Treatt today updated the market on its 1H performance. It looks set to deliver good top line growth – guiding to c.9% despite a quieter (more typical) start to the period. The source of the growth is different this half, with stronger growth from citrus, synthetic aromas and herbs and spices. The growth continue to be underpinned by volumes rather than price. Although orange oil prices are higher, there is a lag in this feeding through to Treatt’s sales. We expect to see further 2H growth too, with the group reporting its order book is up 15%. Given the different 1H sales mix, Treatt is likely to report a lower gross margin, more akin to the GM delivered in FY20. On admin costs we have allowed for some general inflation. There has been some modest increase in depreciation, but this is likely to be more notable once manufacturing activities move across to the new HQ (May ‘22). FX has also been a headwind this half, creating a c.£1m (negative) swing HoH. Taking all of these factors into consideration, we anticipate Treatt will report a 1H PBT in the £6.0-6.5m range. With the strong order book, the group has increased inventory accordingly (it typically holds 6 months stock anyway to ensure a smooth supply chain for customers) and with higher orange oil prices this has added to the working capital outflow in 1H. As a result, the closing H1 debt will be around £20m, a £12m outflow. Some of this will reverse in 2H so we expect to see FY net debt closer to £10m than £20m. The proceeds from the sale of the old UK site have also been received in 1H. The group again flags that profits are likely to be significantly weighted to 2H as it did at the outset of the year. It anticipates the mix in 2H will move back to favour the higher margin categories and it is thus trading in line with its FY expectations.