T
R
E
A
T
T
P
L
C
A
n
n
u
a
l
R
e
p
o
r
t
&
A
c
c
o
u
n
t
s
2
0
2
3
Annual Report & Accounts
ANNUAL REPORT
2023
TreaTT plc Annual Report & Accounts 2023
WELCOME TO
Treatt
MAKING THE WORLD TASTE BETTER. FOR GOOD
By extracting excellence, and enhancing every day
We are writing a growth story like no other. Our innovative natural extracts and impactful synthetic
ingredients have been the differentiating signature notes delighting the global beverage, flavour, fragrance,
and consumer goods industries since 1886.
From our bases in the UK, the US, and China, we now look to leverage our considerable
heritage and continue to drive growth in existing, as well as exciting new markets.
CONTENTS
WHAT'S
inside
Sustainability –
Our Approach
PG 24
corporate Governance
Board of Directors
Corporate Governance Statement
Nomination Committee Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
68
70
77
79
82
94
97
1
TreaTT plc Annual Report & Accounts 2023
Overview
Our Highlights
At a Glance
Our Product Portfolio
Understanding our world
PG 14
Strategic report
Chair's Statement
Chief Executive's Review
Market Overview
Understanding Our World
Our Strategy – Vision 2027
Our Business Leadership Team
Key Performance Indicators
Sustainability
Our approach
People
Planet
TCFD
Performance
Stakeholder Engagement
Financial Review
Group Five-year Trading Record
Principal Risks and Uncertainties
Going Concern and Viability Statement
3
4
6
7
8
10
14
16
21
22
24
27
35
36
47
50
54
59
60
66
Our Strategy – Vision 2027
Protect. Accelerate. Grow.
PG 16
Financial Review
PG 54
Other Information
Notice of Annual General Meeting
Parent Company Information and Advisors
Financial Calendar
Financial Statements
Independent Auditor’s Report to the Members of Treatt Plc
Group Income Statement
Group Statement of Comprehensive Income
Group Statement of Changes in Equity
Parent Company Statement of Changes in Equity
Group and Parent Company Balance Sheets
Group and Parent Company Statements of Cash Flows
Group Reconciliation of Net Cash Flow to Movement in Net Debt
Notes to the Financial Statements
98
104
105
106
107
108
110
112
113
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
142
154
155
2
TreaTT plc Annual Report & Accounts 2023
OUR HIGHLIGHTS
OUR
highlights
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
3
TreaTT plc Annual Report & Accounts 2023
OUR HIGHLIGHTS CONTINUED
FINANCIAL
OPERATIONAL
Revenue1
£147.4m
5.1%
£112.7m
£109.0m
£124.3m
£140.2m
£147.4m
Profit Before Tax And Exceptional Items1
£17.3m
13.7%
£20.9m
£17.3m
£15.3m
£13.3m
£14.8m
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Profit Before Tax1
£13.5m
(16.3%)
Adjusted Net Operating Margin2,3
12.4%
110bps
£19.6m
17.2%
£12.5m
£13.7m
£16.2m
£13.5m
13.8%
12.0%
11.3%
12.4%
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Dividend Per Share6
8.01p
2.0%
Adjusted Return on Average Capital Employed3,4,5
12.2%
60bps
7.50p
7.85p
8.01p
18.8%
18.5%
20.9%
5.50p
6.00p
11.6%
12.2%
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Successful pricing action
Considered pricing action, in
order to recover raw material
inflation, particularly in citrus,
was successful in the year
and drove revenue growth.
Cost discipline embedded
Cost disciplines have been
embedded in the business,
with cost savings in the year
mitigating the macro headwinds,
including destocking.
A promising year
in new markets
Continued strong growth in
China and coffee, helping new
markets grow by 61%. The
Group is excited about these
key strategic growth drivers.
New UK site
transition complete
UK site transition is now
complete, providing a strong
platform for further growth
across multiple categories
and territories. Capex
returns to normalised levels.
Continuing to drive
and embed our
sustainability strategy
Our three pillars – People,
Planet, and Performance
continue to provide the
framework for our priorities
and approach to sustainability.
Working collectively to deliver
positive impact through
the year.
1 Excluding discontinued operations in 2019 and 2020.
There were no discontinued operations in 2021, 2022 and 2023.
2 Operating profit is calculated as profit before net finance costs and taxation.
3 Excludes exceptional items, details of which are provided in note 8 of the
financial statements.
4 The methods of calculating financial 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 financial statements.
6 The dividend per share relates to the interim dividend declared and final
dividend proposed in the corresponding financial year, details of which are
provided in note 10 of the financial statements.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
4
TreaTT plc Annual Report & Accounts 2023
AT A GLANCE
UNDERSTANDING
our world
From our strategically positioned manufacturing campuses across the world, we create innovative extracts
and ingredients that deliver an all-important authentic impact that our customers love.
We will continue to drive long-term sustainable growth for our stakeholders by protecting our heritage, accelerating growth
in our premium categories, and igniting new markets. We are home to seven performance-driven product categories
and are proud that people across the world enjoy our extracts and ingredients every day.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Sales by channel
52% 48%
FMCG
flavour houses
Sales by customer
31%
from top 5
7
product categories
1,638
products
706
customers
74
89%
of waste reused/
recycled/recovered
£2.0m
countries shipped to
investment in innovation
365
employees across
three sites
81%
natural products
88%
natural purchases
Facilities: USA, UK, China
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
5
TreaTT plc Annual Report & Accounts 2023
AT A GLANCE CONTINUED
WHAT MAKES US
great
OUR CUSTOMERS TELL
US IT’S BECAUSE WE:
• have a high-quality and market-driven
product range
• proudly take a responsible approach to sourcing
• always put them first
• are world class technical experts
• service diverse routes to growing markets
• mitigate risk with dual-site manufacturing in
strategic locations
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
WE KNOW IT’S ALSO BECAUSE WE ARE:
• agile and entrepreneurial, working with speed
• quality-driven across every team and department
• ambitious and disruptive in thought and action
• strongly aligned to consumer demand
• not afraid of a challenge
• proudly human, and don’t take ourselves too seriously
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
6
TreaTT plc Annual Report & Accounts 2023
OUR PRODUCT PORTFOLIO
INNOVATION
everywhere
Heritage
Premium
New
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Citrus
Our value-added citrus
extracts and ingredients
deliver an impactful and
genuine profile that’s true
to the fruit at any scale
our customers’ need.
Herbs, spices
& florals
Synthetic
aroma
Our herbs, spices, &
florals portfolio is known
for its breadth, quality,
and reliability, and
is a bedrock of our
established business.
Our curated range
of aroma chemicals
and UK-manufactured
high impact chemicals
consistently provide
the desired profile and
trusted quality through
a secure supply chain.
Tea
Delivering the experience
of real brewed tea, our
extracts differentiate
products in a variety of
formats, offering a range
of powerful tea profiles
and origin claims.
Fruit &
vegetables
Our natural, authentic
extracts capture the best
of nature, and give our
customers the real deal
when it comes to impact.
Health &
wellness
A range consisting of
100% natural proprietary
extracts and distillates
suitable for multiple
applications.
Coffee
Great tasting, premium
products, that deliver
the true experience
of brewed coffee,
regardless of origin,
grade, concentration,
or roast.
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Discover more about our growth ambitions on page 16
i
F
n
a
n
c
a
i
l
7
TreaTT plc Annual Report & Accounts 2023
CHAIR’S STATEMENT
I am delighted to present my
first Chair’s Statement, having
taken up the role earlier this year.
I am grateful to my predecessor,
Tim Jones, for his guidance as
I took over the reins from him."
Vijay Thakrar
Chair
Daemmon Reeve, who has been with Treatt for
almost 33 years, 11 of these as CEO, retires on
31 December 2023. Ryan Govender, our CFO,
will become Interim CEO while we conduct a
search for Daemmon’s replacement. On behalf
of all stakeholders, I’d like to thank both Tim and
Daemmon for the important contribution they have
made to Treatt over many years. The business
is set for exciting growth, and I look forward to
working with its talented people as the business
forges ahead.
Well invested for future growth
As Treatt enters the next chapter in its almost
140-year history, it feels an appropriate time
to reflect on some of its many strengths: deep
expertise in the global sourcing and manufacturing
of ingredients; long-standing trusted customer
relationships; renowned technical expertise
to deliver authentic tastes sustainably; and
commitment to delivering excellence in its products.
Capital investments in the UK and US, together
with the dedication and expertise of our people,
have positioned Treatt for significant growth in the
years ahead. We are excited by growth potential
in China and have continued to invest in our local
team, product range and operations, establishing a
facility focused on product testing and development
tailored to the Chinese market and the wider region.
Since joining the Board, I have been struck by the
talent of my colleagues and their commitment to
the business, to each other and to our customers,
across all our functions and geographies. Their
expertise, passion and teamwork position Treatt
strongly to deliver the Group’s strategic priorities,
and to capitalise on the many opportunities ahead
in the dynamic beverage sector.
Treatt is proud to be trusted by a broad, international
customer base, with many relationships in place for
decades. These include household brands and some
of the biggest flavour houses in the world, as they
navigate and influence evolving consumer trends.
Performance
Treatt has delivered a resilient performance in the
year despite difficult macroeconomic conditions.
This is thanks to the drive and expertise of
colleagues, and the business’ agility in aligning
with changing demand in the beverage market
for healthier and authentic options.
With interest rates at their highest level for many
years, volumes softened as customers in the
beverage sector, and beyond, destocked as they
tightened control of working capital. However,
through considered pricing adjustments to offset
materials price increases, and by focusing on cost
control, we have been able to deliver a profit before
tax and exceptional items increase for the period of
13.7%. Also, through our team’s discipline and focus,
we have been able to reduce our net debt position
by some £12m, driven by record cash generation
over the course of the year. On behalf of the Board,
I’d like to thank all of our people for their hard work
and dedication in delivering these resilient results.
Board Matters
As well as extending our gratitude to Tim Jones
and Daemmon Reeve, I would also like to thank
Yetunde Hofmann, who stepped down from the
Board in January 2023, for her service. We wish
them all the best for the future.
In January 2023, Bronagh Kennedy joined the
Treatt Board as an Independent Non-executive
Director and Chair of the Remuneration Committee.
Bronagh brings a wealth of experience from listed
companies in various sectors and has made
a significant contribution already through her
insights on both people and governance matters.
We have recently established an ESG Board
Advisory Panel, chaired by Non-executive Director,
David Johnston, to support our ESG Management
Team as they develop and execute Treatt’s activities
on sustainability matters, an area our people
and our customers are passionate about.
I feel very fortunate to chair a Board that has
significant industry and business experience
and which is so committed to supporting our
management team in delivering Treatt’s strategy.
Further details of the activities and priorities of
the Board and its committees can be found in
the Corporate Governance Report from page 70.
Dividend
The Board intends to recommend, at the
forthcoming AGM, a final dividend of 5.46p
(2022: 5.35p) which, if approved by shareholders,
would bring the total dividend for the year to 8.01p
(2022: 7.85p), in line with our progressive dividend
policy and our aim to work towards our historical
level of dividend cover of three times.
Outlook
Our talented and dedicated people are focused
on delivering technically sound solutions tailored
to evolving consumer demand. We will continue
to build on our heritage in citrus, herbs, spices &
florals and synthetic aroma, while leveraging
our expertise to drive growth in health & wellness/
sugar reduction categories and accelerate exciting
growth opportunities like China. All of these efforts
will be underpinned on sound provenance and
sustainable practices.
Having made significant investments in our
infrastructure in recent years, we now have
the opportunity to deliver improved operational
leverage and gain further efficiencies from our
modern facilities, and from our supply chain and
procurement as the business continues to grow,
utilising new capacity.
While we remain cognisant of ongoing
macroeconomic headwinds, we are confident
in our strategy and in the strength of our teams
and their expertise to deliver this.
Vijay Thakrar
Chair
28 November 2023
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
8
TreaTT plc Annual Report & Accounts 2023
CHIEF EXECUTIVE'S REVIEW
Optimised for opportunities
In September 2023, with the completion of our
relocation to Skyliner Way, handing over the keys
for the head office Treatt first moved into in 1971
marked a key milestone for the business. This was
the largest project in Treatt’s 137-year history,
executed brilliantly despite challenges in relation
to Brexit and the Covid-19 pandemic. Feedback
from colleagues and customers who have visited
the site has been overwhelmingly positive.
Performance during the year has been resilient,
thanks to ongoing strong demand in our end
markets. Although revenues in the second
half of the year were impacted by customers
destocking as they sought to reduce inventories
in response to interest rate rises, encouragingly,
we are now seeing some early signs of a reversal
of this temporary growth slow-down in a few
customers, whilst volumes are still down from
normalised levels.
During the year we have worked to optimise
our cost base for future growth, supported by
investment in technology and the good performance
of the new site since operations began there a
year ago. Since joining as CFO in July 2022, Ryan
Govender has brought an invigorating commercial
finance mindset and cost discipline, setting the
business up well for sustainable growth.
Performance
I am pleased with the performance in the year
which is reflected in the sales and profit growth
along with record cash generation, despite the
difficult macro trends in our industry. Particularly
pleasing was our growth in new product offerings,
including coffee and Treattzest, and from our
expanding footprint in China. Cost discipline has
been embedded into the business, and with the
transition of our new UK site now complete, the
Group is well-positioned for continued growth.
Although cost of living pressures are being felt
in many of the 74 countries we serve, our core
beverage market continues to be buoyed by long-
term trends towards health and wellness, sugar
reduction and use of natural extracts, areas in which
Treatt is recognised for our technical excellence.
Growing interest in provenance, authenticity and
sustainability also play to our strengths.
Our citrus lines performed extremely well this
year, and we are continuing to drive the category
towards more value-added and innovative products.
To oversee our sustainability efforts and to further
embed these throughout the business we recently
established an ESG Board Advisory Panel, chaired
by Non-executive Director David Johnston. Alongside
the panel, the ESG Management Team, including
members from across the business, collectively
brings diverse perspectives to such an important
area. We have made good progress with our
pathway to net zero, aligning to science-based target
methodology for our short-term targets. Read more
about our sustainability strategy and the impact
we've made during the year on pages 24 to 49.
Our business in China continues to deliver, with
growth accelerating since the lifting of pandemic-
related restrictions early in the reporting period.
We continue to develop relationships with domestic
Chinese beverage customers, which provide a
rich source of growth opportunities in this vast,
innovative market.
Coffee performance in the year was pleasing,
with revenues now reaching £5m, from £1m in
the previous year, we have successfully integrated
coffee as a new category in our portfolio.
We implemented price increases to mitigate
inflationary pressures, although our relatively low
energy usage somewhat shields the business from
these to a degree, since many of our extraction
processes are necessarily gentle, and therefore
more energy efficient to preserve the integrity
of the flavours and fragrances.
Sustainability
Treatt’s operations are rooted in sustainability,
with core lines of our business deriving from
by-products of the citrus industry. The nature of
what we do means it is inherent to our ethos to
be conscious of our impact and what we can do
to mitigate this.
Although the world is experiencing more frequent
and more extreme weather events, our long-term
supply relationships and longstanding experience of
sourcing in times of drought, flood, hurricane and
other risks to harvests mean our customers can
rely on us to supply them consistently. This is one
of Treatt’s core strengths. We are not heavily
dependent on single origins and often source
from different hemispheres to mitigate any issues.
People and culture
Our culture remains a fundamental element of
Treatt’s success, and having the whole of our UK
team under one roof, following the closure of our
previous site, is already paying dividends culturally.
Communication is much easier, and relevant
departments are located close to each other to
facilitate cross-departmental collaboration. This is
also the case between our international locations,
with best practice shared among our facilities,
strengthening our organisational culture as well
as operational excellence.
During the year we launched our refreshed values
with accompanying initiatives to embed them
throughout the business, including the appointment
of cultural ambassadors and materials setting
out what each of the values means to individuals.
Following substantial investment
in our people in the past two years,
we believe we now have the right
team in place to seize multiple
growth opportunities."
Daemmon Reeve
Chief Executive Officer
People with purpose,
expertise and passion
365
employees
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
9
TreaTT plc Annual Report & Accounts 2023
CHIEF EXECUTIVE'S REVIEW CONTINUED
Mindful of the impact of inflationary pressures on
household finances in some countries in which
we operate, we were pleased to support colleagues
with a cost of living payment during the year.
Personal
After nearly 33 years in the Group, and the last
11 years as CEO, my retirement from Treatt was
announced effective on 31 December 2023. I have
enjoyed a wonderful career at Treatt and it has been
a privilege to serve as CEO during a time when the
business has made great strides. I would like to
thank all of my colleagues both past and present
for their trust and support. I retire from Treatt with
the Group in very good shape, the UK site move
well-executed, and the platform set for the business
to ascend to even greater heights in the future.
Outlook
Thanks to the drive and dedication of colleagues,
the business is well-positioned to capitalise on
its future opportunities. We have honed our cost
base appropriately for the growth we expect in the
next few years, and there are further operational
efficiencies to be derived as volumes grow, which
we expect to come from multiple categories and
regions. Our core areas of expertise align with
macro trends. Citrus remains a strong suit, with
one in four new beverages globally based on those
flavours, and we have some exciting new offerings
coming to market across our portfolio. We are
seeing signs of a return to growth in our largest
geographical markets and are continuing to invest
in China, where our burgeoning relationships and
new business wins bode well for a healthy order
book. By continuing to nurture what makes Treatt
special, I am confident in the ability of our team
to achieve our objectives for the years ahead.
Daemmon Reeve
Chief Executive Officer
28 November 2023
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
10
TreaTT plc Annual Report & Accounts 2023
MARKET OVERVIEW
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
ALIGNING OUR BUSINESS
with healthier living macro trends
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
The beverage industry continues to be a resilient hotbed for
innovation, with notable brand owners transforming the way drinks
are sourced, produced, packaged, thought about and consumed."
Tracy Gorman
Insights Executive
11
TreaTT plc Annual Report & Accounts 2023
MARKET OVERVIEW CONTINUED
BEVERAGE SEGMENTS
we're excited about
Our portfolio is strongly aligned with our customers’ needs, giving us optimism
The below beverage segments are forecasting volume growth +20% between
for future growth in multiple beverage categories. The below beverage segments
2023 and 2028 (Global figures). Our portfolio is strongly aligned with our
are forecasting volume growth of greater than 20% between 2023 and 2028.
customers’ needs in this space, giving us optimism for future growth
in multiple beverage categories.
category
Top trending flavours
ENERGY DRINKS
Herbs and spices, apple, lemon, peach, orange, pear, grapefruit, lime, mango, melon, kiwi,
nuts and seeds
SPORTS DRINKS
apple, lemon, peach, orange, lime, mango, berries and tea
RTD COFFEE
Vegetables, berries, nuts and seeds, herbs and spices
RTD ALCOHOLIC DRINKS
apple, berry, orange, basil and jalapeño
Our products are proven to be highly
effective in a range of applications,
delivering that differentiating
authenticity every time."
Lamia Gaman
Senior Applications Manager
FLAVOURED WATERS
lemon, peach, grapefruit, mango, pomegranate, passionfruit, calamansi, melon, guava,
herbs and spices
RTD TEA
apple, grapefruit, tamarind, lychee, mango, melon, nuts and seeds, and calamansi
CARBONATED
pear, lime, coffee, tea, honey, pomegranate, and kiwi
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
12
TreaTT plc Annual Report & Accounts 2023
MARKET OVERVIEW CONTINUED
CONSUMER MINDSETS DRIVING INNOVATION
Tracy Gorman, Insights Executive
During the 2010s, consumers began to demand
more information about the food and drink they
consumed, keen to understand the ingredients
being used. Brands responded with selective
transparency, accentuating what was not used
rather than demystifying the messaging on the
back of pack. We have since seen clean label
evolve, with ingredient labels becoming shorter,
and far easier for consumers to understand –
prioritising naturalness above all else. Ultimately,
this has meant a move to fewer ingredients, and
those ingredients must be easily recognised. In
markets such as Europe, clean label is no longer
a selling point, but it is becoming expectation1.
In North America, consumer interest, and sales
of natural and organic food reached a new high
during the first year of the pandemic. According to
foodnavigator.com, growth is expected to rebound
to pre-pandemic levels by 2024 as consumers
continue to be self-aware with regards to what they
consume and the associated health implications2.
Since 2021, the health and wellness mega-trend has
continued to outrank all others as the most influential
for consumers. Its longevity and permanence persist
as the dominant driver as we look to the future3. The
key target consumers for forward-looking beverage
manufacturers and the flavour and fragrance houses
that serve them are Millennials and Gen Z, both of
whom are increasingly using emerging social media
platforms to discover, share, and connect with new
beverage trends. While statistics vary, up to 60%
of the 1.1 billion TikTok users are now Gen Z4. While
some trends may be flash in the pan, their cumulative
impact is being closely monitored by those up and
down the beverage supply chain as a rich source
of ‘up to the minute’ insight.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
GIVE ME:
Natural, authentic ingredients
The extent to which a product impacts one’s health and wellbeing is a driving influence
for multi-generational consumers5. Natural is proving to be an essential product feature
for Gen Z, Y, X, and Boomers – clearly indicating the desire for natural as a broad,
multi-generational appeal.
An average of 33% of Gen Z, Y, X and Boomer consumers cite that ‘natural’
was an essential or nice to have feature they looked for when choosing a product
1 The Clean Label Evolution in Food and Drink, Mintel, 16 Feb 2022, Davina Patel.
2 Growth of natural, organic products slow, but bright spots include functional ingredients (Foodnavigator.com).
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
13
TreaTT plc Annual Report & Accounts 2023
MARKET OVERVIEW CONTINUED
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
GIVE ME:
GIVE ME:
Premium drinking experiences
The premiumisation trend continues as growing awareness of health issues
associated with the consumption of artificial ingredients is shifting consumers
towards naturally derived food and beverage ingredients, particularly the
younger generations.
36% of UK consumers agree that foods which contain artificial
ingredients cannot be healthy6
3 Global Data, The Evolution of Consumer Mega Trends Over Time, July 2023.
A way to minimise my impact on the planet
Consumers are growing increasingly conscious about how their own decisions, including the brands
they support, are impacting the environment, and the future health of the planet7. Whether it’s reducing
food waste, saving water and energy, or exploring packaging alternatives – brands must continue
to prioritise ESG in bold new ways to drive growth and transform the industry for years to come.
31% of Gen Z consumers cite that how sustainable/environmentally-friendly
a product is, is an essential feature when choosing which products to purchase
4 TikTok Statistics – Everything You Need to Know Aug 2023 Update (wallaroomedia.com).
6 The Clean Label Evolution in Food and Drink, Mintel, 16 Feb 2022, Davina Patel.
5 Global Data Consumer Survey Q2 2023 – Line 2965, Column BC – BI.
7 Global Data Consumer Survey Q2 2023 – Line 2818, Column BC.
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
i
F
n
a
n
c
a
i
l
14
TreaTT plc Annual Report & Accounts 2023
UNDERSTANDING OUR WORLD
EXPERTS IN EXTRACTION
Creating value for our stakeholders
GROWERS, PROCESSORS,
AND SUPPLIERS
We work hard to develop and maintain transparent,
stable, and mutually beneficial relationships with
partners across our portfolio, mitigating risk and
providing traceability at every stage. Working directly
with growers and processors across the world
guarantees the finest quality raw materials and
standards of production – both of which are priorities
for our discerning customers. Turn to page 48 to learn
more about the benefits of our sustainable supply
chain programme.
Quality &
innovation
OPERATIONAL EXCELLENCE
LOGISTICS
From our world class facilities in the UK, the US, and
China, we create consistently high-quality products
that are sold across the world. With over a century
of knowledge and experience, we are true experts in
extraction – known for creating differentiating authentic
products that deliver on impact every time. Our recent
infrastructural investment programme has readied
the business for the next phase of growth, and has
been shaped by our skilled people, our commitment
to quality, and our shared ambition to innovate at scale.
Ensuring our products arrive with our customers on
time, wherever they are in the world, and to our high
standards, is a core part of the service we provide to
our customers. We ship 1,600 products to 74 countries
with shipment quantities varying from 25 grammes to
20 tonnes and have made significant strides in increasing
the sustainability of our logistics operations, with 85% of
shipments now being classed as sustainable. See page 46
to learn more about the progress we have made this year.
Global
facilities in the UK,
the US, and china
85%
shipments now being
classed as sustainable
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
15
TreaTT plc Annual Report & Accounts 2023
UNDERSTANDING OUR WORLD CONTINUED
BRAND OWNERS
Our high-quality, market-driven products, and responsible
approach to sourcing continue to differentiate us from
competitors, along with our commitment to excellent service.
We are known for our unique, highly impactful authentic
extracts, and create value by acting as the extension of our
customers' internal team.
48%
sales to brand owners
FLAVOUR HOUSES
We have worked with the world's leading flavour houses since
our inception, and continue to be the partner of choice for many
of the top tier organisations. Our technical expertise and supply
chain knowledge are broadly recognised in the industry as being
market-leading. We are proud to have built our brand reputation
on delivering consistently high-quality products, at scale, to our
customers all over the world. Our products are used to differentiate
our customers' solutions, which are then sold to brand owners.
52%
sales to flavour houses
Natural, premium
& health
CONSUMERS
Our product portfolio has a strong market alignment,
speaking directly to the needs of health-conscious
consumers across the globe.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
33%
cite 'natural' as essential1
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
1 Global Data Consumer Survey Q2 2023 – Line 2,965, column BC-BI.
16
TreaTT plc Annual Report & Accounts 2023
OUR STRATEGY – VISION 2027
VISION 2027
Protect. Accelerate. Grow.
OUR VISION: Making the world taste better. For good.
By extracting excellence, and enhancing every day.
OUR MISSION: To sustainably grow our profit by creating authentic,
innovative extracts and ingredients our customers, and their consumers, love.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
With a high-performing, values-driven culture
inspiring innovation
17
TreaTT plc Annual Report & Accounts 2023
OUR STRATEGY – VISION 2027 CONTINUED
WHERE WE PLAY
PROTECT
OUR HERITAGE
The core of our business remains
critical, with our citrus, herbs,
spices & florals, and synthetic aroma
categories delivering value.
ACCELERATE
PREMIUM CATEGORIES
Our highly impactful natural extracts are strongly aligned
with key consumer trends, and are well-positioned for
long-term growth in all of our key markets.
GROW
IN NEW MARKETS
We are focused on our ambitions to grow
in China, expand our coffee portfolio, and
launch new innovative citrus extracts.
WINNING WITH THE 7Cs
CULTURE
Investing in our
world class people
CONSUMER
Maintaining relevance
to growing trends
through innovation
CITRUS
launching innovative
and cost-effective
natural extracts
COFFEE
expanding capacity
and growing portfolio
CHINA
Driving growth
with national
beverage brands
CAPACITY
Driving volume
growth to fill capacity
and de-bottleneck
COST BASE
Scaling with
appropriate grip
on costs
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
18
TreaTT plc Annual Report & Accounts 2023
OUR STRATEGY – VISION 2027 CONTINUED
WHERE
we play
PROTECT OUR HERITAGE
ACCELERATE PREMIUM CATEGORIES
GROW IN NEW MARKETS
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
We continue to drive growth with our
flavour and fragrance house customers,
who highly value the quality of our product
offering, our technical expertise, and
sought-after market knowledge.”
Nick Evans
UK Site and Sales Director
We’re excited to further the growth of our
premium categories, building on the success
we have already achieved across the portfolio.”
As we look to further our expansion into
coffee, we will leverage the great work
we’ve done to build a solid foundation
from which to sustainably grow.”
Rosie Travers
Global Fruit & Vegetable and Health & Wellness Category Manager
Dr Maya Zuniga
VP of Innovation & Technical Services
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
19
TreaTT plc Annual Report & Accounts 2023
OUR STRATEGY – VISION 2027 CONTINUED
PROTECT OUR HERITAGE
ACCELERATE PREMIUM CATEGORIES
GROW IN NEW MARKETS
The core of our business remains critical, and we’re
committed to driving its continued success through
targeted strategies in each territory.
Our citrus, herbs, spices & florals, and synthetic aroma
categories will continue to play a significant part in
driving growth over the course of our plan as we look to:
• Share the benefits of our strong, diversified supply
chain with our customers
• Build our partnership model through the
Our premium, authentic, natural products are
strategically aligned with increasing consumer
demand in the healthier living space on a global
scale and will be central to our growth strategy.
The extracts, essences, and distillates that make up our
tea, health & wellness, and fruit & vegetables categories
will drive growth by:
• Scaling up our commercial strategy to increase market
penetration outside the US across both routes to market
sharing of our unrivalled technical expertise
• Using consumer insights to drive the long-term evolution
• Secure our long-term position in the value chain
through mutually beneficial industry relationships
of our portfolio
• Delivering world class quality when it comes to taste and
aroma impact
We have significant opportunities to grow in new
territories, as well as further penetration in emerging
product segments.
These areas are anticipated to deliver strong growth across
the course of our plan by:
• Advancing our China growth trajectory with regional
brand owners, as well as flavour houses
• Scaling up our coffee operation as we grow our
commercial pipeline
• Adding value through a new range of innovative
value-added citrus extracts
We have great ambitions to grow our operation
in china and become known as the ‘go to’
partner for citrus excellence in the region."
Steve Fan
Country Manager, China
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
20
TreaTT plc Annual Report & Accounts 2023
OUR STRATEGY – VISION 2027 CONTINUED
OUR STRATEGIC HEADLINES
driving our focus
INVEST IN OUR WORLD CLASS
PEOPLE AND CULTURE
The continued success of our business is delivered
by our world class team. Turn to page 27 to learn
more about how we put them first.
INNOVATE ACROSS
OUR PORTFOLIO
We will invest in innovation over the course
of our strategy, driving our long-term
growth ambitions.
CONTINUE OUR LONG-TERM
EXPANSION IN COFFEE
We are excited by the obtainable market potential
in each of our key territories.
DRIVE CONTINUED
GROWTH IN CHINA
REALISE OPERATIONAL
EFFICIENCY BENEFITS
Differentiating ourselves with flavour houses and
brand owners.
Our fully invested asset base has the capacity that
will allow us to grow at scale.
1
2
3
4
5
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
21
TreaTT plc Annual Report & Accounts 2023
OUR BUSINESS LEADERSHIP TEAM
Daemmon Reeve
Chief Executive Officer
Daemmon has been part of the Treatt story
for three decades, and has been our CEO
for the last 11 years. His endless passion
for our industry, and for Treatt, as well as
his commitment to investing in our culture
and people have been defining features
of his tenure. He retires at the end of
December 2023.
Ryan Govender
Chief Financial Officer
Ryan has worked in senior commercial roles
across the world for over 20 years. He joined
Treatt as CFO in 2022 from ABF, and will be
assuming the role of Interim CEO from January
2024. Known for his passion, Ryan believes
strongly in teamwork, empowering people,
and fostering a culture of accountability.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Jamie Bowman
Global Supply Chain Director
Jamie joined Treatt over 10 years ago in our
planning team, before moving into procurement
in 2017 and then went on to complete his MCIPS.
He's an ambassador for global thinking, and
creating sustainable value for our stakeholders.
Angie Williams
Head of Acceleration
With a career spanning Finlays, SABMiller,
and AB InBev, Angie was drawn to Treatt
in 2022 because of our reputation for
quality, and has been a driving force
for positive change since joining.
Alison Sleight
Group Finance/IT Director
Having joined Treatt in 2019 from The Music
Sales Group, Alison was immediately struck
by the company's passion and teamwork. She
now leads our finance and IT functions and is
a champion for collaborative global working.
Melanie Cooksey-Stott
US Site Director
Mel has been a valued part of our leadership
structure for many years, and is known in the
industry for her unrivalled knowledge of, and
passion for citrus. A strong ambassador for
culture, Mel is a coach and mentor to many.
Nick Evans
UK Site and Sales Director
Nick joined Treatt in 2011 as a strategic
business and purchasing manager before
moving into a Director of Sales role shortly
after. His wealth of industry knowledge
is trusted by our largest customers.
Kelly Gordon
Business Performance Director
Kelly was Head of Finance within an ABF
division before joining the Treatt team earlier
this year. Impressed by our culture, and
the calibre of our people, Kelly is a strong
addition to our leadership team, bringing
a wealth of experience to this new role.
Gavin Patrick
Global VP Sales
Gavin is a long-serving part of the Treatt
team, having started his career with
us straight out of University. He has
successfully grown long-term partnerships
with our top customers, and is a passionate
advocate for customer centricity.
Dr Maya Zuniga
VP of Innovation & Technical Services
Maya has held several senior roles in the
food industry, before moving into beverage
15 years ago. Joining us with significant
expertise in tea, coffee, and botanicals,
Maya has been an instrumental part of
driving our growth in coffee.
Tracy Marshall
Head of Validation
Tracy has been with Treatt for over 30 years
and is a recognised asset. Her technical
knowledge, expertise, and perspective are
highly valued by our top customers across
the world. A big advocate for learning, Tracy
is a keen developer of our emerging talent.
Babette Norman
VP of Operations
Babette has a wealth of experience from
mining to manufacturing, and was appointed
into her current role this year, having driven
significant positive operational change since
joining Treatt in 2018. Babette now oversees
operations across our UK and US sites.
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
22
TreaTT plc Annual Report & Accounts 2023
KEY PERFORMANCE INDICATORS
The Group has financial
KpIs which it monitors
on a regular basis at
Board level and, where
relevant, at business
leadership meetings.
The key performance
indicators shown here
cover a period of five
years which is reflective
of the Board’s long-term
thinking.
Return on average
capital employed1,2
12.2%
18.8%
18.5%
20.9%
FINANCIAL KPIs
Net cash/(debt) to
adjusted EBITDA1,2
(0.45)
Growth in profit before tax
and exceptional items1
13.7%
Growth in adjusted1
basic earnings per share
15.9%
41.3%
37.2%
11.6%
12.2%
1.07
0.03
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
(0.39)
(0.45)
(1.21)
11.3%
13.7%
10.7%
15.9%
5.2%
2019
2020
2021
2022
2023
2019
(1.1%)
2020
2021
2022
2023
(27.1%)
(26.8%)
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Why we measure it
return on average capital employed is
an important measure used to assess
the profitability of the Group relative
to the capital being utilised.
Return on average capital employed enables
stakeholders to see the profitability of the
business as a function of how much capital
has been invested in the business.
Net cash/(debt) is used to ensure that the
level of debt is appropriate relative to the
profits generated by the business.
profit before tax and exceptional items is
considered the most appropriate measure
of the underlying performance of the Group.
adjusted earnings per share is considered the
most appropriate measure of performance
which is aligned with shareholder value.
It is important to ensure that the level of
borrowings can be supported by the cash flow
in the business. EBITDA is widely recognised
as a good indicator of the cash generative
performance in year.
Profit 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 are excluded.
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 profit
was made for each share they own.
Calculation
We divide operating profit 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 flow to
movement in net debt), averaged over the
opening, interim and closing amounts.
We divide the closing net cash or debt at the
year-end date by adjusted EBITDA. Adjusted
EBITDA is calculated as operating profit before
exceptional items (as shown in the Group
income statement) plus depreciation and
amortisation from continuing operations as
shown in note 5 to the financial statements.
As shown in the Group income statement.
As shown in the Group income statement.
1 All KPIs are calculated excluding exceptional items (see note 8). They also exclude discontinued operations in 2019 and 2020.
2 Return on average capital employed and net cash/(debt) to adjusted EBITDA are considered to be alternative performance measures, details on these and the equivalent statutory measures are provided in note 31 of the financial statements.
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
23
TreaTT plc Annual Report & Accounts 2023
KEY PERFORMANCE INDICATORS CONTINUED
NON-FINANCIAL KPIs
We have a number of
non-financial operational
KpIs, which are aligned
with our strategic
themes and measure
our progress against
a number of priorities.
People
As our employees are central to our business a key priority is that they are happy, safe and engaged and feel supported to deliver their full potential:
Total training hours
Year to
2023
Year to
2022
9,485
7,205
Voluntary employee
turnover
Workforce diversity
Reportable accidents
Year to
2023
Year to
2022
14.6%
Year to
2023
56%
Male
16.5%
Year to
2022
59%
Male
44%
Female
41%
Female
Year to
2023
Year to
2022
Average sick days
per employee
0
1
Year to
2023
Year to
2022
5
4
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 consumed (m³)
Sustainable shipments
Year to
2023
Year to
2022
4,489
4,546
17,943
Year to
2023
Year to
2022
53,149*
Year to
2023
Year to
2022
85%
79%
Performance
Driving improvements in ethical and responsible business practices in our global supply chain is a priority:
SEDEX registered suppliers
Year to
2023
Year to
2022
51%
46%
* See explanation on page 45 for our change to more accurate water reporting.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
24
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY
SUSTAINABILITY
our approach
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
25
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
OUR APPROACH
Our three pillars – People, Planet, and
Performance – continue to provide the
framework for our priorities and approach
to sustainability. Our nine key priorities
focused on throughout this section are
embedded within our business strategy,
to ensure our ambitions are integral
moving forward.
We're proud to highlight the progress we've
made during the year, summarised in 'our
impact in 2023'. With a further summary
of our sustainability in action below.
OUR IMPACT IN 2023
PEOPLE
58%
Business Leadership Team are women
PLANET
Reduced
carbon emissions (Scope 1 and 2)
69%
permanent group employees are shareholders
89%
waste reduced, reused or recycled
ED&I commitments
to empower and support
Enhanced
water consumption monitoring
PERFORMANCE
20%
Executive Director bonus scheme subject
to ESG related non-financial objectives
100%
responsible & sustainable sourcing policy
roll out
New ESG Board Advisory Panel
SUMMARY OF SUSTAINABILITY IN ACTION
Pillar
Areas of focus
Sustainable development goals (SDGs)
PEOPLE
PLANET
• 69% of our permanent group employees are shareholders
• Embedding sustainability into our culture
• Re-launching revised values and behaviours
• Equality, diversity and inclusion (ED&I) that empowers and supports our people
• Living Wage Employer (UK)
• Volunteering hours added to our corporate giving and community relations strategy
• Net zero pathway and carbon reduction targets
• Taskforce on Climate-related Financial Disclosures (TCFD) disclosure
• Carbon emissions data collection and analysis, Scope 1, 2 and 3
• 100% renewable electricity in the UK (40% of global electricity consumption)
• Tree planting to help mitigate effects of necessary business travel
• Improving our waste streams
• Improving water monitoring
PERFORMANCE
• New ESG governance structure
• Delivering on non-financial KPIs
• Creating a responsible and sustainable supply chain
• Improving sustainability disclosure
Page 25
Page 27
Pages 27-29
Page 30
Page 32
Page 33
Pages 35-36, 42
Pages 36-43
Page 42
Pages 42-43
Page 44
Pages 44-45
Page 45
Pages 38-39
Pages 23, 46, 48-49
Pages 48-59
Page 49
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
26
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
Materiality assessment shaping our
strategic focus
As previously reported, a materiality assessment
was undertaken by our consultant in 2021, using
the Sustainability Accounting Standards Board’s
(SASB) materiality mapping as a reference point.
The material issues were identified through
consultation with a number of internal and
external stakeholders. The issues of highest
importance shaped the nine key priorities
of our ESG strategy, focused on in this report.
These are also in line with the recognised
Sustainable Development Goals (SDGs) of
the United Nations.
Those remaining areas of priority are regularly
reviewed and re-evaluated with plans for a
further materiality assessment in the coming year.
Our ESG strategy is devised to test us in ensuring
we address these substantive issues, whilst
continuing to bring about positive change.
We are pleased with our marked progress
during the year, summarised on page 25,
and are driving for continuous improvement.
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. A GRI Standards index
is available on our website www.treatt.com.
Our key priorities
Pillar
PEOPLE
Priority
Embedding sustainability into our culture
Reviewing our purpose, values and behaviours
Community matters
PLANET
Carbon emissions collection and analysis
Carbon reduction strategy/net zero pathway
Taskforce on Climate-related Financial Disclosure reporting (TCFD)
PERFORMANCE
Ensuring appropriate governance of sustainability
Determining and reviewing relevant non-financial KPI’s
Building a responsible and sustainable supply chain
Non-financial information
We have a number of Group policies and standards
which govern our approach in these areas. Further
details can be found in this table and on our website.
Reporting requirements and additional information
environmental matters
Environmental policy
employees
Board composition and diversity – pages 68 to 69
Board diversity policy
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
Page 27
Pages 27-28
Pages 33-34
Human rights
Slavery and human trafficking statement
Supplier code of conduct (revised in 2022)
Labour and human rights (new policy 2022)
Pages 35, 42-43
Pages 35-36
Pages 36-43
Pages 38-39, 49
Pages 25, 46, 48-49
Pages 48-49
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Social matters
Equal opportunities policy
anti-bribery and corruption
Supplier code of conduct (revised in 2022)
Anti-bribery and corruption policy
Understanding our world
Our business model – pages 14 and 15
principal risks
Principal risk and uncertainties –
pages 60 to 65
Sustainability
27
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PEOPLE
Supporting our people, communities & customers
RELEVANT UN SDGs
Our Company succeeds because of our employees and the
purpose and culture we have embedded across our business.
We are keenly aware that for this to continue, the principles
and practices we uphold must evolve with the business. We
continue to dedicate our focus towards both our people and
the communities where we do business and provide services.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
PRIORITY:
Embedding sustainability
into our culture
Clear communication is essential for sustainability
to be successfully embraced and adopted within
our culture. We have followed our communication
plan throughout the year to ensure our internal
community keeps sustainability front of mind.
Through our focused efforts, sustainable behaviours
are now integral to our values and performance
objectives and managers are now well equipped
to drive and support their teams to consider the
part they play in our journey. Our sustainability
working group is now integral to our new ESG
governance structure and we have 24 people from
across the business involved in ESG from strategy
development to delivery. See more on page 38.
Ideas coming to life
Kick-started via our internal ‘Ideas app’, whereby
employees can share ideas for improvements on
all areas of the business including sustainability.
We worked with the UniGreen Scheme to re-home
some of our technical equipment that was no
longer needed after closing our former UK Site.
The company collected the equipment and
reprocessed it in the form of refurbishment,
recertification, all for onward sale, or sold as used
equipment, depending on how much investment
was required. UniGreen endeavours to reuse
everything with very little ending up as waste
disposal. Full reports on weight of equipment
reused and carbon savings are all provided once
they are re-homed. This great initiative saved
the equipment from waste disposal, supported
institutions such as universities with limited
budgets, all whilst ensuring the business receives
a contribution for the value of the equipment.
Looking ahead
We will continue to drive change for good,
harnessing the increased appetite within the
business to support our sustainability journey,
recognising the opportunities this brings.
PRIORITY:
Review our purpose, values
and behaviours
Purpose
Sustainability is integral in our purpose ‘extracting
excellence, enhancing every day’. ‘Enhancing’
encompasses our customer experience, our people
and our planet as we strive to minimise our impact
and give back.
This team reviewed and updated our core values
and the behaviours necessary to foster an
environment conducive to success and optimum
performance. Developing our values has enabled
us to embed sustainability at the heart of everything
we do, see page 28 for further details. During the
year face-to-face workshops were held to relaunch
our values and ensure that our organisation-wide
holistic strategy is supportive of our social and
environmental goals.
Ensuring our values-based culture thrives
Our success as a business depends on the quality
of our own community and culture. We have
worked hard over the past year to maintain and
grow our positive culture by ensuring that our
values and behaviours continue to evolve.
The Culture Ambassador Team, made up of 13
people across the business, are in place to provide
a feedback loop and drive action alongside our
Cultural Influencers (Executive direct reports).
Looking ahead
We will continue to promote our purpose and
values to our employees, customers, suppliers
and communities and find ways to bring these
to life by sharing our successes and updates on
our progress. The values are embedded in our
performance review process which ensures
behaviours are driving towards the delivery of
our business strategy. This will further accelerate
our progress around sustainability and form part
of individual and team-based objectives.
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
28
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
WE ARE
PROGRESSIVE
PASSIONATE
ACCOUNTABLE
TEAM PLAYERS
Being open to the ideas
of others to deliver results
Being creative and optimistic,
inspiring others around us
Being personally accountable
for our actions and trusted
to act with integrity
Operating as one team,
supporting, appreciating,
and respecting one another
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
Challenging ourselves
to change and drive solutions
to move forward
Driving excellence and
celebrating our shared successes
Challenging the status quo
to enhance ways of working
Overcoming adversity and
embracing change
Driving results and delivering
on our commitments to
help us succeed together
Seeing the best in people
and trusting that they have
positive intentions
Collaborating to enhance
the global community
Listening and sharing knowledge
to achieve a common goal
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Seeking innovation and new ways
of working, enabling our
people and planet to flourish
Caring for our people,
our planet and
our communities
Committing to sustainability and
sustainable practices, minimising
our impact to people and planet
Celebrating diversity and
recognising our differences help
us to succeed together
Everything we do, we do with respect
Sustainability
29
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
Total UK
training hours
5,389 13%
3,414
2,804
2,762
2,627
Average UK training
hours per employee
23
4%
29
23
23
20
Male
2022
Male
2023
Female
2022
Female
2023
Male
2022
Male
2023
Female
2022
Female
2023
Mandatory training
hours UK
8
2
Male
2023
Female
2023
Mandatory training
hours US
Professional
development
training UK
22
15
Male
2023
Female
2023
Professional
development
training US
21
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Training has been a key focus,
underlining our commitment to
fostering a culture of continuous
learning and development within
our organisation."
Glendisha Wells
Senior People Operations Partner, USA
Total US
training hours
4,075 318%
2,736
1,339
707
267
Male
2022
Male
2023
Female
2022
Female
2023
Average US training
hours per employee
31
417%
34
27
34
27
7
5
Male
2022
Male
2023
Female
2022
Female
2023
Male
2023
Female
2023
0
Male
2023
Female
2023
Enabling great people to do exceptional things
by creating an environment in which our
people can thrive
Supporting our people’s health and wellbeing is
vital to retaining our key talent. Our flexible working
guidance enables employees to work flexibly (as
far as their role requirements allow) and supports
a harmonious relationship between work life
and home life. We recognise that spending time
in the office environment provides opportunities
to collaborate, build relationships and to share
knowledge and ideas.
Therefore, a hybrid approach has been adopted
(where possible) to support a better culture for
Treatt and its people.
Our commitment to people extends beyond our
internal community to the global communities
in which we operate and serve.
The Culture Ambassadors have also driven
cultural improvement through assessing the
balance of flexibility with business need, working
with Influencers and Line Managers to ensure
a regular presence in the office, opportunities
to drive collaboration and meeting requirements
of key stakeholders.
Training and development
Over the course of the year, we have invested
in 9,485 hours of learning to continue developing
our people.
Our investment in learning for our people focuses
on ensuring quality and compliance and also enables
people to flourish through professional development
opportunities to further enhance our business.
Looking ahead
Next year we intend to launch our ‘People Power’
programme with the goal of creating and developing
authentic leaders that nurture the best performance
from our people. This will focus on training,
mentoring, networking opportunities and shared
experiences, designed for those aspiring to be
leaders, those new to leadership and those
existing leaders benefiting from continuous
professional development.
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
30
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
Engaging with our people
Engagement with our internal community is critical
in providing awareness of our progress and the
key focus areas of our sustainability strategy.
Channels include an online resource centre,
regular newsletter updates and team meetings
updates. The introduction of a dedicated Internal
Communications Executive, to support multi-
channel communication and drive strategy in this
area, has also been key in improving a connection
with our people.
During the year we have carried out bi-annual
engagement surveys across our global community,
relating to ‘leadership’ and ‘positive workplace’.
The surveys focused on two of our Employee
Experience pillars, from our model created to define
the elements that make up an exemplary employee
experience, using employee feedback to further
strengthen the experience we provide.
Various communication methods are used to
feedback on actions taken and changes made,
to ensure our people feel heard and that action
has been taken to improve the overall employee
experience.
Equality, diversity and inclusion (ED&I) that
empowers and supports our people
We are honoured to work with so many outstanding
individuals that offer a wide range of skills and
expertise to the business. We want to embrace
these distinctions and use them to improve both
as a business and as a community partner.
It is fundamental to our values that we celebrate
and respect each other, whilst benefiting from
our diversity as a result of the variety of skills,
experiences, ideas and new perspectives it brings.
We collect our diversity data via forms in the US
and our HR software in the UK, completion of the
data is voluntary.
We have committed to create a greater understanding
of each other and create an environment where we
can all thrive by being ourselves.
We have three primary focus areas that will drive
our ED&I activities:
• Strengthening from within
• Building our understanding of each other
• Calibration
Whilst our ethnicity pay gap has not been formally
reported, it has been regularly reviewed. Though
obtaining meaningful data remains a challenge we
have identified opportunities for improvement to
ensure that everyone has an equal opportunity
for development and progression.
We will continue to develop our opportunities to
attract a diverse workforce and enable our people
to fulfil their own potential.
We believe that each one of us has a role to play
in creating a more diverse, equitable, and inclusive
environment. During the year we have developed our
equality, inclusion, and diversity plans by exploring
the powerful truths of our business by bringing
people together to build a better understanding.
We now have an ED&I Allies Network; a community
of global employees, representing different
diverse groups to help drive our understanding
of each other.
Gender diversity across the Group is reflected 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 enhanced
family leave, mentoring, coaching, physical health
support and programmes to empower our female
colleagues. See our non-financial KPI around male
to female ratios on page 23.
How the Board monitors culture
CULTURAL INDICATORS
EMPLOYEE ENGAGEMENT
Good governance is driven from both the operation of the Board and
from the culture of the organisation in the way our employees conduct
themselves each day, reflected in the following data:
• health and safety metrics
• employee turnover
• speak-up incidents
• breach of Group policies
During the course of the year participants welcomed the opportunity to
interact with Board members through both individual employee voice
sessions and wider Board engagement activities that included time with
departments and individuals to gain oversight of projects and functional
activities. Further details above and on pages 50 and 51.
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 2022: 56% (2021 65%1)
• Group share save scheme take-up in July 2023: 35% (2022: 56%2)
Investing in our culture
LINKEDIN LEARNING
CULTURE AMBASSADORS
This platform provides a wide range of learning opportunities and highlights where employees are keen to further
their knowledge. 729 engagement viewing hours were recorded across the business (2022: 679).
Via regular updates to the Executives, the voices of our people are being heard by management and the Board.
1 Compared to an average participation rate of 41% (Proshare SAYE & SIP report 2022).
2 Compared to an average participation rate of 28% (Proshare SAYE & SIP report 2022).
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
31
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
Diversity profile of our employees reflecting
the communities where Treatt operates
There is an observable gap in both the US and
UK between ethnic groups and white employees,
and whilst our workforce is reflective of the
local demographics, we will be working towards
improving that diversity, considering the methods
by which we attract our talent, and opportunities
for development.
As part of the planning with the ED&I Allies Network
we have a number of actions that will be undertaken
into 2024, these will focus on a plethora of desired
outcomes, of particular note:
• Monitoring women and minority groups in
leadership and critical positions – ensuring
we have a diverse talent pipeline.
• Design a development programme to enable
minority groups to excel in their careers.
FacIlITY
White
Non-BaMe
USA*
UK**
65%
–
–
93%
Black, asian and
Minority ethnic
(BaMe)
Black or african
american
Hispanic
or latino
–
6%
18%
–
15%
–
asian
1%
–
prefer not
to disclose
Two or
more races
–
1%
1%
–
* Lakeland, USA Population data 2022 – White 59%, Black or African American 20%, Hispanic or Latino 17%, Asian 2%, other 1%.
Source: U.S. Census Bureau QuickFacts - Lakeland City, Florida.
** Suffolk, UK Population data 2022 – Non-BAME 95%, BAME 5%.
position
Group Directors
Business Leadership Team1
Direct reports of Group Executive Team
Other employees
Total employees2
Male
Female
Total
2
2
26
172
202
0
8
26
129
163
2
10
52
301
365
1 Group Directors are also part of the Business Leadership Team, they are excluded here to avoid duplication of headcount.
2 Actual number of employees at the year-end date. This differs to the headcount in note 6 to the financial statement which is the
average number of employees during the year.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
32
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
Living Wage
All our salaries should meet living costs as
a minimum. In the UK we are proud to have
continued to be a Real 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.
Employee health and wellbeing
Our mission continues, to
‘think well, live well and be well’
In light of the issues many people face each day,
we have a duty as an employer to take action.
Our internal wellbeing teams continue to drive
initiatives across the Group. This year we have
focused on building people's resilience, supporting
financial wellbeing, proactive health initiatives and
managing stress. We have a plethora of benefits
on offer to our people that support these activities
shown below:
Keeping people safe
For a long time, we have successfully controlled the
risks connected to the production and processing of
chemicals and we continually work to enhance our
performance as we strive to reach manufacturing
operational excellence. Our proactive health and
safety approach encourages reporting of near
misses and attempts to identify behaviours that
could potentially result in an incident or accident.
We consider all of the human variables that
are included in the work environment, such
as temperature, pace of work, stress, health,
distraction, training and competency, instrument
layout, and ergonomics.
We also adopt the recognised 4Cs approach to
managing our health and safety approach and
ensure adoption of behaviours:
• Competence: recruitment, training and
advisory support.
PRIVATE
MEDICAL
AND
HEALTHCARE
DENTAL
HEALTHCARE
LIFE
ASSURANCE
• Control: allocating responsibilities, securing
commitment, instruction and supervision.
• Co-operation between individuals and groups.
• Communication: spoken, written and visible.
All accidents, incidents, near misses and concerns
are required to be reported via easily accessible
means without fear of repercussion. Reported
events are assessed, thoroughly investigated
and corrective action measures implemented.
Additionally, risk assessments are conducted to
determine presentation of risks and mitigation
measures needed. Job safety analysis is conducted
to evaluate hazards associated with various
standard operating procedures with hazard
mitigation measures instituted.
Engaging stakeholders
An organisational culture that incorporates all
employees and emphasises the advantages of
working safely and responsibly is the most crucial
aspect of safety. Employee participation in the
creation of standards, practices and policies, as
well as consultation on any modifications, are
critical. They feel included and accountable
for safety discussed during health, safety, and
environment (HS&E) meetings, toolbox talks,
team meetings, and shift handovers.
HOLIDAY
PURCHASE
SCHEME
Our benefits driving wellbeing at work
INCOME
PROTECTION
FOR ILLNESS
Reintroduced during the year, we now have
eight SHE champions in the UK and anticipate
four to five also joining in the US.
FAMILY
FRIENDLY
POLICIES
FLEXIBLE
WORKING
RETIREMENT
SAVINGS
Their role is to work with the HS&E team to
improve safety in all areas of the business.
Assisting with risk assessment, COSHH assessing,
accident and incident reporting and investigations,
driving the concern card reporting system and
assisting with any corrective actions. They
also form part of the UK HS&E Committee.
Representation in every department and each shift
provides management teams and colleagues access
to dedicated safety contacts, to provide greater
support and allowing questions or issues around
HS&E to be dealt with at the time.
We are in the process of refreshing our HS&E
committee, to be comprised of the SHE champions,
key department supervision and members of the
Business Leadership Team, to further support our
HS&E agenda and embed this further into our
culture. Our aim is to further reduce accidents
to a minimal level (Target Zero).
Occupational health and safety training
In the UK, we collaborate with a third-party
occupational health service to track employees'
health, identify hazards and conduct routine
screening and surveillance. Support services
also include advice and direction for people with
long-term health conditions and for workers who
require medical advice and support. This service
includes medical exams, such as COSHH. We
believe that training is a crucial component of
our health and safety plan for safeguarding our
people from diseases and injuries and as such our
training complies with legislative standards. New
starters receive training linked to specific hazards
as required and also general health, safety and
environmental training. To assist baseline testing
and continuous health assessments we use an
occupational health service provider in the USA.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
33
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
Taking our customers along
on our sustainability journey
It is imperative that we take our customers on our
sustainability journey. Results from our recent
sustainability survey further re-enforced how our
customers are looking to us to support their journey
and climate targets and will help shape our strategy
moving forward.
Our survey highlighted the top three priorities
for our customers in the next ten years:
• Eliminating modern slavery, child labour
and forced labour
• Eliminating deforestation in supply
chains and meeting biodiversity targets
• 100% sustainable ingredients
An increased interest in product level carbon
data was also apparent, encompassed in our
TCFD disclosure on page 40.
PRIORITY:
Community matters
This survey also enabled us to highlight the
certifications and standards we hold, further
cementing our efforts and level of transparency
through standards such as EcoVadis.
We encourage direct conversations with our key
customers regarding sustainability to support their
targets and direction of travel. To inform these
conversations we gather insight from our Sales
Team and Global Sustainability Manager on our
approach and progress.
Our focus: Provide positive, measurable
impacts for our local communities
Our business depends on the communities in
which we source and operate, and we strive
to enhance the lives of the members of these
communities. As a result of our focused community
matters strategy, we made £56,087 in donations
and supported a total of 17 charities globally.
Also under a new initiative we have collectively
contributed 183 volunteering hours
to support causes and charities that matter to
our people.
As our purpose incorporates ‘enhancing every day’
this focus also allows us to align our partnerships
to support the following United Nations Sustainable
Development Goals:
KidsPack &
Toys for Tots
Suffolk Mind, MyWiSH,
Upbeat & Peace River
Enterprise Advisors
& School Support
Bury Rickshaw
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Top three categories of incidents1 – chemical, vehicle, equipment
Top three categories of accidents2 – chemical, human factor, slip/trip same level
Total H&S training hours per Group employee: 5.3 (2022: 5.6)
Total H&S training hours: 872 (2022: 2,391)
Internal hours: 395 (2022: 577) external hours: 477 (2022: 1,834)
Number of reportable accidents3 across Group
average number of sick days
2023
2022
2021
2020
2019
0
5
1
4
2
4
1
3
5
3
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 must 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 or more.
183
volunteering
hours
We launched a volunteering
programme midway through the year
to enable all employees to spend half
a day’s work volunteering which will
further support the SDGs mentioned.
We aim to support further
opportunities, resulting in increased
uptake, in 2024 and beyond.
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Ocean Conservancy
Suffolk Wildlife Trust,
Adopt A Highway &
Operation Honeybee
Reducing human impact on our local
environment (Global).
A number of our key charities work in the area
of wilderness protection and the reduction of
human impact on the environment. These include,
The World Wildlife Fund (WWF), Adopt A Highway,
Operation Honeybee, Ocean Conservancy, and the
Suffolk Wildlife Trust, to name a few.
We have supported these charities through
employee volunteering initiatives, including
Company-wide litter picks, as well as on-site
fundraisers and educational awareness events.
Sustainability
34
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PEOPLE CONTINUED
SUPPORTING THE MENTAL HEALTH OF THOSE IN OUR
COMMUNITIES (GLOBAL)
We take wellbeing seriously both within our
business and by supporting local causes to
improve mental health in the community.
West Suffolk hospital patients, staff, family
members, volunteers, and the wider mental health
trust (the Norfolk and Suffolk NHS Foundation
Trust) totalling more than 1,500 beneficiaries
across the region.
In May we encouraged colleagues across the
Group to get moving in our ‘100 miles’ initiative.
This initiative challenged colleagues to walk, jog,
swim or run, 100 miles across the duration of
Mental Health Awareness Month. The challenge
raised £3,379 for Suffolk Mind, and $877, for
Peace River in the US.
In the UK we have sponsored a local project
to build a sustainable, multi-sensory and
wildlife-rich therapeutic garden for use by
Our close relationship with Suffolk Mind
encouraged us to carry out an emotional needs
audit of our people this financial year, providing
us with key areas of focus for the months ahead.
We have also supported the charity in the capacity
of headline sponsors for their first charity gala
dinner which raised over £27,000.
ENGAGING YOUNG PEOPLE INTO THE WORLD OF
FLAVOUR (UK)
We recognise we have a role to play in ensuring
the next generation is well equipped for the world
of work. Taking this into consideration we support
various local primary schools, high schools,
colleges, sixth forms and universities to enhance
their careers education.
This year we hosted a large group of
Manufacturing Engineering students from the
University of Cambridge, providing insight into
the industry and generating ideas for future job
roles within our sector. Two colleagues also
volunteer their time as Enterprise Advisors for
the Sybil Andrews Academy, based in Bury St
Edmunds, helping them directly with developing
a strong careers programme and creating more
opportunities for young people.
We assist with everything from careers talks and
fairs, mock interviews and assemblies, to tours of
Treatt and 1-2-1 support for students with a desire
to work in the flavour ingredients industry.
9 schools supported this year
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
GREAT BIG GREEN WEEK
Great Big Green Week provided us with another
opportunity to draw focused attention on the
importance of tackling climate change and protecting
nature. We shared success stories and initiatives,
whilst also focusing on the following:
1) ‘The power of sustainable eating’, promoting a
plant-based diet, encouraging our community to
bring in plant-based foods and offering a plant
based subsidised menu in our UK ‘hub’.
2) We focused on rethinking waste, the potential
to further reuse and recycle across our facilities
and in our own day-to-day lives.
3) In the UK we also held a green tombola with prizes
to get us green fingered and in touch with nature.
In the US we focused on educating on ‘saying no
to plastic’.
4) We held a used book swap and sale at our two
main sites and as a result a permanent book swap
and resource library has now been launched across
all sites.
5) In the UK we held a sustainable travel day where
mechanics ran a free bike fixing session, getting
17 people back on their bikes. We also worked with
the local council to offer the chance to test ride and
trial seven free e-bikes via a new scheme for up to
two months, ahead of a potential purchase through
our cycle to work scheme.
6) In the spirit of supporting our local community in the
USA we held a packing event for KidsPack where
fifteen eager volunteers worked at packing stations
to prepare and pack meals for local children in need.
Sustainability
35
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PLANET
Acting on climate change
RELEVANT UN SDGs
We promote environmentally friendly practices at every stage of our operations and
extend this across our supply chain. Because the viability of natural resources is
essential to our Company, environmental effects like climate change are of concern
to both humanity as a whole and to Treatt.
PRIORITY:
Carbon emissions collection
and analysis
Our focus has been on the evaluation and validation
of Scope 1, 2 and 3 carbon emissions data capture.
These are included in our TCFD disclosure on
pages 36 to 43. Building on our long-standing
reporting of Scope 1 and 2 carbon emissions,
capturing Scope 3 data for analysis will enable us
to better understand our overall carbon footprint,
which will, in turn, inform our longer-term carbon
reduction pathways and targets.
Looking ahead, in 2024 we hope to assess how
we can better obtain primary data from our supply
chain to more accurately reflect the emissions
related to Scope 3 purchased goods and services.
From early 2024 we intend to adopt a carbon
reporting software platform which will also
support Scope 3 reporting and assist in the
further development of our net zero pathway.
PRIORITY:
Carbon reduction strategy/
net zero pathway
Our priority is to reduce our absolute carbon
emissions over time to ensure that we are net
zero ahead of the UK Government's 2050 ambition.
Net zero pathway
In 2022 we commissioned ClearLead, an
international energy and sustainability consultancy,
to conduct on-site energy, water and waste audits
of our processing plants in Lakeland, Florida and
Bury St Edmunds, Suffolk, spending three and
two days on the respective sites.
The audit reports provided recommendations
in respect of energy efficiency projects and
step-change infrastructure investments to
significantly reduce our carbon emissions.
The recommendations were costed, included
ROI, payback periods and estimated savings
and took account of our 2022–27 business plan.
Based on these recommendations we took our
first step last year towards developing a net zero
pathway by reporting in our 2022 Annual Report
that we had set a target of reducing Scope 1
and 2 emissions at our US site by 10% by 2025.
We have made further progress during 2023 in
terms of modelling a net zero pathway aligned
to the Science-based Targets initiative (‘SBTi’)
methodology for SME businesses. As part of this
modelling, the following necessary assumptions
were made:
• The grid decarbonisation data was taken
from the International Energy Agency (IEA)
Projections database for the Stated Policies
Scenario. At this point, the USA emissions
data are US-wide and not specific to Florida,
due to lack of available data, but will be
incorporated when the situation changes.
• The baseline year selected is FY2022 which
is considered most suitable as it takes into
account both the availability of accurate baseline
emissions data and the best-case aggregation of
emissions data to reflect the ongoing move from
older UK premises to a new BREEAM-certified
site within Bury St Edmunds.
• For the period until 2030, we have incorporated
the growth projections included in our five-year
business plan.
In 2023 we are reporting our near-term net zero
pathway (2022–30), our associated shorter-term
actions and our interim targets.
Energy efficiency was built into the design of
Skyliner Way, our new site in Bury St Edmunds.
It is therefore understandable that most of our
shorter-term actions are focused on our Florida
facility. The necessary capital expenditure was
already agreed for the period 2022–25 to ensure
that we reach our interim 2025 emissions
reduction target for our US site.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
36
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PLANET CONTINUED
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
)
r
y
/
e
2
O
c
t
(
s
n
o
i
s
s
i
m
e
Scope 1 & 2 near term SBT – in line with 1.5°c reduction – SBTi aligned
0%
5%
11%
16%
21%
26%
32%
Net zero pathway continued
These include improvements in areas such as refrigeration, metering, steam boiler efficiency, thermostatic
controls, air compression and insulation. Other investments identified longer-term for the US plant include:
on-site renewable energy and combined heat and power projects. These will be factored into any planned
expansion of the US site. Future initiatives for the UK site, already utilising 100% renewable electricity,
include on-site renewable energy and the decarbonisation of a natural gas-fired plant.
37%
42%
We have set interim targets for our net zero transition plan which we will continue to monitor and review as
we progress:
Year
reduction in absolute carbon emissions on a like-for-like basis (baseline year: FY2022)
2025
10% reduction in Scope 1 and 2 at Treatt USA
2030
42% reduction (as a minimum) in total Scope 1 and 2 across the Group
2050
90% reduction (as a minimum) in Scope 1, 2 and 3 by 2050 or earlier (subject to further modelling)
In line with SBTi’s guidance for SME companies we are not required to include a near-term target for Scope
3 emissions. In 2024, supported by increased Scope 3 data, increased auditing of our suppliers and ongoing
collaboration with stakeholders across our value chain, we intend to model our longer-term emissions
reductions targets for Scope 1, 2 and 3 and report our actions and targets in our 2024 Annual Report.
0
FY2022
FY2023
FY2024
FY2025
FY2026
FY2027
FY2028
FY2029
FY2030
Business as usual
Forecast emissions
SBT 1.5°C reduction
TCFD DISCLOSURE
PRIORITY:
Taskforce on Climate-related
Financial Disclosure reporting
(TCFD)
Recognising the medium to long-term risks posed
by climate change to our business model, we have
again worked with our sustainability consultants to
assess climate-related risks and opportunities that
are relevant to our business.
We are reporting in reference to the
recommendations of TCFD to understand the
climate resilience of our business. We will
endeavour to increase the level of disclosure
year-on-year.
Positive progress
In last year’s report, we included our initial
response to the Taskforce on Climate-related
Financial Disclosures (‘TCFD’) methodology
where we reported across the framework’s
four key pillars of governance, strategy, risk
management and metrics & targets and responded
to the underlying eleven recommended disclosures.
In line with the TCFD’s suggested approach, we
considered a 2.0°C warming scenario, based on
the Intergovernmental Panel on Climate Change’s
(‘IPCC’) defined Representative Concentration
Pathway 4.5 and assessed the associated physical
and transition risks.
During FY2023 we have made good progress in
terms of continuing to develop our understanding,
management, measurement and decision-making
in regards to climate action.
We have established an ESG Board Advisory
Panel; we have modelled our initial near-term net
zero targets, aligned to the SBTi and building on
last year’s TCFD analysis, we have considered
four specific risks, supported by sector-relevant
scenarios and data provided by the Business for
Social Responsibility (‘BSR’), Network for Greening
the Financial System (‘NGFS’) and the World
Wildlife Foundation (‘WWF’).
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
Sustainability
37
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
TCFD compliance statement
The table below highlights how we have reported in line with the eleven recommendations of TCFD and includes our own informed assessment of our level of compliance.
We recognise that this an iterative process and have highlighted those areas where we are currently not fully compliant and need to make improvement or continue to progress.
Recommendations
Disclosures
Disclosure level
Alignment
GOVERNANCE
Disclose the organisation’s governance
around climate-related risks and
opportunities
STRATEGY
Disclose the actual and potential impacts
of climate-related risks and opportunities
on the organisation’s business, strategy
and financial planning where such
information is material
Describe the Board’s oversight of climate-related risks and opportunities
We are aligned on this recommendation
Describe management’s role in assessing and managing climate-related
risks and opportunities
We are aligned on this recommendation
Describe the climate-related risks and opportunities the organisation
has identified over the short, medium, and long-term
Describe the impact of climate-related risks and opportunities
on the organisation’s businesses, strategy and financial planning
Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
We are aligned on this recommendation
Pages 39-41
We are partially aligned on this recommendation.
We have assessed the impacts of climate-related risks
and opportunities from a qualitative perspective but have
yet to translate this into quantifiable financial impacts
We are partially aligned on this recommendation.
We have assessed the impacts of climate-related risks
and opportunities from a qualitative perspective but have
yet to translate this into quantifiable financial impacts.
This will be addressed in the next financial year
RISK MANAGEMENT
Disclose how the organisation identifies,
assesses and manages climate-related risks
Describe the organisation’s processes for identifying and assessing
climate-related risks
We are aligned on this recommendation
Describe the organisation’s processes for managing climate-related risks
We are aligned on this recommendation
Describe how processes for identifying, assessing and managing
climate-related risks are integrated into the organisation’s overall
risk management
We are aligned on this recommendation
METRICS AND TARGETS
Disclose the metrics and targets
used to assess and manage relevant
climate-related risks and opportunities
where such information is material
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
We are aligned on this recommendation
Pages 41-43
We are partially aligned on this recommendation.
Year-on-year, we intend to improve the accuracy
of our reported Scope 3 emissions, which represents
a significant proportion of our total emissions
Pages 41-42
We are aligned on this recommendation
Pages 41-43
Page reference
Pages 38-39
Pages 38-39
Pages 40-41
Pages 39-41
Page 41
Page 41
Page 41
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
38
TreaTT plc Annual Report & Accounts 2023
TCFD DISCLOSURE CONTINUED
Governance
Board oversight of climate-related risks and
opportunities is provided by the ESG Board
Advisory Panel which was established in 2023.
During the year, in accordance with our ESG
Strategy, we took steps to improve our governance
as regards our oversight and management of
climate action issues.
We established an ESG Board Advisory Panel,
chaired by a Non-executive Director and attended
by two additional Non-executive Directors, one of
whom chairs our Audit Committee and the other
who has extensive experience of sustainability
matters through her executive position at a listed
water utility business. The ESG Board Advisory
Panel also includes our Chief Financial Officer,
who oversees the operational and financial aspects
of our sustainability programme. The ESG Board
Advisory Panel is responsible for reviewing and
advising on the recommendations made by the
ESG Management Group, also established in 2023,
comprising key members of Treatt’s Business
Leadership Team, including the CEO, the CFO
and the Global Sustainability Manager.
The ESG Board Advisory Panel meets quarterly,
and it is the responsibility of the Chair of the ESG
Board Advisory Panel to ensure that the Treatt
Board is equipped with the relevant information to
ensure that the Board can engage in constructive
discussion on climate matters and make informed
decisions. The ESG Board Advisory Panel consults
with the Audit Committee to ensure the relevant
level of assurance.
SUSTAINABILITY CONTINUED
PLANET CONTINUED
The ESG Management Group meets quarterly
and is responsible for reviewing the progress
made by the underlying ESG Working Group
responsible for People, Planet and Performance,
as well at the TCFD Working Group. The TCFD
Working Group includes representatives from
procurement, supply chain, legal and risk,
engineering, finance and sustainability.
The CFO sits on the ESG Management Group,
the ESG Board Advisory Panel and the Board to
ensure that there is a clear flow of information
between the three groups.
Constitution of the ESG Board Advisory Panel
eSG Board advisory
panel members
Board
audit
committee
remuneration
committee
Nomination
committee
eSG Management
Group
David Johnston
Non-executive Chair
Bronagh Kennedy
Non-executive Director
Phillip O’Connor
Non-executive Director
Ryan Govender
Chief Financial Officer
BOARD
Overall accountability of ESG Strategy
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
AUDIT COMMITTEE
Identification and management
of climate risks
ESG BOARD ADVISORY PANEL
Review and advise on climate strategy as
part of People, Planet, Performance strategy
REMUNERATION COMMITTEE
Setting and assessment of
ESG-related remuneration targets
ESG MANAGEMENT GROUP
Accountable for execution of ESG strategy
TCFD WORKING GROUP
Initial assessment of risks and
opportunities linked to climate change
ESG WORKING GROUP
People, Planet, Performance
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
39
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
The Board is responsible for oversight and
governance of climate-related risks as part
of the Company’s risk management process.
Climate change is included as a principal risk
in our risk register, see pages 60 to 65, which
is reviewed bi-annually with each principal risk
assured and classified pre- and post-controls.
Building on the non-financial targets introduced
for our Executive Directors and senior management
team in FY2022, at least 20% of Executive Director
and senior management team annual bonus
scheme outcomes will be subject to ESG-related
non-financial objectives for the 2024 financial year.
These include progress on our published, shorter-
term incremental targets to reduce emissions
by 10% at our Florida site by 2025 and achieve
a 42% reduction (as a minimum) in total Scope
1 and 2 for Treatt by 2030, refer to page 42 for
more information.
As a Company that sits midway through the value
chain in an industry which sources the majority of
its raw materials from the agricultural sectors and
sells to customers who are increasingly demanding
as regards their suppliers’ climate action progress
and performance, the Board and the ESG Board
Advisory Panel are being kept informed on an
ongoing basis of new developments, best practice
and stakeholder expectations.
In addition to this, the Board also intends to include
younger people on the ESG Board Advisory Panel,
to ensure wider representation.
Further details of our governance structures
relating to ESG and climate-related issues
can be found on pages 38 and 47.
Strategy
Over the past year, we have been making good
progress in terms of delivering on our ESG
Strategy. One of our key priorities is to minimise
our environmental impact, both at our processing
sites and across our value chain. In this report,
we have included near-term reduction targets as
part of our first iteration of our net zero pathway,
which we will continue to develop as we gain
greater understanding of our Scope 3 emissions
and increase our collaboration with our suppliers
and customers regarding how best to improve
environmental performance.
Last year, we focused on the medium to long-term
physical (acute and chronic) risks relating to our
manufacturing sites in Florida, USA and Suffolk,
UK and the shorter-term changes anticipated –
transition risks – to take place to ensure that
global warming is restricted to 1.5–2.0°C by 2050.
Building on our 2022 analysis of climate-related
risks and opportunities, where we reviewed them
in terms of both significance and likelihood, we
have broadened our assessment to include material
aspects across our value chain. In order to provide
further context to this year’s assessment, we used
sector-relevant scenarios provided by the Business
for Social Responsibility (‘BSR’) and the Network
for Greening the Financial System (‘NGFS’) and
used water forecasts provided by the World Wildlife
Foundation’s (‘WWF’) Water Risk Filter.
The sector relevant scenarios are summarised as follows:
Physical risk
Transition risk
No new policies
(business as usual)
Smooth 2050
transition
Delayed 2050
transition
High physical risks
Low physical risks
Medium physical risk
Low transition risk
Medium transition risk
High transition risk
Policy ambition
3°C+
1.5°C
1.8°C
Policy reaction
None – continuation
of current policies
Immediate and smooth
Delayed
Technology change
Slow
CO2 removal
Low use
Regional policy removal
Low
Fast
Medium use
Medium
Slow then fast
Low use
High
We considered three different scenarios to give
us greater visibility of potential risks and have
assessed potential impacts as low, medium or
high based on informed, qualitative discussion of
these three scenarios. At this point, we have not
made a quantitative evaluation of these financial
impacts but plan to do so in due course as we
look to introduce internal carbon pricing into our
financial planning.
In terms of our selected timeframes, we have
defined ‘short-term’ as up to five years, in line
with our 2022–27 business planning cycle;
‘medium-term’ as 4–15 years; and ‘long-term’
as beyond 15–27 years in-line with 2050 targets.
During a series of workshops our TCFD Working
Group considered in detail the above scenarios and
reviewed the findings from last year’s assessment
of climate change risks and opportunities, the
TCFD Working Group highlighted the following
four risk areas – physical and transition – as key
material priorities for the business. In turn these
were discussed and approved by both our ESG
Management Group and ESG Board Advisory
Panel. The four areas are: water stress at our
manufacturing operations; citrus sourcing and
its associated supply chain; the cost of energy/
carbon across our value chain; and how changing
societal attitudes towards climate change is having
a material impact on our customers’ procurement
decisions. These were also cross-referenced with
priority climate and sourcing-related findings from
our FY2022 materiality assessment following
consultation with a number of Treatt's stakeholders
and using SASB mapping as a reference point,
this highlighted climate change, carbon emissions,
water, waste and energy along with raw material
sourcing as highest potential material impact.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
40
TreaTT plc Annual Report & Accounts 2023
TCFD DISCLOSURE CONTINUED
Material Risks
TCFD Category
Climate-related
trend
Potential financial impact
PHYSICAL RISK
Water stress
Water stress at our manufacturing plants in the UK and
the USA resulting in disruption to production or inability
to create new products which require more water in the
manufacturing process. Data: WWF Water Risk Filter
Water stress
Water stress for our citrus suppliers – predominantly
based in Latin America – resulting in poorer quality,
lower yields and higher prices on a more regular basis.
Data: WWF Water Risk Filter
SUSTAINABILITY CONTINUED
PLANET CONTINUED
Possible
short-term
impact
Possible
medium-term
impact
Possible
long-term
impact
Low
Low
Medium
Strategic response, resilience, and mitigation
Facility site audits: We have audited our plants from an energy, water and waste perspective and are making
changes to ensure we can maximise water efficiency.
Future NpD: If future products require more water as part of the manufacturing process, we could consider
finding alternative sites for manufacture, or alternatively seek to develop products in a more efficient way.
Medium
Medium
High
risk mapping: We will continue our risk assessment and modelling of our suppliers and continue to
collaborate with them to ensure they have strong physical risk resilience plans.
PHYSICAL AND
REPUTATION RISK
Citrus sourcing
and supply chain
Extreme weather – particularly in Latin America
(see above) – leads to an unreliable supply of citrus
raw materials, resulting in an inability to deliver to
customers on time. Data: NGFS Climate Impact Explorer
Low
Medium
Medium
TRANSITION AND
MARKET RISK
Energy and
carbon pricing
in the value
chain
Our widespread value chain – including long
transportation distances – makes it difficult for us to
reduce our carbon emissions resulting in higher prices
for our raw materials due to increased carbon costs.
Low
Low
Medium
TRANSITION AND
REPUTATION RISK
Customer
procurement
preferences
for low carbon
products
Our widespread value chain makes it difficult for us
to reduce our Scope 3 carbon emissions. This may
cause customers to seek alternative suppliers as they
look to focus on their own net zero targets. Also, the
potential inability to meet increasing customer demand
to provide information regarding carbon/water intensity
at a product level to support their net zero targets,
labelling ambitions.
Low
Medium
Low
Consumer
procurement
preferences
for sustainable
products
Increased demand from consumers for certified
ingredients (such as Rainforest Alliance and Fair
Trade) in products, could mean we lose customers
by not offering enough of these ingredients
(applicable predominantly to tea and coffee).
Low
Low
Medium
continue diverse geographical sourcing: We will continue to ensure that we have a diverse, geographical
supply chain to absorb possible regional disruptions due to extreme weather. We stock accordingly to mitigate
unreliable supply.
Supporting regenerative agriculture: We are also a member of the Sustainable Agricultural Platform (SAI),
a network growing a sustainable, healthy and resilient agricultural sector whilst creating strong and secure
supply chains. Whilst also being a founding member of the SAI regenerative agriculture programme, helping
to drive positive change for a sustainable, thriving and more resilient agriculture sector.
Net zero pathway SBTi methodology: We have now costed a near-term carbon reduction plan for Scope
1 and 2 in line with the Science-based Targets Initiative methodology, this includes projects to generate on-
site renewable energy. In 2024, we are looking to gain greater insight and understanding into how we can
minimise our Scope 3 emissions across our value chain as part of long-term net zero planning to minimise
any potential carbon costs.
Benchmark to eSG ratings: We disclose to CDP and EcoVadis to provide transparency to our stakeholders.
customer engagement: We ensure our customers are fully aware of our broader ESG strategy and net zero
planning. In 2023 we conducted a sustainability-focused customer survey to better understand gaps and our
customers’ requirements (details are summarised on page 33).
Supplier engagement: We will continue to meet with suppliers to discuss our responsible and sustainable
sourcing policy and carbon targets, together with their activities to reduce Scope 1 and 2 emissions and in
turn our Scope 3.
Scope 3 modelling: Next steps are to model our long-term net zero target, including Scope 3. Holding a
workshop to identify how to improve data and identify a strategy for reducing Scope 3 in our supply chain to
facilitate this.
Impact assessment: In this same workshop we will explore the opportunity for LCA analysis for our citrus
category, for product level carbon/water data collection.
certified sourcing: Reacting to market insights into increasing consumer preferences for certified
ingredients in the future we have assessed our current approach. We already source more than 75% of our
tea raw material from Rainforest Alliance certified growers. Rainforest Alliance certification helps farmers
produce better crops, adapt to climate change, increase their productivity, and reduce cost. Using our
certified facilities in the USA to handle this material, enabling our customers to make on-pack certification
claims. Further to this we have obtained certification with Fair Trade USA to enable us to increase our
offering of certified ingredients should demand increase. For other product categories such as citrus we can
procure ingredients assured via The Farm Sustainability Assessment (FSA), allowing us to assess, improve,
and validate on-farm sustainability in our supply chains.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
41
TreaTT plc Annual Report & Accounts 2023
Market opportunities
SUSTAINABILITY CONTINUED
Description of opportunity
Possible short-
term impact
Possible medium/
long-term impact
Strategic response
Material
opportunities
MARKETS
Improving sustainability of supply chain to ensure
consistent supply of high-quality raw materials
and reduce transportation costs/emissions.
MARKETS AND
TECHNOLOGY
To become less dependent on expensive energy
providers and higher-carbon processing.
Low
Low
Medium
Medium
Over the past 18 months, we have conducted a comprehensive audit of our suppliers and circulated our new supplier code of
conduct and sustainable sourcing policy to suppliers and customers (details found on pages 48 to 49). In 2024, we intend to
explore expanding this audit to include environmental emissions throughout our value chain.
As part of the energy, water and waste audits of our manufacturing plants, we have identified investment opportunities in
on-site renewable energy sources and low-carbon processing technologies which have been captured in our future capital
expenditure plans. Further details can be seen in our net zero pathway on pages 35 and 36.
Note: Currently, our assessment of low, medium and high impacts are aligned with the thresholds adopted for our bi-annual risk assurance mapping process. Levels are defined as follows: Low – may occur at some time, one event per 11–50 years, this could be a history
of casual occurrences, conditions exist for this loss to occur. Medium – possibility the event or risk will occur, one event every 3–10 years, may be a history of periodic occurrences, will probably occur in some circumstances. High – strong possibility the event or risk will
occur, one event in up to two years on average, may be a history of frequent occurrences, will probably occur in most circumstances. In the future, we are committed to further quantifying and qualifying the level of impacts and to providing further transparency regarding
the process for determining the relative significance of climate risks.
Resilience of our strategy to climate change
Now that we have an ESG strategy in place and
bearing in mind the actions we are taking and
the progress we are making, we believe our
organisation is resilient to the possible physical
and transition impacts of climate change over our
short-term timeframes across all three scenarios
of water stress, citrus supply and sourcing and
energy/carbon pricing in the value chain. In 2024,
we will continue to engage and collaborate with
our material stakeholders to ensure we remain
competitive and sustainable, and therefore resilient,
in the medium to long-term.
This assessment was finalised by the Board
following engagement and consultation with the ESG
Board Advisory Panel and the Audit Committee.
Risk management
As a principal risk for the business, climate-related
risks are subject to the same formal governance
and review process as other risks on our risk
register. You can read more about how we
assess climate-related risks on pages 60 to 62.
We have an established risk management
framework in place which we use to assure the
climate-related risks and opportunities we face
within our business.
We plan to conduct a follow-up materiality
assessment in 2024 in line with the
recommendations of the International
Sustainability Standards Board (ISSB).
As one of eleven principal risks, climate change
risks are assessed bi-annually and include an initial
pre-controls rating, three ‘lines of defence’, which
include business operations, oversight functions
and internal/external audit, followed by a final
post-controls rating. The assurance level is rated as
low, medium and high while the risk classification
ranges from 1 (low) to 9 (high). More details on our
assessment of climate change as a principal risk
can be found on page 62.
In FY2021, we conducted our first ESG materiality
assessment – qualitative and quantitative – across
external and internal stakeholders which identified
addressing the long-term physical impacts of
climate change as a key material priority for
the business. The findings from this materiality
assessment, summarised in our 2021 Annual
Report, informed our ESG strategy and the
risks identified were incorporated into our risk
management process.
As outlined earlier, our ESG Board Advisory
Panel, which meets twice formally and twice
informally each year, is responsible for reviewing
and advising the ESG Management Group on its
work relating to the risks and opportunities from
identifying, managing and monitoring the principal
risks relating to climate change. Day-to-day risk
management is carried out by the Executive
Directors who work closely with the Business
Leadership Team in reviewing and monitoring
risk and mitigation strategies across the business.
The ESG Management Group, along with the
Global Sustainability Manager, identify key
climate risks, assess their potential impacts
and appropriate risk mitigation strategies.
Responsibility for monitoring and reviewing
each risk is designated to a senior team member
to ensure there is appropriate accountability.
Metrics and targets
Last year we published our initial short-term
emissions reduction target for our manufacturing site
in Florida. This year, we have introduced additional
targets aligned to our shorter-term net zero planning.
As we continue to gain greater insight into our Scope
3 emissions, we will continue to develop new metrics
and targets.
We have been reporting our Scope 1 and 2 emissions
since 2013 and reported on seven Scope 3 emissions
categories in 2022 for the first time. These
categories were purchased goods and services;
fuel and energy-related other emissions; upstream
transportation and distribution; waste generated in
operations; business travel; upstream leased assets;
and downstream transportation and distribution.
In addition, we have modelled and set ourselves
2030 Scope 1 and 2 emissions reduction targets,
aligned to the SBTi methodology. This entails
absolute reductions in our Scope 1 and 2 emissions
of 42% by 2030.
In future, we will look to provide further details
regarding how we will continue to reduce our Scope
1 and 2 emissions beyond 2030 in order to be a net
zero business by 2050 or earlier. Further details can
be found on pages 35 and 36.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
42
TreaTT plc Annual Report & Accounts 2023
TCFD DISCLOSURE CONTINUED
Streamlined energy and carbon
reporting (SECR)
We report all our emission sources under the
Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013. Scope 1, 2
and 3 emissions for 2022 and 2023 have been
reported in line with the GHG Protocol and emission
factors provided by the UK’s Department for
Environment, Food and Rural Affairs (DEFRA) and
the US’s Environmental Protection Agency (EPA).
We continue to use 100% renewable electricity
in the UK, playing our part in stimulating growth
of the renewable energy market. Ensuring we
include 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 more historic reporting. Scope 1 and 2
emissions include all mandatory manufacturing and
non-manufacturing related emissions.
Short-term carbon reduction targets
2023
2022
+3.26%
New
target
Target
10% absolute reduction in
Scope 1 and 2 emissions
by 2025 at USa facility
(baseline FY2022)
42% absolute reduction
in Scope 1 and 2 emissions
by 2030
(baseline FY2022)
Although our target for the USA has not seen
any progress this year, we are already seeing an
encouraging small reduction in our total global
emissions, against the newly set short-term Scope
1 and 2 net zero target.
SUSTAINABILITY CONTINUED
PLANET CONTINUED
GHG emissions
In the UK we continued to operate at two sites for the majority of the year, this together with the commissioning phase of new equipment at our new site has
resulted in an increase in Scope 2 emissions, using location-based EF's for the 100% renewable electricity. The reduction in gas utilisation across both UK sites,
resulted in a reduction in Scope 1 emissions. In the USA, having brought the coffee extraction process in-house, we have seen an uplift in Scope 1 emissions.
However, this has been balanced by a comparative decrease in Scope 2 emissions, due to the current product mix during the year requiring less energy-intensive
processes such as distillation. The impacts of this to our carbon targets can be seen below in the short-term carbon reduction targets table.
category
Scope 1 – UK
Scope 2 – location-based UK
Scope 2 – market-based UK
Scope 1 – USA
Scope 2 – location-based USA
Scope 2 – market-based USA
Total global Scope 1 and 2 (location-based) emissions
Intensity ratio KG CO2 emissions (Scope 1 and 2) per kg of product shipped (location-based)
Scope 3:
Purchased goods and services (spend-based)
Fuel and energy-related activities (average-data method)
Upstream transportation and distribution (distanced-based)
Waste generated in operations (waste-type specific)
Business travel (distance-based)
Upstream leased assets (average-data method)
Downstream transportation and distribution (distance-based)
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
2023
(tonnes of cO2e)
431
2022
(tonnes of cO2e)
629
2021
(tonnes of cO2e)
462
611
0
1,805
1,643
N/a
4,490
0.61
54,991
530
3,692
1,319
189
15
3,221
63,957
68,447
464
0
1,482
2,100
N/A
4,508 (restated)
0.46 (restated)
Not measured
562
0
1,348
2,007
N/A
4,546
0.52
51,177
832
5,005
838
181
14
4,797
62,844
67,390
Not measured
Not measured
New
target
N/A
Total Scope 3 emissions
Total Scope 1, 2 and 3 emissions
2022 and 2023 figures refer to the 52 weeks ending 30 September 2022 and 2023, respectively.
Notes
1 The Group has adopted a greenhouse gas reporting policy and a management system based on the GHG Protocol.
2 As defined 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 financial control boundary.
3 Emissions for previous years are retrospectively adjusted as and when more accurate data is provided.
4 The sales office 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 2023 DEFRA conversion factors, except
for overseas electricity which used the 2023 IEA conversion factor for reporting consistency.
6 GHG Protocol chiller emissions are derived from those specified 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 FY2023, the Group chiller emissions that fall outside of GHG protocol, namely those identified under Montreal Protocol and others, totalled 7 tonnes
(2022: 9.5 tonnes).
Sustainability
43
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
Energy efficiency actions
Following our energy, water and waste audits of
our US and UK manufacturing sites in 2022, we
have identified approximately 30 energy efficiency
projects which will reduce both costs and GHG
emissions. As we have recently moved all of
our UK operations into a new BREEAM-certified
manufacturing site in Suffolk, UK, our focus in
2023 has continued at our site in Florida, USA
building on those projects implemented in 2022.
To date these include adding new pumps with
variable speed drivers to our processes, upgrading
our air compressing systems by adding variable
speed drivers, all of which provide greater energy
efficiencies. We have also carried out extensive
steam trap surveys and pipe insulation, improved
auto-defrost for enhanced freezer management,
optimised air conditioning controls and applied
vacuum pump inverters to enhance motor
efficiencies. For projects completed in FY2023
we anticipate achieving an annual reduction
of 267 tonnes CO2e at our US facility and
contributing to our short-term target.
In 2024 we plan to introduce further meter and
monitoring across our manufacturing processes
in the USA, allowing us to better determine
consumption of specific processes and in turn
determine further efficiencies. We are also
investing in projects such as steam boiler and
efficiency upgrades and seeking specialist support
in better utilisation of refrigeration space, to help
maximise capacity and efficiencies next year.
To further support our efforts during the year
we have also set internal KPI’s around electricity,
gas and water consumption at our US facilities
and are exploring setting these in the UK too.
Positive changes to our UK forklift truck fleet
Site
Forklift fleet details emissions
Old UK site
(2021)
New UK site
(2023)
7 diesel/gas forklifts 27 tonnes CO2*
13 electric forklifts
0 tonnes CO2
(market-based)
* Based on propane and gas consumption in the period,
and Defra conversion factors 2021, using FY2021 as a
baseline, as was the nearest period ahead of dual site
running for comparison.
Energy consumed
energy type
Electricity
Renewable electricity
procured
Natural gas
Other fuel
Group
UK
USA
UK
USA
UK
USA
UK
USA
2023
(MWh)
2022
(MWh)
2021
(MWh)
0
4,452
2,948
0
1,897
8,219
207
81
17,804
0
4,750
2,905
0
2,503
5,769
255
136
16,318
0
4,609
2,186
0
2,510
6,729
226
91
16,351
Summary of targets used to manage climate-related risks, opportunities and performance
climate-related risk
Target
Energy and carbon pricing within our control
42% absolute reduction in Scope 1 and 2 emissions by 2030
Short-term energy efficiency across US
manufacturing site
Citrus oil sourcing
10% absolute reduction in Scope 1 and 2 emissions by 2025
Engage with top ten citrus suppliers to ensure that 100% have
a water stress management plan in place by 2025
climate-related opportunity
Target
Decarbonising manufacturing
42% absolute reduction in Scope 1 and 2 emissions by 2030
Sustainable procurement
During 2024 determine relevant categories and explore
opportunities for further certified raw materials
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
44
TreaTT plc Annual Report & Accounts 2023
BUSINESS TRAVEL
AND TREE PLANTING
We continue to question what we determine to be
necessary travel in recognition of the need for urgent
climate action. To provide a more nature positive
solution to help mitigate necessary air travel we
continue to invest in a tree planting programme.
The programme, managed by Trees4Travel, involves
planting ten trees for each flight booked departing
from the UK (our most travelled route). It is
predicted that each tree will absorb 164.1kgs of CO2
in its first ten years, the programme also invests
in a United Nations Certified Emissions Reduction
renewable energy project which effectively doubles
these emission saving promises. In total 2,493 trees
will be planted as a result of travel during the year
(2022: 1,252). In 2022, 770 trees were planted
as part of a reforestation project in Haiti, a further
860 trees have been planted there this year. Over
time, the native species planted will provide jobs
and a much-needed source of revenue to the local
communities. During the year 570 mangroves have
also been planted in a degraded mangrove forest
on the east coast of Kenya. Over 90% of Kenya has
been deforested and 42% of the population live
below the poverty line.
We hope this initiative can help tackle poverty and
deliver climate, biodiversity and local-level benefits
to these communities.
SUSTAINABILITY CONTINUED
PLANET CONTINUED
WASTE
Whilst we are responsible for our waste from the
point it is produced until it is transferred to an
authorised body, our duty of care for the waste
we produce does not end there; it extends along
the entire chain of waste management, ensuring
that the company accepting our waste holds the
relevant registrations and permits for transportation
and final recovery or disposal. Our new purpose-
built facilities, together with new ways of working,
are providing opportunities to find ways to manage
waste differently, with the environment in mind.
To focus our efforts on reducing waste first and
ensuring as little as possible goes to landfill we use
the hierarchy of waste management. Using this
alongside our Scope 3 waste data has helped us
to focus on the hot spots in our waste streams. All
whilst staying on top of evolving opportunities to
further segment other streams for reuse, recycling
or recovery and supporting the circular economy.
Our circular approach to waste
Our circular approach for a number of our other
waste streams, including honey, citrus and
watermelon, can be seen in the sustainability
section of our website. With a higher waste
footprint in the USA, we are striving to determine
alternative service providers for our waste,
particularly in redirecting waste going to landfill.
As such in the last few months, we have started
working with a green waste processor in Florida
to reuse our spent coffee grounds to create
high-quality compost. As an anticipated growth
category for the business, the re-direction of this
waste stream will play a significant part in our
Scope 3 emissions waste reduction plan, for which
a case study features in the sustainability section of
our website.
previously going to landfill, we anticipate
a reduction of 520kg of cO2e per tonne of
coffee waste*.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Total global waste volume: 19,410mt (2022: 17,775mt)
69.9%
15.2%
11.3%
1.4%
1.4%
Anaerobic
digestion
Combustion
Composting
Landfill
parameter
Recycling
0%
Reuse
0.8%
Reused
* Source: DEFRA emission factors (2023) for commercial and industrial waste to landfill.
Tree planting in Haiti, image courtesy of Eden Reforestation Projects.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
45
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
WASTE MANAGEMENT PYRAMID
As a business, we have a responsibility to ensure we produce, store, transport and dispose of business waste to reduce our impact on the environment.
Further to improvements made over previous years, this year we have made the following positive actions with our waste management.
REDUCE
• 41% reduction in food waste from our catering facility in the UK,
due to improved planning and processing: 3.38mt (2022: 5.74mt)
• 5% reduction in non-hazardous waste for the Group: 16,344mt (2022: 17,112mt)
LANDFILL
• 0% waste to landfill in the UK
•
In the USA we have introduced a crusher service to compact waste before it is taken to
landfill, reducing volume and loads required, for which we estimate a 66.3% reduction
in transportation emissions whilst we work on seeking alternative services to landfill
REDUCE
REUSE
RECYCLE
RECOVER
LAND
FILL
REUSE/RECYCLE/RECOVER
• Where possible, UK-used drums are reused internally or recycled
• 4.1mt of UK cardboard was recycled
• 100% pallets are reused or recycled in the UK
• 100% of our coffee waste in the USA now goes to make compost
• 99% of hazardous waste (3,063mt out of 3,065mt) was recovered,
incinerated or recycled across the Group
• All watermelon cardboard packaging returned to supplier for reuse
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
WATER EFFICIENCY
We have always monitored and sought to improve
our water usage and water efficiency. Wastewater
management is an integral factor as we adopt
principles of operational excellence within our
processes. To enable more effective water
monitoring, a wastewater flow meter has been
installed at our US facility. The meter now allows
for more accurate understanding of our ‘water
consumption’, rather than our water usage being,
based on ‘water withdrawn’.
This is reflected in our water consumption table:
Water consumption
2023
2022
Total water withdrawn (m3)
106,598
57,529
Total wastewater1 (m3)
Total water consumed1 (m3)
Water efficiency (litres per
kg of product shipped)
88,654
17,943
4,3802
53,1493
2.44
5.95
1 Our water reporting has historically been based on all water
withdrawn and hence reported as 'water used'. For 2023, since
installing a wastewater flow meter in the US, this is determined
by deducting our wastewater volumes from our water
withdrawal. Using this alongside wastewater billing in the UK,
based on consumption being 10% of withdrawal. We exclude
the aquifer in the USA which operates a closed loop system.
2 UK only.
3 Water used.
Although our water efficiency now shows a
significant improvement, having brought processes
in-house during the year in the USA along with
variations in our product mix, we’ve seen an
increase in our water withdrawal. As such, to
allow us to look more closely at our water intensive
manufacturing processes in the US, we have
installed further functionality to two water meters,
which will enable us to determine potential
water savings at various stages of the process.
Our UK facility includes several water efficiency
measures, from automatic leak detection to self-
closing push button taps, resulting in a scoring
of 67% for water efficiency under BREEAM.
Our energy, waste and water audit reports
suggested several water-saving improvements to
our manufacturing facilities. A proposed rainwater
harvesting system for the UK, collecting rainwater
from the roof, could provide an annual supply of
3,000m3, more than covering our grey water needs
on site.
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
46
TreaTT plc Annual Report & Accounts 2023
SUSTAINABLE SHIPPING
Treatt continues to face challenges in this area
with over 1,600 different products being shipped
via 74 countries, with shipment quantities
varying from 25 grammes to 20 tonnes and
we are working to increase the sustainability
of our logistics operations.
During the year we continued to monitor the
shipping methods used for export, calculating
total shipments by each carrier.
We have also evaluated imports to provide
our logistics operation a more comprehensive
perspective.
We are selecting and continuing to assess
companies we believe offer 'sustainable
shipping'* methods. We conduct due diligence
before working with new carriers and evaluate
their sustainability policies as part of that
process. This gives us the assurance that,
when we transport our goods across the globe,
we will be supporting ethical and sustainable
business practices in the shipping sector.
SUSTAINABILITY CONTINUED
PLANET CONTINUED
Percentage of sustainable shipments*
79%
85%
61%
23%
2020
2021
2022
2023
70% of shipments by road
100% of shipments by sea
100% of shipments by air
Road shipments using
sustainable carrier
Road shipments using
non-sustainable carrier
70%
30%
Sea shipments using
sustainable carrier
100%
Sea shipments using
non-sustainable carrier
0%
Air shipments using
sustainable carrier
100%
Air shipments using
non-sustainable carrier
0%
* A carrier is classified as being a ‘sustainable shipping’ carrier if they have confirmed 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.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
47
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PERFORMANCE
Strong governance & sustainable sourcing
RELEVANT UN SDGs
Strong governance is essential to corporate success with the ever-increasing
focus on sustainability, driven by both a desire to be responsible and rising
shareholder interest. It is essential that we have key decision-makers in the
business involved in governance to ensure alignment with both potential
impacts of our day-to-day activities together with our longer-term plans.
In order to drive improvements and show that
we are making progress, we are aware that
non-financial KPIs are essential and as such
further KPIs have been shared particularly
around our supply chain which can be seen
on pages 48 and 49.
Consumers are becoming more concerned with
how food is produced and how it affects both
people and the environment. To strengthen
insights and openness with our suppliers we have
intensified our efforts this year. More information
on our strategy for responsible and sustainable
procurement follows on pages 48 and 49.
PRIORITY:
Ensuring appropriate
governance of sustainability
Our focus: Ensure sustainability is embedded in
decision-making. Ensure that the right policies are
in place and that we set and report against targets.
As a result, colleagues have been working
together across the business on our key priorities
to ensure our collective efforts make for positive
and measurable change. We further encourage
engagement by continuing to share success stories
via our internal magazine which has a regular
sustainability feature.
The success of our sustainability strategy sits
with our people. During the last six months an
ESG governance structure has been developed
that provides a framework to further accelerate
our efforts (see more in our TCFD disclosure on
pages 36 to 43). With regards to our ESG strategy
and execution, the ESG Working Group has been
revisited, bringing in more key members and
splitting the team into three focused groups
around People, Planet and Performance to support
the direction provided by the ESG Management
Group and the ESG Board Advisory Panel.
This new structure further supports the integration
of sustainability to our business strategy as we
move forward, ensuring sustainability is integral
to the '7Cs of how we win', see page 17. Our
Global Sustainability Manager has supported this
integration into our strategy development.
From FY2024 we will also look to increase
accountability for sustainability on all projects
by adding measurable parameters to the current
sustainability assessment already in our capex
assessment process. This will provide further
information regarding any contribution to our
net zero pathway, water efficiencies and waste
reduction along with information sought to ensure
we understand any potential impact on our people.
PRIORITY:
Determining and reviewing
relevant non-financial KPIs
During the year we have continued to assess
and, in many cases, deliver on improving our
non-financial KPIs, many of which are summarised
on page 23. We have also introduced KPIs across
our strategy, from improving how we report
on our training to increasing KPIs around our
sustainable and responsible sourcing, see pages
29, 47 and 48. We will continue to monitor against
these and additional metrics as required to drive
continuous improvement.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
48
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
PERFORMANCE CONTINUED
This year we’re pleased to report further KPIs
in this area, focusing on our citrus supply chain,
as set out below.
Supply chain prioritisation
and ESG risk assessment
Our responsible and sustainable supply chain
strategy focuses our efforts in each category with
our priority suppliers. This group of suppliers were
identified at the beginning of the year as likely
to provide the highest volumes in the category
(covering a minimum of 75% of supply), who
supply critical ingredients or are key partners
in meeting customer and business needs.
This year we carried out an assessment of the
inherent social, environmental and governance risks
within our ingredient supply chains to inform our
strategy, and ensure we focus our improvement
efforts with those suppliers and supply chains
where we can have the most impact. To do this we
have used information on the location of suppliers’
processing sites, as well as ingredient origin
location and the nature of the ingredient itself.
For our citrus category we identified water stress
and energy use in processing as key areas of focus,
as well as water stress and use of migrant labour
in all producing areas.
We will continue to work with our suppliers to
understand how they determine and address
these risks in their operations and supply chains.
See more on this in our TCFD disclosure on
pages 36 to 43.
Looking ahead
In 2024 we will continue to gather and report
KPI data for priority suppliers in all categories
and begin work with suppliers on areas identified
as priority issues in our supply chain, including
water stress and carbon emissions.
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 in the supply chain. We will
build our KPIs into other categories as we build
out the data provided from this assessment.
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 responsible business practices in global
supply chains, by enabling buyers and suppliers
to share data.
69%
of our total citrus volume for FY2023 was
sourced from suppliers who adhered to our
responsible and sustainable sourcing policy (i.e.
completing our self-assessment questionnaire
and signing our supplier code of conduct)
69%
of all citrus volume was
procured from sites that have
been SMETA 4-pillar audited
PRIORITY:
Building a responsible and
sustainable supply chain
Our focus: Increase transparency, reduce risks
and ensure responsible sourcing throughout our
supply chain.
As markets continue to fluctuate, the importance
of retaining strong supplier relationships is critical.
In order to ensure a positive influence on the
communities with whom we work and to uphold
our commitment to sustainable, ethical, and
responsible business practices, we are working to
ensure our suppliers act with integrity and respect
for both human rights and the environment. During
the year, we have continued to connect with our
suppliers to further discuss how they align with
our sustainability programme.
Progress on our strategy
Following last year’s initial roll out of our
responsible and sustainable sourcing policy to
suppliers in our largest category of citrus, we have
continued to engage suppliers in our other key
ingredient procurement categories, completing
our target of engaging with all key suppliers in
our raw material supply chain by the end of 2023.
In each category, suppliers are asked to commit
to our enhanced supplier code of conduct and
to complete an enhanced self-assessment
questionnaire, which asks for information on
their management of human and labour rights,
environmental impact, carbon and GHG emissions,
and sustainable agriculture at source.
We assess this information against our policy and
where necessary encourage suppliers to make
improvements.
Being both a supplier and buyer member allows our
customers to access our compliance to SEDEX’s
standards which are verified by independent
SEDEX Members Ethical Trade Audits (SMETA
4-pillar). It also allows us to create links to our
suppliers to access information on their audit
status so we can monitor their compliance.
This year we have seen an increase in the
number of suppliers registered with SEDEX, as
we've continued to roll out our responsible and
sustainably sourcing policy, which encourages
our suppliers to become members. We continue
to measure the number of members audited by
SEDEX’s standards and verified by independent
SMETA 4-pillar audits, which are featured below.
Also sharing our citrus volume procured 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.
Percentage of our suppliers
that are SEDEX registered
Percentage of our suppliers
that are SEDEX registered
Percentage of suppliers sites with
SMETA 4-pillar audits on SEDEX
Percentage of citrus volume
procured from suppliers registered
with SEDEX
2023
2022
51%
46%
38%
27%
78%1
81%
1 In 2022 the percentage shown was from our priority citrus
suppliers, for 2023 this included all citrus suppliers.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
49
TreaTT plc Annual Report & Accounts 2023
SUSTAINABILITY CONTINUED
Looking ahead
In 2024 we will encourage priority suppliers,
not yet registered or audited across all our
supply chains to do so, particularly those
identified as operating in locations with
higher risk of non-compliance.
Procurement – CIPS membership
The majority of our procurement team hold
membership of the Chartered Institute of
Procurement and Supply (CIPS), a professional
body that ensures that procurement and supply
chain management professionals have the
knowledge and capabilities to deliver sustainability
goals for their organisations, with significant focus
on ethical and responsible sourcing. Our aim is
that our entire global procurement team is CIPS
qualified at any given time.
Certifications, memberships and ratings
A wide range of standards help provide
additional reassurance as to where we are on
our sustainability journey. These certifications,
memberships and ratings provide both a benchmark
for our performance and enable us to see where
we can improve the sustainability of our business
and collaborate further to improve our industry’s
sustainability.
SAI platform
The SAI platform is a non-profit network of over
170 members who are united in the shared goal
of solving global agricultural challenges to grow
a sustainable, healthy and resilient sector while
creating strong and secure supply chains.
As members of the SAI platform we have key roles
in a number of projects including that of the SAI
Platform Florida Orange Sustainability Accelerator
Project which hit its objective of FSA verification
in 80% of Florida orange production in 2022.
Discussions are underway on how this could roll
out to core markets such as Brazil, for which we
would be a key intermediary in implementing this
best practice. As part of our sustainability strategy,
we are proud to be a founding partner of the SAI
Platform’s Regenerative Agriculture Programme,
helping to drive positive change for a sustainable,
thriving and more resilient agriculture sector.
There is a blog on our website for more information
on this programme.
Rainforest Alliance
Our facility in the USA is proud to hold Rainforest
Alliance Supply Chain certification, where we are
able to buy and sell specific products with the
Rainforest Alliance (RFA) certification seal. The
RFA is an international non-profit organisation
working at the intersection of business, agriculture,
and forests to make responsible business normal.
The RFA’s standards enforce human rights to
reduce child labour and human trafficking, reduce
deforestation and greenhouse gas emissions and
ensure consumers and suppliers are investing back
into the environment in which the certified crop
is grown. During the year we have increased our
procurement of RFA-certified tea and are exploring
opportunities with other raw materials.
RFA% of total tea raw material
71%
75%
63%
30%
2020
2021
2022
2023
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.
With our silver sustainability rating we are among
the top 25% of companies assessed by EcoVadis.
Carbon disclosure project (CDP)
CDP is a not-for-profit charity that runs a global
disclosure system enabling investors, businesses,
cities, states and regions to manage their environmental
impacts. We disclose to this system to enable
transparency of our progress with our stakeholders.
Our 2022 CDP scores for climate and water were D
and C respectively. The 2023 scores will be released
early in 2024 and will reflect the progress we made in
2022, as unfortunately our financial year doesn’t align
with CDP admissions periods.
IFRA/IOFI
Treatt is a signatory to the IFRA/IOFI Sustainability
Charter to further our involvement with sustainability
initiatives, specifically within our business sector.
Through this voluntary initiative, the flavour and
fragrance industry seek to encourage enhancements
in the field of sustainability, providing a framework to
enable sharing and benchmarking of the industry’s
commitment to sustainable development.
Food safety standards
Both of our sites in Bury St Edmunds, UK and Lakeland,
USA, are certified to the BRCGS global standard
for food safety. Each site is audited annually to this
standard and both sites have achieved AA grades in
2023. Our first year of certification was 2012 and
we must constantly review our processes to remain
certified and put additional control plans in place.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Sustainability
50
TreaTT plc Annual Report & Accounts 2023
STAKEHOLDER ENGAGEMENT
SECTION 172
EMPLOYEES
SHAREHOLDERS
CUSTOMERS
SUPPLIERS
COMMUNITIES
ENVIRONMENT
Central to the Company’s ability to create long-
term value is its understanding of the needs of all
stakeholders. By understanding those needs the
Board is able to ensure that it can best promote the
success of the Company, fully aware of its impacts
on stakeholders and the environment, ultimately
acting in the best interests of its members as a
whole. In the event a decision had to be made that
was not favourable to all stakeholder groups, 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 Directors and the Business Leadership
Team, both via reports and in person. Reports
submitted to the Board highlight positive, negative
and potential impacts of the subject matter on key
stakeholders. This provides the Board with insight
into the effect of our business on our stakeholders.
Board meetings include time dedicated to
discussion on different stakeholder groups; the
views and feedback from various stakeholders in
respect of the Group’s approach to ESG have been
carefully considered. Further details can be found
on pages 38 and 39.
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 benefit of its members as a
whole and in doing so have regard, amongst other matters, to:
a The likely consequences of any decision in the long term
B The interests of the Company’s employees
Page 50
Pages 50 to 51
c The need to foster the Company's business relationships with suppliers, customers and others
Pages 51 to 52
D The impact of the Company's operations on the community and the environment
Page 53
e The desirability of the Company maintaining a reputation for high standards of business conduct
Pages 26, 70, 71
F The need to act fairly as between members of the Company
Pages 51, 72, 73
EMPLOYEES
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 27 to 34.
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 Chair and
designated Non-executive Director. Additional
events, attended by all Board members on days
of Board meetings, were held in the UK and US
with a broad range of colleagues to facilitate
more informal engagement.
The Executive Directors regularly communicate
across the business and engaged through
results presentations, at the half and full year.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
51
TreaTT plc Annual Report & Accounts 2023
STAKEHOLDER ENGAGEMENT CONTINUED
Indirect engagement reported to the Board included:
• Sustainability at Treatt
• Executive Director town hall meetings with
• Mental, physical and financial wellbeing
Q&A sessions
• Executive remuneration
•
Informal ‘cuppa’ sessions and 'coffee
connections' with the Executive Directors
and senior leadership
• Wellbeing workshops for mental health
awareness week focused on resilience and
work-life balance and reducing the stigma
around mental health conditions
• Monthly updates on key initiatives, areas of
focus and successes via a dedicated newsletter
to all employees
• The reinstatement of the safety, health and
environment (SHE) champions, as detailed
on page 32
• The formation of a global equality, diversity and
Inclusion (ED&I) Allies Network, see page 30
• We considered our purpose and values and how
these components feed into our high-performing
culture. Culture Ambassadors and Cultural
Influencers from across the Group considered
and relaunched our values by way of workshops
and interactive presentations see page 27
• We held ‘lunch with the Board sessions’
to provide our employees and Board an
opportunity to mix in an informal setting
What we discussed:
Key topics of engagement:
•
•
Implementation of the five-year strategy
Information on customer wins and financial
results
• Organisational design including culture and
leadership
SHAREHOLDERS
Why we engage:
It is important that all shareholders have
confidence in our business and how it is managed,
whether institutional investors, private individuals
or employee shareholders. The views of our
shareholders inform our decision-making and
engagement with them enables us to explain our
strategic goals.
• A celebration of our heritage marked by the
closure of the former UK site
• Gaining a better understanding of the diverse
groups which make up our workforce to ensure
an equitable and inclusive company culture
• Cultural values are a vital part of our ability
to deliver an employee value proposition that
enhances our employee and stakeholder
experience, see page 28
How we engaged:
Our well-attended Annual General Meeting in
January 2023 enabled direct engagement with
shareholders.
Our Executive Directors met with current and
prospective shareholders during the year, providing
an overview of our business and the industry in
which we operate. 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.
Our Global Sustainability Manager has engaged
with several shareholders in respect of matters of
particular interest to them relating to sustainability.
Consultation provides us with an opportunity to
gauge shareholder opinion and respond to any
concerns raised. During October 2023, our Board
Chair and Chair of Remuneration Committee
engaged with institutional investors on
governance matters.
Board considerations:
• Feedback received from Employee Voice
sessions was discussed at subsequent Board
meetings and action taken by management
where appropriate
• 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 composition
of the Business Leadership Team, reporting
to the Executive Directors, 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
the culture
• The Board approved free and matching share
awards under the SIP and a grant of options
under the all employee share save schemes
What we discussed:
Key topics of engagement:
• Our financial results and performance, providing
opportunities for our shareholders to ask
questions to better understand our business
• Relocation to our new UK Headquarters and
closure of the former UK site
• The conflict in Ukraine, sanctions against Russia
and impact on our business
• Global logistical issues
• Global destocking pressures
•
Inflationary pressures
• Growth in China
• Progress on sustainability
• Board composition, time given to Treatt and
Management remuneration
Board considerations:
• The Board proposed a final dividend for FY2022
and approved an interim dividend for FY2023.
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
closure of our former Northern Way site in
Bury St Edmunds
• Board membership reviewed and discussion
held to ensure each Director is able to devote
sufficient time to Treatt
• Remuneration of management team reviewed
to ensure alignment with shareholder interests
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
52
TreaTT plc Annual Report & Accounts 2023
CUSTOMERS
Why we engage:
It is important that we understand our customers’
requirements to allow us to deliver the products
and service they need and to inform our research
and development. Customer feedback and support
is crucial to the success of our business.
How we engaged:
The Executive Directors have 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 Business 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, logistics and any matters of concern
• Face-to-face visits and calls with customers,
with relevant Treatt specialists in attendance,
enabled us to discuss a wide variety of matters
and seek feedback on our performance
STAKEHOLDER ENGAGEMENT CONTINUED
What we discussed:
Key topics of engagement:
• Service levels and the impact of global logistics
issues on lead times
• The conflict in Ukraine, sanctions against
Russia and any impact on our supply chain
• Global destocking pressures
•
Inflationary pressures
• Customer needs and consumer trends,
to enable us to develop suitable products
to meet their needs
• Relocation of all production to our new UK
Headquarters and closure of our former UK site
• Our approach to sustainability
Board decisions:
• Approval of our ESG structure to further embed
sustainability within our business, ensuring that
we continue to meet the sustainability needs of
our customers
• Continued oversight of the financial 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
offer our customers. It is important to us to deal
with suppliers who are committed to Treatt and
our values.
How we engaged:
The Executive Directors have 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 and face-to-face meetings
• Attendance at discussions with other founding
members of the regenerative agriculture
programme run by the SAI Platform, a value
chain initiative for sustainable agriculture
• The supplier qualification and
requalification process
• Attendance at industry events including
the International Citrus & Beverage
Conference and British Essential Oil
Association conference
What we discussed:
Key topics of engagement:
• Continuity of the supply chain, business
continuity planning, global logistics issues and
lead time delays
• Our responsible and sustainable sourcing policy
in which we set out our expectation of suppliers
for sustainable and responsible raw material
sourcing
• Our supplier code of conduct, which places
greater environmental expectation on our
suppliers of raw materials
Board considerations:
• Receipt of a report on supplier engagement
including the latest payment practices
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
53
TreaTT plc Annual Report & Accounts 2023
STAKEHOLDER ENGAGEMENT CONTINUED
What we discussed:
Key topics of engagement:
• How we can provide assistance
to charity partners
• Sponsorship
• Volunteering
• Donations
Board considerations:
• Receipt of a report on community
engagement activities
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. It is important that
Treatt fosters the best possible reputation in the
communities where we operate and from which
we recruit to enable us to attract the best talent.
How we engaged:
Community relationships are managed locally with
the involvement of the Executive Directors and with
each subsidiary focusing on the community groups,
projects and initiatives which are important to them
via a number of initiatives including:
• Providing financial and non-financial 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
• Hosting a business breakfast held by Suffolk
Mind at our UK site, attended by Board members
as well as the wider Treatt team
Further details of our work with local communities
can be found on pages 33 and 34.
Board considerations:
• Approval of capital expenditure projects for
energy saving initiatives
• Approval of our ESG governance structure,
including the formation of a ESG Board Advisory
Panel, to enable effective information and
decision-making in respect of climate change
and environmental matters
• Approval of the SBTi methodology for our net
zero pathway
• Approval of a short-term SBTi aligned target
• Approval of FY2022 as the baseline year for
future comparisons
• Approval of our second TCFD disclosure on
pages 36 to 43
• Receipt of a report at every meeting on
progress against our ESG strategy and
an annual presentation from our Global
Sustainability Manager
ENVIRONMENT
Why we engage:
The natural environment is of considerable
importance to our business and the supply of
natural raw materials. We know that we must
make a positive contribution to our environment
and the sustainability of our products.
How we engaged:
Continuing to work with consultants, using
our energy, waste and water audits, to develop
our net zero pathway via SBTi methodology
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 effect
of climate change remains a focus within Treatt.
What we discussed:
Key topics of engagement:
• Net zero pathway and short-term targets
• Short and longer-term energy saving
opportunities and prioritisation of investment
• TCFD scenario analysis and the impact of
climate change on our business
•
Increased expectations on our supply chain
in respect of environmental performance
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
54
TreaTT plc Annual Report & Accounts 2023
FINANCIAL REVIEW
Resilient revenue performance."
Ryan Govender
Chief Financial Officer
OVERVIEW
I am pleased with the return to growth in 2023.
Revenue, profit before tax and exceptionals, and
adjusted EBITDA1 are all in growth which reflects
the successful price increase programme and
embedding of cost disciplines to offset macro
inflation and customer destocking.
Having implemented a revised currency
management strategy, providing increased
visibility and controls over our currency exposures,
foreign exchange impacts during the year were
successfully managed.
With the transition to the new UK site complete
and the closure of the old UK site at Northern Way,
capital expenditure has returned to normalised
levels. The Group completed refinancing of the UK
bank facility for £25m with HSBC, and US facility
of $25m with Bank of America for a minimum of
three years. These facilities mean the Group is set
up for future growth.
We launched our new strategy during the year
with a focus on sales volume and innovation led
growth. We have world class people and well-
invested infrastructure globally with available
capacity. Our strong customer base and strategic
relevance in the beverage market gives me belief
that we can grow our core, premium and new
markets, resulting in improvement in profit and
operating margins over the medium term.
I would like to thank Daemmon Reeve for his
leadership of the business, during his eleven
year tenure as CEO, and wish him the very best
in retirement.
1 EBITDA is calculated as profit before interest, tax,
depreciation and amortisation from continuing operations.
See note 31 in the financial statements.
INCOME STATEMENT
Revenue
Revenue for the year increased by 5% to £147.4m
(2022: £140.2m). In constant currency terms,
revenue increased by 3%. Annual growth was
delivered mainly through price increase despite
a challenging macro environment and sector
destocking, particularly in H2. Sales price increases
were successfully implemented to offset raw
material price inflation. Value-added beverage
volumes declined moderately while as a result of
strategic shedding of lower margin commoditised
products and sector destocking, commodity
volumes declined more significantly.
Heritage categories, which includes citrus
(excluding China and Treattzest), herbs, spices
& florals and synthetic aroma grew by 1% with
revenue of £97.6m (2022: £96.6m). Citrus margins,
mainly driven by price increases, improved across
several products while customer destocking and
a decrease in demand for alternative proteins
adversely impacted sales of synthetic aroma and
herbs, spices & florals.
Premium categories, which include tea, health &
wellness and fruit & vegetables, were in line with
the prior year with revenue of £33.7m (2022:
£33.6m). Fruit & vegetables has shown growth in
passionfruit, cucumber and mango, while sugar
reduction products are well established in health
& wellness with growth opportunities in new
customers and regions. Tea volumes declined with
lower US sales, partially offset by price increase.
New markets, which include coffee, China and
Treattzest citrus, grew by 61% with revenue
of £16.1m (2022: £10.0m). Coffee growth was
significant in the year, with revenue of £5.0m
in the year with a focus on the premium cold
brew coffee and ready-to-drink markets.
China continues to make encouraging progress,
in line with management expectations, as citrus
gains momentum in regional FMCG customers,
with revenue of £9.5m (2022 £7.9m).
categories % share of revenue
Citrus
Tea
Health & wellness
Fruit & vegetables
Herbs, spices & florals
Synthetic aroma
Coffee
2023
53%
5%
8%
11%
7%
13%
3%
2022
48%
6%
8%
10%
9%
18%
1%
Geographical % share of revenue
2023
2022
UK
Germany
Ireland
Rest of Europe
USA
Rest of the Americas
China
Rest of the World
6%
4%
10%
9%
42%
9%
7%
13%
7%
6%
8%
10%
38%
9%
6%
16%
Geographical analysis of revenues shows that the
UK and Europe declined, whereas the USA grew
significantly. Europe declined due to the impact of
destocking, particularly in synthetic aroma, more
heavily in H2.
Revenue in the Group’s largest market, the
USA, grew by 14% to £61.4m (2022: £53.7m)
representing 42% of the Group total (2022:
38.3%). Within the US, the Group benefited from
particularly strong growth in citrus, mainly driven
by price increases.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
55
TreaTT plc Annual Report & Accounts 2023
FINANCIAL REVIEW CONTINUED
In the UK, revenues declined by 18% at £8.0m,
primarily due to sector destocking. Sales to the
rest of Europe, which represented 22.8% of
Group revenue (2022: 24.3%), also declined
due to sector destocking, reporting total sales
of £33.6m (2022: £34.0m).
The Group continued to focus on growth
opportunities in China, and despite the extended
Covid-19 restrictions in large parts of China in
place until January 2023, reported revenue to the
country increased by 21% to £9.5m (2022: £7.9m).
We remain optimistic about the opportunities in
this market with a large proportion of growth
representing new business for Treatt, particularly
in local FMCG beverage customers in China.
Sales to the Rest of the World (excluding China)
grew by 2% to £22.3m (2022: £21.8m).
Profit
Gross profit increased by 14.7% with gross profit
margins increasing from 27.9% to 30.4%. The
gross margin increase was driven by operational
efficiencies, successful price increases to mitigate
the impact of raw material inflation, strategically
exiting some lower margin citrus business in the
year and the benefit of effective management of
FX, resulting in negligible FX losses in the year
(2022: £2.3m loss).
Administrative expenses (excluding exceptional
items) grew by 13.7% in the year to £26.5m
(2022: £23.3m), primarily driven by inflationary
pressures, and an increase in depreciation
year-on-year. Headcount across the Group
decreased by 14% from 425 heads in September
2022 to 365 heads in September 2023, following
the closure of the previous UK manufacturing
site, and targeted restructuring. During the year
depreciation increased by £2.0m due to the
full year impact of Skyliner Way depreciation.
The outlook for administration expenses will be to
maintain cost disciplines embedded, and foresee
increases only due to depreciation, inflation and
focused investment in sales and innovation to
drive growth.
Adjusted net operating margin2 increased in the
year to 12.4% (2022: 11.3%), benefiting from
the increase in gross profit. Net operating margin
decreased in the year to 9.9% (2022: 11.9%),
mainly due to the one-off exceptional gain in the
prior year relating to the sale of the previous UK
site. Operating profit excluding exceptional items
increased 16% to £18.3m (2022: £15.8m) whilst
statutory operating profit decreased 13% to
£14.5m (2022: £16.7m), due again to the sale
of the previous UK site. Our medium-term target
for adjusted net operating margin is 15%.
Adjusted return on average capital employed
(ROACE3) increased to 12.2% (2022: 11.6%) as
a consequence of the increase in operating profits
during the year. Statutory return on average capital
employed decreased to 9.0% (2022: 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 range for ROACE is 15–20%.
Exceptional items (see note 8 to the financial
statements) included UK restructuring costs of
£2.7m (2022: £0.6m) and relocation expenses
of £1.1m (2022: £1.5m income).
Adjusted earnings before interest, tax, depreciation
and amortisation (adjusted EBITDA1) for the
year increased significantly by 24.6% to £23.0m
(2022: £18.5m) whereas statutory EBITDA reports
a 1.0% decrease to £19.2m (2022: £19.4m).
Profit before tax and exceptional items from
continuing operations grew by 13.7% to £17.3m
(2022: £15.3m). Reported profit after tax for the
year of £10.9m represents a decrease of 17.8% on
the prior year, driven by an increase in exceptional
charges during the year (as set out above).
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 strengthened against
the US Dollar, ending the year 9.3% stronger at
£1=$1.22 (2022: £1=$1.12); the average Sterling/
US Dollar exchange rate for the year was 4.3%
stronger as compared with the prior year.
The Group’s FX risk management policy can be
found on page 137.
The overall impact of foreign exchange gains
and losses in 2023 was a total loss of £0.1m
(2022: £2.3m loss). This is the result of the new
FX controls and processes put in place in the year.
There was a foreign exchange loss of £6.2m
(2022: £11.5m gain) in the ‘Statement of
Comprehensive Income’ in relation to the
Group’s investment in Treatt USA.
Finance costs
The Group’s net finance costs increased to £1.0m
(2022: £0.5m) due to materially higher interest
rates despite strong cash generation of £12m in the
year. As well as interest costs there were a number
of fixed costs for maintaining facilities for future use
which were funded from operating cash flows.
Interest cover for the year before exceptional items
decreased to 18.75 times (2022: 30.5 times), this
is well above the covenant of 1.5x.
Group tax charge
After providing for deferred tax, the Group tax charge
decreased by £0.3m to £2.6m (2022: £2.9m); an
effective tax rate (after exceptional items) of 19.2%
(2022: 17.7%). The increase in effective tax rate is
driven largely by the prior year tax treatment on the
disposal of Northern Way premises, on which a gain
of £3.3m was considered not taxable.
Earnings per share
Basic earnings per share (as set out in note 11 to
the financial statements) decreased by 18.3% to
18.01p (2022: 22.04p). Adjusted basic earnings
per share for the year increased by 15.9% to
22.94p (2022: 19.80p). The calculation of earnings
per share excludes those shares which are held
by the Treatt Employee Benefit Trust (EBT), which
are not beneficially owned by employees since they
do not rank for dividend and are based upon profit
after tax.
Dividends
The proposed final dividend of 5.46p per share
(2022: 5.35p) increases the total dividend per
share for the year to 8.01p, a 2% increase on the
prior year (2022: 7.85p), representing dividend
cover of 2.2 times earnings for the year and a
rolling three-year cover after exceptional items
of 2.8 times. The Board considers this to be
appropriate cover at this stage of the Group’s
development and against our aim to work
towards our historical level of dividend cover
of three times earnings.
2 Operating profit before exceptional items divided by revenue from continuing operations.
3 Profit before interest, taxation and exceptional items divided by the average of opening, interim and closing net debt. See note 31 in the financial statements.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
56
TreaTT plc Annual Report & Accounts 2023
FINANCIAL REVIEW CONTINUED
There was an overall improvement in working
capital, generating an inflow of £3.5m (2022:
outflow £18.5m), £2.5m of which was generated
from a reduction of inventory and as a result
of a focus on working capital efficiency.
Capital investment programme
UK relocation
The Group acquired a ten-acre greenfield site on
the new Suffolk 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 to deliver operational efficiencies and
advanced capabilities, the aim of the new facility
was to bring together all our UK-based employees
into a single premises.
Construction of the new facility was completed
during 2021. During 2022 the first 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 first phase production
began from the new facility as equipment was
successfully brought online. The new site has state-
of-the-art laboratories which 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, to maintain the
continuity of its manufacturing capability during
the transition. In September 2023, we successfully
exited the Northern Way premises with all UK-
based employees now located at Skyliner Way.
During 2023 we commenced phase two activity
which relates to the purchase and installation of
value-added manufacturing equipment, with the
majority now complete. The remaining project is
now viewed as a capital management process
instead of a relocation project, we anticipate to
be completed during 2024, in line with original
expectations. 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
3,509
44,786
Existing site disposal
(5,592)
–
(5,592)
Exceptional items
4,820
2,299
7,119
Total costs
40,505
5,808 46,313
BALANCE SHEET
Shareholders’ funds grew in the year by £3.3m
to £137.2m (2022: £133.9m), with net assets per
share increasing by 2.1% to £2.25 (2022: £2.20).
Over the last five years net assets per share have
grown by 63.5%. 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 £62.4m (2022:
£68.4m), a decrease of £6.0m. This decrease was
driven by a significant reduction in inventory volume,
offset with higher raw material costs. 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 significant in cash terms.
Net debt
At the year-end date the Group’s net debt position
was £10.4m (2022: £22.4m) including leases
of £0.5m (2022: £0.4m), with available unused
facilities of £35.6m (2022: £8.4m). This is the
result of a focus on cash generation.
In order to support the Group’s growth plans for
the foreseeable future, the Group has secured new
financing arrangements in the UK and US totalling
£45.5m (2022: £30.8m) following a refinance of
all the Group’s main banking arrangements across
the UK and US during the year. None of the banking
facilities (2022: £13.4m) expire in one year or less.
During the year, the Group replaced its various UK
banking arrangements (totalling c.£19.3m), with a
single asset-based lending facility with HSBC of
£25.0m for a three-year term, with an optional
accordion (pre-approved facility) of £10.0m and option
to extend the term of facility for two further years.
This facility lends against the value and quality of
inventory and receivables within the UK business,
and strengthens the ability of the Group to borrow
in the UK.
The US revolving credit facility with Bank of
America was expanded on similar terms, providing
a facility of up to $25.0m (2022: $10.0m), with
an optional accordion of $10.0m, for a period of
three years. Revolving credit facility funds were
then used to repay the secured term loan balance
(2022: £3.2m) in full.
The Group continues to enjoy positive relationships
with its banks and expects all facilities to be
renewed or refinanced when they fall due.
Cash flow
Net cash inflow for the year was £4.6m
(2022: £4.1m outflow) including a net outflow of
£7.1m paying down the existing bank loans and
borrowings. Excluding the refinancing, the Group
delivered cash generation of £12m largely due to
strong cash generation from operations, driven
by efforts across the business to exercise greater
financial prudence but also through lower capital
expenditure and efforts to improve working capital.
During the year the Group invested £5.7m
(2022: £12.8m) on capital projects, of which
£1.3m (2022: £5.0m) was incurred on the UK
relocation project. The level of capital investment
was lower than in previous years as the Group’s
capital investment programme nears completion.
Total investments in the Group’s US operations
were £1.9m and were largely focused on finishing
existing value-added projects.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
57
TreaTT plc Annual Report & Accounts 2023
FINANCIAL REVIEW CONTINUED
The total capital project costs, including proceeds
from the sale of the previous site, are expected
to be approximately £39.2m with exceptional
costs totalling £7.1m expected to be incurred. As
the project moves into the final phase, we expect
a further net cash outflow of £3.1m over the
next year. The cash outflows for the project are
expected to result in the rolling Group net debt
to adjusted EBITDA ratio remaining below 1.0x
during FY2024.
It should be noted that in accordance with IAS 23
‘Borrowing Costs’, the interest charges incurred on
funds utilised on the relocation project prior to its
completion can be capitalised. In the year ended
30 September 2023 £307,000 (2022: £187,000)
was capitalised and further capitalisation of
borrowing costs is expected to be minimal for the
year ending 30 September 2024.
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 offers a similar scheme to its US
employees. All UK employees with a year’s service
were awarded £700 (2022: £700) of ‘Free Shares’
during the year as part of the Group’s employee
incentive and engagement programme as the Board
is firmly 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 (2022: $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.
Under the SIP, UK employees are offered 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 30,000 (2022: 24,000)
matching shares were granted.
The SIP currently holds 380,000 shares
(2022: 438,000) 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 satisfied through the issue of new shares.
In addition, the Group continued its annual
programme of offering 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 267,000 (2022:
72,000) 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 355,000 (2022: 205,000)
shares during the year, whilst 299,000 (2022:
278,000) were exercised from options awarded in
prior years which have now vested. During the year
200,000 (2022: 400,000) shares were issued to
the Employee Benefit Trust (EBT) at par (2 pence
per share). The EBT currently holds 162,000
shares (2022: 270,000) in order to satisfy future
option schemes. It is anticipated that going forward,
all-employee savings-related share schemes will
continue to be satisfied by shares held within the EBT,
to which further shares will be issued as necessary.
Final salary pension scheme
The R C Treatt final salary pension scheme (the
‘scheme’) has not been subject to any further
accruals since 31 December 2012 and instead
members of the scheme were offered membership
of the UK defined contribution pension plan with
effect from 1 January 2013. This means that the
defined benefit 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 deficit
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 (2022: £0.5m) per annum until the next
actuarial review date of 1 January 2024.
Under IAS 19, ‘Employee Benefits’ 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 £2.8m (2022:
£1.3m asset). The increase in the pension asset
is driven by investment returns of £0.8m, and
also an actuarial gain on changes to financial
assumptions of £0.9m, due to continuing increases
in government bond yields which further increased
the discount rate used to calculate liabilities.
Foreign exchange risk management
The nature of Treatt’s activities is such that the
Group could be affected 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 effect. 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 fluctuate with Sterling.
Secondly, with R C Treatt (the Group’s main
UK subsidiary) exporting throughout the world,
fluctuations in the value of Sterling can affect 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 significant,
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 flow. Hence it
is the relative strength or weakness of Sterling
against the US Dollar that is of prime importance.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
58
TreaTT plc Annual Report & Accounts 2023
FINANCIAL REVIEW CONTINUED
As well as affecting the cash value of sales, US
Dollar exchange movements can also have a
significant effect on the replacement cost of
stocks, which affects future profitability 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.
An FX committee was formed in August 2022 in
order to monitor foreign exchange risks within the
business, work on refinements 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 effectiveness 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 offset.
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.
Ryan Govender
Chief Financial Officer
28 November 2023
WINNING WITH THE 7Cs
CULTURE
Investing in our world
class people
CONSUMER
Maintaining relevance to
growing trends through
innovation
CITRUS
Launching innovative
and cost-effective
natural extracts
COFFEE
Expanding capacity
and growing portfolio
CHINA
Driving growth with
national beverage brands
CAPACITY
Driving volume growth
to fill capacity and
de-bottleneck
COST BASE
Scaling with appropriate
grip on costs
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
59
TreaTT plc Annual Report & Accounts 2023
GROUP FIVE-YEAR TRADING RECORD
*2019 and 2020 show discontinued operations separately.
There were no discontinued operations in 2021, 2022 and 2023
2019*
£’000
2020*
£’000
2021
£’000
2022
£’000
2023
£’000
*2019 and 2020 show discontinued operations separately.
There were no discontinued operations in 2021, 2022 and 2023
2019*
£’000
2020*
£’000
2021
£’000
2022
£’000
2023
£’000
cash flow
Cash generated from operations
20,544
15,677
13,892
(1,830)
23,579
Income statement
Revenue
Adjusted EBITDA1,2
EBITDA1
Operating profit2
112,717
109,016
124,326
140,185
14,871
16,982
23,144
18,464
14,115,
15,922,
21,842,
13,499
15,092
21,346
19,387
15,773
Profit before taxation and exceptional items
13,300
14,801
20,919
15,256
Growth in profit before taxation and exceptional items
5.2%
11.3%
41.3%
(27.1%)
147,397
22,997
19,197
18,321
17,344
13.7%
Taxation paid
Net interest paid
Dividends paid
Exceptional items
Profit before taxation
Taxation
Discontinued operations
(755)
(1,060)
(1,302)
923
(3,800)
Net sale of own shares by share trust
12,545
13,741
19,617
16,179
13,544
Proceeds on issue of shares
(2,673)
(2,896)
(4,469)
(2,864)
(2,602)
(Increase)/reduction of lease liabilities
(1,084)
(1,080)
–
–
–
Other cash flows
Profit for the year attributable to owners of the
Parent Company
8,788
9,765
15,148
13,315
10,942
Balance sheet
Intangible assets
845
1,358
2,424
3,206
Property, plant and equipment
29,485
50,159
61,039
74,281
Movement in (debt)/cash
Total net (debt)/cash
ratios
2,752
71,526
538
Adjusted net operating margin2,3
Return on average capital employed2,4
Net (cash)/debt to adjusted EBITDA2,5
Right-of-use assets
Net deferred tax liability
Current assets
Current liabilities
Non-current borrowings
Post-employment benefits
Non-current lease liabilities
Total equity
–
1,173
1,556
375
(319)
(924)
(1,383)
(5,369)
(4,851)
Net (cash)/debt to EBITDA1,2
98,158
69,472
83,606
108,537
96,482
Adjusted basic earnings per share2
(28,905)
(15,989)
(30,556)
(46,329)
(32,551)
Basic earnings per share
(4,369)
(3,450)
(2,624)
(2,342)
–
Growth in adjusted basic earnings per share2
(7,788)
(10,051)
(6,806)
1,782
3,723
Dividend per share6
–
(628)
(957)
(291)
(373)
Dividend cover (adjusted to exclude exceptionals)7
(2,208)
(2,191)
(4,874)
443
(2,174)
(199)
(191)
(270)
(382)
(1,087)
(3,080)
(3,378)
(3,704)
(4,834)
(4,802)
(4,071)
–
624
5
(153)
116
1,033
526
14
–
(161)
(136)
547
2
(659)
(388)
–
630
3
(394)
(451)
–
621
9
657
(812)
5,899
(15,531)
(9,541)
(13,305)
12,037
15,958
427
(9,114)
(22,419)
(10,382)
12.0%
18.8%
(1.07)
(1.13)
13.8%
18.5%
(0.03)
(0.03)
17.2%
20.9%
0.39
0.42
11.3%
11.6%
1.21
1.16
17.82p
19.72p
27.05p
19.80p
16.69p
18.12p
25.29p
22.04p
(1.1%)
5.50p
3.22
10.7%
6.00p
3.28
37.2%
(26.8%)
7.50p
3.60
7.85p
2.51
12.4%
12.2%
0.45
0.54
22.94p
18.01p
15.9%
8.01p
2.85
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Additions to non-current assets net of proceeds
(10,570)
(24,814)
(14,373)
(7,177)
(Acquisition)/disposal of subsidiaries
87,107
91,120
106,299
133,850
137,246
Net assets per share
144.8p
151.2p
176.0p
219.9p
224.5p
1 EBITDA is calculated as profit before interest, tax, depreciation and amortisation from continuing operations. See note 31 in the financial statements.
2 All adjusted measures exclude exceptional items. See note 8 in the financial statements.
3 Operating profit before exceptional items divided by revenue from continuing operations.
4 Profit before interest, taxation and exceptional items divided by the average of opening, interim and closing net debt. See note 31 in the financial statements.
5 Net cash/(debt) at the year-end date divided by adjusted EBITDA1,2. See note 31 in the financial statements.
6 The dividend per share shown relates to the interim dividend declared and final dividend proposed for the corresponding financial year.
7 Dividend cover is defined as profit for the year, less exceptional items and their related tax effect, divided by the total of interim dividend paid and final dividend proposed.
60
TreaTT plc Annual Report & Accounts 2023
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 effective risk management
in the culture of the Group
Empowering people from all areas of the
business 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
BUSINESS 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
The management of risk is embedded in the management and operational processes of the Group including:
HOW We MaNaGe rISKS
The quality of our people
and culture
The process of strategy setting
Processes for identification, review
and monitoring of risk
Established policies, procedures
and internal controls
A dedicated team reviewing adherence to internal procedures and operational controls, requiring action where non-conformances are identified
Oversight of risk by the Board
Regular dissemination of financial and non-financial information
and key performance indicators (KPIs)
A clear understanding of market
conditions and raw material prices
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
61
TreaTT plc Annual Report & Accounts 2023
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 Business
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.
We are prepared to accept certain risks in pursuit
of our strategic objectives provided that the
potential benefits and risks are fully understood
and appropriate mitigation strategies are in place
to minimise the effects of the risks should they
materialise.
Our risk appetite in relation to different categories
is summarised below.
Risk identification
Risk identification is an integral part of the
day-to-day activities of people in all areas of our
business; they are empowered to manage risk
through regular communication channels and
appropriate controls, policies and processes.
The Business Leadership Team is responsible
for compiling Group risk registers to identify key
risks facing the business, their potential effects
and determining appropriate and proportionate
risk mitigation strategies. Responsibility for
monitoring and reviewing each risk is taken
by a designated senior risk owner to ensure
that there is appropriate accountability.
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 financial 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 defined benefits in the medium to longer-term
• Health and safety – our priority is to ensure that no harm comes to our colleagues, customers and environment
• Technology – we have a low appetite for taking risks that may result in significant 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 benefit
• 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 when supported by clear legal advice
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Our risk appetite has been defined 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.
Risks included in the register are rated on their
probability and impact and then re-rated after
mitigation. Risk owners will use a variety of tools to
monitor their risk at a more granular level, including
more detailed sub-registers and pertinent KPIs.
Board review of risk
As well as reviewing risk registers and discussing
risk throughout the year, the Board holds a specific
meeting each year dedicated entirely to risk.
At this meeting the Board hears from colleagues
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.
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 consider ways to continuously
improve our internal systems to ensure that we
work within the risk appetite set by the Board.
The Board also conducted a review of the
effectiveness 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 financial, operational and
compliance related. The Board has monitored and
reviewed the effectiveness 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 financial controls.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Where significant projects are undertaken, such
as the recent site relocation in the UK, specific
project risk registers are established to record
all risks that could have a significant effect on the
success of the project. This ensures that there is
accountability for the mitigation strategies in place
and enables regular monitoring of risk identification
and the effectiveness of mitigating actions
throughout the project.
Those risks with a potential impact that remains
classified 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, financial,
regulatory or reputational issues being reported to
the Board in the meantime.
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.
62
TreaTT plc Annual Report & Accounts 2023
Emerging risks
The Business Leadership Team, being closely
involved in day-to-day matters, has a breadth of
experience across commercial, financial, supply
chain, operations and technical matters. Within
their fields 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 mitigating the impact
of inflation on input costs which, if not acted upon by
seeking price increases with customers, would have
led to reduced profitability. Significant 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. Other businesses, trade bodies
and professional organisations are also consulted
to ensure that risk monitoring activities are as
broad as possible. Reports are commissioned
and briefings arranged on wide-ranging, pertinent
topics to understand changes within the industry
and wider environment.
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 significant 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.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
We have removed the overspend on the UK site
relocation and/or business interruption caused by
the move as a principal risk following the transfer of
all operations to the new UK site and formal closure
of the former UK site.
FINANCIAL
1 Climate change
1 2 3 4 5 6
Geopolitical and macroeconomic uncertainties
has been introduced as a new principal risk this
year as political conflicts and uncertainties have
the potential to cause supply chain disruption and
further impact inflation.
Taskforce on Climate-related
Financial Disclosures (TCFD)
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 in the
Sustainability section of this report, on pages
36 to 43.
Climate change was introduced as a principal risk
in 2021 as the world seeks to reduce longer-term
effects of greenhouse gas emissions. Having a
significant portfolio of natural products, climate
change is likely to impact agriculture and the
sourcing of natural raw materials in the longer
term, although there are more broader risks
associated with climate change than just raw
material sourcing. Our mitigation of this risk has
increased with the formation of an ESG Advisory
Board Panel and ESG Management and Working
Groups to enhance our expertise and increase
internal engagement and communication channels.
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, wildfires, hurricanes and
sudden climatic events
• Operational disruption at production
facilities caused by longer-term
impacts of climate change (including
water stress and wildfires)
• Significant amount of citrus raw
materials provided by Central and
South American suppliers
• Volatility in market price of raw
materials and other effects 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, fines
or penalties
• Introduction of carbon taxes or
similar levies
• Squeeze on margins
No change
MITIGATION
• Formation of an ESG Board Advisory Panel to provide direction and
guidance to reduce environmental impact
• ESG Management Group and working group formed to increase
internal engagement and communication channels
• 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
• Taking action from the results of our energy audit of our UK and US
facilities during 2022 and modelling energy saving projects for our
net zero pathway
• Continued investment in production efficiency, new technologies and
product development
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
63
TreaTT plc Annual Report & Accounts 2023
PRINCIPAL RISKS AND UNCERTAINTIES 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
2 Pandemic and resulting global issues
4 Movements in citrus commodity raw material price
1 2 3 4 5 6
RISK AND IMPACT
• Reduction in demand
for certain products,
decrease in new product
development briefs from
customers, and changes
in consumer habits
• Difficulties within the
supply chain, production,
incoming and outgoing
logistics
• Adverse effect on the
welfare of our employees
No change
1 2 3 4 5 6
No change
MITIGATION
• Continual monitoring of the situation and adopting a flexible 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
• Business Leadership Team to provide regular updates to keep all employees
informed and maintain team spirit
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 other
significant raw materials
PEOPLE
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
3 Geopolitical and macroeconomic uncertainties
5 Loss of critical employees through retention policy and failure to manage succession
1 2 3 4 5 6
RISK AND IMPACT
• Political conflicts,
uncertainties and events
may lead to supply chain
disruptions, impacting
both the availability and
price of our products
• Inflation driving up prices,
increasing production
costs and potentially
reducing customer
demand/destocking
New risk
1 2 3 4 5 6
No change
MITIGATION
• Continue to identify supply chain vulnerabilities to create contingency plans
RISK AND IMPACT
• A lack of experienced
MITIGATION
• Ensure we enhance the employee experience and secure an emotional
for disruptions
• Develop alternative sourcing options in regions less prone to geopolitical conflicts
• Monitoring global issues
• Maintaining strong relationships with key suppliers and working closely with
them to understand their operations and enable early detection of potential
disruptions
• Monitoring the regulatory landscape and market conditions
• Staying close to customers, developing products they need and passing on cost
increases appropriately
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
attachment to the business, that remuneration packages are appropriate to
the position, that employees are empowered and have opportunities within
the business through training to enable upskilling and provide career
development opportunities
• Continue to develop succession planning for positions across the Group
• Utilising engagement surveys and other employee voice mechanisms to
enable feedback and ideas for improvements
• Timely and effective performance reviews and regular catch-ups to ensure
any issues are identified and resolved
• People manager development to ensure that they are equipped with the right
skills to manage and motivate their teams
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
64
TreaTT plc Annual Report & Accounts 2023
Strategic impact key:
1
Engaging with our communities
OPERATIONAL
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
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
6 Pressure on infrastructure for strategic business
9 IT issues including network, hardware, data and security
Decrease
1 2 3 4 5 6
No change
1 2 3 4 5 6
RISK AND IMPACT
• Loss of revenue
• Damage to reputation
• Loss of key strategic
customer
MITIGATION
• Ensure appropriate infrastructure through new UK Headquarters and US
expansion
• Keep close communication between sales and operations to determine likelihood
of large order and capacity constraints to manage customer expectations
• Manage sub-contractor relationships
RISK AND IMPACT
• Loss of IT systems and/
or data impacting on the
ability of the business to
function effectively
• Reputational damage
and litigation in respect
of data protection
7 Structural damage to production facilities from storm or hurricane damage at Treatt USA,
due to its Florida location
1 2 3 4 5 6
RISK AND IMPACT
• Loss of use of buildings,
equipment and product
• Danger to employees
• Major incident due to
type of products stored
No change
MITIGATION
• Regularly inspect and maintain building components
• Implement hurricane action plan when necessary
• Sufficient 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
8 Inadequate documentation of processes and/or non-adherence to required processes
1 2 3 4 5 6
RISK AND IMPACT
• Failure of BRC, HACCP
or regulatory audits
• Damage to reputation
No change
MITIGATION
• Strong Group-wide commitment to disciplined compliance with internal quality
programmes
• Commitment to permit third-party auditing by customers and for certification
as problem-free supplier
and regulatory purposes
• Investment in
• Internal auditing of systems and processes against standard operating
rectification of any non-
compliances noted
procedures and British Retail Consortium (BRC) requirements
• Cross departmental process reviews
10 Product failure
1 2 3 4 5 6
RISK AND IMPACT
• Potential product recall
causing financial and
reputational loss
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 fixes vulnerabilities, including
those reported by third-party security consultants
• Continued investment in infrastructure and particularly software security
• Continued focus on raising employee 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
MITIGATION
• Strong supplier qualification 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
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
65
TreaTT plc Annual Report & Accounts 2023
Strategic impact key:
1
Engaging with our communities
LEGAL AND REGULATORY
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
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
11 Failure to comply with relevant UK and US environmental, H&S and other applicable legislation
1 2 3 4 5 6
RISK AND IMPACT
• HSE and/or EA
investigation
• Probable enforcement
action involving fines,
enforcement notices
• Risk of site closure
No change
MITIGATION
• Detailed understanding of legislative requirements with internal involvement, consultative
support and capital investment
• 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 (COMAH)
• Continuation of relevant training and assessment of employee skills across the Group
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.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
66
TreaTT plc Annual Report & Accounts 2023
GOING CONCERN AND VIABILITY STATEMENT
THREE-YEAR REVIEW OF THE GROUP’S VIABILITY
The Group’s business activities, together with
the factors likely to affect its future development,
performance and position are set out in the
Strategic Report on pages 7 to 65. Information
on the principal risks and uncertainties and how
they are managed can also be found on pages
60 to 65.
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 significantly severe
business interruption like that experienced during
the pandemic, or that could arise through the
impact of climate change or through global conflict.
In accordance with the 2018 UK Corporate
Governance Code, the Directors have assessed
the prospects of the Group over a longer period
than the twelve months required by the Code. The
Board conducted this review for a period of three
years from the current financial year-end. In the
view of the Board, a three-year viability period
gives a reasonable forecasting timeframe, after
which the current global geopolitical and economic
environment creates greater levels of uncertainty
and makes accurate forecasting challenging.
In determining the longer-term viability of the
Group, the Directors considered the Group’s
business activities, together with the factors likely
to affect its future development, performance and
position. The review also included the financial
position of the Group, its cash flows, and available
sources of finance.
In assessing the Group’s prospects and resilience,
the Directors have done so with reference to
its current financial position and prospects, its
credit facilities, its recent and historical financial
performance, and forecasts. The Board’s risk
appetite and the principal risks and mitigating
factors are described on pages 60 to 65.
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 wide-ranging
effects of climate change, or the impact of
another pandemic event and the potential
impact these could have on the Group’s
revenues and profits;
•
•
•
•
•
the implications of fluctuating prices of the
Group’s strategic raw materials;
the impact of the competitive environment
within which the Group operates;
the effects of movement in foreign exchange
rates on the business, particularly the US Dollar;
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 finance;
• a sensitivity analysis which involves flexing
several of the main assumptions underlying
the three-year forecast, and considering the
implications of a number of risks materialising
during a short-term period;
• reverse stress test to determine the scenario
and circumstances that would need to prevail to
cause a breach in banking covenants during the
period; and
•
the potential actions that could be taken in the
event that revenues are lower than expected,
to ensure that operating profit and cash flows
are protected.
The Group successfully refinanced all of its banking
facilities during the year, agreeing a new £25.0m
asset-based lending facility with HSBC in the UK
(June 2023) and extending the existing revolving
credit facility with Bank of America in the US
to $25.0m (May 2023). Both facilities are for a
minimum term of three years and contain pre-
agreed accordion elements of £10.0m and $10.0m
respectively, these accordions are disregarded for
the purposes of the going concern and viability
assessment. It is assumed that these facilities will
be renewed or extended on the same terms when
the time comes for renewal.
Banking covenants on the new facilities are
assessed against each company’s performance
individually, the US business must maintain a net
debt to EBITDA ratio above 2.5x and an interest
cover above 1.5x, whilst the UK business must
comply with operational covenants regarding the
quality and quantity of the inventory and receivables
that are being borrowed against.
The stress tests undertaken were assessed against
the Group’s current and projected liquidity position,
in particular the headroom on existing facilities
and compliance with each entity’s respective
banking covenants.
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
67
TreaTT plc Annual Report & Accounts 2023
GOING CONCERN AND VIABILITY STATEMENT CONTINUED
Stress testing and impact on going
concern and viability assessment
The current global economic environment is still
uncertain in both domestic and international
markets. We have continued to see supply-side
challenges together with ongoing inflationary
pressures on raw material prices as well as
de-stocking from many businesses within the
flavour and fragrances sector, as they seek to
release cash via the reduction of inventories
accrued during the last two years, reducing
overall demand in the 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 (twelve-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 profitability.
A further 'reverse stress test' scenario was
modelled to find a sustained reduction in revenue
over the first two years of the viability period that
would give rise to a breach of the Group’s covenant
conditions or headroom in the period. This scenario
was then stress-tested further by overlaying the
adverse impact of a decline in profit margins.
Outcome of stress testing
At the year-end date, the Group’s net debt was
£10.4m and the Group’s headroom on facilities
was £35.6m.
Under all of the scenarios considered, which
represent severe but plausible manifestations
of the Group’s principal risks and uncertainties,
Group headroom remained significant throughout
the viability period. In the most adverse scenario,
whereby working capital, FX, revenue and margin
assumptions were all stressed simultaneously
by 10% or more, the minimum Group headroom
throughout the period was £28.2m. Under this
scenario however, the Group’s UK subsidiary,
R C Treatt & Co Ltd, would breach its facility limit
in October 2025, but in that event the Group would
act swiftly to activate the mitigations described
below, or recapitalise the company using cash
elsewhere in the business.
R C Treatt & Co Ltd has operational covenant limits,
the most salient of which are maintaining debtor
days below 95 and ensuring that stock exceeding
180 days of ageing does not constitute more than
50% of the overall stock holding. Based on historic
levels, and current forecasts it is not considered
likely that these will be breached over the period,
and these measures are reported regularly to
management so that mitigations can be put in
place when adverse trends start to emerge.
A particularly severe scenario was determined
in which banking covenant requirements or
facility limits 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 36.0%
per annum, or 29.0% per annum alongside a
400bps decline in margin for two consecutive
years, with no mitigating measures put in place,
would result in a breach of the financial covenants
in Treatt USA Inc and a breach of R C Treatt &
Co Ltd's facility limit by around October 2025,
followed by a breach of overall Group facility limits
in October 2026. Such a decline in sales would
represent a catastrophic failure of the business’s
strategy, whereby within two years Group revenue
returns to levels last seen in 2016 without any
mitigations put in place.
The possibility of these extremely severe scenarios
materialising together is considered remote. In
addition, it is implausible that the Group would not
act swiftly and decisively to activate mitigations
such as 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 identified any material uncertainties
which would affect the Group and Parent
Company’s ability to continue as a going concern
for a period of twelve months from the date this
Annual Report is approved. Accordingly, these
financial 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.
The Strategic report was approved by the Board
on 28 November 2023.
Ryan Govender
Chief Financial Officer
O
v
e
r
v
e
w
i
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
68
TreaTT plc Annual Report & Accounts 2023
Committee key:
Audit Committee
Remuneration Committee
Nomination Committee
BOARD OF DIRECTORS
Denotes Committee Chair
Independent
Vijay Thakrar
Non-executive chair
Appointed to the Board:
September 2020
Daemmon Reeve
chief executive Officer
Appointed to the Board:
May 2012
Ryan Govender
chief Financial Officer
Appointed to the Board:
July 2022
Bronagh Kennedy
Non-executive Director
Appointed to the Board:
January 2023
Skills and experience:
Vijay has led Treatt’s Board since his appointment
in January 2023 having joined Treatt’s Board as a
Non-executive Director in September 2020. Having
previously chaired the Audit Committee and acted
as Senior Independent Director, Vijay now chairs
the Nomination Committee. Vijay is a Chartered
Accountant and has extensive strategic, commercial
and governance experience in FMCG. He was
previously a Partner at Deloitte and EY and has
served on various Boards, including Quorn Foods
and the Quoted Companies Alliance. Vijay’s current
external appointments are set out below.
Key external appointments:
• Non-executive Chair of The Alumasc Group plc
• Non-executive Director of Alpha Group
International plc (Audit Committee Chair)
• Non-executive Director of RSM UK Holdings
Limited (Remuneration Committee Chair and
Audit Oversight Board)
Skills and 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 Suffolk.
As announced on 20 October 2023, Daemmon
will retire from Treatt on 31 December 2023.
Key external appointments:
• None
Skills and experience:
Ryan is an experienced CFO, having worked for
over 20 years in senior finance 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 finance transformation.
For the past twelve 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 finance and
management roles within other ABF businesses,
including Speedibake, Germains Seed Technology
and Illovo Sugar. He qualified as a Chartered
Accountant at PwC in South Africa.
As announced on 20 October 2023, Ryan will step
into the role of Interim CEO from 1 January 2024.
Skills and experience:
Bronagh is an experienced independent Non-
executive Director with a wealth of Executive and
Non-executive experience in listed companies across
a number of sectors, most recently as Company
Secretary and General Counsel and sustainability
lead at FTSE 100 listed, Severn Trent plc, a role she
retired from in January 2023. She has previously
acted as Non-executive Director and member of
the Remuneration Committee at the Canal and River
Trust, and was previously Remuneration Committee
Chair at both Wolseley UK and at British Canoeing,
and an advisor to European Metal Recycling.
Bronagh’s broad experience spans HR, sustainability,
corporate M&A and restructuring, legal and
corporate affairs, governance, and risk and regulatory
compliance. She brings a passion for the delivery
of outstanding customer service through engaged
employees, a purpose driven culture and corporate
sustainability.
Key external appointments:
• None
Key external appointments:
• Non-executive Director at Genuit Group plc
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
69
TreaTT plc Annual Report & Accounts 2023
BOARD OF DIRECTORS CONTINUED
David Johnston
Non-executive Director
Appointed to the Board:
May 2011
Christine Sisler
Non-executive Director
Appointed to the Board:
February 2022
Philip O’Connor
Non-executive Director
Appointed to the Board:
February 2022
Skills and 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 flavour
and fragrance companies, Firmenich SA, in a variety
of commercial and technical roles over 13 years.
He finished his career at Firmenich SA as global
head of flavour 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
Scientific Advisory Committee of Driscolls, a
California-based global leader in the production
and sales of fresh berries.
Key external appointments:
• Independent Member of Driscolls Scientific
Advisory Committee
Skills and 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 and 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 and 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
Skills and 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
qualified as a Chartered Certified 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 and Russia, meat
and plant-based alternative markets.
Key external appointments:
• None
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
70
TreaTT plc Annual Report & Accounts 2023
I am pleased to present the
corporate governance report."
Vijay Thakrar
Chair
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION FROM THE CHAIR
Board
I felt humbled to be appointed as Non-executive
Chair of the Treatt Board at the conclusion of the
AGM in January 2023, and I am excited to guide
Treatt through the next phase of its growth journey.
I took the reins from Tim Jones on his retirement
and would like to extend sincere gratitude and
thanks to Tim, on behalf of the Group and the
Board, for his significant contribution and excellent
stewardship during his time as Chair.
Yetunde Hofmann stepped down from the Board at
the conclusion of the 2023 AGM and I also express
the thanks of the Group and the Board to Yetunde
for the contribution she made during her time
with Treatt.
During the year the Board was delighted to welcome
Bronagh Kennedy as a Non-executive Director.
Bronagh brings a wealth of Executive and Non-
executive experience in listed companies across
a number of sectors, most recently as Company
Secretary and General Counsel and sustainability
lead at FTSE 100 listed, Severn Trent plc.
Bronagh’s broad experience spans HR,
sustainability, corporate M&A and restructuring,
governance, risk and regulatory compliance and
she brings a passion for the delivery of outstanding
customer service through engaged employees, a
purpose driven culture and corporate sustainability.
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. Building on
our ESG framework, approved last year, designed
to provide a cohesive, effective and streamlined
approach to the achievement of our strategic goals,
we approved an ESG structure consisting of a
Working Group, Management Group and Board
Advisory Panel. This structure will enable focused
action, decision-making, alignment and sign-off to
support our ESG ambitions.
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 36 to 43.
Strategy
The Board approved a five-year strategy during
the year which saw input from a wide range of
colleagues from across the Group. All departments
delivered their plans which will contribute to the
delivery of the ambitious strategy and the Board
will receive regular updates on progress.
Annual General Meeting
The Board is looking forward to welcoming
shareholders to the 2024 AGM on 25 January
2024, which is to be held at our registered office.
We hope that you will be able to attend. Further
details are on pages 142 to 153.
Corporate governance
At Treatt our commitment to effective corporate
governance is reflected in our principles, policies
and practices.
Board meetings
in the year
7
Board meeting
attendance
100%
Board experience
Board gender diversity
Board Ethnicity
Board independence
Length of service
Independence of
Non-executive Directors
Operations 2
Management 7
HR
Finance
1
4
Industry
ESG
4
2
Female
29%
Male
71%
Ethnic minority 29%
White
71%
Independent
57%
Non-independent 43%
0–5 years
5
Over 10 years 2
Independent
20%
Non-independent
80%
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
71
TreaTT plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE STATEMENT CONTINUED
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 effective 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.
For further information on how we have complied with the Code please refer to the following table.
Board leadership and company purpose
Promoting the long-term sustainable success of the Group
Alignment of our culture with our purpose, values and strategy
Framework of effective controls
Engagement with our stakeholders
Workforce policies and practices
Division of responsibilities
Role of the Chair
Division of responsibilities
Non-executive Directors
Information and support
composition, succession and evaluation
Appointment, succession and diversity
Skills, experience and knowledge
Board evaluation
audit, risk and internal control
Audit and internal control
Fair, balanced and understandable
Risk management
remuneration
page
60
27 to 34
60 to 65
50 to 53
25
74
74
74
74
77 to 78
68 to 69
76
81
80 to 81
60 to 65
Remuneration policies and practice supporting strategy and promoting long-term sustainable success 80 to 81
Developing remuneration policy
Alignment of the policy to the workforce
82
82
Leadership and purpose
Role of the Board
The Board is accountable to shareholders for the effective and entrepreneurial leadership of the Group
in a way which promotes its long-term sustainable success for the benefit 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 Officer.
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
Business Leadership Team, with members located in the UK and US.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
THE BOARD
Provides strategic leadership to the Group within a framework of strong corporate
governance, effective controls and a positive culture, which encourages openness
and transparency, to deliver long-term sustainable growth
Executive Directors
Audit
Committee
Monitors the integrity of
the financial 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
Business
Leadership Team
To assist the Executive
Directors in the day-
to-day operational
management of the
Group’s business
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
72
TreaTT plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE STATEMENT CONTINUED
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:
audit
Board
committee
Nomination
committee
remuneration
committee
chair
Daemmon reeve –
Chief Executive Officer
ryan Govender –
Chief Financial Officer
Vijay Thakrar –
Non-executive Director and Chair
Tim Jones –
Non-executive Director and Chair
(Retired 27 January 2023)
David Johnston –
Non-executive Director
Yetunde Hofmann –
Non-executive Director
(Stepped down 27 January 2023)
philip O’connor –
Non-executive Director
(Appointed 1 February 2022)
christine Sisler –
Non-executive Director
(Appointed 1 February 2022)
Bronagh Kennedy –
Non-executive Director
(Appointed 27 January 2023)
7
7
7
3
7
3
7
7
4
N/A
N/A
1
2
N/A
4
N/A
N/A
4
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4
4
1
4
N/A
N/A
3
1
N/A
4
3
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 flows
within the Board and its committees and between
senior management and Non-executive Directors.
Board from
27 January 2023
Nomination
Board until
27 January 2023
Employee Voice
During the year, Vijay Thakrar and David Johnston,
our Chair and Non-executive Director responsible
for workforce engagement (Employee Voice NEDs),
continued to engage with our people across
the Group.
Remuneration until
27 January 2023
Audit
The Board introduced Employee Voice in 2018
in order to provide employees with direct access
to the NEDs to demonstrate the importance of
the views of our employees to the Board.
David was the Senior Independent Director at the
time and was appointed as Non-executive Director
employee voice contact as he has significant
industry experience and, as the longest serving
Non-executive Director, was already known to
Group employees.
Remuneration from
27 January 2023
Role of our Employee Voice NEDs:
Our Employee Voice NEDs seek to ensure that:
• Employee Voice reflects 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, Vijay
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 confidential, the Board
receives feedback on key themes to enable them
to engage with management and address matters
as appropriate.
Engagement sessions
Sessions were held with project leads and functional
heads during the year to provide the Board with
increased visibility of key projects and initiatives.
These sessions enabled open discussion and gave
those attending the opportunity to gain the Board’s
view through open dialogue. The sessions included:
• Meeting with members of the sales and
customer care teams for updates on customer
trends and collaboration opportunities
• Receiving presentations and discussing key
projects with project leads
• To discuss areas of focus for the quality team
with the functional head
• Attendance of the UK HS&E manager to present
on data and planned improvements
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
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 effectively 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 specific matters. Board
meetings are of sufficient 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.
• The interests and feedback of employees are
considered in Board decision-making
• Feedback is provided to the management team,
as a standing agenda item, on all engagement
activity and any employee concerns raised
• They provide an open channel of communication
with the Board
73
TreaTT plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE STATEMENT CONTINUED
Key themes from employee engagement
UK
US
China
• Many projects are being undertaken requiring
• A welcome forum; due to the level of engagement
• Local technical capacity and manufacturing
cross-functional collaboration
additional sessions were arranged
• Recognition that, following changes in recent years,
a period of consolidation and stability is needed
• Support for the organisational restructure which
will further enable an inclusive environment
• Operational improvements and leadership
perceived as positive
• Clarity on strategy welcomed
• Open dialogue with the Board is viewed positively
• Values are important to employees
• Colleagues are invested in Treatt’s successes
with much discussion about the share price
Speaking up
The Group-wide speak up policy provides
employees with a direct means of contacting the
Chair of the Board and the Audit Committee Chair
in confidence, 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.
An individual submitted a letter under the speak
up policy during the year in respect of operational
matters. The letter was subsequently withdrawn.
Notwithstanding this, the matters raised were
investigated as the Board takes any such letter
seriously and has tasked management with
monitoring and updating the Board on some
of the issues raised.
• Global Town Halls, led by Executive Directors, to
provide updates and feedback are appreciated and
more would be welcomed
capability could be an opportunity for the future
• The team are excited to return to business as
usual following lifting of all restrictions due to
the pandemic
• Additional support required to maintain a positive
• Opportunities for product development for the
culture during very busy periods
China market
• Changes to structure and direction received
• Citrus and health & wellness products are in
positively
demand in China
• Meeting the newly appointed Directors in person
• Ideas discussed during employee voice sessions
was welcomed
• Board engagement helpful
now being implemented
• The team are greatly looking forward to the CFO's
imminent first visit to China
Conflicts of interest
The Group has procedures in place for managing
conflicts of interest. If a Director becomes aware that
they, or a connected party, have a potential conflict
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 conflicts 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 conflicts, 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 conflicts and the Board formally reviews
them annually.
Details of other key directorships held by members
of the Board can be found in the Director profiles on
pages 68 to 69.
Shareholder relations
The Group places a great deal of importance on
communication with shareholders and recognises
their role in safeguarding the Company’s effective
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 Chair 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.
Vijay Thakrar
Chair
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
74
TreaTT plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE STATEMENT CONTINUED
Roles and responsibilities
Details of the Directors, the positions they hold, and the committees of which they are members are shown on pages 68 and 69. The Board consists of the Non-executive Chair, Vijay Thakrar and four further
Non-executive Directors together with Daemmon Reeve, CEO, and Ryan Govender, CFO. There is a clear and effective division of responsibility between the CEO and the Chair; the roles of the Board team can
be generally defined as set out in the table below:
chair
chief Financial Officer
• Ensures that the Board and its committees are
• Ensures that employees are able and encouraged
• Responsible for management of the Group’s
• Manages financial risk and appropriate mitigation
effective 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 effective
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
chief executive Officer
to maintain dialogue directly with the Board
financial affairs, including treasury and taxation
strategies
• 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 fulfil
their role
• Agrees the CEO’s personal objectives
• Maintains regular contact with the Non-executive
Directors without the presence of the Executive
Directors
• In conjunction with the CEO, recommends the
• Oversees the finance, legal and governance
annual budget
and IT departments
• Promotes the culture of the organisation
Senior Independent Director
• Provides a sounding board for the Chair
• Is available to shareholders to deal with
• Serves as an intermediary for the other Directors,
when necessary
concerns which cannot otherwise be resolved
• Leads the performance evaluation of the Chair
• Chairs meetings in the absence of the Chair
Non-executive Directors
• Develops and implements Group strategy
• Manages risk and appropriate mitigation strategies
• In conjunction with the CFO, recommends the
• Advises and updates the Chair and Board in
annual budget
relation to key matters
• Ensures strong leadership of the Group
• Maintains relationships with investors and advises
• Sets and promotes the culture of the organisation
• Develops the Business Leadership Team, plans for
the Board accordingly
• Day-to-day running of the business
succession and reviews organisational design
• Manages the operations and resources of
the Group
• Provide independent oversight of the management
• Provide advice to the Board and management
and governance of the business
and share knowledge and experience
• Provide constructive and objective challenge to
• Serve on Board committees
Executive management
• Update and refresh their skills, knowledge
• Assist with the development of strategy
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 and governance specialist
• Provides advice and support to the Board on
governance, compliance and legal matters
• Provides support for Board meetings and agendas
to enable efficient process and compliance with
Board procedures
• Ensures good information flows within the
Board and its committees and between senior
management and Non-executive Directors
• Responsible for legal and compliance matters
• Oversees governance department
relating to the Group
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
75
TreaTT plc Annual Report & Accounts 2023
CORPORATE GOVERNANCE STATEMENT CONTINUED
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
Bronagh Kennedy. During the year the Board
reviewed the membership of these committees.
Delegation of responsibilities to these committees
ensures that sufficient time is spent on matters
within their responsibility. The Board has decided
that, due to its importance, risk should currently
remain as a matter for the full Board and should
not be delegated to a committee. The formation
of the ESG Board Advisory Panel provides a
dedicated panel of Board members to drive the
ESG agenda and provides regular updates to the
full Board with progress.
Further details of the committees can be found on
pages 77 to 93. 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 David Johnston has served on the Board
for more than nine years he is no longer regarded
as independent under the 2018 UK Corporate
Governance Code (the Code). Nonetheless, over
half of the Board are independent Non-executive
Directors, as defined by the Code.
David Johnston reached nine years’ service on the
Board on 20 May 2020 and 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 significant industry
knowledge and experience, which benefits 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,
regular contact is maintained between meetings to
ensure 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 Chair. The service contracts of Non-executive
Directors do not permit them to accept other board
appointments without approval from the Chair, who
will consider any potential conflicts of interest with
the Group or potential constraints on time required
to fulfil the commitment to the Company. During the
year, Bronagh Kennedy was permitted to accept a
position on another board. The Board is satisfied
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
financial, technical, industry-specific 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 Board, with support from the Nomination
Committee, is fully committed to enhancing diversity
of all types at both Board and senior management
level. Our policy is to ensure that our Board reflects
the markets we serve and to recruit the best
possible candidate for each individual role having
regard to qualifications, experience and personality,
without prejudice to a candidate’s gender, ethnicity,
social background, age, sexual orientation, disability
and other characteristics. Further details on Board
diversity are included in the Nomination Committee
report on page 77.
Further details on the Group approach to diversity
are given on page 30.
All Non-executive Directors receive a fixed
fee for their services. However, in exceptional
circumstances, where significant 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 77 and 78.
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, financial information
and briefings on Directors’ responsibilities and
corporate governance.
The Chair 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 offer 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 effective, hold recent and
relevant experience and continue to demonstrate
commitment to the role.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
76
TreaTT plc Annual Report & Accounts 2023
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 effectiveness. During
2022 an external evaluation was undertaken by
Bvalco Limited, an advisor with no other connection
to the Group.
The evaluator recognised that, whilst the Board
was in transition, there was no doubt that it had the
individual and collective motivation, commitment
and skills to steward Treatt through its next
phase of growth. To ensure the effectiveness of
the external evaluation, the Board held a further
session with the independent evaluator during
the year focusing on effective communication
and debate. Ways that the Board could be more
effective, including in its support and challenge
to the Management Team, were discussed, leading
to arrangements for the Board to engage more
with a wide range of colleagues going forward.
The agreed set of priorities to improve the
functioning of the Board, recommended by the
independent evaluator, were actioned during the
year and included:
• Gaining strategic clarity
• Building the refreshed Board
as a high-performance team
• Considering how the Board will
oversee the transformation agenda
During the year an evaluation of the Board, its
committees and each individual director was
carried out internally. The Board and committee
reviews are conducted by the appropriate
Chair. Additionally, the skills matrix of each
of the Directors was reviewed and the skills
and experience mix discussed in respect of
performance and composition of the Board.
The performance of individual Directors was
evaluated by the Chair and the Chair was
evaluated by the Senior Independent Director.
The evaluation process demonstrated that the
performance of the Directors, the Board and the
committees is effective overall.
What the Board did during the year
The Board met formally seven times this year with
meetings 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 financial and trading position from
the CFO, and updates on health and safety,
people, sustainability, commercial, supply chain,
manufacturing, innovation, quality and legal matters.
In addition to these regular items, specific areas
of focus for the Board during the year included:
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Strategy and business
development
• Reviewed the progress of the
Group’s strategy throughout the
year with regular updates from the
Executive Directors
• Approved the strategic plan for the next
five years
• 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 formed
the ESG Board Advisory Panel
Financial performance
Operational performance
Governance and risk
People
• Regularly reviewed the trading
• Maintained oversight of the
• Undertook an internal Board and
performance of the business and
updated the market as required
• On the recommendation of the Audit
Committee, reviewed and approved
the FY2022 Annual Report and the
FY2023 half year results
• Approved the FY2024 budget and
capital investment proposals
• Reviewed the Group forecasts, net debt
levels, facility headroom and covenants
and working capital
• Approved financing proposals,
relocation spend and bank facilities
• Approved the recommendation of the
final dividend for FY2022 and payment
of the interim dividend for FY2023
completion of the new UK Headquarters
and the move and closure of 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
Sustainability Customer Experience
Survey
• Received presentations from UK and
US sales on pipeline opportunities and
recent wins
• Received updates on opportunities
in China
committee evaluation
• Refreshed the Chair position of the
Remuneration Committee and appointed
a new Senior Independent Director
• Reviewed and approved the annual
modern slavery statement and other
Board policies
• Six-monthly risk register review
• 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
• Met with large investors to discuss
governance
• Completed the recruitment process
for a new Non-executive Director
• Maintained oversight of the introduction
of a new Business 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 28 November 2023.
Ryan Govender
Chief Financial Officer and Company Secretary
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
77
TreaTT plc Annual Report & Accounts 2023
NOMINATION COMMITTEE REPORT
I am pleased to present our
Nomination Committee Report.”
Vijay Thakrar
Chair – Nomination Committee
A focus on board composition
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 to support our culture and values.
Membership and meetings
As reported in last year’s Annual Report, I succeeded
Lynne Weedall when she stepped down from
the Board in September 2022. Daemmon Reeve
stepped down from the committee when his
retirement was announced. The committee takes
Board composition and succession planning very
seriously and as such has met formally four times
during the course of the year with additional
informal meetings held as required.
Roles 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:
Activities since the last report
• Appointment of Bronagh Kennedy as
Non-executive Director and Remuneration
Committee Chair
• Appointment of search firm in October 2023
• 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 fill 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
for the CEO role
• Conducted and reviewed the Board evaluation
as it relates to the composition of the Board
and their relevant skills and experience
• Arranged Board development training with an
external provider
• Reviewed the time commitment required from
Non-executive Directors and determined
whether appropriate value is being provided to
the Company. As a result, it is felt that the NEDs
need to devote around 30 days per annum on
average to Treatt, with the Non-executive Chair
needing to devote considerably more than this
• Board succession planning
• To review the results of the Board and
• Reviewed the terms of reference of
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 fulfilment of their duties
the committee
• Reviewed the diversity of the Board and
the Business Leadership Team which leads
the business on a day-to-day basis with the
Executive Directors
NOMINaTION cOMMITTee MeMBerS
Vijay Thakrar (chair)
Non-executive Director
philip O’connor
Non-executive Director
Bronagh Kennedy
Non-executive Director
Nomination Committee
experience
Committee meetings
in the year
4
HR
Finance
Management
ESG
Industry
1
2
3
2
1
Meeting
attendance
90%*
* Daemmon Reeve did not attend 2 Nomination Committee
meetings in the year where CEO succession was discussed.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
78
TreaTT plc Annual Report & Accounts 2023
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 are 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, finance,
risk management, stakeholder engagement and
corporate governance and ethics. The skills matrix
is reviewed annually by each Director, the Chair
and the Nomination Committee.
During the year, Pure Executive, an independent
search and selection agency, which is a division
of Pure Resourcing Solutions Limited, were
instructed to search for a suitable candidate for
the role of Non-executive Director and to provide
a list of suitable candidates to the committee.
NOMINATION COMMITTEE REPORT CONTINUED
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 final
shortlisted candidates.
In light of the announcement regarding the CEO's
retirement on 31 December 2023, Pure Executive
has been selected to search for a suitable candidate
for the role of CEO and to provide a list of suitable
candidates to the committee. This followed a tender
process involving another search firm.
The recruitment process is underway to ensure
the best candidate is selected to lead the business
in the next exciting phase of its evolution.
Pure Executive have previously provided
recruitment services to Treatt but do not have
any other connection with the Company or
individual Directors.
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 benefit 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
and to encourage diversity of thinking. The
committee considers the benefits of all aspects of
diversity including race, gender, social background,
disability, sexual orientation, religion, belief, age and
culture when appointing both Executive and Non-
executive Directors; independence and relevant
commercial experience are also key considerations
for Non-executive Director appointments.
Since 2018 seven directors have been recruited
to the Board of which four have been women
and two from minority ethnic backgrounds.
As at 30 September 2023, the Board has partially
met the diversity targets set by the FCA listing
rules with two members being from a minority
ethnic background exceeding the target of one.
See page 30 for further details on Board ethnic
diversity. Owing to the size of our Board, which
reflects the size of our Company, our Board female
gender proportion is 29% compared to the target
of 40%. We intend to progress towards the target
of 40% as the Board is refreshed. See page 70
for further details on Board gender diversity.
We are committed to enhancing diversity at both
Board and senior management levels with our
Business Leadership Team responsible for the day
to day running of the business, being 70% female
(excluding Executive Directors). Details of the
members of our Business Leadership Team can
be found on page 21. Further details on gender
diversity within the Group are set out on page 30.
This year’s achievements
• Appointment of a Non-executive Director to chair
the Remuneration Committee
• Internal Board evaluation, including a review of
the relevant skills and experience needed for the
future, and time commitment needed from NEDs
• Board development session led by an external
provider
Future plans
• Appointment of a new CEO
• Continuing review and development of Board and
committees, including evaluation
• Oversight of senior management resilience and
succession plans and development of leadership
talent across the Group.
• Enhanced engagement with the Treatt Business
Leadership Team and wider workforce
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
The Board does not currently comply with the
target that at least one of the senior Board positions
(Chair, CEO, CFO and Senior Independent Director)
is held by a woman, owing to the size of the Board.
The committee intends to progress on this area as
the Board and its roles are refreshed, and it is noted
that two of these senior Board positions are held by
individuals from a minority ethnic background. In
addition, all of the Board members are from humble
and diverse social backgrounds and each was the
first generation in their family to attend university.
Committee evaluation
An internal evaluation of the Board and its
committees was undertaken as reported on
page 76.
Vijay Thakrar
Chair – Nomination Committee
79
TreaTT plc Annual Report & Accounts 2023
AUDIT COMMITTEE REPORT
I am pleased to present
our Audit Committee Report.”
Philip O’Connor
Chair – Audit Committee
A focus on governance and reporting
The audit committee focuses on effective
governance and financial reporting.
Membership, independence and experience
Treatt's Audit Committee of two independent
Non-executive Directors reflects the Company's
size as a smaller listed company. Having had
its membership refreshed in September 2022,
the current membership of the Audit Committee
is Philip O’Connor (Chair) and Christine Sisler,
who is also a member of the Remuneration
Committee. Philip joined the Board in February
2022 having spent many years in senior roles,
including as Finance Director of Kerry Foods,
and is a qualified Chartered Certified Accountant
deemed by the Board to have recent and relevant
financial experience.
The committee acts independently of
management and the Board is satisfied that its
members have the appropriate skills, experience,
knowledge and professional qualifications, 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. The Board Chair, CEO,
CFO and other senior finance team members
attended meetings 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
financial performance and to report to the Board
on significant financial 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 effectiveness 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 confidence,
raise concerns about possible improprieties
in matters of financial 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
aUDIT cOMMITTee MeMBerS
philip O’connor (chair)
Non-executive Director
christine Sisler
Non-executive Director
Audit Committee
experience
Finance
Management
Industry
Operations
2
2
2
1
Committee meetings
in the year
4
Meeting
attendance
100%
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
80
TreaTT plc Annual Report & Accounts 2023
AUDIT COMMITTEE REPORT CONTINUED
Activities since the last report
• Reviewed and reported to the Board on the half
• Reviewed the performance of the
Audit Committee
year report and trading updates
• Reviewed the terms of reference of the
• Met with the audit partner to approve the audit
Audit Committee
plan and identification of risks
• Reviewed the auditor’s findings, 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
effectiveness of the audit, providing feedback
to the auditor in this respect
• Approval of the fees paid to the auditors for
the audit
• Reviewed and reported to the Board on the
Group’s Annual Report for 2023 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 financial statements, significant financial
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 financial reporting matters
• Reviewed the potential requirement for an
internal audit function
• Reviewed the appropriateness of having
a formal review of the Group's half year
results undertaken
• Reviewed the operation of the policy on
the provision of non-audit services by the
external auditor and approving any such
work undertaken
• Received an update on progress of the
inventory improvement plan at Treatt USA
• Reviewed and recommended to the Board
the foreign exchange and hedging strategy
as well as implementation and oversight
of monthly FX Committee meetings
Financial reporting
During the year the committee and the Board
monitor the integrity of any externally published
announcements relating to the Group’s financial
performance. Reports are requested from
management on particular matters, especially
where a significant 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 2023 Annual Report was reviewed
at a committee meeting in November 2023; 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.
Significant judgements and issues
The committee receives reports from management
on the significant accounting and financial reporting
matters and judgements involved in the preparation
of the financial statements. Amongst the matters
considered by the committee in relation to the
Group’s 2023 Annual Report were:
Global economic uncertainty and impact
on going concern basis of accounting
Despite the Group‘s resilient financial 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
inflationary price increases, supply-side challenges,
de-stocking and changing consumer tastes as well
as impacting the rate of economic recovery within
our key markets.
Appropriate financial 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 66
and 67 sets out the approach taken and the
conclusions reached.
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 findings following their review
of the work done on inventory valuation and the
controls in place over the processes involved.
Defined benefit pension scheme
The choice of discount rate, inflation rate and life
expectancy basis could materially affect the level
of surpluses and deficits in the defined benefit
pension scheme. The most recent funding update
showed that valuation at the year-end date revealed
there was 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 confirming
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.
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
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
81
TreaTT plc Annual Report & Accounts 2023
AUDIT COMMITTEE REPORT CONTINUED
• Senior management confirm that the content
in respect of their areas of responsibility
is considered to be fair, balanced
and understandable
It was agreed during the year that a senior member
of the finance team would dedicate a portion of
their time to focus on internal controls and will
report directly to the Audit Committee.
• The committee receives an early draft of
the Annual Report to enable timely review
and comment
These processes, together with its own
review, allow the committee to provide
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 2023, responsibility for risk
management and monitoring the effectiveness
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 66 and 67. 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 60 to 65.
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 60.
During the planning phase of the external audit the
auditors confirm 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 significant deficiencies
therein, they will report their findings to the
Audit Committee.
External audit
The Audit Committee is committed to ensuring
the independence, effectiveness 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.
(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 financial 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 office. 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 fix their remuneration. The remuneration of the
auditors for the year ended 30 September 2023 is
disclosed in note 5 of the financial statements.
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
effect from 29 May 2020. For FY2023, 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
2023 and for the previous three years.
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
effectiveness of the external auditor is undertaken
to facilitate continued improvement in the audit
process which incorporates the views of senior
management. This assessment considers:
• Continuity within the audit team
• Adherence to independence, policies and other
regulatory requirements
The committee was satisfied that these requirements
have been met and that BDO demonstrated
commitment to perform high-quality work and was
committed to strengthen audit quality infrastructure
in response to the FRC’s Audit Quality Review
2022/2023.
External auditor independence
The committee has undertaken an assessment of the
effectiveness of BDO’s performance and relationship
with Treatt and is satisfied that BDO delivered a
robust audit and remain independent of Treatt,
having no previous connection with the Company.
Effectiveness of the committee
The effectiveness of the committee was considered
as part of the internal 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 effectively.
Philip O’Connor
Chair – Audit Committee
Future plans
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
The level of non-audit fees and their effect 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 financial 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
• The delivery of an efficient, robust audit in
• Treatt is committed to developing a business
compliance with the agreed plan and timescale
which is underpinned by a thorough risk
identification 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
with strong ESG values at its core. As reported
elsewhere, Treatt formed an ESG Advisory Board
Panel during the year. The Advisory Panel’s
membership comprises the CFO and three
Non-executive Directors.
• Continue to monitor developments to consider
whether it is appropriate the Group’s half year
results to be externally audited.
82
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT
A focus on remuneration structure
The policy is to ensure that remuneration
structures are transparent and proportionate.
Key performance highlights included:
• The Group’s profit before tax and exceptional
items increased to £17.3m, meeting expectations
Chair’s statement
Following my appointment as Chair of the
Remuneration Committee on joining the Board
in January 2023, I am pleased to present the
Directors’ Remuneration Report for Treatt.
The Directors’ Remuneration Report for Treatt
for 2023, including both this Chair’s statement
and the Implementation Report, which details
the remuneration paid to the Directors during
the financial year under review, will be put to an
advisory vote at the AGM on 25 January 2024.
Performance and reward outcomes for 2023
As referenced throughout this year’s Annual Report,
Treatt returned to profit growth during the year
with resilient revenue performance. The Committee
is satisfied that in light of this performance level,
the Company's remuneration outcomes for FY2023
were appropriate.
• Adjusted basic earnings per share (EPS)
increase to 22.94p (2022: 19.80p)
• Dividend per share increase to 8.01p
(2022: 7.90p)
The Group made good progress on important
strategic initiatives which we believe will support
the Group well for its positive growth trajectory.
These actions included:
• Completion of the relocation to the new
UK Headquarters of all employees and UK
operations, and the closure of the former site
• Lowering of net debt to £10.4m (FY22: £22.4m)
reflecting record cash generation
• Group-wide roll out of the updated five-year
strategy
As has been our practice since 2014, we will again
be offering free shares to the value of £700/$1,000
respectively to all UK and US qualifying employees.
As we are required to confirm by the UK Directors’
Remuneration Report regulations, the committee
confirms 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
• Confirming 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 below.
Following the year end, the committee did act to
moderate downwards the calculated vesting level
for 2020 LTIPs (vesting December 2023); the
now proposed vesting level at 51.0% is considered
to reflect our growth in EPS over the LTIP
performance period of three financial years 2021 to
2023 appropriately. The committee determined that
a higher vesting outcome would not be aligned to
shareholders’ overall long-term experience across
the LTIP performance period.
I am pleased to present our
Remuneration Committee Report.”
Bronagh Kennedy
Chair – Remuneration Committee
reMUNeraTION cOMMITTee MeMBerS
Bronagh Kennedy (chair)
Non-executive Director
Vijay Thakrar
Board Chair
christine Sisler
Non-executive Director
Remuneration Committee
experience
Committee meetings
in the year
4
HR
Finance
Management
ESG
Operations
Industry
1
2
3
2
1
1
Meeting
attendance
100%
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
83
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
The 2023 Executive bonus outcome was 33.5%
of the maximum bonus achievable, and included
a 12.0% personal objectives element.
Retirement of our Chief Executive Officer
As announced in October, Daemmon Reeve will
retire from the business on 31 December 2023.
I would like to extend my thanks to Daemmon
for his contribution during my first months with
Treatt and wish him a long and happy retirement.
Appropriate disclosures of the treatments applied
to remuneration items for Daemmon as part of
this process will be made in next year's Directors'
Remuneration Report.
Looking ahead to 2024
Although we face a period of leadership transition
in FY2024, the Remuneration Committee’s intention
is to continue to apply our remuneration policy
consistently with how this has operated in past
years, and no material changes to the operation of
our annual bonus plan and our LTIP are proposed
for our financial year to 30 September 2024.
We believe that these incentive plans have served
the Company and its shareholders well over the
long-term. However, following last year's AGM
the committee agreed that there will be no pay
out under the annual bonus scheme in respect of
non-financial measures unless minimum financial
targets have been achieved.
One change has been approved for FY2024 relating
to the salary of our Chief Financial Officer, Ryan
Govender. When Ryan was appointed to his role
in July 2022 his salary was set at the same level
as our prior CFO at £230,000. In the period since
his appointment Ryan has demonstrated excellent
performance and progression in the role and it is
now proposed to reposition Ryan’s salary, over a
period of two financial years. His salary in FY2024
is proposed as £270,000, with a potential second
phased increase to £300,000 in FY2025.
This potential second increase will only be made
after a Remuneration Committee review in the
summer of 2024 which will consider the continuing
appropriateness of the proposal in the context of
individual and Company performance.
As part of our review process we consulted
appropriate market comparators for CFO pay levels
and, consistent with our long-established outlook
on fixed pay, the proposed new CFO salary level
at Treatt maintains a positioning that we regard
as competitive but which is still below ‘market
suggested’ salary levels in comparable FTSE
SmallCap companies. As a committee we approach
the use of market data for pay comparisons
cautiously and ensure that we look only at
companies which are similar to Treatt in both
company market values (by market capitalisation)
and turnover. This ensures that scale of operations
is also captured in our considerations appropriately.
As we disclosed in October 2023, until a new
CEO is appointed, Ryan will act as Interim CEO
from 1 January 2024. Any implications for Ryan’s
remuneration in FY2024 will be appropriately
disclosed in our Directors’ Remuneration Report
for 2024.
Matters to be approved at our 2024 AGM
At the 2024 AGM, shareholders will be asked
to approve the Directors’ Remuneration Report;
this will be the normal annual advisory vote on
the report.
We will also propose resolutions which renew our
authority to operate our existing SIP and LTIP.
This is a business as usual matter and no material
changes are being made to the existing SIP and LTIP
rules, which were last approved by our shareholders
at our 2014 and 2019 AGMs respectively. A full
summary of the SIP and LTIP rules will be set
out in the notice of meeting for the 2024 AGM.
We are happy to receive feedback from shareholders
at any time in relation to our remuneration policy
and hope to receive your support for the resolution
to approve the Directors’ Remuneration Report and
to renew our authority to operate the SIP and LTIP
at the forthcoming AGM. I will be available at the
AGM to answer any questions you may have and
look forward to meeting those attending.
Bronagh Kennedy
Chair – Remuneration Committee
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
84
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
DIRECTORS’ REMUNERATION POLICY
The Directors’ Remuneration Policy for executive and non-executive directors for the three-year period
expiring at the Company’s 2025 AGM, and which was approved by shareholders at the 2022 AGM, can be
found within the Company’s Annual Report and Accounts for 2021 which is available on the Company’s
website at www.treatt.com/investor-relations/financial-results-presentations/reports.
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:
IMPLEMENTATION REPORT
Membership and meetings
Yetunde Hofmann stepped down from the Board and as Chair of the committee during the year.
Current membership is Bronagh Kennedy (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 the year.
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:
• We will always aim to compete on salary and other benefits, but executives should not be overpaid
when compared with external pay relativity and wider workforce remuneration and conditions
• Set the remuneration policy for all Executive Directors, the Chair and Non-executive Directors including,
where appropriate, bonuses, share-based incentive schemes and post-retirement benefits
• We will recognise strong contribution from performance, experience and industry expertise as well as
• Determine the remuneration packages for the Executive Directors, the Chair and senior management,
demonstrating our culture and values
which includes the Company Secretary
• All colleagues participate in a good pension plan, with the same pension contribution rates applying to
• Approve the design of, and determine targets for, any performance-related incentive schemes operated
all employees in a country
by the Group and approve the total annual payments made under such schemes
• 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 scheme, and we have high alignment of business-based
• 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 employees, and any performance targets
to be used
targets for bonuses 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
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
85
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
Activities since the last report
• Approval of the 2023 Directors’ Remuneration Report
• Agreement of the bonuses payable for the 2023 financial year
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.
• 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 Chair respectively, and agreement of
proportionality – There is a clear link between individual awards, delivery of strategy and our long-term
performance. In addition, the significant role played by incentive pay, together with the structure of the
Executive Directors’ service contracts, ensures that poor performance is not rewarded.
salary and fee increases for the 2024 financial year
• Determination of the salary increases of members of the Business Leadership Team for the 2024
financial 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 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 significant 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.
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 Chair 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 £22,452 (2022: £12,293) 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 satisfied that the advice received during the year was objective and
independent.
Effectiveness of the committee
The effectiveness of the committee was considered as part of the Board evaluation detailed on page 76 and
reviewed as part of the committee’s own processes. The committee is regarded as effective, and receives
good quality, timely information in respect of regulatory changes and best practice and communicates well
with the rest of the Board.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
86
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
IMPLEMENTATION OF POLICY IN 2024
element of
remuneration policy
Implementation of policy for 2024
Base salaries
Daemmon Reeve – £435,000 (FY2023: £435,000)
Ryan Govender – £270,000 (FY2023: £234,600)
element of
remuneration policy
Implementation of policy for 2024
long-Term Incentive
plan (lTIp)
Annual LTIP award to Ryan Govender of shares worth 150% of base salary
(calculated using share prices at the time of award)
Benefits
pensions
Unchanged from FY2023. Private healthcare (including family cover for Daemmon
Reeve); life assurance; permanent health insurance; car allowance; all-employee
share schemes
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 FY2024 targets,
which are based on:
• Group profit before tax and exceptionals* calibrated by reference to the
performance of the Group in FY2023 (80% weighting)
• Non-financial targets and objectives set by the Remuneration Committee
(20% weighting)
The bonus outcomes for FY2024 will be paid:
• 75% in cash after finalisation of the Group’s results for FY2024
• 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
* We use PBTE as it is considered the most appropriate measure of the underlying performance
of the Group
FY2024 awards will be subject to performance conditions measured over three
financial years to FY2026
The performance condition will be:
• Based on average compound annual growth in adjusted basic earnings per share
(‘EPS’) (80% weighting) measured from FY2023 as the base point and with a
performance range as follows: Threshold of 5.0% p.a. (below which there is 0%
vesting) through to maximum vesting at 17.0% p.a.
• Based on average return on average capital employed (‘ROACE’) (20% weighting)
with a performance range as follows: Threshold of 13.0% (below which there is
0% vesting) through to maximum vesting at 17.0%
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 2023 Daemmon Reeve held shares worth 645% of basic salary
and Ryan Govender held shares worth 2% of basic salary
Malus and clawback
Applies to all performance-related elements of Executive Directors’ remuneration
chair and
Non-executive
Directors’ fees
The base fees for the Chair and Non-executive Directors for FY2024 are as follows:
• Chair – £124,000* (FY2023: £124,000)
For all other Non-executive Directors:
• Base fee – £51,000 (FY2023: £51,000)
• Audit Committee Chair – £10,000 (FY2023: £10,000)
• Remuneration Committee Chair – £10,000 (FY2023: £10,000)
• Senior Independent Director – £10,000 (FY2023: £10,000)
• ESG Board Advisory Panel Chair – £5,000
• Treatt USA Advisor - £5,000
* On a review of the Chair's fees in FY2023, which considered fee levels at selected comparator companies, a revised fee level
for the Chair of £150,000 p.a. was proposed. However, the Chair declined to accept the revised fee and the fee level for the
Chair shown will continue to apply for FY2024
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
87
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
The following section of this report provides details of the implementation of the policy for the year ended 30 September 2023
Directors’ remuneration (audited)
The tables below report a single figure for total remuneration, and the proportion of fixed and variable
pay is shown below for the Executive Directors and for each individual Executive and Non-executive
Director respectively.
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
profit before tax, adjusted for exceptional items (PBTE) with 80% weighting, and on the achievement
of non-financial measures set by the Remuneration Committee with 20% weighting.
Daemmon reeve
ryan Govender1
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Bonus payments linked to financial 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 Remuneration Committee determined that 26.9% of the bonus relating to the
achievement of financial objectives should be paid.
Fixed pay:
Salary
Taxable benefits2
Pension3
Total fixed pay
Variable pay:
Annual bonus
Share options vesting in the financial year4
Total variable pay
435
16
34
485
182
359
541
390
16
31
437
40
989
1,029
1,466
235
15
21
271
98
–
98
369
83
4
7
94
–
–
–
94
Total single figure of remuneration
1,026
1 Ryan Govender was appointed as an Executive Director on 1 July 2022.
2 Taxable benefits provided to Executive Directors relate to private medical insurance and car allowances.
3 Pension contributions for Daemmon Reeve 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 86. The percentage of the value which vested during the
year which related to share price growth was 28.7%.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Threshold
Maximum
actual achieved
percentage bonus
attainable
0%
100%
26.9%
2023 pBTe
£’000
16,000
21,000
17,13 17,344
The amounts payable in respect of non-financial objectives were determined with reference to key objectives
included in the table below, and the Remuneration Committee determined that 60% of the bonus relating to
the achievement of non-financial objectives should be paid.
Objective
Performance culture
Target %
achieved %
actions completed
3.0%
2.0%
People restructure fully executed
Cost base reduction
Corporate strategy
12.0%
7.5%
Increase of coffee capacity
Implemented price increase programme
FX risk successfully mitigated
Improvement in working capital
Equality, inclusion and diversity (ED&I)
5.0%
2.5%
Progressed ED&I programme
Sustainability
5.0%
3.0%
Total
25.0%
15.0%
Formation of ED&I Allies Network
Formation of ESG Board Advisory
Panel and ESG Management Team
Clear sustainability roadmap to net zero
88
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
Percentage bonus awarded
The annual bonus, as a percentage of the maximum bonus achievable (125% of salary), was as follows:
Directors share options during the year
The share options of the Directors in office during the year are as set out below:
Daemmon Reeve
Ryan Govender1
2023
33.5%
33.5%
2022
8.2%
0.0%
1 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 financial year:
Scheme
Basis
Date of grant
Share price at
date of grant
Face value
£’0001
Minimum
performance
award
Daemmon Reeve
LTIP 20232
Executive 14 Dec 2022 £6.60
Ryan Govender
LTIP 20232
Executive 14 Dec 2022 £6.60
SAYE 20233 All-Emp
14 July 2023 £5.92
544
293
22
25%
25%
N/A
performance
end date
30 Sept 2025
30 Sept 2025
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 offered 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.
Performance conditions for Executive LTIP options
The 2023 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)
exercise dates
exercise
price
at 1 Oct
2022
Granted
during the
year
exercised
during the
year
Forfeited
during the
year
at 30 Sept
2023
Daemmon reeve Sept 2025 – Feb 2026
610.0p
Dec 2022 – Dec 2029
Dec 2023 – Dec 2030
Feb 2025 – Feb 2032
Dec 2025 – Dec 2032
Nil
Nil
Nil
Nil
ryan Govender
Sept 2026 – Feb 2027
566.0p
Dec 2025 – Dec 2032
Nil
2,950
73,978
45,571
52,232
–
–
–
–
–
82,386
–
–
2,950
(56,223)
(17,755)
–
–
–
–
–
–
–
45,571
52,232
82,386
174,731
82,386
(56,223)
(17,755)
183,139
–
–
–
1,272
44,431
45,703
–
–
–
–
–
–
1,272
44,431
45,703
The aggregate amount of gains made by the Directors on the exercise of share options in the year was
£358,703 (2022: £1,638,000).
There have been no further changes in the interests of the Directors to subscribe for or acquire shares
between 1 October 2023 and 21 November 2023, the latest date practicable to obtain the information
prior to publication of this document.
The market price of the shares at 30 September 2023 was £5.07 and the range during the financial
year was £4.93 to £7.24. All market price figures are derived from the Daily Official List of the London
Stock Exchange.
Former director's share options during the year
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 to be capable of vesting at originally
specified vesting times per the scheme rules. During the year, 8,943 shares were exercised. A total of
30,381 share options remain unvested.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
89
TreaTT plc Annual Report & Accounts 2023
Non-executive Directors (audited)
Vijay Thakrar1
Tim Jones2
David Johnston
Philip O’Connor3
Christine Sisler3
Bronagh Kennedy4
Yetunde Hofmann5
Lynne Weedall6
Jeff Iliffe6
Richard Illek6
DIRECTORS’ REMUNERATION REPORT CONTINUED
Fees (fixed pay)
2023
£’000
104
41
51
68
52
42
20
–
–
–
378
2022
£’000
52
113
47
31
32
–
55
52
23
12
417
Pensions (audited)
The Chief Executive Officer 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, defined benefit occupational pension scheme.
The annual pension entitlement accrued is as follows:
Daemmon Reeve
24 Sept 2036
Normal retirement date
accrued total pension p.a.
2023
£
15,865
2022
£
14,855
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 27.
Contributions to defined money purchase pension plans were made as follows:
Daemmon Reeve
Ryan Govender1
2023
£’000
34
21
2022
£’000
31
7
1 Ryan Govender was appointed as an Executive Director on 1 July 2022.
Pension contributions for Daemmon Reeve include pay in lieu of pension after deduction of employers’
NI in order to be cost neutral to the Group.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
1 Vijay Thakrar was appointed as Chair on 27 January 2023.
2 Tim Jones stepped down from his position as Chair and as a Non-executive Director on 27 January 2023.
3 Philip O’Connor and Christine Sisler were both appointed on 1 February 2022.
4 Bronagh Kennedy was appointed on 27 January 2023.
5 Yetunde Hofmann stepped down on 27 January 2023.
6 Richard Illek, Jeff Iliffe and Lynne Weedall resigned on 31 December 2021, 25 February 2022 and 17 September 2022 respectively.
90
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
Directors’ interests (audited)
The Directors who held office at 30 September 2023 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
Ten-year performance graph
The performance graph shows Treatt plc's performance, measured by total shareholder return, compared
with that of the FTSE All-Share index, selected by the Board as being the most appropriate measure
against which to benchmark its performance.
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Total shareholder return
Treatt Plc
FTSE All-Share
executive Directors
Daemmon Reeve
Ryan Govender
Non-executive Directors
Vijay Thakrar
Philip O'Connor
Bronagh Kennedy
553,780
549,161
180,139
171,781
976
–
44,431
7,006
6,550
522
6,144
–
–
–
–
–
–
–
–
–
2,950
1,272
–
–
–
2,950
–
–
–
–
1,000%
800%
600%
400%
200%
0%
Between 1 October 2023 and 21 November 2023, the latest date practicable to obtain the information prior
to publication of this document, there were no changes in the Directors’ interests.
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Treatt TSR performance over the last 10 years to 30 September 2023, compared with the FTSE All-Share index.
The table below shows the value of Executive Directors’ interests in shares as at 30 September 2023 as a
percentage of their base salary:
Value of shares held1
outright or vested
Base salary2
Value of interest as
% of base salary
Daemmon Reeve
Ryan Govender3
2023
£’000
2,808
5
2022
£’000
3,240
–
2023
£’000
435
235
2022
£’000
390
235
2023
£’000
645%
2%
2022
£’000
831%
–
Target % of
base salary
200%
200%
1 Based upon a share price of £5.07 as at 30 September 2023.
2 Base salary is the basic gross pay for the corresponding year.
3 Ryan Govender was appointed on 1 July 2022.
CEO remuneration
The following table provides historical data on remuneration in respect of the Director performing the role
of Chief Executive Officer for each of the years covered by the performance graph.
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Total remuneration
(£’000)
Annual bonus as
% of maximum
Share options vesting
as % of maximum
1,026
1,466
741
1,219
1,501
1,757
603
580
470
436
33.5% 8.2% 100% 100% 62.5% 92.5% 100%
88%
92%
95%
76.0% 100%
N/A1
100% 100% 100%
N/A1
N/A1
100%2
100%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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
91
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
Relative importance of spend on pay
Wages and salaries are the most significant 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 profit, the most significant of which, taxation, has therefore
been selected:
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 2023 to establish the data set used to
calculate the ratio, and was chosen as it is the most accurate and comprehensive data currently available.
This data had not significantly changed by the year-end date, so we consider this to be a reliable data set.
Total remuneration1
Dividends2
Current tax3
2023
£’000
21,542
4,802
3,139
2022
£’000
20,939
4,834
1,939
Movement
2.9%
(0.7%)
61.9%
1 Total remuneration includes wages, salaries and pension costs as disclosed in note 6.
2 Dividends paid in the financial year as disclosed in note 10.
3 Current tax charge in respect of the financial year as disclosed in note 9.
Chief Executive pay ratio reporting
Set out below is the ratio of the Chief Executive’s single figure of total remuneration expressed as a
multiple of total remuneration for UK employees. The CEO pay ratio for years prior to the year ended
30 September 2022 are not in scope, as the number of UK employees came within scope of the
requirements for the first time during FY2022.
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
2023
2022
Method used
25th percentile
50th percentile
75th percentile
Option B
Option B
35:1
48:1
32:1
44:1
24:1
31:1
comparison group
Employee A – 25th percentile
Employee B – 50th percentile
Employee C – 75th percentile
Total remuneration
Base salary
29,538
32,211
43,441
27,300
32,005
42,000
Year-to-year movements in the pay ratio will largely be down to the Chief Executive’s variable pay outcome
which will significantly 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
offer participation in all-employee share schemes as well as share incentive plans in the UK, and similar
schemes for US colleagues. The Group is satisfied that the median pay ratio for this financial year is
consistent with the Group’s wider pay, reward and progression policies affecting 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 satisfied that the Chief
Executive’s pay is weighted at the correct level.
We expect the pay ratio to fluctuate year-on-year and it may not always coincide with the underlying
performance of the business in a single year.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
92
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
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 2023.
Employees1,2
exec Directors:
Daemmon Reeve
Ryan Govender3
Richard Hope4
Non-exec Directors:
Vijay Thakrar5
Tim Jones6
David Johnston
Philip O'Connor7
Christine Sisler7
Yetunde Hofmann8
Lynne Weedall9
Jeff Iliffe9
Richard Illek9
% change from 2022 to 2023
% change from 2021 to 2022
% change from 2020 to 2021
% change from 2019 to 2020
Salary or fees
Bonus Taxable benefits
Salary or fees
Bonus Taxable benefits
Salary or fees
Bonus Taxable benefits
Salary or fees
Bonus Taxable benefits
10.3%
64.1%
(1.0%)
9.0%
(58.6%)
31.6%
4.2%
56.5%
10.3%
4.9%
22.9%
6.5%
11.5%
2.0%
N/a
101.8%
8.8%
9.2%
45.9%
7.8%
11.5%
N/a
N/a
N/a
355.0%
N/a
N/a
N/a
N/a
N/a
N/a
N/a
N/a
N/a
N/a
N/a
0.5%
39.4%
N/a
N/a
N/a
N/a
N/a
N/a
N/a
N/a
N/a
N/a
14.7%
N/A
2.5%
8.0%
9.7%
10.1%
N/A
N/A
28.9%
10.1%
10.1%
10.1%
(88.2%)
N/A
(79.5%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.2%
N/A
0.2%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1.0%
N/A
1.0%
1.0%
1.0%
(9.0%)
N/A
N/A
1.0%
5.4%
1.0%
1.0%
1.0%
N/A
1.0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.1%
N/A
0.1%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2.1%
N/A
1.8%
N/A
2.0%
(4.7%)
N/A
N/A
2.0%
10.0%
2.0%
2.0%
63.6%
N/A
62.3%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.2%
N/A
0.1%
N/A
N/A
N/A
N/A
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 2023 financial year.
2 Employee bonuses are based on a combination of Group performance and the performance of the entity they are employed by. US all-employee bonuses were 12.5% of salary (2022: 0.0%) and UK all-employee bonuses were 0.0% of salary (2022: 1.6%).
3 Ryan Govender was appointed on 1 July 2022, the percentage change from 2022 to 2023 is shown pro-rated.
4 Richard Hope retired on 30 June 2022, the percentage change from 2021 to 2022 is shown pro-rated.
5 Vijay Thakrar was appointed as Chair on 27 January 2023.
6 Tim Jones stepped down as Chair and resigned as a Non-executive Director on 27 January 2023, the percentage change from 2022 to 2023 is shown pro-rated.
7 Philip O’Connor and Christine Sisler were both appointed on 1 February 2022, the percentage change from 2022 to 2023 is shown pro-rated.
8 Yetunde Hofmann resigned on 27 January 2023, the percentage change from 2022 to 2023 is shown pro-rated.
9 Richard Illek, Jeff Iliffe and Lynne Weedall resigned on 31 December 2021, 25 February 2022 and 17 September 2022 respectively, the percentage change from 2022 to 2023 is shown pro-rated.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
93
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
Statement of voting
At the Annual General Meeting held on 27 January 2023, the votes cast in respect of the resolution to
approve the Directors’ Remuneration Report, was as follows:
Directors’ Remuneration Report
For 86.16%
Against 13.84%
Votes withheld 7,662
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 28 November 2023.
Ryan Govender
Chief Financial Officer and Company Secretary
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
94
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REPORT
OTHER STATUTORY INFORMATION
The Directors present their report and the audited
financial statements for the Group for the year
ended 30 September 2023.
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 70
to 76, 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 104. Reported profit before tax for the year
was £13.5m (2022: £16.2m). Profit before tax and
exceptional items was £17.3m (2022: £15.3m).
The Directors recommend a final dividend of 5.46p
(2022: 5.35p) per ordinary share. This, when taken
with the interim dividend of 2.55p (2022: 2.50p)
per share paid on 10 August 2023, gives a total
dividend of 8.01p (2022: 7.85p) per share for the
year ended 30 September 2023.
Events since balance sheet date
No important events affecting the Group have
occurred since the year end date.
Research and development
Product innovation and research and development
are a critical part of the Group’s strategy and
business model.
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
61,129,589 ordinary shares with a nominal value
of 2 pence each. All 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 Secretariat.
Details of the issued ordinary share capital of the
Parent Company and movements during the year
are set out in note 24 of the financial statements.
Treatt share incentive plan (SIP)
The Company outsources the administration of the
UK Share Incentive Plan to Link Asset Services
Trustees (the SIP Trust), who, at 30 September
2023, held 379,822 shares (2022: 437,711), 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 notified of the
following holdings of 3% or more of the voting
rights at 21 November 2023 (the latest practicable
reporting date prior to publication of this document).
Group
abrdn plc
Number
Issued
%
Voting
%
7,240,693
11.84
11.94
Blackrock Inc
3,249,416
5.32
5.36
Canaccord Genuity
Group Inc
2,966,903
4.85
4.89
Hargreaves Lansdown Plc 2,959,475
4.84
4.88
Liontrust Asset
Management
2,506,426
4.1
4.13
Ameriprise Financial
2,450,071
4.01
4.04
Invesco
2,043,263
James Sharp & Co
2,036,382
3.34
3.33
3.37
3.36
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 profits available for
such purposes.
Treatt employee benefit 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
2023 the trustees, Apex Financial Services (Trust
Company) Limited held 162,539 shares (2022:
270,140). No shares (2022: nil) were purchased
by the EBT during the year ended 30 September
2023. During the year 200,000 (2022: 400,000)
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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
95
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REPORT CONTINUED
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
68 to 69.
Powers of Directors and purchase
of own shares
At the forthcoming Annual General Meeting in
2024 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 2024
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 financing 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 142 to 153.
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 office until the next Annual
General Meeting and shall then be eligible, subject
to Board recommendation, for election at that
meeting. All Directors will offer themselves for
re-election annually; further details are provided
in the Corporate Governance Statement on pages
70 to 76.
The Executive Directors’ contracts are terminable
by the Group giving the required notice period
of twelve 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 office,
either by passing an ordinary resolution of which
special notice has been given or by notice being
given by all the other Directors.
Conflicts of interest
No Director had an interest in any contract of
significance during the year. The Group has
procedures in place for managing conflicts of
interest, which are set out on page 73.
Directors’ and officers’ liability insurance
The Group maintains Directors’ and officers’
liability insurance which is reviewed annually.
The insurance covers the Directors and officers
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 officer of a Group company and in respect of
damages or civil fines 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 66 and 67.
Political donations
The Group made no political donations in 2023
(2022: £nil).
Significant 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, Suffolk, IP32
7FR on 25 January 2024. The Notice of Meeting
and explanatory notes are given on pages 142
to 153. 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).
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
96
TreaTT plc Annual Report & Accounts 2023
DIRECTORS’ REPORT CONTINUED
Financial and internal control
The Board confirms that a process for the ongoing
identification, evaluation and management of
significant 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 effectiveness. This
covers financial, operational and compliance
controls including those in relation to financial
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
significant internal control issues identified during
the year.
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 effective internal controls are
as follows:
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 financial statements, which is subject
to review by senior management throughout the
consolidation process.
The Board monitors the integrity of all financial
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 effective financial control. Compliance with
accounting policies is reviewed where necessary
as part of the external audit.
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 defined guidelines for
capital expenditure. These include annual budgets,
appraisal and review procedures, and levels
of authority. Post-investment appraisals are
performed for major investments.
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 60 to 65.
Additional disclosures
Future business developments
Further details on these are set out in the Strategic
Report on pages 7 to 67.
Financial instruments
Information on the Group’s financial risk
management objectives and policies and on the
exposure of the Group to relevant risks in respect
of financial instruments is set out in note 29 of the
financial statements.
Health and safety
The Group’s disclosures on health and safety have
been included within the Sustainability section on
pages 24 to 53.
Employees
The Group’s disclosures on employees have been
included within the Sustainability section on pages
24 to 53. Group’s policies on equal opportunities
recruitment can be found on page 30.
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 46.
Taskforce on Climate-related Financial
Disclosures (TCFD)
The Group’s first report in line with
recommendations from the Taskforce on
Climate-related Financial Disclosures (TCFD)
report can be found on pages 36 to 43.
Directors’ interests in shares
The interests of Directors in shares of the Company
are shown in the Directors’ Remuneration Report
on page 82.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
97
TreaTT plc Annual Report & Accounts 2023
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 financial statements
in accordance with applicable law and regulations.
In preparing each of the Group and Parent
Company financial statements, the Directors are
required to:
a. select suitable accounting policies and apply
them consistently;
Company law requires the Directors to prepare
Group financial statements for each financial year.
The Directors are required under company law and
the listing rules of the Financial Conduct Authority
to prepare Group financial statements and have
elected to prepare the Group financial statements
in accordance with UK-adopted international
accounting standards.
The Group financial statements are required by
law, and UK-adopted international accounting
standards, to present fairly the financial position
of the Group and the Parent Company and the
financial performance of the Group. The Companies
Act 2006 provides, in relation to such financial
statements, that references in the relevant part
of that Act to financial statements giving a true
and fair view are references to their achieving
a fair presentation.
Under company law the Directors must not approve
the financial statements unless they are satisfied
that they give a true and fair view of the state
of affairs of the Group and the Parent Company
and of the profit of the Group for that period.
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
financial statements;
d. prepare the financial 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 sufficient to show and
explain the Group’s and the Parent Company’s
transactions and disclose with reasonable accuracy
at any time the financial position of the Group and
the Parent Company and enable them to ensure
that the financial statements and the Directors’
Remuneration Report comply with the Companies
Act 2006 and, as regards the Group financial
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 other irregularities.
The Directors are responsible for ensuring the
Annual Report and the financial 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 financial statements, which may vary from
legislation in other jurisdictions. The Directors
are responsible for the maintenance and integrity
of the corporate and financial 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, confirms that,
to the best of their knowledge:
a. the financial statements, prepared in accordance
with UK-adopted international accounting
standards, give a true and fair view of the
assets, liabilities, financial position and profit
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 office on the date
of approval of these financial statements have
confirmed, as far as they are aware, that there is
no relevant audit information of which the auditors
are unaware. Each of the Directors has confirmed
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
28 November 2023.
Ryan Govender
Chief Financial Officer and Company Secretary
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
98
TreaTT plc Annual Report & Accounts 2023
Opinion on the financial statements
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the
Group’s and of the Parent Company’s affairs as at 30 September
2023 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
the Parent Company financial 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 financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Treatt Plc (the ‘Parent
Company’) and its subsidiaries (the ‘Group’) for the year ended
30 September 2023 which comprise Group Income Statement, Group
Statement of Comprehensive Income, Group Statement of Changes
in Equity, Parent Company Statement of Changes in Equity, Group
and Parent Company Balance Sheets, Group and Parent Company
statements of Cash Flows and notes to the financial statements,
including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is
applicable law and UK adopted international accounting standards
and as regards the Parent Company financial 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 financial statements section of
our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the additional report to the audit committee.
INDEPENDENT AUDITOR’S REPORT
to the members of Treatt Plc
Independence
Following the recommendation of the audit committee, we were
appointed by the Board of Directors on 29 June 2020 to audit the
financial statements for the year ended 30 September 2020 and
subsequent financial periods. The period of total uninterrupted
engagement including retenders and reappointments is 4 years,
covering the years ended 30 September 2020 to 30 September
2023. We remain independent of the Group and the Parent Company
in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we have
fulfilled 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial 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 flow forecasts and evaluated the key
assumptions in respect of revenue growth, gross profit 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;
• Evaluated sensitivity analysis and reverse stress tests prepared
by the Directors in relation to the Group’s cashflow forecasts with
reference to the covenants in place over the existing financing
facilities. The reasonableness of such scenarios modelled was
considered with reference to our knowledge and experience of
the entity;
• We assessed compliance with covenants during the year, at the
year end and through the going concern period of 12 months from
the date of which the financial statements are approved, to check
the Group’s ability to comply with the covenant requirements going
forward; and
• We considered the adequacy of disclosures in the financial
statements in respect of going concern against the applicable
financial reporting framework.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant 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 financial 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 financial 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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Overview
coverage
98.6% (2022: 98.5%) of Group profit before tax
98.6% (2022: 99.5%) of Group revenue
99.6% (2022: 99.8%) of Group total assets
Key audit matters Valuation of inventory which is consistent with
prior years
Materiality
Group financial statements as a whole
£677,000 (2022: £808,000) based on 5%
(2022: 5%) of profit before tax
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
financial 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.
99
TreaTT plc Annual Report & Accounts 2023
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Treatt Plc
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 significant
components and are subject to full scope audits. Treatt Trading
(Shanghai) Company Limited was considered to be a non-significant
component, where we performed desktop review procedures. All
audits and desktop review procedures were completed by BDO LLP.
Climate change
Our work on the assessment of potential impacts on climate-related
risks on the Group’s operations and financial statements included:
• Enquiries and challenge of management, as well as review of
minutes of Board and Audit Committee meetings to understand
the actions they have taken to identify climate-related risks and
their potential impacts on the financial statements and adequately
disclose climate-related risks within the annual report;
• Our own qualitative risk assessment taking into consideration
the sector in which the Group operates and how climate change
affects this particular sector; and
• We challenged the extent to which climate-related considerations,
including the expected cash flows from the initiatives and
commitments have been reflected, where appropriate, in the
Directors' going concern assessment and viability assessment.
We also assessed the consistency of managements disclosures
included as Statutory Other Information on pages 36 to 43 with the
financial statements and with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to
be any Key Audit Matters materially impacted by climate-related risks.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
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 significant inventory
balances, and as a result of the nature
of the products, include an element of
estimation and judgement in respect
of the allocation of overheads in the
valuation process, as well as provisions
against inventory for slow moving,
obsolete items or in respect of commodity
price fluctuations. As a result, this was
determined to be a key audit matter.
How the scope of our audit addressed the key audit matter
Our audit work included but was not limited to;
• Checked that direct costs and overheads relevant to the manufacturing
process, based on knowledge and experience of the industry, were
included in management’s overhead absorption calculations as required
by accounting standards;
• Challenged 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 based on our understanding and knowledge of the business.
• Considered the variance between budgeted overhead and actual overhead
recovery to check that the proportion of overheads absorbed was accurate;
• In order to check the allocations of costs through the production process,
we selected a sample of overheads absorbed that were recalculated and
verified back to works orders and budgeted utilisation;
• Verified for a sample of completed works orders that the corresponding
overhead recovery charge was recorded accurately;
• We considered the accuracy of management’s policy in respect of
the recognition of inventory provisions based on our knowledge and
understanding of the business. We compared amounts written off in the
current year in comparison to the prior year provision, as well as checking
the policy has been applied consistently
• Challenged management’s judgement in relation to inventory provisions,
including the percentage applied, by reviewing the utilisation of prior
year provisions to assess the accuracy of management’s estimation to
supporting evidence
• Held discussions with management to determine that where a provision
was required, it had been appropriately recognised in accordance with the
specific criteria outlined in management’s policy.
• We performed a review of sales in October, checking inventory items have
been sold above the cost they were held at year end. For those that were
not, checked they were included in provision at year end, or would not have
a material impact of year-end inventory
Key observations:
We found management’s judgements and estimates used in the allocation of
overheads and provisions to be appropriate and in line with the requirements
of applicable accounting standards.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
100 TreaTT plc Annual Report & Accounts 2023
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Treatt Plc
Our application of materiality
We apply the concept of materiality both in planning and performing
our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable
users that are taken on the basis of the financial 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
identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements
as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Component materiality
For the purposes of our Group audit opinion, we set materiality for
each significant component of the Group, based on a percentage of
between 66% and 67% (2022: 54% and 66%) of Group materiality
dependent on the size and our assessment of the risk of material
misstatement of that component. Component materiality ranged
from £445,000 to £454,000 (2022: £436,000 to £536,000).
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 differences in excess of £23,500 (2022: £28,000).
We also agreed to report differences 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 financial statements and our auditor’s
report thereon. Our opinion on the financial 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 financial 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 financial 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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Materiality
Basis for determining
materiality
rationale for the
benchmark applied
Group financial statements
parent company financial statements
2023
£
677,000
2022
£
808,000
2023
£
445,000
2022
£
436,000
5% profits before tax
5% profits before tax
1% of total assets
1% of total assets
We consider the use of profit before tax to
be a key statutory performance measure for
stakeholders based on market practice and
investor expectations and is reflective of
the changing market sentiment in respect
of alternative performance measures.
We consider the use of profit before tax to
be a key statutory performance measure for
stakeholders based on market practice and
investor expectations and is reflective of
the changing market sentiment in respect
of alternative performance measures.
The parent company is a non-trading holding
company and the most significant balance
in its financial statements is total assets.
The parent company is a non-trading holding
company and the most significant balance
in its financial statements is total assets.
performance materiality
474,000
566,000
311,500
305,000
Basis for determining
performance materiality
rationale for the
percentage applied for
performance materiality
70% of financial statement materiality.
The level of performance materiality was set after considering a number of factors including significant transactions in the year, the expected value of known and likely misstatements, and management’s
attitude towards proposed misstatements.
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
101
TreaTT plc Annual Report & Accounts 2023
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Treatt Plc
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 specified 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 financial 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 identified set
out on page 66; 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 66.
Other code provisions
• Directors' statement on fair, balanced and understandable set out on page 97;
• Board’s confirmation that it has carried out a robust assessment of the emerging
and principal risks set out on page 62;
• The section of the annual report that describes the review of effectiveness of
risk management and internal control systems set out on pages 60 to 65; and
• The section describing the work of the audit committee set out on pages 79 to 81
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
financial year for which the financial statements are prepared is consistent with
the financial 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 identified
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 financial 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 specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and
for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial 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 financial 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 influence the economic decisions of users taken on the basis of these
financial statements.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
102
TreaTT plc Annual Report & Accounts 2023
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Treatt Plc
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.
Non-compliance with laws and regulations:
• We gained an understanding of the legal and regulatory framework applicable to the Group and the
components within the Group, as well as the industry in which they operate, through discussion with
management and the Audit Committee and out knowledge of the industry; and
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud.
Our risk assessment procedures included:
• Enquiry with management, those charged with governance and the Audit Committee regarding any
known or suspected instances of fraud;
• Obtaining an understanding of the Group’s policies and procedures relating to:
– Detecting and responding to the risks of fraud; and
– Internal controls established to mitigate risks related to fraud
• Reviewing management's response to instances of identified and alleged fraud in the period, including
• Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws
understanding improvements made to the internal control environment;
and regulations.
We considered the significant laws and regulations to be UK adopted International accounting standards,
Companies Act 2006, the UK Listing Rules, the applicable accounting standards, the Bribery Act 2010 and
local tax and employment legislation for significant components.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with governance for any known or suspected instances
of fraud;
• Assessing the susceptibility of the Group’s financial statements to material misstatement as an
engagement team, including how fraud might occur throughout the group including the parent company
and components, by considering industry, legal and external factors relevant to the Group;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate
• Review of minutes of meetings of those charged with governance for any instances of non-compliance
risks of material misstatement due to fraud; and
with laws and regulations;
• Considering remuneration incentive schemes and performance targets and the related impacted
• Enquired as to whether there was any correspondence with regulatory and tax authorities for any
financial statement areas.
instances of non-compliance with laws and regulations;
• Reperformed tax calculations in respect of corporation tax, employment tax and sales tax in each
significant jurisdiction;
• Review of whistleblowing allegations, together with challenging management’s response and
conclusions;
• Review of employee settlement agreements;
• Review of legal advice obtained;
•
Involvement of tax specialists in the audit; and
• Review of legal expenditure accounts to understand the nature of expenditure incurred.
Based on our risk assessment, we considered the areas most susceptible to fraud in relation to the group
to be judgements and estimates applied by management in the financial statements in respect of inventory
valuation, timing of revenue recognised around the year-end and management override of controls.
Our procedures in respect of the above included:
• With regard to the fraud risk in management override in controls, our procedures included a review
of recurring bank transactions to consider if these indicated fraud, review of payroll data to identify
any possible duplicate employees or inappropriate payments to employees who have joined or left the
business, and targeting journal transactions with specific criteria, with a focus on large or unusual
transactions based on our knowledge of the business and agreeing these to supporting documentation;
• With regard to fraud in revenue recognition, we tested the recording of revenue transactions near
the year end to supporting documentation to check recognition of the corresponding revenue in the
appropriate period. In addition we obtained management’s assessment of the revenue exposure of
varying International Commercial Terms for items that were in transit at year end and checked the
impact would not be material to the amount of revenue recognised in the year; and
• Assessing significant estimates made in the inventory valuation process by management for bias.
Please refer to the key audit matter section of our report for more detail.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
103
TreaTT plc Annual Report & Accounts 2023
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Treatt Plc
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members who were all deemed to have appropriate competence and capabilities 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 financial
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 reflected in the financial 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.
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
28 November 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
104 TreaTT plc Annual Report & Accounts 2023
GROUP INCOME STATEMENT
for the year ended 30 September 2023
revenue
Cost of sales
Gross profit
Administrative expenses
Gain on disposal of land and buildings
Relocation expenses
Operating profit/(loss)1
Finance income
Finance costs
profit/(loss) before taxation
Taxation
profit/(loss) for the year attributable to owners of the parent company
earnings per share
Basic
Diluted
2023
2022
Before exceptional
items
£’000
Notes
exceptional items
£’000
–
–
–
(2,655)
–
(1,145)
(3,800)
–
–
(3,800)
803
(2,997)
4
8
8
8
5
7
7
9
11
11
147,397
(102,573)
44,824
(26,503)
–
–
18,321
112
(1,089)
17,344
(3,405)
13,939
adjusted2
22.94p
22.81p
Total
£’000
147,397
(102,573)
44,824
(29,158)
–
(1,145)
14,521
112
(1,089)
13,544
(2,602)
10,942
Before exceptional
items
£’000
exceptional items
£’000
140,185
(101,101)
39,084
(23,311)
–
–
15,773
8
(525)
15,256
(3,295)
11,961
–
–
–
(601)
3,324
(1,800)
923
–
–
923
431
1,354
Statutory
adjusted2
18.01p
17.91p
19.80p
19.60p
Total
£’000
140,185
(101,101)
39,084
(23,912)
3,324
(1,800)
16,696
8
(525)
16,179
(2,864)
13,315
Statutory
22.04p
21.82p
1 Operating profit/(loss) is calculated as profit/(loss) before net finance costs and taxation.
2 All adjusted earnings per share measures exclude exceptional items and the related tax effect, details of which are given in note 8.
All financial information presented relates to continuing operations.
The group reconciliation of net cash flow to movement in net debt, together with notes 1 to 31, form part of these financial statements.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
105
TreaTT plc Annual Report & Accounts 2023
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2023
profit for the year attributable to owners of the parent company
Items that will or may be reclassified subsequently to profit or loss:
Currency translation differences on foreign currency net investments
Current tax on foreign currency translation differences
Deferred tax on foreign currency translation differences
Fair value movement on cash flow hedges
Deferred tax on fair value movement
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain on defined benefit pension scheme
Deferred tax on actuarial gain
Other comprehensive (expense)/income for the year
Total comprehensive income for the year attributable to owners of the parent company
All financial information presented relates to continuing operations.
The group reconciliation of net cash flow to movement in net debt, together with notes 1 to 31, form part of these financial statements.
Notes
9
9
23
9
27
9
2023
£’000
10,942
(6,188)
(33)
301
269
–
2022
£’000
13,315
11,461
102
–
(23)
4
(5,651)
11,544
1,381
(345)
1,036
(4,615)
6,327
8,273
(2,068)
6,205
17,749
31,064
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
106
TreaTT plc Annual Report & Accounts 2023
Group
Notes
1 October 2021
Profit for the year
Other comprehensive
income:
Exchange differences
Fair value movement
on cash flow hedges
23, 29
Actuarial gain on defined
benefit pension scheme
Taxation relating
to items above
Total comprehensive income
Transactions with owners:
Dividends
Share-based payments
Movement in own
shares in share trusts
Gain on release of
shares in share trusts
Issue of share capital
Taxation relating to items
recognised directly in equity
Total transactions with owners
27
9
10
26
24
9
Share
capital
£’000
Share
premium
account
£’000
1,208
23,484
–
–
–
–
–
–
–
–
–
–
9
–
9
–
–
–
–
–
–
–
–
–
–
–
–
–
30 September 2022
1,217
23,484
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2023
Own
shares
in share
trusts
£’000
(4)
–
Hedging
reserve
£’000
Foreign
exchange
reserve
£’000
retained
earnings
£’000
Total
equity
£’000
Group
Notes
(292)
1,820
80,083 106,299
1 October 2022
–
–
13,315
13,315
Profit for the year
–
11,461
–
–
(23)
–
4
Other comprehensive
income:
11,461
Exchange differences
(23)
Fair value movement
on cash flow hedges
23, 29
–
–
8,273
8,273
Actuarial gain on defined
benefit pension scheme
102
(2,068)
(1,962)
Taxation relating
to items above
(19)
11,563
19,520
31,064
Total comprehensive income
Transactions with owners:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,834)
(4,834)
Dividends
1,115
1,115
Share-based payments
–
8
622
–
622
–
Movement in own
shares in share trusts
Gain on release of
shares in share trusts
Issue of share capital
(424)
(424)
Taxation relating to items
recognised directly in equity
(3,521)
(3,513)
Total transactions with owners
27
9
10
26
24
9
–
–
–
–
–
–
–
8
–
(9)
–
(1)
(5)
Share
capital
£’000
Share
premium
account
£’000
1,217
23,484
–
–
–
–
–
–
–
–
–
–
6
–
6
–
–
–
–
–
–
–
–
–
–
–
–
–
Own
shares
in share
trusts
£’000
(5)
–
Hedging
reserve
£’000
Foreign
exchange
reserve
£’000
retained
earnings
£’000
Total
equity
£’000
(311)
13,383
96,082 133,850
–
–
10,942
10,942
–
–
–
–
–
–
–
9
–
(6)
–
3
269
–
–
–
(6,188)
–
–
(6,188)
269
1,381
1,381
–
–
268
(345)
(77)
269
(5,920)
11,978
6,327
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4,802)
(4,802)
1,189
1,189
–
9
620
–
620
–
53
53
(2,940)
(2,931)
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
(311)
13,383
96,082 133,850
30 September 2023
1,223
23,484
(2)
(42)
7,463 105,120 137,246
The group reconciliation of net cash flow to movement in net debt, together with notes 1 to 31, form part of
these financial statements.
107
TreaTT plc Annual Report & Accounts 2023
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2023
parent company
1 October 2021
Profit for the year
Total comprehensive income
Transactions with owners:
Dividends
Movement in own shares in share trusts
Share-based payments
Gain on release of shares in share trusts
Issue of share capital
Total transactions with owners
30 September 2022
Profit for the year
Total comprehensive income
Transactions with owners:
Dividends
Movement in own shares in share trusts
Share-based payments
Gain on release of shares in share trusts
Issue of share capital
Total transactions with owners
30 September 2023
The group reconciliation of net cash flow to movement in net debt, together with notes 1 to 31, form part of these financial statements.
Notes
Share capital
£’000
1,208
Share premium
account
£’000
23,484
Own shares in
share trusts
£’000
(4)
10
15, 26
24
10
15, 26
24
–
–
–
–
–
–
9
9
–
–
–
–
–
–
–
–
1,217
23,484
–
–
–
–
–
–
6
6
–
–
–
–
–
–
–
–
1,223
23,484
–
–
–
8
–
–
(9)
(1)
(5)
–
–
–
9
–
–
(6)
3
(2)
retained
earnings
£’000
17,456
4,101
4,101
Total equity
£’000
42,144
4,101
4,101
(4,834)
(4,834)
–
1,115
622
–
(3,097)
18,460
3,850
3,850
8
1,115
622
–
(3,089)
43,156
3,850
3,850
(4,802)
(4,802)
–
1,189
620
–
(2,993)
19,317
9
1,189
620
–
(2,984)
44,022
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
108
TreaTT plc Annual Report & Accounts 2023
Registered number: 01568937
aSSeTS
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investment in subsidiaries
Post-employment benefits
current assets
Inventories
Trade and other receivables
Current tax assets
Derivative financial instruments
Cash and bank balances
Total assets
lIaBIlITIeS
current liabilities
Bank overdrafts
Borrowings
Provisions
Trade and other payables
Lease liabilities
Derivative financial instruments
Current tax liabilities
Net current assets
GROUP AND PARENT COMPANY BALANCE SHEETS
as at 30 September 2023
Notes
Group
2023
£’000
12
13
14
15
27
17
18
23
19
20
20
21
22
14
23
2,752
71,526
538
–
3,723
78,539
62,396
32,969
300
8
809
96,482
175,021
–
(10,642)
(102)
(20,700)
(176)
(176)
(755)
(32,551)
63,931
2022
£’000
3,206
74,281
375
–
1,782
79,644
68,351
37,113
719
–
2,354
108,537
188,181
(6,174)
(15,861)
(397)
(22,903)
(105)
(666)
(223)
(46,329)
62,208
parent company
2023
£’000
2022
£’000
–
–
–
38,574
–
38,574
–
5,580
–
–
359
5,939
44,513
–
–
–
–
–
–
37,385
–
37,385
–
4,141
–
–
2,085
6,226
43,611
–
–
–
(491)
(455)
–
–
–
(491)
5,448
–
–
–
(455)
5,771
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
109
TreaTT plc Annual Report & Accounts 2023
GROUP AND PARENT COMPANY BALANCE SHEETS
as at 30 September 2023
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Total liabilities
Net assets
eQUITY
Share capital
Share premium account
Own shares in share trusts
Hedging reserve
Foreign exchange reserve
Retained earnings
Notes
20
14
16
24
25
Total equity attributable to owners of the parent company
The group reconciliation of net cash flow to movement in net debt, together with notes 1 to 31, form part of these financial statements.
The Parent Company reported a profit for the year of £3,850,000 (2022: £4,101,000).
The financial statements were approved by the Board of Directors and authorised for issue on 28 November 2023 and were signed on its behalf by:
Vijay Thakrar
Chair
Ryan Govender
Chief Financial Officer
Group
2023
£’000
–
(373)
(4,851)
(5,224)
(37,775)
137,246
1,223
23,484
(2)
(42)
7,463
105,120
137,246
2022
£’000
(2,342)
(291)
(5,369)
(8,002)
(54,331)
133,850
1,217
23,484
(5)
(311)
13,383
96,082
133,850
parent company
2023
£’000
2022
£’000
–
–
–
–
(491)
44,022
1,223
23,484
(2)
–
–
19,317
44,022
–
–
–
–
(455)
43,156
1,217
23,484
(5)
–
–
18,460
43,156
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
110
TreaTT plc Annual Report & Accounts 2023
GROUP AND PARENT COMPANY STATEMENTS OF CASH FLOWS
for the year ended 30 September 2023
cash flow from operating activities
Profit before taxation
adjusted for:
Depreciation of property, plant and equipment and right-of-use assets
Amortisation of intangible assets
Impairment charge on intangible assets
Loss/(gain) on disposal of property, plant and equipment
Net finance costs/(income) excluding post-employment benefit expense
Share-based payments
(Increase)/decrease in fair value of derivatives
Employer contributions to defined benefit pension scheme
Dividend income settled via intercompany account
Post-employment benefit (income)/expense
Operating cash flow before movements in working capital
Movements in working capital:
Decrease/(increase) in inventories
Decrease/(increase) in receivables
(Decrease)/increase in payables
cash generated from/(used in) operations
Taxation (paid)/received
Net cash generated from/(used in) operating activities
Notes
13, 14
12
12
13
7
26
27
27
Group
2023
£’000
13,544
4,277
399
228
241
1,087
1,222
(230)
(450)
–
(110)
20,208
2,507
3,004
(2,054)
23,665
(2,174)
21,491
2022
£’000
16,179
2,476
215
–
(3,324)
382
1,039
61
(450)
–
135
16,713
(14,396)
(8,502)
4,355
(1,830)
443
(1,387)
parent company
2023
£’000
2022
£’000
3,850
4,102
–
–
–
–
–
–
–
–
(1,541)
–
2,309
–
(21)
35
2,323
–
2,323
–
–
–
–
(16)
–
–
–
–
–
4,086
–
–
3
4,089
–
4,089
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
111
TreaTT plc Annual Report & Accounts 2023
GROUP AND PARENT COMPANY STATEMENTS OF CASH FLOWS CONTINUED
for the year ended 30 September 2023
cash flow from investing activities
Proceeds on disposal of property, plant and equipment
Decrease/(increase) in intercompany loan balance
Acquisition of shares in subsidiaries
Purchase of property, plant and equipment
Purchase of intangible assets
Interest received
Net cash (used in)/generated from investing activities
cash flow from financing activities
Repayment of borrowings and loans
Proceeds from bank borrowings
Repayment of lease liabilities
Interest paid
Dividends paid
Proceeds on issue of shares
Net sale of own shares by share trusts
Net cash (used in)/generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of foreign exchange rates
Movement in cash and cash equivalents in the year
Cash and cash equivalents/(overdrafts) at beginning of year
cash and cash equivalents/(overdrafts) at end of year
cash and cash equivalents/(overdrafts) comprise:
Cash and bank balances
Bank overdrafts
Notes
Group
2023
£’000
15
12
7
7
10
24
19
20
1,557
–
–
(5,507)
(207)
2
(4,155)
(17,737)
10,642
(161)
(1,080)
(4,802)
6
623
(12,509)
4,827
(198)
4,629
(3,820)
809
809
–
809
2022
£’000
5,597
–
–
(11,849)
(925)
8
(7,169)
(360)
9,412
(80)
(390)
(4,834)
9
621
4,378
(4,178)
111
(4,067)
247
(3,820)
2,354
(6,174)
(3,820)
parent company
2023
£’000
–
124
–
–
–
–
2022
£’000
–
(2,925)
(81)
–
–
–
124
(3,006)
–
–
–
–
–
–
–
–
(4,802)
(4,834)
6
623
(4,173)
(1,726)
–
(1,726)
2,085
359
359
–
359
9
621
(4,204)
(3,121)
–
(3,121)
5,206
2,085
2,085
–
2,085
The group reconciliation of net cash flow to movement in net debt, together with notes 1 to 31, form part of these financial statements.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
112
TreaTT plc Annual Report & Accounts 2023
GROUP RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 30 September 2023
The statement of reconciliation of net cash flow to movement in net debt does not form part of the primary statements.
Movement in cash and cash equivalents in the year
Repayment of borrowings and loans
Proceeds from bank borrowings
(Increase)/reduction in lease liabilities
cash inflow/(outflow) from changes in net debt in the year
Effect of foreign exchange rates
Movement in net debt in the year
Net debt at beginning of year
Net debt at end of year
Analysis of movement in net debt during the year:
Cash and bank balances
Bank overdrafts
cash and cash equivalents/(overdrafts)
Bank borrowings and term loan
Lease liabilities
Net debt
Cash and bank balances
Bank overdrafts
cash and cash equivalents/(overdrafts)
Bank borrowings and term loan
Lease liabilities
Net debt
2023
£’000
4,629
17,737
(10,642)
(153)
11,571
466
12,037
(22,419)
(10,382)
2022
£’000
(4,067)
360
(9,412)
657
(12,462)
(843)
(13,305)
(9,114)
(22,419)
at 1 October
2022
£’000
2,354
(6,174)
(3,820)
(18,203)
(396)
(22,419)
cash flow
£’000
(1,347)
6,174
4,827
7,095
161
12,083
at 1 October
2021
£’000
7,260
(7,013)
247
(8,308)
(1,053)
(9,114)
Non-cash
movements
£’000
Foreign exchange
movements
£’000
at 30 September
2023
£’000
–
–
–
–
(317)
(317)
cash flow
£’000
(5,017)
839
(4,178)
(9,052)
666
(12,564)
(198)
–
(198)
466
3
271
809
–
809
(10,642)
(549)
(10,382)
Foreign exchange
movements
£’000
at 30 September
2022
£’000
111
–
111
(843)
(9)
(741)
2,354
(6,174)
(3,820)
(18,203)
(396)
(22,419)
The group reconciliation of net cash flow to movement in net debt, together with notes 1 to 31, form part of these financial statements.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
113
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2023
1. GENERAL INFORMATION
Treatt plc (the Parent Company) is a public limited company incorporated in the United Kingdom and is
domiciled in England and Wales. The Parent Company’s shares are traded on the London Stock Exchange.
The address of the registered office is included within the Parent Company Information section on
page 154.
2. ADOPTION OF NEW AND AMENDED 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 effective for the current reporting
period have had any material effect on the financial 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 effective
There are no IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a
material impact on the Group or Parent Company.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies which have been used in the preparation of these financial statements
are set out below.
Accounting convention
The Group is required to prepare its annual consolidated financial statements in accordance with UK-
adopted international accounting standards. The Parent Company has also prepared its own financial
statements in accordance with UK-adopted international accounting standards. The financial 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 financial statements.
The financial statements are prepared in Sterling which is the functional currency of the Parent Company
and Group and figures are presented to the nearest thousand, unless stated otherwise.
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 financial and operating policies of an investee entity so as to obtain benefits
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
financial statements based on the expectation that the Group has adequate resources to continue as a
going concern for a period of twelve months from the date these financial statements are approved.
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 60 to 65, most significantly
severe business interruption like that which was experienced during the pandemic, or that could arise
through the impact of climate change or through global conflict.
The Group successfully refinanced all of its banking facilities during the year, agreeing a new £25.0m
asset-based lending facility with HSBC in the UK and extending the existing revolving credit facility with
Bank of America in the US to $25.0m. Both facilities are for a minimum term of three years and contain
pre-agreed accordion elements of £10.0m and $10.0m respectively, these accordions are disregarded for
the purposes of the going concern and viability assessment. At the year-end date, the Group had net debt
of £10.4m and headroom on facilities of £35.6m.
In assessing the Group’s prospects and resilience, the Directors have done so with reference to its
current financial position and prospects, its credit facilities, its recent and historical financial performance,
and forecasts.
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 both separately and
simultaneously. These assumptions are those that would arise from the aforementioned uncertainties and
that would adversely impact cash generation and profitability. Using these assumptions, Group headroom
and covenant compliance have been assessed throughout the going concern (twelve-month) and viability
(three-year) periods.
The modelling indicated that the Group would retain sufficient headroom on total facilities and comply
with its banking covenants throughout the tested periods. In the most adverse scenario, where all risks
are stressed simultaneously by 10% or more, the Group’s subsidiary, R C Treatt & Co Ltd, would breach
its banking facility limit in October 2025, but in that event the Group would act swiftly to activate the
mitigations described overleaf, or recapitalise the company using cash elsewhere in the business.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
114
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
3. SIGNIFICANT ACCOUNTING POLICIES continued
Going concern continued
A further ‘reverse stress test’ scenario was modelled to find a sustained reduction in revenue that would
give rise to a breach of the Group’s covenant conditions and the Group’s headroom on facilities within the
viability period. This scenario was then stress-tested further by overlaying the adverse impact of a decline
in profit margins.
Under the reverse-engineered scenario, it was determined that a continuous decline in sales of greater
than 36.0% per annum, or 29.0% per annum alongside a 400bps decline in margin for two consecutive
years, with no mitigating measures put in place, would result in a breach of the financial covenants in
Treatt USA Inc and a breach of R C Treatt’s facility limit by around October 2025, followed by a breach
of overall Group facility limits in October 2026. 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 operating cost savings, reduction in capital expenditure, and delaying or
cancelling future dividend payments to avoid a breach of its banking limits or covenants.
Having considered the range of stress-test scenarios and the Group’s proven ability to adapt to and manage
adversity, the Directors have not identified any material uncertainties which would affect the Group’s ability
to continue as a going concern for a period of at least twelve months from the date this report is approved.
Accordingly, they continue to adopt the going concern basis of accounting in preparing these financial
statements.
Presentation of financial statements
The primary statements within the financial 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 identifiable 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 financial 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’.
Effect 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 differences 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 Effects of Changes in Foreign Exchange Rates’, these cumulative translation differences 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 differences 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 specific development is recognised as an asset only if all of the following
conditions are met:
• An asset is created that can be identified.
•
It is probable that the asset created will generate future economic benefits.
• 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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
115
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
3. SIGNIFICANT ACCOUNTING POLICIES continued
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 twelve 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.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit 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 off, 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 differences between the carrying amount
of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference 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 affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries,
except where the Group is able to control the reversal of the temporary difference and it is probable that
the temporary difference 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
differences 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 off, 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 classified as those which are separately identified 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 final 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 defined by IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’.
Consequently, final dividends are only recognised as a liability once formally approved at the Annual
General Meeting and interim dividends are not recognised until paid.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Cash flow
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 benefits associated with the assets will flow 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 off 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:
• Plant and machinery:
50 years
4–15 years
• Fixtures, fittings and equipment: 4–15 years
• Laboratory equipment:
5 years
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
116
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
3. SIGNIFICANT ACCOUNTING POLICIES continued
Property, plant and equipment continued
Property, plant and equipment is derecognised on disposal or where no future economic benefits 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 off the cost of the asset, less estimated residual value,
as follows:
• Software:
4–12 years
• Development costs: 10 years
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 flow 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 benefits from a contract are lower than
the unavoidable costs of meeting the contract’s obligations. This arises when fixed-price contracts become
loss-making as a result of raw material price increases or market pressure on selling prices.
Financial instruments
Financial assets and financial 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 classified 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 classification depends on both the nature of contractual cash flows due
from the instrument, and the business model in which it is expected the cash flows will be realised.
Trade receivables
The Group generally holds trade receivables with the objective to collect the contractual cash flows, and
so it measures them initially at fair value then subsequently at amortised cost using the effective 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 classified as ‘held to collect
and sell’ and held at fair value with changes recognised in other comprehensive income. The Group has
adopted the simplified 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
effective 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 significantly since initial recognition, twelve-month
ECLs are recognised. ECLs measured over the lifetime of the financial asset are only recognised where
it is determined that the credit risk has increased significantly.
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 flow statement.
Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
117
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified 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 effective 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 financial instruments
The Group’s activities expose it to both the financial 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
financial instruments for speculative purposes. The use of financial 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.
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 effective in offsetting changes in fair values or cash flows of the hedged item.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised,
or no longer qualifies 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 reclassified to profit and loss as a reclassification
adjustment through reserves. Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as they arise.
Cash flow hedges
Changes in the fair value of derivative financial instruments that are designated as effective as cash flow
hedging instruments are initially recognised directly in equity. Where the hedged item is cash flows 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 affect net profit or loss. Any ineffective portion is
recognised immediately in the income statement as other gains and losses. If the cash flow hedge of a firm
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 defined benefit scheme through
an independently administered pension scheme.
For defined benefit retirement plans, the cost of providing benefits 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 benefits obligation or surplus recognised in the balance sheet
represents the present value of the defined benefit 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 Benefits’, the asset or liability in the defined benefit pension scheme
is recognised as an asset or liability of the Group under non-current assets or liabilities under the heading
‘post-employment benefits’. The deferred tax in respect of ‘post-employment benefits’ 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 reflected in the income
statement for the period, in place of the actual cash contribution made. All experience gains or losses on
the assets and liabilities of the scheme, together with the effect of changes in assumptions are reflected as
a gain or loss in the Statement of Comprehensive Income.
The Group also operates a number of defined 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 benefit trust and share incentive plan trust
Shares held by the Treatt Employee Benefit Trust (EBT) for the purpose of fulfilling 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 reflects the substance of the entity’s control
of the trust.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
118
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
3. SIGNIFICANT ACCOUNTING POLICIES continued
Share options, the employee benefit trust and share incentive plan trust continued
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 fulfilling obligations
under the SIP. The treatment of the SIP in the Group and Parent financial 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 financial 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 effect of non-market-based vesting conditions. This expense, which is in relation to share option
schemes for staff 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 effect of non market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects
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 profit 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 financial 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.
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 definition, 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 financial statements.
Key sources of estimation uncertainty
The key sources of estimation uncertainty with a significant risk of causing a material adjustment to assets
and liabilities in the next financial year include the following:
Pensions
The choice of discount rate, inflation rate and life expectancy basis could materially affect the level of
surpluses and deficits in the defined benefit 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 inflation 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 defined benefit 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.
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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
119
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
3. SIGNIFICANT ACCOUNTING POLICIES continued
Critical judgements
In the course of preparing these financial 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 effect on the amounts recognised in the financial 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 Benefit 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 beneficially held on behalf of
employees have been waived.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash
flow hedging instruments related to hedged transactions that have not yet occurred.
Foreign exchange reserve
The foreign exchange reserve records the cumulative exchange differences arising from the translation of
the financial statements of overseas subsidiaries.
4. SEGMENTAL INFORMATION
Group
Business segments
IFRS 8 requires operating segments to be identified on the basis of internal financial information reported
to the Chief Operating Decision Maker (CODM). The Group’s CODM has been identified 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 profit 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, flavour, fragrance and consumer product industries with
manufacturing sites in the UK and the US. Many of the Group’s activities, including sales, manufacturing,
supply chain, technical, IT and finance, 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
United Kingdom
Rest of Europe
The Americas
Rest of the World
– Germany
– Ireland
– Other
– USA
– Other
– China
– Other
2023
£’000
8,039
5,937
14,653
13,006
61,407
12,549
9,525
22,281
2022
£’000
9,777
7,907
11,527
14,596
53,731
12,919
7,901
21,827
147,397
140,185
Retained earnings
Retained earnings comprises the Group’s cumulative annual profits and losses, actuarial gains and losses
on the defined benefit pension scheme and dividend payments, combined with the employee share option
reserve which represents the equity component of share-based payment arrangements.
All Group revenue is in respect of the sale of goods, other than property rental income of £nil
(2022: £1,000). No country included within ‘Other’ contributes more than 5% of the Group’s total revenue.
The Group revenue from the largest customer was £15,472,000 (2022: £15,226,000).
Non-current assets by geographical location, excluding post-employment benefit surplus, were as follows:
Non-current assets by destination
United Kingdom
United States
China
2023
£’000
44,800
29,908
108
74,816
2022
£’000
44,914
32,910
38
77,862
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
120 TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
6. EMPLOYEES
Number of employees
During the year the average number of staff employed by the Group, including Directors, was as follows:
Group
Technical and production
Administration and sales
2023
Number
2022
Number
184
217
401
208
233
441
The total number of staff employed by the Group at the year-end date is 365 (2022: 425), no staff were
employed by the Parent Company in the current or prior year. During the year, the Directors shown on
pages 68 to 69 were employed by R C Treatt & Co Limited.
Employment costs
The following costs were incurred in respect of the above:
Group
Wages and salaries
Social security costs
Pension costs (see note 27)
Share-based payments (see note 26)
2023
£’000
20,305
1,850
1,237
1,222
24,614
2022
£’000
19,733
1,683
1,206
1,039
23,661
The value of other short-term non-monetary benefits was £1,498,000 (2022: £1,545,000).
5. OPERATING PROFIT FOR THE YEAR
Operating profit1 for the year is stated after charging/(crediting):
Group
Depreciation of property, plant and equipment and right-of-use assets
Amortisation of intangible assets2
Impairment of intangible assets
Loss on disposal of property, plant and equipment
Research and development costs
Research and development tax credits
Net foreign exchange loss/(gain)3
Cost of inventories recognised as an expense4
Write down of inventories recognised as an expense
Shipping costs
IT and telephony costs
Insurance costs
Energy and utility costs
2023
£’000
4,277
399
228
137
1,742
–
341
87,411
2,230
2,503
1,110
1,450
1,416
2022
£’000
2,476
215
–
–
2,338
(208)
(1)
84,469
2,295
3,362
1,174
1,061
1,217
1 Figures refer to operating profit excluding exceptional items, which is calculated as profit before exceptional items, net finance
costs and taxation.
2 Included in administrative expenses.
3 Excludes foreign exchange gains or losses on financial instruments disclosed in note 23.
4 Included in cost of sales.
The analysis of auditor’s remuneration is as follows:
Fees payable to the parent company’s auditors and their associates for
the audit of:
– the Parent Company and Group accounts
– the Group’s subsidiaries pursuant to legislation
Total audit fees
Fees payable to the parent company’s auditors and their associates for
other services to the Group:
– other assurance services
Total non-audit fees
2023
£’000
2022
£’000
85
198
283
16
16
73
164
237
14
14
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
121
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
6. EMPLOYEES continued
Directors
During the year, the aggregate emoluments in respect of the Executive and Non-executive Directors was
as follows:
Group
Directors in aggregate
Emoluments in respect of qualifying services
Fees paid to Non-executive Directors in respect of qualifying services
Taxable benefits in respect of qualifying services
Share-based payment expense in respect of qualifying services
Pension contributions to money purchase schemes
2023
£’000
2022
£’000
950
378
31
252
55
722
417
32
351
52
1,666
1,574
The share based payments expense in respect of qualifying services differs to the gains made on the
vesting of share options as disclosed in the Directors' Remuneration Report.
Further information on Directors’ emoluments and share options are set out on pages 82 to 93.
7. FINANCE INCOME AND COSTS
Group
Finance income
Other interest received
Post-employment benefit income (see note 27)
Finance costs
Bank interest paid
Other bank finance costs
Post-employment benefit expense (see note 27)
Lease liabilities finance expense (see note 14)
2023
£’000
2022
£’000
2
110
112
757
323
–
9
1,089
8
–
8
189
187
135
14
525
8. EXCEPTIONAL ITEMS
The exceptional items referred to in the income statement can be categorised as follows:
Group
UK relocation project:
Relocation expenses
Less: tax effect of relocation expenses
restructuring costs:
Restructuring costs
Less: tax effect of restructuring costs
Disposal of Northern Way premises:
Gain on disposal of land and buildings
Less: tax effect of disposal
2023
£’000
2022
£’000
(1,145)
205
(2,655)
598
–
–
(2,997)
(1,800)
317
(601)
114
3,324
–
1,354
The exceptional items all relate to non-recurring costs which are considered material and discrete in
nature; therefore the Group considers them exceptional in order to provide a more meaningful view of
the Group’s underlying business performance.
Relocation expenses relate to one-off costs incurred in connection with the relocation of the Group’s
UK operations that do not fall to be capitalised. These costs arose in relation to the decommissioning of
equipment and site preparation ahead of the UK business formally exiting the Northern Way premises
in August 2023, together with costs associated with the final stages of manufacturing fit-out at Skyliner
Way premises. Included within this line is a loss on the disposal of property, plant and equipment of
£104,000 that did not transition to Skyliner Way.
Restructuring costs principally comprise redundancy and consulting costs relating to the closure of
distillation operations at the Northern Way premises and the creation of an enhanced global leadership
structure, which was communicated to the business in August 2023. These costs consist of contractual
employment and termination payments for those employees impacted. Amounts which are contractually
due under employees’ existing terms and conditions are considered to be fully allowable for tax purposes.
During the financial year, payments totalling £887,000 had been made in respect of the restructuring costs,
with the cash flow impact of the remaining costs expected to be settled in the following financial year.
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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
122
TreaTT plc Annual Report & Accounts 2023
9. TAXATION
Analysis of tax charge in income statement
Group
current tax:
UK corporation tax on profits for the year
Adjustments to UK tax in respect of previous periods
Overseas corporation tax on profits for the year
Adjustments to overseas tax in respect of previous periods
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Effect of change of tax rate on opening deferred tax
Adjustments in respect of previous periods
Total deferred tax (see note 16)
Tax on profit on ordinary activities
Analysis of tax charge in other comprehensive income
Group
current tax:
Foreign currency translation differences
Total current tax
Deferred tax:
Cash flow hedges
Foreign currency translation differences
Defined benefit pension scheme
Total deferred tax
Total tax expense recognised in other comprehensive income
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
Analysis of tax (credit)/charge in equity
2023
£’000
2022
£’000
Group
current tax:
Share-based payments
Deferred tax:
Share-based payments
Total tax (credit)/charge recognised in equity
2023
£’000
2022
£’000
(28)
(25)
(53)
(20)
444
424
(32)
(41)
3,577
(365)
3,139
(141)
(29)
(367)
(537)
153
(231)
2,069
(52)
1,939
726
(45)
244
925
Factors affecting tax charge for the year
The tax assessed for the year is different from that calculated at the standard rate of corporation tax in the
UK applicable to the Group of 22.0% (2022: 19.0%). The differences are explained below:
Group
2023
£’000
2022
£’000
profit before tax multiplied by standard rate of UK corporation tax at 22.0%
(2022: 19.0%)
2,980
3,074
2,602
2,864
effects of:
2023
£’000
2022
£’000
33
33
–
(301)
345
44
77
(102)
(102)
(4)
–
2,068
2,064
1,962
Expenses not deductible in determining taxable profit
Income not taxable in determining taxable profit
Research and development tax credits
Difference in tax rates on overseas earnings
Adjustments to tax charge in respect of prior years
Effect of change of tax rate on opening deferred tax
Deferred tax not recognised
Total tax charge for the year
335
–
(20)
49
(732)
(47)
37
268
(694)
(243)
678
(39)
(38)
(142)
2,602
2,864
From 1 April 2023, the main rate of corporation tax increased from 19% to 25%. The blended rate
applicable to the Group's UK operations is 22.0%. The Group’s effective UK corporation tax rate for
the year was 13.2% (2022: 17.7%). The effective tax rate of US-based earnings is 19.4% (2022: 21.5%).
The adjustments in respect of prior years relate to the finalisation of previous year’s tax computations.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
123
TreaTT plc Annual Report & Accounts 2023
10. DIVIDENDS
Equity dividends on ordinary shares
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
The number of shares used to calculate earnings per share (EPS) have been derived as follows:
Dividend per share for years ended 30 September
Group
parent company and Group
Interim dividend
Final dividend
2023
pence
2.55p3
5.46p4
8.01p
2022
pence
2.50p2
5.35p3
7.85p
2021
pence
2.00p1
5.50p2
7.50p
2023
£’000
1,552
3,250
4,802
2022
£’000
1,512
3,322
4,834
1 Accounted for in the year ended 30 September 2021.
2 Accounted for in the year ended 30 September 2022.
3 Accounted for in the year ended 30 September 2023.
4 The proposed final dividend for the year ended 30 September 2023 of 5.46p will be voted on at the Annual General Meeting
on 25 January 2024 and will therefore be accounted for in the financial statements for the year ending 30 September 2024.
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 Benefit Trust (EBT) as these do not rank for dividend.
Group
profit after taxation attributable to owners of the parent company (£’000)
Weighted average number of ordinary shares in issue (No: ‘000)
Basic earnings per share (pence)
2023
10,942
60,762
18.01p
2022
13,315
60,400
22.04p
Weighted average number of shares
Weighted average number of shares held in the EBT
Weighted average number of shares used for calculating basic epS
Executive share option schemes
All-employee share options
Weighted average number of shares used for calculating diluted epS
Diluted earnings per share (pence)
Group
Profit after taxation attributable to owners of the Parent Company
Adjusted for:
Exceptional items – restructuring costs (see note 8)
Exceptional items – relocation expenses (see note 8)
Exceptional items – gain on disposal of land and buildings (see note 8)
Taxation thereon
adjusted earnings
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 effect of all dilutive potential ordinary shares.
adjusted basic earnings per share (pence)
adjusted diluted earnings per share (pence)
Adjusted earnings per share
Adjusted earnings per share measures are calculated based on profits for the year attributable to owners
of the Parent Company before exceptional items as follows:
2023
2022
No (‘000)
No (‘000)
60,916
(154)
60,762
301
45
61,108
17.91p
60,578
(178)
60,400
487
148
61,035
21.82p
2023
£’000
10,942
2,655
1,145
–
(803)
13,939
22.94p
22.81p
2022
£’000
13,315
601
1,800
(3,324)
(431)
11,961
19.80p
19.60p
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
124
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
12. INTANGIBLE ASSETS
Group
cost
1 October 2021
Additions
Disposals
30 September 2022
Exchange adjustment
Additions
Disposals
30 September 2023
amortisation and impairment
1 October 2021
Exchange adjustment
Charge for year
Disposals
30 September 2022
Exchange adjustment
Charge for year
Disposals
Impairment charge
30 September 2023
Net book value
30 September 2023
30 September 2022
Development
costs
£’000
625
86
278
–
989
(43)
69
–
Software
licences
£’000
2,067
3
647
(43)
Total
£’000
2,692
89
925
(43)
2,674
3,663
(1)
138
(26)
(44)
207
(26)
1,015
2,785
3,800
42
15
44
–
101
(8)
46
–
228
367
648
888
226
2
171
(43)
356
(2)
353
(26)
–
681
2,104
2,318
268
17
215
(43)
457
(10)
399
(26)
228
1,048
2,752
3,206
Included in intangible assets are software licences in the course of construction totalling £nil (2022: £53,000)
and included within development costs are ongoing projects totalling £329,000 (2022: £488,000) which
are not yet subject to amortisation. Included within software additions is £nil (2022: £8,000) of interest
payments capitalised in accordance with IAS 23, ‘Borrowing Costs’.
Impairment charges
The Group reviews development assets under construction for impairment indicators annually, and
when testing is required, the recoverable amount of the assets are assessed. During the year, the Group
recognised a £228,000 impairment charge against a product development asset on the basis that any
future return was uncertain due to a re-evaluation of the business strategy.
13. PROPERTY, PLANT AND EQUIPMENT
land &
buildings
£’000
plant &
machinery
£’000
Fixtures, fittings
& equipment
£’000
laboratory
equipment
£’000
Group
cost
1 October 2021
Exchange adjustment
Additions
Disposals
30 September 2022
Exchange adjustment
Additions
Disposals
37,464
2,798
28
(2,611)
37,679
(1,384)
279
–
27,689
3,666
10,486
(922)
40,919
(1,925)
3,562
(2,889)
30 September 2023
36,574
39,667
Depreciation
1 October 2021
Exchange adjustment
Charge for year
Disposals
30 September 2022
Exchange adjustment
Charge for year
Disposals
30 September 2023
Net book value
30 September 2023
30 September 2022
2,334
347
334
(840)
2,175
(176)
582
–
2,581
6,609
1,140
1,266
(922)
8,093
(575)
2,447
(1,103)
8,862
33,993
35,504
30,805
32,826
4,987
436
1,005
(606)
5,822
(225)
1,853
(284)
7,166
1,540
129
560
(606))
1,623
(67)
862
(273)
2,145
5,021
4,199
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
Total
£’000
71,851
7,026
12,010
(4,243)
86,644
(3,600)
5,943
(3,267)
1,711
126
491
(104)
2,224
(66)
249
(94)
2,313
85,720
329
34
213
(104)
472
(19)
247
(94)
606
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
10,812
1,650
2,373
(2,472)
12,363
(837)
4,138
(1,470)
14,194
1,707
1,752
71,526
74,281
125
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
13. PROPERTY, PLANT AND EQUIPMENT continued
Included within freehold land and buildings is £6,361,000 (2022: £6,597,000) of land which is
not depreciated.
Included in property, plant and equipment are land and buildings assets in the course of construction
totalling £nil (2022: £7,363,000), plant and machinery assets in the course of construction of
£5,449,000 (2022: £21,422,000), fixtures, fittings and equipment in the course of construction totalling
£215,000 (2022: £827,000) and laboratory equipment in the course of construction totalling £145,000
(2022: £225,000) which are not yet being depreciated.
Included within land and buildings additions is £nil (2022: £1,000), within plant and machinery additions
is £277,000 (2022: £273,000), within fixtures and fittings is £26,000 (2022: £5,000) and laboratory
equipment £4,000 (2022: £1,000) of interest payments capitalised in accordance with IAS 23,
‘Borrowing Costs’.
capital commitments
Contracted but not provided for
2023
£’000
802
2022
£’000
4,398
Lease liabilities
Group
lease liabilities
At start of year
Exchange adjustment
Additions
Lease liabilities finance expense
Disposals
Repayments of lease liabilities
Balance at end of year
Of which:
Current lease liabilities
Non-current lease liabilities
2023
£’000
2022
£’000
396
(3)
308
9
–
(161)
549
176
373
1,053
9
36
14
(622)
(94)
396
105
291
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 twelve-month duration or those of low value.
Right-of-use assets
Group
Net carrying value
1 October 2021
Exchange adjustment
Additions
Depreciation charge
Disposals
30 September 2022
Exchange adjustment
Additions
Depreciation charge
30 September 2023
land & buildings
£’000
plant & machinery
£’000
1,129
–
–
(3)
(1,126)
–
–
–
–
–
427
10
37
(99)
–
375
(6)
308
(139)
538
Total
£’000
1,556
10
37
(102)
(1,126)
375
(6)
308
(139)
538
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 3.4% (2022: 3.0%).
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.
The maturity analysis of the undiscounted contractual lease commitments is shown below:
Group
Maturity analysis – undiscounted lease payments
Within one year
In one to two years
In two to five years
In more than five years
2023
£’000
2022
£’000
176
171
225
9
105
91
213
–
As part of the sale agreement for the sale of premises at Northern Way, the Group leased back a building
until August 2023 at which point the lease was terminated. The short-term exemption, as permitted by
IFRS 16, ‘Leases’ was applied from the outset. The income statement expense in respect of this short-term
lease was £95,000 (2022: £35,000).
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
126
TreaTT plc Annual Report & Accounts 2023
15. INVESTMENTS IN SUBSIDIARIES
parent company
Cost
1 October 2021
Capital contribution to subsidiaries
Acquisition of share capital in subsidiaries
30 September 2022
Capital contribution to subsidiaries
30 September 2023
parent company
Subsidiary:
R C Treatt & Co Limited – 100% (2022: 100%)
Treatt USA Inc – 100% (2022: 100%)
Treatt Trading (Shanghai) Company Limited 100% – (2022: 100%)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
£’000
36,189
1,115
81
37,385
1,189
38,574
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-off 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 applicable to the Group’s US subsidiary was 21.3% (2022: 21.5%).
A reconciliation of the net deferred tax liability is shown below:
2023
£’000
2022
£’000
28,761
9,372
441
38,574
27,790
9,154
441
37,385
Group
1 October 2021
Exchange differences
Credit/(charge) to
income statement:
For the year
In respect of prior period
For change in tax rate
Credit/(charge) to other
comprehensive income:
For the year
Credit to equity:
UK deferred tax
Overseas deferred tax
post-
employment
benefits
£’000
Fixed
assets
£’000
cash flow
hedge
£’000
Other and
share-based
payments
£’000
losses
£’000
Fixed
assets
£’000
1,702
(1,797)
–
–
69
–
818
–
– (2,768)
–
(661)
Other
temporary
differences
Total
£’000
£’000
593
108
(1,383)
(553)
(80)
(1,277)
–
–
(2,068)
–
(231)
–
–
–
–
–
–
4
–
(142)
1,609
(627)
(209)
(30)
–
–
(301)
17
–
–
–
–
47
–
–
(726)
(244)
45
–
(2)
– (2,064)
(143)
(444)
Subsidiary
Wholly-owned by Treatt plc:
R C Treatt & Co Limited
Treatt USA Inc
country of
incorporation Holding
principal activity
England1
100% Supply of flavour and fragrance ingredients
For the year
USA2
100% Supply of flavour and fragrance ingredients
1 October 2022
(446) (3,305)
73
345
1,626 (4,009)
347 (5,369)
Treatt Trading (Shanghai) Company Limited
China³
100% Supply of flavour and fragrance ingredients
Registered office 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
UK deferred tax liability
Overseas deferred tax liability
Deferred tax liabilities
2023
£’000
(1,647)
(3,204)
(4,851)
2022
£’000
(1,707)
(3,662)
(5,369)
Credit/(charge) to
income statement:
For the year
In respect of prior period
For change in tax rate
Credit/(charge) to other
comprehensive income:
For the year
Charge to equity:
For the year
(140)
(434)
(46)
(352)
1,122
(411)
402
–
–
(345)
–
74
–
–
–
–
–
–
–
200
(58)
–
–
39
–
–
–
151
29
–
–
141
367
29
339
(38)
(44)
–
(14)
25
30 September 2023
(931) (3,665)
27
232 2,690 (3,901)
697 (4,851)
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
127
TreaTT plc Annual Report & Accounts 2023
17. INVENTORIES
Group
Raw materials
Work in progress and intermediate products
Finished goods
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
2023
£’000
24,119
25,130
13,146
62,396
2022
£’000
30,784
22,347
15,220
68,351
The average credit period taken for trade receivables is as follows:
Group
Average debtor days
2023
82
2022
76
The Group recognises the lifetime expected credit losses (ECLs) based on the difference between the
contractual cash flows due and the cash flows 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 five accounting
years and adjusted to reflect 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 specific provisions. A specific provision for impairment is made when there is objective evidence of
impairment which is usually indicated by a significant delay in the expected cash flows or non-payment
from customers.
An impairment review has been undertaken at the balance sheet date to assess whether the carrying
amount of financial assets is deemed recoverable.
parent company
The amounts presented in the balance sheet are net of amounts that are individually determined to be
impaired as follows:
Group
Impairment provision
At start of year
Released in year
Provided in year
Foreign exchange
Balance at end of year
2023
£’000
2022
£’000
816
(728)
134
(6)
216
788
(628)
624
32
816
Inventories are stated net of provisions for impairment of £2,855,250 (2022: £3,602,000).
Gross inventory with a carrying value of £38,772,000 (2022: £40,810,000) has been pledged as security
in relation to all US borrowings, and gross inventory with a carrying value of £24,075,000 has been
pledged as security in relation to all UK borrowings under the new asset-based lending structure, as
detailed in note 20.
18. TRADE AND OTHER RECEIVABLES
current
Trade receivables1
Amounts owed by subsidiaries
Other receivables
Prepayments
Group
2023
£’000
31,114
–
306
1,549
32,969
2022
£’000
34,727
–
478
1,908
37,113
2023
£’000
–
5,503
77
–
5,580
2022
£’000
–
4,086
55
–
4,141
1 This includes £1,624,000 (2022: £9,000) of trade receivables which are classified under the business model of ‘held to collect
and sell’ and are measured at fair value with changes through other comprehensive income.
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 specific changes in circumstances.
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 five customers represent 30.7% (2022: 33.4%) 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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
128
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
18. TRADE AND OTHER RECEIVABLES continued
The ageing profile of impaired trade receivables is as follows:
20. BORROWINGS
Current
Group
Number of days past the due date:
1–30
31–60
Over 60
2023
£’000
2022
£’000
Group
–
–
216
127
–
689
UK bank overdrafts
UK asset-based lending facility
UK revolving credit facilities
US line of credit
US term loan
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 58. The currency exposure within trade receivables of the principal
foreign currencies, was as follows:
Group
US Dollar
Euro
Chinese Yuan
2023
£’000
23,326
2,848
317
2022
£’000
23,691
3,314
–
Non-current
Group
US term loan
Loans and borrowings
The term loan comprises the following:
Trade receivables with a carrying value of £14,214,000 (2022: £12,462,000) have been pledged as
security in relation to all US borrowings, and trade receivables with a carrying value of £16,569,000 have
been pledged as security in relation to all UK borrowings under the new asset-based lending structure, as
detailed in note 20.
Group
Treatt USA $6.5m term loan – US
2023
£’000
–
10,305
–
337
–
10,642
2022
£’000
6,174
–
13,000
2,034
827
22,035
2023
£’000
–
2022
£’000
2,342
2023
£’000
–
2022
£’000
3,169
19. CASH AND BANK BALANCES
Group and Parent Company
Cash and bank balances of £809,000 (2022: £2,354,000) 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 £359,000 (2022: £2,085,000). 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.
In the UK, the Group refinanced all its prior banking arrangements and now has access to a £25.0m,
three-year asset-based lending facility with HSBC, this arrangement allows the UK business to borrow
against the quality and quantity of its inventory and receivables. UK borrowings are secured by a legal
charge over the land and buildings at the UK Headquarters of Skyliner Way, and fixed and floating charges
over all other current and non-current assets of R C Treatt & Co Ltd.
In the US, the Group now has access to a $25.0m (2022: $10.0m) three-year line of credit with Bank of
America, funds from which were used to pay off the remaining balance of the seven-year $6.5m term loan,
which was secured by legal charge over US-based fixed assets. US borrowings are now secured by fixed
and floating charges over all current and non-current assets of Treatt USA Inc.
The net book value of property, plant and equipment secured by legal charge in respect of UK borrowings
is £21,285,000 (2022: £21,325,000), and the net book value of US assets specifically secured by legal
charge in respect of US borrowings is £nil (£32,850,000).
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
129
TreaTT plc Annual Report & Accounts 2023
20. BORROWINGS continued
Borrowings are repayable as follows:
Group
– in one year or less
– in more than one year but not more than two years
– in more than two years but not more than five years
– in more than five years
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
2023
£’000
10,642
–
–
–
2022
£’000
22,035
827
1,515
–
10,642
24,377
22. TRADE AND OTHER PAYABLES
current
Trade payables
Other taxes and social security costs
Accruals and other creditors
Group
2023
£’000
13,131
404
7,165
20,700
2022
£’000
17,565
411
4,927
22,903
parent company
2023
£’000
172
–
319
491
2022
£’000
27
(1)
429
455
Trade payables principally comprise amounts for trade purchases and ongoing 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 58. The currency exposure within trade payables of the principal foreign currencies,
was as follows:
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Further information on Group borrowing facilities is given in note 29, including a detailed analysis of cash
balances by currency.
Borrowing facilities
At 30 September 2023, the Group had total borrowing facilities of £45,490,000 (2022: £30,773,000)
of which £nil (2022: £13,437,000) expires in one year or less at the balance sheet date. At 30 September
2023 the Group had access to £35,658,000 (2022: £8,355,000) of financing facilities including its own
cash balances at that date.
21. PROVISIONS
Group
Onerous contract provision:
At start of year
Utilised in year
Additional provision in year
Foreign exchange
Balance at end of year
Group
US Dollar
Euro
2023
£’000
2022
£’000
Chinese Yuan
397
(342)
75
(28)
102
143
(138)
348
44
397
Onerous contract provisions relate to losses which are or were expected to materialise in the future on
fixed 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 financial year.
2023
£’000
10,134
687
227
2022
£’000
12,236
464
–
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
130 TreaTT plc Annual Report & Accounts 2023
23. DERIVATIVE FINANCIAL INSTRUMENTS
25. SHARE PREMIUM ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
2023
£’000
2022
£’000
parent company and Group
Group
Current – derivative financial assets
Derivative financial assets
Current – derivative financial liabilities
Derivative financial liabilities
The gains/(losses) on derivative financial instruments were as follows:
Group
Income statement:
Foreign exchange contracts
Other comprehensive income:
Foreign exchange contracts
8
8
(176)
(176)
–
–
(666)
(666)
2023
£’000
2022
£’000
386
269
Further details on the Group’s hedging policies and derivative financial instruments are disclosed in
note 29.
24. SHARE CAPITAL
parent company and Group –
called up, allotted and fully paid
At start of year
Issued in year
at end of year
2023
2022
£’000
Number
1,217
60,864,564
£’000
1,208
Number
60,411,933
6
265,025
9
452,631
1,223
61,129,589
1,217
60,864,564
The Parent Company has one class of ordinary shares with a nominal value of 2p each, which carry no
right to fixed income.
During the year the Parent Company issued 200,000 (2022: 400,000) ordinary shares to the Employee
Benefit Trust (EBT), and 65,025 (2022: 52,631) ordinary shares to the SIP Trust (SIP), at nominal value
of 2p per share, for the purpose of meeting obligations under employee share option schemes.
The number of shares held in the EBT at 30 September 2023 is 162,000 (2022: 270,000) and the number
of shares held in the SIP is 380,000 (2022: 437,000).
2023
£’000
23,484
Balance at 1 October 2022 and 30 September 2023
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 fixed 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 (SIP) in the UK, and operates an
equivalent scheme for its US employees.
(2,336)
The share-based payments charge was as follows:
(23)
Group
Share option schemes – see (a) below
Share incentive plans – see (b) below
Effect of movement in foreign exchange rates
2023
£’000
816
373
1,189
33
1,222
2022
£’000
735
380
1,115
(76)
1,039
(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 Benefit Trust.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
131
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
26. SHARE-BASED PAYMENTS continued
(a) Share option schemes continued
The equity-settled options which existed during the year were as follows:
Number of share
options outstanding at
30 September 2023
Number
exercised
in year
exercise price
per share
UK SAYE¹ Scheme 2019
UK SAYE¹ Scheme 2020
UK SAYE¹ Scheme 2021
UK SAYE¹ Scheme 2022
UK SAYE¹ Scheme 2023
US ESPP2 Scheme 2022
US ESPP2 Scheme 2023
UK LTIP³ Scheme 2014
UK LTIP³ Scheme 2015
UK LTIP³ Scheme 2016
UK LTIP³ Scheme 2017
UK LTIP³ Scheme 2019
US LTIP³ Scheme 2019
UK LTIP³ Scheme 2020
US LTIP³ Scheme 2020
UK LTIP³ Scheme 2021
US LTIP³ Scheme 2021
UK LTIP³ Scheme 2022
US LTIP³ Scheme 2022
–
10,565
42,067
101,679
78,638
14,301
91,219
1,544
–
–
–
4,303
9,412
–
–
–
2,137
8,740
–
–
12,565
14,045
13,249
–
5.362
7,295
6,893
25,536
–
45,267
23,341
22,945
65,018
73,206
8,559
–
–
–
UK Executive⁴ Options 2019
49,212
56,223
UK Executive⁴ Options 2020
UK Executive⁴ Options 2021
UK Executive⁴ Options 2022
75,952
52,232
126,817
–
–
–
361.0p
409.0p
932.0p
610.0p
566.0p
634.0p
521.0p
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The fair value per option granted using the 'Black-Scholes' model, and the assumptions used in the
share-based payments calculations, are as follows:
Date option
exercisable
Sep 2022 – Feb 2023
Sep 2023 – Feb 2024
Sep 2024 – Feb 2025
Sep 2025 – Feb 2026
Sep 2026 – Feb 2027
July 2023
July 2024
all-employee share schemes:
Share price at date of grant
Contractual life
Expected life
Expected volatility
Risk-free interest rate
Dividend yield
Expected cancellations
Expected forfeitures
Jun 2017 – Jun 2024
Fair value per option at date of grant
2022
SaYe
2023
SaYe
US eSpp
2022
US eSpp
2023
762.5p
594.0p
758.0p
594.0p
3.5 years
3.5 years
1.0 years
1.0 years
3.1 years
3.1 years
1.0 years
1.0 years
46.8%
1.9%
1.1%
10.0%
25.0%
269.8p
47.9%
4.9%
1.1%
10.0%
25.0%
191.7p
42.7%
56.5%
1.9%
1.1%
10.0%
14.4%1
171.5p
4.9%
1.1%
10.0%
18.0%
191.7p
Jun 2018 – Jun 2025
Jun 2019 – Jun 2026
Jun 2020 – Jun 2027
Jun 2022 – Jun 2029
Jun 2022 – Feb 2023
Jun 2023 – Jun 2030
Jun 2023 – Feb 2024
Key-employee share schemes:
UK exec
2021
UK exec
2022
UK lTIp
20212
UK lTIp
2022
US lTIp
2022
Share price at date of grant
1,120.0p
660.0p
1,205.0p
660.0p
660.0p
Contractual life
Expected life
Expected volatility
10.0 years
10.0 years
10.0 years
10.0 years
3.2 years
3.0 years
3.2 years
3.2 years
3.2 years
3.2 years
44.2%
48.0%
52.4%
48.0%
48.0%
Jun 2024 – Jun 2031
Risk-free interest rate
Jun 2024 – Feb 2025
Dividend yield
Dec 2025 – Dec 2032
Jun 2025 – Feb 2026
Dec 2022 – Dec 2029
Dec 2023 – Dec 2030
Expected cancellations
Expected forfeitures
Feb 2025 – Feb 2032
1 Actual forfeiture experienced.
Dec 2025 – Dec 2032
2 Additional UK LTIP grants made to specific employees.
1.1%
0.7%
0.0%
3.4%
1.2%
0.0%
0.7%
0.6%
0.0%
100.0%
76.0%
67.0%
3.4%
1.2%
0.0%
48.6%
635.0p
3.4%
1.2%
0.0%
55.5%
635.0p
Fair value per option at date of grant
1,096.2p
635.0p
1,179.0p
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
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.
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 five
year benchmark gilts during the month in which a grant of options is made.
132
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
26. SHARE-BASED PAYMENTS continued
Details of movements in share options during the year were as follows:
Group
Outstanding at start of year
Granted during the year
Forfeited during the year
Exercised during the year
Lapsed during the year
Cancelled during the year
Outstanding at end of year
exercisable at end of year
2023
2022
Number
of options
Weighted average
exercise price
Number
of options
Weighted average
exercise price
780,841
360,017
(38,611)
(299,312)
(32,328)
(18,862)
751,745
89,850
£2.28
£1.38
£0.87
£1.56
£2.17
£7.90
£2.06
£1.03
982,449
207,436
(45,791)
(326,542)
(8,787)
(27,924)
780,841
80,429
£1.68
£3.92
£1.27
£1.22
£10.63
£4.59
£2.28
£0.64
Details of the movements in the SIP were as follows:
Group
Outstanding at start of year
Granted during the year
Vested during the year
Forfeited during the year
Released during the year
Number of free and matching shares
Number of nil cost rSUs
2023
142,290
51,859
2022
167,463
35,875
(67,954)
(52,638)
(4,335)
(16,110)
(7,832)
(578)
2023
25,556
15,128
(10,766)
(5,326)
(94)
2022
33,152
7,440
(10,962)
(4,074)
–
Outstanding at end of year
105,750
142,290
24,498
25,556
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.
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 5.5 years (2022: 4.4 years).
The weighted average actual market share price on the date of exercise for share options exercised during
the year was 626.7 pence (2022: 841.0 pence) and the weighted average fair value of options granted
during the year was 542.4 pence (2022: 392.0 pence).
27. POST-EMPLOYMENT BENEFITS
The Group operates a wholly-funded defined benefit 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 final salary pension
scheme became eligible for membership of a defined contribution pension plan with effect from
1 January 2013.
(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 twelve 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 £750
(2022: £700) of ‘Free Shares’, and US employees $1,000 (2022: $1,000) 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 (2022: 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.
Defined 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
Defined contribution schemes
Other pension costs
2023
£’000
1,233
4
1,237
2022
£’000
1,181
25
1,206
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
133
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
27. POST-EMPLOYMENT BENEFITS continued
Defined benefit pension scheme
The Group accounts for pensions in accordance with IAS 19, ‘Employee Benefits’.
The valuation used for IAS 19 disclosures in respect of the defined benefit 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.
• Member options: Certain benefit 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 benefits.
The financial assumptions used to calculate scheme liabilities and assets under IAS 19 are:
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 2023, 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.
Group
Discount rate
Rate of inflation (RPI)
Rate of inflation (CPI)
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
financial statements.
Rate of increase in pensions in payment –
CPI max 5%
Rate of increase in pensions in payment –
CPI max 3%
Rate of increase in pensions in payment –
CPI max 2.5%
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
benefit 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 deficit 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.
Inflation risk: A proportion of the benefits under the scheme are linked to inflation. Although the
scheme’s assets are expected to provide a good hedge against inflation over the long-term, movements
over the short-term could lead to deficits emerging.
• Mortality risk: In the event that members live longer than assumed a greater deficit will emerge in
the scheme.
Mortality table
Commutation allowance
Proportion married
(at retirement or earlier death)
GMP equalisation allowance
Rate of increase in salaries
Life expectancy for male aged 65
in 20 years’ time
Life expectancy for female aged 65
in 20 years’ time
Life expectancy for male aged 65 now
Life expectancy for female aged 65 now
2023
5.75%
3.40%
3.00%
2.90%
2.40%
2.15%
2022
5.50%
3.75%
3.35%
3.20%
2.60%
2.25%
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
20%
75%
20%
75%
0.5% of liability value
0.5% of liability value
N/a
23.7
26.1
22.3
24.7
N/A
23.6
26.0
22.3
24.6
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
134
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
27. POST-EMPLOYMENT BENEFITS continued
Effect of the scheme on future cash flows
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 deficit 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 deficit funding contributions of £450,000 (2022: £450,000). The weighted average duration of
the defined benefit obligation is approximately 13 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
changes in scheme assets
Balance at start of period
Interest on scheme assets
Employer contributions
Benefits paid
Remeasurement gains:
– Return/(loss) on plan assets (excluding amounts included in interest expense)
Balance at end of year
2023
£’000
2022
£’000
amount charged to finance costs
Group
Group
Scheme assets
Equities
Target return funds
Gilts
Bonds
Multi-asset credit
Other
Fair value of scheme assets
Present value of funded obligations (scheme liabilities)
Surplus in the scheme recognised in the balance sheet
Related deferred tax
Net pension surplus
changes in scheme liabilities
Balance at start of year
Interest cost
Benefits paid
Remeasurement losses:
– Experience loss on liabilities
– Actuarial gain arising from changes in financial assumptions
Balance at end of year
9,616
–
3,683
4,501
2,659
–
11,073
3,776
–
6,300
–
63
20,459
21,212
(16,736)
(19,430)
3,723
(931)
2,792
1,782
(446)
1,336
(19,430)
(30,618)
(1,007)
3,111
(621)
704
(325)
915
(548)
11,653
(16,736)
(19,430)
Interest on scheme assets
Interest on scheme liabilities
Net income/(expense) recognised in income statement
amount recognised in statement of comprehensive income
Gain/(loss) on scheme assets in excess of interest
Experience loss on liabilities
Gain from changes to financial assumptions
remeasurement gain recognised in statement of comprehensive income
actual return/(loss) on scheme assets
cumulative remeasurement gain recognised in statement of comprehensive income
The approximate effect of a change of assumptions on surplus values at 30 September 2023:
Reduce discount rate by 0.25% pa
Increase inflation and all related assumptions by 0.1% pa
Increase life expectancy by one year
reduce surplus
by: £’000
530
119
527
The above sensitivities are approximate and only show the likely effect 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.
2023
£’000
2022
£’000
21,212
23,812
1,117
450
(3,111)
486
450
(704)
791
20,459
(2,832)
21,212
2023
£’000
2022
£’000
1,117
(1,007)
110
791
(325)
915
1,381
1,908
1,483
486
(621)
(135)
(2,832)
(548)
11,653
8,273
(2,346)
102
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
135
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
28. CONTINGENT LIABILITIES
Parent Company
The Parent Company enters into financial guarantee contracts that guarantee the indebtedness of its
subsidiaries. The Parent Company has considered the requirements of IFRS 17, ‘Insurance Contracts’
which is mandatorily effective in the following financial year and made the election to account for such
arrangements under IFRS 9, ‘Financial Instruments’. Under this recognition principle, a financial guarantee
contract is initially measured at its fair value (the deemed consideration received under the arrangement)
and subsequently at the value of expected credit losses.
The Parent Company has guaranteed the borrowings, net of cash balances for Treatt USA Inc and RC
Treatt & Co Ltd. At the balance sheet date, the liabilities covered by this guarantee amounted to $202,000
(£166,000) (2022: $5,808,000 (£5,203,000)) and £10,193,000 (2022: £5,797,000) respectively.
Categories of financial instruments
In the following table those financial 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).
Expected credit losses of the Parent Company in respect of these arrangements have been assessed,
and it was determined that no liability is required to be recognised in respect of either agreement.
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 for the Group to borrow
locally in the countries in which it operates, and to borrow in the local reporting currency.
In the UK, the Group refinanced all its prior banking arrangements of c.£20.4m in June 2023 and now has
access to a £25.0m, three-year asset-based lending facility with HSBC, this arrangement allows the UK
business to borrow against its inventory and receivables. In the US, the Group now has access to a $25.0m
(2022: $10.0m) three-year line of credit facility with Bank of America, funds from which were used to
pay off the remaining $3.5m of capital on the seven-year $6.5m term loan. 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 58.
Financial assets
Measured at amortised cost:
Trade receivables1
Other receivables
Cash and cash equivalents
Amounts owed by subsidiaries
Derivative financial instruments measured at
fair value through other comprehensive income:
Trade receivables
Derivative financial instruments measured
at fair value through profit and loss:
Forward currency contracts (level 2)
Group
parent company
2023
£’000
2022
£’000
2023
£’000
2022
£’000
29,490
306
809
–
1,624
8
34,718
478
2,354
–
9
–
–
77
359
5,503
–
–
–
55
2,085
4,086
–
–
32,237
37,559
5,939
6,226
1 Trade receivables at amortised cost are shown net of lifetime expected credit losses.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
136
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
29. FINANCIAL INSTRUMENTS continued
Financial liabilities
Measured at amortised cost:
Trade payables
Other creditors
UK asset-based lending facility
UK revolving credit facilities
UK bank overdraft
US line of credit
US term loan
Lease liabilities
Amounts owed to subsidiaries
Derivative financial instruments measured
at fair value through profit and loss:
Forward currency contracts (level 2)
Group
parent company
2023
£’000
2022
£’000
2023
£’000
2022
£’000
13,131
7,165
10,305
–
–
337
–
549
–
176
31,663
17,565
4,927
–
13,000
6,174
2,034
3,169
396
–
666
47,931
172
319
–
–
–
–
–
–
–
–
491
27
429
–
–
–
–
–
–
–
–
456
Fair values of financial assets and liabilities
The estimated fair values of financial assets and liabilities is not considered to be significantly different
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 financial 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 financial instruments as the costs involved currently outweigh the risks they
seek to protect against. Speculative purchases of financial instruments are not made.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial 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 significant
concentrations of credit risk.
The carrying amount of financial assets recorded in the financial 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 flows and matching the maturity profiles of financial 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 sufficient 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 in the US are based on interest
cover and net debt to EBITDA ratio (calculated under IFRS) and in the UK, are based on operational
metrics linked to quality and quantity if inventory and receivables. 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 profile, are
given in note 20. The undiscounted expected maturity profile of the Group’s financial instrument liabilities
payable at year-end, including interest payments estimated using the prevailing floating rate at that date, is
as follows:
Group
Non-derivative financial instruments:
Trade payables
Other creditors
UK asset-based lending facility
US line of credit
Derivative financial instruments:
Forward currency contracts
Within
0 to 3 months
£’000
Within
3 to 12 months
£’000
Within
1 to 2 years
Within
2 to 5 years
£’000
£’000
Over
5 years
£’000
13,131
6,340
1,475
337
35
–
825
9,238
–
141
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Group trade payables and other creditors are not interest-bearing and are all due within one year.
All financial instruments held by the Parent Company fall due within twelve months, and contractual
interest due is £nil.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
137
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
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.
Interest rate sensitivity analysis has been performed on the floating rate financial liabilities to illustrate the
impact on Group profits 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 profit before taxation for the year ended 30 September 2023
would have decreased or increased as follows:
The Group has facilities denominated in Sterling and US Dollar, which attract floating rate interest. Interest
on the Group’s asset-based lending facility in the UK is charged at Bank of England base rate plus 1.80%
for borrowings in Sterling, and at 1.80% above a currency reference rate for borrowings in US Dollar
and Euro, such borrowings are minimal as the Group seeks to minimise these as part of its FX policy.
The Group’s US-based $25.0m line of credit are both charged at BSBY plus 1.55%.
The Group’s net cash/(debt) position by currency at year-end, is as follows:
Group
Bank balances and revolving credit facilities:
Sterling
US Dollars
Euro
Other
asset-based lending facility:
Sterling
US Dollars
Euro
Overdrafts:
Sterling
Term loans:
US Dollars
lease liabilities:
Sterling
Total net debt
Floating rate
financial assets/(liabilities)
Fixed rate
financial liabilities
2023
£’000
2022
£’000
2023
£’000
2022
£’000
416
(128)
1
183
(10,090)
(140)
(75)
–
–
–
(10,905)
(2,015)
1
93
–
–
–
(6,028)
(3,169)
–
(9,833)
(22,023)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(549)
(549)
(396)
(396)
Group
parent company
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Impact on profit before tax of 100bps interest
rate movement
(280)
(314)
–
–
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 effective and is accounted for using the principles of hedge accounting. Ineffectiveness
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 58.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
The gain/(loss) recognised in the Group's income statement and the Group statement of comprehensive
income on cash flow hedges of foreign currency receipts during the year, is as follows:
Group
Revenue
Other comprehensive income
2023
£’000
386
269
655
2022
£’000
(2,336)
(23)
(2,359)
The reconciliation of the hedging reserve per the statement of changes in equity is as follows:
138
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
29. FINANCIAL INSTRUMENTS continued
Foreign currency contract assets and liabilities are shown under the heading of ‘derivative financial
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 2023
US Dollars:
Forward contracts to sell USD within 1–3 months
Forward contracts to sell USD within 4–6 months
Forward contracts to sell USD within 6–9 months
Forward contracts to sell USD within 9–12 months
euros:
Forward contracts to sell EUR within 1–3 months
Forward contracts to sell EUR within 4–6 months
Forward contracts to sell EUR within 6–9 months
Forward contracts to sell EUR within 9–12 months
Group – as at 30 September 2022
US Dollars:
average
contract rate
Nominal
currency
‘000
contract
GBp
£’000
Fair value
loss/(gain)
£’000
1.2424
1.2493
1.2725
1.2770
1.1505
1.1426
1.1502
1.1506
$4,170
$1,700
$1,850
$900
€760
€600
€490
€350
3,356
1,361
1,454
705
661
525
426
304
(35)
(43)
(60)
(32)
4
2
2
2
(168)
average
contract rate
Nominal
currency
‘000
contract
GBp
£’000
Fair value
(loss)/gains
£’000
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
The derivative financial instruments for the foreign currency contracts and options described above are
all held as cash flow hedges and are classified 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.
Group
1 October 2021
Fair value movement on:
Cash flow hedges of probable future receipts
Transfer from hedging reserve to:
Profit and loss account
amounts recognised in other comprehensive income
Taxation relating to items above
30 September 2022
Fair value movement on:
Cash flow hedges of probable future receipts
Transfer from hedging reserve to:
Profit and loss account
amounts recognised in other comprehensive income
Taxation relating to items above
30 September 2023
(50)
(666)
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Hedging reserve
£’000
(292)
(2,359)
2,336
(23)
4
(311)
(117)
386
269
–
(42)
139
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
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
Salaries and other short-term employee benefits
Group – net foreign currency financial assets
US Dollar
Euro
Other
Fees paid to Non-executive Directors in respect of qualifying services
Employer’s social security costs
Pension contributions to money purchase schemes
Share-based payments charge in respect of qualifying services
2023
£’000
4,602
2,229
256
7,087
2022
£’000
6,953
2,774
148
9,875
2023
£’000
981
378
196
55
252
2022
£’000
754
417
160
52
351
1,862
1,734
A currency sensitivity analysis has been performed on the financial 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 profit for the year in the income statement would be a gain on net monetary
assets or liabilities as follows:
Group
Impact of 10% strengthening of US Dollar against Sterling
Impact of 10% strengthening of Euro against Sterling
2023
£’000
511
248
2022
£’000
773
308
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 reflect 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 here in
aggregate. Further information about the remuneration of individual Directors is provided in the Directors’
Remuneration Report on pages 82 to 93.
No Directors were active members of a defined benefit pension scheme as the scheme was closed to
future accrual with effect from 31 December 2012. Further details on Directors’ pensions are given in the
Directors’ Remuneration Report on pages 82 to 93.
Parent Company
Transactions with subsidiaries:
parent company
Interest received from:
R C Treatt & Co Limited
Dividends received from:
R C Treatt & Co Limited
Treatt USA Inc
Balances with subsidiaries:
parent company
amounts owed to parent company:
R C Treatt & Co Limited
2023
£’000
2022
£’000
–
16
1,541
3,261
2,005
2,829
2023
£’000
2022
£’000
5,503
4,086
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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
140 TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
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 financial information,
provide valuable and more meaningful information regarding the underlying financial and operating
performance of the Group to its stakeholders.
APMs referenced throughout the Annual Report which are not possible to easily derive from the financial
statements, are shown in the reconciliations below alongside their statutory equivalent measures.
ROACE – statutory measure
Group
Average capital employed2
Profit before taxation
rOace %
page reference
104
2023
£’000
150,429
13,544
9.0%
2022
£’000
135,486
16,179
11.9%
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 profitability of the business as a function of
how much capital has been invested in the business.
The derivation of this percentage, along with the statutory equivalent measure, is shown below:
ROACE – APM measure
Group
Total equity
Net debt
capital employed
Interim total equity1
Interim net debt1
Interim capital employed1
average capital employed2
adjusted operating profit3
rOace %
page reference
109
112
2023
£’000
137,246
10,382
147,628
129,685
17,704
147,389
2022
£’000
133,850
22,419
156,269
114,988
19,787
134,775
104
150,429
135,486
18,321
12.2%
15,773
11.6%
2021
£’000
106,299
9,114
115,413
95,369
4,468
99,837
101,981
21,346
20.9%
The previous five years’ measure of ROACE can be found in the Key Performance Indicators section,
on page 22.
Net debt to adjusted EBITDA
The net debt to adjusted EBITDA ratio is useful to ensure that the level of borrowings in the business can
be supported by the cash flow 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
Profit before taxation
Exceptional items
profit before taxation and exceptional items
Interest receivable
Interest payable
Depreciation of property, plant and equipment
and right-of-use assets
Amortisation of intangible assets
adjusted eBITDa
Net debt
Net debt to adjusted eBITDa
page reference
104
104
104
104
104
104
104
112
2023
£’000
13,544
3,800
17,344
(112)
1,089
4,277
399
22,997
10,382
0.45
2022
£’000
16,179
(923)
15,256
(8)
525
2,476
215
18,464
22,419
1.21
The previous five years’ measure of net debt to adjusted EBITDA can be found in the Key Performance
Indicators section, on page 22.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
141
TreaTT plc Annual Report & Accounts 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 30 September 2023
31. ALTERNATIVE PERFORMANCE MEASURES continued
Statutory measure
Group
profit before taxation
Interest receivable
Interest payable
Depreciation of property, plant and equipment
and right-of-use assets
Amortisation of intangible assets
eBITDa
Net debt
Net debt to eBITDa
page reference
104
104
104
104
104
112
2023
£’000
13,544
(112)
1,089
4,277
399
19,197
10,382
0.54
2022
£’000
16,179
(8)
525
2,476
215
19,387
22,419
1.16
1
Interim total equity and interim net debt for a given year are taken from the unaudited half year condensed financial 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 profit for ROACE purposes is operating profit before exceptional items as defined in the Group income statement.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
142
TreaTT plc Annual Report & Accounts 2023
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 25 January 2024 at 10.30am
at Treatt plc, Skyliner Way, Bury St Edmunds, Suffolk, IP32 7FR is set out below.
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
30 September 2023.
Explanatory note
Under the Companies Act 2006 (the ‘Act’) the Directors of the Company must present the accounts to
the meeting.
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 23 January 2024, 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 certificate
or is available from our registrars, Link Group. For those who hold their shares in uncertificated 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 and Wales.
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, Suffolk, IP32 7FR on 25 January 2024, at 10.30am for the purpose of
considering and, if thought fit, passing the resolutions set out in this notice. Resolutions 1 to 14 (inclusive) will
be proposed as ordinary resolutions. Resolutions 15 to 18 (inclusive) will be proposed as special resolutions.
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 2024. Resolution 2 is an advisory resolution to approve the Directors’
Remuneration Report, which details the remuneration packages paid to Directors during the year ended
30 September 2023. You can find the Implementation Section of the Directors’ Remuneration Report on
pages 84 to 93 within the Directors' Remuneration Report on pages 82 to 93.
Resolution 3 – Final dividend
3.
To approve a final dividend of 5.46 pence per share on the ordinary shares of the Company for the
year ended 30 September 2023.
Explanatory note
A final dividend can only be paid after the shareholders at a general meeting have approved it. A final
dividend of 5.46 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 2 February 2024. If approved, the date of
payment of the final dividend will be 14 March 2024. An interim dividend of 2.55 pence per ordinary share
was paid on 10 August 2023. This represents an increase of 0.16 pence per share, or 2.0%, on the total
2022 dividend.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
143
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Resolutions 4 to 9 – Election or re-election of Directors
4. To re-elect Ryan Govender as a Director of the Company.
5. To re-elect Christine Sisler as a Director of the Company.
6. To re-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 David Johnston as a Director of the Company.
9. To elect Bronagh Kennedy 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 annual re-election.
Short biographies of the Directors are given on pages 68 and 69. Having considered the performance
of, and contribution made, by each of the Directors, the Board remains satisfied that the performance of
each of the Directors continues to be effective and to demonstrate commitment to the role and, as such,
recommends their election/re-election, as appropriate. Each Executive Director has a service agreement
which provides for 12 months' notice by either party and each Non-executive Director is appointed on
terms that provide for three months' notice by either party. As previously announced, Daemmon Reeve is
stepping down as Chief Executive Officer and as a Director of the Company on 31 December 2023 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 office 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 fixed 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 – Approval of Share Incentive Plan
12. THAT the Directors be and are hereby authorised:
To adopt and establish the Treatt plc 2024 Share Incentive Plan, the principle terms of which are
summarised in Appendix 1 to this Notice of Meeting, and, for the purpose of identification only, initialled
by the Chair, and to do all such acts and things which they may consider necessary or desirable to
establish and carry it into effect; and at their discretion, to adopt similar all-employee plans as they
deem appropriate for the benefit of employees and Directors of the Company and its subsidiaries, on
identical terms, which are located outside the United Kingdom.
Explanatory note
Treatt has operated a Share Incentive Plan (‘SIP’), in which all employees currently participate, since its
first approval by shareholders in 2014. The SIP runs alongside the existing all employee Save As You
Earn Share Option Scheme, under which shares are purchased at the end of a three year saving period,
in order to align the interests of all employees with those of shareholders and further foster employee
share ownership. The Directors believe that the SIP provides employees with the opportunity to further
invest in the Company’s shares. The SIP rules are approved by shareholders for a period of ten years
and accordingly this resolution seeks approval for the adoption by the Company of the rules. The main
provisions of the Treatt plc 2024 Share Incentive Plan are summarised in Appendix 1 at the end of this
Notice of Meeting.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Resolution 13 – Approval of Long Term Incentive Plan
13. THAT the Directors be and are hereby authorised:
i
F
n
a
n
c
a
i
l
a)
to adopt and establish the Treatt plc 2024 Long Term Incentive Plan and the US sub-plan to this
plan, known as the 'Treatt plc Restricted Stock Unit Plan' for US-based participants, the principal
terms of which are summarised in Appendix 2 to this Notice of Meeting, and the rules of which
are produced to this meeting and, for the purpose of identification only, initialled by the Chair, and
to do all such acts and things which they may consider necessary or desirable to establish and
carry it into effect; and
b)
to establish further plans based on the Treatt plc 2024 Long Term Incentive Plan but modified to
take account of local tax, exchange control or securities laws in overseas territories, provided that
any shares made available under such further plans are treated as counting against any limits on
individual or overall participation contained within the Treatt plc 2024 Long Term Incentive Plan.
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
Explanatory note
Treatt has operated a Long Term Incentive Plan (‘LTIP’), in which the Executive Directors and employees
currently participate, since its approval by shareholders in 2019. The LTIP rules are approved by
shareholders for a period of ten years and accordingly this resolution seeks approval for the adoption by the
Company of rules, which take account of changes in executive remuneration since 2019 and current best
practice. The main provisions of the Treatt plc 2024 Long Term Incentive Plan are summarised in Appendix
2 at the end of this Notice of Meeting.
144
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
ORDINARY RESOLUTIONS CONTINUED
Resolution 14 – Authority to allot securities
14. 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)
b)
up to an aggregate nominal amount (within the meaning of section 551(3) and (6) of the Act) of
£407,531 (such amount to be reduced by the nominal amount allotted or granted under paragraph
(b) below in excess of such sum); and
comprising equity securities (as defined in Sections 560 of the Act) up to an aggregate nominal
amount (within the meaning of section 551(3) and (6) of the Act) of £815,061 (such amount to
be reduced by any allotments or grants made under paragraph (a) above) in connection with or
pursuant to an offer of or invitation to apply for equity securities by way of a pre-emptive offer
or invitation (including an offer by way of a rights issue or open offer) 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 difficulties 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 2025, or at close of business on 25 April 2025 (whichever occurs
first) save that the Company may before such expiry make an offer 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 offer 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 2025 or, if earlier, on 25 April 2025 (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 £407,531
(representing approximately one-third (33.33%) of the total issued ordinary share capital of the Company
as at 21 November 2023, 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 fully pre-emptive offer
up to an aggregate nominal value of £815,061 (representing approximately two-thirds (66.66%) of the total
issued ordinary share capital of the Company as at 21 November 2023, 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 the resolution.
This is in line with the Investment Association's Share Capital Management Guidelines issued in 2023.
SPECIAL RESOLUTIONS
Resolution 15 – Authority to disapply pre-emption rights
15. THAT subject to the passing of resolution 14 above and in accordance with Sections 570 and 573
of the Companies Act 2006 (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 14 above and to sell ordinary shares (as defined 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:
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
a)
in connection with or pursuant to an offer of, or invitation to apply for, equity securities (but in
the case of the authority granted under paragraph (b) of resolution 14, by way of a pre-emptive
offer or invitation (including a rights issue or open offer) 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 difficulties 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 14 and/or in the case of any
sale of treasury shares, (and otherwise than under paragraph (a) or (c) of this resolution) up to an
aggregate nominal amount of £122,259; and
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
145
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
c)
in the case of the authority granted under paragraph (a) of resolution 14 above 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 offer 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 2025 or at close of business on 25 April 2025 (whichever occurs
first), save that the Company may before such expiry make an offer 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 offer 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 first instance offer them to existing shareholders in proportion to their holdings. There may
be occasions, however, when the Directors will need the flexibility to finance business opportunities by the
issue of ordinary shares without a pre-emptive offer to existing shareholders. This cannot be done under
the Act unless the shareholders have first authorised this.
Resolution 15 asks the shareholders to do this and, apart from offers or invitations in proportion to the
respective number of shares held, the authority will be limited to the issue of shares for cash (i) up to a
maximum aggregate nominal value of £122,259 (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 21 November 2023, the latest practicable date prior to publication of this Notice and (ii) up to a
nominal amount of 20% of any allotment made under (i), for the purposes of any follow-on offer which the
Directors determine to be of a kind contemplated by paragraph 3 of Part 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. Shareholders will note that this resolution also relates to treasury shares and will be proposed
as a special resolution.
If given, the authority will expire at the conclusion of the next AGM of the Company in 2025 or, if earlier,
25 April 2025 (the date which is 15 months after the date of passing of the resolution).
The figure of up to 10% reflects the Statement of Principles on Disapplying Pre-Emption Rights most
recently published by the Pre-Emption Group. The Directors intend to adhere to the provisions in the
Pre-Emption Group’s most recently published Statement of Principles on Disapplying of Pre-Emption Rights.
Resolution 16 – Authority to disapply pre-emption rights for the purposes of acquisitions or
capital investments
16.
THAT subject to the passing of resolutions 14 and 15 above and in addition to the power granted
under resolution 15, the Directors be and are hereby given power pursuant to Sections 570 and 573
of the Companies Act 2006 (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 14 above and to sell
ordinary shares (as defined 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)
b)
the allotment of equity securities for cash and sale of treasury shares up to an aggregate nominal
amount of £122,259 such authority to be used only for the purposes of financing (or refinancing,
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 specified 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
the allotment of equity securities for cash and sale of treasury shares (otherwise than under
paragraph (a) of this resolution) up to an aggregate 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 offer 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
2025 or at close of business on 25 April 2025 (whichever occurs first), save that the Company may
before such expiry make an offer 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 offer or agreement as if the power
conferred hereby had not expired.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
146
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
SPECIAL RESOLUTIONS CONTINUED
Resolution 16 – Authority to disapply pre-emption rights for the purposes of acquisitions or
capital investments continued
Explanatory note
The purpose of resolution 16 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 reflect the
Statement of Principles on Disapplying Pre-Emption Rights.
Accordingly, resolution 16 will be proposed as a special resolution to grant such a power. The power will
be limited to (i) the allotment of equity securities and sales of treasury shares for cash up to an aggregate
nominal value of £122,259, being approximately 10% of the Company’s issued ordinary share capital
as at 21 November 2023, the latest practicable date prior to publication of this Notice, and (ii) up to an
additional 20% of any allotment made under (i), for the purposes of any follow-on offer which the Directors
determine to be of a kind contemplated by paragraph 3 of Part 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. This is in addition to the 10% referred to in resolution 15.
If given, the authority will expire at the conclusion of the next AGM of the Company in 2025 or, if earlier,
25 April 2025 (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 on Disapplying Pre-Emption Rights in
relation to any exercise of this power and in particular they confirm that they intend to use this power only
in connection with a transaction which they have determined to be an acquisition or a specified capital
investment (of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights)
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.
Resolution 17 – Authority to purchase own shares
17.
THAT the Company be generally and unconditionally authorised for the purposes of section 701 of the
Companies Act 2006 (the ‘Act’) to make market purchases (within the meaning of Section 693 of the
Act) of up to a maximum of 6,112,959 ordinary shares in the capital of the Company, subject to the
following conditions:
The authority hereby conferred shall expire at the conclusion of the AGM of the Company to be held
in 2025, or at close of business on 25 April 2025 (whichever occurs first), 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 17 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
effect 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-effectively and provides the Company with greater flexibility 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 specifies the maximum number of ordinary shares that may be acquired (approximately 10%
of the Company’s issued ordinary share capital as at 21 November 2023, 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 21 November 2023,
the latest practicable date prior to publication of this Notice, was 994,699. The proportion of issued share
capital that they represented at that time was 1.63% 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 1.81%.
a)
b)
the minimum price (excluding expenses) which may be paid for an ordinary share is the nominal
amount of that share; and
If given, the authority will expire at the conclusion of the next AGM of the Company in 2025 or, if earlier,
25 April 2025 (the date which is 15 months after the date of passing of the resolution).
the maximum price (excluding expenses) which may be paid for an ordinary share so purchased is
an amount equal to the higher of (i) 5% above the average of the middle market quotations shown
for an ordinary share of the Company in The London Stock Exchange Daily Official List on the five
business days immediately preceding the day on which that ordinary share is purchased, and (ii)
the higher of the price of the last independent trade of an ordinary share and the highest current
independent bid for an ordinary share on the trading venues where the purchase is carried out.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
147
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Resolution 18 – Notice of general meetings
18. 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 Act, the notice period required for all general meetings of listed companies is 21 clear days;
however, it is possible to reduce this period to 14 clear days (other than for AGMs), provided that the
following two conditions are met: (i) that a company offers 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 clear days to 14 clear days. This resolution would,
if passed, allow the Company flexibility to call general meetings, other than AGMs, on not less than 14
clear days’ notice. This additional flexibility 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
effective 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 Officer & Company Secretary
Registered Office:
Skyliner Way
Bury St Edmunds
Suffolk
IP32 7FR
12 December 2023
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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
148
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
APPENDIX 1 SUMMARY OF PROVISIONS OF THE TREATT PLC 2024 SHARE INCENTIVE
PLAN ('SIP')
The Company proposes to continue with an H M Revenue & Customs approved Share Incentive Plan
(the 'SIP') to provide all UK employees of the Group with the opportunity to acquire shares in the Company
on a tax efficient basis.
Partnership Shares
The Company may invite applications from qualifying employees to enter into a contract under the SIP to
buy Partnership Shares by deduction from pre-tax salary (subject to the annual statutory Individual Limits).
The Company may specify a maximum number of shares to be available for purchase as Partnership
Shares under any particular invitation.
The SIP provides for the acquisition of shares. The SIP will be governed by a Trust Deed and Rules which
will be submitted for approval to H M Revenue & Customs. The SIP will be operated through a UK resident
trust (the 'Trust'). The trustees of the Trust (the 'Trustees') will buy or subscribe for shares that are
awarded to or acquired by employees under the SIP and will hold these shares in the Trust on their
behalf under the terms of the SIP.
The main features of the SIP are as follows:
Eligibility
All employees of the Group who are resident and ordinarily resident in the United Kingdom and who are
determined by the Company to be qualifying employees are eligible to participate in any offer made by the
Company under the Plan. Non-UK resident employees may also be invited to participate in the SIP.
The Company may require employees to have completed a minimum qualifying period of employment
before they are eligible to participate, but such period may not exceed 18 months ending on the date shares
are awarded and/or purchased under the SIP.
Basis for participation
The SIP provides for the acquisition by participating employees of one or more of four categories of shares:
As determined by the Directors, deductions may either be:
a)
b)
transferred directly to the Trustees to be applied in the acquisition of Partnership Shares. Within 30
days of the deduction from salary, the Trustees will acquire Partnership Shares which will then be
held in the Trust on the participant’s behalf. The purchase price paid for the Partnership Shares will
be determined as the market value of the shares on the date of acquisition; or
accumulated over an accumulation period and held in an account until the end of an accumulation
period not exceeding 12 months. Within 30 days of the end of the accumulation period the Trustees
shall apply the accumulated funds to acquire Partnership Shares and hold such Shares in the Trust on
the participant’s behalf. The Directors will decide in respect of each offer whether the purchase price
paid for the Partnership Shares will be determined as the market value of the shares at the start of
the accumulation period or the market value on the day the shares are acquired or the lower of those
two values.
Matching Shares
Where the Company decides to offer the opportunity for the acquisition of Partnership Shares it may also
offer Matching Shares to those participants who elect to buy Partnership Shares. Allocations of Matching
Shares will be made on the same day as Partnership Shares are acquired on behalf of participants by
the Trustees.
The Company may award 'Free Shares' to participants and or allow participants to give up salary to
purchase 'Partnership Shares', and to the extent that they do so, the Company may award up to two
'Matching Shares' for each Partnership Share purchased. Any dividends arising on shares held in the
SIP may also be reinvested to acquire further 'Dividend Shares' under the SIP.
The Company will decide the basis on which Matching Shares are allocated (subject to the statutory
individual limits). Allocations of Matching Shares will be made to all participants on the same basis.
The maximum permissible number of Matching Shares according to the law is two Matching Shares
for each Partnership Share purchased.
The Directors will determine in any year whether participation in the SIP will be offered and, if so,
the basis on which each of the above categories may be offered.
Free Shares
The Company may award Free Shares to participating employees (subject to the annual statutory
Individual Limits).
The number of Free Shares awarded to participants will be determined by the Directors on the basis
of objective criteria and may also be subject to performance measures. Performance measures may be
based on personal, team, or divisional targets and the relevant measure selected will be notified to all
qualifying employees.
Dividend Shares
Participants will be entitled to dividends paid on their Free Shares, Matching Shares and Partnership
Shares while they are held in the Trust.
At the discretion of the Directors, dividends arising on shares held in the Trust under the SIP may either
be paid directly to a participant in cash or reinvested, subject to the individual limits, for the acquisition of
further shares under the SIP on behalf of the participant.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
149
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Individual limits
The value of Free Shares which may be awarded to a participant under the SIP in any year shall not
exceed the statutory maximum of £3,600 per annum (or such higher limit as may be specified in the
relevant SIP legislation from time to time).
The maximum amount which can be deducted from a participant’s salary for the purpose of buying
Partnership Shares shall not exceed the statutory maximum being the lower of 10% of salary or £1,800
per annum (or such higher limit as may be specified in the relevant SIP legislation from time to time).
The number of Matching Shares which may be awarded to a participant purchasing Partnership Shares
under the SIP shall not exceed the statutory maximum which is currently two Matching Shares for every
one Partnership Share purchased.
There is no limit on the number or value of shares that may be acquired in the Plan as Dividend Shares.
Holding periods
Free Shares and Matching Shares must be held in the Trust by the Trustees for a holding period of
between three and five years, or, if earlier, until the employee leaves the Group. The Directors shall
determine the applicable holding period at the time the offer is made.
Dividend Shares must be held in the Trust by the Trustees for a holding period of three years or, if earlier,
until the employee leaves the Group.
Participants may withdraw their Partnership Shares from the SIP at any time.
Termination of employment and forfeiture provisions
On termination of employment with the Company or any company within the Group, a participant is
required to withdraw all shares from the SIP (other than those which are forfeited under the terms of
any offer under the SIP).
The SIP may provide for Free Shares and/or Matching Shares to be forfeited if an employee terminates
employment with the Group within a specified period (the 'Forfeiture Period') unless the termination of
employment is by reason of death, injury, disability or sale of the business for which the participant works
out of the Group or the participant’s employment is transferred out of the Group. The Forfeiture Period
may not exceed three years from the date the allocation of Free Shares/Matching Shares is made.
In addition the Directors may provide that Matching Shares may be subject to forfeiture if the
corresponding Partnership Shares are withdrawn within three years of purchase.
Voting rights
The Directors will determine whether participants shall have the right to exercise any voting rights
attaching to Shares held under the SIP.
Limits on the issue of shares
The SIP will be subject to a limit on the number of new shares in the Company that may be issued. In any
rolling ten-year period not more than 10% of the issued ordinary share capital of the Company may be
issued or issuable pursuant to the rights acquired in total under the SIP, the Treatt plc Long Term Incentive
Plan and any other employees’ share schemes adopted by the Company.
Adjustment of awards
On a variation of the capital of the Company, the number of Shares held under the SIP will be adjusted in
such manner as the Directors determine, subject to written confirmation from the Company’s auditors that
the adjustment is, in their opinion, fair and reasonable.
Reconstructions and takeovers
In the event of any reconstruction or change in control of the Company, shares must be either withdrawn
from the SIP, or, if certain circumstances are met, exchanged for shares in the new holding which will
continue to be held in the Trust under the SIP under the same terms and subject to the same rights and
restrictions as the original shares.
Alterations
The SIP may at any time be altered by the Directors in any respect, provided that the prior approval of
the shareholders in general meeting will be obtained for alterations or additions to the advantage of
participants, except for minor amendments to benefit the administration of the SIP, to take account of
existing or proposed legislation or to obtain or maintain favourable tax, exchange control or regulatory
treatment for participants in the SIP or for the Company and or any member of the Group.
To the extent required by the law, H M Revenue & Customs approval will be sought in respect of any
proposed amendment to a 'key feature' of the SIP (ie, being a feature which is necessary to meet the
requirements of the relevant legislation governing the SIP).
Rights attaching to shares
Ordinary shares allotted under the SIP will rank equally with all other shares of the Company for the time
being in issue and the Company will apply for admission of any new shares issued under the SIP to any
relevant exchange.
Funding the SIP
Each participating company within the Group may fund the Trustees of the Trust to subscribe for or buy
shares in the market or privately. The Company may only fund the Trust at such time that it has sufficient
distributable reserves to do so. The acquisition price for private purchases must not be materially more
than the market price of a share at that time and the subscription of shares must be at market value or,
if higher, at nominal value.
General
Benefits under the SIP are not pensionable.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
150 TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
APPENDIX 2 SUMMARY OF PROVISIONS OF THE TREATT PLC 2024 LONG TERM INCENTIVE
PLAN ('LTIP')
The Company proposes to continue the LTIP to incentivise executive directors ('Directors') and employees
of the Company's group ('Group').
Eligibility
All full-time employees and Directors of the Group shall be eligible to participate in the LTIP at the
discretion of the Committee. The making and level of Awards will be determined from year to year on an
individual basis by the Committee and, for Directors, in accordance with the Director's Remuneration Policy.
The LTIP is capable of making awards of share options, conditional share awards, conditional phantom
awards and Restricted Stock Units in the US ('Awards').
It is intended that the LTIP will be used to make awards of 'nil cost' share options to selected employees
of the Company in the UK which may be satisfied by issue or transfer of shares (or a cash equivalent
amount), and Restricted Stock Units, which may at the discretion of the Company be satisfied by the issue
or transfer of shares, or payment in cash of equivalent value, once vesting conditions have been met, to
employees in the US.
All Awards granted to executive directors will be made in accordance with the Company’s Director's
Remuneration Policy as approved by shareholders from time to time.
It is proposed that all options granted under the LTIP will have an exercise price equal to the nominal value
of a share in the case of an option satisfied by shares issued directly to participants and nil in the case of
an option to acquire shares held in the Treatt Employee Benefit Trust ('EBT'). Restricted Stock Units will
similarly be awarded for the nominal value in the case of newly issued shares, and nil in the case of shares
held in the EBT. The LTIP will be administered by the remuneration committee of the board of directors
('Committee'), which will determine any dispute under or question in connection with the Plan.
Grants of awards
Awards may be granted to eligible employees at the discretion of the Committee. Awards may be
granted only:
i) during the period of 42 days following the date of adoption of the LTIP by the Company;
ii)
during the period of 42 days following the announcement of yearly, half yearly or other period
financial results of the Company; or
iii) on any other date, if in the opinion of the Committee, the circumstances are exceptional.
In the event that any restrictions imposed by statute, order, regulation or Government directive, or by the
UK Market Abuse Regulation or the share dealing policy adopted by the Company prevents the Company
from making Awards, the Award will be made within 42 days after that restriction is removed.
Performance conditions
The Committee may impose performance conditions ('Performance Conditions') applying usually over
a period of at least three years that must normally be satisfied before Awards vest. The Performance
Conditions will be determined at the time of grant to ensure that they are sufficiently stretching and for
Directors will be set in accordance with the Director's Remuneration Policy. If, on vesting, the Committee
considered that the level of vesting is inappropriate notwithstanding the satisfaction of any Performance
Conditions, it will be able to reduce the extent to which an Award is treated as having vested.
Malus and clawback
Awards may be reduced to such extent (which could be zero) prior to the Award vesting (malus) or
up to three years after an Award vesting (clawback) as determined by the Committee in the event of:
i)
ii)
a material misstatement, error or misrepresentation of the Company’s financial results;
any error or incorrect statement or fact and/or information or assumption used in determination
of vesting;
iii) any error in assessing a Performance Condition;
iv)
the reliance, by the Committee, on incorrect statements and/or facts in the assessment of
Performance Conditions;
v) a participant leaves employment by reason of misconduct;
vi)
any circumstances coming to light after a participant ceases to hold office or employment for
any reason, which would have entitled the employer to dismiss the participant summarily;
vii) the Company being placed in receivership, compulsory liquidation, administration, being subject to
a voluntary arrangement or any composition or arrangement with its creditors generally or any class
of its creditors;
viii) serious reputational damage; or
viii) corporate failure on the part of the participant.
The Committee shall have the right to clawback from the participant by reducing Awards under the LTIP,
cash bonus, other share awards under any other of the Group's employee share schemes, or salary
(or any other means the Committee specify):
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
151
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Limit of participation
The market value of shares over which Awards may be made under the LTIP may not exceed the limit set
in the Remuneration Policy for Directors (which is currently 150% of salary) and may not exceed 150% of
salary for below-Board employees.
Total number of shares available
No award may be granted under the LTIP on any date if, as a result, the aggregate number of Shares
issued, or committed to be issued, pursuant to Awards and pursuant to grants made during the previous
ten years under all other employee share plans established by the Company, would exceed 10% of the
issued ordinary share capital of the Company on that date.
Further, no award may be granted under the LTIP on any date if, as a result, the aggregate number of
Shares issued, or committed to be issued, pursuant to Awards and pursuant to grants or appropriations
made during the previous ten years under all other executive share plans established by the Company,
would exceed 5% of the issued ordinary share capital of the Company on that date. For this purpose,
newly issued shares will include shares issued out of treasury.
Vesting of Restricted Stock Units and exercise of options
Awards will normally vest once Performance Conditions have been either satisfied or waived or are treated
as satisfied under the provisions described below. Options shall generally be exercisable after a period
beginning with the date on which it is established that a Performance Condition has been satisfied and
ending up to ten years from the date of grant. Restricted Stock Units may not be sold, exchanged, pledged
or otherwise disposed of until they vest. To the extent that they do not vest, Awards will lapse.
In addition to the any Performance Conditions, Awards made to Directors of the Company will be subject
to a five-year holding period such that they may not sell the shares they receive (other than as required to
cover tax due on exercise, or in exceptional circumstances) until, at the earliest, the fifth anniversary of the
date on which Awards are granted.
In the case of a takeover, demerger or a statutory reconstruction, the Committee may at its discretion, and
acting fairly and reasonably, Awards will vest earlier than the normal vesting date. The Committee may
determine the proportion or number of Awards that will vest in their absolute discretion taking into account,
unless they determine otherwise, the extent the Performance Conditions are satisfied and any pro-rata
reduction for time.
Award holders may be able to exchange their Awards under the LTIP for Awards over the shares of the
Company making any takeover or on an internal reconstruction involving the Company coming under
the control of another but remaining under the control of the person or persons who had control of the
Company before the reconstruction.
Employees leaving the Company
If an Award holder ceases to hold office or employment with the Group as a Good Leaver, Awards shall,
at the discretion of the Committee either vest at the date of cessation or at the normal time of vesting.
The Committee shall determine the level of vesting taking into account, amongst other factors, whether
to pro-rate Awards for time and whether to test Performance Conditions.
For Director Good Leaver treatment, subject to the prevailing Directors' Remuneration Policy as amended
from time to time, a time pro-rated proportion of outstanding 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 specified holding periods would normally continue to be applied to the
vesting shares. For Directors, alternatively, a time pro-rated number of Awards may vest subject to an
assessment of the Performance Conditions early on termination and may be exercised within six months
of leaving the Group (and the Committee may disapply holding periods).
A 'Good Leaver' is any employee leaving by reason of injury or disability, redundancy, death in service,
the transfer of the employment outside the Group, the sale of a Company outside the Group or any other
reason determined by the Committee. If an Award holder dies after having ceased to hold employment
with the Group, the Committee may determine the extent to which any unvested Awards vest.
If an Award holder leaves for any other reason, all Awards shall lapse.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
Variation of share capital
In the event of a variation of share capital the Directors may adjust the number of shares under the Award
and, where appropriate, the exercise price to reflect such variation.
Alteration of the LTIP
The Directors may at any time alter or amend the provisions of the LTIP provided that no alteration may be
made to the advantage of existing or new Award holders without the approval of shareholders by ordinary
resolution, except for any such alteration where the amendments are minor, to benefit the administration
of the LTIP, to take account of a change in legislation or to obtain or maintain favourable tax treatment.
Pensions
Benefits under the LTIP will not be pensionable.
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
152
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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 23 January 2024 (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 certificated or uncertificated 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 specified 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 reflection 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 23 January
2024, 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 fixed 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 certificate 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 25 January 2024 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)
b)
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 & International Limited’s (‘EUI’) specifications 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 specified in
this Notice. 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.
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 Uncertificated Securities Regulations 2001. Members may change proxy
instructions by submitting a new proxy appointment using the methods set out above. Note that the
cut-off time for receipt of proxy appointments also apply in relation to amended instructions; any
amended proxy appointment received after the relevant cut-off time will be disregarded.
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 23 January 2024 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.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
153
TreaTT plc Annual Report & Accounts 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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 Company may process personal data of participants at or in relation to the AGM. This may include
webcasts, photos, recordings, and audio and video links, as well as other forms of personal data. Please
refer to the Company's privacy notices for details of how the Company will process personal data.
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 confidential 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 ineffective (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.
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.
Under section 527 of the Companies Act 2006, members meeting the threshold requirements set out in
that section have the right to require the Company to publish on a website a statement setting out any
matter relating to: (i) the audit of the Company's accounts (including the auditor's report and the conduct
of the audit) that are to be laid before the AGM; or (ii) any circumstance connected with an auditor of the
Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid
in accordance with section 437 of the Act, (in each case) that the members propose to raise at the AGM.
The Company may not require the members requesting any such website publication to pay its expenses
in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on
a website under section 527 of the Act, it must forward the statement to the Company's auditor not later
than the time when it makes the statement available on the website. The business which may be dealt with
at the meeting includes any statement that the Company has been required under section 527 of the Act to
publish on a website.
As at 21 November 2023 the Company’s issued share capital consists of 61,129,589 ordinary shares. The
number of shares held in the Employee Benefit Trust and Treatt Share Incentive Plan, under which voting
rights are waived, is 499,841. The total number of voting rights in the Company as at 21 November 2023
(the latest practicable date prior to publication of this Notice) is 60,629,748.
A statement of Directors’ share transactions, copies of the Directors' service contracts, letters of
appointment of the Non-executive Directors, the Treatt plc 2024 Long Term Incentive Plan and Treatt plc
2024 Share Incentive Plan are available for inspection during usual business hours at the registered office
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, Suffolk, IP32 7FR.
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
154
TreaTT plc Annual Report & Accounts 2023
PARENT COMPANY INFORMATION AND ADVISORS
Directors
Vijay Thakrar
Chair and Non-executive Director
Daemmon Reeve
Chief Executive Officer
Ryan Govender
Chief Financial Officer
David Johnston
Non-executive Director
Philip O’Connor
Senior Independent Non-executive Director
Christine Sisler
Independent Non-executive Director
Bronagh Kennedy
Independent Non-executive Director
Company Secretary
Ryan Govender
Registered Office
Skyliner Way,
Bury St Edmunds,
Suffolk, IP32 7FR
Tel: +44 (0) 1284 702500
Email: cosec@treatt.com
Website
www.treatt.com
Registered Number
01568937
Audit Committee
Philip O’Connor (Chair)
Christine Sisler
Remuneration Committee
Bronagh Kennedy (Chair)
Vijay Thakrar
Christine Sisler
Nomination Committee
Vijay Thakrar (Chair)
Philip O’Connor
Bronagh Kennedy
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
First Floor,
Franciscan House,
51 Princes Street,
Ipswich, IP1 1UR
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,
Suffolk, 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
Central Square,
29 Wellington Street,
Leeds, LS1 4DL
Annual and half year reports are available
on the Group’s website: www.treatt.com
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
155
TreaTT plc Annual Report & Accounts 2023
FINANCIAL YEAR 2023/24
Interim results to 31 March 2023 announced
Interim dividend for 2023 goes ‘ex-dividend’
Record date for 2023 interim dividend
FINANCIAL CALENDAR
FINANCIAL YEAR 2024/25
9 May 2023
Interim results to 31 March 2024 announced
29 June 2023
Interim dividend for 2024 goes ‘ex-dividend’
30 June 2023
Record date for 2024 interim dividend
Last day for dividend reinvestment plan election
20 July 2023
Last day for dividend reinvestment plan election
Interim dividend for 2023 paid
Financial year ended
10 August 2023
Interim dividend for 2024 paid
30 September 2023
Financial year ended
Results for year to 30 September 2023 announced
28 November 2023
Results for year to 30 September 2024 announced
Final dividend for 2023 paid
14 March 2024
Final dividend for 2024 paid
* These dates are provisional and may be subject to change
14 May 2024*
4 July 2024*
5 July 2024*
25 July 2024*
15 August 2024*
30 September 2024
26 November 2024*
13 March 2025*
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
156
TreaTT plc Annual Report & Accounts 2023
NOTES
O
v
e
r
v
e
w
i
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
O
t
h
e
r
I
n
f
o
r
m
a
t
i
o
n
CBP00019082504183028
Printed by a CarbonNeutral® Company certified to ISO 14001 environmental management system.
Printed on material from well-managed, FSC® certified forests and other controlled sources.
100% of the inks used are HP Indigo ElectroInk which complies with RoHS legislation and meets
the chemical requirements of the Nordic Ecolabel (Nordic Swan) for printing companies, 95% of
press chemicals are recycled for further use and, on average 99% of any waste associated with
this production will be recycled and the remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an international conservation charity, who
offset carbon emissions through the purchase and preservation of high conservation value land.
Through protecting standing forests, under threat of clearance, carbon is locked-in, that would
otherwise be released.
TREATT PLC
Skyliner Way, Bury St. Edmunds, Suffolk IP32 7FR
www.treatt.com
cosec@treatt.com
+ 44 (0) 1284 702500