“When the coronavirus first hit, it was clearly a real shock to see what was going on around us, but it was important to stay calm and provide clarity to the business,” says Richard Hope, CFO of Treatt, a specialist food ingredients firm, when faced with the initial impact of the coronavirus.
For the group – that has two thirds of its 325 workers in the UK and the rest in the US, bar half a dozen staff in China – there was little certainty about the virus. Being in the food production chain meant greater levels of responsibility in terms of ensuring production of the group’s products, while protecting staff.
“We took very early precautions before lockdown started, because our thinking was very much to protect those staff who were involved in making and testing the products, to make sure no-one else came into contact with them,” says Hope.
Treatt’s CFO, who has been with the Bury St Edmunds headquartered firm for 17 years, says the group organised a sequence of moves in response to the pandemic. “We put in place daily updates to the team, social distancing, one-way systems, changed shift patterns, but most importantly listened to the staff,” says Hope.
“A colleague in America came up with a foot door opener so nobody would have to touch doors, for example. And it’s great to take on board these ideas, it’s in our DNA to do that because it really creates a sense of inclusion and being listened to,” he says.
Hope says the finance function played a key role in supporting the group as it went through the early stages of the pandemic. “We were on the lookout for any changes in customer behaviour, any issues with payment terms, with customers and suppliers. With all that information we were able to act quickly,” he says.
Hope says the ability to act effectively in a moment of crisis was down to a decision to upskill the finance team, enabling them to move seamlessly to working from home and providing the business with the information it needed.
“It was about not being afraid to make decisions, and having the permission to fail, taking appropriate risks, trusting colleagues. During the lockdown we focused on wellbeing, making sure our staff accessed all the emotional support they needed as well and providing training,” says Hope.
“Our investment in staff training has increased radically over the years, because they are the bedrock of the business. We think of them as the drivers of the business, the decision-makers, theirs are the skills that matter in the business,” he says.
The upshot is that Treatt’s offering, based around six product categories aimed at the premier drinks market that was growing steadily in recent years, was able to maintain sales as a whole during the period of the lockdown.
Although US revenues slipped recently, the group was able to post strong results in May, based on the strength of the range that includes ingredients for soft drinks. “It could be a flavoured tonic water for example, where our flavour is natural. It could be where we’re working with large beverage companies to reduce or eliminate the sugar content, from their beverage. We do some really clever extraction with fruit and vegetables, tea, sugar reduction,” says Hope.
Treatt is also active in the fragrances market as well, giving it strong returns from growth in the cleaning product market. “It could be the lemon fragrance in a bleach for example, or the grapefruit ragrance in a hand sanitizer,” he says.
“The pandemic overall has not had an adverse effect on us,” says Hope. There are pluses and minuses, but there are some Treatt specifics which mean we are winning market share, and remain on track to meet our expectations for the current financial year,” he adds.
A career in firms supplying fast moving consumer goods (FMCGs) followed a degree in economics and accounting at Bristol University and four years at accountancy firm Price Waterhouse, now PwC. A brief period working as a commercial business manager for Overdrive petrol card company Richbell, was followed by seven years at Hampshire Cosmetics, a producer of products for the cosmetics sector, which he joined as head of finance, a role he stayed in.
It was at the owner-managed business, that Hope says he realised to become a CFO, meant being “more than an accountant, more being a strategic business adviser.” With a new head of operations, Hope worked on devising KPIs, bringing in a new ERP system, and enabling the firm’s sales force to “drive the business forward.”
Given the limited career prospect, Hope decided to look around. When he was hired to become CFO of Treatt in 2003 it was something of a leap of faith becoming the finance lead of a listed company. “I had ambition and a certain amount of self-confidence, so nothing ventured, nothing gained,” he says.
Although it was a £20m microcap compared to the current valuation of around £350m, he recognised the breadth of new responsibilities, required at board level, “dealing with remuneration committees, audit committees, corporate governance, investor relations,” he says.
There was also the benefit of working in “similar markets, so similar customers, similar suppliers, Hampshire Cosmetics even becoming a customer of Treatt at various points “so I had a certain amount of industry background knowledge that stood me in good stead,” he says.
But the big challenge for Hope was that the previous CFO had departed before his arrival, so the financial controller was holding the fort, which means he had to learn on the job, drawing on the experience and know-how of advisers.
What was clear was that that Treatt, which was owned by a handful of key investors, had plenty of scope for growth. Having finessed the finance function by switching to a new ERP system and improving efficiencies across the board, he looked at other ways to support the business.
A significant investment in business information (BI) systems and better data to optimise the business – for example getting the best priced quality ingredients aned yields – was added. “We need to make sure the important metrics emerge with clarity. So, there’s a lot thinking that has to go into how you communicate information as well,” he says.
A big leap forward came with the appointment of a new CEO Daemmon Reeve in 2012. Then a critical decision was made to change the culture of the business. “We felt we wanted a different culture, one with trust, where people worked flexibly and really enjoyed their work, so we started to do a lot more in the community, especially in Bury St Edmunds,” says Hope.
An incentive scheme was added to give all staff, from the shop floor to the leadership team, the opportunity to benefit from the firm’s growth through Free Shares. “There was only one requirement- you had to stay with the business for the next three years.
“All our staff in the UK and US that have been with us for at least a year are shareholders, and that makes such a difference because they’re not only employees, they feel they’ve got much more of an emotional stake in the business,” says Hope.
He says that investment in staff not only paid off well in recent years, but especially since the impact of the pandemic. “I think its stood us in really good stead, our teams moved to home working and social distancing, and because we’ve got a small team in China, we’d seen a month earlier what was going on there and everybody just adapted to it really quickly,” he says.
While Treatt has benefited from a set of products that have stayed in demand, it has still been vitally important to communicate effectively how the firm is placed to meet the challenges of the next phase of the pandemic.
Along with half year results in May, in which the firm recorded profit before tax and exceptional items down two percent to £6.1m on revenue 5.3 percent lower at £53.6m, Reeve and Hope undertook around 50 presentations on zoom to fund managers. “We don’t over-exaggerate, we’re always prudent. We always try to adopt the under-promise and over-deliver approach? because that creates trust,” says Hope.
The conferencing device has also been used to undertake town Hall sessions online, where he says staff are using the chat facility, to discuss issues more openly than they might do in an office environment.
Despite the impact of the pandemic, Treatt is on an ambitious course. Last year the group completed a $15m expansion of its US business, which doubled the capacity for three product categories, natural extracts, tea, health & wellness.
In the UK, Treatt is moving its headquarters from six buildings in Bury St Edmunds to a new single site development in a greenfield business park nearby that will be occupied next year. “Looking forward over the next five to 10 years, we’ve created the scale-able platform in the UK and US to grow,” says Hope.
When it comes to returning to work, Hope says Treatt is not rushing people back into the office. “Its still very much the case that only those who need to be on site go on site, we have all sorts of protocols in place to make sure that happens,” he says. Those who are on site are operations and technical staff making the product, despatching, sampling and testing.
Although demand has dropped off in the US from the closure of the on-trade, Hope says the market in China has rebounded. “What we are seeing can be best be described as a v-shaped recovery in terms of demand. It bounced back quickly,” he says.
In the UK the picture is also positive. “Globally Treatt has a very strong position in tea flavour extracts products, sold through supermarkets which have grown substantially during lockdown. We’re going to come out of this in a strong position I think,” says Hope.
Treatt had included in its disaster planning, scenarios in which it was forced by governments to close down in the UK or US, for three or six months. “Because we did an equity fundraising to support our relocation in the UK and US expansion, we are a cash positive business, so we were going to be fine.
“But the overarching point I made to the board is if Treatt had closed down there would be nothing on supermarket shelves because lots of other companies in the food supply chain would be shut down on the same set of rules. So logic told you that wasn’t going to happen. But it was something that we prepared for,” adds.