statements.
Health and safety
The Group’s disclosures on health and safety have
been included within the Sustainability section on
pages 24 to 49.
Employees
The Group’s disclosures on employees have been
included within the Sustainability section on pages
24 to 49. Group’s policies on equal opportunities
recruitment can be found on page 27.
Employee engagement
The Group’s disclosures on how the Board has
engaged with employees and how it has had regard
to employee interests have been included within
the Section 172 statement on pages 50 to 53.
Business relationships
The Group’s disclosures on how the Board has
had regard to the need to foster the Company’s
business relationships with suppliers, customers
and others have been included within the Section
172 statement on pages 50 to 53.
Streamlined energy and carbon reporting
In compliance with the SECR requirements, our
greenhouse gas emissions, energy consumption
and energy reduction initiatives are reported within
the sustainability section on pages 35 to 49.
Directors’ interests in shares
The interests of Directors in shares of
the Company are shown in the Directors’
Remuneration Report on page 97.
DIRECTORS’ REPORT CONTINUED
102
TREATT PLC Annual Report & Accounts 2022
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing
the Directors’ Report, the Strategic Report, the
Directors’ Remuneration Report, the Corporate
Governance Statement and the nancial
statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare
Group nancial statements and they have
elected to prepare the Parent Company nancial
statements for each nancial year. The Directors
are required under company law and the listing
rules of the Financial Conduct Authority to prepare
Group nancial statements and have elected to
prepare the Parent Company nancial statements
in accordance with UK-adopted international
accounting standards.
The Group nancial statements are required by
law, and UK-adopted international accounting
standards, to present fairly the nancial position
of the Group and the Parent Company and
the nancial performance of the Group. The
Companies Act 2006 provides, in relation to such
nancial statements, that references in the relevant
part of that Act to nancial statements giving a true
and fair view are references to their achieving a
fair presentation.
Under company law the Directors must not approve
the nancial statements unless they are satised
that they give a true and fair view of the state of
aairs of the Group and the Parent Company and
of the prot of the Group for that period.
In preparing each of the Group and Parent
Company nancial statements, the Directors are
required to:
a. select suitable accounting policies and apply
them consistently;
b. make judgements and estimates that are
reasonable and prudent;
c. state whether they have been prepared in
accordance with UK-adopted international
accounting standards, subject to material
departures disclosed and explained in the
nancial statements;
d. prepare the nancial statements on the
going concern basis unless it is inappropriate
to presume that the Group and the Parent
Company will continue in business; and
e. prepare a Directors’ Report, a Strategic
Report and Directors’ Remuneration Report
which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sucient to show and
explain the Group’s and the Parent Company’s
transactions and disclose with reasonable accuracy
at any time the nancial position of the Group and
the Parent Company and enable them to ensure
that the nancial statements and the Directors’
Remuneration Report comply with the Companies
Act 2006 and, as regards the Group nancial
statements, Article 4 of the IAS Regulation.
They are also responsible for safeguarding the
assets of the Group and the Parent Company
and hence for taking reasonable steps for
the prevention and detection of fraud and
otherirregularities.
The Directors are responsible for ensuring the
Annual Report and the nancial statements are
made available on a website. Financial statements
are published on the Company’s website in
accordance with legislation in the United Kingdom
governing the preparation and dissemination
of nancial statements, which may vary from
legislation in other jurisdictions. The Directors are
responsible for the maintenance and integrity of the
corporate and nancial information included on the
Treatt plc website.
DIRECTORS’ STATEMENT PURSUANT TO THE
DISCLOSURE AND TRANSPARENCY RULES
Each of the Directors, whose names and functions
are listed in the Directors’ Report, conrms that, to
the best of their knowledge:
a. the nancial statements, prepared in
accordance with UK-adopted international
accounting standards in conformity with the
requirements of the Companies Act 2006 and
Article 4 of the IAS Regulation, give a true
and fair view of the assets, liabilities, nancial
position and prot of the Group and Parent
Company and the undertakings included in the
consolidation taken as a whole;
b. the Strategic Report contained in the Annual
Report includes a fair review of the development
and performance of the business and the
position of the Group and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks
and uncertainties that they face; and
c. consider the Annual Report, taken as a
whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Group’s position
and performance, business model and strategy.
STATEMENT AS TO DISCLOSURE OF
INFORMATION TO AUDITORS
The Directors who were in oce on the date
of approval of these nancial statements have
conrmed, as far as they are aware, that there is
no relevant audit information of which the auditors
are unaware. Each of the Directors has conrmed
that they have taken all the steps that they ought
to have taken as Directors in order to make
themselves aware of any relevant audit information
and to establish that it has been communicated to
the auditors.
This report was approved by the Board on
29 November 2022.
Ryan Govender
Chief Financial Ocer and Company
Secretary
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 103
TREATT PLC Annual Report & Accounts 2022
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the nancial statements, we have concluded that the Directors’ use of the going concern basis
of accounting in the preparation of the nancial statements is appropriate. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
We obtained the Directors’ cash ow forecasts and evaluated the key assumptions in respect of revenue
growth, gross prot margins, cash generation and the potential impact of key provisions with reference to
our knowledge of the business, its historical performance and results;
• We checked the mathematical accuracy of forecasts and critically assessed the integrity of the
forecast model and its consistency with approved forecasts as well as assessing management’s ability
to forecast through comparison of actuals to prior year forecasts;
• Evaluated sensitivity analysis and reverse stress tests prepared by the Directors in relation to the
Group’s cash ow forecasts with reference to the nancial covenants in place over the existing
nancing facilities and the expiration of the certain facilities in April 2023. The analysis considered
reasonably possible adverse eects that could arise, as well as a stress test to consider the level of
future revenue reduction the Group could support without the facilities being renewed;
• We assessed covenants during the year, at the year end and through the going concern period,
checking that the Group remains compliant under the terms of its lender agreements; and
• We considered the adequacy of disclosures in the nancial statements in respect of going concern
against the applicable nancial reporting framework.
Based on the work we have performed, we have not identied any material uncertainties relating to
events or conditions that, individually or collectively, may cast signicant doubt on the Group and the
Parent Company’s ability to continue as a going concern for a period of at least twelve months from when
the nancial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the Directors’ statement in the nancial
statements about whether the Directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in
the relevant sections of this report.
INDEPENDENT AUDITOR’S REPORT
to the members of Treatt Plc
OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
• the nancial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s aairs as at 30 September 2022 and of the Group’s prot for the year then ended;
• the Group nancial statements have been properly prepared in accordance with UK adopted
international accounting standards;
• the Parent Company nancial statements have been properly prepared in accordance with UK adopted
international accounting standards and as applied in accordance with the provisions of the Companies
Act 2006; and
• the nancial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
We have audited the nancial statements of Treatt Plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 30 September 2022 which comprise the Group Income Statement, the Group
Statement of Comprehensive Income, the Group Statement of Changes in Equity, the Parent Company
Statement of Changes in Equity, the Group and Parent Company Balance Sheets, the Group and Parent
Company Statements of Cash Flows and notes to the nancial statements, including a summary of
signicant accounting policies. The nancial reporting framework that has been applied in their preparation
is applicable law and UK adopted international accounting standards and as regards the Parent Company
nancial statements, as applied in accordance with the provisions of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the nancial statements section of our report. We believe that the audit
evidence we have obtained is sucient and appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we were appointed by the Board of Directors on
29 June 2020 to audit the nancial statements for the year ended 30 September 2020 and subsequent
nancial periods. The period of total uninterrupted engagement including retenders and reappointments
is 3 years, covering the years ended 30 September 2020 to 30 September 2022. We remain independent
of the Group and the Parent Company in accordance with the ethical requirements that are relevant to
our audit of the nancial statements in the UK, including the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fullled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard were not provided to the Group or the
Parent Company.
104
TREATT PLC Annual Report & Accounts 2022
OVERVIEW
Coverage1 98.5% (2021: 99.9%) of Group prot before tax
99.5% (2021: 99.9%) of Group revenue
99.8% (2021: 99.7%) of Group total assets
Key audit matters Valuation of inventory which is consistent with prior years
Materiality Group nancial statements as a whole
£808,000 (2021:£980,000) based on 5% of prot before tax.
1 These are areas which have been subject to a full scope audit by the group engagement team
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including
the Group’s system of internal control, and assessing the risks of material misstatement in the nancial
statements. We also addressed the risk of management override of internal controls, including assessing
whether there was evidence of bias by the Directors that may have represented a risk of material
misstatement.
The Group operates through a number of legal entities, which form reporting components, consistent
with those included in Note 15. Treatt PLC, R C Treatt & Co. Limited and Treatt USA Inc are signicant
components and are subject to full scope audits. Treatt Trading (Shanghai) Company Limited was
considered to be a non-signicant component, where we performed desktop review procedures. All audits
and desktop review procedures were completed by BDO LLP.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most signicance in our
audit of the nancial statements of the current period and include the most signicant assessed risks of
material misstatement (whether or not due to fraud) that we identied, including those which had the
greatest eect on: the overall audit strategy, the allocation of resources in the audit, and directing the
eorts of the engagement team. This matter was addressed in the context of our audit of the nancial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
this matter.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation of
inventory
The accounting
policy, key
judgements and
estimates applied
are disclosed in
note 3 and the
Group inventory
note can be found
in note 17.
The Group
has signicant
inventory
balances, which
due to the nature
of the products,
include a degree
of estimation
and judgement
in respect of the
allocation of costs
in the valuation
process, as well
as provisions
against inventory
for slow moving,
obsolete items
or in respect of
commodity price
uctuations.
Accordingly, this
was determined
to be a key audit
matter.
Our audit work included but was not limited to;
• Verication a sample of raw materials purchased during the year, to
conrm the accuracy of the value recognised in inventory;
• Critically reviewed direct costs and overheads to check that those
relevant to the manufacturing process were included in management’s
overhead absorption calculations;
• Critically assessed management’s judgement applied when setting
overhead recovery rates, including the appropriateness of the nature
of categories of overheads absorbed and reviewing the underlying
assumptions applied in the calculations;
• Considered variances between expected overhead and actual overhead
recovery to conrm that the proportion of overheads absorbed was
accurate;
• In order to conrm the allocation of costs through the production process,
we selected a sample of overheads absorbed and veried these back to
works orders and budgeted utilisation;
• Veried a sample of completed works orders checking that the
corresponding overhead recovery charge was recorded as appropriate;
• Checked the mathematical accuracy of management’s overhead
absorption and inventory provision calculations;
• We critically assessed management’s policy in respect of the recognition
of inventory provisions to determine its appropriateness in relation to the
age, nature and condition of the Group’s inventory and the requirements
of the applicable accounting standards;
• Critically assessed management’s weighted average inventory valuation
policy including allocation of overheads for compliance with IAS 2;
• Challenged management’s judgements in relation to inventory provisions
by reviewing the utilisation of prior year provisions to assess the accuracy
of management’s estimation process; and
• Tested a sample of year end inventory items via examination of
supporting evidence and held discussions with management to determine
that where a provision was required it had been appropriately recognised
in accordance with the specic criteria outlined in management’s policy.
Key observations:
We found management’s judgements and estimates used in the valuation of
inventory to be appropriate and in line with the requirements of applicable
accounting standards.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 105
TREATT PLC Annual Report & Accounts 2022
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the
eect of misstatements. We consider materiality to be the magnitude by which misstatements, including
omissions, could inuence the economic decisions of reasonable users that are taken on the basis of the
nancial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we
also take account of the nature of identied misstatements, and the particular circumstances of their
occurrence, when evaluating their eect on the nancial statements as a whole.
Based on our professional judgement, we determined materiality for the nancial statements as a whole
and performance materiality as follows:
Group nancial statements Parent company nancial statements
2022
£
2021
£
2022
£
2021
£
Materiality 808,000 980,000 436,000 600,000
Basis for
determining
materiality
5% of prots before tax 5% of prots before tax 1% of total assets 1.4% of total assets
Rationale for
the benchmark
applied
We consider the use of
prot before tax to be
the most appropriate
benchmark as this is a
key statutory performance
measure for stakeholders
based on market practice
and investor expectations
and is reective of
the changing market
sentiment in respect of
alternate performance
measures.
We consider the use of
prot before tax to be
the most appropriate
benchmark as this is a
key statutory performance
measure for stakeholders
based on market practice
and investor expectations
and is reective of
the changing market
sentiment in respect of
alternate performance
measures.
The parent company is
a non-trading holding
company and the most
signicant balance in
its nancial statements
is total assets.
The parent company is
a non-trading holding
company and the most
signicant balance in
its nancial statements
is total assets.
Performance
materiality
£566,000 £686,000 £305,000 £424,600
Basis for
determining
performance
materiality
70% of nancial statement materiality. The level of performance materiality was set after considering
a number of factors including signicant transactions in the year, the expected value of known and
likely misstatements, and management’s attitude towards proposed misstatements.
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Treatt Plc
Component materiality
We set materiality for each component of the Group based on a percentage of between 54% and 66%
(2021: 61% to 71%) of Group materiality dependent on the size and our assessment of the risk of material
misstatement of that component. Component materiality ranged from £436,000 to £536,000 (2021:
£600,000 to £700,000). In the audit of each component, we further applied performance materiality
levels of 70% of the component materiality to our testing to ensure that the risk of errors exceeding
component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit dierences in
excess of £28,000 (2021:£34,300). We also agreed to report dierences below this threshold that, in our
view, warranted reporting on qualitative grounds.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information
included in the annual report and accounts other than the nancial statements and our auditor’s report
thereon. Our opinion on the nancial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the nancial statements or our knowledge obtained in
the course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the nancial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
106
TREATT PLC Annual Report & Accounts 2022
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term
viability and that part of the Corporate Governance Statement relating to the parent company’s compliance
with the provisions of the UK Corporate Governance Code specied for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with the nancial statements or our
knowledge obtained during the audit.
Going concern and longer-term
viability
• The Directors’ statement with regards to the appropriateness of adopting the
going concern basis of accounting and any material uncertainties identied set
out on page 69; and
• The Directors’ explanation as to their assessment of the Group’s prospects,
the period this assessment covers and why the period is appropriate set out
on page 68.
Other Code provisions • Directors’ statement on fair, balanced and understandable set out on
page 103;
• Board’s conrmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 64.
• The section of the annual report that describes the review of eectiveness
of risk management and internal control systems set out on page 83; and
• The section describing the work of the audit committee set out on
pages 81 to 83.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit,
we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as
described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the nancial
year for which the nancial statements are prepared is consistent with the nancial
statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company
and its environment obtained in the course of the audit, we have not identied material
misstatements in the strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Matters on which we
are required to report by
exception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the Parent Company nancial statements and the part of the Directors’ remuneration
report to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specied by law are not made; or
• we have not received all the information and explanations we require for our audit.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 107
TREATT PLC Annual Report & Accounts 2022
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the statement of Director’s responsibilities, the Directors are responsible for
the preparation of the nancial statements and for being satised that they give a true and fair view, and
for such internal control as the Directors determine is necessary to enable the preparation of nancial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the nancial statements, the Directors are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the nancial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the
basis of these nancial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
• We gained an understanding of the legal and regulatory framework applicable to the Group and the
industry in which it operates, through discussion with management and the Audit Committee and our
knowledge of the industry. We focussed on signicant laws and regulations that could give rise to
a material misstatement in the nancial statements, including, but not limited to, the Companies Act
2006, the UK Listing Rules, UK adopted International Accounting Standards,, Health and Safety, the
Bribery Act 2010 and tax legislations;
• We considered compliance with these laws and regulations through discussions with management, in-
house legal counsel and the Audit Committee. Our procedures also included reviewing minutes from
board meetings of those charged with governance to identify any instances of non-compliance with
laws and regulations;
• We assessed the susceptibility of the Group’s nancial statements to material misstatement as an
engagement team, including how fraud might occur, by meeting with management to understand
where it is considered there would be a susceptibility of fraud;
• Our audit planning identied fraud risks in relation to management override and inappropriate or
incorrect revenue recognition. We obtained an understanding of the processes and controls that the
group has established to address risks identied by the entity or that otherwise seek to prevent, deter
or detect fraud;
• With regard to the fraud risk in management override, our procedures included targeted journal
transactions testing, with a focus on large or unusual transactions based on our knowledge of the
business and we tested the application of revenue recognition policies;
• We identied areas at risk of management bias, particularly in respect of the inventory valuation and
reviewed key estimates and judgements applied by management in the nancial statements to assess
their appropriateness (refer to valuation of inventory KAM); and
• We communicated relevant identied laws and regulations and potential fraud risks to all engagement
team members, and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the nancial
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reected in the nancial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Treatt Plc
108
TREATT PLC Annual Report & Accounts 2022
USE OF OUR REPORT
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Parent Company’s members those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Tracey Keeble (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Ipswich, UK
29 November 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 109
TREATT PLC Annual Report & Accounts 2022
GROUP INCOME STATEMENT
for the year ended 30 September 2022
Notes
2022 2021
Before exceptional
items
£’000
Exceptional items
£’000
Total
£’000
Before exceptional
items
£’000
Exceptional items
£’000
Total
£’000
Revenue 4140,185 – 140,185 124,326 – 124,326
Cost of sales (101,101) – (101,101 ) (82,103) – (82,103 )
Gross prot 39,084 – 39,084 42,223 – 42,223
Administrative expenses 8(23,311) (601) (23,912 ) (20,877) – (20,877 )
Gain on disposal of land and buildings 8 –3,3243,324 –––
Relocation expenses 8–(1,800)(1,800 ) – (1,302) (1,302 )
Operating prot1515,773 923 16,696 21,346 (1,302) 20,044
Finance income 78–8 12 – 12
Finance costs 7(525) – (525 ) (439) – (439 )
Prot before taxation 15,256 923 16,179 20,919 (1,302) 19,617
Taxation 9(3,295) 431 (2,864 ) (4,655) 186 (4,469 )
Prot for the year attributable to owners of the Parent Company 11,961 1,354 13,315 16,264 (1,116) 15,148
Earnings per share Adjusted2Statutory Adjusted2Statutory
Basic 11 19.80p 22.04 p27.05p 25.19 p
Diluted 11 19.60p 21.82 p 26.74p 24.91 p
1 Operating prot is calculated as prot before net nance costs and taxation.
2 All adjusted earnings per share measures exclude exceptional items and the related tax eect, details of which are given in note 8.
All nancial information presented relates to continuing operations.
Notes 1 to 31 form part of these nancial statements.
110
TREATT PLC Annual Report & Accounts 2022
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2022
Notes
2022
£’000
2021
£’000
Prot for the year attributable to owners of the Parent Company 13,315 15,148
Items that will or may be reclassied subsequently to prot or loss:
Currency translation dierences on foreign currency net investments 11,461 (1,752 )
Current tax on foreign currency translation dierences 9102 18
Fair value movement on cash ow hedges 23 (23 ) (508 )
Deferred tax on fair value movement 94 93
Items that will not be reclassied subsequently to prot orloss:
Actuarial gain on dened benet pension scheme 27 8,273 2,952
Deferred tax on actuarial gain 9(2,068 ) (135 )
Other comprehensive income for the year 17,749 668
Total comprehensive income for the year attributable to owners of the Parent Company 31,064 15,816
All nancial information presented relates to continuing operations.
Notes 1 to 31 form part of these nancial statements.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 111
TREATT PLC Annual Report & Accounts 2022
Group Notes
Share
capital
£’000
Share
premium
account
£’000
Own
shares
in share
trusts
£’000
Hedging
reserve
£’000
Foreign
exchange
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
1 October 2020
Prot for the year
Other comprehensive
income:
Exchange dierences
Fair value movement
on cash ow hedges
23, 29 – – – (508 ) – – (508 )
Actuarial gain on dened
benet pensionscheme
27– – – – – 2,952 2,592
Taxation relating to
items above
9– – – 93 18 (135 )(24 )
Total comprehensive income
Transactions with owners:
Dividends
10– – – – – (3,704 )(3,704 )
Share-based payments
26– – – – – 1,732 1,732
Movement in own shares in
share trusts
Gain on release of shares in
share trusts
Issue of share capital
24 3 – (3 ) – – – –
Taxation relating to items
recognised directly in equity
9– – – – – 702 702
Total transactions with owners
30 September 2021
Group Notes
Share
capital
£’000
Share
premium
account
£’000
Own
shares
in share
trusts
£’000
Hedging
reserve
£’000
Foreign
exchange
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
1 October 2021 1,208 23,484 (4 ) (292 ) 1,820 80,083 106,299
Prot for the year – – – – – 13,315 13,315
Other comprehensive
income:
Exchange dierences – – – – 11,461 – 11,461
Fair value movement
on cash ow hedges 23, 29 - - - (23 ) - - (23 )
Actuarial gain on dened
benet pension scheme 27 - - - - - 8,273 8,273
Taxation relating to
items above 9 - - - 4 102 (2,068 ) (1,962 )
Total comprehensive income - - - (19 )11,563 19,520 31,064
Transactions with owners:
Dividends 10 - - - - - (4,834 ) (4,834 )
Share-based payments 26 - - - - - 1,115 1,115
Movement in own shares in
share trusts – – 8 – – – 8
Gain on release of shares in
share trusts – – – – – 622 622
Issue of share capital 24 9 – (9 ) - – - –
Taxation relating to items
recognised directly in equity 9 – – – – – (424 ) (424 )
Total transactions with owners 9 – (1 ) – – (3,521 ) (3,513 )
30 September 2022 1,217 23,484 (5 ) (311 ) 13,383 96,082 133,850
Notes 1 to 31 form part of these nancial statements.
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2022
112
TREATT PLC Annual Report & Accounts 2022
Parent Company Notes
Share capital
£’000
Share premium
account
£’000
Own shares in
share trusts
£’000
Retained
earnings
£’000
Total equity
£’000
1 October 2020
1,205 23,484 (5) 15,644 40,328
Prot for the year
–––3,1553,155
Total comprehensive income
–––3,155 3,155
Transactions with owners:
Dividends
10 – – – (3,704) (3,704)
Movement in own shares in share trusts
––4–4
Share-based payments
15 – – – 1,732 1,732
Gain on release of shares in share trusts
–––629629
Issue of share capital
24 3 – (3) – –
Total transactions with owners
3– 1(1,343)(1,339)
30 September 2021 1,208 23,484 (4) 17,456 42,144
Prot for the year –––4,1014,101
Total comprehensive income –––4,1014,101
Transactions with owners:
Dividends 10 – – – (4,834) (4,834)
Movement in own shares in share trusts – – 8 – 8
Share-based payments 15 – – – 1,115 1,115
Gain on release of shares in share trusts – – – 622 622
Issue of share capital 24 9 – (9) – –
Total transactions with owners 9 – (1) (3,097) (3,089)
30 September 2022 1,217 23,484 (5) 18,460 43,156
Notes 1 to 31 form part of these nancial statements.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 113
TREATT PLC Annual Report & Accounts 2022
GROUP AND PARENT COMPANY BALANCE SHEETS
as at 30 September 2022
Notes
Group Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
ASSETS
Non-current assets
Intangible assets 12 3,206 2,424 ––
Property, plant and equipment 13 74,281 61,039 ––
Right-of-use assets 14 375 1,556 ––
Investment in subsidiaries 15 – – 37,385 36,189
Post-employment benets 27 1,782 – ––
Deferred tax assets 16 – 792 ––
Current assets
Inventories 17 68,351 47,263 ––
Trade and other receivables 18 37,113 26,371 4,141 1,252
Current tax assets 719 2,701 ––
Derivative nancial instruments 23 – 11 ––
Cash and bank balances 19 2,354 7,260 2,085 5,206
Total assets 188,181 149,417 43,611 42,647
LIABILITIES
Current liabilities
Bank overdrafts 20 (6,174 ) (7,013 ) ––
Borrowings 20 (15,861 ) (5,684 ) ––
Provisions 21 (397 ) (143 ) ––
Trade and other payables 22 (22,903 ) (17,027 ) (455) (503)
Lease liabilities 14 (105 ) (96 ) ––
Derivative nancial instruments 23 (666 ) (593 ) ––
Current tax liabilities (223 ) – ––
(46,329 ) (30,556 ) (455) (503)
Net current assets 62,208 53,050 5,771 5,955
Registered number: 01568937
114
TREATT PLC Annual Report & Accounts 2022
Notes
Group Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Non-current liabilities
Borrowings 20 (2,342 ) (2,624 ) ––
Lease liabilities 14 (291 ) (957 ) ––
Post-employment benets 27 – (6,806 ) ––
Deferred tax liabilities 16 (5,369 ) (2,175 ) ––
(8,002 ) (12,562 ) ––
Total liabilities (54,331 ) (43,118 ) (455) (503)
Net assets 133,850 106,299 43,156 42,144
EQUITY
Share capital 24 1,217 1,208 1,217 1,208
Share premium account 25 23,484 23,484 23,484 23,484
Own shares in share trusts (5 ) (4 ) (5) (4)
Hedging reserve (311 ) (292 ) ––
Foreign exchange reserve 13,383 1,820 ––
Retained earnings 96,082 80,083 18,460 17,456
Total equity attributable to owners of the Parent Company 133,850 106,299 43,156 42,144
Notes 1 – 31 form part of these nancial statements.
The Parent Company reported a prot for the year of £4,101,000 (2021: £3,155,000).
The nancial statements were approved by the Board of Directors and authorised for issue on 29 November 2022 and were signed on its behalf by:
Tim Jones Ryan Govender
Chairman Chief Financial Ocer
Financial Statements
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Overview Other Information 115
TREATT PLC Annual Report & Accounts 2022
GROUP AND PARENT COMPANY STATEMENTS OF CASH FLOWS
for the year ended 30 September 2022
Notes
Group Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Cash ow from operating activities
Prot before taxation 16,179 19,617 4,102 3,155
Adjusted for:
Depreciation of property, plant and equipment and right-of-use assets 2,476 1,705 ––
Amortisation of intangible assets 12 215 93 ––
Gain on disposal of land and buildings 8 (3,324 ) – – –
Net nance costs excluding post-employment benet expense 7 382 270 (16) (65)
Share-based payments 26 1,039 1,733 ––
Increase in fair value of derivatives 61 365 ––
Employer contributions to dened benet pension scheme 27 (450 ) (450 ) ––
Post-employment benet expense 27 135 157 ––
Operating cash ow before movements in working capital 16,713 23,490 4,086 3,090
Movements in working capital:
Increase in inventories (14,396 ) (11,851 ) ––
(Increase)/decrease in receivables (8,502 ) (2,680 ) –(453)
Increase/(decrease) in payables 4,355 4,483 3243
Cash (used in)/generated from operations (1,830 ) 13,442 4,089 2,880
Taxation received/(paid) 443 (4,874 ) ––
Net cash (used in)/generated from operating activities (1,387 ) 8,568 4,089 2,880
116
TREATT PLC Annual Report & Accounts 2022
Notes
Group Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Cash ow from investing activities
Proceeds on disposal of property, plant and equipment 5,597 – ––
Increase in intercompany loan balance – – (2,925) –
Acquisition of shares in subsidiaries 15 – – (81) (360)
Purchase of property, plant and equipment (11,849 ) (13,195 ) ––
Purchase of intangible assets 12 (925 ) (1,178 ) ––
Interest received/(paid) 7 8 12 –(1)
Net cash used in investing activities (7,169 ) (14,361 ) (3,006) (361)
Cash ow from nancing activities
Repayment of bank loans (360 ) (674 ) ––
Increase of bank loans 9,412 5,000 ––
Repayment of lease liabilities (80 ) (10 ) ––
Interest paid 7 (390 ) (282 ) ––
Dividends paid 10 (4,834 ) (3,704 ) (4,834) (3,704)
Proceeds on issue of shares 24 9 3 93
Net sale of own shares by share trusts 621 630 621 630
Net cash generated from/(used in) nancing activities 4,378 963 (4,204) (3,071)
Net decrease in cash and cash equivalents (4,178 ) (4,830 ) (3,121) (552)
Eect of foreign exchange rates 111 (173 ) ––
Movement in cash and cash equivalents in the year (4,067 ) (5,003 ) (3,121) (552)
Cash and cash equivalents at beginning of year 247 5,250 5,206 5,758
Cash and cash equivalents at end of year (3,820 ) 247 2,085 5,206
Cash and cash equivalents comprise:
Cash and bank balances 19 2,354 7,260 2,085 5,206
Bank overdrafts 20 (6,174 ) (7,013 ) ––
(3,820 ) 247 2,085 5,206
Notes 1 – 31 form part of these nancial statements.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 117
TREATT PLC Annual Report & Accounts 2022
GROUP RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 30 September 2022
The statement of reconciliation of net cash ow to movement in net debt does not form part of the primary statements.
2022
£’000
2021
£’000
Movement in cash and cash equivalents in the year (4,067) (5,003)
Repayment of bank loans 360 674
Increase of bank loans (9,412) (5,000)
Reduction in/(increase of) lease liabilities 657 (394)
Cash outow from changes in net debt in the year (12,462) (9,723)
Eect of foreign exchange rates (843) 182
Movement in net debt in the year (13,305) (9,541)
Net (debt)/cash at beginning of year (9,114) 427
Net debt at end of year (22,419) (9,114)
118
TREATT PLC Annual Report & Accounts 2022
Analysis of movement in net debt during the year:
At 1 October
2021
£’000
Cash ow
£’000
Foreign exchange
movements
£’000
At 30 September
2022
£’000
Cash and bank balances 7,260 (5,017) 111 2,354
Bank overdrafts (7,013) 839 – (6,174)
Cash and cash equivalents 247 (4,178) 111 (3,820)
Bank loans (8,308) (9,052) (843) (18,203)
Lease liabilities (1,053) 666 (9) (396)
Net debt (9,114) (12,564) (741) (22,419)
At 1 October
2020
£’000
Cash ow
£’000
Foreign exchange
movements
£’000
At 30 September
2021
£’000
Cash and bank balances 7,739 (306) (173) 7,260
Bank overdrafts (2,489) (4,524) – (7,013)
Cash and cash equivalents 5,250 (4,830) (173) 247
Bank loans (4,164) (4,326) 182 (8,308)
Lease liabilities (659) (396) 2 (1,053)
Net cash/(debt) 427 (9,552) 11 (9,114)
Notes 1 – 31 form part of these nancial statements.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 119
TREATT PLC Annual Report & Accounts 2022
Basis of consolidation
The Group accounts consolidate the accounts of Treatt plc and all of its subsidiaries (entities controlled
by the Parent Company) made up to 30 September each year. Control is achieved where the Parent
Company has the power to govern the nancial and operating policies of an investee entity so as to obtain
benets from its activities. All intra-group transactions, balances and unrealised gains on transactions
between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred.
Going concern
The Directors have concluded that it is reasonable to adopt the going concern basis in preparing these
nancial statements based on the expectation that the Group has adequate resources to continue as a
going concern for a period of 12 months from the date of these nancial statements.
The process adopted to assess the viability of the Group involved the modelling of a series of theoretical
‘stress test’ scenarios linked to the Group’s principal risks as set out on pages 65 to 67, most signicantly
severe business interruption like that which was experienced during the pandemic, or that could arise
through the impact of climate change.
The current Global economic environment post-pandemic is still uncertain in both domestic and
international markets. We have seen supply-side challenges and economic slowdown due to China’s
lockdowns, together with higher-than-expected inationary pressures, especially on raw material prices
and energy from Russia’s invasion of Ukraine, all alongside a challenging labour market.
Considering this, the Directors have modelled scenarios representing varying degrees of severity and have
considered the impact of changes in working capital, foreign exchange rates, revenues and margins. These
assumptions are those that would arise from the aforementioned uncertainties and that would adversely
impact cash generation and protability. Using these assumptions, headroom and covenant compliance
have been assessed throughout the going concern (12-month) and viability (three-year) periods. The
modelling indicated that the Group would comply with its covenants throughout the tested periods.
A further ‘reverse stress test’ scenario was modelled to nd a sustained reduction in revenue that would
give rise to a breach of the Group’s covenant conditions within the next 24 months. This scenario was
then stress-tested further by overlaying the adverse impact of a decline in prot margins.
At the year-end date, the Group had net debt of £22.4m, headroom on facilities of £8.8m and was
comfortably within its net debt to EBITDA ratio covenant limit of 2.5x and interest cover limit of 4.0x. The
Group has an accordion facility of £6.5m and access to an uncommitted asset-backed nancing line should
further funding be required. Facilities of £13.4m come for renewal in April 2023, and for the purpose of
the review these were assumed not to be renewed.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2022
1. GENERAL INFORMATION
domiciled in England and Wales. The Parent Company’s shares are traded on the London Stock Exchange.
The address of the registered oce is included within the Parent Company Information section on
page 157.
2.ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
New and amended accounting standards
The consolidated entity has adopted all of the new or amended accounting standards and interpretations
issued by the International Accounting Standards Board (IASB) that are mandatory for the current
reporting period. No accounting standards which became mandatorily eective for the current reporting
period have had any material eect on the nancial statements of the Group.
Any new or amended accounting standards or interpretations that are not yet mandatory have not been
early adopted.
Accounting standards in issue but not yet eective
There are no IFRSs or IFRIC interpretations that are not yet eective that would be expected to have a
material impact on the Group or Parent Company.
3. SIGNIFICANT ACCOUNTING POLICIES
The signicant accounting policies which have been used in the preparation of these nancial statements
are set out below.
Accounting convention
The Group is required to prepare its annual consolidated nancial statements in accordance with
international accounting standards in conformity with UK-adopted international nancial reporting
standards. The Parent Company has also prepared its own nancial statements in accordance with UK-
adopted international accounting standards in conformity with the requirements of the Companies Act
2006. The nancial statements have also been prepared under the historical cost convention (unless a
fair value basis is required by IFRS) and are in accordance with the Companies Act 2006 applicable for
companies reporting under IFRS.
The Parent Company has taken advantage of the exemption under Section 408 of the Companies Act
2006 and has not presented its own income statement in these nancial statements.
The nancial statements are prepared in Sterling which is the functional currency of the Parent Company
and Group and gures are presented to the nearest thousand, unless stated otherwise.
120
TREATT PLC Annual Report & Accounts 2022
Eect of changes in foreign exchange rates
Transactions in currencies other than Sterling are recorded at the rate of exchange at the date of
transaction. Assets and liabilities in foreign currencies are translated into Sterling in the balance sheet at
the year-end rate.
Income and expense items of the Group’s overseas subsidiaries are translated into Sterling at the average
rate for the year. Their balance sheets are translated at the rate ruling at the balance sheet date.
Exchange dierences which arise from the translation of the opening net assets and results of foreign
subsidiaries and from translating the income statement at an average rate are taken to reserves. Under
IAS 21, ‘The Eects of Changes in Foreign Exchange Rates’, these cumulative translation dierences
which are recognised in the Statement of Comprehensive Income are separately accounted for within
reserves and are transferred from equity to the income statement in the event of the disposal of a foreign
operation. All other exchange dierences are taken to the income statement.
Research and development expenditure
Expenditure on research activities is recognised as an expense and charged to the income statement in
the period in which it is incurred.
Expenditure arising from any specic development is recognised as an asset only if all of the following
conditions are met:
• An asset is created that can be identied;
• It is probable that the asset created will generate future economic benets; and
• The development cost of the asset can be measured reliably.
Development expenditure meeting these conditions is amortised on a straight-line basis over its useful
life. Where these conditions for capitalising development expenditure have not been met, the related
expenditure is recognised as an expense in the period in which it is incurred.
Leases
When the Group becomes party to a lease arrangement it applies IFRS 16, ‘Leases’ and recognises a right-
of-use asset and a lease liability upon commencement, except for leases of low value (less than £3,000)
or for leases with a duration of less than 12 months. The lease liability and right-of-use asset is initially
measured at the present value of the lease payments payable over the lease term, discounted at the
incremental borrowing rate for that lease. Right-of-use assets are depreciated over the expected life of the
lease. The amount charged to the income statement comprises the depreciation of the right-of-use asset
and the interest cost on the lease liability.
Rentals receivable under lease arrangements continue to be recognised in the income statement as and
when they fall due.
Taxation
The tax expense comprises current and deferred tax.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2022
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Going concern continued
Under the reverse-engineered scenario, it was determined that a continuous decline in sales of greater
than 12.5% per annum, or 8.0% per annum alongside a 300bps decline in margin for two consecutive
years, with no change to the forecast operating costs and no mitigating measures put in place, would lead
to a breach in banking covenants around 22 months from the date of this report and a breach in headroom
in May 2023 if the Group fails to renance any of its facilities that fall for renewal, does not draw upon its
uncommitted facilities and does not implement any of the cash-saving measures it has at its disposal. The
Directors believe that the nancial position of the Group is suciently robust that it could renew or extend
its facilities should it wish to and consider it implausible that the Group would not act swiftly and decisively
to activate the cash generative mitigations it has at its disposal should they be required.
Having considered the range of stress-test scenarios and the Group’s proven ability to adapt to and
manage adversity, the Directors have not identied any material uncertainties which would aect the
Group’s ability to continue as a going concern for a period of at least 12 months from the date of this
report. Accordingly, they continue to adopt the going concern basis of accounting in preparing these
nancial statements.
Presentation of nancial statements
The primary statements within the nancial information contained in this document have been presented
in accordance with IAS 1, ‘Presentation of Financial Statements’.
Investments in subsidiaries
Investments in subsidiaries in the Parent Company balance sheet are stated at cost, less any provision
for impairment.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition
is measured at the aggregate fair values, at the date of exchange, of assets given, liabilities incurred
or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The
acquiree’s identiable assets, liabilities and contingent liabilities that meet the conditions for recognition
under IFRS 3, ‘Business Combinations’ are recognised at their fair value at the acquisition date.
Revenue recognition
Revenue represents amounts receivable net of trade discounts, VAT and other sales-related taxes.
Revenue is recognised in these nancial statements when goods are physically dispatched from the
Group and/or Parent Company’s premises or other storage depots, irrespective of the terms of trade.
Where goods are sold to a customer, but retained physically on a bill and hold arrangement, revenue is
recognised at the point that the goods are assigned to the customer. At the point of physical dispatch or
assignment, the goods are derecognised by the Group and are no longer available for sale, therefore the
Directors believe that this is the point at which control transfers to the customer in accordance with IFRS
15, ‘Revenue from Contracts with Customers’.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 121
TREATT PLC Annual Report & Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Current tax
The tax currently payable is based on taxable prot for the year. Taxable prot diers from net prot as
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by
the balance sheet date. Where the Group and/or Parent Company have a net current tax asset in one legal
jurisdiction, a liability in another, and consequently have no legal right of set o, then these assets and
liabilities will be shown separately on the balance sheet as required by IAS 12, ‘Income Taxes’.
Current tax is charged or credited in the income statement, except when it relates to items credited or
charged directly to equity, in which case the current tax is also dealt with in equity.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on dierences between the carrying amount
of assets and liabilities in the nancial statements and the corresponding tax bases used in the computation
of taxable prot, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
recognised for all taxable temporary dierences and deferred tax assets are recognised to the extent that it is
probable that taxable prots will be available against which deductible temporary dierences can be utilised.
Such assets and liabilities are not recognised if the temporary dierence arises from the initial recognition of
goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in
a transaction which aects neither the taxable prot nor the accounting prot.
Deferred tax liabilities are recognised for taxable temporary dierences arising on investments in
subsidiaries, except where the Group is able to control the reversal of the temporary dierence and it is
probable that the temporary dierence will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to apply in the periods in which timing
dierences are expected to reverse, based on tax rates and laws that have been enacted or substantively
enacted by the balance sheet date. Where the Group and/or Parent Company have a net deferred tax asset
in one legal jurisdiction, a liability in another, and consequently have no legal right of set o, then these
assets and liabilities will be shown separately on the balance sheet as required by IAS 12, ‘Income Taxes’.
Deferred tax is charged or credited in the income statement, except when it relates to items credited or
charged directly to equity, in which case deferred tax is also dealt with in equity.
Exceptional items
The Group has elected to classify certain items as exceptional and present them separately on the face of
the income statement. Exceptional items are classied as those which are separately identied by virtue of
their size, nature or expected frequency, to allow a better understanding of the underlying performance in
the year.
Post balance sheet events and dividends
IAS 10, ‘Events after the Balance Sheet Date’ requires that nal dividends proposed after the balance
sheet date should not be recognised as a liability at that balance sheet date, as the liability does not
represent a present obligation as dened by IAS 37, ‘Provisions, Contingent Liabilities and Contingent
Assets’. Consequently, nal dividends are only recognised as a liability once formally approved at the
Annual General Meeting and interim dividends are not recognised until paid.
Cash ow
The Statement of Cash Flows explains the movement in cash and cash equivalents and short-term
borrowings. Short-term borrowings comprise of amounts drawn on overdrafts.
Property, plant and equipment
Property, plant and equipment is stated at cost less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition or construction of the assets. Assets are recognised only when it
is probable that future economic benets associated with the assets will ow to the Group and the cost of
the asset can be measured reliably.
Depreciation is provided on all property, plant and equipment and right-of-use assets, except freehold and long
leasehold land, using the straight-line basis to write o the cost of the asset, less estimated residual value.
Property, plant and equipment residual values and useful lives are reviewed annually, and are as follows:
• Buildings: 50 years
• Plant and machinery: 4 – 15 years
• Fixtures, ttings and equipment: 4 – 10 years
• Laboratory equipment: 5 years
Property, plant and equipment is derecognised on disposal or where no future economic benets are
expected to arise from the continued use of the asset. Gains and losses on disposals are determined by
comparing the net proceeds with the carrying amount and are recognised within administration expenses.
Intangible assets
Intangible assets comprise of licences for software, internally generated software and development costs
that meet the criteria for capitalisation as set out in the research and development expenditure accounting
policy note. Amortisation (which is included within administrative expenses) is provided on all intangible
assets, using the straight-line basis to write o the cost of the asset, less estimated residual value,
as follows:
• Software: 4 – 12 years
• Development costs: 10 years
122
TREATT PLC Annual Report & Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Impairment of property, plant and equipment and intangible assets
Provision will be made should any impairment in the value of properties or other non-current assets,
excluding deferred tax assets, occur.
The carrying amounts of the Group’s non-current assets, excluding deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication
exists, the need for an impairment is assessed by comparison of the carrying value of the asset against
the higher of fair value less costs of disposal and value in use. The value in use is estimated using a
discounted cash ow model.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on raw material costs
plus attributable overheads.
Net realisable value is based on estimated selling price less further costs expected to be incurred through
to disposal. Provision is made for obsolete, slow-moving and defective items.
Onerous contracts
Provisions for onerous contracts are recognised when the expected benets from a contract are lower
than the unavoidable costs of meeting the contract’s obligations. This arises when xed-price contracts
become loss-making as a result of raw material price increases or market pressure on selling prices.
Financial instruments
Financial assets and nancial liabilities are recognised on the Group and/or Parent Company’s balance
sheet when the Group and/or Parent Company have become a party to the contractual provisions of the
instrument.
Financial assets
Financial assets held by the Group are classied in accordance with IFRS 9, ‘Financial Instruments’.
Financial assets at the reporting date comprise trade receivables, loans, other receivables and cash and
cash equivalents. The classication depends on both the nature of contractual cash ows due from the
instrument, and the business model in which it is expected the cash ows will be realised.
Trade receivables
The Group generally holds trade receivables with the objective to collect the contractual cash ows, and
so it measures them initially at fair value then subsequently at amortised cost using the eective interest
method, less an allowance for expected credit losses (ECLs). The Group may sell trade receivables from
some customers before the due date; these sales are true sales of debt that result in derecognition. Any
receivables from such customers not sold at the reporting date are classied as ‘held to collect and sell’
and held at fair value with changes recognised in other comprehensive income. The Group has adopted
the simplied approach to impairment as permitted under IFRS 9 and recognises the lifetime ECLs for
trade receivables at initial recognition. ECLs have been estimated using the Group’s historical credit loss
experience and the current and anticipated future market conditions at the reporting date.
Loans receivable
All loans receivable are intercompany balances held by the Parent Company and are initially recognised
at fair value. After initial recognition, interest-bearing loans are measured at amortised cost using the
eective interest method, less an allowance for ECLs. Impairment provisions for receivables from related
parties and loans to related parties are recognised based on the forward looking ECL model. For those
receivables where the credit risk has not increased signicantly since initial recognition, 12-month ECLs
are recognised. ECLs measured over the lifetime of the nancial asset are only recognised where it is
determined that the credit risk has increased signicantly.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-
term highly liquid investments with original maturities of three months or less. Bank overdrafts that
are repayable on demand and form an integral part of the Group’s cash management are included as a
component of cash and cash equivalents for the purposes of the consolidated cash ow statement.
Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classied according to the substance of the contractual
arrangements entered into, and in accordance with IAS 32, ‘Financial Instruments: Presentation’. An
equity instrument is any contract that evidences a residual interest in the assets of the Group or Parent
Company after deducting all of its liabilities.
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received, net of issue
costs. After initial recognition, interest-bearing loans and borrowings are measured at amortised cost using
the eective interest method. All borrowing costs are recognised in the income statement in the year in
which they are incurred unless they meet the criteria for capitalisation under IAS 23, ‘Borrowing Costs’.
Trade payables
Trade payables are not interest-bearing and are stated at their nominal value.
Equity instruments
Equity instruments issued by the Parent Company are recorded at the proceeds received, net of direct
issue costs.
Derivative nancial instruments
The Group’s activities expose it to both the nancial risks of changes in foreign currency exchange rates
and interest rates. From time to time the Group uses foreign exchange forward and option contracts
and interest rate swap contracts to hedge some of these exposures. The Group does not use derivative
nancial instruments for speculative purposes. The use of nancial derivatives is governed by the Group’s
policies approved by the Board. Further information on currency and interest rate management is provided
in note 29.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 123
TREATT PLC Annual Report & Accounts 2022
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Hedge accounting
At the inception of the hedge relationship, the Group documents the relationship between the hedging
instrument and the hedged item, along with the Group’s risk management objectives and strategy for
undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing
basis, the Group prospectively documents whether the hedging instrument that is used in a hedging
relationship is eective in osetting changes in fair values or cash ows of the hedged item.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised,
or no longer qualies for hedge accounting. If a hedging transaction is no longer expected to occur, the net
cumulative gain or loss that was recognised in equity is reclassied to prot and loss as a reclassication
adjustment through reserves. Changes in the fair value of derivative nancial instruments that do not
qualify for hedge accounting are recognised in the income statement as they arise.
Cash ow hedges
Changes in the fair value of derivative nancial instruments that are designated as eective as cash ow
hedging instruments are initially recognised directly in equity. Where the hedged item is cash ows that
are to be recognised in the income statement, amounts deferred in equity are recognised in the income
statement at the same time in which the hedged items aect net prot or loss. Any ineective portion
is recognised immediately in the income statement as other gains and losses. If the cash ow hedge of
a rm commitment or forecasted transaction results in the recognition of an asset or a liability, then, at
the time the asset or liability is recognised, the associated gains or losses on the derivative that had been
previously recognised in equity are included in the initial measurement of the asset or liability.
Pension costs
One of the Group’s UK subsidiaries, R C Treatt & Co Limited, operates a dened benet scheme through
an independently administered pension scheme.
For dened benet retirement plans, the cost of providing benets is determined using the projected
unit credit method, with full actuarial valuations being carried out every three years and updated at each
balance sheet date. The post-employment benets obligation or surplus recognised in the balance sheet
represents the present value of the dened benet pension obligations as reduced by the fair value of
scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds
and reductions in future contributions to the scheme.
In accordance with IAS 19, ‘Employee Benets’, the asset or liability in the dened benet pension scheme
is recognised as an asset or liability of the Group under non-current assets or liabilities under the heading
‘post-employment benets’. The deferred tax in respect of ‘post-employment benets’ is netted against
other deferred tax assets and liabilities relating to the same jurisdiction (see taxation accounting policy)
and included in the deferred taxation asset or liability shown under non-current assets or liabilities.
The service cost and net interest on assets, net of interest on scheme liabilities, are reected in the
income statement for the period, in place of the actual cash contribution made. All experience gains or
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
losses on the assets and liabilities of the scheme, together with the eect of changes in assumptions are
reected as a gain or loss in the Statement of Comprehensive Income.
The Group also operates a number of dened contribution pension schemes. The contributions for these
schemes are charged to the income statement in the year in which they become payable.
Share options, the employee benet trust and share incentive plan trust
Shares held by the Treatt Employee Benet Trust (EBT) for the purpose of fullling obligations in respect
of various employee share plans are deducted from equity in the Group and Parent Company balance
sheets. The treatment in the Parent Company balance sheet reects the substance of the entity’s control
of the trust.
The Group has an HMRC-approved share incentive plan (SIP) which is administered by Link Asset
Services Trustees, to whom shares are issued at nominal value for the purpose of fullling obligations
under the SIP. The treatment of the SIP in the Group and Parent nancial statements is consistent with
that of the EBT as explained above.
Share-based payments
IFRS 2, ‘Share-based Payments’, requires that an expense for equity instruments granted be recognised
in the nancial statements based on their fair value at the date of grant. The Group has adopted the Black-
Scholes model for the purposes of computing the fair value of options under IFRS. The fair value excludes
the eect of non market-based vesting conditions. This expense, which is in relation to share option
schemes for sta in the UK and US, is recognised on a straight-line basis over the vesting period of the
scheme, based on the Group’s estimate of the number of equity instruments that will eventually vest.
At each balance sheet date, the Group revises its estimate of the number of equity instruments expected
to vest as a result of the eect of non market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in prot or loss such that the cumulative expense reects the
revised estimate, with a corresponding adjustment to the retained earnings reserve.
Savings-related share options granted to employees are treated as cancelled when employees cease
to contribute to the scheme. Cancelled options are accounted for as an acceleration of vesting. The
unrecognised grant date fair value is recognised in prot or loss in the year that the options are cancelled.
The Group has an HMRC-approved SIP for its UK-based employees under which employees can be
awarded ‘Free’ and ‘Matching’ shares. The fair value of shares awarded under the SIP is the market value
of those shares at the date of grant, which is then adjusted for leavers and recognised on a straight-line
basis over the vesting period.
Where the Parent Company grants options over its shares to employees in subsidiaries, it recognises this
as a capital contribution equivalent to the share-based payment charge recognised in the Group income
statement. In the nancial statements of the Parent Company, this capital contribution is recognised as an
increase in the cost of investment in subsidiaries, with the corresponding credit being recognised directly
in equity.
124
TREATT PLC Annual Report & Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Critical accounting estimates, assumptions and judgements
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates and assumptions will, by denition, seldom equal the related actual results. The
Group has evaluated the estimates and assumptions that have been made in relation to the carrying
amounts of assets and liabilities in these nancial statements.
Key sources of estimation uncertainty
The key sources of estimation uncertainty with a signicant risk of causing a material adjustment to
assets and liabilities in the next nancial year include the following:
Pensions
The choice of discount rate, ination rate and life expectancy basis could materially aect the level of
surpluses and decits in the dened benet pension scheme. Under IAS 19, a discount rate should be
based upon a yield of high quality corporate bonds of appropriate term and currency, hence a degree
of estimation exists in the choice of applicable bond universe on which the yield curve is constructed,
the method used to produce the yield curve as well as the expected average duration of the
scheme’s liabilities.
The methodology behind the ination assumptions is based on similar assumptions regarding duration
of the scheme and choice of yield curves, as well as the application of a risk-premium deduction. The
estimated life expectancy of scheme members is determined through the choice of mortality model and
allowances for future mortality improvements.
The key assumptions listed above, and how a change in those would impact the dened benet pension
liability or asset are set out in note 27.
Inventory provisions
Estimates are made of the level of provision against inventory at the year-end date. The Group has an
inventory provisioning policy which is applied consistently year on year, however, because of the volatility
of citrus commodity pricing as well as the fast-moving nature of trends and customer requirements there
is a chance that judgements made at the balance sheet date could lead to a material adjustment in the
following year.
Expected credit losses
Estimations are made in determining the expected credit losses on its trade receivables based on historic
credit loss levels and its current knowledge of customer relationships and wider market conditions at the
balance sheet date. Due to the size, diversity and international nature of its customer base the estimates
on credit losses require judgements around recoverability which could give rise to material adjustments in
the following year.
Share-based-payments
In accordance with IFRS 2, ‘Share-based Payments’, share options and other share awards are measured
at fair value at the date of grant. The fair value determined is then expensed in the income statement on
a straight-line basis over the vesting period, with a corresponding increase in equity. The fair value of the
options is measured using the Black-Scholes option pricing model. The valuation of these share-based
payments requires several estimates to be made in respect of the number of options that are expected
to vest. Details of the assumptions made in respect of each of the share-based payment schemes are
disclosed in note 26. Changes in these assumptions could lead to changes in the income statement
expense in future periods.
Critical judgements
In the course of preparing these nancial statements, no judgements have been made in the process of
applying the Group’s accounting policies, other than those involving estimations as discussed above, that
have had a material eect on the amounts recognised in the nancial statements.
Description of the nature and purpose of each reserve within equity
Share capital
Share capital represents the value of all called up, allotted and fully paid shares of the Parent Company.
Share premium account
The share premium account represents amounts received in excess of the nominal value of shares on the
issue of new shares.
Own shares in share trusts
Own shares in share trusts relate to shares held in the Treatt Employee Benet Trust (the EBT) and the
SIP Trust, which is administered by Link Asset Services Trustees. The shares held in the EBT and SIP
Trust are all held to meet options to be exercised by employees, and share awards and tax-approved
purchases by employees under the SIP. Dividends on those shares not benecially held on behalf of
employees have been waived.
Hedging reserve
The hedging reserve comprises the eective portion of the cumulative net change in the fair value of cash
ow hedging instruments related to hedged transactions that have not yet occurred.
Foreign exchange reserve
The foreign exchange reserve records the cumulative exchange dierences arising from the translation of
the nancial statements of overseas subsidiaries.
Retained earnings
Retained earnings comprises the Group’s cumulative annual prots and losses, actuarial gains and losses
on the dened benet pension scheme and dividend payments, combined with the employee share option
reserve which represents the equity component of share-based payment arrangements.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 125
TREATT PLC Annual Report & Accounts 2022
4. SEGMENTAL INFORMATION
Group
Business segments
IFRS 8 requires operating segments to be identied on the basis of internal nancial information reported
to the Chief Operating Decision Maker (CODM). The Group’s CODM has been identied as the Board of
Directors who are 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 prot performance from the Group’s operations.
The Group operates one global business segment engaging in the manufacture and supply of innovative
ingredient solutions for the beverage, avour, fragrance and consumer product industries with
manufacturing sites in the UK and the US. Many of the Group’s activities, including sales, manufacturing,
technical, IT and nance, are managed globally on a Group basis.
Geographical segments
The following table provides an analysis of the Group’s revenue by geographical market:
Revenue by destination
2022
£’000
2021
£’000
United Kingdom 9,777 9,502
Rest of Europe – Germany 7,907 5,970
– Ireland 11,527 7,313
– Other 14,596 13,931
The Americas – USA 53,731 53,356
– Other 12,919 9,595
Rest of the World – China 7,901 7,440
– Other 21,827 17,219
140,185 124,326
All Group revenue is in respect of the sale of goods, other than property rental income of £1,000
(2021: £18,000). No country included within ‘Other’ contributes more than 5% of the Group’s total
revenue. The Group revenue from the largest customer was £15,226,000 (2021: £10,331,000).
Non-current assets by geographical location, excluding deferred tax assets and post-employment benet
surplus were as follows:
Continuing operations
2022
£’000
2021
£’000
United Kingdom 44.952 41,622
United States 32,910 23,397
77,862 65,019
5. PROFIT FOR THE YEAR
Prot1 for the year is stated after charging/(crediting):
Group
2022
£’000
2021
£’000
Depreciation of property, plant and equipment and right-of-use assets 2,476 1,705
Amortisation of intangible assets2215 93
Research and development costs 2,338 1,767
Research and development tax credits (208) (181)
Net foreign exchange (gain)/loss3(1) 450
Rent receivable (1) (18)
Cost of inventories recognised as an expense484,469 69,204
Write down of inventories recognised as an expense 2,295 1,157
Shipping costs 3,362 2,774
IT and telephony costs 1,174 953
Insurance costs 1,061 950
Energy and utility costs 1,217 987
1 Figures refer to operating prot excluding exceptional items, which is calculated as prot before exceptional items, net nance
costs and taxation.
2 Included in administrative expenses.
3 Excludes foreign exchange gains or losses on nancial instruments disclosed in note 23.
4 Included in cost of sales.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
126
TREATT PLC Annual Report & Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
5. PROFIT FOR THE YEAR CONTINUED
The analysis of auditor’s remuneration is as follows:
2022
£’000
2021
£’000
Fees payable to the Parent Company’s auditors and their associates for
the audit of:
– the Parent Company and Group accounts 73 55
– the Group’s subsidiaries pursuant to legislation 164 124
Total audit fees 237 179
Fees payable to the Parent Company’s auditors and their associates for other
services to the Group:
– other assurance services 14 12
Total non-audit fees 14 12
6. EMPLOYEES
Number of employees
During the year the average number of sta employed by the Group, including Directors, was as follows:
Group
2022
Number
2021
Number
Technical and production 208 216
Administration and sales 233 176
441 392
The total number of sta employed by the Group at the year-end date is 425 (2021: 423), no sta were
employed by the Parent Company in the current or prior year. During the year, the Directors shown on
pages 70 and 71 were employed by R C Treatt & Co Limited.
Employment costs
The following costs were incurred in respect of the above:
Group
2022
£’000
2021
£’000
Wages and salaries 19,733 17,912
Social security costs 1,683 1,962
Pension costs (see note 27) 1,206 997
Share-based payments (see note 26) 1,039 1,733
23,661 22,604
The value of other short-term non-monetary benets were £1,545,000 (2021: £1,110,000).
Directors
During the year, the aggregate emoluments in respect of the Executive and Non-executive Directors was
as follows:
Group
2022
£’000
2021
£’000
Directors in aggregate
Emoluments in respect of qualifying services 722 1,134
Fees paid to Non-executive Directors in respect of qualifying services 417 375
Taxable benets in respect of qualifying services 32 32
Gains made on the vesting of share options 351 501
Pension contributions to money purchase schemes 52 63
1,574 2,105
Further information on Directors’ emoluments and share options are set out on pages 95 to 99.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 127
TREATT PLC Annual Report & Accounts 2022
7. NET FINANCE COSTS
Group
2022
£’000
2021
£’000
Finance income
Bank interest received –12
Other interest received 8–
812
Finance costs
Bank interest paid 189 89
Other bank nance costs 187 168
Post-employment benet expense (see note 27) 135 157
Lease liabilities nance expense (see note 14) 14 25
525 439
8. EXCEPTIONAL ITEMS
The exceptional items referred to in the income statement can be categorised as follows:
Group
2022
£’000
2021
£’000
Disposal of Northern Way premises:
Gain on disposal of land and buildings 3,324 –
Less: tax eect of disposal ––
UK relocation project:
Relocation expenses (1,800) (1,302)
Less: tax eect of relocation expenses 317 186
Restructuring costs:
Restructuring costs (601) –
Less: tax eect of restructuring costs 114 –
1,354 (1,116)
The exceptional items all relate to non-recurring items.
On 28 February 2022, the Group successfully disposed of its former UK premises at Northern Way,
Bury St Edmunds. The proceeds of the sale, net of selling costs were £5,597,000 and the associated gain
on disposal was £3,324,000. The gain on the sale of property is not expected to be taxable as indexation
allowances are available which fully oset the taxable gain.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Relocation expenses relate to one-o costs incurred in connection with the relocation of the Group’s UK
operations that do not fall to be capitalised.
Restructuring costs relate to a signicant change to the management and executive leadership structure
of the global business, which was announced in May 2022. The restructuring costs consist of employment
and termination costs for those employees impacted. Payments to employees are those which are
contractually due under their existing terms and conditions, and are therefore considered to be fully
allowable expenses for tax purposes. During the nancial year, payments totalling £387,000 had
been made, with the cash ow impact of the remaining costs expected to be settled in the following
nancial year.
9. TAXATION
Analysis of tax charge in income statement:
Group
2022
£’000
2021
£’000
Current tax:
UK corporation tax on prots for the year 153 157
Adjustments to UK tax in respect of previous periods (231) (131)
Overseas corporation tax on prots for the year 2,069 3,882
Adjustments to overseas tax in respect of previous periods (52) (534)
Total current tax 1,939 3,374
Deferred tax:
Origination and reversal of temporary dierences 726 945
Eect of change of tax rate on opening deferred tax (45) 183
Adjustments in respect of previous periods 244 (33)
Total deferred tax (see note 16) 925 1,095
Tax on prot on ordinary activities 2,864 4,469
128
TREATT PLC Annual Report & Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
9. TAXATION CONTINUED
Analysis of tax charge/(credit) in other comprehensive income:
Group
2022
£’000
2021
£’000
Current tax:
Foreign currency translation dierences (102) (18)
Total current tax (102) (18)
Deferred tax:
Cash ow hedges (4) (93)
Dened benet pension scheme 2,068 135
Total deferred tax 2,064 42
Total tax expense recognised in other comprehensive income 1,962 24
Analysis of tax credit in equity:
Group
2022
£’000
2021
£’000
Current tax:
Share-based payments (20) (116)
Deferred tax:
Share-based payments 444 (586)
Total tax charge recognised in equity 424 (702)
Factors aecting tax charge for the year:
The tax assessed for the year is dierent from that calculated at the standard rate of corporation tax in the
UK of 19.0% (2021: 19.0%). The dierences are explained below:
Group
2022
£’000
2021
£’000
Prot before tax multiplied by standard rate of UK corporation tax at 19.0%
(2021: 19.0%) 3,074 3,727
Eects of:
Expenses not deductible in determining taxable prot 268 660
Income not taxable in determining taxable prot (694) –
Research and development tax credits (243) (52)
Dierence in tax rates on overseas earnings 678 479
Adjustments to tax charge in respect of prior years (39) (699)
Eect of change of tax rate on opening deferred tax (38) 354
Deferred tax not recognised (142) –
Total tax charge for the year 2,864 4,469
The Group’s eective UK corporation tax rate for the year was 17.7% (2021: 22.8%). The eective tax
rate of US-based earnings is 21.5% (2021: 21.9%). The adjustments in respect of prior years relate to the
nalisation of previous year’s tax computations.
10. DIVIDENDS
Equity dividends on ordinary shares:
Dividend per share for years ended 30 September
Parent Company and Group
2022
Pence
2021
Pence
2020
Pence
2022
£’000
2021
£’000
Interim dividend 2.50p32.00p21.84p11,512 1,203
Final dividend 5.35p45.50p34.16p23,322 2,501
7.85p 7.50p 6.00p 4,834 3,704
1 Accounted for in the year ended 30 September 2020.
2 Accounted for in the year ended 30 September 2021.
3 Accounted for in the year ended 30 September 2022.
4 The proposed nal dividend for the year ended 30 September 2022 of 5.35p pence will be voted on at the Annual
General Meeting on 31 January 2023 and will therefore be accounted for in the nancial statements for the year ending
30 September 2023.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 129
TREATT PLC Annual Report & Accounts 2022
11. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is based on the weighted average number of ordinary shares in issue and
ranking for dividend during the year. The weighted average number of shares excludes shares held by the
Treatt Employee Benet Trust (EBT), together with shares held by the Treatt SIP Trust (SIP Trust), which
do not rank for dividend.
Group 2022 2021
Prot attributable to owners of the Parent Company (£’000) 13,315 15,148
Weighted average number of ordinary shares in issue (No: ‘000) 60,400 60,125
Basic earnings per share (pence) 22.04p 25.19p
Diluted earnings per share
Diluted earnings per share is based on the weighted average number of ordinary shares in issue and
ranking for dividend during the year, adjusted for the eect of all dilutive potential ordinary shares.
The number of shares used to calculate earnings per share (EPS) have been derived as follows:
Group
2022
No (‘000)
2021
No (‘000)
Weighted average number of shares 60,578 60,310
Weighted average number of shares held in the EBT and SIP (178) (185)
Weighted average number of shares used for calculating basic EPS 60,400 60,125
Executive share option schemes 487 486
All-employee share options 148 210
Weighted average number of shares used for calculating diluted EPS 61,035 60,821
Diluted earnings per share (pence) 21.82p 24.91p
Adjusted earnings per share
Adjusted earnings per share measures are calculated based on prots for the year attributable to owners
of the Parent Company before exceptional items as follows:
Group
2022
£’000
2021
£’000
Prot after taxation attributable to owners of the Parent Company 13,315 15,148
Adjusted for:
Exceptional items – gain on disposal of land and buildings (see note 8) (3,324) –
Exceptional items – relocation expenses (see note 8) 1,800 1,302
Exceptional items – restructuring costs (see note 8) 601 –
Taxation thereon (431) (186)
Adjusted earnings 11,961 16,264
Adjusted basic earnings per share (pence) 19.80p 27.05p
Adjusted diluted earnings per share (pence) 19.60p 26.74p
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
130
TREATT PLC Annual Report & Accounts 2022
12. INTANGIBLE ASSETS
Group
Development
costs
£’000
Software
licences
£’000
Total
£’000
Cost
1 October 2020 428 1,209 1,637
Exchange adjustment (18) (1) (19)
Additions 215 963 1,178
Disposals – (104) (104)
30 September 2021 625 2,067 2,692
Exchange adjustment 86 3 89
Additions 278 647 925
Disposals – (43) (43)
30 September 2022 989 2,674 3,663
Amortisation
1 October 2020 –279279
Exchange adjustment 1– 1
Charge for year 41 52 93
Disposals –(104)(104)
30 September 2021 42 226 268
Exchange adjustment 15 2 17
Charge for year 44 171 215
Disposals – (43) (43)
30 September 2022 101 356 457
Net book value
30 September 2022 888 2,318 3,206
30 September 2021 583 1,841 2,424
Included in intangible assets are software licences in the course of construction totalling £53,000 (2021:
£1,699,000) and included within development costs are ongoing projects totalling £488,000 (2021:
£210,000) which are not yet subject to amortisation. Intangible assets with a net book value of £407,000
(2021: £373,000) have been pledged as security in relation to all US borrowings as detailed in note 20.
Included within software additions is £8,000 (2021: nil) of interest payments capitalised in accordance
with IAS 23, ‘Borrowing Costs’.
13. PROPERTY, PLANT AND EQUIPMENT
Group
Land &
buildings
£’000
Plant &
machinery
£’000
Fixtures, ttings
& equipment
£’000
Laboratory
equipment
£’000
Total
£’000
Cost
1 October 2020 35,748 19,967 3,345 1,003 60,063
Exchange adjustment (544) (500) (46) (16) (1,106)
Additions 2,260 8,429 1,763 983 13,435
Disposals – (207) (75) (259) (541)
30 September 2021 37,464 27,689 4,987 1,711 71,851
Exchange adjustment 2,798 3,666 436 126 7,026
Additions 28 10,486 1,005 491 12,010
Disposals (2,611) (922) (606) (104) (4,243)
30 September 2022 37,679 40,919 5,822 2,224 86,644
Depreciation
1 October 2020 2,094 6,006 1,324 480 9,904
Exchange adjustment (52) (168) (11) (5) (236)
Charge for year 292 978 302 113 1,685
Disposals – (207) (75) (259) (541)
30 September 2021 2,334 6,609 1,540 329 10,812
Exchange adjustment 347 1,140 129 34 1,650
Charge for year 334 1,266 560 213 2,373
Disposals (840) (922) (606) (104) (2,472)
30 September 2022 2,175 8,093 1,623 472 12,363
Net book value
30 September 2022 35,504 32,826 4,199 1,752 74,281
30 September 2021 35,130 21,080 3,447 1,382 61,039
Included within freehold land and buildings is £6,597,000 (2021: £6,016,000) of land which is
not depreciated.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 131
TREATT PLC Annual Report & Accounts 2022
13. PROPERTY, PLANT AND EQUIPMENT CONTINUED
Included in property, plant and equipment are land and buildings assets in the course of construction
totalling £7,363,000 (2021: £15,503,000), plant and machinery assets in the course of construction of
£21,422,000 (2021: £14,899,000), xtures, ttings and equipment in the course of construction totalling
£827,000 (2021: £2,013,000) and laboratory equipment in the course of construction totalling £225,000
(2021: £868,000) which are not yet being depreciated.
Included within land and buildings additions is £1,000 (2021: £4,000), within plant and machinery additions
is £273,000 (2021: £19,000), within xtures and ttings is £5,000 (2021: nil) and laboratory equipment
£1,000 (2021: nil) of interest payments capitalised in accordance with IAS 23, ‘Borrowing Costs’.
Property, plant and equipment with a net book value of £32,443,000 (2021: £22,984,000) has been
pledged as security in relation to all US borrowings and property, plant and equipment with a net book
value of £21,325,000 (2021: £23,175,000) has been pledged as security in relation to UK borrowings as
detailed in note 20.
Capital commitments
2022
£’000
2021
£’000
Contracted but not provided for 4,398 4,919
14. LEASES
Group as lessee
The Group reports right-of-use assets and lease liabilities for all lease arrangements it is party to,
excluding those with less than a 12 month duration or those of low value.
Right-of-use assets
Group
Land & buildings
£’000
Plant & machinery
£’000
Total
£’000
Net carrying value
1 October 2020 1,138 35 1,173
Exchange Adjustment (see note 12) –(3)(3)
Additions –406406
Depreciation charge (9) (11) (20)
30 September 2021 1,129 427 1,556
Exchange adjustment – 10 10
Additions – 37 37
Disposals (1,126) – (1,126)
Depreciation charge (3) (99) (102)
30 September 2022 – 375 375
Lease liabilities
Group
2022
£’000
2021
£’000
Lease liabilities
At start of year 1,053 659
Exchange adjustment 9(3)
Additions 36 406
Lease liabilities nance expense 14 25
Disposals (622) –
Repayments of lease liabilities (94) (34)
Balance at end of year 396 1,053
Of which:
Current lease liabilities 105 96
Non-current lease liabilities 291 957
The lease liability is determined by discounting the lease payments over the life of the leases using
an incremental borrowing rate applicable to the respective lease. The weighted average incremental
borrowing rate associated with the lease liabilities is 3.0% (2021: 3.2%).
Following the disposal of the Group’s former UK Headquarters at Northern Way and its associated leases
in February 2022, the Group’s leasing activities now primarily comprise equipment hire agreements.
There are no residual value guarantees, variable lease payments or extension options in any of the
lease arrangements.
As part of the sale agreement for the sale of premises at Northern Way, the Group leased back a building
for a period of up to 19 months, with a break-clause at 12 months. The short-term exemption, as permitted
by IFRS 16, ‘Leases’ was applied from the outset as expectations were of a 12-month lease. The income
statement expense in respect of short-term leases is £35,000 (2021: £nil).
The maturity analysis of the undiscounted contractual lease commitments is shown below:
Group
2022
£’000
2021
£’000
Maturity analysis – undiscounted lease payments
Within one year 105 97
In one to two years 91 109
In two to ve years 213 301
In more than ve years –2,994
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
132
TREATT PLC Annual Report & Accounts 2022
15. INVESTMENTS IN SUBSIDIARIES
Parent Company £’000
Cost
1 October 2020 34,097
Capital contribution to subsidiaries 1,732
Acquisition of share capital in subsidiaries 360
30 September 2021 36,189
Capital contribution to subsidiaries 1,115
Acquisition of share capital in subsidiaries 81
30 September 2022 37,385
Parent Company
2022
£’000
2021
£’000
Subsidiary:
R C Treatt & Co Limited – 100% (2021: 100%) 27,790 26,871
Treatt USA Inc – 100% (2021: 100%) 9,154 8,958
Treatt Trading (Shanghai) Company Limited – (2021: 100%) 441 360
37,385 36,189
Treatt SIP Trustees Limited and Treatt Development Company Limited were no longer required as part of
the Group’s company structure and were struck-o the register in November 2021.
Subsidiary
Country of
incorporation Holding Principal activity
Wholly owned by Treatt plc:
R C Treatt & Co Limited England1100% Supply of avour and fragrance ingredients
Treatt USA Inc USA2100% Supply of avour and fragrance ingredients
Treatt Trading (Shanghai) Company Limited China³100% Supply of avour and fragrance ingredients
Registered oce addresses:
1 Skyliner Way, Bury St Edmunds, IP32 7FR, UK.
2 The Prentice-Hall Corporation System Inc., 1201 Hays Street, Suite 105, Tallahassee, FL 32301, USA.
3 Room 906, Hongmei International Plaza, 105 Tianlin Road, Xuhui District, Shanghai 200233, China.
16. DEFERRED TAXATION
Group
2022
£’000
2021
£’000
UK deferred tax asset –792
Deferred tax assets –792
UK deferred tax liability (1,707) –
Overseas deferred tax liability (3,662) (2,175)
Deferred tax liabilities (5,369) (2,175)
Deferred tax assets and liabilities are presented net within the same legal jurisdictions where it is
expected that such assets and liabilities may be set-o in the future.
At the balance sheet date, R C Treatt & Co Limited had a deferred tax liability in relation to its
pension surplus
Legislation was substantively enacted that set out the main rate of UK corporation tax as 25.0% from
1 April 2023. The deferred tax rate applied to UK companies within the Group is 19.0% (2021: 19.0%) if
the tax asset or liability is expected to unwind before 1 April 2023, and is 25.0% for those unwinding after
that date. The deferred tax rate applicable to the Group’s US subsidiary was 21.5% (2021: 21.9%).
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 133
TREATT PLC Annual Report & Accounts 2022
16. DEFERRED TAXATION CONTINUED
A reconciliation of the net deferred tax liability is shown below:
UK deferred tax Overseas deferred tax
Group
Post-
employment
benets
£’000
Fixed
assets
£’000
Cash ow
hedge
£’000
Other and
share-based
payments
£’000
Losses
£’000
Fixed
assets
£’000
Other
temporary
dierences
£’000
Total
£’000
1 October 2020 1,910 (672) 8 112 – (2,576) 294 (924)
Exchange dierences – – – – – 102 (10) 92
Credit/(charge) to income
statement:
For the year (73) (913) (32) 243 – (324) 187 (912)
For change in tax rate – (212) – – – 30 (1) (183)
Credit/(charge) to other
comprehensive income:
For the year (738) – 93 – – – – (645)
For change in tax rate 603–– ––– –603
Credit to equity:
For the year – – – 428 – – 123 551
For change in tax rate –– – 35 – – –35
1 October 2021 1,702 (1,797) 69 818 – (2,768) 593 (1,383)
Exchange dierences – – – – – (661) 108 (553)
Credit/(charge) to income
statement:
For the year (80) (1,277) – (142) 1,609 (627) (209) (726)
In respect of prior period
– (231) – (30) 17 – – (244)
For change in tax rate – – – – – 47 (2) 45
Credit/(charge) to other
comprehensive income:
For the year (2,068) – 4 – – – – (2,064)
For change in tax rate –– – – – – ––
Charge to equity:
For the year – – – (301) – – (143) (444)
For change in tax rate –– – – – – ––
30 September 2022 (446) (3,305) 73 345 1,626 (4,009) 347 (5,369)
17. INVENTORIES
Group
2022
£’000
2021
£’000
Raw materials 30,784 23,162
Work in progress and intermediate products 22,347 20,197
Finished goods 15,220 3,904
68,351 47,263
Inventories are stated net of provisions for impairment of £3,602,000 (2021: £2,102,000).
Inventory with a carrying value of £40,810,000 (2021: £28,541,000) has been pledged as security in
relation to all US borrowings as detailed in note 20.
18. TRADE AND OTHER RECEIVABLES
Group Parent Company
Current
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Trade receivables134,727 23,529 ––
Amounts owed by subsidiaries ––4,086 1,194
Other receivables 478 763 55 58
Prepayments 1,908 2,079 ––
37,113 26,371 4,141 1,252
1 This includes £9,000 (2021: £1,109,000) of trade receivables which are classied under the business model of ‘held to collect
and sell’ and are measured at fair value with changes through other comprehensive income.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
134
TREATT PLC Annual Report & Accounts 2022
18. TRADE AND OTHER RECEIVABLES CONTINUED
The Group’s credit risk is primarily attributable to its trade receivables. Before accepting any new
customer, the Group uses a range of information, including credit reports, industry data and other
publicly or privately available information in order to assess the prospective customer’s credit quality and
determine credit limits by customer, and where appropriate will only accept orders on the basis of cash in
advance, or if secured through a bank letter of credit. Processes are in place to manage trade receivables
and overdue debt and to ensure that appropriate action is taken to resolve issues on a timely basis. Credit
control operating procedures are in place to review all new customers. Existing customers are reviewed
as management become aware of any specic changes in circumstances.
The average credit period taken for trade receivables is as follows:
Group 2022 2021
Average debtor days 76 67
The Group recognises the lifetime expected credit losses (ECLs) based on the dierence between the
contractual cash ows due and the cash ows the Group expects to receive over the life of the receivable.
An ECL loss rate has been calculated based on the historical credit losses of the past ve accounting
years and adjusted to reect current and forward-looking information. The carrying amount of receivables
is reduced by the value of the provision, as determined by applying the ECL loss rate and providing for
any specic provisions. A specic provision for impairment is made when there is objective evidence of
impairment which is usually indicated by a signicant delay in the expected cash ows or non-payment
from customers.
An impairment review has been undertaken at the balance sheet date to assess whether the carrying
amount of nancial assets is deemed recoverable.
The amounts presented in the balance sheet are net of amounts that are individually determined to be
impaired as follows:
Group
2022
£’000
2021
£’000
Impairment provision
At start of year 788 611
Released in year (628) (127)
Provided in year 624 314
Foreign exchange 32 (10)
Balance at end of year 816 788
The ECL model is also applied to amounts owed by subsidiaries of the Parent Company. Application of the
model did not result in the recognition of an impairment in the Parent Company accounts against amounts
owed by subsidiaries.
The Group’s top ve customers represent 33.4% (2021: 33.0%) of the Group’s turnover. These customers
have favourable credit ratings and consequently reduce the credit risk of the Group’s overall trade
receivables. The Directors consider that the carrying amount of trade and other receivables approximates
to their fair value. The Group holds no collateral against these receivables at the balance sheet date.
The ageing prole of impaired trade receivables is as follows:
Group
2022
£’000
2021
£’000
Number of days past the due date:
1-30 127 –
31-60 ––
Over 60 689 788
The currency risk in respect of trade receivables is managed in conjunction with the other currency risks
faced by the Group as part of its overall hedging strategy. For further details see note 29 and the
Financial Review on pages 54 to 60. The currency exposure within trade receivables of the principal
foreign currencies, was as follows:
Group
2022
£’000
2021
£’000
US Dollar 23,691 14,896
Euro 3,314 3,358
Trade receivables with a carrying value of £12,462,000 (2021: £10,505,000) have been pledged as
security in relation to all US borrowings as detailed in note 20.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 135
TREATT PLC Annual Report & Accounts 2022
19. CASH AND BANK BALANCES
Group and Parent Company
Cash and bank balances of £2,354,000 (2021: £7,260,000) comprise cash held by the Group and short-
term deposits with an original maturity of three months or less. The Parent Company held cash and bank
balances of £2,085,000 (2021: £5,206,000). The carrying amount of these assets approximates to their
fair value.
A detailed analysis of net cash balances by currency is shown in note 29. All material cash balances are
held with the Group’s main banks, being HSBC and Bank of America. The credit ratings of these banks are
considered to be satisfactory.
20. BORROWINGS
Current
Group
2022
£’000
2021
£’000
UK bank overdrafts 6,174 7,013
UK revolving credit facilities 13,000 5,000
US line of credit 2,034 –
US term loan 827 684
22,035 12,697
Non-current
Group
2022
£’000
2021
£’000
US term loan 2,342 2,624
Loans and borrowings
The term loan comprises the following:
Group
2022
£’000
2021
£’000
Treatt USA $6.5m term loan – US 3,169 3,308
The Group has a three-year US Dollar credit facility (US line of credit) of $8.0 million (with an additional
$2.0 million seasonal line from March to July each year) expiring in July 2025. At the year-end date the
overdrawn balance was £2,034,000 (2021: £nil). The Group also has a $6.5 million US Dollar term loan
repayable over seven years. The US line of credit and the term loan, both held by Treatt USA Inc, are
secured by a xed and oating charge over Treatt USA’s current and non-current assets.
The Group’s UK facilities consist of a £7.0 million three-year revolving credit facility (RCF) alongside
a £6.5m accordion facility, secured on the value of the freehold land and buildings of the new UK
Headquarters at Skyliner Way, renewing in March 2024 and a $9.0 million unsecured RCF and an
unsecured overdraft facility of $6.0 million which both come for renewal in April 2023.
The Group’s UK-based bank borrowings and cash balances denominated in Sterling are operated on a
pooling basis, whereby interest is only charged on the net overdrawn balance of the Group’s UK-based
accounts. At the year-end date, the £6,174,000 balance on the UK overdraft was oset against UK cash
balances within the overdraft pool, and was incurring interest.
Borrowings are repayable as follows:
Group
2022
£’000
2021
£’000
– in one year or less 22,035 12,697
– in more than one year but not more than two years 827 685
– in more than two years but not more than ve years 1,515 1,939
– in more than ve years ––
24,377 15,321
Further information on Group borrowing facilities is given in notes 28 and 29, including a detailed analysis
of cash balances by currency.
Borrowing facilities
At 30 September 2022, the Group had total borrowing facilities of £30,773,000 (2021: £25,833,000)
of which £13,437,000 (2021: £2,225,000) expires in one year or less at the balance sheet date. At
30 September 2022 the Group had access to £8,355,000 (2021: £17,822,000) of nancing facilities
including its own cash balances at that date.
21. PROVISIONS
Group
2022
£’000
2021
£’000
Onerous contract provision:
At start of year 143 146
Utilised in year (138) (145)
Additional provision in year 348 142
Foreign exchange 44 –
Balance at end of year 397 143
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
136
TREATT PLC Annual Report & Accounts 2022
21. PROVISIONS CONTINUED
Onerous contract provisions relate to losses which are or were expected to materialise in the future on
xed price contracts as a result of raw material price increases or market pressure on selling prices.
The onerous contract provision expense is included in cost of sales within the income statement and is
expected to be utilised in the following nancial year.
22. TRADE AND OTHER PAYABLES
Group Parent Company
Current
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Trade payables 17,565 10,412 27 67
Other taxes and social security costs 411 346 (1) –
Accruals and other creditors 4,927 6,269 429 436
22,903 17,027 455 503
Trade payables principally comprise amounts for trade purchases and on-going costs. The Directors
consider that the carrying amount of trade and other payables approximates to their fair values.
The currency risk in respect of trade payables is managed in conjunction with the other currency
risks faced by the Group as part of its overall hedging strategy. For further details see note 29 and the
Financial Review on pages 54 to 60. The currency exposure within trade payables of the principal foreign
currencies, was as follows:
Group
2022
£’000
2021
£’000
US Dollar 12,236 9,387
Euro 464 241
23. DERIVATIVE FINANCIAL INSTRUMENTS
Group
2022
£’000
2021
£’000
Derivative nancial assets:
Current:
Foreign exchange contracts asset –11
Derivative nancial liabilities:
Current:
Foreign exchange contracts liability (666) (593)
The gains/(losses) on derivative nancial instruments were as follows:
Group
2022
£’000
2021
£’000
Income statement:
Foreign exchange contracts (2,336) 1,355
Other comprehensive income:
Foreign exchange contracts (23) (508)
Further details on the Group’s hedging policies and derivative nancial instruments are disclosed in
note 29.
24. SHARE CAPITAL
2022 2021
Parent Company and Group Called up,
allotted and fully paid £’000 Number £’000 Number
At start of year 1,208 60,411,933 1,205 60,270,670
Issued in year 9452,631 3141,263
At end of year 1,217 60,864,564 1,208 60,411,933
The Parent Company has one class of ordinary shares with a nominal value of 2p each, which carry no
right to xed income.
During the year the Parent Company issued 400,000 (2021: 100,000) ordinary shares to the Employee
Benet Trust, and 52,631 (2021: 41,263) ordinary shares to the SIP Trust, at nominal value of 2p per
share, for the purpose of meeting obligations under employee share option schemes.
25. SHARE PREMIUM ACCOUNT
Parent Company and Group
2022
£’000
Balance at 1 October 2021 and 30 September 2022 23,484
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 137
TREATT PLC Annual Report & Accounts 2022
26. SHARE-BASED PAYMENTS
The Group has applied the requirements of IFRS 2, ‘Share-based Payments’.
The Group operates executive share option schemes for Directors, senior management and other key
employees within the Group in addition to issuing UK and US approved savings-related share options for
employees of certain subsidiaries. Options are granted with a xed exercise price and will lapse when an
employee leaves the Group subject to certain ‘good leaver’ provisions.
The Group also operates an HMRC-approved share incentive plan in the UK, and operates an equivalent
scheme for its US employees.
The share-based payments charge was as follows:
Group
2022
£’000
2021
£’000
Share option schemes – see (a) below 735 1,390
Share incentive plans – see (b) below 380 342
1,115 1,732
Eect of movement in foreign exchange rates (76) 1
1,039 1,733
(a) Share option schemes
Under the schemes listed below, options have been granted to subscribe for the following number
of existing ordinary shares of 2p each in the capital of the Parent Company. These share options are
expected to be settled via the transfer of shares out of the Treatt Employee Benet Trust.
The equity-settled options which existed during the year were as follows:
Number of share
options outstanding at
30 September 2022
Number exercised
in year
Exercise price
per share
Date option
exercisable
UK SAYE¹ Scheme 2018 – 7,138 373.0p Sep 2021 – Feb 2022
UK SAYE¹ Scheme 2019 14,301 102,622 361.0p Sep 2022 – Feb 2023
UK SAYE¹ Scheme 2020 110,545 – 409.0p Sep 2023 – Feb 2024
UK SAYE¹ Scheme 2021 51,077 – 932.0p Sep 2024 – Feb 2025
UK SAYE¹ Scheme 2022 113,095 – 610.0p Sep 2025 – Feb 2026
US ESPP2 Scheme 2021 – – 1,062.5p July 2022
US ESPP2 Scheme 2022 17,615 – 634.0p July 2023
UK LTIP³ Scheme 2014 12,565 – Nil Jun 2017 – Jun 2024
UK LTIP³ Scheme 2015 14,045 – Nil Jun 2018 – Jun 2025
UK LTIP³ Scheme 2016 15,984 – Nil Jun 2019 – Jun 2026
UK LTIP³ Scheme 2017 2,137 – Nil Jun 2020 – Jun 2027
UK LTIP³ Scheme 2019 14,102 33,486 Nil Jun 2022 – Jun 2029
US LTIP³ Scheme 2019 7,295 49,151 Nil Jun 2022 – Feb 2023
UK LTIP³ Scheme 2020 39,934 – Nil Jun 2023 – Jun 2030
US LTIP³ Scheme 2020 64,206 – Nil Jun 2023 – Feb 2024
UK LTIP³ Scheme 2021 16,962 – Nil Jun 2024 – Jun 2031
UK LTIP³ Scheme 2021 5,578 – Nil Dec 2023 – Dec 2030
US LTIP³ Scheme 2021 25,275 – Nil Jun 2024 – Feb 2025
UK LTIP³ Scheme 2021 20,124 – Nil Dec 2024 – Dec 2031
UK Executive⁴ Options 2018 – 134,145 Nil Dec 2021 – Dec 2028
UK Executive⁴ Options 2019 120,014 – Nil Dec 2022 – Dec 2029
UK Executive⁴ Options 2020 63,755 – Nil Dec 2023 – Dec 2030
UK Executive⁴ Options 2022 52,232 – Nil Feb 2025 – Feb 2032
1 The SAYE schemes are HMRC-approved Save As You Earn share option plans which vest after three years. Options are forfeited
where employees choose to leave the Group before the end of the three year period.
2 The ESPP schemes are IRS-approved Employee Stock Purchase Plans which vest after one year. Options are forfeited where
employees choose to leave the Group before the end of the vesting period.
3 Options are awarded to certain key employees in the UK and US under a Long Term Incentive Plan. All awards are nil-cost
options which vest, subject to achievement of the relevant performance conditions, after three years and can be exercised over
the following seven years in the UK, or upon vesting in the US. Save as permitted in the LTIP rules, awards lapse on an employee
leaving the Group.
4 Details of the Executive options are provided in the Directors’ Remuneration Report.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
138
TREATT PLC Annual Report & Accounts 2022
26. SHARE-BASED PAYMENTS CONTINUED
The fair value per option granted using the “Black-Scholes” model, and the assumptions used in the
share-based payments calculations, are as follows:
All-employee share schemes:
2018
SAYE
2019
SAYE
2020
SAYE
2021
SAYE
2022
SAYE
Share price at date of grant 466.3p 451.0p 511.3p 1,165.0p 762.5p
Contractual life 3.5 years 3.5 years 3.5 years 3.5 years 3.5 years
Expected life 3.0 years 3.0 years 3.5 years 3.5 years 3.5 years
Expected volatility 27.29% 31.10% 39.63% 43.88% 46.77%
Risk-free interest rate 0.71% 0.53% 0.09% 0.17% 1.86%
Dividend yield 1.06% 1.15% 1.10% 0.53% 1.05%
Expected cancellations 10.00% 10.00% 10.00% 10.00% 10.00%
Expected forfeitures 14.46%14.76%120.00% 5.00% 20.00%
Fair value per option
at date of grant 114.3p 117.0p 158.5p 403.6p 279.9p
Key-employee share schemes:
US LTIP
2019
US LTIP
2020
US ESPP
2021
US LTIP
2021
US ESPP
2022
Share price at date of grant 455.0p 485.0p 1,120.0p 1,140.0p 758.0p
Contractual life 3.2 years 3.2 years 1.0 year 3.2 years 1.0 years
Expected life 3.2 years 3.2 years 1.0 year 3.2 years 1.0 years
Expected volatility 31.10% 39.63% 43.15% 43.88% 42.70%
Risk-free interest rate 0.62% 0.05% 0.17% 0.22% 1.86%
Dividend yield 1.14% 1.16% 0.55% 0.54% 1.06%
Expected cancellations 0.00% 0.00% 10.00% 0.00% 10.00%
Expected forfeitures 18.67% 37.38% 13.88%120.13% 10.00%
Fair value per option at date of grant 438.6p 467.2p 242.7p 1,120.4p 171.5p
Key-employee share schemes:
UK LTIP
2019
UK LTIP
2020
UK LTIP
2021
UK LTIP
20212
UK LTIP
20212
Share price at date of grant 455.0p 485.0p 1,140.0p 1,000.0p 1,205.0p
Contractual life 10.0 years 10.0 years 10.0 years 10.0 years 10.0 years
Expected life 5.0 years 3.5 years 3.5 years 2.5 years 3.5 years
Expected volatility 31.10% 39.63% 43.88% 48.57% 52.41%
Risk-free interest rate 0.62% 0.05% 0.22% 0.19% 0.69%
Dividend yield 1.14% 1.16% 0.54% 0.62% 0.62%
Expected cancellations 0.00% 0.00% 0.00% 0.00% 0.00%
Expected forfeitures 0.00% 28.75% 20.13% 11.25% 100.00%
Fair value per option at date of grant 429.7p 465.6p 1,118.6p 984.7p 1,179.0p
Executive share schemes:
UK Exec
2018
UK Exec
2019
UK Exec
2020
UK Exec
2022
Share price at date of grant 410.0p 455.0p 746.0p 1,120.0p
Contractual life 10.0 years 10.0 years 10.0 years 10.0 years
Expected life 5.0 years 3.5 years 3.5 years 3.0 years
Expected volatility 27.29% 31.10% 39.63% 44.15%
Risk-free interest rate 0.73% 0.59% 0.11% 1.06%
Dividend yield 1.24% 1.21% 0.80% 0.71%
Expected cancellations 0.00% 0.00% 0.00% 0.00%
Expected forfeitures 0.00%127.0%325.50%3100.00%
Fair value per option at date of grant 385.3p 436.1p 725.3p 1,096.2p
1 Actual forfeiture experienced.
2 Additional UK LTIP grants made to specic employees.
3 Expected forfeitures relate to the retirement of Richard Hope on 30 June 2022. The Board exercised its discretion to permit a
proportion of shares under these existing LTIP awards awards to be retained,. the non-vesting portion is forfeited. More details
are provided in the Director remuneration report on pages 95 and 99.
Expected volatility was determined by calculating the historical volatility of the Group’s share price over a
period equivalent to the expected life of the respective options prior to their date of grant.
The risk-free interest rate was based on the simple average of the historical daily gilt yields quoted for ve
year benchmark gilts during the month in which a grant of options is made.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 139
TREATT PLC Annual Report & Accounts 2022
26. SHARE-BASED PAYMENTS CONTINUED
Details of movements in share options during the year were as follows:
2022 2021
Group No of options
Weighted average
exercise price No of options
Weighted average
exercise price
Outstanding at start of year 982,449 £1.68 1,111,072 £1.27
Granted during the year 207,436 £3.92 196,734 £3.39
Forfeited during the year (45,791) £1.27 (6,677) £1.36
Exercised during the year (326,542) £1.22 (116,757) £3.64
Lapsed during the year (8,787) £10.63 (201,483) £0.00
Cancelled during the year (27,924) £4.59 (440) £4.09
Outstanding at end of year 780,841 £2.28 982,449 £1.68
Exercisable at end of year 80,429 £0.64 62,367 £2.22
Forfeiture arises when the employee is no longer entitled to participate in the savings-related share option
scheme as a consequence of leaving the Group whereas cancellation arises when a participant voluntarily
chooses to cease their membership of a scheme within the vesting period.
The options outstanding had a weighted average remaining contractual period of 4.4 years (2021:
4.9 years). The weighted average actual market share price on the date of exercise for share options
exercised during the year was 841.0 pence (2021: 1,052.4 pence) and the weighted average fair value of
options granted during the year was 392.0 pence (2021: 700.6 pence).
(b) Share incentive plans
All UK-based employees are eligible to participate in an HMRC-approved SIP once they have been with the
Group for a qualifying period of up to 12 months. US employees participate in a similar scheme through
the use of nil cost Restricted Stock Units (RSUs). During the year UK employees were awarded £700
(2021: £650) of ‘Free Shares’, and US employees $1,000 (2021: $950) of RSUs, in Treatt plc. There are
no vesting conditions attached to the Free Shares or RSUs, other than being continuously employed by
the Group for three years from the date of grant. UK employees can also buy shares in Treatt plc out of
pre-tax income, subject to an annual HMRC limit, currently £1,800. These shares are called ‘Partnership
Shares’ and are held in trust on behalf of the employee. The employees must take their shares out of the
plan on leaving the Group. For every Partnership Share acquired during the year, one and a half (2021:
one and a half) ‘Matching Shares’ were awarded under the rules of the SIP. Matching Shares are subject
to the same forfeiture rules as Free Shares.
Details of the movements in the SIP were as follows:
Number of free and matching shares Number of nil cost RSUs
Group 2022 2021 2022 2021
Outstanding at start of year 167,463 185,095 33,152 34,548
Granted during the year 35,875 47,147 7,440 9,776
Vested during the year (52,638) (50,952) (10,962) (8,437)
Forfeited during the year (7,832) (5,178) (4,074) (2,735)
Released during the year (578) (8,649) ––
Outstanding at end of year 142,290 167,463 25,556 33,152
In accordance with IFRS 2, no valuation model is required to calculate the fair value of awards under the
SIPs. The fair value of an equity-based payment under the SIPs is the face value of the award on the
date of grant because the participants are entitled to receive the full value of the shares and there are no
market-based performance conditions attached to the awards.
At 30 September 2022 the number of shares held by the EBT was 270,000 (2021: 166,000), and the
number of shares held by the SIP was 438,000 (2021: 477,000).
27. POST-EMPLOYMENT BENEFITS
The Group operates a wholly-funded dened benet pension scheme for certain current and former UK
employees. The scheme’s assets are held separately from the assets of the Group and are administered by
trustees and managed professionally. From 1 October 2001 this scheme was closed to new entrants and
from 1 January 2013 was not subject to any further accruals. Instead, members of the nal salary pension
scheme became eligible for membership of a dened contribution pension plan with eect from
1 January 2013.
Dened contribution schemes are operated on behalf of eligible employees throughout the Group, the
assets of which are held separately from those of the Group in independently administered funds.
The pension charge for the year was made up as follows:
Group
2022
£’000
2021
£’000
Dened contribution schemes 1,181 972
Other pension costs 25 25
1,206 997
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
140
TREATT PLC Annual Report & Accounts 2022
27. POST-EMPLOYMENT BENEFITS CONTINUED
Dened benet pension scheme
The Group accounts for pensions in accordance with IAS 19, ‘Employee Benets’.
The valuation used for IAS 19 disclosures in respect of the dened benet pension scheme (the scheme)
for the current year has been calculated by updating the valuation calculations used in the actuarial
valuation as at 1 January 2021. The liabilities in last year’s disclosures were calculated by updating the
valuation calculations used in the initial results of the same actuarial valuation.
The actuarial valuation as at 1 January 2021 was carried out by Barnett Waddingham, and the updates
made to them to take account of the requirements of IAS 19 in order to assess the assets and liabilities
of the scheme at 30 September 2022, are carried out by Mrs L Lawson, a Fellow of the Institute and
Faculty of Actuaries. Scheme assets are stated at their market value as at that date.
The scheme is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation
of the scheme is carried out at least once every three years to determine whether the Statutory
Funding Objective is met. As part of the process the Group must agree with the trustees of the
scheme the contributions to be paid to address any shortfall against the Statutory Funding Objective.
The Statutory Funding Objective does not currently impact on the recognition of the scheme in these
nancial statements.
The scheme is managed by a board of trustees appointed in part by the Group and part from elections
by members of the scheme. The trustees have responsibility for obtaining valuations of the fund,
administering benet payments and investing the scheme’s assets. The trustees delegate some of
these functions to their professional advisors where appropriate.
The scheme exposes the Group to a number of risks:
• Investment risk: The scheme holds investments in asset classes, such as equities, which have
volatile market values and while these assets are expected to provide real returns over the long-term,
the short-term volatility can cause additional funding to be required if a decit emerges.
• Interest rate risk: The scheme’s liabilities are assessed using market yields on high quality corporate
bonds to discount the liabilities. As the scheme holds assets such as equities the value of the assets
and liabilities may not move in the same way.
• Ination risk: A proportion of the benets under the scheme are linked to ination. Although
the scheme’s assets are expected to provide a good hedge against ination over the long-term,
movements over the short-term could lead to decits emerging.
• Mortality risk: In the event that members live longer than assumed a greater decit will emerge in
the scheme.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
• Member options: Certain benet options may be exercised by members without requiring the consent
of the trustees or the Company, for example exchanging pension for cash at retirement. In this
example, if fewer members than expected exchange pension for cash at retirement then a funding
strain will emerge. The assets do not include any investment in shares of the Group and there were
no plan amendments, curtailments or settlements during the period. The disclosed liability makes no
allowance for discretionary benets.
The nancial assumptions used to calculate scheme liabilities and assets under IAS 19 are:
Group 2022 2021
Discount rate 5.50% 2.05%
Rate of ination (RPI) 3.75% 3.50%
Rate of ination (CPI) 3.35% 3.10%
Rate of increase in pensions in payment – CPI max 5% 3.20% 3.00%
Rate of increase in pensions in payment – CPI max 3% 2.60% 2.45%
Rate of increase in pensions in payment – CPI max 2.5% 2.25% 2.20%
Mortality table
S3PA tables with CMI
2019 projections using a
long-term improvement
rate of 1.25% pa & initial
addition parameter of
0.25% pa
S3PA tables with CMI 2019
projections using a long-
term improvement rate of
1.25% pa & initial addition
parameter of 0.25% pa
Commutation allowance 20% 20%
Proportion married (at retirement or earlier death) 75% 75%
GMP equalisation allowance 0.5% of liability value 0.5% of liability value
Rate of increase in salaries N/A N/A
Life expectancy for male aged 65 in 20 years’ time 23.6 23.6
Life expectancy for female aged 65 in 20 years’ time 26.0 25.9
Life expectancy for male aged 65 now 22.3 22.2
Life expectancy for female aged 65 now 24.6 24.5
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 141
TREATT PLC Annual Report & Accounts 2022
27. POST-EMPLOYMENT BENEFITS CONTINUED
Eect of the scheme on future cash ows
The Group is required to agree a schedule of contributions with the trustees of the scheme following a full
valuation which must be carried out at least once every three years. The latest valuation of the scheme
took place as at 1 January 2021. The valuation revealed that there was a funding decit in the scheme
as at that date of £4,924,000, being a funding level of 82%. The Group has agreed with the Trustees to
continue to make decit funding contributions of £450,000 (2021: £450,000). The weighted average
duration of the dened benet obligation is approximately 14 years.
Recognition of pension surplus
The Group obtained legal advice over the recognition of a pension surplus, and determined that per the
scheme rules the Group has an unconditional right to a refund of any surplus that may arise on cessation
of the scheme in context of IFRIC 14 paragraph 11b. The full net pension surplus has been recognised on
the Group balance sheet.
Group
2022
£’000
2021
£’000
Scheme assets:
Equities 11,073 12,025
Target return funds 3,776 4,834
Bonds 6,300 6,882
Other 63 71
Fair value of scheme assets 21,212 23,812
Present value of funded obligations (scheme liabilities) (19,430) (30,618)
Surplus/(decit) in the scheme recognised in the balance sheet 1,782 (6,806)
Related deferred tax (446) 1,702
Net pension surplus/(liability) 1,336 (5,104)
Changes in scheme liabilities
Balance at start of year (30,618) (31,166)
Interest cost (621) (493)
Benets paid 704 671
Remeasurement losses:
– Experience gain on liabilities (548) 246
– Actuarial gain arising from changes to demographic assumptions –109
– Actuarial gain arising from changes in nancial assumptions 11,653 15
Balance at end of year (19,430) (30,618)
Group
2022
£’000
2021
£’000
Changes in scheme assets
Balance at start of period 23,812 21,115
Interest on scheme assets 486 336
Employer contributions 450 450
Benets paid (704) (671)
Remeasurement gains:
– (Loss)/return on plan assets (excluding amounts included in interest expense) (2,832) 2,582
Balance at end of year 21,212 23,812
Group
2022
£’000
2021
£’000
Amount charged to nance costs
Interest on scheme assets 486 336
Interest on scheme liabilities (621) (493)
Net expense recognised in income statement (135) (157)
Amount recognised in statement of comprehensive income
(Loss)/gain on scheme assets in excess of interest (2,832) 2,582
Experience (losses)/gains on liabilities (548) 246
Gain from changes to demographic assumptions –109
Gain from changes to nancial assumptions 11,653 15
Remeasurement gain recognised in statement of comprehensive income 8,273 2,952
Actual (loss)/return on scheme assets (2,346) 2.918
Cumulative remeasurement gain/(loss) recognised in statement of comprehensive
income 102 (8,171)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
142
TREATT PLC Annual Report & Accounts 2022
27. POST-EMPLOYMENT BENEFITS CONTINUED
Approximate eect of change of assumptions on surplus values at 30 September 2022:
Reduce surplus
by: £’000
Reduce discount rate by 0.25% pa 633
Increase ination and all related assumptions by 0.1% pa 135
Increase life expectancy by one year 584
The above sensitivities are approximate and only show the likely eect of an assumption being adjusted
whilst all other assumptions remain the same. The assumptions used in preparing this sensitivity analysis
are unchanged from the prior year.
28. CONTINGENT LIABILITIES
Parent Company
When the Parent Company enters into nancial guarantee contracts that guarantee the indebtedness of
group companies, the Parent Company considers these to be insurance arrangements. In this respect,
the Parent Company treats the guarantee contract as a contingent liability until such a time it becomes
probable that the Parent Company will be required to make payments under the guarantee. The Parent
Company has guaranteed the borrowings, net of cash balances for Treatt USA Inc. At the balance sheet
date, the liability covered by this guarantee amounted to $5,808,000 (£5,203,000) (2021: $3,253,000
(£2,413,000)).
The Parent Company has also guaranteed certain bank borrowings of its UK subsidiary R C Treatt & Co
Limited that are held within cash pooling arrangements. At the year-end the liabilities covered by this
guarantee amounted to £5,797,000 (2021: £7,013,000).
29. FINANCIAL INSTRUMENTS
Parent Company and Group
Capital risk management
The Group and Parent Company manage their capital to ensure that entities in the Group continue as
going concerns whilst maximising returns to stakeholders through the optimisation of the debt and equity
balance. The capital structure of the Group consists of net debt and equity shareholders’ funds. The Group
is not subject to any externally imposed capital requirements. Board policy is to operate with a mix of
short and medium-term borrowings.
The Group has a mix of facilities for its UK and US-based businesses. In the UK, the Group has both an
unsecured $9.0m (2021: $12.0m) ve-year revolving credit facility (RCF) and an unsecured $6.0m (2021:
$3.0m) overdraft facility, as well as a secured £7.0m three-year RCF, all of which are held with HSBC. In
the US, the Group has a $8.0m (plus $2.0m from March to July each year) three-year line of credit facility
and a seven-year term loan of $6.5m, both held with Bank of America.
All bank facilities are operated independently and are therefore not syndicated. The Group’s net debt
position is monitored daily and reviewed by management on a weekly basis. Further details of the Group’s
capital management are given in the Financial Review on pages 54 to 60.
Categories of nancial instruments
In the following table those nancial instruments which are measured subsequent to initial recognition
at fair value are required to be grouped into levels 1 to 3 based on the degree to which the fair value
is observable:
• level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets
for identical assets or liabilities;
• level 2 – fair value measurements are those derived from inputs other than quoted prices included
within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
• level 3 – fair value measurements are those derived from valuation techniques that include inputs for
the asset or liability that are not based on observable market data (unobservable inputs).
Group Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Financial assets
Measured at amortised cost:
Trade receivables134,718 22,420 ––
Other receivables 478 763 55 58
Cash and cash equivalents 2,354 7,260 2,085 5,206
Amounts owed by subsidiaries ––4,086 1,194
Derivative nancial instruments measured at fair
value through other comprehensive income:
Trade receivables 91,109 ––
Derivative nancial instruments measured at fair
value through prot and loss:
Forward currency contracts (level 2) –11 ––
37,559 31,563 6,226 6,458
1 Trade receivables at amortised cost are shown net of lifetime expected credit losses.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 143
TREATT PLC Annual Report & Accounts 2022
29. FINANCIAL INSTRUMENTS CONTINUED
Group Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Financial liabilities
Measured at amortised cost:
Trade payables 17,565 10,412 27 67
Other creditors 4,927 6,269 429 436
UK bank overdraft 6,174 7,013 ––
US line of credit 2,034 –––
Lease liabilities 396 1,053 ––
Amounts owed to subsidiaries ––––
Revolving credit facilities 13,000 5,000 ––
US term loan 3,169 3,308 ––
Derivative nancial instruments measured at fair
value through prot and loss:
Forward currency contracts (level 2) 666 593 ––
47,931 33,648 456 503
Fair values of nancial assets and liabilities
The estimated fair values of nancial assets and liabilities is not considered to be signicantly dierent
from their carrying values.
Financial risk management objectives
The Group and Parent Company collate information from across the business and report to the Board on
key nancial risks. These risks include credit risk, liquidity risk, interest rate risk and currency risk. The
Group has policies in place, which have been approved by the Board, to manage these risks. The Group
does not enter into traded nancial instruments as the costs involved currently outweigh the risks they
seek to protect against. Speculative purchases of nancial instruments are not made.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
nancial loss to the Group or Parent Company. The Group’s credit risk is primarily attributable to its trade
receivables and details of how this risk is managed are explained in note 18. The credit risk on liquid
funds is limited because the counterparties are banks with good credit ratings assigned by international
credit rating agencies as outlined in note 19. The Directors are of the opinion that there are no signicant
concentrations of credit risk. The carrying amount of nancial assets recorded in the nancial statements,
which is net of impairment losses, represents the Group and Parent Company’s maximum exposure to
credit risk.
Liquidity risk management
Liquidity risk refers to the risk that the Group may not be able to fund the day-to-day running of the
Group. Liquidity risk is reviewed by the Board at all Board meetings. The Group manages liquidity risk
by monitoring actual and forecast cash ows and matching the maturity proles of nancial assets and
liabilities. The Group also monitors the drawdown of debt against the available banking facilities and
reviews the level of reserves. Liquidity risk management ensures sucient debt funding is available for the
Group’s day-to-day needs. Board policy is to maintain a reasonable headroom of unused committed bank
facilities. The Board also monitors the Group’s banking covenants which are based on total net assets,
interest cover and net debt to EBITDA ratio, and are calculated under IFRS. There were no breaches
during the year or prior year.
The Group has a number of debt facilities, details of which, including their terms and maturity prole,
are given in note 20. The undiscounted contracted maturity prole of the Group’s nancial instrument
liabilities payable at year-end, including interest payments estimated using the prevailing oating rate at
that date, is as follows:
Group
Within
0 to 3 months
£’000
Within
3 to 12 months
£’000
Within
1 to 2 years
£’000
Within
2 to 5 years
£’000
Over
5 years
£’000
Non-derivative nancial
instruments:
Trade payables 17,565 – – – –
Other creditors 3,736 1,084 104 3 –
UK bank overdraft 6,174 – – – –
US line of credit 2,034 – – – –
Revolving credit facilities 13,000 – – – –
US term loan:
– Capital repayments 207 620 827 1,515 –
– Interest repayments 34 90 87 65 –
Derivative nancial instruments:
Forward currency contracts 50 616 – – –
Group trade payables and other creditors are not interest-bearing and are all due within one year. All
nancial instruments held by the Parent Company fall due within twelve months, and contractual interest
due is £nil.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
144
TREATT PLC Annual Report & Accounts 2022
29. FINANCIAL INSTRUMENTS CONTINUED
Interest rate risk management
The Group is exposed to interest rate risk on short to medium-term borrowings primarily with two major
institutions being HSBC and Bank of America. The risk is managed by maintaining borrowings with
several institutions across a number of currencies, principally US Dollar and Sterling. Long-term nancing
is primarily used to nance long-term capital investment.
The Group has facilities denominated in various currencies, all of which attract oating rate interest.
Interest on the Group’s UK-based $9.0m unsecured RCF, £7.0m secured RCF and $6.0m overdraft
facility are charged at SONIA plus 2.25%, SONIA plus 1.20% and Bank of England base rate plus 2.00%
respectively for borrowings denominated in Sterling. The Group’s US-based $8.0m line of credit and
$6.5m term loan are both charged at SOFR plus 1.75%.
The Group’s net cash/(debt) position by currency at year-end, is as follows:
Group
Floating rate nancial assets/
(liabilities) Fixed rate nancial liabilities
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Bank balances:
US Dollars (2,015) 2,131 ––
Sterling (10,905) (800) ––
Euro 1509 ––
Other 93 420 ––
Overdrafts:
Sterling (6,028) (7,013) ––
Term loans:
US Dollars (3,169) (3,308) ––
Lease liabilities:
Sterling ––(396) (1,053)
Total net debt (22,023) (8,061) (396) (1,053)
Interest rate sensitivity analysis has been performed on the oating rate nancial liabilities to illustrate the
impact on Group prots if interest rates increased or decreased. A 100 bps increase or decrease has been
used, comprising management’s assessment of reasonably possible changes in interest rates. If interest
rates had been 100 bps higher or lower, then prot before taxation for the year ended 30 September
2022 would have decreased or increased as follows:
Group Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Impact on prot before tax of 1.00% interest rate
movement (314) (66) ––
Foreign currency risk management
Foreign currency risk management occurs at a transactional level on revenues and purchases in foreign
currencies and at a translational level in relation to the translation of overseas operations. The Group’s
main foreign exchange risk is the US Dollar. The Group has a risk management strategy with regards to
the hedging of foreign currency transactions which is approved by the Audit Committee. The policy for
the UK business is to mitigate foreign currency transactional exposures by managing foreign currency
borrowings, and by entering into foreign currency forward contracts and options on a rolling basis with the
aim to provide a hedge on the Group’s margin exposure where both purchases and sales are made in the
same currencies, and gross revenue exposure where only the selling price is exposed. This is achieved by
matching the value of the contracts, the hedging instrument, to the expected amount of foreign currency
margin received in the period, the hedged item.
Where the hedged item and hedging instrument are aligned economically and matched on a 1:1
ratio, a hedge is considered eective and is accounted for using the principles of hedge accounting.
Ineectiveness can occur as a result of a mismatch between the hedged item and instrument, for example
as a result of credit risk deterioration in the Group or the counterparty’s credit risk, or more likely a
shortfall in the amount of expected receipts or payments.
Further details of the Group’s foreign currency risk management can be found in the Financial Review on
pages 54 to 60.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 145
TREATT PLC Annual Report & Accounts 2022
29. FINANCIAL INSTRUMENTS CONTINUED
Foreign currency contract assets and liabilities are shown under the heading of ‘derivative nancial
instruments’, in current assets and liabilities respectively within the Group balance sheet. The following
table details the forward and option contracts outstanding at the year-end as well as information regarding
their related hedged items:
Group – as at 30 September 2022
Average
contract rate
Nominal
currency
‘000
Contract
GBP
£’000
Fair value loss
£’000
US Dollars:
Forward contract to sell USD within 4 – 6 months 1.2457 $7,000 5,642 (616)
Euros:
Forward contract to sell EUR within 1 – 3 months 1.1661 €2,500 2,144 (50)
(666)
Group – as at 30 September 2021
Average
contract rate
Nominal
currency
‘000
Contract
GBP
£’000
Fair value
(loss)/gains
£’000
US Dollars:
Forward contract to sell USD within 1 – 3 months 1.413 $9,000 6,369 (301)
Forward contract to sell USD within 4 – 6 months 1.382 $9,000 6,512 (162)
Forward contract to sell USD within 6 – 9 months 1.414 $3,500 2,475 (123)
Euros:
Forward contract to sell EUR within 1 – 3 months 1.157 €2,500 2,160 11
Forward contract to sell EUR within 4 – 6 months 1.168 €1,500 1,284 (7)
(582)
The derivative nancial instruments for the foreign currency contracts and options described above are
all held as cash ow hedges and are classied as level 2. The fair value of the foreign currency contracts
at the year-end equate to the mark-to-market valuation of the contracts and options. These represent the
amounts which the Group would expect to pay or receive in order to close these contracts at the balance
sheet date.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
The gain/(loss) recognised in the Groups income statement and the Group statement of comprehensive
income on cash ow hedges of foreign currency receipts during the year, is as follows:
Group
2022
£’000
2021
£’000
Revenue (2,336) 1,355
Other comprehensive income (23) (508)
(2,359) 847
The reconciliation of the hedging reserve per the statement of changes in equity is as follows:
Group
Hedging reserve
£’000
1 October 2020 123
Fair value movement on:
– Cash ow hedges of probable future receipts 847
Transfer from hedging reserve to:
– Prot and loss account (1,355)
Amounts recognised in other comprehensive income (508)
Taxation relating to items above 93
30 September 2021 (292)
Fair value movement on:
– Cash ow hedges of probable future receipts (2,359)
Transfer from hedging reserve to:
– Prot and loss account 2,336
Amounts recognised in other comprehensive income (23)
Taxation relating to items above 4
30 September 2022 (311)
146
TREATT PLC Annual Report & Accounts 2022
29. FINANCIAL INSTRUMENTS CONTINUED
The Group’s currency exposure, being those exposures arising from transactions where the net currency
gains and losses will be recognised in the income statement, is as follows:
Group – net foreign currency nancial assets
2022
£’000
2021
£’000
US Dollar 6,953 1,131
Euro 2,774 3,587
Other 148 499
9,875 5,217
A currency sensitivity analysis has been performed on the nancial assets and liabilities to sensitivity
of a 10% increase/decrease in the Sterling to US Dollar and Sterling to Euro exchange rate. A 10%
strengthening has been used, comprising management’s assessment of reasonably possible changes
in exchange rates. The impact on prot for the year in the income statement would be a gain on net
monetary assets or liabilities as follows:
Group
2022
£’000
2021
£’000
Impact of 10% strengthening of US Dollar against Sterling 773 126
Impact of 10% strengthening of Euro against Sterling 308 399
In management’s opinion the sensitivity analysis is unrepresentative of the inherent foreign exchange risk
since it is limited only to the year-end exposure and does not reect the exposure during the year, nor
does it include the impact of gains or losses that would have occurred on hedging instruments.
30. RELATED PARTY TRANSACTIONS
The following transactions were carried out with related parties:
Group
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Group, is set out
below in aggregate. Further information about the remuneration of individual Directors is provided in the
Directors’ Remuneration Report on pages 95 to 99.
Group
2022
£’000
2021
£’000
Salaries and other short-term employee benets 754 1,166
Fees paid to Non-executive Directors in respect of qualifying services 417 375
Employer’s social security costs 160 213
Pension contributions to money purchase schemes 52 63
Share-based payments charge in respect of qualifying services 351 501
1,734 2,318
No Directors were members of a dened benet pension scheme as the scheme was closed to future
accrual with eect from 31 December 2012. Further details on Directors’ pensions are given in the
Directors’ Remuneration Report on pages 96 and 97.
Parent Company
Transactions with subsidiaries:
Parent Company
2022
£’000
2021
£’000
Interest received from:
R C Treatt & Co Limited 16 65
Dividends received from:
R C Treatt & Co Limited 2,005 1,404
Treatt USA Inc 2,829 2,300
Balances with subsidiaries:
Parent Company
2022
£’000
2021
£’000
Amounts owed to Parent Company:
R C Treatt & Co Limited 4,086 1,194
The Parent Company has guaranteed certain bank borrowings of its subsidiaries as set out in note 29.
Amounts owed to the Parent Company are unsecured and will be settled in cash.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 147
TREATT PLC Annual Report & Accounts 2022
31. ALTERNATIVE PERFORMANCE MEASURES
The Group reports certain alternative performance measures (APMs) that are not required under IFRS.
The Group believes that these APMs, when viewed in conjunction with its IFRS nancial information,
provide valuable and more meaningful information regarding the underlying nancial and operating
performance of the Group to its stakeholders.
APMs referenced throughout the Annual Report which are not possible to easily derive from the nancial
statements, are shown in the reconciliations below alongside their statutory equivalent measures.
Return on average capital employed
Adjusted return on average capital employed (ROACE) is considered to be a key performance indicator
(KPI), and is an APM which enables stakeholders to see the protability of the business as a function of
how much capital has been invested in the business.
In the years to and including the year to 30 September 2020, the equivalent KPI disclosed was return
on capital employed (ROCE), however the Board decided that ROACE was considered to be a more
meaningful measure and as such, has been reported in the current and prior nancial year. The derivation
of how the new APM is measured, along with the statutory equivalent measure, and the former measure,
is shown below:
ROACE – APM measure
Group Page reference
2022
£’000
2021
£’000
2020
£’000
Total equity 115 133,850 106,299 91,120
Net debt/(cash) 118 22,419 9,114 (427)
Capital employed 156,269 115,413 90,693
Interim total equity1114,988 95,369 88,782
Interim net debt/(cash)119,787 4,468 (6,067)
Interim capital employed1134,775 99,837 82,715
Average capital employed2135,486 101,981 81,519
Adjusted operating prot3110 15,773 21,346 15,137
ROACE % 11.6% 20.9% 18.6%
ROACE – statutory measure
Group Page reference
2022
£’000
2021
£’000
Average capital employed2135,486 101,981
Prot before taxation 110 16,179 19,617
ROACE % 11.9% 19.2%
ROCE – former measure
Group Page reference
2022
£’000
2021
£’000
Closing capital employed 156,269 115,413
Adjusted operating prot3110 15,773 21,346
ROCE % 10.1% 18.5%
The previous ve years’ measure of ROACE can be found in the Key Performance Indicators section,
on page 20.
Net debt/(cash) to adjusted EBITDA
The net debt/(cash) to adjusted EBITDA ratio is useful to ensure that the level of borrowings in the
business can be supported by the cashow in the business, and as it is measured by reference to adjusted
EBITDA, is considered to be an APM. The derivation of this ratio, along with its statutory equivalent
measure is shown below:
APM Measure
Group Page reference
2022
£’000
2021
£’000
Prot before taxation 110 16,179 19,617
Exceptional items 110 (923) 1,302
Prot before taxation and exceptional items 110 15,256 20,919
Interest receivable 110 (8) (12)
Interest payable 110 525 439
Depreciation of property, plant and equipment and
right-of-use assets 126 2,476 1,705
Amortisation of intangible assets 126 215 93
Adjusted EBITDA 18,464 23,144
Net debt 118 22,419 9,114
Net debt to adjusted EBITDA 110 1.21 0.39
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
148
TREATT PLC Annual Report & Accounts 2022
31. ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Statutory measure
Group Page reference
2022
£’000
2021
£’000
Prot before taxation 110 16,179 19,617
Interest receivable 110 (8) (12)
Interest payable 110 525 439
Depreciation of property, plant and equipment and
right-of-use assets 126 2,476 1,705
Amortisation of intangible assets 126 215 93
EBITDA 19,387 21,842
Net debt 118 22,419 9,114
Net debt to EBITDA 110 1.16 0.42
1 Interim total equity and interim net debt/(cash) for a given year are taken from the unaudited half year condensed nancial
statements made out to 31 March, which can be found on www.treatt.com.
2 Average capital employed for a given year is calculated as the average of the opening, interim and closing capital employed.
3 Adjusted operating prot for ROACE and ROCE purposes is operating prot before exceptional items as dened in the Group
income statement.
Alternative performance measures no longer reported
In the previous nancial years, the Group reported free cash ow as an alternative performance measure.
The measure was calculated as cash generated from operations minus the purchase of property, plant
and equipment and intangible assets, adjusted to exclude UK relocation costs.
The measure was useful to express Group net cashows without the distortion of the signicant annual
spend on the UK relocation project. As the capital investment programme nears its conclusion and the
associated spend reduces, the measure was no longer considered useful.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2022
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 149
TREATT PLC Annual Report & Accounts 2022
NOTICE OF ANNUAL GENERAL MEETING
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE
IN ANY DOUBT AS TO WHAT ACTION TO TAKE YOU ARE RECOMMENDED TO CONSULT YOUR
STOCKBROKER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT ADVISOR AUTHORISED
UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000.
If you have sold or transferred all of your ordinary shares in Treatt plc, you should pass this document to
the person through whom the sale or transfer was made for transmission to the purchaser or transferee.
Notice of the Annual General Meeting (AGM) which has been convened for 27 January 2023 at 10.30am
at Treatt plc, Skyliner Way, Bury St Edmunds, Suolk, IP32 7FR is set out below.
PROXY VOTING
Shareholders are requested to complete and submit their proxy appointment online by using the Signal
Shares share portal service at www.signalshares.com as soon as possible and, in any event, by no later
than 10.30am on 25 January 2023, being 48 hours before the time appointed for the holding of the
AGM. To do so, you will need to log in to your Treatt plc Signal Shares account, or register if you have
not previously done so. To register you will need your Investor Code, which is detailed on your share
certicate or is available from our registrars, Link Group. For those who hold their shares in uncerticated
form in CREST, proxy appointments may be made via the CREST system.
Proxy appointments can also be made by completing a paper proxy form and returning it to Link Group in
accordance with the instructions printed on the form. If you require a paper proxy form, please contact
Link Group by email at enquiries@linkgroup.co.uk or by telephone on +44 (0) 371 664 0300*.
* Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom are charged at the
applicable international rate. Lines are open 9.00am – 5.30pm Monday to Friday excluding bank holidays in England andWales.
Notice is hereby given that the AGM of the shareholders of Treatt plc (the Company) will be held at
Treatt plc, Skyliner Way, Bury St Edmunds, Suolk, IP32 7FR on 27 January 2023, at 10.30am for the
purpose of considering and, if thought t, passing the resolutions set out in this notice. Resolutions 1 to 12
(inclusive) will be proposed as ordinary resolutions. Resolutions 13 to 16 (inclusive) will be proposed as
special resolutions.
ORDINARY RESOLUTIONS
Resolution 1 – Annual accounts and Directors’ Report
1. To receive the audited accounts and related reports of the Directors and auditors for the year ended
30September 2022.
Explanatory note
Under the Companies Act 2006 (the ‘Act’) the Directors of the Company must present the accounts to
the meeting.
Resolution 2 – Directors’ Remuneration Report
2. To approve the Directors’ Remuneration Report.
Explanatory note
The Act requires two resolutions to be put to shareholders on separate sections of the Directors’
Remuneration Report. The remuneration policy is only required to be approved by shareholders every
three years or in the intervening period if amendments are proposed. The Company’s remuneration policy
was approved at the 2022 AGM and accordingly, since no amendments are proposed, it will not be put
before shareholders at the AGM in 2023. Resolution 2 is an advisory resolution on the Implementation
Section of the Directors’ Remuneration Report, which details the remuneration packages paid to Directors
during the year ended 30 September 2022. You can nd the Implementation Section of the Directors’
Remuneration Report on pages 92 to 99.
Resolution 3 – Final dividend
3. To approve a nal dividend of 5.35 pence per share on the ordinary shares of the Company for the
year ended 30 September 2022.
Explanatory note
A nal dividend can only be paid after the shareholders at a general meeting have approved it. A nal
dividend of 5.35 pence per ordinary share is recommended by the Directors for payment to shareholders
who are on the register of members at the close of business on 3 February 2023. If approved, the date
of payment of the nal dividend will be 16 March 2023. An interim dividend of 2.50 pence per ordinary
share was paid on 11 August 2022. This represents an increase of 0.35 pence per share, or 4.7%, on the
total 2021 dividend.
Resolutions 4 to 9 – Re-election of Directors
4. To elect Ryan Govender as a Director of the Company.
5. To elect Christine Sisler as a Director of the Company.
6. To elect Philip O’Connor as a Director of the Company.
7. To re-elect Vijay Thakrar as a Director of the Company.
8. To re-elect Daemmon Reeve as a Director of the Company.
9. To re-elect David Johnston as a Director of the Company.
Explanatory note
In accordance with the Company’s Articles of Association and in order to comply with best practice
under the 2018 Corporate Governance Code, all Directors will retire and stand for election/re-election.
Short biographies of the Directors are given on pages 70 and 71. Having considered the performance
150
TREATT PLC Annual Report & Accounts 2022
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
of, and contribution made, by each of the Directors, the Board remains satised that the performance
of each of the Directors continues to be eective and to demonstrate commitment to the role and, as
such, recommends their election/re-election, as appropriate. As previously announced, both Tim Jones
and Yetunde Hofmann are stepping down as Chairman and Non-executive Director respectively at the
conclusion of the AGM and therefore will not stand for re-election.
Resolution 10 – Re-appointment of auditors
10. To re-appoint BDO LLP as auditors of the Company, to hold oce from the conclusion of this meeting
until the conclusion of the next AGM.
Explanatory note
At each general meeting at which the Company’s Annual Report and Accounts are presented to its ordinary
shareholders, the shareholders are required to appoint an auditor to serve until the next such meeting.
Following a recommendation by the Audit Committee, the Board is proposing the re-appointment of BDO LLP
as auditors of the Company.
Resolution 11 – Auditor’s remuneration
11. To authorise the Directors to determine the remuneration of the auditors of the Company.
Explanatory note
The remuneration of the Company’s auditors must be xed by the Company in general meeting or in such
manner as the shareholders may determine in general meeting. This resolution gives authority to the
Directors to determine the remuneration of the auditors of the Company.
Resolution 12 – Authority to allot securities
12. THAT in accordance with section 551 of the Companies Act 2006 (the Act) the Directors be and
are hereby generally and unconditionally authorised to exercise all the powers of the Company to allot
shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the
Company:
(a) up to an aggregate nominal amount of £405,764 (such amount to be reduced by the nominal amount
allotted or granted under paragraph (b) below in excess of such sum); and
(b) comprising equity securities (as dened in Sections 560 of the Act) up to an aggregate nominal
amount of £811,528 (such amount to be reduced by any allotments or grants made under paragraph
(a) above) in connection with an oer by way of a rights issue in favour of ordinary shareholders
in proportion (as nearly as may be practicable) to the respective number of ordinary shares held
by them on the record date for such allotment (and holders of any other class of equity securities
entitled to participate therein or if the Directors consider it necessary, as permitted by the rights of
those securities), but subject to such exclusions or other arrangements as the Directors may consider
necessary or appropriate to deal with fractional entitlements, treasury shares, record dates or legal,
regulatory or practical diculties which may arise under the laws of, or the requirements of any
regulatory body or stock exchange in, any territory or any other matter whatsoever.
provided that this authority shall expire at the conclusion of the AGM of the Company to be held in
2024, or at close of business on 27 April 2024 (whichever occurs rst) save that the Company may
before such expiry make an oer or enter into an agreement which would or might require shares
to be allotted, or rights to subscribe for or to convert securities into shares to be granted, after such
expiry and the Directors may allot shares or grant such rights in pursuance of such an oer or
agreement as if the authority conferred hereby had not expired.
Explanatory note
The Company may only allot ordinary shares or grant rights over ordinary shares if authorised to do so by
shareholders. This resolution seeks to grant authority to the Directors to allot unissued share capital of the
Company and grant rights to subscribe for, or convert other securities into, shares and will expire at the
conclusion of the next AGM of the Company in 2024 or, if earlier, on 27 April 2024 (the date which is
15 months after the date of passing of the resolution). Whilst the Board has no present intention of
exercising these authorities, the Board believes it is in the best interests of the Company to have these
authorities so that, if the need arises, the Board can allot securities at short notice and without the need
to hold a general meeting of the Company.
The authority in paragraph (a) of the resolution will allow the Directors to allot new shares and grant
rights to subscribe for, or convert other securities into, shares up to an aggregate nominal value of
£405,764 (representing approximately one-third (33.33%) of the total issued ordinary share capital of the
Company as at 22November 2022, the latest practicable date prior to publication of this Notice).
The authority in paragraph (b) of the resolution will allow the Directors to allot new shares and grant
rights to subscribe for, or convert other securities into, shares only in connection with a rights issue up
to an aggregate nominal value of £811,528 (representing approximately two-thirds (66.66%) of the total
issued ordinary share capital of the Company as at 22 November 2022, the latest practicable date prior
to publication of this Notice) such amount to be reduced by the amount of any relevant securities issued
under the authority conferred by paragraph (a) of resolution 12.
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 151
TREATT PLC Annual Report & Accounts 2022
SPECIAL RESOLUTIONS
Resolution 13 – Authority to disapply pre-emption rights
13. THAT subject to the passing of resolution 12 above and in accordance with Sections 570 and 573
of the Act, the Directors be and are hereby given power to allot equity securities (within the meaning of
Section 560 of the Act) for cash pursuant to the authority conferred by resolution 12 above and to sell
ordinary shares (as dened in Section 560(1) of the Act) held by the Company as treasury shares for
cash, as if Section 561 of the Act did not apply to any such allotment or sale, such power to be limited to
the allotment of equity securities for cash and the sale of treasury shares:
(a) in connection with or pursuant to an oer of, or invitation to acquire, equity securities (but in the case
of the authority granted under paragraph (b) of resolution 12, by way of a rights issue only) in favour
of holders of ordinary shares in proportion (as nearly as practicable) to the respective number of
ordinary shares held by them on the record date for such allotment or sale (and holders of any other
class of equity securities entitled to participate therein or if the Directors consider it necessary, as
permitted by the rights of those securities) but subject to such exclusions or other arrangements as
the Directors may consider necessary or appropriate to deal with fractional entitlements, treasury
shares, record dates or legal, regulatory or practical diculties which may arise under the laws of, or
the requirements of any regulatory body or stock exchange in any territory or any other matter;
(b) in the case of the authority granted under paragraph (a) of resolution 12 and/or in the case of any sale
of treasury shares, (and otherwise than under paragraph (a) of this resolution) up to an aggregate
nominal amount of £121,729; and
(c) in the case of the authority granted under paragraph (a) of resolution 12 above and/or in the case of
any sale of treasury shares (and otherwise than under paragraph (a) and (b) of this resolution), up to
a nominal amount equal to 20% of any allotment of equity securities or sale of treasury shares from
time to time under paragraph (b) of this resolution, such authority to be used only for the purposes of
making a follow-on oer which the Directors determine to be a kind contemplated by paragraph 3 of
Section 2B of the Statement of Principles on Disapplying Pre-Emption Rights most recently published
by the Pre-Emption Group prior to the date of this notice,
provided that this power shall expire at the conclusion of the AGM of the Company to be held in 2024 or at
close of business on 27 April 2024 (whichever occurs rst), save that the Company may before such expiry
make an oer or enter into an agreement which would or might require equity securities to be allotted, or
treasury shares to be sold, after such expiry and the Directors may allot equity securities or sell treasury
shares in pursuance of such an oer or agreement as if the power conferred hereby had not expired.
Explanatory note
Under Section 561 of the Act, if the Directors wish to allot any of the unissued shares or grant rights over
shares or sell treasury shares for cash (other than pursuant to an employee share scheme) they must
in the rst instance oer them to existing shareholders in proportion to their holdings. There may be
occasions, however, when the Directors will need the exibility to nance business opportunities by the
issue of ordinary shares without a pre-emptive oer to existing shareholders. This cannot be done under
the Act unless the shareholders have rst authorised this.
Resolution 13 asks the shareholders to do this and, apart from rights issues or any other pre-emptive oer
concerning equity securities, the authority will be limited to the issue of shares for cash up to a maximum
aggregate nominal value of £121,729 (which includes the sale on a non pre-emptive basis of any shares
held in treasury), which is equivalent to approximately 10% of the Company’s issued ordinary share capital
as at 22 November 2022, the latest practicable date prior to publication of this Notice. Shareholders will
note that this resolution also relates to treasury shares and will be proposed as a special resolution.
This resolution seeks a disapplication of the pre-emption rights on a rights issue so as to allow the
Directors to make exclusions or such other arrangements as may be appropriate to resolve legal or
practical problems which, for example, might arise with overseas shareholders. If given, the authority will
expire at the conclusion of the next AGM of the Company in 2024 or, if earlier, 27 April 2024 (the date
which is 15 months after the date of passing of the resolution).
The Directors intend to adhere to the provisions in the Pre-Emption Group’s most recently published
Statement of Principles in respect of any disapplication of pre-emption rights.
Resolution 14 – Authority to disapply pre-emption rights for the purposes of acquisitions or
capital investments
14. THAT subject to the passing of resolutions 12 and 13 above and in addition to the power granted under
resolution 13, the Directors be and are hereby given power pursuant to Sections 570 and 573 of the Act
to allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority
conferred paragraph (a) of resolution 12 above and to sell ordinary shares (as dened in Section 560(1) of
the Act) held by the Company as treasury shares for cash, as if Section 561 of the Act did not apply to any
such allotment of equity securities for cash and sale of treasury shares, such power to be limited to:
(a) the allotment of equity securities for cash and sale of treasury shares up to an aggregate nominal
amount of £121,729; such authority to be used only for the purposes of nancing (or renancing,
if the authority is to be used within 12 months after the original transaction) a transaction which
the Directors have determined to be either an acquisition or specied capital investment of a kind
contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently
published by the Pre-Emption Group prior to the date of this Notice, or for any other purposes as the
Company in general meeting may at any time by special resolution determine; and
(b) the allotment of equity securities or sale of treasury shares (otherwise than under paragraph (a) of
this resolution) up to a nominal amount equal to 20% of any allotment of equity securities or sale
of treasury shares from time to time under paragraph (a) of this resolution, such authority to be
used only for the purposes of making a follow-on oer which the Directors determine to be a kind
contemplated by paragraph 3 of Section 2B of the Statement of Principles on Disapplying Pre-
Emption Rights most recently published by the Pre-Emption Group prior to the date of this notice,
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
152
TREATT PLC Annual Report & Accounts 2022
provided that this power shall expire at the conclusion of the AGM of the Company to be held in 2024 or
at close of business on 27 April 2024 (whichever occurs rst), save that the Company may before such
expiry make an oer or enter into an agreement which would or might require equity securities to be
allotted, or treasury shares to be sold, after such expiry and the Directors may allot equity securities or
sell treasury shares in pursuance of such an oer or agreement as if the power conferred hereby had
not expired.
Explanatory note
The purpose of resolution 14 is to seek a further power from shareholders to allot equity securities or sell
treasury shares for cash otherwise than to existing shareholders pro rata to their holdings to reect the
Statement of Principles for the disapplication of pre-emption rights.
Accordingly, resolution 14 will be proposed as a special resolution to grant such a power. The power will
be limited to the allotment of equity securities and sales of treasury shares for cash up to an aggregate
nominal value of £121,729, being approximately 10% of the Company’s issued ordinary share capital as at
22 November 2022, the latest practicable date prior to publication of this Notice. This is in addition to the
10% referred to in resolution 13. If given, the authority will expire at the conclusion of the next AGM of the
Company in 2024 or, if earlier, 27 April 2024 (the date which is 15 months after the date of passing of the
resolution). The Directors will have due regard to the Statement of Principles in relation to any exercise
of this power and in particular they conrm that they intend to use this power only in connection with an
acquisition or other capital investment (of a kind contemplated by the Statement of Principles from time
to time) which is announced contemporaneously with the announcement of the issue, or which has taken
place in the preceding 12 month period and is disclosed in the announcement of the issue.
The Directors have no present intention of exercising these powers but believe that this resolution will
assist them in taking advantage of business opportunities as they arise.
Resolution 15 – Authority to purchase own shares
15. THAT the Company be generally and unconditionally authorised to make market purchases (within the
meaning of Section 693 of the Act) of up to a maximum of 6,086,456 ordinary shares in the capital of the
Company, subject to the following conditions:
(a) the minimum price (excluding expenses) which may be paid for an ordinary share is the nominal
amount of that share; and
(b) the maximum price which may be paid for an ordinary share so purchased is an amount equal to 5%
above the average of the middle market quotations shown for an ordinary share in The London Stock
Exchange Daily Ocial List on the ve business days immediately preceding the day on which that
ordinary share is purchased.
The authority hereby conferred shall expire at the conclusion of the AGM of the Company to be held
in 2024, or at close of business on 27 April 2024 (whichever occurs rst), save that in relation to the
purchase of ordinary shares the contract for which is concluded before such date and which would or
might be executed wholly or partly on or after such date, the Company may purchase ordinary shares
pursuant to any such contract under this authority.
Explanatory note
In certain circumstances, it may be advantageous for the Company to purchase its own shares and
resolution 15 seeks the authority from shareholders to continue to do so. The Directors will continue to
exercise this power only when, in the light of market conditions prevailing at the time, they believe that the
eect of such purchases will be to increase earnings per share and is in the best interests of shareholders
generally. Other investment opportunities, appropriate gearing levels and the overall position of the
Company will be taken into account when exercising this authority.
Any shares purchased in this way will be cancelled and the number of shares in issue will be reduced
accordingly, save that the Company may hold in treasury any of its own shares that it purchases pursuant
to the Act and the authority conferred by this resolution. This gives the Company the ability to re-issue
treasury shares quickly and cost-eectively and provides the Company with greater exibility in the
management of its capital base.
It also gives the Company the opportunity to satisfy employee share scheme awards with treasury shares.
Once held in treasury, the Company is not entitled to exercise any rights, including the right to attend and
vote at meetings in respect of the shares. Further, no dividend or other distribution of the Company’s
assets may be made to the Company in respect of the treasury shares.
The resolution species the maximum number of ordinary shares that may be acquired (approximately
10% of the Company’s issued ordinary share capital as at 22 November 2022, the latest practicable date
prior to publication of this Notice) and the maximum and minimum prices at which they may be bought.
The total number of options to subscribe for ordinary shares that were outstanding at 22 November 2022,
the latest practicable date prior to publication of this Notice, was 729,518. The proportion of issued share
capital that they represented at that time was 1.20% and the proportion of issued share capital that they
will represent if the full authority to purchase shares (existing and being sought) is used is 1.33%.
If given, the authority will expire at the conclusion of the next AGM of the Company in 2024 or, if earlier,
27 April 2024 (the date which is 15 months after the date of passing of the resolution).
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 153
TREATT PLC Annual Report & Accounts 2022
Resolution 16 – Notice of general meetings
16. THAT a general meeting (other than an Annual General Meeting) of the Company may be called on not
less than 14 clear days’ notice.
Explanatory note
Under the Companies Act 2006, the notice period required for all general meetings of listed companies
is 21 days; however, it is possible to reduce this period to 14 days (other than for AGMs), provided that
the following two conditions are met: (i) that a company oers facilities for shareholders to submit proxy
appointments by electronic means; and (ii) that there is an annual resolution of shareholders approving the
reduction in the minimum notice period from 21 days to 14 days. This resolution would, if passed, allow
the Company exibility to call general meetings, other than AGM, on not less than 14 clear days’ notice.
This additional exibility would not be used as a matter of routine for such meetings but would be used
where the Board considers it appropriate in the circumstances. The approval will be eective until the
Company’s next AGM, at which meeting it is intended to propose a similar resolution for approval.
By order of the Board
Ryan Govender
Chief Financial Ocer & Company Secretary
Registered Oce:
Skyliner Way
Bury St Edmunds
Suolk
IP32 7FR
15 December 2022
The note on voting procedures and general rights of shareholders, together with explanatory notes on the
resolutions to be put to the meeting form part of this Notice.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
154
TREATT PLC Annual Report & Accounts 2022
NOTES ON VOTING PROCEDURES AND GENERAL RIGHTS OF SHAREHOLDERS
Only those persons entered in the Register of Members of the Company (the Register) as at close of
business on 25 January 2023 (the Record Date) shall be entitled to attend or vote at the AGM in respect
of the number of ordinary shares in the capital of the Company registered in their names at that time.
Changes to entries on the Register for certicated or uncerticated shares of the Company after the
Record Date shall be disregarded in determining the rights of any person to attend or vote at the AGM.
Should the AGM be adjourned to a time no more than 48 hours after the Record Date, that time will
also apply for the purpose of determining the entitlement of members to attend and vote (and for the
purpose of determining the number of votes they may cast) at the adjourned AGM. Should the AGM be
adjourned for a longer period, to be so entitled, members must have been entered on the Register by
close of business 48 hours prior to the adjourned AGM (excluding weekends and public holidays) or, if the
Company gives notice of the adjourned AGM, at the time specied in such notice.
Voting at the meeting will be conducted by poll rather than on a show of hands, which the Board believes
provides a more accurate reection of shareholder views and takes into account the number of shares
held by each member. Those shareholders who are unable to attend the meeting should submit a form
of proxy as detailed below. Shareholders attending the meeting may also wish to vote in advance of the
meeting by submitting a form of proxy. Members who have done so will not need to vote at the meeting
unless they wish to change their vote or the way in which the proxy is instructed to vote. It will not be
possible to vote at the meeting if joining remotely.
A member entitled to attend and vote at this meeting may appoint a proxy or proxies to attend and vote
instead of him or her. The proxy need not be a member of the Company. Shareholders are requested
to complete and submit their proxy appointment online by using the Signal Shares share portal service
at www.signalshares.com as soon as possible and, in any event, by no later than 10.30am on 25
January 2023, being 48 hours before the time appointed for the holding of the AGM (or in the case of an
adjournment, no later than 48 hours (excluding non-business days) before the time xed for the holding
of the adjourned meeting). To do so, you will need to log in to your Treatt plc Signal Shares account, or
register if you have not previously done so. To register you will need your Investor Code, which is detailed
on your share certicate or is available from our registrars, Link Group.
Proxy appointments can also be made by completing a paper proxy form and returning it to Link Group in
accordance with the instructions printed on the form. If you require a paper proxy form, please contact
Link Group by email at enquiries@linkgroup.co.uk or by telephone on +44 (0) 371 664 0300. Calls are
charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom are
charged at the applicable international rate. Lines are open 9.00am – 5.30pm Monday to Friday excluding
bank holidays in England and Wales. Completion and return of a form of proxy will not preclude a member
from attending and voting in person at the meeting or any adjournment of the meeting.
An abstention option is provided on the form of proxy to enable you to instruct your proxy to abstain on
any particular resolution, however, it should be noted that an abstention in this way is not a ‘vote’ in law
and will not be counted in the calculation of the proportion of the votes ‘For’ and ‘Against’ a resolution.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so for the AGM to be held on 27 January 2023 and any adjournment(s) of the meeting
by using the procedures described in the CREST Manual. CREST personal members or other CREST
sponsored members, and those CREST members who have appointed a voting service provider(s), should
refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action
on their behalf. Please note the following:
(a) In order for a proxy appointment or instruction made using the CREST service to be valid, the
appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s (‘EUI’) specications and must contain the
information required for such instructions, as described in the CREST Manual. The message,
regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction
given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by
the issuer’s agent (ID RA10) by the latest time(s) for receipt of proxy appointments specied in this
notice of the AGM. For this purpose, the time of receipt will be taken to be the time (as determined by
the timestamp applied to the message by the CREST applications host) from which the issuer’s agent
is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this
time any change of instructions to proxies appointed through CREST should be communicated to the
appointee through other means.
(b) CREST members and, where applicable, their CREST sponsors or voting service providers should note
that EUI does not make available special procedures in CREST for any particular messages. Normal
system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST
personal member or sponsored member or has appointed a voting service provider(s), to procure
that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting service providers
are referred in particular to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
(c) The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
regulation 35(5)(a) of the Uncerticated Securities Regulations 2001. Members may change proxy
instructions by submitting a new proxy appointment using the methods set out above. Note that the
cut-o time for receipt of proxy appointments also apply in relation to amended instructions; any
amended proxy appointment received after the relevant cut-o time will be disregarded.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 155
TREATT PLC Annual Report & Accounts 2022
If you are an institutional investor you may be able to appoint a proxy electronically via the Proximity
platform, a process which has been agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 10.30am
on 25 January 2023 in order to be considered valid or, if the meeting is adjourned, by the time which is
48 hours before the time of the adjourned meeting. Before you can appoint a proxy via this process you
will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these
carefully as you will be bound by them and they will govern the electronic appointment of your proxy.
The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another
person and who have been nominated to receive communications from the Company in accordance with
section 146 of the Companies Act 2006 (‘nominated persons’). Nominated persons may have a right
under an agreement with the registered shareholder who holds the shares on their behalf to be appointed
(or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a
right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to
the person holding the shares as to the exercise of voting rights.
A member of the Company which is a corporation may authorise a person or persons to act as its
representative(s) at the AGM. In accordance with the provisions of the Companies Act 2006 (as amended
by the Companies (Shareholders’ Rights) Regulations 2009), each such representative may exercise
(on behalf of the corporation) the same powers as the corporation could exercise if it were an individual
member of the Company, provided that they do not do so in relation to the same shares. It is therefore no
longer necessary to nominate a designated corporate representative.
Pursuant to Section 319A of the Companies Act 2006, the Company must cause to be answered at
the AGM any question relating to the business being dealt with at the AGM which is put by a member
attending the meeting, except in certain circumstances, including if it is undesirable in the interests of the
Company or the good order of the meeting that the question be answered or if to do so would involve the
disclosure of condential information.
Members satisfying the thresholds in Section 338 of the Companies Act 2006 may require the Company
to give, to members of the Company entitled to receive notice of the AGM, notice of a resolution which
those members intend to move (and which may properly be moved) at the AGM. A resolution may
properly be moved at the AGM unless (i) it would, if passed, be ineective (whether by reason of any
inconsistency with any enactment or the Company’s constitution or otherwise); (ii) it is defamatory of any
person; or (iii) it is frivolous or vexatious. The business which may be dealt with at the AGM includes a
resolution circulated pursuant to this right. A request made pursuant to this right may be in hard copy or
electronic form, must identify the resolution of which notice is to be given, must be authenticated by the
person(s) making it and must be received by the Company no later than six weeks before the date of
the AGM.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Members satisfying the thresholds in Section 338A of the Companies Act 2006 may request the Company
to include in the business to be dealt with at the AGM any matter (other than a proposed resolution) which
may properly be included in the business at the AGM. A matter may properly be included in the business at
the AGM unless (i) it is defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant
to this right may be in hard copy or electronic form, must identify the matter to be included in the business,
must be accompanied by a statement setting out the grounds for the request, must be authenticated by the
person(s) making it and must be received by the Company no later than six weeks before the date of the AGM.
In accordance with Section 311A of the Companies Act 2006, the contents of this notice of meeting details
the total number of shares in respect of which members are entitled to exercise voting rights at the
AGM, the total voting rights members are entitled to exercise at the AGM and, if applicable, any members’
statements, members’ resolutions or members’ matters of business received by the Company after the
date of this notice will be available on the Company’s website www.treatt.com.
As at 22 November 2022 the Company’s issued share capital consists of 60,864,564 ordinary shares.
The number of shares held in the Employee Benet Trust and Treatt Share Incentive Plan, under which
voting rights are waived, is 694,416. The total number of voting rights in the Company as at
22 November 2022 (the latest practicable date prior to publication of this Notice) is 60,170,148.
A statement of Directors’ share transactions and copies of their service contracts and the letters of
appointment of the Non-executive Directors are available for inspection during usual business hours at
the registered oce of the Company from the date of this notice until the close of the AGM (Saturdays,
Sundays and public holidays excluded).
Except as provided above, members who wish to communicate with the Company in relation to the
meeting should do so using the following means:
Calling the Company Secretariat on +44 (0) 1284 702500;
Emailing the Company Secretariat on Cosec@treatt.com; or
Writing to: The Company Secretariat, Treatt plc, Skyliner Way, Bury St Edmunds, Suolk, IP32 7FR.
156
TREATT PLC Annual Report & Accounts 2022
PARENT COMPANY INFORMATION AND ADVISORS
DIRECTORS
Tim Jones
Chairman and Non-executive Director
Daemmon Reeve
Chief Executive Ocer
Ryan Govender
Chief Financial Ocer
Vijay Thakrar
Senior Independent Non-executive Director and
Chairman Designate
David Johnston
Non-executive Director
Philip O’Connor
Independent Non-executive Director
Christine Sisler
Independent Non-executive Director
COMPANY SECRETARY
Ryan Govender
REGISTERED OFFICE
Skyliner Way,
Bury St. Edmunds,
Suolk, IP32 7FR
Tel: +44 (0) 1284 702500
Email: cosec@treatt.com
WEBSITE
www.treatt.com
REGISTERED NUMBER
01568937
AUDIT COMMITTEE
Philip O’Connor (Chair)
Vijay Thakrar
Christine Sisler
REMUNERATION COMMITTEE
Yetunde Hofmann (Chair)
Vijay Thakrar
Christine Sisler
NOMINATION COMMITTEE
Vijay Thakrar (Chair)
Daemmon Reeve
Yetunde Hofmann
Christine Sisler
Philip O’Connor
JOINT BROKERS
Investec Bank plc
30 Gresham Street,
London, EC2V 7QP
Peel Hunt LLP
7th Floor,
100 Liverpool Street,
London, EC2M 2AT
PUBLIC RELATIONS
MHP
4th Floor,
60 Great Portland Street,
London, W1W 7RT
AUDITORS
BDO LLP
16 The Havens,
Ransomes Europark,
Ipswich, IP3 9SJ
TAX ADVISORS
KPMG LLP
Botanic House,
98–100 Hills Road,
Cambridge, CB2 1JZ
Crowe LLP
124 South Florida Avenue, Suite 1,
Lakeland, Florida 33801-4629
SOLICITORS
Greene & Greene Solicitors
80 Guildhall Street,
Bury St. Edmunds,
Suolk, IP33 1QB
Ashurst LLP
London Fruit & Wool Exchange,
1 Duval Square,
London, E1 6PW
BANKERS
HSBC Bank plc
140 Leadenhall Street,
London, EC3V 4PS
Bank of America
5th Floor, 101 E. Kennedy Boulevard,
Tampa, FL 33602
REGISTRARS
Link Group
10th Floor,
Central Square,
29 Wellington Street,
Leeds, LS1 4DL
Annual and half year reports are available on the
Group’s website: www.treatt.com
Financial Statements
Corporate GovernanceStrategic Report
Overview Other Information 157
TREATT PLC Annual Report & Accounts 2022
FINANCIAL CALENDAR
FINANCIAL YEAR 2021/22
Financial year ended 30 September 2022
Results for year announced 29 November 2022
Annual Report and Financial Statements published 15 December 2022
Annual General Meeting 27 January 2023
Final dividend for 2022 goes ‘ex-dividend’ 2 February 2023
Record date for 2022 nal dividend 3 February 2023
Last day for dividend reinvestment plan election 23 February 2023
Final dividend for 2022 paid 16 March 2023
FINANCIAL YEAR 2022/23
Interim results to 31 March 2023 announced 9 May 2023*
Interim dividend for 2023 goes ‘ex-dividend’ 29 June 2023*
Record date for 2023 interim dividend 30 June 2023*
Last day for dividend reinvestment plan election 20 July 2023*
Interim dividend for 2023 paid 10 August 2023*
Financial year ended 30 September 2023
Results for year to 30 September 2023 announced 28 November 2023*
Final dividend for 2023 paid 14 March 2024*
* These dates are provisional and may be subject to change
158
TREATT PLC Annual Report & Accounts 2022
CBP00019082504183028
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Through protecting standing forests, under threat of clearance, carbon is locked-in, that would otherwise
be released.
Treatt plc
Skyliner Way, Bury St. Edmunds, Suolk IP32 7FR
www.treatt.com
cosec@treatt.com
+ 44 (0) 1284 702500
