TREATT PLC Annual Report & Accounts 2023

ANNUAL REPORT

2023

Annual Report & Accounts

TREATT PLC Annual Report & Accounts 2023

MAKING THE WORLD TASTE BETTER. FOR GOOD

By extracting exceence, and enhancing every day

We are writing a growth story like no other. Our innovative natural extracts and impactful synthetic

ingredients have been the dierentiating signature notes delighting the global beverage, avour, 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.

WELCOME TO

Trea

TREATT PLC Annual Report & Accounts 2023

Sustainability –

Our Approach

PG 24

Overview

Our Highlights 3

At a Glance 4

Our Product Portfolio 6

Understanding our world

PG 14

Our Strategy – Vision 2027

Protect. Accelerate. Grow.

PG 16

Financial Review

PG 54

WHAT'S

inside

Corporate Governance

Board of Directors 68

Corporate Governance Statement 70

Nomination Committee Report 77

Audit Committee Report 79

Directors’ Remuneration Report 82

Directors’ Report 94

Statement of Directors’ Responsibilities 97

Financial Statements

Independent Auditor’s Report to the Members of Treatt Plc 98

Group Income Statement 104

Group Statement of Comprehensive Income 105

Group Statement of Changes in Equity 106

Parent Company Statement of Changes in Equity 107

Group and Parent Company Balance Sheets 108

Group and Parent Company Statements of Cash Flows 110

Group Reconciliation of Net Cash Flow to Movement in Net Debt 112

Notes to the Financial Statements 113

Strategic Report

Chair's Statement 7

Chief Executive's Review 8

Market Overview 10

Understanding Our World 14

Our Strategy – Vision 2027 16

Our Business Leadership Team 21

Key Performance Indicators 22

Sustainability

Our approach 24

People 27

Planet 35

TCFD 36

Performance 47

Stakeholder Engagement 50

Financial Review 54

Group Five-year Trading Record 59

Principal Risks and Uncertainties 60

Going Concern and Viability Statement 66

Other Information

Notice of Annual General Meeting 142

Parent Company Information and Advisors 154

Financial Calendar 155

CONTENTS

TREATT PLC Annual Report & Accounts 2023

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OUR

highlights

OUR HIGHLIGHTS

TREATT PLC Annual Report & Accounts 2023

2022

2023

2019

2020

2021

£147.4m

£13.5m

8.01p

£17.3m

12.4%

12.2%

£109.0m

£13.7m

6.00p

£14.8m

13.8%

18.5%

£112.7m

£12.5m

5.50p

£13.3m

12.0%

18.8%

£124.3m

£19.6m

7.50p

£20.9m

17.2%

20.9%

£140.2m

£16.2m

7.85p

£15.3m

11.3%

11.6%

Revenue

£147.4m

Prot Before Tax

£13.5m

Dividend Per Share

8.01p

Prot Before Tax And Exceptional Items

£17.3m

Adjusted Net Operating Margin

2,3

12.4%

Adjusted Return on Average Capital Employed

3,4,5

12.2%

5.1%

(16.3%)

2.0%

13.7%

110bps

60bps

OUR HIGHLIGHTS CONTINUED

FINANCIAL OPERATIONAL

1 Excluding discontinued operations in 2019 and 2020.

There were no discontinued operations in 2021, 2022 and 2023.

2 Operating prot is calculated as prot before net nance costs and taxation.

3 Excludes exceptional items, details of which are provided in note 8 of the

nancial statements.

4 The methods of calculating nancial key performance indicators are shown

on page 22.

5 Return on average capital employed is considered to be an alternative

performance measure, details on these and the equivalent statutory

measures are provided in note 31 of the nancial statements.

6 The dividend per share relates to the interim dividend declared and nal

dividend proposed in the corresponding nancial year, details of which are

provided in note 10 of the nancial statements.

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.

A promising year

in new markets

Continued strong growth in

China and coee, helping new

markets grow by 61%. The

Group is excited about these

key strategic growth drivers.

Successful pricing action

Considered pricing action, in

order to recover raw material

ination, 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.

TREATT PLC Annual Report & Accounts 2023

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Other Information

88%

natural purchases

1,638

products

81%

natural products

365

employees across

three sites

product categories

£2.0m

investment in innovation

countries shipped to

Sales by customer

31%

from top 5

89%

of waste reused/

recycled/recovered

706

customers

Sales by channel

52% 48%

FMCG avour houses

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.

Facilities: USA, UK, China

TREATT PLC Annual Report & Accounts 2023

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

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 rst

• are world class technical experts

• service diverse routes to growing markets

• mitigate risk with dual-site manufacturing in

strategic locations

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Citrus

Our value-added citrus

extracts and ingredients

deliver an impactful and

genuine prole that’s true

to the fruit at any scale

our customers’ need.

Synthetic

aroma

Our curated range

of aroma chemicals

and UK-manufactured

high impact chemicals

consistently provide

the desired prole and

trusted quality through

a secure supply chain.

Herbs, spices

& orals

Our herbs, spices, &

orals portfolio is known

for its breadth, quality,

and reliability, and

is a bedrock of our

established business.

Fruit &

vegetables

Our natural, authentic

extracts capture the best

of nature, and give our

customers the real deal

when it comes to impact.

INNOVATION

Health &

wellness

A range consisting of

100% natural proprietary

extracts and distillates

suitable for multiple

applications.

Tea

Delivering the experience

of real brewed tea, our

extracts dierentiate

products in a variety of

formats, oering a range

of powerful tea proles

and origin claims.

Coee

Great tasting, premium

products, that deliver

the true experience

of brewed coee,

regardless of origin,

grade, concentration,

or roast.

everywhere

OUR PRODUCT PORTFOLIO

Heritage NewPremium

Discover more about our growth ambitions on page 16

TREATT PLC Annual Report & Accounts 2023

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 reect 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 signicant 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 avour houses in the world, as they

navigate and inuence evolving consumer trends.

Performance

Treatt has delivered a resilient performance in the

year despite dicult 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 oset

materials price increases, and by focusing on cost

control, we have been able to deliver a prot 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 signicant 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

signicant 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 nal 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 &

orals 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 eorts

will be underpinned on sound provenance and

sustainable practices.

Having made signicant investments in our

infrastructure in recent years, we now have

the opportunity to deliver improved operational

leverage and gain further eciencies 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 condent

in our strategy and in the strength of our teams

and their expertise to deliver this.

Vijay Thakrar

Chair

28 November 2023

I am delighted to present my

rst 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

CHAIR’S STATEMENT

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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 oce Treatt rst 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

nance mindset and cost discipline, setting the

business up well for sustainable growth.

Performance

I am pleased with the performance in the year

which is reected in the sales and prot growth

along with record cash generation, despite the

dicult macro trends in our industry. Particularly

pleasing was our growth in new product oerings,

including coee 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.

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.

Coee performance in the year was pleasing,

with revenues now reaching £5m, from £1m in

the previous year, we have successfully integrated

coee as a new category in our portfolio.

We implemented price increases to mitigate

inationary 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 ecient to preserve the integrity

of the avours 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.

To oversee our sustainability eorts 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.

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, ood, 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 dierent 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.

People with purpose,

expertise and passion

365

employees

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 Ocer

TREATT PLC Annual Report & Accounts 2023

Mindful of the impact of inationary pressures on

household nances 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 eective 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

eciencies 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

avours, and we have some exciting new oerings

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 condent in the ability of our team

to achieve our objectives for the years ahead.

Daemmon Reeve

Chief Executive Ocer

28 November 2023

CHIEF EXECUTIVE'S REVIEW CONTINUED

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MARKET OVERVIEW

ALIGNING OUR BUSINESS

with healthier living macro trends

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

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

for future growth in multiple beverage categories. The below beverage segments

are forecasting volume growth of greater than 20% between 2023 and 2028.

Category Top trending avours

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

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, coee, tea, honey, pomegranate, and kiwi

Our products are proven to be highly

eective in a range of applications,

delivering that dierentiating

authenticity every time."

Lamia Gaman

Senior Applications Manager

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MARKET OVERVIEW CONTINUED

GIVE ME:

Natural, authentic ingredients

The extent to which a product impacts one’s health and wellbeing is a driving inuence

for multi-generational consumers

. 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

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 expectation

In North America, consumer interest, and sales

of natural and organic food reached a new high

during the rst 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 implications

Since 2021, the health and wellness mega-trend has

continued to outrank all others as the most inuential

for consumers. Its longevity and permanence persist

as the dominant driver as we look to the future

. The

key target consumers for forward-looking beverage

manufacturers and the avour 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 Z

. While

some trends may be ash 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.

CONSUMER MINDSETS DRIVING INNOVATION

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).

TREATT PLC Annual Report & Accounts 2023

MARKET OVERVIEW CONTINUED

GIVE ME:

Premium drinking experiences

The premiumisation trend continues as growing awareness of health issues

associated with the consumption of articial ingredients is shifting consumers

towards naturally derived food and beverage ingredients, particularly the

younger generations.

36% of UK consumers agree that foods which contain articial

ingredients cannot be healthy

GIVE ME:

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 planet

. 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

6 The Clean Label Evolution in Food and Drink, Mintel, 16 Feb 2022, Davina Patel.

7 Global Data Consumer Survey Q2 2023 – Line 2818, Column BC.

3 Global Data, The Evolution of Consumer Mega Trends Over Time, July 2023.

4 TikTok Statistics – Everything You Need to Know Aug 2023 Update (wallaroomedia.com).

5 Global Data Consumer Survey Q2 2023 – Line 2965, Column BC – BI.

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UNDERSTANDING OUR WORLD

EXPERTS IN EXTRACTION

GROWERS, PROCESSORS,

AND SUPPLIERS

OPERATIONAL EXCELLENCE

LOGISTICS

We work hard to develop and maintain transparent,

stable, and mutually benecial 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 nest 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 benets of our sustainable supply

chain programme.

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 dierentiating 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 signicant 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.

Quality &

innovation

85%

shipments now being

classed as sustainable

Global

facilities in the UK,

the US, and China

Creating value for our stakeholders

TREATT PLC Annual Report & Accounts 2023

UNDERSTANDING OUR WORLD CONTINUED

FLAVOUR HOUSES

BRAND OWNERS

CONSUMERS

We have worked with the world's leading avour 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 dierentiate

our customers' solutions, which are then sold to brand owners.

Our high-quality, market-driven products, and responsible

approach to sourcing continue to dierentiate 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.

Our product portfolio has a strong market alignment,

speaking directly to the needs of health-conscious

consumers across the globe.

52%

sales to avour houses

33%

cite 'natural' as essential

Natural, premium

& health

48%

sales to brand owners

1 Global Data Consumer Survey Q2 2023 – Line 2,965, column BC-BI.

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OUR STRATEGY – VISION 2027

With a high-performing, values-driven culture

inspiring innovation

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 prot by creating authentic,

innovative extracts and ingredients our customers, and their consumers, love.

TREATT PLC Annual Report & Accounts 2023

OUR STRATEGY – VISION 2027 CONTINUED

WINNING WITH THE 7Cs

PROTECT

OUR HERITAGE

The core of our business remains

critical, with our citrus, herbs,

spices & orals, 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 coee portfolio, and

launch new innovative citrus extracts.

CONSUMER

Maintaining relevance

to growing trends

through innovation

CULTURE

Investing in our

world class people

CITRUS

Launching innovative

and cost-eective

natural extracts

COFFEE

Expanding capacity

and growing portfolio

CHINA

Driving growth

with national

beverage brands

CAPACITY

Driving volume

growth to ll capacity

and de-bottleneck

COST BASE

Scaling with

appropriate grip

on costs

WHERE WE PLAY

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We continue to drive growth with our

avour and fragrance house customers,

who highly value the quality of our product

oering, 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.”

Rosie Travers

Global Fruit & Vegetable and Health & Wellness Category Manager

As we look to further our expansion into

coee, we will leverage the great work

we’ve done to build a solid foundation

from which to sustainably grow.”

Dr Maya Zuniga

VP of Innovation & Technical Services

WHERE

we play

OUR STRATEGY – VISION 2027 CONTINUED

PROTECT OUR HERITAGE

ACCELERATE PREMIUM CATEGORIES GROW IN NEW MARKETS

TREATT PLC Annual Report & Accounts 2023

OUR STRATEGY – VISION 2027 CONTINUED

PROTECT OUR HERITAGE

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 & orals, and synthetic aroma

categories will continue to play a signicant part in

driving growth over the course of our plan as we look to:

• Share the benets of our strong, diversied supply

chain with our customers

• Build our partnership model through the

sharing of our unrivalled technical expertise

• Secure our long-term position in the value chain

through mutually benecial industry relationships

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

ACCELERATE PREMIUM CATEGORIES

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

• Using consumer insights to drive the long-term evolution

of our portfolio

• Delivering world class quality when it comes to taste and

aroma impact

GROW IN NEW MARKETS

We have signicant 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 avour houses

• Scaling up our coee operation as we grow our

commercial pipeline

• Adding value through a new range of innovative

value-added citrus extracts

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OUR STRATEGY – VISION 2027 CONTINUED

OUR STRATEGIC HEADLINES

driving our focus

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 rst.

We will invest in innovation over the course

of our strategy, driving our long-term

growth ambitions.

We are excited by the obtainable market potential

in each of our key territories.

Dierentiating ourselves with avour houses and

brand owners.

Our fully invested asset base has the capacity that

will allow us to grow at scale.

INVEST IN OUR WORLD CLASS

PEOPLE AND CULTURE

INNOVATE ACROSS

OUR PORTFOLIO

CONTINUE OUR LONGTERM

EXPANSION IN COFFEE

DRIVE CONTINUED

GROWTH IN CHINA

REALISE OPERATIONAL

EFFICIENCY BENEFITS

TREATT PLC Annual Report & Accounts 2023

OUR BUSINESS LEADERSHIP TEAM

Daemmon Reeve

Chief Executive Ocer

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 dening features

of his tenure. He retires at the end of

December 2023.

Ryan Govender

Chief Financial Ocer

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.

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.

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 nance and IT functions and is

a champion for collaborative global working.

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.

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.

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.

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.

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 signicant

expertise in tea, coee, and botanicals,

Maya has been an instrumental part of

driving our growth in coee.

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

signicant positive operational change since

joining Treatt in 2018. Babette now oversees

operations across our UK and US sites.

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.

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2022 2022 2022 20222023 2023 20232019 2019 2019 20192020 2020 2020 20202021 2021 2021 2021

12.2%

(0.45)

13.7%

15.9%

18.5%

0.03

11.3%

10.7%

18.8%

1.07

5.2%

(1.1%)

20.9%

(0.39)

41.3%

37.2%

11.6%

(1.21)

(27.1%)

(26.8%)

Return on average

capital employed

1,2

12.2%

Net cash/(debt) to

adjusted EBITDA

1,2

(0.45)

Growth in prot before tax

and exceptional items

13.7%

2023

KEY PERFORMANCE INDICATORS

FINANCIAL KPIs

Growth in adjusted

basic earnings per share

15.9%

The Group has nancial

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 ve

years which is reective

of the Board’s long-term

thinking.

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 nancial statements.

Return on average capital employed is

an important measure used to assess

the protability of the Group relative

to the capital being utilised.

Net cash/(debt) is used to ensure that the

level of debt is appropriate relative to the

prots generated by the business.

Prot 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.

Why we measure it

Return on average capital employed enables

stakeholders to see the protability of the

business as a function of how much capital

has been invested in the business.

It is important to ensure that the level of

borrowings can be supported by the cash ow

in the business. EBITDA is widely recognised

as a good indicator of the cash generative

performance in year.

Prot 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 prot

was made for each share they own.

Calculation

We divide operating prot from continuing

operations (as shown in the Group income

statement) by the average capital employed in

the business, which we calculate as total equity

(as shown in the Group balance sheet) plus

net debt or minus net cash (as shown in

the Group reconciliation of net cash ow to

movement in 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 prot before

exceptional items (as shown in the Group

income statement) plus depreciation and

amortisation from continuing operations as

shown in note 5 to the nancialstatements.

As shown in the Group income statement. As shown in the Group income statement.

TREATT PLC Annual Report & Accounts 2023

Total training hours

Scope 1 and 2 CO

emissions (tonnes)

SEDEX registered suppliers

Voluntary employee

turnover

Total water consumed (m³) Sustainable shipments

Workforce diversity

Reportable accidents

Average sick days

per employee

Year to

2023

Year to

2023

Year to

2023

Year to

2023

Year to

2023

Year to

2023

Year to

2023

Year to

2023

Year to

2023

9,485

4,489

51%

14.6%

17,943 85%

44%

Female

56%

Male

0 5

Year to

2022

Year to

2022

Year to

2022

Year to

2022

Year to

2022

Year to

2022

Year to

2022

Year to

2022

Year to

2022

7,205

4,546

46%

16.5%

53,149* 79%

41%

Female

59%

Male

1 4

KEY PERFORMANCE INDICATORS CONTINUED

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:

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:

Performance

Driving improvements in ethical and responsible business practices in our global supply chain is a priority:

NON-FINANCIAL KPIs

* See explanation on page 45 for our change to more accurate water reporting.

We have a number of

non-nancial operational

KPIs, which are aligned

with our strategic

themes and measure

our progress against

a number of priorities.

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SUSTAINABILITY

our approach

TREATT PLC Annual Report & Accounts 2023

SUSTAINABILITY CONTINUED

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.

PEOPLE

PEOPLE PLANET PERFORMANCE

PLANET

PERFORMANCE

58%

Business Leadership Team are women

69%

permanent group employees are shareholders

ED&I commitments

to empower and support

Reduced

carbon emissions (Scope 1 and 2)

89%

waste reduced, reused or recycled

Enhanced

water consumption monitoring

20%

Executive Director bonus scheme subject

to ESG related non-nancial objectives

100%

responsible & sustainable sourcing policy

roll out

New ESG Board Advisory Panel

SUMMARY OF SUSTAINABILITY IN ACTION

OUR IMPACT IN 2023

Areas of focusPillar

Sustainable development goals (SDGs)

• 69% of our permanent group employees are shareholders Page 25

• Embedding sustainability into our culture Page 27

• Re-launching revised values and behaviours Pages 27-29

• Equality, diversity and inclusion (ED&I) that empowers and supports our people Page 30

• Living Wage Employer (UK) Page 32

• Volunteering hours added to our corporate giving and community relations strategy Page 33

• Net zero pathway and carbon reduction targets Pages 35-36, 42

• Taskforce on Climate-related Financial Disclosures (TCFD) disclosure Pages 36-43

• Carbon emissions data collection and analysis, Scope 1, 2 and 3 Page 42

• 100% renewable electricity in the UK (40% of global electricity consumption) Pages 42-43

• Tree planting to help mitigate eects of necessary business travel Page 44

• Improving our waste streams Pages 44-45

• Improving water monitoring Page 45

• New ESG governance structure Pages 38-39

• Delivering on non-nancial KPIs Pages 23, 46, 48-49

• Creating a responsible and sustainable supply chain Pages 48-59

• Improving sustainability disclosure Page 49

OUR APPROACH

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Sustainability

Embedding sustainability into our culture Page 27

Reviewing our purpose, values and behaviours Pages 27-28

Community matters Pages 33-34

Carbon emissions collection and analysis Pages 35, 42-43

Carbon reduction strategy/net zero pathway Pages 35-36

Taskforce on Climate-related Financial Disclosure reporting (TCFD) Pages 36-43

Ensuring appropriate governance of sustainability Pages 38-39, 49

Determining and reviewing relevant non-nancial KPI’s Pages 25, 46, 48-49

Building a responsible and sustainable supply chain Pages 48-49

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 identied 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.

SUSTAINABILITY CONTINUED

Environmental matters

Environmental policy

Social matters

Equal opportunities policy

Understanding our world

Our business model – pages 14 and 15

Principal risks

Principal risk and uncertainties –

pages 60 to 65

Employees

Board composition and diversity – pages 68 to 69

Board diversity policy

Anti-bribery and corruption

Supplier code of conduct (revised in 2022)

Anti-bribery and corruption policy

Human rights

Slavery and human tracking statement

Supplier code of conduct (revised in 2022)

Labour and human rights (new policy 2022)

Reporting requirements and additional information

These are also in line with the recognised

Sustainable Development Goals (SDGs) of

the United Nations.

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.

PEOPLE

PLANET

PERFORMANCE

PriorityPillar

Those remaining areas of priority are regularly

reviewed and re-evaluated with plans for a

further materiality assessment in the coming year.

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.

Non-nancial 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.

Our key priorities

TREATT PLC Annual Report & Accounts 2023

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.

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 eorts, 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,

recertication, 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.

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 Inuencers (Executive direct reports).

PEOPLE

Supporting our people, communities & customers

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.

Looking ahead

We will continue to promote our purpose and

values to our employees, customers, suppliers

and communities and nd 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.

RELEVANT UN SDGs

SUSTAINABILITY CONTINUED

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Sustainability

SUSTAINABILITY CONTINUED

PROGRESSIVE PASSIONATE ACCOUNTABLE TEAM PLAYERS

WE ARE

Everything we do, we do with respect

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

Challenging ourselves

to change and drive solutions

to move forward

Driving excellence and

celebrating our shared successes

Driving results and delivering

on our commitments to

help us succeed together

Collaborating to enhance

the global community

Overcoming adversity and

embracing change

Caring for our people,

our planet and

our communities

Seeing the best in people

and trusting that they have

positive intentions

Listening and sharing knowledge

to achieve a common goal

Committing to sustainability and

sustainable practices, minimising

our impact to people and planet

Celebrating diversity and

recognising our dierences help

us to succeed together

Seeking innovation and new ways

of working, enabling our

people and planet to ourish

Challenging the status quo

to enhance ways of working

PEOPLE CONTINUED

TREATT PLC Annual Report & Accounts 2023

Female

2023

Male

2022

Male

2023

Female

2022

23 23

Average UK training

hours per employee

Female

2023

Male

2022

Male

2023

Female

2022

2,736

1,339

707 267

Total US

training hours

4,075

318%

Female

2023

Male

2022

Male

2023

Female

2022

Average US training

hours per employee

417%

Female

2023

Male

2022

Male

2023

Female

2022

2,762

2,627

2,804

3,414

Total UK

training hours

5,389

13%

Male

2023

Male

2023

Female

2023

Female

2023

Mandatory training

hours US

Professional

development

training US

Male

2023

Male

2023

Female

2023

Female

2023

Mandatory training

hours UK

Professional

development

training UK

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 exible working

guidance enables employees to work exibly (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 oce 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.

The Culture Ambassadors have also driven

cultural improvement through assessing the

balance of exibility with business need, working

with Inuencers and Line Managers to ensure

a regular presence in the oce, opportunities

to drive collaboration and meeting requirements

of key stakeholders.

SUSTAINABILITY CONTINUED

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

Our commitment to people extends beyond our

internal community to the global communities

in which we operate and serve.

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 ourish 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 beneting from continuous

professional development.

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Sustainability

SUSTAINABILITY CONTINUED

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 oer 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 beneting 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

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 dierent

diverse groups to help drive our understanding

of each other.

PEOPLE CONTINUED

How the Board monitors culture

Investing in our culture

ALL-EMPLOYEE SHARE SCHEME TAKE-UP

A good indicator of employee commitment to Treatt, its strategy,

performance and culture:

• UK partnership shares take-up December 2022: 56% (2021 65%

)

• Group share save scheme take-up in July 2023: 35% (2022: 56%

)

CULTURAL INDICATORS

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, reected in the following data:

• health and safety metrics

• employee turnover

• speak-up incidents

• breach of Group policies

EMPLOYEE ENGAGEMENT

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.

LINKEDIN LEARNING

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).

CULTURE AMBASSADORS

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).

Whilst our ethnicity pay gap has not been formally

reported, it has been regularly reviewed. Though

obtaining meaningful data remains a challenge we

have identied 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 full their own potential.

Gender diversity across the Group is reected 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-nancial KPI around male

to female ratios on page 23.

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 dene

the elements that make up an exemplary employee

experience, using employee feedback to further

strengthen the experience we provide.

TREATT PLC Annual Report & Accounts 2023

Diversity prole of our employees reecting

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 reective 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

Black, Asian and

Minority Ethnic

(BAME)

Black or African

American

Hispanic

or Latino

Asian

Prefer not

to disclose

Two or

more races

USA* 65% – – 18% 15% 1% – 1%

UK** – 93% 6% – – – 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.

** Suolk, UK Population data 2022 – Non-BAME 95%, BAME 5%.

Position Male Female Total

Group Directors 2 0 2

Business Leadership Team

2 8 10

Direct reports of Group Executive Team 26 26 52

Other employees 172 129 301

Total employees

202 163 365

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 diers to the headcount in note 6 to the nancial statement which is the

average number of employees during the year.

SUSTAINABILITY CONTINUED

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Sustainability

PEOPLE CONTINUED

SUSTAINABILITY 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

nancial wellbeing, proactive health initiatives and

managing stress. We have a plethora of benets

on oer to our people that support these activities

shown below:

• 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 modications, 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.

Reintroduced during the year, we now have

eight SHE champions in the UK and anticipate

four to ve also joining in the US.

DENTAL

HEALTHCARE

FLEXIBLE

WORKING

FAMILY

FRIENDLY

POLICIES

RETIREMENT

SAVINGS

INCOME

PROTECTION

FOR ILLNESS

HOLIDAY

PURCHASE

SCHEME

LIFE

ASSURANCE

PRIVATE

MEDICAL

AND

HEALTHCARE

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 specic 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.

Our benets driving wellbeing at work

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.

TREATT PLC Annual Report & Accounts 2023

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.

This survey also enabled us to highlight the

certications and standards we hold, further

cementing our eorts 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.

Top three categories of incidents

– chemical, vehicle, equipment

Top three categories of accidents

– 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)

2023 2022 2021 2020 2019

Number of reportable accidents

across Group 0 1 2 1 5

Average number of sick days 5 4 4 3 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.

PRIORITY:

Community matters

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.

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.

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:

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

Suolk 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.

KidsPack &

Toys for Tots

Enterprise Advisors

& School Support

Ocean Conservancy

Suffolk Mind, MyWiSH,

Upbeat & Peace River

Bury Rickshaw

Suffolk Wildlife Trust,

Adopt A Highway &

Operation Honeybee

SUSTAINABILITY CONTINUED

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Sustainability

SUSTAINABILITY CONTINUED

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.

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 avour ingredients industry.

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.

9 schools supported this year

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 oering 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 ngered 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 xing session, getting

17 people back on their bikes. We also worked with

the local council to oer 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

fteen eager volunteers worked at packing stations

to prepare and pack meals for local children in need.

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.

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 Suolk 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

West Suolk hospital patients, sta, family

members, volunteers, and the wider mental health

trust (the Norfolk and Suolk NHS Foundation

Trust) totalling more than 1,500 beneciaries

across the region.

Our close relationship with Suolk Mind

encouraged us to carry out an emotional needs

audit of our people this nancial 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 rst charity gala

dinner which raised over £27,000.

PEOPLE CONTINUED

TREATT PLC Annual Report & Accounts 2023

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 eects 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 reect 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, Suolk, spending three and

two days on the respective sites.

The audit reports provided recommendations

in respect of energy eciency projects and

step-change infrastructure investments to

signicantly 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

rst 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 specic to Florida,

due to lack of available data, but will be

incorporated when the situation changes.

PLANET

Acting on climate change

• 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 reect the ongoing move from

older UK premises to a new BREEAM-certied

site within Bury St Edmunds.

• For the period until 2030, we have incorporated

the growth projections included in our ve-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 eciency 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.

RELEVANT UN SDGs

SUSTAINABILITY CONTINUED

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Sustainability

Scope 1 & 2 near term SBT – in line with 1.5°C reduction – SBTi aligned

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Emissions (tCO

e/yr)

Business as usual Forecast emissions SBT 1.5°C reduction

FY2022

FY2023

FY2024

11%

FY2025

16%

FY2026

21%

FY2027

26%

FY2028

32%

FY2029

37%

FY2030

42%

SUSTAINABILITY CONTINUED

Net zero pathway continued

These include improvements in areas such as refrigeration, metering, steam boiler eciency, thermostatic

controls, air compression and insulation. Other investments identied 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-red plant.

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.

PLANET CONTINUED

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’) dened 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 specic 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’).

TREATT PLC Annual Report & Accounts 2023

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.

AlignmentDisclosuresRecommendations Page referenceDisclosure level

GOVERNANCE

Disclose the organisation’s governance

around climate-related risks and

opportunities

Describe the Board’s oversight of climate-related risks and opportunities

We are aligned on this recommendation Pages 38-39

Describe management’s role in assessing and managing climate-related

risks and opportunities

We are aligned on this recommendation Pages 38-39

STRATEGY

Disclose the actual and potential impacts

of climate-related risks and opportunities

on the organisation’s business, strategy

and nancial planning where such

information is material

Describe the climate-related risks and opportunities the organisation

has identied over the short, medium, and long-term

We are aligned on this recommendation Pages 39-41

Describe the impact of climate-related risks and opportunities

on the organisation’s businesses, strategy and nancial planning

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 quantiable nancial impacts

Pages 40-41

Describe the resilience of the organisation’s strategy, taking into

consideration dierent climate-related scenarios, including a 2

°C

or lowerscenario

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 quantiable nancial impacts.

This will be addressed in the next nancial year

Pages 39-41

RISK MANAGEMENT

Disclose how the organisation identies,

assesses and manages climate-related risks

Describe the organisation’s processes for identifying and assessing

climate-related risks

We are aligned on this recommendation Page 41

Describe the organisation’s processes for managing climate-related risks

We are aligned on this recommendation Page 41

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 Page 41

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

We are aligned on this recommendation Pages 41-43

Describe Scope 1, Scope 2 and if appropriate, Scope 3 greenhouse gas

(GHG) emissions, and the related risks

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 signicant proportion of our total emissions

Pages 41-42

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

SUSTAINABILITY CONTINUED

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Sustainability

SUSTAINABILITY CONTINUED

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 Ocer,

who oversees the operational and nancial 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.

TCFD WORKING GROUP

Initial assessment of risks and

opportunities linked to climate change

ESG WORKING GROUP

People, Planet, Performance

REMUNERATION COMMITTEE

Setting and assessment of

ESG-related remuneration targets

AUDIT COMMITTEE

Identication and management

of climate risks

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, nance 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 ow 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 Ocer

PLANET CONTINUED

BOARD

Overall accountability of ESG Strategy

ESG BOARD ADVISORY PANEL

Review and advise on climate strategy as

part of People, Planet, Performance strategy

ESG MANAGEMENT GROUP

Accountable for execution of ESG strategy

TREATT PLC Annual Report & Accounts 2023

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 classied pre- and post-controls.

Building on the non-nancial 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-nancial objectives for the 2024 nancial 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.

The sector relevant scenarios are summarised as follows:

No new policies

(business as usual)

Smooth 2050

transition

Delayed 2050

transition

Physical risk High physical risks Low physical risks Medium physical risk

Transition risk Low transition risk Medium transition risk High transition risk

Policy ambition

°C+ 1.5°C 1.8°C

Policy reaction None – continuation

of current policies

Immediate and smooth Delayed

Technology change Slow Fast Slow then fast

removal Low use Medium use Low use

Regional policy removal Low Medium High

During a series of workshops our TCFD Working

Group considered in detail the above scenarios and

reviewed the ndings 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 ndings 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.

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 rst 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 Suolk,

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 signicance 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.

We considered three dierent 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 nancial

impacts but plan to do so in due course as we

look to introduce internal carbon pricing into our

nancial planning.

In terms of our selected timeframes, we have

dened ‘short-term’ as up to ve 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.

SUSTAINABILITY CONTINUED

TREATT PLC Annual Report & Accounts 2023

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Other Information

Sustainability

SUSTAINABILITY CONTINUED

Material Risks

TCFD Category

Climate-related

trend

Potential nancial impact

Possible

short-term

impact

Possible

medium-term

impact

Possible

long-term

impact

PHYSICAL RISK

PHYSICAL AND

REPUTATION RISK

TRANSITION AND

MARKET RISK

TRANSITION AND

REPUTATION RISK

Water stress

Citrus sourcing

and supply chain

Energy and

carbon pricing

in the value

chain

Customer

procurement

preferences

for low carbon

products

Consumer

procurement

preferences

for sustainable

products

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

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

Our widespread value chain – including long

transportation distances – makes it dicult for us to

reduce our carbon emissions resulting in higher prices

for our raw materials due to increased carbon costs.

Our widespread value chain makes it dicult 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.

Increased demand from consumers for certied

ingredients (such as Rainforest Alliance and Fair

Trade) in products, could mean we lose customers

by not oering enough of these ingredients

(applicable predominantly to tea and coee).

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

Low

Medium

Low

Medium

Low

Medium

Low

Medium

Low

Medium

High

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 eciency.

Future NPD: If future products require more water as part of the manufacturing process, we could consider

nding alternative sites for manufacture, or alternatively seek to develop products in a more ecient way.

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.

Certied sourcing: Reacting to market insights into increasing consumer preferences for certied

ingredients in the future we have assessed our current approach. We already source more than 75% of our

tea raw material from Rainforest Alliance certied growers. Rainforest Alliance certication helps farmers

produce better crops, adapt to climate change, increase their productivity, and reduce cost. Using our

certied facilities in the USA to handle this material, enabling our customers to make on-pack certication

claims. Further to this we have obtained certication with Fair Trade USA to enable us to increase our

oering of certied 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.

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.

PLANET CONTINUED

TCFD DISCLOSURE CONTINUED

TREATT PLC Annual Report & Accounts 2023

Market opportunities

Material

opportunities

Description of opportunity

Possible short-

term impact

Possible medium/

long-term impact

MARKETS

MARKETS AND

TECHNOLOGY

Improving sustainability of supply chain to ensure

consistent supply of high-quality raw materials

and reduce transportation costs/emissions.

To become less dependent on expensive energy

providers and higher-carbon processing.

Low

Medium

Strategic response

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 identied 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.

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 nalised 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

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.

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 nal

post-controls rating. The assurance level is rated as

low, medium and high while the risk classication

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 rst ESG materiality

assessment – qualitative and quantitative – across

external and internal stakeholders which identied

addressing the long-term physical impacts of

climate change as a key material priority for

the business. The ndings from this materiality

assessment, summarised in our 2021 Annual

Report, informed our ESG strategy and the

risks identied were incorporated into our risk

management process.

We plan to conduct a follow-up materiality

assessment in 2024 in line with the

recommendations of the International

Sustainability Standards Board (ISSB).

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 rst 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.

SUSTAINABILITY CONTINUED

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 dened 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 signicance of climate risks.

TREATT PLC Annual Report & Accounts 2023

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Sustainability

SUSTAINABILITY CONTINUED

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 Aairs (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

Target 2023 2022

10% absolute reduction in

Scope 1 and 2 emissions

by 2025 at USA facility

(baseline FY2022)

+3.26% New

target

42% absolute reduction

in Scope 1 and 2 emissions

by 2030

(baseline FY2022)

New

target

N/A

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.

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 coee 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

2023

(tonnes of CO

2022

(tonnes of CO

2021

(tonnes of CO

Scope 1 – UK 431 629 462

Scope 2 – location-based UK 611 562 464

Scope 2 – market-based UK 0 0 0

Scope 1 – USA 1,805 1,348 1,482

Scope 2 – location-based USA 1,643 2,007 2,100

Scope 2 – market-based USA N/A N/A N/A

Total global Scope 1 and 2 (location-based) emissions 4,490 4,546 4,508

(restated)

Intensity ratio KG CO

emissions (Scope 1 and 2) per kg of product shipped (location-based) 0.61 0.52 0.46 (restated)

Scope 3: Not measured

Purchased goods and services (spend-based) 54,991 51,177

Fuel and energy-related activities (average-data method) 530 832

Upstream transportation and distribution (distanced-based) 3,692 5,005

Waste generated in operations (waste-type specic) 1,319 838

Business travel (distance-based) 189 181

Upstream leased assets (average-data method) 15 14

Downstream transportation and distribution (distance-based) 3,221 4,797

Total Scope 3 emissions 63,957 62,844 Not measured

Total Scope 1, 2 and 3 emissions 68,447 67,390 Not measured

2022 and 2023 gures 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 dened by the GHG Protocol, Scope 1 and 2 emissions relate to emissions from activities within the operational control of the Group. In general, the emissions reported are the same as those

which would be reported based on a nancial control boundary.

3 Emissions for previous years are retrospectively adjusted as and when more accurate data is provided.

4 The sales oce 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 specied 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 identied under Montreal Protocol and others, totalled 7 tonnes

(2022: 9.5 tonnes).

PLANET CONTINUED

TREATT PLC Annual Report & Accounts 2023

Energy eciency actions

Following our energy, water and waste audits of

our US and UK manufacturing sites in 2022, we

have identied approximately 30 energy eciency

projects which will reduce both costs and GHG

emissions. As we have recently moved all of

our UK operations into a new BREEAM-certied

manufacturing site in Suolk, UK, our focus in

2023 has continued at our site in Florida, USA

building on those projects implemented in 2022.

Energy consumed

Energy type

2023

(MWh)

2022

(MWh)

2021

(MWh)

Electricity UK 0 0 0

USA 4,452 4,750 4,609

Renewable electricity

procured

UK 2,948 2,905 2,186

USA 0 0 0

Natural gas UK 1,897 2,503 2,510

USA 8,219 5,769 6,729

Other fuel UK 207 255 226

USA 81 136 91

Group 17,804 16,318 16,351

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

eciencies. 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

eciencies. For projects completed in FY2023

we anticipate achieving an annual reduction

of 267 tonnes CO

e at our US facility and

contributing to our short-term target.

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 eciency across US

manufacturing site

10% absolute reduction in Scope 1 and 2 emissions by 2025

Citrus oil sourcing 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 certied raw materials

In 2024 we plan to introduce further meter and

monitoring across our manufacturing processes

in the USA, allowing us to better determine

consumption of specic processes and in turn

determine further eciencies. We are also

investing in projects such as steam boiler and

eciency upgrades and seeking specialist support

in better utilisation of refrigeration space, to help

maximise capacity and eciencies next year.

To further support our eorts 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 eet

Site Forklift eet details Emissions

Old UK site

(2021)

7 diesel/gas forklifts 27 tonnes CO

New UK site

(2023)

13 electric forklifts 0 tonnes CO

(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.

SUSTAINABILITY CONTINUED

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

Sustainability

Total global waste volume: 19,410mt (2022: 17,775mt)

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Anaerobic

digestion

Composting Landfill Recycling Reuse ReusedCombustion

1.4%

11.3%

69.9%

1.4%

15.2%

Parameter

0.8%

SUSTAINABILITY 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 nal recovery or disposal. Our new purpose-

built facilities, together with new ways of working,

are providing opportunities to nd ways to manage

waste dierently, with the environment in mind.

To focus our eorts on reducing waste rst and

ensuring as little as possible goes to landll 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 landll.

As such in the last few months, we have started

working with a green waste processor in Florida

to reuse our spent coee grounds to create

high-quality compost. As an anticipated growth

category for the business, the re-direction of this

waste stream will play a signicant 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 landll, we anticipate

a reduction of 520kg of CO

e per tonne of

coeewaste

PLANET CONTINUED

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 ight booked departing

from the UK (our most travelled route). It is

predicted that each tree will absorb 164.1kgs of CO

in its rst ten years, the programme also invests

in a United Nations Certied Emissions Reduction

renewable energy project which eectively 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 benets

to these communities.

Tree planting in Haiti, image courtesy of Eden Reforestation Projects.* Source: DEFRA emission factors (2023) for commercial and industrial waste to landll.

TREATT PLC Annual Report & Accounts 2023

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.

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 coee 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

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 landll in the UK

• In the USA we have introduced a crusher service to compact waste before it is taken to

landll, reducing volume and loads required, for which we estimate a 66.3% reduction

in transportation emissions whilst we work on seeking alternative services to landll

REDUCE

REUSE

RECYCLE

RECOVER

LAND

FILL

WATER EFFICIENCY

We have always monitored and sought to improve

our water usage and water eciency. Wastewater

management is an integral factor as we adopt

principles of operational excellence within our

processes. To enable more eective water

monitoring, a wastewater ow 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’.

Although our water eciency now shows a

signicant 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 eciency

measures, from automatic leak detection to self-

closing push button taps, resulting in a scoring

of 67% for water eciency 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

3,000m

, more than covering our grey water needs

on site.

This is reected in our water consumption table:

Water consumption 2023 2022

Total water withdrawn (m

) 106,598 57,529

Total wastewater

) 88,654 4,380

Total water consumed

) 17,943 53,149

Water eciency (litres per

kg of product shipped) 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 ow 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.

SUSTAINABILITY CONTINUED

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Sustainability

Percentage of sustainable shipments*

70% of shipments by road

Road shipments using 70%

sustainable carrier

Road shipments using 30%

non-sustainable carrier

100% of shipments by sea

Sea shipments using 100%

sustainable carrier

Sea shipments using 0%

non-sustainable carrier

100% of shipments by air

Air shipments using 100%

sustainable carrier

Air shipments using 0%

non-sustainable carrier

20232020 2021 2022

61%

85%

23%

79%

* A carrier is classied as being a ‘sustainable shipping’ carrier if they have conrmed 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.

PLANET CONTINUED

SUSTAINABILITY CONTINUED

SUSTAINABLE SHIPPING

Treatt continues to face challenges in this area

with over 1,600 dierent 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 oer '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.

TREATT PLC Annual Report & Accounts 2023

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-nancial 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 aects both

people and the environment. To strengthen

insights and openness with our suppliers we have

intensied our eorts 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.

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 eorts (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.

As a result, colleagues have been working

together across the business on our key priorities

to ensure our collective eorts 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.

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 eciencies and waste

reduction along with information sought to ensure

we understand any potential impact on our people.

PERFORMANCE

Strong governance & sustainable sourcing

PRIORITY:

Determining and reviewing

relevant non-nancial KPIs

During the year we have continued to assess

and, in many cases, deliver on improving our

non-nancial 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.

RELEVANT UN SDGs

SUSTAINABILITY CONTINUED

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Sustainability

SUSTAINABILITY CONTINUED

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 uctuate, the importance

of retaining strong supplier relationships is critical.

In order to ensure a positive inuence 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.

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 eorts in each category with

our priority suppliers. This group of suppliers were

identied 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

eorts 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 identied 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 identied

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.

Being both a supplier and buyer member allows our

customers to access our compliance to SEDEX’s

standards which are veried 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 veried 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

2023 2022

Percentage of our suppliers

that are SEDEX registered 51% 46%

Percentage of suppliers sites with

SMETA 4-pillar audits on SEDEX 38% 27%

Percentage of citrus volume

procured from suppliers registered

with SEDEX 78%

81%

1 In 2022 the percentage shown was from our priority citrus

suppliers, for 2023 this included all citrus suppliers.

PERFORMANCE CONTINUED

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

TREATT PLC Annual Report & Accounts 2023

RFA% of total tea raw material

20232020 2021 2022

63%

75%

30%

71%

Looking ahead

In 2024 we will encourage priority suppliers,

not yet registered or audited across all our

supply chains to do so, particularly those

identied 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 signicant focus

on ethical and responsible sourcing. Our aim is

that our entire global procurement team is CIPS

qualied at any given time.

Certications, memberships and ratings

A wide range of standards help provide

additional reassurance as to where we are on

our sustainability journey. These certications,

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-prot 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 verication

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 certication, where we are

able to buy and sell specic products with the

Rainforest Alliance (RFA) certication seal. The

RFA is an international non-prot 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 tracking, reduce

deforestation and greenhouse gas emissions and

ensure consumers and suppliers are investing back

into the environment in which the certied crop

is grown. During the year we have increased our

procurement of RFA-certied tea and are exploring

opportunities with other raw materials.

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-prot 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 reect the progress we made in

2022, as unfortunately our nancial 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, specically within our business sector.

Through this voluntary initiative, the avour and

fragrance industry seek to encourage enhancements

in the eld of sustainability, providing a framework to

enable sharing and benchmarking of the industry’s

commitment to sustainable development.

Food safety standards

Both of our sites in Bury St Edmunds, UK and Lakeland,

USA, are certied 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 rst year of certication was 2012 and

we must constantly review our processes to remain

certied and put additional control plans in place.

SUSTAINABILITY CONTINUED

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Sustainability

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.

SECTION 172

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 eect of our business on our stakeholders.

Board meetings include time dedicated to

discussion on dierent 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.

Page 50

Pages 50 to 51

Pages 51 to 52

Page 53

Pages 26, 70, 71

Pages 51, 72, 73

A The likely consequences of any decision in the long term

B The interests of the Company’s employees

C The need to foster the Company's business relationships with suppliers, customers and others

D The impact of the Company's operations on the community and the environment

E The desirability of the Company maintaining a reputation for high standards of business conduct

F The need to act fairly as between members of the Company

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 benet of its members as a

whole and in doing so have regard, amongst other matters, to:

STAKEHOLDER ENGAGEMENT

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.

EMPLOYEES SHAREHOLDERS CUSTOMERS SUPPLIERS COMMUNITIES ENVIRONMENT

TREATT PLC Annual Report & Accounts 2023

Indirect engagement reported to the Board included:

• Executive Director town hall meetings with

Q&A sessions

• Informal ‘cuppa’ sessions and 'coee

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

Inuencers 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 ve-year strategy

• Information on customer wins and nancial

results

• Organisational design including culture and

leadership

• Sustainability at Treatt

• Mental, physical and nancial wellbeing

• Executive remuneration

• 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

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

SHAREHOLDERS

Why we engage:

It is important that all shareholders have

condence 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.

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.

What we discussed:

Key topics of engagement:

• Our nancial results and performance, providing

opportunities for our shareholders to ask

questions to better understand our business

• Relocation to our new UK Headquarters and

closure of the former UK site

• The conict in Ukraine, sanctions against Russia

and impact on our business

• Global logistical issues

• Global destocking pressures

• Inationary pressures

• Growth in China

• Progress on sustainability

• Board composition, time given to Treatt and

Management remuneration

Board considerations:

• The Board proposed a nal 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

sucient time to Treatt

• Remuneration of management team reviewed

to ensure alignment with shareholder interests

STAKEHOLDER ENGAGEMENT CONTINUED

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STAKEHOLDER ENGAGEMENT CONTINUED

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

What we discussed:

Key topics of engagement:

• Service levels and the impact of global logistics

issues on lead times

• The conict in Ukraine, sanctions against

Russia and any impact on our supply chain

• Global destocking pressures

• Inationary 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 nancial position of

the business, including the level of inventory

required to be held by the Group to meet

customer demand

• Receipt of a report on customer engagement

SUPPLIERS

Why we engage:

We have a strong supplier base located all

over the world with which, in order to grow

sustainably, we need to develop and maintain

close relationships. Our suppliers are fundamental

to the quality and sustainability of the products we

oer 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 qualication and

requalication 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

TREATT PLC Annual Report & Accounts 2023

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 nancial and non-nancial donations

to community projects and charities

• Enterprise Advisors working closely with local

schools to support careers education through

virtual assemblies and collaborative projects

• Regular meetings with community, charity and

school contacts

• Group-wide charity fundraisers increasing

awareness of their causes, whilst raising vital

funds to support their services

• Hosting a business breakfast held by Suolk

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.

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

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 eect

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

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 eective 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

STAKEHOLDER ENGAGEMENT CONTINUED

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

FINANCIAL REVIEW

OVERVIEW

I am pleased with the return to growth in 2023.

Revenue, prot before tax and exceptionals, and

adjusted EBITDA

are all in growth which reects

the successful price increase programme and

embedding of cost disciplines to oset macro

ination 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 renancing 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 prot 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.

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 oset raw

material price ination. 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 signicantly.

Heritage categories, which includes citrus

(excluding China and Treattzest), herbs, spices

& orals 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 & orals.

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 oset by price increase.

New markets, which include coee, China and

Treattzest citrus, grew by 61% with revenue

of £16.1m (2022: £10.0m). Coee growth was

signicant in the year, with revenue of £5.0m

in the year with a focus on the premium cold

brew coee 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 2023 2022

Citrus 53% 48%

Tea 5% 6%

Health & wellness 8% 8%

Fruit & vegetables 11% 10%

Herbs, spices & orals 7% 9%

Synthetic aroma 13% 18%

Coee 3% 1%

Geographical % share of revenue 2023 2022

UK 6% 7%

Germany 4% 6%

Ireland 10% 8%

Rest of Europe 9% 10%

USA 42% 38%

Rest of the Americas 9% 9%

China 7% 6%

Rest of the World 13% 16%

Geographical analysis of revenues shows that the

UK and Europe declined, whereas the USA grew

signicantly. 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 beneted from

particularly strong growth in citrus, mainly driven

by price increases.

Resilient revenue performance."

Ryan Govender

Chief Financial Ocer

1 EBITDA is calculated as prot before interest, tax,

depreciation and amortisation from continuing operations.

See note 31 in the nancial statements.

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).

Prot

Gross prot increased by 14.7% with gross prot

margins increasing from 27.9% to 30.4%. The

gross margin increase was driven by operational

eciencies, successful price increases to mitigate

the impact of raw material ination, strategically

exiting some lower margin citrus business in the

year and the benet of eective 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 inationary

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, ination and

focused investment in sales and innovation to

drive growth.

Adjusted net operating margin

increased in the

year to 12.4% (2022: 11.3%), beneting from

the increase in gross prot. Net operating margin

decreased in the year to 9.9% (2022: 11.9%),

mainly due to the one-o exceptional gain in the

prior year relating to the sale of the previous UK

site. Operating prot excluding exceptional items

increased 16% to £18.3m (2022: £15.8m) whilst

statutory operating prot 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

(ROACE

) increased to 12.2% (2022: 11.6%) as

a consequence of the increase in operating prots

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 nancial

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 EBITDA

) for the

year increased signicantly by 24.6% to £23.0m

(2022: £18.5m) whereas statutory EBITDA reports

a 1.0% decrease to £19.2m (2022: £19.4m).

Prot before tax and exceptional items from

continuing operations grew by 13.7% to £17.3m

(2022: £15.3m). Reported prot 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 nance 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 xed costs for maintaining facilities for future use

which were funded from operating cash ows.

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

eective tax rate (after exceptional items) of 19.2%

(2022: 17.7%). The increase in eective 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 nancial 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 Benet Trust (EBT), which

are not benecially owned by employees since they

do not rank for dividend and are based upon prot

after tax.

Dividends

The proposed nal 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 prot before exceptional items divided by revenue from continuing operations.

3 Prot before interest, taxation and exceptional items divided by the average of opening, interim and closing net debt. See note 31 in the nancial statements.

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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 ve 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 signicant reduction in inventory volume,

oset 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 signicant 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

nancing arrangements in the UK and US totalling

£45.5m (2022: £30.8m) following a renance 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 renanced when they fall due.

Cash ow

Net cash inow for the year was £4.6m

(2022: £4.1m outow) including a net outow of

£7.1m paying down the existing bank loans and

borrowings. Excluding the renancing, the Group

delivered cash generation of £12m largely due to

strong cash generation from operations, driven

by eorts across the business to exercise greater

nancial prudence but also through lower capital

expenditure and eorts 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 nishing

existing value-added projects.

There was an overall improvement in working

capital, generating an inow of £3.5m (2022:

outow £18.5m), £2.5m of which was generated

from a reduction of inventory and as a result

of a focus on working capital eciency.

Capital investment programme

UK relocation

The Group acquired a ten-acre greeneld site on

the new Suolk 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 eciencies 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 rst phase of

installation and commissioning of plant and

machinery was completed, inventory was physically

transferred to be managed by the new warehouse

management system and rst 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

FINANCIAL REVIEW CONTINUED

TREATT PLC Annual Report & Accounts 2023

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 nal phase, we expect

a further net cash outow of £3.1m over the

next year. The cash outows 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 Benet 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 oers 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 rmly of the view that increased employee share

ownership is an important tool for driving positive

employee engagement in the business.

A similar scheme exists for US employees who

were awarded $1,000 (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 oered 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 satised through the issue of new shares.

In addition, the Group continued its annual

programme of oering 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 Benet 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 satised by shares held within the EBT,

to which further shares will be issued as necessary.

Final salary pension scheme

The R C Treatt nal salary pension scheme (the

‘scheme’) has not been subject to any further

accruals since 31 December 2012 and instead

members of the scheme were oered membership

of the UK dened contribution pension plan with

eect from 1 January 2013. This means that the

dened benet 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 decit

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 Benets’ 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 nancial

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 aected 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 eect. This risk

manifests itself in a number of ways.

Firstly, the value of the foreign currency net

assets of Treatt USA (the Group’s main overseas

subsidiary) can uctuate with Sterling.

Secondly, with R C Treatt (the Group’s main

UK subsidiary) exporting throughout the world,

uctuations in the value of Sterling can aect 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 signicant,

typically accounting for around half of the UK

business’s sales.

Even if a sale is made in Sterling, its price may

be set by reference to its US Dollar denominated

raw material price which therefore can have an

impact on the Sterling gross margin. Raw materials

are also mainly purchased in US Dollars and bank

accounts are operated through which US Dollar

denominated sales and purchases ow. Hence it

is the relative strength or weakness of Sterling

against the US Dollar that is of prime importance.

FINANCIAL REVIEW CONTINUED

TREATT PLC Annual Report & Accounts 2023

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FINANCIAL REVIEW CONTINUED

As well as aecting the cash value of sales, US

Dollar exchange movements can also have a

signicant eect on the replacement cost of

stocks, which aects future protability 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 renements 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 eectiveness 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 oset.

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 Ocer

28 November 2023

CULTURE

Investing in our world

class people

COST BASE

Scaling with appropriate

grip on costs

CAPACITY

Driving volume growth

to ll capacity and

de-bottleneck

CHINA

Driving growth with

national beverage brands

CONSUMER

Maintaining relevance to

growing trends through

innovation

CITRUS

Launching innovative

and cost-eective

natural extracts

COFFEE

Expanding capacity

and growing portfolio

WINNING WITH THE 7Cs

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

Income statement

Revenue 112,717 109,016 124,326 140,185 147,397

Adjusted EBITDA

1,2

14,871 16,982 23,144 18,464 22,997

EBITDA

14,115, 15,922, 21,842, 19,387 19,197

Operating prot

13,499 15,092 21,346 15,773 18,321

Prot before taxation and exceptional items 13,300 14,801 20,919 15,256 17,344

Growth in prot before taxation and exceptional items 5.2% 11.3% 41.3% (27.1%) 13.7%

Exceptional items (755) (1,060) (1,302) 923 (3,800)

Prot before taxation 12,545 13,741 19,617 16,179 13,544

Taxation (2,673) (2,896) (4,469) (2,864) (2,602)

Discontinued operations (1,084) (1,080) – – –

Prot 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 2,752

Property, plant and equipment 29,485 50,159 61,039 74,281 71,526

Right-of-use assets – 1,173 1,556 375 538

Net deferred tax liability (319) (924) (1,383) (5,369) (4,851)

Current assets 98,158 69,472 83,606 108,537 96,482

Current liabilities (28,905) (15,989) (30,556) (46,329) (32,551)

Non-current borrowings (4,369) (3,450) (2,624) (2,342) –

Post-employment benets (7,788) (10,051) (6,806) 1,782 3,723

Non-current lease liabilities – (628) (957) (291) (373)

Total equity 87,107 91,120 106,299 133,850 137,246

1 EBITDA is calculated as prot before interest, tax, depreciation and amortisation from continuing operations. See note 31 in the nancial statements.

2 All adjusted measures exclude exceptional items. See note 8 in the nancial statements.

3 Operating prot before exceptional items divided by revenue from continuing operations.

4 Prot before interest, taxation and exceptional items divided by the average of opening, interim and closing net debt. See note 31 in the nancial statements.

5 Net cash/(debt) at the year-end date divided by adjusted EBITDA

1,2

. See note 31 in the nancial statements.

6 The dividend per share shown relates to the interim dividend declared and nal dividend proposed for the corresponding nancial year.

7 Dividend cover is dened as prot for the year, less exceptional items and their related tax eect, divided by the total of interim dividend paid and nal dividend proposed.

*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 ow

Cash generated from operations 20,544 15,677 13,892 (1,830) 23,579

Taxation paid (2,208) (2,191) (4,874) 443 (2,174)

Net interest paid (199) (191) (270) (382) (1,087)

Dividends paid (3,080) (3,378) (3,704) (4,834) (4,802)

Additions to non-current assets net of proceeds (10,570) (24,814) (14,373) (7,177) (4,071)

(Acquisition)/disposal of subsidiaries 1,033 (136) – – –

Net sale of own shares by share trust 526 547 630 621 624

Proceeds on issue of shares 14 2 3 9 5

(Increase)/reduction of lease liabilities – (659) (394) 657 (153)

Other cash ows (161) (388) (451) (812) 116

Movement in (debt)/cash 5,899 (15,531) (9,541) (13,305) 12,037

Total net (debt)/cash 15,958 427 (9,114) (22,419) (10,382)

Ratios

Adjusted net operating margin

2,3

12.0% 13.8% 17.2% 11.3% 12.4%

Return on average capital employed

2,4

18.8% 18.5% 20.9% 11.6% 12.2%

Net (cash)/debt to adjusted EBITDA

2,5

(1.07) (0.03) 0.39 1.21 0.45

Net (cash)/debt to EBITDA

1,2

(1.13) (0.03) 0.42 1.16 0.54

Adjusted basic earnings per share

17.82p 19.72p 27.05p 19.80p 22.94p

Basic earnings per share 16.69p 18.12p 25.29p 22.04p 18.01p

Growth in adjusted basic earnings per share

(1.1%) 10.7% 37.2% (26.8%) 15.9%

Dividend per share

5.50p 6.00p 7.50p 7.85p 8.01p

Dividend cover (adjusted to exclude exceptionals)

3.22 3.28 3.60 2.51 2.85

Net assets per share 144.8p 151.2p 176.0p 219.9p 224.5p

TREATT PLC Annual Report & Accounts 2023

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PRINCIPAL RISKS AND UNCERTAINTIES

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 eective 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

HOW WE MANAGE RISKS

The management of risk is embedded in the management and operational processes of the Group including:

A dedicated team reviewing adherence to internal procedures and operational controls, requiring action where non-conformances are identied

A clear understanding of market

conditions and raw material prices

Oversight of risk by the Board

Regular dissemination of nancial and non-nancial information

and key performance indicators (KPIs)

The quality of our people

and culture

Processes for identication, review

and monitoring of risk

Established policies, procedures

and internal controls

The process of strategy setting

RISK MANAGEMENT

TREATT PLC Annual Report & Accounts 2023

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

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 benets and risks are fully understood

and appropriate mitigation strategies are in place

to minimise the eects of the risks should they

materialise.

Our risk appetite has been dened and agreed

by the Board and helps frame decision-making

in determining how best to manage each of our

principal risks. It is communicated across the

business in our risk management framework.

Our risk appetite in relation to dierent categories

is summarised below.

Risk identication

Risk identication 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 eects

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.

Board review of risk

As well as reviewing risk registers and discussing

risk throughout the year, the Board holds a specic

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

eectiveness of the Group’s system of internal

controls. The Board reviewed and discussed a

paper prepared by management on the Group’s

internal controls, covering all material controls,

including those which are nancial, operational and

compliance related. The Board has monitored and

reviewed the eectiveness of the Group’s overall

approach to risk management, including any control

failures and received a comprehensive report

on the review of the Group’s nancial controls.

Our risk appetite

• Strategic – we will actively seek to maximise shareholder value whilst assessing and managing strategic risks

• Financial – we are prepared to invest for reward and minimise the possibility of nancial loss by managing the

risks to a tolerable level

• Operational – we are prepared for adverse operational performance in the short-term if there is a clear business

case with dened benets 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 signicant 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 benet

• 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

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.

Where signicant projects are undertaken, such

as the recent site relocation in the UK, specic

project risk registers are established to record

all risks that could have a signicant eect on the

success of the project. This ensures that there is

accountability for the mitigation strategies in place

and enables regular monitoring of risk identication

and the eectiveness of mitigating actions

throughout the project.

Those risks with a potential impact that remains

classied as high or medium post-mitigation form

the Board risk register, providing details of those

risks that may impact upon the performance of

the business and its strategic direction. The Board

formally reviews this register twice a year and

upon any material change, with any amendments,

control issues, accidents or commercial, nancial,

regulatory or reputational issues being reported to

the Board in the meantime.

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.

TREATT PLC Annual Report & Accounts 2023

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PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Emerging risks

The Business Leadership Team, being closely

involved in day-to-day matters, has a breadth of

experience across commercial, nancial, supply

chain, operations and technical matters. Within

their elds of specialism, they consider emerging

risks that have the potential to adversely impact

the business or its stakeholders and take steps to

ensure that such risks are appropriately mitigated, as

required. One such example is mitigating the impact

of ination on input costs which, if not acted upon by

seeking price increases with customers, would have

led to reduced protability. Signicant 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 briengs 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 signicant impact

on the long-term performance of the business and

its strategic priorities. It is not intended to be an

exhaustive list and additional risks not presently

known to management, or risks currently deemed

to be less material, may also have potential to

cause an adverse impact on the business.

We have removed the 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.

Geopolitical and macroeconomic uncertainties

has been introduced as a new principal risk this

year as political conicts and uncertainties have

the potential to cause supply chain disruption and

further impact ination.

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

eects of greenhouse gas emissions. Having a

signicant 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.

FINANCIAL

1 Climate 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 eciency, new technologies and

product development

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, wildres, hurricanes and

sudden climatic events

• Operational disruption at production

facilities caused by longer-term

impacts of climate change (including

water stress and wildres)

• Signicant amount of citrus raw

materials provided by Central and

South American suppliers

• Volatility in market price of raw

materials and other eects on

supply chain

• Reduced consumer demand over

time for certain products

• Increasing demands from customers

to reduce emissions across the

supply chain and ensure supply

chain is resilient to climate change

• Regulatory changes or restrictions

on our manufacturing facilities, nes

or penalties

• Introduction of carbon taxes or

similar levies

• Squeeze on margins

No change

TREATT PLC Annual Report & Accounts 2023

3 Geopolitical and macroeconomic uncertainties

No change

New risk

MITIGATION

• Continual monitoring of the situation and adopting a exible approach to ensure

appropriate response to support the business

• The health, safety and wellbeing of our employees is paramount and our

response has focused on our employees, customers and our local communities

• Flexible work practices to enable everyone who can, to work from home and to

arrange our sites with safety in mind to ensure all vital operations and projects

remain on track. Adopting a staged approach to the re-opening of facilities

• Working closely with customers to manage their immediate and longer-term

needs

• Maintaining regular contact with our supply chain to ensure continuity of supply

• Monitoring the regulatory landscape and market conditions

• Managing cash and headroom to protect the Group’s liquidity

• Business Leadership Team to provide regular updates to keep all employees

informed and maintain team spirit

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

signicant raw materials

MITIGATION

• Continue to identify supply chain vulnerabilities to create contingency plans

for disruptions

• Develop alternative sourcing options in regions less prone to geopolitical conicts

• 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

RISK AND IMPACT

• Reduction in demand

for certain products,

decrease in new product

development briefs from

customers, and changes

in consumer habits

• Diculties within the

supply chain, production,

incoming and outgoing

logistics

• Adverse eect on the

welfare of our employees

RISK AND IMPACT

• Can materially impact

revenue, contribution and

onerous stock provisions

• Possible stock shortages

RISK AND IMPACT

• Political conicts,

uncertainties and events

may lead to supply chain

disruptions, impacting

both the availability and

price of our products

• Ination driving up prices,

increasing production

costs and potentially

reducing customer

demand/destocking

5 Loss of critical employees through retention policy and failure to manage succession

PEOPLE

No change

MITIGATION

• Ensure we enhance the employee experience and secure an emotional

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 eective performance reviews and regular catch-ups to ensure

any issues are identied and resolved

• People manager development to ensure that they are equipped with the right

skills to manage and motivate their teams

RISK AND IMPACT

• A lack of experienced

and engaged employees

will have a detrimental

impact on all areas of

the business

• Loss of skills may impact

our ability to deliver

the best service to

our customers

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

2 Pandemic and resulting global issues

4 Movements in citrus commodity raw material price

Investing for future growth

Strategic impact key:

Engaging with our communities Reducing our environmental impact Diversifying into new categories

Investing in our culture Investing in our core categories

1 3 52 4

TREATT PLC Annual Report & Accounts 2023

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6 Pressure on infrastructure for strategic business 9 IT issues including network, hardware, data and security

10 Product failure

8 Inadequate documentation of processes and/or non-adherence to required processes

7 Structural damage to production facilities from storm or hurricane damage at Treatt USA,

due to its Florida location

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Decrease

No change

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

MITIGATION

• Well-constructed IT infrastructure with failover capabilities, supported by a

comprehensive asset management database and best practice maintenance

processes

• Multi-layered security protection system in place including subscription to

managed threat response service, which proactively searches for suspicious

activity in our network 24/7

• Security team continuously searches for and xes vulnerabilities, including

those reported by third-party security consultants

• Continued investment in infrastructure and particularly software security

• Continued focus on raising 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

MITIGATION

• Strong supplier qualication 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

MITIGATION

• Strong Group-wide commitment to disciplined compliance with internal quality

programmes

• Commitment to permit third-party auditing by customers and for certication

and regulatory purposes

• Internal auditing of systems and processes against standard operating

procedures and British Retail Consortium (BRC) requirements

• Cross departmental process reviews

MITIGATION

• Regularly inspect and maintain building components

• Implement hurricane action plan when necessary

• Sucient 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

RISK AND IMPACT

• Loss of revenue

• Damage to reputation

• Loss of key strategic

customer

RISK AND IMPACT

• Loss of IT systems and/

or data impacting on the

ability of the business to

function eectively

• Reputational damage

and litigation in respect

of data protection

RISK AND IMPACT

• Potential product recall

causing nancial and

reputational loss

RISK AND IMPACT

• Failure of BRC, HACCP

or regulatory audits

• Damage to reputation

as problem-free supplier

• Investment in

rectication of any non-

compliances noted

RISK AND IMPACT

• Loss of use of buildings,

equipment and product

• Danger to employees

• Major incident due to

type of products stored

OPERATIONAL

Investing for future growth

Strategic impact key:

Engaging with our communities Reducing our environmental impact Diversifying into new categories

Investing in our culture Investing in our core categories

1 3 52 4

TREATT PLC Annual Report & Accounts 2023

11 Failure to comply with relevant UK and US environmental, H&S and other applicable legislation

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

RISK AND IMPACT

• HSE and/or EA

investigation

• Probable enforcement

action involving nes,

enforcement notices

• Risk of site closure

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.

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

LEGAL AND REGULATORY

Investing for future growth

Strategic impact key:

Engaging with our communities Reducing our environmental impact Diversifying into new categories

Investing in our culture Investing in our core categories

1 3 52 4

TREATT PLC Annual Report & Accounts 2023

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GOING CONCERN AND VIABILITY STATEMENT

The Group’s business activities, together with

the factors likely to aect 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.

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 nancial 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 aect its future development, performance and

position. The review also included the nancial

position of the Group, its cash ows, and available

sources of nance.

The process adopted to assess the viability of

the Group involved the modelling of a series of

theoretical 'stress test' scenarios linked to the

Group’s principal risks, most signicantly severe

business interruption like that experienced during

the pandemic, or that could arise through the

impact of climate change or through global conict.

In assessing the Group’s prospects and resilience,

the Directors have done so with reference to

its current nancial position and prospects, its

credit facilities, its recent and historical nancial

performance, and forecasts. The Board’s risk

appetite and the principal risks and mitigating

factors are described on pages 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

eects of climate change, or the impact of

another pandemic event and the potential

impact these could have on the Group’s

revenues and prots;

• the implications of uctuating prices of the

Group’s strategic raw materials;

• the impact of the competitive environment

within which the Group operates;

• the eects 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 nance;

• a sensitivity analysis which involves exing

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 prot and cash ows

are protected.

The Group successfully renanced 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.

THREE-YEAR REVIEW OF THE GROUP’S VIABILITY

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 inationary

pressures on raw material prices as well as

de-stocking from many businesses within the

avour 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 protability.

A further 'reverse stress test' scenario was

modelled to nd a sustained reduction in revenue

over the rst two years of the viability period that

would give rise to a breach of the Group’s covenant

conditions or headroom in the period. This scenario

was then stress-tested further by overlaying the

adverse impact of a decline in prot 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 signicant 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 nancial 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 identied any material uncertainties

which would aect 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

nancial statements have been prepared on a going

concern basis. Furthermore, the Directors have a

reasonable expectation that the Group has adequate

resources available to it to continue in business and

meet its liabilities over the three-year period of their

viability assessment.

The Strategic report was approved by the Board

on 28 November 2023.

Ryan Govender

Chief Financial Ocer

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

Daemmon Reeve

Chief Executive Ocer

Appointed to the Board:

May 2012

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 Suolk.

As announced on 20 October 2023, Daemmon

will retire from Treatt on 31 December 2023.

Key external appointments:

• None

Ryan Govender

Chief Financial Ocer

Appointed to the Board:

July 2022

Skills and experience:

Ryan is an experienced CFO, having worked for

over 20 years in senior nance roles across global

FMCG businesses, particularly in the food sector.

His diverse experience includes strategy, FP&A,

corporate structuring, large capital projects, investor

relations and nance transformation.

For the past 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 nance and

management roles within other ABF businesses,

including Speedibake, Germains Seed Technology

and Illovo Sugar. He qualied 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.

Key external appointments:

• None

Bronagh Kennedy

Non-executive Director

Appointed to the Board:

January 2023

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 aairs, 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:

• Non-executive Director at Genuit Group plc

Committee key:

Audit Committee Remuneration Committee Nomination Committee

Denotes Committee Chair

Independent

BOARD OF DIRECTORS

Vijay Thakrar

Non-executive Chair

Appointed to the Board:

September 2020

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)

TREATT PLC Annual Report & Accounts 2023

David Johnston

Non-executive Director

Appointed to the Board:

May 2011

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 avour

and fragrance companies, Firmenich SA, in a variety

of commercial and technical roles over 13 years.

He nished his career at Firmenich SA as global

head of avour innovation. David went on to start

his own company, Natural Taste Consulting SARL,

which focuses on the development and sale of taste

modifying compounds. Since December 2019,

David has been an independent member of the

Scientic Advisory Committee of Driscolls, a

California-based global leader in the production

and sales of fresh berries.

Key external appointments:

• Independent Member of Driscolls Scientic

AdvisoryCommittee

BOARD OF DIRECTORS CONTINUED

Christine Sisler

Non-executive Director

Appointed to the Board:

February 2022

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

Philip O’Connor

Non-executive Director

Appointed to the Board:

February 2022

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

qualied as a Chartered Certied 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

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

Board independence

Length of service

Independence of

Non-executive Directors

0–5 years 5

Over 10 years 2

Independent 20%

Non-independent 80%

Independent 57%

Non-independent 43%

Board gender diversity

Female 29%

Male 71%

Board experience

Operations 2

HR 1

Finance 4

Management 7

Industry 4

ESG 2

Board Ethnicity

Ethnic minority 29%

White 71%

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 signicant 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, eective 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-o 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 ve-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 oce.

We hope that you will be able to attend. Further

details are on pages 142 to 153.

Corporate governance

At Treatt our commitment to eective corporate

governance is reected in our principles, policies

and practices.

Board meeting

attendance

100%

Board meetings

in the year

CORPORATE GOVERNANCE STATEMENT

INTRODUCTION FROM THE CHAIR

I am pleased to present the

corporate governance report."

Vijay Thakrar

Chair

TREATT PLC Annual Report & Accounts 2023

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 eective 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.

Page

Board leadership and company purpose

Promoting the long-term sustainable success of the Group 60

Alignment of our culture with our purpose, values and strategy 27 to 34

Framework of eective controls 60 to 65

Engagement with our stakeholders 50 to 53

Workforce policies and practices 25

Division of responsibilities

Role of the Chair 74

Division of responsibilities 74

Non-executive Directors 74

Information and support 74

Composition, succession and evaluation

Appointment, succession and diversity 77 to 78

Skills, experience and knowledge 68 to 69

Board evaluation 76

Audit, risk and internal control

Audit and internal control 81

Fair, balanced and understandable 80 to 81

Risk management 60 to 65

Remuneration

Remuneration policies and practice supporting strategy and promoting long-term sustainable success 80 to 81

Developing remuneration policy 82

Alignment of the policy to the workforce 82

Leadership and purpose

Role of the Board

The Board is accountable to shareholders for the eective and entrepreneurial leadership of the Group

in a way which promotes its long-term sustainable success for the benet 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 Ocer.

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.

Audit

Committee

Monitors the integrity of

the nancial reporting

and independence

and objectivity of the

external auditor

Nomination

Committee

Ensures that the Board

and committees have

the right balance of

skills, knowledge and

experience

Remuneration

Committee

Determines the policy for

Executive remuneration;

approves and monitors

remuneration and

incentive plans for the

Group

Business

Leadership Team

To assist the Executive

Directors in the day-

to-day operational

management of the

Group’s business

THE BOARD

Provides strategic leadership to the Group within a framework of strong corporate

governance, eective controls and a positive culture, which encourages openness

and transparency, to deliver long-term sustainable growth

Executive Directors

CORPORATE GOVERNANCE STATEMENT CONTINUED

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

Attendance at meetings

The attendance of the members of the Board and its committees during the year, against the number of

scheduled meetings they were eligible to attend, are shown below:

Board

Audit

Committee

Nomination

Committee

Remuneration

Committee Chair

Daemmon Reeve –

Chief Executive Ocer

7 N/A 2 N/A

Ryan Govender –

Chief Financial Ocer

7 N/A N/A N/A

Vijay Thakrar –

Non-executive Director and Chair

7 1 4 4 Board from

27 January 2023

Nomination

Tim Jones –

Non-executive Director and Chair

(Retired 27 January 2023)

3 N/A N/A N/A Board until

27 January 2023

David Johnston –

Non-executive Director

7 N/A N/A N/A

Yetunde Hofmann –

Non-executive Director

(Stepped down 27 January 2023)

3 N/A 1 1 Remuneration until

27 January 2023

Philip O’Connor –

Non-executive Director

(Appointed 1 February 2022)

7 4 4 N/A Audit

Christine Sisler –

Non-executive Director

(Appointed 1 February 2022)

7 4 N/A 4

Bronagh Kennedy –

Non-executive Director

(Appointed 27 January 2023)

4 N/A 3 3 Remuneration from

27 January 2023

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 eectively 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 specic matters. Board

meetings are of sucient duration to enable debate and discussion, ensuring adequate analysis of issues

during the decision-making process. The Board takes the opportunity to interact with employees from

across the business on an informal basis when lunching in the shared eating areas.

If necessary, there is an agreed procedure for

Directors to take independent professional advice

at the Group’s expense. This is in addition to the

access which every Director has to the Company

Secretariat. The Secretariat is charged by the

Board with ensuring that Board procedures are

followed and that there are good information ows

within the Board and its committees and between

senior management and Non-executive Directors.

Employee Voice

During the year, 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.

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 signicant

industry experience and, as the longest serving

Non-executive Director, was already known to

Group employees.

Role of our Employee Voice NEDs:

Our Employee Voice NEDs seek to ensure that:

• The interests and feedback of employees are

considered in Board decision-making

• Feedback is provided to the 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

• Employee Voice reects 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 condential, 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

CORPORATE GOVERNANCE STATEMENT CONTINUED

TREATT PLC Annual Report & Accounts 2023

China

• Local technical capacity and manufacturing

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

• Opportunities for product development for the

China market

• Citrus and health & wellness products are in

demand in China

• Ideas discussed during employee voice sessions

now being implemented

• The team are greatly looking forward to the CFO's

imminent rst visit to China

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 condence, 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.

Conicts of interest

The Group has procedures in place for managing

conicts of interest. If a Director becomes aware that

they, or a connected party, have a potential conict

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 conicts 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 conicts, 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 conicts and the Board formally reviews

them annually.

Details of other key directorships held by members

of the Board can be found in the Director proles 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 eective

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

• Many projects are being undertaken requiring

cross-functional collaboration

• 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

• A welcome forum; due to the level of engagement

additional sessions were arranged

• Global Town Halls, led by Executive Directors, to

provide updates and feedback are appreciated and

more would be welcomed

• Additional support required to maintain a positive

culture during very busy periods

• Changes to structure and direction received

positively

• Meeting the newly appointed Directors in person

was welcomed

• Board engagement helpful

Key themes from employee engagement

CORPORATE GOVERNANCE STATEMENT CONTINUED

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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 eective division of responsibility between the CEO and the Chair; the roles of the Board team can

be generally dened as set out in the table below:

Chief Financial Ocer

• Responsible for management of the Group’s

nancial aairs, including treasury and taxation

• In conjunction with the CEO, recommends the

annual budget

• Manages nancial risk and appropriate mitigation

strategies

• Oversees the nance, legal and governance

and IT departments

• Promotes the culture of the organisation

Senior Independent Director

• Provides a sounding board for the Chair

• Serves as an intermediary for the other Directors,

when necessary

• Chairs meetings in the absence of the Chair

• Is available to shareholders to deal with

concerns which cannot otherwise be resolved

• Leads the performance evaluation of the Chair

Non-executive Directors

• Provide independent oversight of the management

and governance of the business

• Provide constructive and objective challenge to

Executive management

• Assist with the development of strategy

• Provide advice to the Board and management

and share knowledge and experience

• Serve on Board committees

• Update and refresh their skills, knowledge

and familiarity with the business

• Appoint and remove Executive Directors

Company Secretary

• Is supported by a Deputy Company Secretary, who

is responsible for the day-to-day running of the

Secretariat and includes an Assistant Company

Secretary and governance specialist

• Provides advice and support to the Board on

governance, compliance and legal matters

• Responsible for legal and compliance matters

relating to the Group

• Provides support for Board meetings and agendas

to enable ecient process and compliance with

Board procedures

• Ensures good information ows within the

Board and its committees and between senior

management and Non-executive Directors

• Oversees governance department

CORPORATE GOVERNANCE STATEMENT CONTINUED

Chair

• Ensures that the Board and its committees are

eective 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 eective

communication between Directors

• Ensures that the Company maintains a dialogue with

its principal shareholders about strategy, direction,

Directors’ and senior managers’ remuneration and

is aware of shareholders’ issues or concerns

• Ensures that employees are able and encouraged

to maintain dialogue directly with the Board

• Ensures that the performance of individual

Directors, the whole Board and its committees

are evaluated at least annually

• Encourages Directors to update their skills,

knowledge and familiarity with the Company, its

employees and all stakeholders as required to full

their role

• Agrees the CEO’s personal objectives

• Maintains regular contact with the Non-executive

Directors without the presence of the Executive

Directors

Chief Executive Ocer

• Develops and implements Group strategy

• In conjunction with the CFO, recommends the

annual budget

• Ensures strong leadership of the Group

• Sets and promotes the culture of the organisation

• Develops the Business Leadership Team, plans for

succession and reviews organisational design

• Manages risk and appropriate mitigation strategies

• Advises and updates the Chair and Board in

relation to key matters

• Maintains relationships with investors and advises

the Board accordingly

• Day-to-day running of the business

• Manages the operations and resources of

the Group

TREATT PLC Annual Report & Accounts 2023

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 sucient 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 dened 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 signicant industry

knowledge and experience, which benets 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 conicts of interest with

the Group or potential constraints on time required

to full the commitment to the Company. During the

year, Bronagh Kennedy was permitted to accept a

position on another board. The Board is satised

that the other commitments of Board members

do not detract from the extent or the quality of the

time which they are able to devote to the Group.

Composition, succession and evaluation

Board composition

The Board has been refreshed to ensure that it has

an appropriate balance of skills and experience with

nancial, technical, industry-specic 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 reects

the markets we serve and to recruit the best

possible candidate for each individual role having

regard to qualications, 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 xed

fee for their services. However, in exceptional

circumstances, where signicant 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, nancial information

and briengs 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 oer 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 eective, hold recent and

relevant experience and continue to demonstrate

commitment to the role.

CORPORATE GOVERNANCE STATEMENT CONTINUED

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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 eectiveness. 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 eectiveness of

the external evaluation, the Board held a further

session with the independent evaluator during

the year focusing on eective communication

and debate. Ways that the Board could be more

eective, 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 eective 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 nancial 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, specic areas

of focus for the Board during the year included:

CORPORATE GOVERNANCE STATEMENT CONTINUED

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

ve 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

• Regularly reviewed the trading

performance of the business and

updated the market as required

• On the recommendation of the Audit

Committee, reviewed and approved

the 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 nancing proposals,

relocation spend and bank facilities

• Approved the recommendation of the

nal dividend for FY2022 and payment

of the interim dividend for FY2023

Operational performance

• Maintained oversight of the

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

Governance and risk

• Undertook an internal Board and

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

People

• 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 Ocer and Company Secretary

TREATT PLC Annual Report & Accounts 2023

Nomination Committee

experience

HR 1

Finance 2

Management 3

ESG 2

Industry 1

NOMINATION COMMITTEE REPORT

Meeting

attendance

90%

Committee meetings

in the year

* Daemmon Reeve did not attend 2 Nomination Committee

meetings in the year where CEO succession was discussed.

NOMINATION COMMITTEE MEMBERS

Vijay Thakrar (Chair)

Non-executive Director

Philip O’Connor

Non-executive Director

Bronagh Kennedy

Non-executive Director

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:

• To regularly review the structure, size and

composition (including the skills, knowledge,

experience and diversity) of the Board and its

committees and make recommendations to

the Board with regard to any changes that

are deemed necessary

• To identify and nominate candidates for

the approval of the Board, to ll Board and

committee vacancies as and when they arise

• To oversee succession planning for the Board

and senior management, considering current

and future strategy, the challenges and

opportunities facing the Group and the skills and

expertise needed on the Board for the future

• To review the results of the Board and

committee performance evaluation process

that relate to the composition of the Board

and committees, and to assess whether the

Non-executive Directors are providing

appropriate value in fullment of their duties

Activities since the last report

• Appointment of Bronagh Kennedy as

Non-executive Director and Remuneration

Committee Chair

• Appointment of search rm in October 2023

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

• Reviewed the terms of reference of

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

I am pleased to present our

Nomination Committee Report.”

Vijay Thakrar

Chair – Nomination Committee

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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 nal

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 rm.

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 benet 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 benets 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

reects 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

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, nance,

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.

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

rst 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

TREATT PLC Annual Report & Accounts 2023

Audit Committee

experience

Finance 2

Management 2

Industry 2

Operations 1

I am pleased to present

our Audit Committee Report.”

Philip O’Connor

Chair – Audit Committee

Meeting

attendance

100%

Committee meetings

in the year

AUDIT COMMITTEE MEMBERS

Philip O’Connor (Chair)

Non-executive Director

Christine Sisler

Non-executive Director

A focus on governance and reporting

The Audit Committee focuses on eective

governance and nancial reporting.

Membership, independence and experience

Treatt's Audit Committee of two independent

Non-executive Directors reects 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 qualied Chartered Certied Accountant

deemed by the Board to have recent and relevant

nancial experience.

The committee acts independently of

management and the Board is satised that its

members have the appropriate skills, experience,

knowledge and professional qualications, 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 nance 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

nancial performance and to report to the Board

on signicant nancial reporting issues and

judgements contained therein, having regard

to matters communicated to it by the auditor

• To review the content of the Annual Report

and advise the Board on whether, taken as a

whole, it is fair, balanced and understandable,

and provides the information necessary

for shareholders to assess the Group’s

performance, business model and strategy

• To oversee the relationship with the auditor and

assess the eectiveness 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 condence,

raise concerns about possible improprieties

in matters of nancial reporting or other

matters. The Group has arrangements in

place for the proportionate and independent

investigation of such matters and for appropriate

follow-up action

AUDIT COMMITTEE REPORT

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

AUDIT COMMITTEE REPORT CONTINUED

Activities since the last report

• Reviewed and reported to the Board on the half

year report and trading updates

• Met with the audit partner to approve the audit

plan and identication of risks

• Reviewed the auditor’s ndings, management’s

responses and ensured robust challenge

• Reviewed the auditor’s performance and

the audit process to ensure that they remain

objective and independent, and to assess the

eectiveness 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 nancial statements, signicant nancial

reporting issues and judgements contained

therein, and discussions with management

• Reviewed the clarity and completeness of

the treatment and disclosure of exceptional

items and alternative performance measures

• Received presentations from management

on nancial reporting matters

• 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

• Reviewed the performance of the

Audit Committee

• Reviewed the terms of reference of the

Audit Committee

• 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 nancial

performance. Reports are requested from

management on particular matters, especially

where a signicant 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.

Signicant judgements and issues

The committee receives reports from management

on the signicant accounting and nancial reporting

matters and judgements involved in the preparation

of the nancial statements. Amongst the matters

considered by the committee in relation to the

Group’s 2023 Annual Report were:

Global economic uncertainty and impact

on going concern basis of accounting

Despite the Group‘s resilient nancial performance

throughout the global pandemic, the committee

remains vigilant to the uncertainties arising both

domestically and internationally from the current

economic and geopolitical environment, as well as

the prospect of a future pandemic. The impact of

these various challenges is manifesting itself in

inationary 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 nancial modelling has since been

undertaken with this in mind to support the

assessment of the business as a going concern

and its longer-term viability. The Group’s going

concern and viability statement is on pages 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 ndings following their review

of the work done on inventory valuation and the

controls in place over the processes involved.

Dened benet pension scheme

The choice of discount rate, ination rate and life

expectancy basis could materially aect the level

of surpluses and decits in the dened benet

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 conrming

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

TREATT PLC Annual Report & Accounts 2023

AUDIT COMMITTEE REPORT CONTINUED

• Senior management conrm that the content

in respect of their areas of responsibility

is considered to be fair, balanced

andunderstandable

• The committee receives an early draft of

the Annual Report to enable timely review

and comment

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 eectiveness

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.

It was agreed during the year that a senior member

of the nance team would dedicate a portion of

their time to focus on internal controls and will

report directly to the Audit Committee.

During the planning phase of the external audit the

auditors conrm 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 signicant deciencies

therein, they will report their ndings to the

Audit Committee.

External audit

The Audit Committee is committed to ensuring

the independence, eectiveness and objectivity of

the external auditor, and reviews the performance

of the external auditor in respect of audit-related

services and non-audit services every year.

Appointment and re-appointment

of external auditor

The Group undertook a competitive external audit

tendering process in 2020 and BDO LLP (BDO)

was selected as the Group’s external auditor with

eect 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.

The level of non-audit fees and their eect on

the auditor’s independence or objectivity is also

considered on a regular basis. The split between

audit and non-audit fees for the year under review

appears in note 5 to the nancial statements. The

committee has a policy for the provision of non-

audit services by the Company auditor, which

is aligned with the requirements of the UK

Financial Reporting Council’s Ethical Standards

(2016 and 2019); it ensures that objectivity and

independence are not compromised. Under the

policy, all non-audit services to be contracted with

the external auditor will require the approval of the

committee. Apart from other assurance services,

as set out in note 5 to the nancial statements,

BDO has not provided any non-audit services to the

Group and when considering the use of the auditor

to undertake such assignments, consideration will

be given at all times to the provisions of the FRC

Guidance on Audit Committees with regard to

the preservation of independence. BDO LLP has

indicated its willingness to continue in oce. The

Audit Committee recommended to the Board that

BDO be re-appointed and resolutions are to be

proposed at the Annual General Meeting for the

re-appointment of BDO LLP as auditors of Treatt

plc and its subsidiaries, and to authorise the Board

to x their remuneration. The remuneration of the

auditors for the year ended 30 September 2023 is

disclosed in note 5 of the nancial statements.

External auditor assessment

The committee has oversight of the relationship

with the external auditor and is responsible for

monitoring their independence, objectivity and

compliance with professional and regulatory

requirements. An annual assessment of the

eectiveness of the external auditor is undertaken

to facilitate continued improvement in the audit

process which incorporates the views of senior

management. This assessment considers:

• The delivery of an ecient, robust audit in

compliance with the agreed plan and timescale

which is underpinned by a thorough risk

identication process

• The provision of robust and perceptive advice

on key areas of judgement, and technical issues

• The demonstration of a high level of

professionalism and technical expertise

• Continuity within the audit team

• Adherence to independence, policies and other

regulatory requirements

The committee was satised 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

eectiveness of BDO’s performance and relationship

with Treatt and is satised that BDO delivered a

robust audit and remain independent of Treatt,

having no previous connection with the Company.

Eectiveness of the committee

The eectiveness 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 eectively.

Philip O’Connor

Chair – Audit Committee

Future plans

• Treatt is committed to developing a business

with strong ESG values at its core. As reported

elsewhere, 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.

TREATT PLC Annual Report & Accounts 2023

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Other Information

Remuneration Committee

experience

HR 1

Finance 2

Management 3

ESG 2

Operations 1

Industry 1

DIRECTORS’ REMUNERATION REPORT

I am pleased to present our

Remuneration Committee Report.”

Bronagh Kennedy

Chair – Remuneration Committee

Meeting

attendance

100%

Committee meetings

in the year

REMUNERATION COMMITTEE MEMBERS

Bronagh Kennedy (Chair)

Non-executive Director

Vijay Thakrar

Board Chair

Christine Sisler

Non-executive Director

A focus on remuneration structure

The policy is to ensure that remuneration

structures are transparent and proportionate.

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 nancial 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 prot growth during the year

with resilient revenue performance. The Committee

is satised that in light of this performance level,

the Company's remuneration outcomes for FY2023

were appropriate.

Key performance highlights included:

• The Group’s prot before tax and exceptional

items increased to £17.3m, meeting expectations

• 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)

reecting record cash generation

• Group-wide roll out of the updated ve-year

strategy

As has been our practice since 2014, we will again

be oering free shares to the value of £700/$1,000

respectively to all UK and US qualifying employees.

As we are required to conrm by the UK Directors’

Remuneration Report regulations, the committee

conrms 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

• Conrming 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 reect our growth in EPS over the LTIP

performance period of three nancial 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.

TREATT PLC Annual Report & Accounts 2023

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 Ocer

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 rst 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 nancial 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-nancial measures unless minimum nancial

targets have been achieved.

One change has been approved for FY2024 relating

to the salary of our Chief Financial Ocer, 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 nancial 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 xed 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

DIRECTORS’ REMUNERATION REPORT CONTINUED

TREATT PLC Annual Report & Accounts 2023

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Other Information

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/nancial-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:

• We will always aim to compete on salary and other benets, but executives should not be overpaid

when compared with external pay relativity and wider workforce remuneration and conditions

• We will recognise strong contribution from performance, experience and industry expertise as well as

demonstrating our culture and values

• All colleagues participate in a good pension plan, with the same pension contribution rates applying to

all employees in a country

• Remuneration packages should align with Treatt’s strategic objectives and the interests of shareholders

by using stretching performance metrics that provide a strong link to the creation of shareholder value

• Variable pay should incentivise delivery against performance in accordance with our culture where

employees are accountable and rewarded for their performance

• All employees can participate in a bonus scheme, and we have high alignment of business-based

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

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:

• 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 benets

• Determine the remuneration packages for the Executive Directors, the Chair and senior management,

which includes the Company Secretary

• Approve the design of, and determine targets for, any performance-related incentive schemes operated

by the Group and approve the total annual payments made under such schemes

• Review the design of all share incentive plans requiring approval by the Board and shareholders.

Forany such plans, the committee shall determine each year, taking into account the recommendations

of the CEO as appropriate, whether awards will be made and, if so, the amount of such awards to

the Executive Directors, senior management and other key employees, and any performance targets

to be used

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 nancial year

• Grant of options to Executive Directors, senior management and other business critical employees

under the Treatt LTIP and the setting of performance conditions

• Reviewing salary and fee levels for the Executive Directors and Chair respectively, and agreement of

salary and fee increases for the 2024 nancial year

• Determination of the salary increases of members of the Business Leadership Team for the 2024

nancial year

• Consideration of the award of free and matching shares to UK employees under the Share

Incentive Plan and equivalent awards of restricted stock units to US employees under the

Long-Term Incentive Plan

• Reviewing the quality of the advice received from FIT Remuneration Consultants and whether it was

objective and independent

• Reviewing Executive Directors’ shareholdings against the requirements of the Share Retention Policy

• Reviewing the terms of reference of the Remuneration Committee

• Reviewing the performance of the Remuneration Committee

In addition, the committee has ensured that the 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 signicant role played by

shares in our incentive plans (together with LTIP holding periods and in-employment and post-cessation

shareholding guidelines) and (iii) malus/clawback provisions within all our incentive plans.

Predictability – Our incentive plans are subject to individual caps, with our share plans also subject to

market standard dilution limits. The weighting towards use of shares within our incentive plans means

that actual pay outcomes are highly aligned to the experience of our shareholders.

Proportionality – There is a clear link between individual awards, delivery of strategy and our long-term

performance. In addition, the signicant role played by incentive pay, together with the structure of the

Executive Directors’ service contracts, ensures that poor performance is not rewarded.

Alignment to culture – Our executive pay policies are fully aligned to Treatt’s culture through the

application of our developed remuneration principles which were widely reviewed by our Board before

being settled.

External advisors

During the year the committee continued to engage the services of FIT Remuneration Consultants LLP,

who were appointed in the latter stages of 2017 following a selection process led by the 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 satised that the advice received during the year was objective and

independent.

Eectiveness of the committee

The eectiveness 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 eective, and receives

good quality, timely information in respect of regulatory changes and best practice and communicates well

with the rest of the Board.

TREATT PLC Annual Report & Accounts 2023

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DIRECTORS’ REMUNERATION REPORT CONTINUED

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)

Benets Unchanged from FY2023. Private healthcare (including family cover for Daemmon

Reeve); life assurance; permanent health insurance; car allowance; all-employee

shareschemes

Pensions Daemmon Reeve – 9% of salary (contributions are paid as cash and reduced for

the impact of Employers’ NICs, giving an actual contribution rate of 7.9% of salary)

Ryan Govender – 9% of salary

Annual bonus Maximum is 125% of base salary for Executive Directors for FY2024 targets,

which are based on:

• Group prot before tax and exceptionals* calibrated by reference to the

performance of the Group in FY2023 (80% weighting)

• Non-nancial targets and objectives set by the Remuneration Committee

(20%weighting)

The bonus outcomes for FY2024 will be paid:

• 75% in cash after nalisation 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

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)

FY2024 awards will be subject to performance conditions measured over three

nancial 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

IMPLEMENTATION OF POLICY IN 2024

TREATT PLC Annual Report & Accounts 2023

DIRECTORS’ REMUNERATION REPORT CONTINUED

Directors’ remuneration (audited)

The tables below report a single gure for total remuneration, and the proportion of xed and variable

pay is shown below for the Executive Directors and for each individual Executive and Non-executive

Director respectively.

Daemmon Reeve Ryan Govender

2023

£’000

2022

£’000

2023

£’000

2022

£’000

Fixed pay:

Salary 435 390 235 83

Taxable benets

16 16 15 4

Pension

34 31 21 7

Total xed pay 485 437 271 94

Variable pay:

Annual bonus 182 40 98 –

Share options vesting in the nancial year

359 989 – –

Total variable pay 541 1,029 98 –

Total single gure of remuneration 1,026 1,466 369 94

1 Ryan Govender was appointed as an Executive Director on 1 July 2022.

2 Taxable benets 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%.

The following section of this report provides details of the implementation of the policy for the year ended 30 September 2023

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

prot before tax, adjusted for exceptional items (PBTE) with 80% weighting, and on the achievement

of non-nancial measures set by the Remuneration Committee with 20% weighting.

Bonus payments linked to nancial measures range from 2.5% of salary at threshold level, rising

incrementally to a maximum of 100%. The ranges are set out below in comparison to the actual achieved

growth in the year. The Remuneration Committee determined that 26.9% of the bonus relating to the

achievement of nancial objectives should be paid.

Percentage bonus

attainable

2023 PBTE

£’000

Threshold 0% 16,000

Maximum 100% 21,000

Actual achieved 26.9% 17,13 17,344

The amounts payable in respect of non-nancial 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-nancial objectives should be paid.

Objective Target % Achieved % Actions completed

Performance culture 3.0% 2.0% People restructure fully executed

Cost base reduction

Corporate strategy 12.0% 7.5% Increase of coee 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

Formation of ED&I Allies Network

Sustainability 5.0% 3.0% Formation of ESG Board Advisory

Panel and ESG Management Team

Clear sustainability roadmap to net zero

Total 25.0% 15.0%

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Percentage bonus awarded

The annual bonus, as a percentage of the maximum bonus achievable (125% of salary), was as follows:

2023 2022

Daemmon Reeve 33.5% 8.2%

Ryan Govender

33.5% 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 nancial year:

Scheme Basis Date of grant

Share price at

date of grant

Face value

£’000

Minimum

performance

award

Performance

end date

Daemmon Reeve LTIP 2023

Executive 14 Dec 2022 £6.60 544 25% 30 Sept 2025

Ryan Govender LTIP 2023

Executive 14 Dec 2022 £6.60 293 25% 30 Sept 2025

SAYE 2023

All-Emp 14 July 2023 £5.92 22 N/A N/A

1 Face value is calculated based upon share price at date of grant as shown above.

2 Executive LTIPs are granted at nil cost, subject to performance conditions.

3 SAYE (Save As You Earn) share options are oered 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)

Directors share options during the year

The share options of the Directors in oce during the year are as set out below:

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 2,950 – – – 2,950

Dec 2022 – Dec 2029 Nil 73,978 – (56,223) (17,755) –

Dec 2023 – Dec 2030 Nil 45,571 – – – 45,571

Feb 2025 – Feb 2032 Nil 52,232 – – – 52,232

Dec 2025 – Dec 2032 Nil – 82,386 – – 82,386

174,731 82,386 (56,223) (17,755) 183,139

Ryan Govender Sept 2026 – Feb 2027 566.0p – 1,272 – – 1,272

Dec 2025 – Dec 2032 Nil – 44,431 – – 44,431

– 45,703 – – 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 nancial

year was £4.93 to £7.24. All market price gures are derived from the Daily Ocial 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

specied vesting times per the scheme rules. During the year, 8,943 shares were exercised. A total of

30,381 share options remain unvested.

DIRECTORS’ REMUNERATION REPORT CONTINUED

TREATT PLC Annual Report & Accounts 2023

DIRECTORS’ REMUNERATION REPORT CONTINUED

Non-executive Directors (audited)

Fees (xed pay)

2023

£’000

2022

£’000

Vijay Thakrar

104 52

Tim Jones

41 113

David Johnston 51 47

Philip O’Connor

68 31

Christine Sisler

52 32

Bronagh Kennedy

42 –

Yetunde Hofmann

20 55

Lynne Weedall

– 52

Je Ilie

– 23

Richard Illek

– 12

378 417

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, Je Ilie and Lynne Weedall resigned on 31 December 2021, 25 February 2022 and 17 September 2022 respectively.

Pensions (audited)

The Chief Executive Ocer 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, dened benet occupational pension scheme.

The annual pension entitlement accrued is as follows:

Accrued total pension p.a.

Normal retirement date

2023

2022

Daemmon Reeve 24 Sept 2036 15,865 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 dened money purchase pension plans were made as follows:

2023

£’000

2022

£’000

Daemmon Reeve 34 31

Ryan Govender

21 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.

TREATT PLC Annual Report & Accounts 2023

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Other Information

Directors’ interests (audited)

The Directors who held oce 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

2023

£’000

2022

£’000

2023

£’000

2022

£’000

2023

£’000

2022

£’000

Executive Directors

Daemmon Reeve 553,780 549,161 180,139 171,781 2,950 2,950

Ryan Govender 976 – 44,431 – 1,272 –

Non-executive Directors

Vijay Thakrar 7,006 6,144 – – – –

Philip O'Connor 6,550 – – – – –

Bronagh Kennedy 522 – – – – –

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.

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 held

outright or vested Base salary

Value of interest as

% of base salary

2023

£’000

2022

£’000

2023

£’000

2022

£’000

2023

£’000

2022

£’000

Target % of

base salary

Daemmon Reeve 2,808 3,240 435 390 645% 831% 200%

Ryan Govender

5 – 235 235 2% – 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.

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.

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

200%

800%

400%

600%

1,000%

Total shareholder return

Treatt Plc

FTSE All-Share

Treatt TSR performance over the last 10 years to 30 September 2023, compared with the FTSE All-Share index.

CEO remuneration

The following table provides historical data on remuneration in respect of the Director performing the role

of Chief Executive Ocer for each of the years covered by the performance graph.

2023 2022 2021 2020 2019 2018 2017 2016 2015 2014

Total remuneration

(£’000) 1,026 1,466 741 1,219 1,501 1,757 603 580 470 436

Annual bonus as

% of maximum 33.5% 8.2% 100% 100% 62.5% 92.5% 100% 88% 92% 95%

Share options vesting

as % of maximum 76.0% 100% N/A

100% 100% 100% N/A

N/A

100%

1 There were no options which vested during the year.

2 All share options vested in full as they were all-employee share options which were not subject to performance conditions.

DIRECTORS’ REMUNERATION REPORT CONTINUED

TREATT PLC Annual Report & Accounts 2023

Relative importance of spend on pay

Wages and salaries are the most signicant 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 prot, the most signicant of which, taxation, has therefore

been selected:

2023

£’000

2022

£’000 Movement

Total remuneration

21,542 20,939 2.9%

Dividends

4,802 4,834 (0.7%)

Current tax

3,139 1,939 61.9%

1 Total remuneration includes wages, salaries and pension costs as disclosed in note 6.

2 Dividends paid in the nancial year as disclosed in note 10.

3 Current tax charge in respect of the nancial year as disclosed in note 9.

Chief Executive pay ratio reporting

Set out below is the ratio of the Chief Executive’s single gure 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 rst 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 Method used 25th percentile 50th percentile 75th percentile

2023 Option B 35:1 32:1 24:1

2022 Option B 48:1 44:1 31:1

Of the three options set out in legislation for calculating Chief Executive pay ratios, we have chosen

option B. This option utilises existing gender pay gap data from April 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 signicantly changed by the year-end date, so we consider this to be a reliable data set.

Comparison group Total remuneration Base salary

Employee A – 25th percentile 29,538 27,300

Employee B – 50th percentile 32,211 32,005

Employee C – 75th percentile 43,441 42,000

Year-to-year movements in the pay ratio will largely be down to the Chief Executive’s variable pay outcome

which will signicantly 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

oer participation in all-employee share schemes as well as share incentive plans in the UK, and similar

schemes for US colleagues. The Group is satised that the median pay ratio for this nancial year is

consistent with the Group’s wider pay, reward and progression policies aecting 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 satised that the Chief

Executive’s pay is weighted at the correct level.

We expect the pay ratio to uctuate year-on-year and it may not always coincide with the underlying

performance of the business in a single year.

DIRECTORS’ REMUNERATION REPORT CONTINUED

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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.

% 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 benets Salary or fees Bonus Taxable benets Salary or fees Bonus Taxable benets Salary or fees Bonus Taxable benets

Employees

1,2

10.3% 64.1% (1.0%) 9.0% (58.6%) 31.6% 4.2% 56.5% 10.3% 4.9% 22.9% 6.5%

Exec Directors:

Daemmon Reeve 11.5% 355.0% 0.5% 14.7% (88.2%) 0.2% 1.0% 1.0% 0.1% 2.1% 63.6% 0.2%

Ryan Govender

2.0% N/A 39.4% N/A N/A N/A N/A N/A N/A N/A N/A N/A

Richard Hope

N/A N/A N/A 2.5% (79.5%) 0.2% 1.0% 1.0% 0.1% 1.8% 62.3% 0.1%

Non-exec Directors:

Vijay Thakrar

101.8% N/A N/A 8.0% N/A N/A 1.0% N/A N/A N/A N/A N/A

Tim Jones

8.8% N/A N/A 9.7% N/A N/A 1.0% N/A N/A 2.0% N/A N/A

David Johnston 9.2% N/A N/A 10.1% N/A N/A (9.0%) N/A N/A (4.7%) N/A N/A

Philip O'Connor

45.9% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Christine Sisler

7.8% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Yetunde Hofmann

11.5% N/A N/A 28.9% N/A N/A 1.0% N/A N/A 2.0% N/A N/A

Lynne Weedall

N/A N/A N/A 10.1% N/A N/A 5.4% N/A N/A 10.0% N/A N/A

Je Ilie

N/A N/A N/A 10.1% N/A N/A 1.0% N/A N/A 2.0% N/A N/A

Richard Illek

N/A N/A N/A 10.1% N/A N/A 1.0% N/A N/A 2.0% 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 nancial year.

2 Employee bonuses are based on a combination of Group performance and the performance of the entity they are employed by. US all-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, Je Ilie 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.

DIRECTORS’ REMUNERATION REPORT CONTINUED

TREATT PLC Annual Report & Accounts 2023

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 Ocer and Company Secretary

DIRECTORS’ REMUNERATION REPORT CONTINUED

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

DIRECTORS’ REPORT

The Directors present their report and the audited

nancial 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 prot before tax for the year

was £13.5m (2022: £16.2m). Prot before tax and

exceptional items was £17.3m (2022: £15.3m).

The Directors recommend a nal 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 aecting 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 nancial statements.

Restrictions on transfer of securities

There are no restrictions on the transfer of ordinary

shares or on the exercise of voting rights attached

to them, except (i) where the Company has

exercised its right to suspend their voting rights

or to prohibit their transfer following the omission

of their holder or any person interested in them to

provide the Company with information requested by

it in accordance with Part 22 of the Companies Act

2006 or (ii) where their holder is precluded from

exercising voting rights by the Financial Conduct

Authority’s Listing Rules or the City Code on

Takeovers and Mergers.

Rights and obligations of ordinary shares

On a show of hands at a general meeting, every

holder of ordinary shares present in person or

by proxy and entitled to vote shall have one vote

and on a poll, every member present in person or

by proxy and entitled to vote shall have one vote

for every ordinary share held. Subject to the

relevant statutory provisions and the Articles,

holders of ordinary shares are entitled to a dividend

where declared or paid out of prots available for

such purposes.

Treatt employee benet 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.

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 notied 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 Number

Issued

Voting

abrdn plc 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 3.34 3.37

James Sharp & Co 2,036,382 3.33 3.36

OTHER STATUTORY INFORMATION

TREATT PLC Annual Report & Accounts 2023

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 nancing an acquisition or other

capital investment.

It is the Directors’ intention to seek renewal

of these general authorities annually. Further

information is set out in the notice of Annual

General Meeting on pages 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 oce until the next Annual

General Meeting and shall then be eligible, subject

to Board recommendation, for election at that

meeting. All Directors will oer 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 oce,

either by passing an ordinary resolution of which

special notice has been given or by notice being

given by all the other Directors.

Conicts of interest

No Director had an interest in any contract of

signicance during the year. The Group has

procedures in place for managing conicts of

interest, which are set out on page 73.

Directors’ and ocers’ liability insurance

The Group maintains Directors’ and ocers’

liability insurance which is reviewed annually.

The insurance covers the Directors and ocers

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 ocer of a Group company and in respect of

damages or civil nes or penalties resulting from

the unsuccessful defence of any proceedings.

Going concern and viability

The going concern and viability statement is set

out on pages 66 and 67.

Political donations

The Group made no political donations in 2023

(2022: £nil).

Signicant 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.

DIRECTORS’ REPORT CONTINUED

Annual General Meeting

The Annual General Meeting will be held at Treatt

plc, Skyliner Way, Bury St Edmunds, Suolk, 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).

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

DIRECTORS’ REPORT CONTINUED

Financial and internal control

The Board conrms that a process for the ongoing

identication, evaluation and management of

signicant 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 eectiveness. This

covers nancial, operational and compliance

controls including those in relation to nancial

reporting processes (including the preparation of

consolidated accounts). In addition to monitoring

reports received via the Executive Directors, the

Board considers whether the control systems are

appropriate and consults with those responsible

for environmental, insurance, legal and health and

safety compliance as appropriate. There were no

signicant internal control issues identied 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 eective 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 nancial statements, which is subject

to review by senior management throughout the

consolidation process.

The Board monitors the integrity of all nancial

announcements released by the Group, ensuring

that, among other things, appropriate accounting

standards and policies are applied consistently,

that all material information is presented and that

appropriate disclosures are made.

Financial and accounting principles

Financial controls and accounting policies are

set by the Board so as to meet appropriate levels

of eective nancial 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 dened 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 nancial risk

management objectives and policies and on the

exposure of the Group to relevant risks in respect

of nancial instruments is set out in note 29 of the

nancial statements.

Health and safety

The Group’s disclosures on health and safety have

been included within the Sustainability section on

pages 24 to 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 rst 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.

TREATT PLC Annual Report & Accounts 2023

The Directors are responsible for preparing

the Directors’ Report, the Strategic Report, the

Directors’ Remuneration Report, the Corporate

Governance Statement and the nancial statements

in accordance with applicable law and regulations.

Company law requires the Directors to prepare

Group nancial statements for each nancial year.

The Directors are required under company law and

the listing rules of the Financial Conduct Authority

to prepare Group nancial statements and have

elected to prepare the Group nancial statements

in accordance with UK-adopted international

accounting standards.

The Group nancial statements are required by

law, and UK-adopted international accounting

standards, to present fairly the nancial position

of the Group and the Parent Company and the

nancial performance of the Group. The Companies

Act 2006 provides, in relation to such nancial

statements, that references in the relevant part

of that Act to nancial statements giving a true

and fair view are references to their achieving

a fair presentation.

Under company law the Directors must not approve

the nancial statements unless they are satised

that they give a true and fair view of the state

of aairs of the Group and the Parent Company

and of the prot of the Group for that period.

In preparing each of the Group and Parent

Company nancial statements, the Directors are

required to:

a. select suitable accounting policies and apply

them consistently;

b. make judgements and estimates that are

reasonable and prudent;

c. state whether they have been prepared in

accordance with UK-adopted international

accounting standards, subject to material

departures disclosed and explained in the

nancial statements;

d. prepare the nancial statements on the

going concern basis unless it is inappropriate

to presume that the Group and the Parent

Company will continue in business; and

e. prepare a Directors’ Report, a Strategic Report

and Directors’ Remuneration Report which

comply with the requirements of the Companies

Act 2006.

The Directors are responsible for keeping adequate

accounting records that are sucient to show and

explain the Group’s and the Parent Company’s

transactions and disclose with reasonable accuracy

at any time the nancial position of the Group and

the Parent Company and enable them to ensure

that the nancial statements and the Directors’

Remuneration Report comply with the Companies

Act 2006 and, as regards the Group nancial

statements, Article 4 of the IAS Regulation.

They are also responsible for safeguarding the

assets of the Group and the Parent Company and

hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

The Directors are responsible for ensuring the

Annual Report and the nancial statements are

made available on a website. Financial statements

are published on the Company’s website in

accordance with legislation in the United Kingdom

governing the preparation and dissemination

of nancial statements, which may vary from

legislation in other jurisdictions. The Directors

are responsible for the maintenance and integrity

of the corporate and nancial information included

on the Treatt plc website.

Directors’ statement pursuant to the

Disclosure and Transparency Rules

Each of the Directors, whose names and functions

are listed in the Directors’ Report, conrms that,

to the best of their knowledge:

a. the nancial statements, prepared in accordance

with UK-adopted international accounting

standards, give a true and fair view of the

assets, liabilities, nancial position and prot

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 oce on the date

of approval of these nancial statements have

conrmed, as far as they are aware, that there is

no relevant audit information of which the auditors

are unaware. Each of the Directors has conrmed

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 Ocer and Company Secretary

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

Independence

Following the recommendation of the audit committee, we were

appointed by the Board of Directors on 29 June 2020 to audit the

nancial statements for the year ended 30 September 2020 and

subsequent nancial periods. The period of total uninterrupted

engagement including retenders and reappointments is 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 nancial statements in the UK, including the FRC’s Ethical

Standard as applied to listed public interest entities, and we have

fullled 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 nancial statements, we have concluded that the

Directors’ use of the going concern basis of accounting in the

preparation of the nancial statements is appropriate. Our

evaluation of the Directors’ assessment of the Group and the

Parent Company’s ability to continue to adopt the going concern

basis of accounting included:

We obtained the Directors’ cash ow forecasts and evaluated the key

assumptions in respect of revenue growth, gross prot 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 cashow forecasts with

reference to the covenants in place over the existing nancing

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 nancial statements are approved, to check

the Group’s ability to comply with the covenant requirements going

forward; and

INDEPENDENT AUDITOR’S REPORT

to the members of Treatt Plc

Opinion on the nancial statements

In our opinion:

• the nancial statements give a true and fair view of the state of the

Group’s and of the Parent Company’s aairs as at 30 September

2023 and of the Group’s prot for the year then ended;

• the Group nancial statements have been properly prepared in

accordance with UK adopted international accounting standards;

• the Parent Company nancial statements have been properly

prepared in accordance with UK adopted international accounting

standards and as applied in accordance with the provisions of the

Companies Act 2006; and

• the nancial statements have been prepared in accordance with

the requirements of the Companies Act 2006.

We have audited the nancial statements of Treatt Plc (the ‘Parent

Company’) and its subsidiaries (the ‘Group’) for the year ended

30 September 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 nancial statements,

including a summary of signicant accounting policies. The nancial

reporting framework that has been applied in their preparation is

applicable law and UK adopted international accounting standards

and as regards the Parent Company nancial statements, as applied

in accordance with the provisions of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards

on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities

under those standards are further described in the Auditor’s

responsibilities for the audit of the nancial statements section of

our report. We believe that the audit evidence we have obtained is

sucient and appropriate to provide a basis for our opinion. Our audit

opinion is consistent with the additional report to the audit committee.

• We considered the adequacy of disclosures in the nancial

statements in respect of going concern against the applicable

nancial reporting framework.

Based on the work we have performed, we have not identied any

material uncertainties relating to events or conditions that, individually

or collectively, may cast signicant doubt on the Group and the

Parent Company’s ability to continue as a going concern for a period

of at least twelve months from when the nancial statements are

authorised for issue.

In relation to the Parent Company’s reporting on how it has applied

the UK Corporate Governance Code, we have nothing material to

add or draw attention to in relation to the Directors’ statement in

the nancial statements about whether the Directors considered it

appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with

respect to going concern are described in the relevant sections of

this report.

Overview

Coverage 98.6% (2022: 98.5%) of Group prot 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 nancial statements as a whole

£677,000 (2022: £808,000) based on 5%

(2022: 5%) of prot 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

nancial statements. We also addressed the risk of management

override of internal controls, including assessing whether there was

evidence of bias by the Directors that may have represented a risk of

material misstatement.

TREATT PLC Annual Report & Accounts 2023

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 signicant

components and are subject to full scope audits. Treatt Trading

(Shanghai) Company Limited was considered to be a non-signicant

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 nancial 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 nancial 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

aects this particular sector; and

• We challenged the extent to which climate-related considerations,

including the expected cash ows from the initiatives and

commitments have been reected, 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

nancial 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 signicance in our audit of the nancial

statements of the current period and include the most signicant

assessed risks of material misstatement (whether or not due to fraud)

that we identied, including those which had the greatest eect on:

the overall audit strategy, the allocation of resources in the audit, and

directing the eorts of the engagement team. These matters were

addressed in the context of our audit of the nancial statements as a

whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters.

INDEPENDENT AUDITOR’S REPORT CONTINUED

to the members of Treatt Plc

Key audit matter How the scope of our audit addressed the key audit matter

Valuation of Inventory

The accounting policy,

key judgements and

estimates applied are

disclosed in note 3 and

the Group inventory

note can be found in

note 17

The Group has signicant 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 uctuations. As a result, this was

determined to be a 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

veried back to works orders and budgeted utilisation;

• Veried 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 o 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

specic 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.

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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 eect of misstatements. We consider

materiality to be the magnitude by which misstatements, including

omissions, could inuence the economic decisions of reasonable

users that are taken on the basis of the nancial statements.

In order to reduce to an appropriately low level the probability that any

misstatements exceed materiality, we use a lower materiality level,

performance materiality, to determine the extent of testing needed.

Importantly, misstatements below these levels will not necessarily

be evaluated as immaterial as we also take account of the nature of

identied misstatements, and the particular circumstances of their

occurrence, when evaluating their eect on the nancial statements

as a whole.

Based on our professional judgement, we determined materiality

for the nancial statements as a whole and performance materiality

as follows:

Group nancial statements Parent company nancial statements

2023

2022

2023

2022

Materiality 677,000 808,000 445,000 436,000

Basis for determining

materiality

5% prots before tax 5% prots before tax 1% of total assets 1% of total assets

Rationale for the

benchmark applied

We consider the use of prot before tax to

be a key statutory performance measure for

stakeholders based on market practice and

investor expectations and is reective of

the changing market sentiment in respect

of alternative performance measures.

We consider the use of prot before tax to

be a key statutory performance measure for

stakeholders based on market practice and

investor expectations and is reective of

the changing market sentiment in respect

of alternative performance measures.

The parent company is a non-trading holding

company and the most signicant balance

in its nancial statements is total assets.

The parent company is a non-trading holding

company and the most signicant balance

in its nancial statements is total assets.

Performance materiality 474,000 566,000 311,500 305,000

Basis for determining

performance materiality

70% of nancial statement materiality.

Rationale for the

percentage applied for

performance materiality

The level of performance materiality was set after considering a number of factors including signicant transactions in the year, the expected value of known and likely misstatements, and management’s

attitude towards proposed misstatements.

Component materiality

For the purposes of our Group audit opinion, we set materiality for

each signicant 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 dierences in excess of £23,500 (2022: £28,000).

We also agreed to report dierences below this threshold that, in our

view, warranted reporting on qualitative grounds.

Other information

The directors are responsible for the other information. The other

information comprises the information included in the annual report

and accounts other than the nancial statements and our auditor’s

report thereon. Our opinion on the nancial statements does not cover

the other information and, except to the extent otherwise explicitly

stated in our report, we do not express any form of assurance

conclusion thereon. Our responsibility is to read the other information

and, in doing so, consider whether the other information is materially

inconsistent with the nancial statements or our knowledge obtained

in the course of the audit, or otherwise appears to be materially

misstated. If we identify such material inconsistencies or apparent

material misstatements, we are required to determine whether this

gives rise to a material misstatement in the nancial statements

themselves. If, based on the work we have performed, we conclude

that there is a material misstatement of this other information, we are

required to report that fact.

We have nothing to report in this regard.

100

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 specied for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements

of the Corporate Governance Statement is materially consistent with the nancial statements or our

knowledge obtained during the audit.

Going concern and

longer-term viability

• The Directors' statement with regards to the appropriateness of adopting the

going concern basis of accounting and any material uncertainties identied 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 conrmation 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 eectiveness 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

nancial year for which the nancial statements are prepared is consistent with

the nancial statements; and

• the Strategic report and the Directors’ report have been prepared in accordance

with applicable legal requirements.

In the light of the knowledge and understanding of the Group and Parent Company

and its environment obtained in the course of the audit, we have not identied

material misstatements in the strategic report or the Directors’ report.

Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has

been properly prepared in accordance with the Companies Act 2006.

Matters on which we

are required to report

by exception

We have nothing to report in respect of the following matters in relation to which

the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or

returns adequate for our audit have not been received from branches not visited

by us; or

• the Parent Company nancial statements and the part of the Directors’

remuneration report to be audited are not in agreement with the accounting

records and returns; or

• certain disclosures of Directors’ remuneration specied 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 nancial statements and for being satised that they give a true and fair view, and

for such internal control as the Directors determine is necessary to enable the preparation of nancial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the nancial statements, the Directors are responsible for assessing the Group’s and the

Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the Directors either intend to liquidate the

Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the nancial statements

Our objectives are to obtain reasonable assurance about whether the nancial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to inuence the economic decisions of users taken on the basis of these

nancial statements.

101

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Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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

• Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws

and regulations.

We considered the signicant 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 signicant components.

Our procedures in respect of the above included:

• Review of minutes of meetings of those charged with governance for any instances of non-compliance

with laws and regulations;

• Enquired as to whether there was any correspondence with regulatory and tax authorities for any

instances of non-compliance with laws and regulations;

• Reperformed tax calculations in respect of corporation tax, employment tax and sales tax in each

signicant 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.

Fraud

We assessed the susceptibility of the nancial 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 identied and alleged fraud in the period, including

understanding improvements made to the internal control environment;

• 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 nancial 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

risks of material misstatement due to fraud; and

• Considering remuneration incentive schemes and performance targets and the related impacted

nancial statement areas.

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 nancial 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 specic 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 signicant 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.

102

TREATT PLC Annual Report & Accounts 2023

INDEPENDENT AUDITOR’S REPORT CONTINUED

to the members of Treatt Plc

We also communicated relevant identied 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 nancial

statements, recognising that the risk of not detecting a material misstatement due to fraud is higher

than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,

for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit

procedures performed and the further removed non-compliance with laws and regulations is from the

events and transactions reected in the nancial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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).

103

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

Notes

2023 2022

Before exceptional

items

£’000

Exceptional items

£’000

Total

£’000

Before exceptional

items

£’000

Exceptional items

£’000

Total

£’000

Revenue 4 147,397 – 147,397 140,185 – 140,185

Cost of sales (102,573) – (102,573) (101,101) – (101,101)

Gross prot 44,824 – 44,824 39,084 – 39,084

Administrative expenses 8 (26,503) (2,655) (29,158) (23,311) (601) (23,912)

Gain on disposal of land and buildings 8 – – – – 3,324 3,324

Relocation expenses 8 – (1,145) (1,145) – (1,800) (1,800)

Operating prot/(loss)

5 18,321 (3,800) 14,521 15,773 923 16,696

Finance income 7 112 – 112 8 – 8

Finance costs 7 (1,089) – (1,089) (525) – (525)

Prot/(loss) before taxation 17,344 (3,800) 13,544 15,256 923 16,179

Taxation 9 (3,405) 803 (2,602) (3,295) 431 (2,864)

Prot/(loss) for the year attributable to owners of the Parent Company 13,939 (2,997) 10,942 11,961 1,354 13,315

Adjusted

Statutory Adjusted

Statutory

Earnings per share

Basic 11 22.94p 18.01p 19.80p 22.04p

Diluted 11 22.81p 17.91p 19.60p 21.82p

1 Operating prot/(loss) is calculated as prot/(loss) before net nance costs and taxation.

2 All adjusted earnings per share measures exclude exceptional items and the related tax eect, details of which are given in note 8.

All nancial information presented relates to continuing operations.

The group reconciliation of net cash ow to movement in net debt, together with notes 1 to 31, form part of these nancial statements.

GROUP INCOME STATEMENT

for the year ended 30 September 2023

104

TREATT PLC Annual Report & Accounts 2023

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2023

Notes

2023

£’000

2022

£’000

Prot for the year attributable to owners of the Parent Company 10,942 13,315

Items that will or may be reclassied subsequently to prot or loss:

Currency translation dierences on foreign currency net investments (6,188) 11,461

Current tax on foreign currency translation dierences 9 (33) 102

Deferred tax on foreign currency translation dierences 9 301 –

Fair value movement on cash ow hedges 23 269 (23)

Deferred tax on fair value movement 9 – 4

(5,651) 11,544

Items that will not be reclassied subsequently to prot orloss:

Actuarial gain on dened benet pension scheme 27 1,381 8,273

Deferred tax on actuarial gain 9 (345) (2,068)

1,036 6,205

Other comprehensive (expense)/income for the year (4,615) 17,749

Total comprehensive income for the year attributable to owners of the Parent Company 6,327 31,064

All nancial information presented relates to continuing operations.

The group reconciliation of net cash ow to movement in net debt, together with notes 1 to 31, form part of these nancial statements.

105

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

Group Notes

capital

£’000

premium

account

£’000

Own

in share

trusts

£’000

Hedging

reserve

£’000

Foreign

exchange

reserve

£’000

Retained

earnings

£’000

Total

equity

£’000

1 October 2021 1,208 23,484 (4) (292) 1,820 80,083 106,299

Prot for the year – – – – – 13,315 13,315

Other comprehensive

income:

Exchange dierences – – – – 11,461 – 11,461

Fair value movement

on cash ow hedges 23, 29 – – – (23) – – (23)

Actuarial gain on dened

benet pensionscheme 27 – – – – – 8,273 8,273

Taxation relating

to items above 9 – – – 4 102 (2,068) (1,962)

Total comprehensive income – – – (19) 11,563 19,520 31,064

Transactions with owners:

Dividends 10 – – – – – (4,834) (4,834)

Share-based payments 26 – – – – – 1,115 1,115

Movement in own

shares in share trusts – – 8 – – – 8

Gain on release of

shares in share trusts – – – – – 622 622

Issue of share capital 24 9 – (9) – – – –

Taxation relating to items

recognised directly in equity 9 – – – – – (424) (424)

Total transactions with owners 9 – (1) – – (3,521) (3,513)

30 September 2022 1,217 23,484 (5) (311) 13,383 96,082 133,850

Group Notes

capital

£’000

premium

account

£’000

Own

in share

trusts

£’000

Hedging

reserve

£’000

Foreign

exchange

reserve

£’000

Retained

earnings

£’000

Total

equity

£’000

1 October 2022 1,217 23,484 (5) (311) 13,383 96,082 133,850

Prot for the year – – – – – 10,942 10,942

Other comprehensive

income:

Exchange dierences – – – – (6,188) – (6,188)

Fair value movement

on cash ow hedges 23, 29 – – – 269 – – 269

Actuarial gain on dened

benet pension scheme 27 – – – – – 1,381 1,381

Taxation relating

to items above 9 – – – – 268 (345) (77)

Total comprehensive income – – – 269 (5,920) 11,978 6,327

Transactions with owners:

Dividends 10 – – – – – (4,802) (4,802)

Share-based payments 26 – – – – – 1,189 1,189

Movement in own

shares in share trusts – – 9 – – – 9

Gain on release of

shares in share trusts – – – – – 620 620

Issue of share capital 24 6 – (6) – – – –

Taxation relating to items

recognised directly in equity 9 – – – – – 53 53

Total transactions with owners 6 – 3 – – (2,940) (2,931)

30 September 2023 1,223 23,484 (2) (42) 7,463 105,120 137,246

The group reconciliation of net cash ow to movement in net debt, together with notes 1 to 31, form part of

these nancial statements.

GROUP STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2023

106

TREATT PLC Annual Report & Accounts 2023

Parent Company Notes

Share capital

£’000

Share premium

account

£’000

Own shares in

share trusts

£’000

Retained

earnings

£’000

Total equity

£’000

1 October 2021 1,208 23,484 (4) 17,456 42,144

Prot for the year – – – 4,101 4,101

Total comprehensive income – – – 4,101 4,101

Transactions with owners:

Dividends 10 – – – (4,834) (4,834)

Movement in own shares in share trusts – – 8 – 8

Share-based payments 15, 26 – – – 1,115 1,115

Gain on release of shares in share trusts – – – 622 622

Issue of share capital 24 9 – (9) – –

Total transactions with owners 9 – (1) (3,097) (3,089)

30 September 2022 1,217 23,484 (5) 18,460 43,156

Prot for the year – – – 3,850 3,850

Total comprehensive income – – – 3,850 3,850

Transactions with owners:

Dividends 10 – – – (4,802) (4,802)

Movement in own shares in share trusts – – 9 – 9

Share-based payments 15, 26 – – – 1,189 1,189

Gain on release of shares in share trusts – – – 620 620

Issue of share capital 24 6 – (6) – –

Total transactions with owners 6 – 3 (2,993) (2,984)

30 September 2023 1,223 23,484 (2) 19,317 44,022

The group reconciliation of net cash ow to movement in net debt, together with notes 1 to 31, form part of these nancial statements.

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2023

107

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Other Information

GROUP AND PARENT COMPANY BALANCE SHEETS

as at 30 September 2023

Registered number: 01568937

Notes

Group Parent Company

2023

£’000

2022

£’000

2023

£’000

2022

£’000

ASSETS

Non-current assets

Intangible assets 12 2,752 3,206 – –

Property, plant and equipment 13 71,526 74,281 – –

Right-of-use assets 14 538 375 – –

Investment in subsidiaries 15 – – 38,574 37,385

Post-employment benets 27 3,723 1,782 – –

78,539 79,644 38,574 37,385

Current assets

Inventories 17 62,396 68,351 – –

Trade and other receivables 18 32,969 37,113 5,580 4,141

Current tax assets 300 719 – –

Derivative nancial instruments 23 8 – – –

Cash and bank balances 19 809 2,354 359 2,085

96,482 108,537 5,939 6,226

Total assets 175,021 188,181 44,513 43,611

LIABILITIES

Current liabilities

Bank overdrafts 20 – (6,174) – –

Borrowings 20 (10,642) (15,861) – –

Provisions 21 (102) (397) – –

Trade and other payables 22 (20,700) (22,903) (491) (455)

Lease liabilities 14 (176) (105) – –

Derivative nancial instruments 23 (176) (666) – –

Current tax liabilities (755) (223) – –

(32,551) (46,329) (491) (455)

Net current assets 63,931 62,208 5,448 5,771

108

TREATT PLC Annual Report & Accounts 2023

Notes

Group Parent Company

2023

£’000

2022

£’000

2023

£’000

2022

£’000

Non-current liabilities

Borrowings 20 – (2,342) – –

Lease liabilities 14 (373) (291) – –

Deferred tax liabilities 16 (4,851) (5,369) – –

(5,224) (8,002) – –

Total liabilities (37,775) (54,331) (491) (455)

Net assets 137,246 133,850 44,022 43,156

EQUITY

Share capital 24 1,223 1,217 1,223 1,217

Share premium account 25 23,484 23,484 23,484 23,484

Own shares in share trusts (2) (5) (2) (5)

Hedging reserve (42) (311) – –

Foreign exchange reserve 7,463 13,383 – –

Retained earnings 105,120 96,082 19,317 18,460

Total equity attributable to owners of the Parent Company 137,246 133,850 44,022 43,156

The group reconciliation of net cash ow to movement in net debt, together with notes 1 to 31, form part of these nancial statements.

The Parent Company reported a prot for the year of £3,850,000 (2022: £4,101,000).

The nancial 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 Ryan Govender

Chair Chief Financial Ocer

GROUP AND PARENT COMPANY BALANCE SHEETS

as at 30 September 2023

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Other Information

GROUP AND PARENT COMPANY STATEMENTS OF CASH FLOWS

for the year ended 30 September 2023

Notes

Group Parent Company

2023

£’000

2022

£’000

2023

£’000

2022

£’000

Cash ow from operating activities

Prot before taxation 13,544 16,179 3,850 4,102

Adjusted for:

Depreciation of property, plant and equipment and right-of-use assets 13, 14 4,277 2,476 – –

Amortisation of intangible assets 12 399 215 – –

Impairment charge on intangible assets 12 228 – – –

Loss/(gain) on disposal of property, plant and equipment 13 241 (3,324) – –

Net nance costs/(income) excluding post-employment benet expense 7 1,087 382 – (16)

Share-based payments 26 1,222 1,039 – –

(Increase)/decrease in fair value of derivatives (230) 61 – –

Employer contributions to dened benet pension scheme 27 (450) (450) – –

Dividend income settled via intercompany account – – (1,541) –

Post-employment benet (income)/expense 27 (110) 135 – –

Operating cash ow before movements in working capital 20,208 16,713 2,309 4,086

Movements in working capital:

Decrease/(increase) in inventories 2,507 (14,396) – –

Decrease/(increase) in receivables 3,004 (8,502) (21) –

(Decrease)/increase in payables (2,054) 4,355 35 3

Cash generated from/(used in) operations 23,665 (1,830) 2,323 4,089

Taxation (paid)/received (2,174) 443 – –

Net cash generated from/(used in) operating activities 21,491 (1,387) 2,323 4,089

110

TREATT PLC Annual Report & Accounts 2023

GROUP AND PARENT COMPANY STATEMENTS OF CASH FLOWS CONTINUED

for the year ended 30 September 2023

Notes

Group Parent Company

2023

£’000

2022

£’000

2023

£’000

2022

£’000

Cash ow from investing activities

Proceeds on disposal of property, plant and equipment 1,557 5,597 – –

Decrease/(increase) in intercompany loan balance – – 124 (2,925)

Acquisition of shares in subsidiaries 15 – – – (81)

Purchase of property, plant and equipment (5,507) (11,849) – –

Purchase of intangible assets 12 (207) (925) – –

Interest received 7 2 8 – –

Net cash (used in)/generated from investing activities (4,155) (7,169) 124 (3,006)

Cash ow from nancing activities

Repayment of borrowings and loans (17,737) (360) – –

Proceeds from bank borrowings 10,642 9,412 – –

Repayment of lease liabilities (161) (80) – –

Interest paid 7 (1,080) (390) – –

Dividends paid 10 (4,802) (4,834) (4,802) (4,834)

Proceeds on issue of shares 24 6 9 6 9

Net sale of own shares by share trusts 623 621 623 621

Net cash (used in)/generated from nancing activities (12,509) 4,378 (4,173) (4,204)

Net increase/(decrease) in cash and cash equivalents 4,827 (4,178) (1,726) (3,121)

Eect of foreign exchange rates (198) 111 – –

Movement in cash and cash equivalents in the year 4,629 (4,067) (1,726) (3,121)

Cash and cash equivalents/(overdrafts) at beginning of year (3,820) 247 2,085 5,206

Cash and cash equivalents/(overdrafts) at end of year 809 (3,820) 359 2,085

Cash and cash equivalents/(overdrafts) comprise:

Cash and bank balances 19 809 2,354 359 2,085

Bank overdrafts 20 – (6,174) – –

809 (3,820) 359 2,085

The group reconciliation of net cash ow to movement in net debt, together with notes 1 to 31, form part of these nancial statements.

111

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Other Information

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 ow to movement in net debt does not form part of the primary statements.

2023

£’000

2022

£’000

Movement in cash and cash equivalents in the year 4,629 (4,067)

Repayment of borrowings and loans 17,737 360

Proceeds from bank borrowings (10,642) (9,412)

(Increase)/reduction in lease liabilities (153) 657

Cash inow/(outow) from changes in net debt in the year 11,571 (12,462)

Eect of foreign exchange rates 466 (843)

Movement in net debt in the year 12,037 (13,305)

Net debt at beginning of year (22,419) (9,114)

Net debt at end of year (10,382) (22,419)

Analysis of movement in net debt during the year:

At 1 October

2022

£’000

Cash ow

£’000

Non-cash

movements

£’000

Foreign exchange

movements

£’000

At 30 September

2023

£’000

Cash and bank balances 2,354 (1,347) – (198) 809

Bank overdrafts (6,174) 6,174 – – –

Cash and cash equivalents/(overdrafts) (3,820) 4,827 – (198) 809

Bank borrowings and term loan (18,203) 7,095 – 466 (10,642)

Lease liabilities (396) 161 (317) 3 (549)

Net debt (22,419) 12,083 (317) 271 (10,382)

At 1 October

2021

£’000

Cash ow

£’000

Foreign exchange

movements

£’000

At 30 September

2022

£’000

Cash and bank balances 7,260 (5,017) 111 2,354

Bank overdrafts (7,013) 839 – (6,174)

Cash and cash equivalents/(overdrafts) 247 (4,178) 111 (3,820)

Bank borrowings and term loan (8,308) (9,052) (843) (18,203)

Lease liabilities (1,053) 666 (9) (396)

Net debt (9,114) (12,564) (741) (22,419)

The group reconciliation of net cash ow to movement in net debt, together with notes 1 to 31, form part of these nancial statements.

112

TREATT PLC Annual Report & Accounts 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 efiective

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.

113

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Other Information

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 confiict.

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.

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 30 September 2023

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 afiect 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.

3. SIGNIFICANT ACCOUNTING POLICIES continued

Going concern continued

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

114

TREATT PLC Annual Report & Accounts 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 afiects 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.

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 fiow 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: 50 years

• Plant and machinery: 4–15 years

• Fixtures, fittings and equipment: 4–15 years

• Laboratory equipment: 5 years

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

115

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Other Information

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 fiow statement.

Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

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TREATT PLC Annual Report & Accounts 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 ofisetting 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 fiow

hedging instruments are initially recognised directly in equity. Where the hedged item is cash fiows 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 afiect 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 reffected 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 reffected 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 reffects the substance of the entity’s control

of the trust.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

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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 reffects

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 afiect 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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

118

TREATT PLC Annual Report & Accounts 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.

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.

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
		2023
		£’000
			2022
			£’000
United Kingdom		8,039	9,777
Rest of Europe	– Germany	5,937	7,907
	– Ireland	14,653	11,527
	– Other	13,006	14,596
The Americas	– USA	61,407	53,731
	– Other	12,549	12,919
Rest of the World	– China	9,525	7,901
	– Other	22,281	21,827
		147,397	140,185

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
	2023
	£’000
		2022
		£’000
United Kingdom	44,800	44,914
United States	29,908	32,910
China	108	38
	74,816	77,862

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

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5. OPERATING PROFIT FOR THE YEAR

Operating profit

for the year is stated after charging/(crediting):

Group
	2023
	£’000
		2022
		£’000
Depreciation of property, plant and equipment and right-of-use assets	4,277	2,476
Amortisation of intangible assets
2
	399	215
Impairment of intangible assets	228	–
Loss on disposal of property, plant and equipment	137	–
Research and development costs	1,742	2,338
Research and development tax credits	–	(208)
Net foreign exchange loss/(gain)
3
	341	(1)
Cost of inventories recognised as an expense
4
	87,411	84,469
Write down of inventories recognised as an expense	2,230	2,295
Shipping costs	2,503	3,362
IT and telephony costs	1,110	1,174
Insurance costs	1,450	1,061
Energy and utility costs	1,416	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:

	2023
	£’000
		2022
		£’000
Fees payable to the Parent Company’s auditors and their associates for
the audit of:
– the Parent Company and Group accounts	85	73
– the Group’s subsidiaries pursuant to legislation	198	164
Total audit fees	283	237
Fees payable to the Parent Company’s auditors and their associates for
other services to the Group:
– other assurance services	16	14
Total non-audit fees	16	14

6. EMPLOYEES

Number of employees

During the year the average number of staff employed by the Group, including Directors, was as follows:

Group
	2023
	Number
		2022
		Number
Technical and production	184	208
Administration and sales	217	233
	401	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
	2023
	£’000
		2022
		£’000
Wages and salaries	20,305	19,733
Social security costs	1,850	1,683
Pension costs (see note 27)	1,237	1,206
Share-based payments (see note 26)	1,222	1,039
	24,614	23,661

The value of other short-term non-monetary benefits was £1,498,000 (2022: £1,545,000).

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

120

TREATT PLC Annual Report & Accounts 2023

6. EMPLOYEES continued

Directors

During the year, the aggregate emoluments in respect of the Executive and Non-executive Directors was

as follows:

Group
	2023
	£’000
		2022
		£’000
Directors in aggregate
Emoluments in respect of qualifying services	950	722
Fees paid to Non-executive Directors in respect of qualifying services	378	417
Taxable benefits in respect of qualifying services	31	32
Share-based payment expense in respect of qualifying services	252	351
Pension contributions to money purchase schemes	55	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
	2023
	£’000
		2022
		£’000
Finance income
Other interest received	2	8
Post-employment benefit income (see note 27)	110	–
	112	8
Finance costs
Bank interest paid	757	189
Other bank finance costs	323	187
Post-employment benefit expense (see note 27)	–	135
Lease liabilities finance expense (see note 14)	9	14
	1,089	525

8. EXCEPTIONAL ITEMS

The exceptional items referred to in the income statement can be categorised as follows:

Group
	2023
	£’000
		2022
		£’000
UK relocation project:
Relocation expenses	(1,145)	(1,800)
Less: tax effect of relocation expenses	205	317
Restructuring costs:
Restructuring costs	(2,655)	(601)
Less: tax effect of restructuring costs	598	114
Disposal of Northern Way premises:
Gain on disposal of land and buildings	–	3,324
Less: tax effect of disposal	–	–
	(2,997)	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 fiow 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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

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9. TAXATION

Analysis of tax charge in income statement

Group
	2023
	£’000
		2022
		£’000
Current tax:
UK corporation tax on profits for the year	(32)	153
Adjustments to UK tax in respect of previous periods	(41)	(231)
Overseas corporation tax on profits for the year	3,577	2,069
Adjustments to overseas tax in respect of previous periods	(365)	(52)
Total current tax	3,139	1,939
Deferred tax:
Origination and reversal of temporary differences	(141)	726
Effect of change of tax rate on opening deferred tax	(29)	(45)
Adjustments in respect of previous periods	(367)	244
Total deferred tax (see note 16)	(537)	925
Tax on profit on ordinary activities	2,602	2,864

Analysis of tax charge in other comprehensive income

Group
	2023
	£’000
		2022
		£’000
Current tax:
Foreign currency translation differences	33	(102)
Total current tax	33	(102)
Deferred tax:
Cash flow hedges	–	(4)
Foreign currency translation differences	(301)	–
Defined benefit pension scheme	345	2,068
Total deferred tax	44	2,064
Total tax expense recognised in other comprehensive income	77	1,962

Analysis of tax (credit)/charge in equity

Group
	2023
	£’000
		2022
		£’000
Current tax:
Share-based payments	(28)	(20)
Deferred tax:
Share-based payments	(25)	444
Total tax (credit)/charge recognised in equity	(53)	424

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
Effects of:
Expenses not deductible in determining taxable profit	335	268
Income not taxable in determining taxable profit	–	(694)
Research and development tax credits	(20)	(243)
difference in tax rates on overseas earnings	49	678
Adjustments to tax charge in respect of prior years	(732)	(39)
Effect of change of tax rate on opening deferred tax	(47)	(38)
Deferred tax not recognised	37	(142)
Total tax charge for the year	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

122

TREATT PLC Annual Report & Accounts 2023

10. DIVIDENDS

Equity dividends on ordinary shares

	Dividend per share for years ended 30 September
Parent Company and Group
	2023
	Pence
		2022
		Pence
			2021
			Pence
				2023
				£’000
					2022
					£’000
Interim dividend	2.55p
	3
		2.50p
		2
			2.00p
			1
				1,552	1,512
Final dividend	5.46p
	4
		5.35p
		3
			5.50p
			2
				3,250	3,322
	8.01p	7.85p	7.50p	4,802	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	2023	2022
Profit after taxation attributable to owners of the Parent Company (£’000)	10,942	13,315
Weighted average number of ordinary shares in issue (No: ‘000)	60,762	60,400
Basic earnings per share (pence)	18.01p	22.04p

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.

The number of shares used to calculate earnings per share (EPS) have been derived as follows:

Group
	2023
	No (‘000)
		2022
		No (‘000)
Weighted average number of shares	60,916	60,578
Weighted average number of shares held in the EBT	(154)	(178)
Weighted average number of shares used for calculating basic EPS	60,762	60,400
Executive share option schemes	301	487
All-employee share options	45	148
Weighted average number of shares used for calculating diluted EPS	61,108	61,035
Diluted earnings per share (pence)	17.91p	21.82p

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:

Group
	2023
	£’000
		2022
		£’000
Profit after taxation attributable to owners of the Parent Company	10,942	13,315
Adjusted for:
Exceptional items – restructuring costs (see note 8)	2,655	601
Exceptional items – relocation expenses (see note 8)	1,145	1,800
Exceptional items – gain on disposal of land and buildings (see note 8)	–	(3,324)
Taxation thereon	(803)	(431)
Adjusted earnings	13,939	11,961
Adjusted basic earnings per share (pence)	22.94p	19.80p
Adjusted diluted earnings per share (pence)	22.81p	19.60p

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

123

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12. INTANGIBLE ASSETS

Group
	Development
	costs
	£’000
		Software
		licences
		£’000
			Total
			£’000
Cost	625	2,067	2,692
1 October 2021	86	3	89
Additions	278	647	925
Disposals	–	(43)	(43)
30 September 2022	989	2,674	3,663
Exchange adjustment	(43)	(1)	(44)
Additions	69	138	207
Disposals	–	(26)	(26)
30 September 2023	1,015	2,785	3,800
Amortisation and impairment
1 October 2021	42	226	268
Exchange adjustment	15	2	17
Charge for year	44	171	215
Disposals	–	(43)	(43)
30 September 2022	101	356	457
Exchange adjustment	(8)	(2)	(10)
Charge for year	46	353	399
Disposals	–	(26)	(26)
Impairment charge	228	–	228
30 September 2023	367	681	1,048
Net book value
30 September 2023	648	2,104	2,752
30 September 2022	888	2,318	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

Group
	Land &
	buildings
	£’000
		Plant &
		machinery
		£’000
			Fixtures, fittings
			& equipment
			£’000
				Laboratory
				equipment
				£’000
					Total
					£’000
Cost
1 October 2021	37,464	27,689	4,987	1,711	71,851
Exchange adjustment	2,798	3,666	436	126	7,026
Additions	28	10,486	1,005	491	12,010
Disposals	(2,611)	(922)	(606)	(104)	(4,243)
30 September 2022	37,679	40,919	5,822	2,224	86,644
Exchange adjustment	(1,384)	(1,925)	(225)	(66)	(3,600)
Additions	279	3,562	1,853	249	5,943
Disposals	–	(2,889)	(284)	(94)	(3,267)
30 September 2023	36,574	39,667	7,166	2,313	85,720
Depreciation
1 October 2021	2,334	6,609	1,540	329	10,812
Exchange adjustment	347	1,140	129	34	1,650
Charge for year	334	1,266	560	213	2,373
Disposals	(840)	(922)	(606))	(104)	(2,472)
30 September 2022	2,175	8,093	1,623	472	12,363
Exchange adjustment	(176)	(575)	(67)	(19)	(837)
Charge for year	582	2,447	862	247	4,138
Disposals	–	(1,103)	(273)	(94)	(1,470)
30 September 2023	2,581	8,862	2,145	606	14,194
Net book value
30 September 2023	33,993	30,805	5,021	1,707	71,526
30 September 2022	35,504	32,826	4,199	1,752	74,281

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

124

TREATT PLC Annual Report & Accounts 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
	2023
	£’000
		2022
		£’000
Contracted but not provided for	802	4,398

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
	Land & buildings
	£’000
		Plant & machinery
		£’000
			Total
			£’000
Net carrying value
1 October 2021	1,129	427	1,556
Exchange adjustment	–	10	10
Additions	–	37	37
Depreciation charge	(3)	(99)	(102)
Disposals	(1,126)	–	(1,126)
30 September 2022	–	375	375
Exchange adjustment	–	(6)	(6)
Additions	–	308	308
Depreciation charge	–	(139)	(139)
30 September 2023	–	538	538

Lease liabilities

Group
	2023
	£’000
		2022
		£’000
Lease liabilities
At start of year	396	1,053
Exchange adjustment	(3)	9
Additions	308	36
Lease liabilities finance expense	9	14
Disposals	–	(622)
Repayments of lease liabilities	(161)	(94)
Balance at end of year	549	396
Of which:
Current lease liabilities	176	105
Non-current lease liabilities	373	291

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
	2023
	£’000
		2022
		£’000
Maturity analysis – undiscounted lease payments
Within one year	176	105
In one to two years	171	91
In two to five years	225	213
In more than five years	9	–

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).

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

125

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Other Information

15. INVESTMENTS IN SUBSIDIARIES

Parent Company	£’000
Cost
1 October 2021	36,189
Capital contribution to subsidiaries	1,115
Acquisition of share capital in subsidiaries	81
30 September 2022	37,385
Capital contribution to subsidiaries	1,189
30 September 2023	38,574

Parent Company
	2023
	£’000
		2022
		£’000
Subsidiary:
R C Treatt & Co Limited – 100% (2022: 100%)	28,761	27,790
Treatt USA Inc – 100% (2022: 100%)	9,372	9,154
Treatt Trading (Shanghai) Company Limited 100% – (2022: 100%)	441	441
	38,574	37,385

Subsidiary
	Country of
	incorporation	Holding	Principal activity
Wholly-owned by Treatt plc:
R C Treatt & Co Limited	England
	1
		100%	Supply of flavour and fragrance ingredients
Treatt USA Inc	USA
	2
		100%	Supply of flavour and fragrance ingredients
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
	2023
	£’000
		2022
		£’000
UK deferred tax liability	(1,647)	(1,707)
Overseas deferred tax liability	(3,204)	(3,662)
Deferred tax liabilities	(4,851)	(5,369)

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:

			UK deferred tax			Overseas deferred tax
Group
	Post-
	employment
	benefits
	£’000
		Fixed
		assets
		£’000
			Cash flow
			hedge
			£’000
				Other and
				share-based
				payments
				£’000
					Losses
					£’000
						Fixed
						assets
						£’000
							Other
							temporary
							diffierences
							£’000
								Total
								£’000
1 October 2021	1,702	(1,797)	69	818	–	(2,768)	593	(1,383)
Exchange differences	–	–	–	–	–	(661)	108	(553)
Credit/(charge) to
income statement:
For the year	(80)	(1,277)	–	(142)	1,609	(627)	(209)	(726)
In respect of prior period	–	(231)	–	(30)	17	–	–	(244)
For change in tax rate	–	–	–	–	–	47	(2)	45
Credit/(charge) to other
comprehensive income:
For the year	(2,068)	–	4	–	–	–	–	(2,064)
Credit to equity:
For the year	–	–	–	(301)	–	–	(143)	(444)
1 October 2022	(446)	(3,305)	73	345	1,626	(4,009)	347	(5,369)
Credit/(charge) to
income statement:
For the year	(140)	(434)	(46)	(352)	1,122	(411)	402	141
In respect of prior period	–	74	–	200	(58)	151	–	367
For change in tax rate	–	–	–	–	–	29	–	29
Credit/(charge) to other
comprehensive income:
For the year	(345)	–	–	–	–	339	(38)	(44)
Charge to equity:
For the year	–	–	–	39	–	–	(14)	25
30 September 2023	(931)	(3,665)	27	232	2,690	(3,901)	697	(4,851)

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

126

TREATT PLC Annual Report & Accounts 2023

17. INVENTORIES

Group
	2023
	£’000
		2022
		£’000
Raw materials	24,119	30,784
Work in progress and intermediate products	25,130	22,347
Finished goods	13,146	15,220
	62,396	68,351

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

	Group		Parent Company
Current
	2023
	£’000
		2022
		£’000
			2023
			£’000
				2022
				£’000
Trade receivables
1
	31,114	34,727	–	–
Amounts owed by subsidiaries	–	–	5,503	4,086
Other receivables	306	478	77	55
Prepayments	1,549	1,908	–	–
	32,969	37,113	5,580	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 average credit period taken for trade receivables is as follows:

Group	2023	2022
Average debtor days	82	76

The Group recognises the lifetime expected credit losses (ECLs) based on the difference between the

contractual cash fiows due and the cash fiows 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 reffect 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.

The amounts presented in the balance sheet are net of amounts that are individually determined to be

impaired as follows:

Group
	2023
	£’000
		2022
		£’000
Impairment provision
At start of year	816	788
Released in year	(728)	(628)
Provided in year	134	624
Foreign exchange	(6)	32
Balance at end of year	216	816

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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

127

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Other Information

18. TRADE AND OTHER RECEIVABLES continued

The ageing profile of impaired trade receivables is as follows:

Group
	2023
	£’000
		2022
		£’000
Number of days past the due date:
1–30	–	127
31–60	–	–
Over 60	216	689

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
	2023
	£’000
		2022
		£’000
US Dollar	23,326	23,691
Euro	2,848	3,314
Chinese Yuan	317	–

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.

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.

20. BORROWINGS

Current

Group
	2023
	£’000
		2022
		£’000
UK bank overdrafts	–	6,174
UK asset-based lending facility	10,305	–
UK revolving credit facilities	–	13,000
US line of credit	337	2,034
US term loan	–	827
	10,642	22,035

Non-current

Group
	2023
	£’000
		2022
		£’000
US term loan	–	2,342

Loans and borrowings

The term loan comprises the following:

Group
	2023
	£’000
		2022
		£’000
Treatt USA $6.5m term loan – US	–	3,169

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).

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

128

TREATT PLC Annual Report & Accounts 2023

20. BORROWINGS continued

Borrowings are repayable as follows:

Group
	2023
	£’000
		2022
		£’000
– in one year or less	10,642	22,035
– in more than one year but not more than two years	–	827
– in more than two years but not more than five years	–	1,515
– in more than five years	–	–
	10,642	24,377

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
	2023
	£’000
		2022
		£’000
Onerous contract provision:
At start of year	397	143
Utilised in year	(342)	(138)
Additional provision in year	75	348
Foreign exchange	(28)	44
Balance at end of year	102	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.

22. TRADE AND OTHER PAYABLES

	Group		Parent Company
Current
	2023
	£’000
		2022
		£’000
			2023
			£’000
				2022
				£’000
Trade payables	13,131	17,565	172	27
Other taxes and social security costs	404	411	–	(1)
Accruals and other creditors	7,165	4,927	319	429
	20,700	22,903	491	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:

Group
	2023
	£’000
		2022
		£’000
US Dollar	10,134	12,236
Euro	687	464
Chinese Yuan	227	–

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

129

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Other Information

23. DERIVATIVE FINANCIAL INSTRUMENTS

Group
	2023
	£’000
		2022
		£’000
Current – derivative financial assets	8	–
Derivative financial assets	8	–
Current – derivative financial liabilities	(176)	(666)
Derivative financial liabilities	(176)	(666)

The gains/(losses) on derivative financial instruments were as follows:

Group
	2023
	£’000
		2022
		£’000
Income statement:
Foreign exchange contracts	386	(2,336)
Other comprehensive income:
Foreign exchange contracts	269	(23)

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
	2023		2022
	£’000	Number	£’000	Number
At start of year	1,217	60,864,564	1,208	60,411,933
Issued in year	6	265,025	9	452,631
At end of year	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).

25. SHARE PREMIUM ACCOUNT

Parent Company and Group
	2023
	£’000
Balance at 1 October 2022 and 30 September 2023	23,484

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.

The share-based payments charge was as follows:

Group
	2023
	£’000
		2022
		£’000
Share option schemes – see (a) below	816	735
Share incentive plans – see (b) below	373	380
	1,189	1,115
effect of movement in foreign exchange rates	33	(76)
	1,222	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

130

TREATT PLC Annual Report & Accounts 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
				Date option
				exercisable
UK SAYE¹ Scheme 2019	–	14,301	361.0p	Sep 2022 – Feb 2023
UK SAYE¹ Scheme 2020	10,565	91,219	409.0p	Sep 2023 – Feb 2024
UK SAYE¹ Scheme 2021	42,067	1,544	932.0p	Sep 2024 – Feb 2025
UK SAYE¹ Scheme 2022	101,679	–	610.0p	Sep 2025 – Feb 2026
UK SAYE¹ Scheme 2023	78,638	–	566.0p	Sep 2026 – Feb 2027
US ESPP
2
Scheme 2022	–	4,303	634.0p	July 2023
US ESPP
2
Scheme 2023	9,412	–	521.0p	July 2024
UK LTIP³ Scheme 2014	–	12,565	Nil	Jun 2017 – Jun 2024
UK LTIP³ Scheme 2015	–	14,045	Nil	Jun 2018 – Jun 2025
UK LTIP³ Scheme 2016	–	13,249	Nil	Jun 2019 – Jun 2026
UK LTIP³ Scheme 2017	2,137	–	Nil	Jun 2020 – Jun 2027
UK LTIP³ Scheme 2019	8,740	5.362	Nil	Jun 2022 – Jun 2029
US LTIP³ Scheme 2019	–	7,295	Nil	Jun 2022 – Feb 2023
UK LTIP³ Scheme 2020	6,893	25,536	Nil	Jun 2023 – Jun 2030
US LTIP³ Scheme 2020	–	45,267	Nil	Jun 2023 – Feb 2024
UK LTIP³ Scheme 2021	23,341	8,559	Nil	Jun 2024 – Jun 2031
US LTIP³ Scheme 2021	22,945	–	Nil	Jun 2024 – Feb 2025
UK LTIP³ Scheme 2022	65,018	–	Nil	Dec 2025 – Dec 2032
US LTIP³ Scheme 2022	73,206	–	Nil	Jun 2025 – Feb 2026
UK Executive⁴ Options 2019	49,212	56,223	Nil	Dec 2022 – Dec 2029
UK Executive⁴ Options 2020	75,952	–	Nil	Dec 2023 – Dec 2030
UK Executive⁴ Options 2021	52,232	–	Nil	Feb 2025 – Feb 2032
UK Executive⁴ Options 2022	126,817	–	Nil	Dec 2025 – Dec 2032

1 The SAYE schemes are HMRC-approved Save As You Earn share option plans which vest after three years. Options are forfeited

where employees choose to leave the Group before the end of the three-year period.

2 The ESPP schemes are IRS-approved Employee Stock Purchase Plans which vest after one year. Options are forfeited where

employees choose to leave the Group before the end of the vesting period.

3 Options are awarded to certain key employees in the UK and US under a Long-Term Incentive Plan. All awards are nil-cost

options which vest, subject to achievement of the relevant performance conditions, after three years and can be exercised over

the following seven years in the UK, or upon vesting in the US. Save as permitted in the LTIP rules, awards lapse on an employee

leaving the Group.

4 Details of the Executive options are provided in the Directors’ Remuneration Report.

The fair value per option granted using the 'Black-Scholes' model, and the assumptions used in the

share-based payments calculations, are as follows:

All-employee share schemes:
	2022
	SAYE
		2023
		SAYE
			US ESPP
			2022
				US ESPP
				2023
Share price at date of grant	762.5p	594.0p	758.0p	594.0p
Contractual life	3.5 years	3.5 years	1.0 years	1.0 years
Expected life	3.1 years	3.1 years	1.0 years	1.0 years
Expected volatility	46.8%	47.9%	42.7%	56.5%
Risk-free interest rate	1.9%	4.9%	1.9%	4.9%
Dividend yield	1.1%	1.1%	1.1%	1.1%
Expected cancellations	10.0%	10.0%	10.0%	10.0%
Expected forfeitures	25.0%	25.0%	14.4%
			1
				18.0%
Fair value per option at date of grant	269.8p	191.7p	171.5p	191.7p

Key-employee share schemes:
	UK Exec
	2021
		UK Exec
		2022
			UK LTIP
			2021
			2
				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	10.0 years	10.0 years	10.0 years	10.0 years	3.2 years
Expected life	3.0 years	3.2 years	3.2 years	3.2 years	3.2 years
Expected volatility	44.2%	48.0%	52.4%	48.0%	48.0%
Risk-free interest rate	1.1%	3.4%	0.7%	3.4%	3.4%
Dividend yield	0.7%	1.2%	0.6%	1.2%	1.2%
Expected cancellations	0.0%	0.0%	0.0%	0.0%	0.0%
Expected forfeitures	100.0%	76.0%	67.0%	48.6%	55.5%
Fair value per option at date of grant	1,096.2p	635.0p	1,179.0p	635.0p	635.0p

1 Actual forfeiture experienced.

2 Additional UK LTIP grants made to specific employees.

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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

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26. SHARE-BASED PAYMENTS continued

Details of movements in share options during the year were as follows:

	2023		2022
Group
	Number
	of options
		Weighted average
		exercise price
			Number
			of options
				Weighted average
				exercise price
Outstanding at start of year	780,841	£2.28	982,449	£1.68
Granted during the year	360,017	£1.38	207,436	£3.92
Forfeited during the year	(38,611)	£0.87	(45,791)	£1.27
Exercised during the year	(299,312)	£1.56	(326,542)	£1.22
Lapsed during the year	(32,328)	£2.17	(8,787)	£10.63
Cancelled during the year	(18,862)	£7.90	(27,924)	£4.59
Outstanding at end of year	751,745	£2.06	780,841	£2.28
Exercisable at end of year	89,850	£1.03	80,429	£0.64

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).

(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.

Details of the movements in the SIP were as follows:

	Number of free and matching shares		Number of nil cost RSUs
Group	2023	2022	2023	2022
Outstanding at start of year	142,290	167,463	25,556	33,152
Granted during the year	51,859	35,875	15,128	7,440
Vested during the year	(67,954)	(52,638)	(10,766)	(10,962)
Forfeited during the year	(4,335)	(7,832)	(5,326)	(4,074)
Released during the year	(16,110)	(578)	(94)	–
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.

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.

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
	2023
	£’000
		2022
		£’000
Defined contribution schemes	1,233	1,181
Other pension costs	4	25
	1,237	1,206

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

132

TREATT PLC Annual Report & Accounts 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.

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.

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.

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.

• 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:

Group	2023	2022
Discount rate	5.75%	5.50%
Rate of inflation (RPI)	3.40%	3.75%
Rate of inflation (CPI)	3.00%	3.35%
Rate of increase in pensions in payment –
CPI max 5%	2.90%	3.20%
Rate of increase in pensions in payment –
CPI max 3%	2.40%	2.60%
Rate of increase in pensions in payment –
CPI max 2.5%	2.15%	2.25%
Mortality table
	S3PA tables with CMI 2019
	projections using a long-term
	improvement rate of 1.25% pa
	ameter of & initial addition par
	0.25% pa
		S3PA tables with CMI 2019
		projections using a long-term
		improvement rate of 1.25% pa
		& initial addition parameter of
		0.25% pa
Commutation allowance	20%	20%
Proportion married
(at retirement or earlier death)	75%	75%
GMP equalisation allowance	0.5% of liability value	0.5% of liability value
Rate of increase in salaries	N/A	N/A
Life expectancy for male aged 65
in 20 years’ time	23.7	23.6
Life expectancy for female aged 65
in 20 years’ time	26.1	26.0
Life expectancy for male aged 65 now	22.3	22.3
Life expectancy for female aged 65 now	24.7	24.6

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

133

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27. POST-EMPLOYMENT BENEFITS continued

Effect of the scheme on future cash fiows

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
	2023
	£’000
		2022
		£’000
Scheme assets
Equities	9,616	11,073
Target return funds	–	3,776
Gilts	3,683	–
Bonds	4,501	6,300
Multi-asset credit	2,659	–
Other	–	63
Fair value of scheme assets	20,459	21,212
Present value of funded obligations (scheme liabilities)	(16,736)	(19,430)
Surplus in the scheme recognised in the balance sheet	3,723	1,782
Related deferred tax	(931)	(446)
Net pension surplus	2,792	1,336
Changes in scheme liabilities
Balance at start of year	(19,430)	(30,618)
Interest cost	(1,007)	(621)
Benefits paid	3,111	704
Remeasurement losses:
– Experience loss on liabilities	(325)	(548)
– Actuarial gain arising from changes in financial assumptions	915	11,653
Balance at end of year	(16,736)	(19,430)

Group
	2023
	£’000
		2022
		£’000
Changes in scheme assets
Balance at start of period	21,212	23,812
Interest on scheme assets	1,117	486
Employer contributions	450	450
Benefits paid	(3,111)	(704)
Remeasurement gains:
– Return/(loss) on plan assets (excluding amounts included in interest expense)	791	(2,832)
Balance at end of year	20,459	21,212

Group
	2023
	£’000
		2022
		£’000
Amount charged to finance costs
Interest on scheme assets	1,117	486
Interest on scheme liabilities	(1,007)	(621)
Net income/(expense) recognised in income statement	110	(135)
Amount recognised in statement of comprehensive income
Gain/(loss) on scheme assets in excess of interest	791	(2,832)
Experience loss on liabilities	(325)	(548)
Gain from changes to financial assumptions	915	11,653
Remeasurement gain recognised in statement of comprehensive income	1,381	8,273
Actual return/(loss) on scheme assets	1,908	(2,346)
Cumulative remeasurement gain recognised in statement of comprehensive income	1,483	102

The approximate effect of a change of assumptions on surplus values at 30 September 2023:

	Reduce surplus
	by: £’000
Reduce discount rate by 0.25% pa	530
Increase inflation and all related assumptions by 0.1% pa	119
Increase life expectancy by one year	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

134

TREATT PLC Annual Report & Accounts 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.

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.

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).

	Group		Parent Company
	2023
	£’000
		2022
		£’000
			2023
			£’000
				2022
				£’000
Financial assets
Measured at amortised cost:
Trade receivables
1
	29,490	34,718	–	–
Other receivables	306	478	77	55
Cash and cash equivalents	809	2,354	359	2,085
Amounts owed by subsidiaries	–	–	5,503	4,086
Derivative financial instruments measured at
fair value through other comprehensive income:
Trade receivables	1,624	9	–	–
Derivative financial instruments measured
at fair value through profit and loss:
Forward currency contracts (level 2)	8	–	–	–
	32,237	37,559	5,939	6,226

1 Trade receivables at amortised cost are shown net of lifetime expected credit losses.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

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29. FINANCIAL INSTRUMENTS continued

	Group		Parent Company
	2023
	£’000
		2022
		£’000
			2023
			£’000
				2022
				£’000
Financial liabilities
Measured at amortised cost:
Trade payables	13,131	17,565	172	27
Other creditors	7,165	4,927	319	429
UK asset-based lending facility	10,305	–	–	–
UK revolving credit facilities	–	13,000	–	–
UK bank overdraft	–	6,174	–	–
US line of credit	337	2,034	–	–
US term loan	–	3,169	–	–
Lease liabilities	549	396	–	–
Amounts owed to subsidiaries	–	–	–	–
Derivative financial instruments measured
at fair value through profit and loss:
Forward currency contracts (level 2)	176	666	–	–
	31,663	47,931	491	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 fiows 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
	Within
	0 to 3 months
	£’000
		Within
		3 to 12 months
		£’000
			Within
			1 to 2 years
			£’000
				Within
				2 to 5 years
				£’000
					Over
					5 years
					£’000
Non-derivative financial instruments:
Trade payables	13,131	–	–	–	–
Other creditors	6,340	825	–	–	–
UK asset-based lending facility	1,475	9,238	–	–	–
US line of credit	337	–	–	–	–
Derivative financial instruments:
Forward currency contracts	35	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

136

TREATT PLC Annual Report & Accounts 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.

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
	Floating rate
	financial assets/(liabilities)
			Fixed rate
			financial liabilities
	2023
	£’000
		2022
		£’000
			2023
			£’000
				2022
				£’000
Bank balances and revolving credit facilities:
Sterling	416	(10,905)	–	–
US Dollars	(128)	(2,015)	–	–
Euro	1	1	–	–
Other	183	93	–	–
Asset-based lending facility:
Sterling	(10,090)	–	–	–
US Dollars	(140)	–	–	–
Euro	(75)	–	–	–
Overdrafts:
Sterling	–	(6,028)	–	–
Term loans:
US Dollars	–	(3,169)	–	–
Lease liabilities:
Sterling	–	–	(549)	(396)
Total net debt	(9,833)	(22,023)	(549)	(396)

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:

	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

137

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Other Information

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
	Average
	contract rate
		Nominal
		currency
		‘000
			Contract
			GBP
			£’000
				Fair value
				loss/(gain)
				£’000
US Dollars:
Forward contracts to sell USD within 1–3 months	1.2424	$4,170	3,356	(35)
Forward contracts to sell USD within 4–6 months	1.2493	$1,700	1,361	(43)
Forward contracts to sell USD within 6–9 months	1.2725	$1,850	1,454	(60)
Forward contracts to sell USD within 9–12 months	1.2770	$900	705	(32)
Euros:
Forward contracts to sell EUR within 1–3 months	1.1505	€760	661	4
Forward contracts to sell EUR within 4–6 months	1.1426	€600	525	2
Forward contracts to sell EUR within 6–9 months	1.1502	€490	426	2
Forward contracts to sell EUR within 9–12 months	1.1506	€350	304	2
				(168)

Group – as at 30 September 2022
	Average
	contract rate
		Nominal
		currency
		‘000
			Contract
			GBP
			£’000
				Fair value
				(loss)/gains
				£’000
US Dollars:
Forward contract to sell USD within 4–6 months	1.2457	$7,000	5,642	(616)
Euros:
Forward contract to sell EUR within 1–3 months	1.1661	€2,500	2,144	(50)
				(666)

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.

The gain/(loss) recognised in the Group's income statement and the Group statement of comprehensive

income on cash fiow hedges of foreign currency receipts during the year, is as follows:

Group
	2023
	£’000
		2022
		£’000
Revenue	386	(2,336)
Other comprehensive income	269	(23)
	655	(2,359)

The reconciliation of the hedging reserve per the statement of changes in equity is as follows:

Group
	Hedging reserve
	£’000
1 October 2021	(292)
Fair value movement on:
Cash flow hedges of probable future receipts	(2,359)
Transfer from hedging reserve to:
Profit and loss account	2,336
Amounts recognised in other comprehensive income	(23)
Taxation relating to items above	4
30 September 2022	(311)
Fair value movement on:
Cash flow hedges of probable future receipts	(117)
Transfer from hedging reserve to:
Profit and loss account	386
Amounts recognised in other comprehensive income	269
Taxation relating to items above	–
30 September 2023	(42)

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

138

TREATT PLC Annual Report & Accounts 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 – net foreign currency financial assets
	2023
	£’000
		2022
		£’000
US Dollar	4,602	6,953
Euro	2,229	2,774
Other	256	148
	7,087	9,875

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
	2023
	£’000
		2022
		£’000
Impact of 10% strengthening of US Dollar against Sterling	511	773
Impact of 10% strengthening of Euro against Sterling	248	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 reffect 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.

Group
	2023
	£’000
		2022
		£’000
Salaries and other short-term employee benefits	981	754
Fees paid to Non-executive Directors in respect of qualifying services	378	417
Employer’s social security costs	196	160
Pension contributions to money purchase schemes	55	52
Share-based payments charge in respect of qualifying services	252	351
	1,862	1,734

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
	2023
	£’000
		2022
		£’000
Interest received from:
R C Treatt & Co Limited	–	16
Dividends received from:
R C Treatt & Co Limited	1,541	2,005
Treatt USA Inc	3,261	2,829

Balances with subsidiaries:

Parent Company
	2023
	£’000
		2022
		£’000
Amounts owed to Parent Company:
R C Treatt & Co Limited	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

139

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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.

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	Page reference
		2023
		£’000
			2022
			£’000
				2021
				£’000
Total equity	109	137,246	133,850	106,299
Net debt	112	10,382	22,419	9,114
Capital employed		147,628	156,269	115,413
Interim total equity
1
		129,685	114,988	95,369
Interim net debt
1
		17,704	19,787	4,468
Interim capital employed
1
		147,389	134,775	99,837
Average capital employed
2
		150,429	135,486	101,981
Adjusted operating profit
3
	104	18,321	15,773	21,346
ROACE %		12.2%	11.6%	20.9%

The previous five years’ measure of ROACE can be found in the Key Performance Indicators section,

on page 22.

ROACE – statutory measure

Group	Page reference
		2023
		£’000
			2022
			£’000
Average capital employed
2
		150,429	135,486
Profit before taxation	104	13,544	16,179
ROACE %		9.0%	11.9%

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	Page reference
		2023
		£’000
			2022
			£’000
Profit before taxation	104	13,544	16,179
Exceptional items	104	3,800	(923)
Profit before taxation and exceptional items	104	17,344	15,256
Interest receivable	104	(112)	(8)
Interest payable	104	1,089	525
Depreciation of property, plant and equipment
and right-of-use assets	104	4,277	2,476
Amortisation of intangible assets	104	399	215
Adjusted EBITDA		22,997	18,464
Net debt	112	10,382	22,419
Net debt to adjusted EBITDA		0.45	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

140

TREATT PLC Annual Report & Accounts 2023

31. ALTERNATIVE PERFORMANCE MEASURES continued

Statutory measure

Group	Page reference
		2023
		£’000
			2022
			£’000
Profit before taxation	104	13,544	16,179
Interest receivable	104	(112)	(8)
Interest payable	104	1,089	525
Depreciation of property, plant and equipment
and right-of-use assets	104	4,277	2,476
Amortisation of intangible assets	104	399	215
EBITDA		19,197	19,387
Net debt	112	10,382	22,419
Net debt to EBITDA		0.54	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.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

for the year ended 30 September 2023

141

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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, Suolk, IP32 7FR is set out below.

Proxy voting

Shareholders are requested to complete and submit their proxy appointment online by using the Signal

Shares share portal service at www.signalshares.com as soon as possible and, in any event, by no later

than 10.30am on 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 certicate

or is available from our registrars, Link Group. For those who hold their shares in uncerticated 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, Suolk, IP32 7FR on 25 January 2024, at 10.30am for the purpose of

considering and, if thought t, 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.

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.

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 nd 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 nal dividend of 5.46 pence per share on the ordinary shares of the Company for the

year ended 30 September 2023.

Explanatory note

A nal dividend can only be paid after the shareholders at a general meeting have approved it. A nal

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 nal 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.

142

TREATT PLC Annual Report & Accounts 2023

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 satised that the performance of

each of the Directors continues to be eective 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 Ocer 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 oce from the conclusion of this meeting

until the conclusion of the next AGM.

Explanatory note

At each general meeting at which the Company’s Annual Report and Accounts are presented to its ordinary

shareholders, the shareholders are required to appoint an auditor to serve until the next such meeting.

Following a recommendation by the Audit Committee, the Board is proposing the re-appointment of BDO

LLP as auditors of the Company.

Resolution 11 – Auditor’s remuneration

11. To authorise the Directors to determine the remuneration of the auditors of the Company.

Explanatory note

The remuneration of the Company’s auditors must be xed by the Company in general meeting or in such

manner as the shareholders may determine in general meeting. This resolution gives authority to the

Directors to determine the remuneration of the auditors of the Company.

Resolution 12 – 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 identication 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 eect; and at their discretion, to adopt similar all-employee plans as they

deem appropriate for the benet 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

rst 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.

Resolution 13 – Approval of Long Term Incentive Plan

13. THAT the Directors be and are hereby authorised:

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 identication 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 eect; and

b) to establish further plans based on the Treatt plc 2024 Long Term Incentive Plan but modied 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.

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.

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

143

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

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) 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

b) comprising equity securities (as dened 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 oer of or invitation to apply for equity securities by way of a pre-emptive oer

or invitation (including an oer by way of a rights issue or open oer) 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 diculties 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

rst) save that the Company may before such expiry make an oer 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 oer 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 oer

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 dened in Section 560(1) of the Act) held

by the Company as treasury shares for cash, as if Section 561 of the Act did not apply to any such

allotment or sale, such power to be limited to the allotment of equity securities for cash and the sale

of treasury shares:

a) in connection with or pursuant to an oer 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

oer or invitation (including a rights issue or open oer) 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 diculties 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

144

TREATT PLC Annual Report & Accounts 2023

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 oer 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

rst), save that the Company may before such expiry make an oer 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 oer or

agreement as if the power conferred hereby had not expired.

Explanatory note

Under Section 561 of the Act, if the Directors wish to allot any of the unissued shares or grant rights

over shares or sell treasury shares for cash (other than pursuant to an employee share scheme) they

must in the rst instance oer them to existing shareholders in proportion to their holdings. There may

be occasions, however, when the Directors will need the exibility to nance business opportunities by the

issue of ordinary shares without a pre-emptive oer to existing shareholders. This cannot be done under

the Act unless the shareholders have rst authorised this.

Resolution 15 asks the shareholders to do this and, apart from oers 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 oer 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 gure of up to 10% reects 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 dened in Section 560(1) of the Act) held by the Company as treasury shares for

cash, as if Section 561 of the Act did not apply to any such allotment of equity securities for cash and

sale of treasury shares, such power to be limited to:

a) the allotment of equity securities for cash and sale of treasury shares up to an aggregate nominal

amount of £122,259 such authority to be used only for the purposes of nancing (or renancing,

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 specied capital investment of a kind

contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently

published by the Pre-Emption Group prior to the date of this Notice, or for any other purposes

as the Company in general meeting may at any time by special resolution determine; and

b) the allotment of equity securities 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 oer 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 rst), save that the Company may

before such expiry make an oer 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 oer or agreement as if the power

conferred hereby had not expired.

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

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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 reect 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 oer 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 conrm that they intend to use this power only

in connection with a transaction which they have determined to be an acquisition or a specied 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:

a) the minimum price (excluding expenses) which may be paid for an ordinary share is the nominal

amount of that share; and

b) the maximum price (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 Ocial List on the ve

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.

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 rst), save that in relation to the

purchase of ordinary shares the contract for which is concluded before such date and which would or

might be executed wholly or partly on or after such date, the Company may purchase ordinary shares

pursuant to any such contract under this authority.

Explanatory note

In certain circumstances, it may be advantageous for the Company to purchase its own shares and

resolution 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

eect 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-eectively and provides the Company with greater exibility in the

management of its capital base.

It also gives the Company the opportunity to satisfy employee share scheme awards with treasury shares.

Once held in treasury, the Company is not entitled to exercise any rights, including the right to attend and

vote at meetings in respect of the shares. Further, no dividend or other distribution of the Company’s

assets may be made to the Company in respect of the treasury shares.

The resolution species 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%.

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).

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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 oers 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 exibility to call general meetings, other than AGMs, on not less than 14

clear days’ notice. This additional exibility would not be used as a matter of routine for such meetings

but would be used where the Board considers it appropriate in the circumstances. The approval will be

eective 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 Ocer & Company Secretary

Registered Oce:

Skyliner Way

Bury St Edmunds

Suolk

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.

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

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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 ecient basis.

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 oer 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:

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 Directors will determine in any year whether participation in the SIP will be oered and, if so,

the basis on which each of the above categories may be oered.

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 notied to all

qualifying employees.

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.

As determined by the Directors, deductions may either be:

a) 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

b) 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 oer 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 oer the opportunity for the acquisition of Partnership Shares it may also

oer 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 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.

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.

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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 specied 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 specied 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 ve years, or, if earlier, until the employee leaves the Group. The Directors shall

determine the applicable holding period at the time the oer 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 oer 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 specied 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 conrmation 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 benet 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 sucient

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

Benets under the SIP are not pensionable.

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

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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').

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 satised by issue or transfer of shares (or a cash equivalent

amount), and Restricted Stock Units, which may at the discretion of the Company be satised 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 satised by shares issued directly to participants and nil in the case of

an option to acquire shares held in the Treatt Employee Benet 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

nancial 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.

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.

Performance conditions

The Committee may impose performance conditions ('Performance Conditions') applying usually over

a period of at least three years that must normally be satised before Awards vest. The Performance

Conditions will be determined at the time of grant to ensure that they are suciently 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) a material misstatement, error or misrepresentation of the Company’s nancial results;

ii) 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 oce 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):

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TREATT PLC Annual Report & Accounts 2023

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 satised or waived or are treated

as satised 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 satised 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 ve-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 fth 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 satised 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 oce 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 specied 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.

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 reect 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 benet the administration

of the LTIP, to take account of a change in legislation or to obtain or maintain favourable tax treatment.

Pensions

Benets under the LTIP will not be pensionable.

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

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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 certicated or uncerticated 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 specied 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 reection 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 xed for the holding

of the adjourned meeting). To do so, you will need to log in to your Treatt plc Signal Shares account, or

on your share certicate 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) 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’) specications 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 specied 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.

b) CREST members and, where applicable, their CREST sponsors or voting service providers should note

that EUI does not make available special procedures in CREST for any particular messages. Normal

system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.

It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST

personal member or sponsored member or has appointed a voting service provider(s), to procure

that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to

ensure that a message is transmitted by means of the CREST system by any particular time. In this

connection, CREST members and, where applicable, their CREST sponsors or voting service providers

are referred in particular to those sections of the CREST Manual concerning practical limitations of the

CREST system and timings.

c) The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in

regulation 35(5)(a) of the Uncerticated Securities Regulations 2001. Members may change proxy

instructions by submitting a new proxy appointment using the methods set out above. Note that the

cut-o time for receipt of proxy appointments also apply in relation to amended instructions; any

amended proxy appointment received after the relevant cut-o time will be disregarded.

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.

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

152

TREATT PLC Annual Report & Accounts 2023

Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated

terms and conditions. It is important that you read these carefully as you will be bound by them and they

will govern the electronic appointment of your proxy.

The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another

person and who have been nominated to receive communications from the Company in accordance with

section 146 of the Companies Act 2006 (‘nominated persons’). Nominated persons may have a right

under an agreement with the registered shareholder who holds the shares on their behalf to be appointed

(or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a

right, or do not wish to exercise it, they may have a right under such an agreement to give instructions

to the person holding the shares as to the exercise of voting rights.

A member of the Company which is a corporation may authorise a person or persons to act as its

representative(s) at the AGM. In accordance with the provisions of the Companies Act 2006 (as amended

by the Companies (Shareholders’ Rights) Regulations 2009), each such representative may exercise

(on behalf of the corporation) the same powers as the corporation could exercise if it were an individual

member of the Company, provided that they do not do so in relation to the same shares. It is therefore no

longer necessary to nominate a designated corporate representative.

Pursuant to Section 319A of the Companies Act 2006, the Company must cause to be answered at the

AGM any question relating to the business being dealt with at the AGM which is put by a member attending

the meeting, except in certain circumstances, including if it is undesirable in the interests of the Company

or the good order of the meeting that the question be answered or if to do so would involve the disclosure

of condential 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 ineective (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.

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.

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 oce 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 Benet 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 oce

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, Suolk, IP32 7FR.

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

153

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

PARENT COMPANY INFORMATION AND ADVISORS

Directors

Vijay Thakrar

Chair and Non-executive Director

Daemmon Reeve

Chief Executive Ocer

Ryan Govender

Chief Financial Ocer

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 Oce

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,

Suolk, 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

154

TREATT PLC Annual Report & Accounts 2023

FINANCIAL CALENDAR

FINANCIAL YEAR 2023/24

Interim results to 31 March 2023 announced 9 May 2023

Interim dividend for 2023 goes ‘ex-dividend’ 29 June 2023

Record date for 2023 interim dividend 30 June 2023

Last day for dividend reinvestment plan election 20 July 2023

Interim dividend for 2023 paid 10 August 2023

Financial year ended 30 September 2023

Results for year to 30 September 2023 announced 28 November 2023

Final dividend for 2023 paid 14 March 2024

FINANCIAL YEAR 2024/25

Interim results to 31 March 2024 announced 14 May 2024*

Interim dividend for 2024 goes ‘ex-dividend’ 4 July 2024*

Record date for 2024 interim dividend 5 July 2024*

Last day for dividend reinvestment plan election 25 July 2024*

Interim dividend for 2024 paid 15 August 2024*

Financial year ended 30 September 2024

Results for year to 30 September 2024 announced 26 November 2024*

Final dividend for 2024 paid 13 March 2025*

* These dates are provisional and may be subject to change

155

TREATT PLC Annual Report & Accounts 2023

Financial StatementsCorporate GovernanceStrategic ReportOverview

Other Information

NOTES

156

TREATT PLC Annual Report & Accounts 2023

Printed by a CarbonNeutral

Company certied to ISO 14001 environmental management system.

Printed on material from well-managed, FSC

certied 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

oset 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.

CBP00019082504183028

TREATT PLC

Skyliner Way, Bury St. Edmunds, Suolk IP32 7FR

www.treatt.com

cosec@treatt.com

+ 44 (0) 1284 702500