Good morning. We very much appreciate you coming along today. I'd like to extend a warm welcome to you all, but also a warm welcome to my CFO here, Ryan. This is our first, what I hope will be the first of many roadshows together, and a big warm welcome to Ryan as well. We'll start by talking about the summary of the year. What we don't want to do is lose sight of what happened in August with the downgrade. We do have positives to talk about. We have the issues around the downgrade. Ryan will talk about those in more detail. Much of that has already been addressed.
The good news is that our site relocation, for example, is at least 95% done, and we're beginning to see a number of operational positives, including our record sales month for the U.K. business in August. Our revenue growth in the period was also very strong, up nearly 13% with growth across six of our seven categories. Again, we'll talk about those in more detail soon. There's also been some very important positive work in our sustainability agenda. Over to you, Ryan.
Thank you, Daemmon, and good morning, everyone. Let me remind you again for the reasons that we had the downgrade in our profits. It was regrettable that we reduced the consensus view in FY 2022, down by 30% to GBP 15.3 million of PBTE. There were four very clear reasons for the decline in profits. The majority, though, was due to the lower than expected demand for hard tea sales in our U.S. business and FX losses, mainly due to overhedged contracts in the second half of the year.
I am pleased that the stronger trading that we had in August and September meant that we delivered profit at the upper end of the range that I called, and we closed the year on a profit before tax of GBP 15.3 million. Having reset some of these profit expectations, I think it was important for me as the new CFO in TREATT, to quickly understand the business processes and to identify what gaps there were within these processes so that we could drive improvements quickly. It was clear to me at the time that we needed to act with pace across the business, which we did.
We have a few new processes now, which I've described in the slide, but I just wanna share a bit of insight on one or two of them. We've increased our rigor on sales pricing. We've improved financial partnering in the business to the commercial and procurement teams, which I think is really important when you're talking about sales price and margin maintenance. We've enhanced the transparency of our raw material forecast, where we look out over the next 12 months. I think most importantly, we have a very clear category pricing strategy. We've also improved the FX controls in the business, and we started partnering with Alpha FX in the city.
They've helped us to develop a new FX risk management policy, which is now being reviewed by the business and implemented. We focus on tiered hedging of exposures, where we match the timing of cash flows to the timing of contracts. Hedging contracts now have more flexibility for us in the business, and we've established a new FX hedging committee within the business to monitor these FX risks. I firmly believe these improvements that we've made in the short term will help us mitigate risks and help to strengthen our foundations. Therefore, in 2022, our focus was to achieve revised targets while we were acting with pace to execute these process improvements.
That done, in 2023, our focus will shift to returning to growth. We've got sales growth and FX unwinds that will more than offset the macro headwinds that we have for higher depreciation from the new site in the U.K. In 2024, we anticipate to continue the sustainable growth, at which point we'll focus more greatly on the cost optimization and allow more of that to go from the top line growth to hit the bottom line. Moving over to the income statement. For the year ending 30 of September 2022, revenue grew by 12.8% to GBP 140.2 million, which is 9% ahead in constant currency terms.
As Daemmon has said, we grew in six out of the seven categories. Gross margin, however, declined by 610 basis points to just short of 28%, reverting back to a more normalized level and more normalized historical range. Admin expenses in the year grew, but this reflects our investment in headcount and inflation. An adjusted profit before tax, which excludes exceptionals of GBP 15.3 million, is at the upper range of our revised expectations that we spoke to you about in August. More importantly, profit reverted to the historical half one, half two splits in a year. During the year, we also disposed of our previous U.K. facilities, which we spoke to you about earlier in the year.
These are within exceptional, showing a gain of GBP 3.3 million. I think it's really important to talk about our dividend policy. Our progressive dividend policy is maintained in 2022, with a proposed total dividend of GBP 0.0785 per share, which is an increase of just higher 5% from 2021.
We've had some very strong sales growth in the year, and as Ryan said, across six of our seven categories. Although even the category that showed decline overall, which was our tea category, actually the underlying, the core part of that tea category actually was in growth. It was the alcoholic hard iced tea category as part of the tea category that saw the decline. Our strategic relevance to the market we serve remains very strong. If I can take you through the categories one by one. On the left-hand side there, you see our citrus category, which is by far the biggest part of our portfolio.
If you want to be in beverage ingredients, it's very important that you have a strong citrus category. We indeed have a strong citrus category. It's a long-established category in the business, the one that we're taking to become a more added value category over a period of time. We have synthetic aromas. This is a slightly different category of the business 'cause it tends to serve the food industry as opposed to the beverage industry. Plant-based proteins are bringing an awful lot of growth opportunity for us, and we've seen this progressively in the last five years.
Our provision of molecules in this space is a very important part of the business, and it's actually a part of the business where the operational expenses is very low, and it's a very light touch for the business. We provide some important relevance to the growth in this market. Our fruit and vegetable extracts continues to grow strongly, and this is on the back of a very strong FY 2021. These extracts bring great authenticity to beverage and is very suitable for certainly the premium end of the beverage, where the consumer experience is significant, and they expect an authentic flavor profile to the beverage.
Herbs, spices, and florals is a wide category with many different ingredients, but important ones in there are cola-type ingredients for the beverage industry, as well as products such as honey. Good double-digit growth in that category. For many years now, we've talked about the importance of our health and wellness category. It was gratifying to see a strong double-digit growth in the period. Five years ago, we've talked about this category in the sense of being about sugar reduction. Today, it's much more about the design of new beverages with low or indeed no sugar being present. We've got some very important extraction technology in this space.
We expect the growth to continue. I mentioned tea. Ryan has also mentioned our tea category. The important thing about the tea category here is that the underlying business, the core non-alcoholic tea category, continues to see growth. Indeed, we do see more opportunities in our pipeline with projects that we're working on with customers. We turn to coffee. This is the first time that TREATT have split out coffee as a standalone category in our numbers. Finally, it's reached GBP 1 million in revenue. Excitingly, when we look at our opportunities that we're working on with our customers, coffee is starting to weigh in in a more significant way, and we expect coffee to continue to grow quite substantially over the medium term.
In terms of strategic progress, five years ago, about 28% of our portfolio was traded or minimally processed. Today, it's 17%, so good progress in that respect. In terms of channels to market, 40% of our business is direct to the FMCGs and 60% is through third party, what we call our traditional customer base, the flavor houses.
Gross margins have declined from a high of 34% to 27.9% in the year. As I said before, it reverts back to a more normalized level when we look over the last five years. I think it's important to remember that the high gross margin in 2021 includes benefits of higher margin tea, hard tea business in the U.S. and FX gains in that year. In the gross margin waterfall chart on the right-hand side, I've split out the major reasons for the decline in gross margin in the year.
What you're able to see there clearly is the impact of the decline in hard tea volumes and FX losses, which make up the majority of the variances in gross margin. On admin expenses, we've increased by short of 12% in the year to GBP 23.3 million in 2022. I wanna take you through the detail of some of the movements year-over-year. We've increased admin expenses, that's driven by an increase in headcount, including an investment in our new coffee team, which Daemmon will speak to you about later. We've also increased overhead and salaries through inflation, we've got higher depreciation following the capital investment in innovation and capacity.
I will stress that within the admin number is an R&D investment of 2% of sales. After this period of substantial investment in our people and our cost base, we believe that this can support our future growth, I don't anticipate any further or significant increase in admin expenses in the short to medium term above the normal rate of inflation and any full year effect of depreciation of the new U.K. site. I think it's important that as the new CFO of the business, my ambition is that we optimize our cost base. We allow the greater proportion of this fantastic top-line growth to hit the bottom line over the next few years.
On the cash flow side, net debt has increased in the year by GBP 13.3 million, and we closed the position at GBP 22.4 million of net debt, which includes capitalized leases. There are some significant movements, though, in cash flow, and therefore, I need to explain this in more detail. Operating cash flows was more than offset by higher working capital in the year, mostly as a result of our strategic increase in inventory in the response to longer lead times in the supply chain and higher commodity prices, mainly in citrus. We spent GBP 7.2 million in CapEx in the year. I will stress that we are nearing the end of our capital investment cycle.
In 2023, we want to reduce our inventory levels. We understand that our inventory levels at the moment are too high, and therefore, I expect a reduction in net debt in the year. We have plans to improve our inventory turn by implementing better demand and production planning, S&OPs, and changing our purchase contract call-off terms. We've already started progress in these terms. Today, compared to year-end, our net debt has improved by over GBP 3.5 million. Our net debt today is at GBP 18.8 million, and even over the last eight weeks, you can see the concerted effort we've made in the reduction of net debt. When looking at the 2023 guidance, we return to growth.
Profit is expected to benefit from sales growth through price and volume, and the reversal of FX losses, which will more than offset incremental depreciation, macro inflation, and higher interest costs. I will talk you through the slide from left to right. We expect sales to grow between 6%-8% in the year, with the majority of the growth through price increase planning, and to a lesser extent, volume growth in the added value categories. This year, we started our price increase plan early. We wanted to ensure that we'd get the benefit for most of the year, and certainly from January 1, 2023, when most of our annual contracts renew.
Gross margins , stay at more normal levels, but we are increasing minimum order values, and we want to improve our discipline on category margins, as I've explained before. In the year, we have higher depreciation, mainly from the full year effect of the new site in the U.K.. We also have higher inflation and higher interest rates. We expect salaries will increase by more than 5% through inflation with an element of fixed and variable. Lastly, we expect to reduce net debt with lower CapEx spend. We are at the end of our investment cycle, and we want to improve our inventory turn.
The target reduction in net debt will be less than 0.8x to EBITDA. We have two medium-term financial metrics. In 2022, net operating margin was at 11.3%, and this was impacted largely by the decline in gross margins. Our medium-term target remains unchanged at 15%-20% of sustainable net operating margins. Return on average capital employed in 2022 was 11.6%. This reflects both the lower profits during the year, while capital employed increased because of the investment in the new U.K. site. Similarly, our medium-term target for return on average capital employed remains unchanged at 20%-25%.
I believe that our asset base is now fully invested, and we have the ability to at least double manufacturing output at both sites in the U.K. and the U.S. in the medium term. After five months of being CFO of TREATT, I feel I have a better understanding of the business, certainly a more deeper understanding than when I last spoke to you. Most importantly, I'm confident on the growth plans that we have in the short and medium term. We have a renewed focus on sales pricing and the disciplines that go around that, cost optimization, and our strong focus on cash management.
Our 2023 ambition is to return to growth. We're confident about a return to growth with work to do. This is the work we are already doing now, improving a number of important foundations to the business, such as demand planning, operational performance, and working to deliver the upside efficiencies of our wonderful new facility at Skyliner Way in Bury St. Edmunds, as well as a number of process improvements in our U.S. facility. Two of these three pillars are ways to grow our top line, and the third one is a strong focus on gross margin, is about effective pricing and cost control to positively influence our bottom line.
Certainly, that is a key ambition for the business. We expect category growth in the higher margin categories to continue as they really have for the last decade. That fundamental strategic relevance remains very much in place for the business. Let me explain some of our drivers of growth. Natural remains in very high demand. Consumers are increasingly interested in what it is they're consuming, particularly in beverage. We're working with some very important customers, a wide range of customers on a number of projects where natural remains very much the focus of our business. 80% of our portfolio are natural ingredients, so our strategic relevance is very strong.
Premiumization in beverage continues apace, and buying better and consuming better perfectly aligns with our authentic natural extracts, where a consumer expects the taste of watermelon to be like a fresh watermelon, and we can deliver that with our important and high-tech technology. We experienced a lot of growth in the premiumization category of beverage in the last decade, and we expect that to continue. Better For You beverages continues to drive a lot of opportunity for the business. Consumers are increasingly conscious about sugar avoidance or calorific awareness in beverage, and this provides some important opportunities for some of our premium higher-margin ranges in the business.
It's much more about now the design of new beverages without sugar than it is about reducing sugar itself in existing beverages. There are a number of opportunities that we're working on actively across the group. This year, we've brought out coffee as a new category, and it's great to be able to talk about coffee in a meaningful way now, rather than just an R&D project that we've been actively pursuing now for three to four years. Coffee is seemingly everywhere. You find coffee in beer, coffee in cola, even. Importantly, coffee is present in a wide market opportunity in cold brew coffee extracts and beverages.
There's a good reason when you go into a high-quality coffee shop that baristas are freshly grinding coffee beans, and that's because the coffee molecules start to collapse and degrade as soon as you start meddling with the beans. We've developed some extraction technology that enables us to maintain that important flavor and aroma of fresh brewed, fresh ground coffee and impart that extract into a beverage. The premium experience of taste, which aligns with the rest of our portfolio, enables our customers to take cold brew coffee beverages to a new level in the future. That's exactly what we're pursuing today.
It's a good example, actually, coffee, of how we've invested ahead of the curve. Ryan mentioned our growth in administration costs in the business. Of course, it was critically important to put the right squad of people together on coffee, and we've absolutely done that. Now we're ready to realize some of the benefits going forward. Happily, we've already secured quite a meaningful contract on coffee for FY 2023, which is likely to be worth $3 million-$4 million over the course of the financial year. This is in an existing product in the market, an established product in the market, where our customer was looking for a strong second source.
We're beginning to gain traction in this space. It also, importantly, it doesn't use all of our available capacity. When we look at the opportunities that our research team are looking on, coffee is beginning to weigh in increasingly as we go forward. It's a good place to be, and we're quite proud to add a new category to our business. This is an image that Ryan took on a recent visit to a U.S. supermarket, which really sort of demonstrates the scale of the opportunity in the U.S., but also in other territories too, increasingly actually here in the U.K.
This is a local supermarket near our facility in Lakeland. There's lots of customers you will see present on this shelf. To date, they haven't yet all woken up and smelled our coffee. Indeed, that is our ambition going forward. We do have a number of customers on this shelf. They just happen not to be buying coffee from us today. I think it gives a good indication of the sort of market that we're going after, and we're going after it with pace and with, I would say, a professionalism and an opportunity to premiumize this category.
Certainly, the number of customers that we're talking to have ambition to premiumize this category and get above the quality constraint of today's cold brew coffee extract. In terms of outlook, we expect good growth in higher margin categories to continue. This is very important, and it's also very much supported by some of the cost disciplines that Ryan has introduced into the business. This is an important factor for the business as we look into the future in financial year 2023 and indeed beyond. We are encouraged by our opportunity pipeline overall across a wide range of categories, also in coffee, and feel we can add a lot of value for sure in the coffee space.
Skyliner Way, our new facility in Bury St . Edmunds, is achieving its goals of operational efficiency with more to come. Also importantly, the leveraging effect of customer attraction is something that we're beginning to see. We've already onboarded two new customers in the last financial year. Frankly, those customers probably wouldn't have been customers of ours at our old facility before we moved. We're now taken much more seriously by customers that can make a meaningful difference to the business. Lastly, I've been CEO of TREATT now for 10 years, and I'm very proud of our people and what the business has achieved. We are reset, we're ready, and we're determined to grow again.
Happily, we've made an encouraging start to the financial year. Thanks very much, everybody.