Half Yearly Report

TREATT PLC

HALF YEAR RESULTS

SIX MONTHS ENDED 31 MARCH 2015

Adjusted profit before tax up 5% and adjusted EPS up 9% as the Group continues to meet expectations

Treatt Plc, the manufacturer and supplier of ingredient solutions for the flavour, fragrance and FMCG industries, announces today its half year results for the six months ended 31 March 2015.

HIGHLIGHTS of our half year:

· Revenues for the six months up 12% to £41.4 million (H1 2014: £37.1 million)

· Operating profit increased by 5% to £3.3m (H1 2014: £3.1m)

· Adjusted EBITDA1 up 4% to £4.0m (H1 2014: £3.8m)

· Adjusted profit before tax1 rose by 5% to £2.9m (H1 2014: £2.8m)

· Adjusted basic earnings per share1 increased by 9% to 4.21p (H1 2014: 3.87p)

· Interim dividend per share raised by 3% to 1.28p (2014 interim dividend: 1.24p)

Commenting on the results, Group CEO Daemmon Reeve said:

"Our strategy continues to gain momentum. The performance and effort of our enabled and motivated teams across the Group is impressive. We are securing and delivering on opportunities which are making a real difference to the business and this provides me with great optimism for the future."

Notes:

1 Adjusted to exclude exceptional items - see note 7

Enquiries:

Treatt plc +44 (0)1284 702500

Daemmon Reeve Chief Executive Officer

Richard Hope Finance Director

Brokers

Investec Investment Banking

Patrick Robb +44 (0)20 7597 4000

David Anderson

Public relations

Davidson Ryan Dore

Lawrence Dore +44 (0)20 7520 9218

CHAIRMAN'S STATEMENT

I am pleased to be reporting a solid set of results for the first six months of the current financial year and the progress made in the business in order to meet our long term strategic objectives. Adjusted1 EBITDA has improved by 4% to £4.0m (2014: £3.8m) with adjusted1 profit before tax increasing by 5% to £2.9m (2014: £2.8m). Adjusted1 earnings per share have increased by 9% to 4.21 pence per share (2014: 3.87 pence per share).

The Board has declared an increase in the interim dividend of 3% to 1.28 pence per share (2014: 1.24 pence per share) which represents approximately one third of the previous year's total dividend in line with the Board's policy. Naturally, the total dividend for the year will continue to be guided by the overarching policy of maintaining a dividend cover of between 2-2.5X on a rolling three year basis. The interim dividend will be payable on 16 October 2015 to all shareholders on the register at close of business on 11 September 2015.

The first half of the financial year saw revenue grow by an encouraging 12% to £41.4m (2014: £37.1m) with a consequent increase in gross profit of 9% to £9.1m (2014: £8.4m). Margins in the first six months of the financial year have, as anticipated, been impacted by adverse raw material price movements in relation to some longer term fixed price contracts.

There has been a small increase in net debt of £0.3m (2014: £3.1m increase) as the Group generated free cash inflow of £0.9m (2014: outflow £2.2m) in the period. The Group would expect to report an increase in net debt at this time of year, as inventory is built up to support the seasonally stronger sales in the second half. However, a number of strategic business developments have resulted in improvements in the underlying cash performance of the business.

There are hedging instruments in place to protect the Group from the full impact of foreign exchange rate volatility, particularly in respect of the US Dollar and Euro. Overall, this resulted in a short term FX loss, included within administrative expenses, of £0.4m which we expect to be offset by corresponding FX gains or margin improvements in H2.

The Group's strategy is to focus on delivering added-value ingredient solutions across key market segments in the flavour, fragrance, cosmetics, and in particular, the beverage sectors. We are making particularly good progress in the beverage sector which itself breaks down into a number of important segments for Treatt, including the fast growing craft beer market. The beverage market continues to innovate and brings opportunities to develop new products in these areas, especially the wellness and natural areas as demand grows for lower calorie and health-conscious products. We believe our experience in operating in these markets is a critical factor in our success but another is the close commercial and technical relationships we develop with key, targeted customers to deliver the difference they seek. In the first half of the year, we have achieved a number of new business wins leveraging our expertise in these areas.

Shareholders who attended January's AGM will have seen the new product development centre, including new sensory, applications and brewing capabilities, which we opened earlier this year at our UK site in Bury St. Edmunds. Building collaborative commercial and technical platforms such as this provides the environment that our customers expect and enhances our opportunities to achieve long-term success.

As we reported in March 2015, the Board has been actively considering a number of options with regard to our UK plant which no longer meets the medium to long term needs of the business. We believe that the best option for the future growth of the business will come in the form of a full site re-location within the Bury St. Edmunds area with new modern and efficient manufacturing and technical facilities. This will enable a material increase in our value-added capabilities through greater investment in innovation and R&D capabilities, lower cost production, and reduced inefficiencies and maintenance costs. Above all, this will enable us to partner on a much greater scale with global FMCG customers to deliver the innovative solutions they require.

Whilst plans are still being finalised, current indications are that the move is likely to cost in the region of £15m to £20m net of disposal proceeds, but will enable us to deliver greater returns for shareholders. As previously stated, we will consult with key stakeholders to ensure their support as these plans come together.

Prospects

The third quarter of the financial year has started steadily and with order books up on the prior year, the Board remains confident at this early stage of the second half that the Group will meet its expectations for the year ending 30 September 2015. Over the remainder of the year, we will continue to develop and evolve our strategy in order to build a stronger, more profitable business for the long term.

TIM JONES

Chairman

18 May 2015

Notes:

1Adjusted to exclude exceptional items - see note 7

Responsibility statement

We confirm that to the best of our knowledge:

(a) the condensed set of financial statements for the six months ended 31 March 2015 has been prepared in accordance with IAS 34

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

(c) the half year report and condensed financial statements includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

RICHARD HOPE

Finance Director

18 May 2015

NOTES TO THE UNAUDITED HALF YEAR FINANCIAL STATEMENTS

1. Basis of preparation

The Group is required to prepare its condensed half year financial statements in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards (IFRS)). The Group has adopted the reporting requirements of IAS 34 'Interim Financial Reporting'.

The consolidated condensed half year financial statements are prepared on the basis of all International Accounting Standards (IAS) and IFRS published by the International Accounting Standards Board (IASB) that are currently in issue. New interpretations may be issued by the International Financial Reporting Interpretations Committee (IFRIC) on existing standards and best practice continues to evolve. It is therefore possible that the accounting policies set out below may be updated by the time the Group prepares its full set of financial statements under IFRS for the year ending 30 September 2015.

The information relating to the six months ended 31 March 2015 and 31 March 2014 is unaudited and does not constitute statutory accounts. The statutory accounts for the year ended 30 September 2014 have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 of the Companies Act 2006. These condensed half year financial statements for the six months ended 31 March 2015 have neither been audited nor formally reviewed by the Group's auditors.

2. Accounting policies

These condensed half year financial statements have been prepared on the basis of the same accounting policies and presentation set out in the Group's 30 September 2014 annual report.

There were no new standards, or amendments to standards, which are mandatory and relevant to the Group for the first time for the financial year ending 30 September 2015 which have had a material effect on these condensed half year financial statements.

3. Accounting estimates

The preparation of the condensed half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. In preparing these condensed half year financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited consolidated financial statements as at, and for the year ended, 30 September 2014.

4. Going concern

As at the date of this report, the Directors have a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. Since the period end all the Group's expiring banking facilities have been renewed on existing or improved terms. Accordingly, the condensed half year financial statements have been prepared on the going concern basis.

5. Risks and uncertainties

The operation of a public company involves a series of risks and uncertainties across a range of strategic, commercial, operational and financial areas. The principal risks and uncertainties that could have a material impact on the Group's performance over the remaining six months of this financial year (for example, causing actual results to differ materially from expected results or from those experienced previously) are the same as those detailed on pages 17-18 of the 2014 Annual Report and Financial Statements.

NOTES TO THE UNAUDITED HALF YEAR FINANCIAL STATEMENTS (continued)

6. Segmental information

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 as one global business segment. The Group is engaged in the manufacture and supply of ingredient solutions for the flavour, fragrance and FMCG industries with manufacturing sites in the UK, US and Kenya. Many of the Group's activities, including sales, purchasing, manufacturing, 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:

7. Exceptional items

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

The exceptional items in the year all relate to non-recurring items. The legal and professional fees relate to the earnout dispute in relation to the acquisition of the Earthoil Group, which remains on-going.

8. Taxation

Taxation has been provided on pre-exceptional profits at 26.2% (six months ended 31 March 2014: 28.9%) which is the effective group rate currently anticipated for the financial year ending 30 September 2015.

NOTES TO THE UNAUDITED HALF YEAR FINANCIAL STATEMENTS (continued)

9. 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), together with shares held by the Treatt SIP Trust (SIP) which do not rank for dividend.

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:

NOTES TO THE UNAUDITED HALF YEAR FINANCIAL STATEMENTS (continued)

9 Earnings per share (continued)

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:

10. Dividends

Equity dividends on ordinary shares:

1 Accounted for in the subsequent year in accordance with IFRS.

2 The declared interim dividend for the year ended 30 September 2015 of 1.28 pence was approved by the Board on 18 May 2015 and in accordance with IFRS has not been included as a deduction from equity at 31 March 2015. The dividend will be paid on 16 October 2015 to those shareholders on the register at 11 September 2015 and will, therefore, be accounted for in the financial statements for the year ended 30 September 2016.

3 Following a resolution approved by shareholders on 16 May 2014, the share capital of the Company was sub-divided on a five for one ratio (i.e. five new 2 pence ordinary shares replacing each existing 10 pence ordinary share) and accordingly, where required the above numbers have been restated on the basis of the new share capital.

NOTES TO THE UNAUDITED HALF YEAR FINANCIAL STATEMENTS (continued)

11. Contingent liabilities

As disclosed in note 27 of the 2014 annual report and financial statements, the sellers of the Earthoil Group, which was acquired by the Group in April 2008, have filed a claim in the Chancery Division of the High Court against the Group for £1.8m which has subsequently been extended to £2.3m. Following rulings by the High Court and Court of Appeal on issues of contractual interpretation, two of which were found in Treatt's favour and one in favour of the sellers of the Earthoil Group, the matter has now been referred to chartered accountants for determination of the substantive claim, being the quantum of the Earn-out. The costs of resolving the dispute currently total £1,037,000, of which the current year's costs of £98,000 have been included in exceptional items (see note 7), on a consistent basis to the prior year. The total eventual legal and professional fees of the dispute are currently unknown, but are likely to exceed £1.25m.

12. Related party transactions

Treatt Plc, the Parent Company, entered into the following material transactions with related parties:

The redeemable loan notes are redeemable in full on 31 December 2015 or from 31 March 2009 on request from the issuer. Interest is receivable at 1% above UK base rate. Amounts owed to the Parent Company are unsecured and will be settled in cash.