Preliminary Results

CHAIRMAN'S STATEMENT

Results

2012 has been a mixed year for the Group. Notwithstanding a weak start to the financial year, it is pleasing to report that results for the last year were significantly better than had been originally forecast. Pre-exceptional profits for the financial year recovered to £5.1m, being the second highest on record. Group revenue remained steady at £74.0m (2011: £74.5m). Though orange oil prices over the year fell by more than half, our adjusted* group earnings before interest, tax, depreciation and amortisation were reduced by only 14.2% to £6.9m (2011: £8.0m). Operating profits were down 18% to £5.6m (2011: £6.9m) with adjusted* profit before tax for the year lower by 21% to £5.1m (2011: £6.4m). In comparison this year's adjusted profits exceed the profits for 2009/10 by 12% and those of 2008/9 by 45%. Adjusted* basic earnings per share were 34.4 pence (2011: 42.5 pence) per share.

The exceptional item of £0.6m reported in these results relates to compensation for loss of office in respect of the out-going Group Managing Director who was subject to a notice period of two years.

Dividends

The Board is proposing a net final dividend of 10.4 pence (2011: 9.7 pence), increasing the total dividend for the year by 6.9% to 15.5 pence (2011: 14.5 pence) per share. If approved, the final dividend will be payable on 8 March 2013 to all shareholders on the register at close of business on 1 February 2013. Shareholders who wish to participate in the dividend re-investment plan for this and future dividends should elect to do so by 11 February 2013.

Board Changes

Following my appointment as Chairman of the Board at the AGM in February this year, the Board announced the appointment of Daemmon Reeve as an Executive Director in May and subsequently as Group Chief Executive Officer in August. Daemmon has worked for the Group for over twenty years, latterly as CEO of Treatt USA where, in a relatively short space of time, he has taken the Group's US business onto a significantly more profitable footing and we have every confidence that under Daemmon's leadership the Group as a whole will enjoy sustainable long term growth in profits over the coming years.

Review of the year

The weak Q4 experienced in the preceding financial year continued into Q1 of the financial year ended 30 September 2012, particularly at R.C. Treatt, the Group's UK-based operating subsidiary. As has been the case in previous downturns, demand then steadily recovered throughout the rest of the financial year although prices for many raw materials continued to decline. Orange oil (the Group's largest product segment) fell in price by over 60% creating downward pressure on margins.

Whilst sales in the UK grew by an encouraging 12%, across the rest of Europe demand was very weak, with sales to France and Germany coming under particular pressure during the year. The Group continues to perform well across Asia and the Americas. In terms of product categories, the Group has steadily increased its focus on the beverage sectors where sales of citrus and natural ingredients are growing, while at the same time maintaining a strong foothold in the supply of aroma and specialty chemical ingredients for the flavour and fragrance industries.

As a consequence of the weak Q1, R.C. Treatt saw revenue falling by 4% to £43.5m (2011: £45.3m). The significant price volatility of orange oil impacted on R.C. Treatt's sales and contributions in the year as the Group managed its risk through strategic inventory management.

For Treatt USA, 2012 has been another good year although, in the absence of some prior year stock profits, overall contributions were lower. The underlying performance of Treatt USA continues to be strong, with some significant new business being won during the course of the year. Year on year US Dollar sales grew by 4%.

2012 has been a steady year for Earthoil as it made a small profit for the second year in succession. Year on year sales for Earthoil fell slightly by 3% but underlying performance was much better than this suggests as prior year sales included a substantial shipment which had been delayed from 2010. On a like for like basis sales grew by a satisfactory 12%. This growth was achieved without any increase in overheads and resulted in a 22% increase in profits, albeit from a very small base.

Prospects

The new financial year has started at a steady pace which in relative terms will mean that Q1 of the current year ending 30 September 2013 will show a significant improvement on last year. The Board is currently carrying out a thorough review of the business with the aim of taking the Group through to its next stage of growth. The UK business has gradually evolved since it began manufacturing in the 1970's and the task now is to re-focus and further modernise R.C. Treatt in order to drive future growth in the Group's profitability. Treatt USA, which predominantly serves the fast-moving North American market is continuing to progress well, with some substantial new contracts coming fully on stream over the coming year whilst Earthoil is expected to make steady progress as a niche supplier to the cosmetics industry.

Summary

Despite the weak first quarter, particularly at R.C. Treatt, the results for the last year were better than original expectations with Treatt USA continuing to perform very well. The view for the current year ending 30 September 2013 is it will be a year of steady progress as the Group re-aligns its strategy to ensure that it is well placed to grow profit sustainably over the coming decade. The world continues to eat, drink and to buy cosmetics; overall demand continues to grow in spite of economic conditions. Flavour, fragrance and cosmetics companies look to our Company to provide quality products in an efficient manner. As a truly independent and global business, Treatt remains well placed to take advantage of competitive opportunities, and through its commitment to continuous improvement, Treatt has become a supplier of choice to many large global businesses as well as national companies.

People

The most important asset of the Group is its people and, on behalf of the Board, I would like to express our sincere thanks to all colleagues throughout the globe without whose effort, dedication and skill these results would not have been possible.

TIM JONES

Chairman

7 December 2012

* Excluding exceptional item for compensation for loss of office

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

GROUP INCOME STATEMENT

All amounts relate to continuing operations

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

GROUP STATEMENT OF COMPREHENSIVE INCOME

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

GROUP STATEMENT OF CHANGES IN EQUITY

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

GROUP BALANCE SHEET

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

GROUP STATEMENT OF CASH FLOWS

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

GROUP RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

NOTES TO THE PRELIMINARY STATEMENT

1. Basis of preparation

In accordance with Section 435 of the Companies Act 2006, the Group confirms that the financial information for the years ended 30 September 2012 and 2011 are derived from the Group's audited financial statements and that these are not statutory accounts and, as such, do not contain all information required to be disclosed in the financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"). The statutory accounts for the year ended 30 September 2011 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 September 2012 have been audited and approved, but have not yet been filed.

The Group's audited financial statements received an unqualified audit opinion and the auditor's report contained no statement under section 498(2) or 498(3) of the Companies Act 2006.

The financial information contained within this preliminary statement was approved and authorised for issue by the Board on 7 December 2012.

2. Accounting policies

These financial statements have been prepared in accordance with the accounting policies set out in the full financial statements for the year ending 30 September 2011.

There were no new standards and amendments to standardswhich are mandatory and relevant to the Group for the first time for the financial year ending 30 September 2012 which had a material effect on this preliminary statement.

3. Geographical segmental information

The following table provides an analysis of the Group's revenue by geographical market, irrespective of the origin of the goods or services:

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

NOTES TO THE PRELIMINARY STATEMENT

4. Taxation

TREATT PLC

PRELIMINARY STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2012

NOTES TO THE PRELIMINARY STATEMENT

5. Dividends

The declared interim dividend for the year ended 30 September 2012 of 5.1 pence was approved by the Board on 18 May 2012 and was paid on 19 October 2012. Accordingly it has not been included as a deduction from equity at 30 September 2012. The proposed final dividend for the year ended 30 September 2012 of 10.4 pence will be voted on at the Annual General Meeting on 25 February 2013. Both dividends will therefore be accounted for in the financial statements for the year ended 30 September 2013.

6. Earnings per share

(1) 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 of 10,227,473 (2011: 10,238,837).

Basic earnings per share has been shown both before and after the exceptional item of £598,000 net of tax thereon of £150,000. The earnings used to calculate basic earnings per share before and after the exceptional item are earnings of £3,521,000 and £3,072,000 respectively (2011: £4,355,000).

The weighted average number of shares excludes shares held by the "Treatt Employee Benefit Trust".

(2) 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, of 10,263,239 (2011: 10,285,902), and earnings (after exceptional item) of £3,072,000 (2011: £4,355,000).

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