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PureCircle Limited
(“PureCircle” or the “Company”)
Interim results for the six months ended 31 December 2014
PureCircle (LSE: PURE) the world’s largest producer and marketer of high purity stevia today announces its unaudited interim results for the six month period from 1 July 2014 to 31 December 2014 (“1H FY 15”). The unaudited financial statements comprising the profit and loss and cashflow statements for the six months to 31 December 2014 (“1H FY15”) along with the balance sheet as at 31 December 2014 are set out below, together with the unaudited profit and loss and cashflow comparatives for the six months to 31 December 2013 (“1H FY14”). SUMMARY FINANCIALS
Period ended 31 December (US$m) 1H FY15 1H FY14 Change
Sales 43.2 34.9 24%
Gross margin 14.5 12.3 18%
Operating profit** 3.5 2.9 21%
EBITDA** 6.4 5.2 24%
Net result after tax (0.9) (1.9) 53%
Net debt (52) (85) 39%
Net assets 188 141 33%
Net assets per share (US cents) 1.1 0.9 29% ** Operating profit and EBITDA are as per segmental reporting on page 13. The full profit and loss account is detailed on page 4.
Sales: Sales of $43m increased 24% over 1H FY14 ($35m). There was growth in sales in all of our global sales regions.
Gross margin: Gross margin increased 18% to $14.5m. Gross margin % of 34% was consistent with 1H FY14 (35%).
EBITDA: EBITDA increased 24% in line with sales revenues to $6.4m. EBITDA improvements are after $1.5m increased SG&A investment in PCL’s operational management and global customer service infrastructure, including in-region application capacity, to support anticipated future sales growth.
Net Result after Tax: 1H FY15 net result of ($0.9m) represented a $1m (53%) improvement on 1H FY14. The net result reflects $1.2m improved EBITDA, $0.6m increased Long Term Incentive Plan (LTIP) costs, $3m adverse foreign exchange movements and $3.8m favourable interest and tax.
Net debt: Net debt of $52m is $33m lower than the $85m at 31 December 2013. This reflects $43m November 2014 placement proceeds, offset by increases in inventory production ahead of anticipated H2 and FY16 sales growth.
During 1H FY15 the Group successfully restructured its principal bank facilities. $20m of debt was repaid a year early and the balance refinanced onto a new $71m 5 year facility (to September 2019) at a 3% lower interest rate.
Share Placement: In November 2014 the Group issued 5 million new ordinary shares at GBP 5.50 per share raising $43m to fund expansion of its production capacity, described in more detail below.
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Interim results for the six months ended 31 December 2014 (continued) BUSINESS DEVELOPMENTS Market: Since the end of FY14 the Stevia market has seen an unparalleled series of milestone F&B product launches and roll-outs integrating stevia into mainstream products. High profile Cola roll-outs led by Coca-Cola Life, Pepsi Next and Pepsi True into major markets like the USA, Mexico, UK, France, Japan and other markets and reformulations across a range of leading carbonated Lemon Lime, Orange and other brands indicate clearly that stevia is now seen as a mainstream sweetener of choice in the Carbonated Soft Drink (CSD) category. The period has also seen a wide range of stevia sweetened product launches from major retailers across Europe and America and iconic brand adoption in categories as diverse as Ketchups, Yogurts and Confectionery. Global brand adoption has been mirrored with growth in product launches by large regional F&B brands across the world: from Chile in the South to Finland in the North and from Japan, China, and Philippines in the East to Mexico in the West. Mintel reports 2,274 new product launches in 2014 taking 5 year launches over 6,000. Mintel report that food product adoption exceeded beverages by number, confirming the widening usage of stevia as a mainstream ingredient. With 4 billion consumers now having regulatory access to stevia, market estimates suggest that the current footprint of products already launched using stevia has the potential to support billion dollar industry when existing launches are rolled out fully across the next 10+ years. Innovation: PureCircle continues to lead stevia innovation with new products and applications designed to meet identified market needs and unlock further demand to help moderate calories naturally. 1H FY15 saw important developments including the successful launch of Sigma D, which has excellent application properties in the dairy sector, and further developments within our proprietary flavor systems. Each of our new developments continue to grow overall market usage and strengthen further our market share. With our strong diversified customer base, our unique breadth of product innovation and application support and our global supply chain and customer support infrastructure already established PureCircle continues to retain and build further market leadership.
Production capacity expansion: With the prospects of sustained long term market growth, PureCircle has started to expand its production capacity so as to meet anticipated future increased volume demand and further sustain market share and its first mover advantage. The PureCircle Board has approved $42m of capital expenditure projects that will increase production capacity of refined stevia sweeteners and natural flavor systems and provide additional investment in next generation stevia innovation.
It is expected that $34m of the investment will be for production capacity expansion to come on stream in FY17 with the balance of $8m supporting innovation projects through FY18. The $42m investment will be funded from the $43m November 2014 Placement proceeds described earlier. The production capacity expansion will be centred on the Group’s existing Malaysia and China production facilities. Leaf: with growth in end consumer demand, leaf supply has tightened. Prices in China have increased year on year. We are actively managing this long term through leading the diversification of leaf supply outside China. But in the short term higher leaf prices will increase cost of sales.
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Interim results for the six months ended 31 December 2014 (continued) Sustainability: In January PureCircle issued the industry’s first sustainability report. The report demonstrates the efficient carbon and water footprint of stevia relative to other major sweeteners and tracks progress against the Company’s social and environmental goals. The full report may be downloaded at http://purecircle.com/company/corporate-social-responsibility/ Management and systems: To support management of growth, in 1H FY15 we strengthened our management with the appointment of Jordi Ferre as Chief Operating Officer and implemented an Operating Committee reporting to him with key new hires in Manufacturing, Leaf Development, HR and Planning. At the same time we have strengthened management in each of our key Commercial regions. We also implemented the first stages of Group ERP information systems. Outlook: Commenting on the 1H FY15 trading, the Group CEO Magomet Malsagov said: the size and breadth of F&B product launches and roll-outs in 1H FY15 indicate that stevia is well on the way to becoming an important ingredient for F&B companies wishing to moderate calories. Further the existing footprint of products launched using stevia provides a sound basis for a multi-billion $ stevia industry in the years to come. In 1H FY15 we again strengthened our position as market leader with further proprietary product innovation and growth in both delivered sales and project pipelines. With sustained long term growth prospects, PureCircle has started to expand our production capacity and expect this to come on stream in FY17. We are generating revenues from a wide range of natural sweetener and flavor products and from a wide range of customers directly and through our business partners. With accelerating roll-outs of food and beverage products using PureCircle's stevia solutions, particularly in the important Carbonated Soft Drink category, the Company is confident of large long term sales growth and with it improvements in profitability. However, until market consumption smooths out, that growth will come with a lumpy sales profile and therefore some volatility: this adds some complexity to our ability to provide guidance in the short term. Magomet Malsagov, CEO +603 2166 2066 William Mitchell, CFO +44 7974 005 163 RFC Ambrian Ltd (NOMAD) +61 8 9480 2500 Stephen Allen NOTES TO EDITORS
PureCircle is the global leader in the production of high purity Stevia sweeteners and natural flavors. PureCircle is leading the industry with the development of a sustainable, vertically integrated supply chain operating in four continents. Across these regions, PureCircle sources dry stevia leaves, undertakes extraction processes and refines the extract into sweeteners which it markets as a mainstream ingredient to Food and Beverage manufacturers worldwide. PureCircle provides a sustainable cash crop for rural farming communities in each region and works closely with these communities to maximize the social, economic, and environmental benefits of its operations. PureCircle’s investment in research and development has given it a leadership position in the Stevia industry and its scientists are globally recognized experts in their field. PureCircle has pioneered the industry trust mark “Stevia PureCircle” that educates consumers about the benefits of Stevia and provides a strong base of trust for both consumers and Food & Beverage companies alike. PureCircle also funds the Global Stevia Institute (globalsteviainstitute.com) which provides a global platform for stevia education and outreach, led by internationally recognized health professionals. PureCircle’s corporate offices are located in Chicago, USA; Asuncion, Paraguay; Kuala Lumpur, Malaysia; Ganzhou, China; Shanghai, China and Kericho, Kenya. PureCircle is listed on the London Stock Exchange AiM market under the ticker symbol: PURE. For more information on PureCircle, visit: www.purecircle.com.
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Condensed consolidated statement of comprehensive income
for the period ended 31 December 2014
Unaudited
Notes
Six months ended
31 December
31 December
2014
2013
USD’000
USD’000
Continuing operations
Revenue
43,228
34,851
Cost of sales
(28,435) (22,596)
Gross profit
14,793
12,255
Other income 6
148
2,057
Other expenses 7
(1,348)
-
Administrative expenses
(13,693)
(11,782)
Finance income
12
180
Finance costs
(3,768)
(4,537)
Share of loss of joint ventures
(516) (532)
Loss before taxation
(4,372)
(2,359)
Income tax credit 15 3,445 470
Loss for the period
(927)
(1,889)
Other comprehensive income (net of tax):
Items that may be reclassified subsequently to profit or loss:
Exchange difference arising on translation of foreign
operations
(5,646)
(1,160)
Share of other comprehensive income of investments accounted
for using equity method
(34)
(43)
(5,680) (1,203)
Total comprehensive loss for the period (net of tax)
(6,607) (3,092)
Loss for the financial period attributable to:
Owners of the company
(899)
(1,894)
Non-controlling interest
(28)
5
(927) (1,889)
Total comprehensive loss attributable to:
Owners of the company
(6,590)
(3,106)
Non-controlling interest
(17)
14
(6,607) (3,092)
Earnings per share (US cents)
Basic 17
(0.54)
(1.15)
Diluted 17 (0.54) (1.15)
5
Condensed consolidated statement of financial position As at 31 December 2014
Unaudited Audited
31 December 30 June
Notes
2014 2014
USD’000 USD’000
Assets
Non-current assets
Property, plant and equipment 11
59,651 63,715
Intangible assets 11
37,818 38,023
Biological assets 13
3,990 4,237
Prepaid land lease payments
2,973 2,999
Deferred tax assets
9,282 5,876
Investment in joint ventures
312 149
Trade receivables
- 1,950
Other receivables
1,415 553
115,441 117,502
Current assets
Inventories 12
96,810 86,519
Trade receivables
36,220 37,362
Other receivables and prepayments
7,547 4,962
Tax recoverable
501 581
Cash and bank balances
58,325 45,865
199,403 175,289
Total assets
314,844 292,791
Equity and liabilities
Equity
Share capital 16
16,973 16,472
Share premium 16
206,251 163,240
Foreign exchange translation reserve
(4,771) 920
Share option reserve
7,597 5,076
Accumulated losses
(39,102) (38,203)
Equity attributable to owners of the company
186,948 147,505
Non-controlling interest
705 722
Total equity
187,653 148,227
Non-current liabilities
Long-term borrowings 14
67,515 2,169
Deferred income
319 360
Other payables and accruals
2,180 2,111
70,014 4,640
Current liabilities
Trade payables
5,799 5,879
Other payables and accruals
9,090 10,364
Short-term borrowings 14
42,288 123,681
57,177 139,924
Total liabilities
127,191 144,564
Total equity and liabilities
314,844 292,791
Net assets per share (USD)
1.11 0.90
6
Condensed consolidated statement of changes in equity as at 31 December 2014
Attributable to owners of the Company
Foreign
exchange Share
Non-
Share Share translation option Accumulated
controlling Total
capital premium reserve reserve losses Sub-total interest equity
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Balance at 1 July 2014 16,472 163,240 920 5,076 (38,203) 147,505 722 148,227
Loss for the period - - - - (899) (899) (28) (927)
Other comprehensive income - - (5,691) - - (5,691) 11 (5,680)
Total comprehensive loss for the period (net of tax)
- - (5,691) - (899) (6,590) (17) (6,607)
Share option scheme
compensation expense granted during the period
- - - 2,570 - 2,570 - 2,570
Issuance of shares 500 42,963 - - - 43,463 - 43,463
Exercise of share options 1 48
(49)
Balance at 31 December 2014 16,973 206,251 (4,771) 7,597 (39,102) 186,948 705 187,653
7
Condensed Consolidated Statement of Changes in Equity as at 31 December 2013
Attributable to owners of the Company
Foreign
exchange Share
Non-
Share Share translation option Accumulated
controlling Total
capital premium reserve reserve losses Sub-total interest equity
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Balance at 1 July 2013 16,460 162,898 1,432 1,530 (40,519) 141,801 715 142,516
Loss for the period - - - - (1,894) (1,894) 5 (1,889)
Other comprehensive income - - (1,212) - - (1,212) 9 (1,203)
Total comprehensive loss for the period (net of tax)
- - (1,212) - (1,894) (3,106) 14 (3,092)
Share option scheme compensation expense granted during the period
- - - 1,522 - 1,522 - 1,522
Exercise of share options 2 41 - (43) - - - -
Balance at 31 December 2013 16,462 162,939 220 3,009 (42,413) 140,217 729 140,946
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Condensed consolidated cash flow statement for the period ended 31 December 2014
Unaudited 6 months ended
31 December
31 December
2014
2013
USD’000
USD’000
CASH FLOWS FOR OPERATING ACTIVITIES
Loss before taxation
(4,372)
(2,359)
Adjustments for:-
Amortisation of deferred income
(49)
(21)
Amortisation of prepaid land lease payments
73
70
Depreciation of property, plant and equipment
2,893
2,927
Interest expense
3,768
4,537
Interest income
(12)
(180)
Share based payments
2,570
1,522
Amortisation of intangible assets
113
40
Inventories written off
12
4
Intangible assets written off
47
-
Unrealised exchange loss/(gain)
1,922
(1,250)
Share of loss in joint ventures
516
532
Operating cash flow before working capital changes
7,481
5,822
Increase in inventories
(10,044)
(4,038)
(Increase)/decrease in trade and other receivables
(355)
1,428
Decrease in trade and other payables
(1,930)
(5,205)
NET CASH FOR OPERATIONS
(4,848)
(1,993)
Interest received
12
180
Interest paid
(3,768)
(4,537)
Tax refund/(paid)
101
(121)
NET CASH FOR OPERATING ACTIVITIES
(8,503)
(6,471)
CASH FLOWS FOR INVESTING ACTIVITIES
Addition of intangible assets
(1,964)
(2,708)
Addition of leasehold land
(50)
-
Addition of property, plant and equipment
(1,411)
(3,436)
Proceeds from disposal of property, plant and equipment
1
-
Investment in joint venture
(342)
(336)
NET CASH FOR INVESTING ACTIVITIES
(3,766)
(6,480)
BALANCE CARRIED FORWARD
(12,269)
(12,951)
9
Condensed consolidated cash flow statement for the period ended 31 December 2014 (continued)
Unaudited 6 months ended
31 December
31 December
2014
2013
USD’000
USD’000
BALANCE BROUGHT FORWARD
(12,269)
(12,951)
CASH FLOWS FOR FINANCING ACTIVITIES
Placement of shares
43,463
-
Drawdown of borrowings
105,101
17,066
Repayment of borrowings
(123,047)
(22,194)
Net repayment of hire purchase
(19)
(19)
Decrease/(increase) in restricted cash
7,589
(36)
NET CASH FROM/(FOR) FINANCING ACTIVITIES
33,087
(5,183)
Effects of foreign exchange rate changes on
cash and cash equivalents
(769)
(232)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE FINANCIAL PERIOD
38,014
46,605
CASH AND CASH EQUIVALENTS AT END OF THE
FINANCIAL PERIOD
58,063
28,239
GROSS CASH
58,325
30,589
LESS: RESTRICTED CASH
(262)
(2,350)
CASH AND CASH EQUIVALENTS
58,063
28,239
10
Notes to interim financial statements
1. General information
The Company was incorporated and registered as a private limited company in Bermuda, under the Companies (Bermuda) Law 1991 (as amended). The Company has its primary listing on the AIM market operated by the London Stock Exchange, plc (AIM).
The Company is engaged principally in the business of investment holding whilst the principal activities
of the rest of the Group are the production, marketing and distribution of natural sweeteners and
flavours.
The unaudited condensed consolidated interim financial statements have been authorised for issue by the Board of Directors on 16 March 2015.
2. Basis of preparation The condensed consolidated interim financial statements for the six months ended 31 December 2014 have been prepared in accordance with IAS 34, “Interim financial reporting”. In preparing these condensed interim financial statements, the significant judgments and estimates made by management in applying the Group’s accounting policies were the same as those that applied to the consolidated financial statements for the year ended 30 June 2014. The condensed consolidated interim financial statements should be read in conjunction with the Group’s annual financial statements for the year ended 30 June 2014 (“FY2014”), which have been prepared in accordance with IFRSs.
3. Accounting policies
The accounting policies adopted for 1H FY2015 are as stated in the Group’s FY2014 financial statements, with the addition of new standards and amendments to standards that are mandatory for the financial year beginning 1 July 2014, the new standards are summarised below:
(i) Financial year beginning on/after 1 July 2014
Amendment to IAS 32, ‘Financial Instruments: Presentation’ does not change the current offsetting model in IAS 32. It clarifies the meaning of ‘currently has a legally enforceable right of set-off’ that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the IAS 32 offsetting criteria.
Amendments to IFRS 10, IFRS 12 and IAS 27 introduce an exception to consolidation for investment entities. Investment entities are entities whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both and evaluate the performance of its investments on fair value basis. The amendments require investment entities to measure particular subsidiaries at fair value instead of consolidating them.
Amendment to IFRS 2 ‘Share-based Payment’ clarifies the definition of ‘vesting conditions’ by separately defining ‘performance condition’ and ‘service condition’ to ensure consistent classification of conditions attached to a share-based payment.
11
Notes to interim financial statements (continued)
4. Accounting policies (continued)
The accounting policies adopted for 1H FY2015 are as stated in the Group’s FY2014 financial statements, with the addition of new standards and amendments to standards that are mandatory for the financial year beginning 1 July 2014, the new standards are summarised below (continued):
(i) Financial year beginning on/after 1 July 2014 (continued)
Amendment to IFRS 8 “Operating Segments” requires disclosure of the judgements made by management in aggregating operating segments. This includes a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The standard is further amended to require a reconciliation of segment assets to the entity’s assets when segment assets are reported.
Amendment to IFRS 13 “Fair Value Measurement” relates to the Basis for Conclusions which is not an integral part of the Standard. The Basis for Conclusions clarifies that when International Accounting Standards Board (IASB) issued IFRS 13, it did not remove the practical ability to measure short-term receivables and payables with no stated interest rate at invoice amounts without discounting, if the effect of discounting is immaterial.
Amendment to IAS 24 “Related Party Disclosures” extends the definition of ‘related party’ to include an entity, or any member of a group of which it is a part, that provides key management personnel services to the reporting entity or to the parent of the reporting entity.
The adoption of the above standards and interpretations does not have any material impact on the interim financial statements in the period of initial application.
5. Fair value estimation Assets and liabilities measured at fair value can be determined based on valuation methods as defined
in the fair value measurement hierarchy as follows:
(i) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). (ii) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). (iii) Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (Level 3). The Group’s biological assets are measured at fair value less cost to sell and classified as Level 3 of which valuation inputs are not based on observable market data as management considers that the costs of the biological assets approximate fair value as little biological transformation has taken place since initial cost incurrences, and expect that the impact of the biological transformation on price is not expected to be material. There are no other assets and liabilities of the Group which are measured at fair value. The carrying values of the financial assets and liabilities of the Group at the balance sheet date approximated their fair values.
12
Notes to interim financial statements (continued)
6. Other income Other income represents net foreign exchange gain and other miscellaneous income.
7. Other expenses
Other expenses represent net foreign exchange loss and other operating expenses.
8. Principal risks and uncertainties
The Group set out in its FY2014 Annual Report and Financial Statements the financial risks including foreign currency risk, interest rate risk, credit risk, liquidity and cash flow risks and capital risk management that could impact its performance; these remain unchanged since the Annual Report was published. The Group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity.
9. Seasonality
At 31 December 2014 the Group had gross cash of USD58 million (30 June 2014: USD46 million) and net
debt of USD52 million (30 June 2014: USD80 million). Net debt is defined as short-term and long-term
borrowings less cash and bank balances. The Group’s sales are seasonally weighted towards the H2 of
each year and net debt is expected to reduce over time as sales increase and then convert to cash. At 31
December 2014, the Group had more than USD76 million cash and banking facilities headroom. The
Directors believe the banking facilities to be sufficient for projected funding requirements.
10. Segmental information
Management determines the Group’s operating segments based on the criteria used by the Chief
Operating Decision Maker who has been identified as the Chief Executive Officer (CEO) for making
strategic decisions. Management considers the Group to be a single operating segment whose activities
are the production, marketing and distribution of natural sweeteners and flavors.
From a geographical perspective, the Group is a multinational with operations located on all continents,
but managed as one unified global organization.
13
Notes to interim financial statements (continued) 10. Segmental information (Cont’d)
31 December 31 December
2014 2013
USD’000 USD’000
Revenue
43,228 34,851
Cost of sales
(28,735) (22,596)
Gross profit
14,493 12,255
Other income
160 305
Administrative expenses
(11,156) (9,665)
Operating profit
3,497 2,895
Other expenses
(2,811) (2,242)
Foreign exchange (loss)/gain
(1,074) 2,057
Finance costs
(3,768) (4,537)
Share of loss in joint ventures
(216) (532)
Taxation
3,445 470
Loss for the financial period
(927) (1,889)
EBITDA
6,393 5,175
Reconciliation of Adjusted EBITDA to loss for the financial year
EBITDA
6,393 5,175
Share based payment
(2,570) (1,522)
Others
(246) (500)
Foreign exchange (loss)/gain
(1,074) 2,057
Finance costs
(3,768) (4,537)
Taxation
3,445 470
Non-controlling interest
(28) 5
Depreciation and amortisation
(3,079) (3,037)
Loss for the financial period
(927) (1,889)
Under segmental reporting, share of loss in joint venture includes Group’s realised profit amounting to USD 0.3 million, arising from its sales to the joint ventures. Under the statement of comprehensive income, the profit is included within the gross profit line.
14
Notes to interim financial statements (continued) 10. Segmental information (Cont’d)
31 December 31 December
2014 2013
Cash Flow USD’000 USD’000
Operating cash flow before working capital changes 7,481 5,822
Increase in inventories (10,044) (4,038)
(Increase)/decrease in receivables (355) 1,428
Decrease in payables (1,930) (5,205)
Net cash for operations (4,848) (1,993)
Net cash from/(for) financing activities 33,087 (5,183)
Gross cash at end of the financial period 58,325 30,589
31 December 30 June
2014 2014
Statement of Financial Position USD’000 USD’000
Property, plant and equipment 59,651 63,715
Inventories 96,810 86,519
Third party trade receivables 26,091 29,107
Trade receivables from jointly controlled entities 10,129 10,205
Cash and bank balances 58,325 45,865
Total assets 314,844 292,791
Borrowings 109,803 125,850
Net debt 51,478 79,985
Geographical information
Bermuda Asia Europe Americas Goodwill Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
31 December 2014
Sales - 9,622 4,851 28,755 - 43,228
Non-current assets 725 98,092 2,007 12,811 1,806 115,441
31 December 2013
Sales - 7,879 3,144 23,828 - 34,851
Non-current assets 1,577 100,894 1,624 11,601 1,806 117,502
The primary performance indicators used by the Group are revenues, gross profit, EBITDA, net cash from operations and net debt.
15
Notes to interim financial statements (continued) 10. Segmental information (Cont’d)
EBITDA is calculated as EBITDA adjusted to exclude discretionary items such as share based, bonus,
foreign exchange gain/losses and any other non-recurring expenses.
The entity is domiciled in Bermuda. The entity’s non-current assets are located in countries other than
Bermuda. There is no revenue from Bermuda.
11. Property, plant and equipment and intangible assets During the period, the Group invested USD1.4 million in property, plant and equipment.
The addition to intangible assets is in respect of capitalisation of project developments during the
period, net of amortisation for products now launched commercially.
12. Inventories
31 December 30 June
2014 2014
USD’000 USD’000
Raw materials
14,343 14,422
Work-in-progress
18,030 11,898
Finished goods
64,437 60,199
96,810 86,519
13. Biological assets As at 31 December 2014, total biological assets of USD 3.9 million (30 June 2014: USD 4.2 million) represent 5.4 million nursery plants (30 June 2014: 5.2 million). Nursery plants are carried at cost as it is deemed to have limited biological transformation. Seedlings from nursery plants are sold to farmers upon harvest and are carried at a consistent unit cost.
16
Notes to interim financial statements (continued) 14. Borrowings
31 December 30 June
2014 2014
USD’000 USD’000
Current
- Hire purchase
20 32
- Term loans
42,268 123,649
42,288 123,681
Non-Current
- Hire purchase
25 36
- Term loans
67,490 2,133
67,515 2,169
Total borrowings
109,803 125,850
During the period, the Group repaid bank loan amounting to USD123 million, in line with previously
disclosed repayment terms. The Group then drew down bank loans amounting to USD105 million at a
weighted average effective interest rate of 5% per annum. The proceeds were used to meet working
capital.
15. Income taxes
Income tax expense is recognised based on management’s best estimate of the weighted average annual
income tax rate expected for the full financial year. The Group has no estimated assessable profit.
The Company was granted a tax assurance certificate dated 18 August 2007 under the Exempted
Undertakings Tax Protection Act 1966 pursuant to which it is exempted from any Bermuda taxes (other
than local property taxes) until 28 March 2016 which was extended to 31 March 2035 following the
enactment of the Exempted Undertakings Tax Protection Amendment Act 2011.
A subsidiary of the Group, PureCircle Sdn Bhd (PCSB), has been granted the Bio-Nexus Status by the
Malaysian Biotechnology Corporation Sdn Bhd in which PCSB is entitled to a 100% income tax exemption
for a period of 10 years on its first statutory income commencing in 2009. Upon the expiry of the 10-year
incentive period, PCSB will be entitled to a concessionary tax rate of 20% on income derived from
qualifying activities for a further period of 10 years.
Another subsidiary of the Group, PureCircle (Jiangxi) Co. Ltd. (PCJX), has also been granted a 10% exemption on corporate tax from 1 January 2013 to 31 December 2020 by Ganzhou State Tax Revenue Department under the Western Ganzhou State Development program.
17
Notes to interim financial statements (continued) 16. Share capital and share premium
Number of
shares Ordinary
shares Share
premium Total
’000 USD’000 USD’000 USD’000
Balance at 1 July 2014
164,722 16,472 163,240 179,712
Issuance of shares
5,000 500 42,963 43,463
Exercise of share options
6 1 48 49
Balance at 31 December 2014
169,728 16,973 206,251 223,224
Balance at 1 July 2013
164,602 16,460 162,898 179,358
Exercise of share options
12 2 41 43
Balance at 31 December 2013
164,614 16,462 162,939 179,401
In November 2014, the Group completed a placement of 5 million new ordinary shares at GBP5.50 per
share. The placement raised USD43.5 million in cash, net of expenses.
17. Earnings per share
The basic earnings per share is calculated by dividing the loss attributable to owners of the Company by
the weighted average number of ordinary shares in issue during the period.
6 months ended
31 December 31 December
2014 2013
Loss attributable to equity holders of the Company (USD’000) (899) (1,894)
Weighted average number of ordinary shares in issue (’000) 166,041 164,616
Basic loss per share (US Cents)
(0.54) (1.15)
Diluted earnings per share is not applicable as the potential ordinary shares under the Company’s Long Term Incentive Plan would have an anti-dilutive effect.
18. Dividends No dividends were declared or paid by the Company during the interim period.
19. Contingent liabilities and capital commitments At the end of the period, there are no material contingent liabilities which, upon becoming enforceable, may have a material impact on the financial position of the Group. Capital commitments amounting to approximately USD1.1million is approved and contracted for, these are incurred for the purchase of land and upgrading of plant and machinery in Malaysia. Subsequent to the period, the Group approved an expansion capital expenditure of USD7.8 million.
18
Notes to interim financial statements (continued) 20. Events after the end of the reporting period
There were no events that had a material impact to the condensed consolidated interim financial statements after the end of the reporting period. Please refer to note 19 relating to post balance sheet capital expenditure expansion.
21. Significant related party transactions (a) Identities of related parties:
The Group and / or the Company have related party relationships with:
(i) its subsidiaries and joint ventures;
(ii) the directors who are the key management personnel; and
(iii) companies in which certain directors are common directors and / or substantial shareholders.
The following transactions were carried out by the Group during the period: (b) Related parties
(i) Related Parties
31 December
31 December
2014 2013
USD’000
USD’000
Sales of goods to jointly controlled entities 2,885
2,536
(ii) Key Management Personnel
Key management includes executive and non-executive directors. The compensation paid or payable to key management for employee services is shown as below:
31 December
31 December
2014 2013
USD’000
USD’000
Paul Selway-Swift 84
44
Magomet Malsagov 279
165
John Robert Slosar -
21
Olivier Phillipe Marie Maes 42
23
Peter Lai Hock Meng 45
26
Christopher Pratt 34
-
William Mitchell 192
166
676
445
31 December
31 December
2014 2013
USD’000
USD’000
Remuneration 676
445
19
Notes to interim financial statements (continued) 21. Significant related party transactions (continued)
(b) Related parties (Cont’d)
(ii) Key Management Personnel (Cont’d)
Number of Ordinary Shares Of USD0.10 Each
At
At
The Company 1 July
Bought Sold 31 December
2014 2014
Direct Interests
Paul Selway-Swift 202,300 5,500 - 207,800
Magomet Malsagov 14,855,612 11,300 - 14,866,912
Christopher Pratt 686,916 5,500 - 692,416
Olivier Phillipe Marie Maes 408,210 10,100 - 418,310
Peter Lai Hock Meng 191,400 8,700 - 200,100
William Mitchell 910,890 13,650 - 924,540
Number of Options over Ordinary Shares Of USD0.10 Each
At
At
The Company 1 July
Award Exercise 31 December
2014 2014
Direct Interests
Magomet Malsagov 686,640 5,336 - 691,976
Christopher Pratt - 3,280 - 3,280
Olivier Phillipe Marie Maes 2,900 4,110 (2,900) 4,110
Peter Lai Hock Meng 3,200 4,360 (3,200) 4,360
William Mitchell 529,170 4,689 - 533,859
PricewaterhouseCoopers (AF 1146), Chartered Accountants,
Level 10, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral, P.O. Box 10192, 50706 Kuala Lumpur, Malaysia T: +60 (3) 2173 1188, F: +60 (3) 2173 1288, www.pwc.com/my
20
Independent review report to PureCircle Limited PureCircle Limited (Incorporated in Bermuda) Registration No.: 40431 Introduction We have been engaged by the Company to review the condensed consolidated interim financial statements for the six months ended 31 December 2014 set out on pages 4 to 19, which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and related notes. Directors’ responsibilities The condensed consolidated interim financial statements are the responsibility of, and have been approved by, the directors of PureCircle Limited. The directors are responsible for preparing the condensed consolidated interim financial statements in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the Company’s annual financial statements. As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards. The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" (“IAS 34”). The maintenance and integrity of the PureCircle Limited website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the condensed consolidated interim financial statements since they were initially presented on the website. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial statements based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of preparing the condensed consolidated interim financial statements under IAS 34 and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
21
Independent review report to PureCircle Limited (continued) PureCircle Limited (Incorporated in Bermuda) Registration No.: 40431 Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements for the six months ended on 31 December 2014 are not prepared, in all material respects, in accordance with IAS 34. PricewaterhouseCoopers (No. AF: 1146) Chartered Accountants Kuala Lumpur Malaysia 16 March 2015
22
Corporate Information
BOARD OF DIRECTORS
Non-executive Chairman
Paul Selway-Swift
Executive Directors
Magomet Malsagov, Chief Executive
William Mitchell, Chief Financial Officer
Non-executive Directors
Peter Lai Hock Meng
Olivier Maes
Christopher Pratt
Audit Committee
Peter Lai Hock Meng (Chairman)
Olivier Maes
Christopher Pratt
Remuneration Committee
Olivier Maes (Chairman)
Paul Selway-Swift
Christopher Pratt
Nomination Committee
Paul Selway-Swift (Chairman)
Magomet Malsagov
Olivier Maes
NOMINATED ADVISERS
RFC Ambrian Limited
Level 14, 19-31 Pitt Street
Sydney NSW 2000
Australia.
Level 28, QV1 Building
250 St George’s Terrace
Perth WA 6000
Australia.
CORPORATE BROKERS
Macquarie Capital (Europe) Limited
Ropemaker Place
28 Ropemaker Street
London EC2Y 9HD
United Kingdom
Mirabaud Securities Limited
33 Grosvenor Place
London SW1X 7HY
United Kingdom
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
United Kingdom
AUDITORS
PricewaterhouseCoopers
Chartered Accountants
Level 10, 1 Sentral
Jalan Travers, Kuala Lumpur Sentral
PO Box 10192
50706 Kuala Lumpur
Malaysia
23
Shareholder Information INTERNET
Investors and corporate stakeholders
www.purecircle.com
Consumers
www.steviapurecircle.com
Health professionals, customers, policy makers,
consumers
www.globalsteviainstitute.com
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
CORPORATE HEADQUARTERS MALAYSIA
10th Floor, West Wing
Rohas Perkasa
No. 9 Jalan P. Ramlee
50250 Kuala Lumpur, Malaysia
T +606 2166 2206
F +606 2166 2207
INVESTOR RELATIONS
Request for further copies of the annual report or
other investor relation matters should be
addressed to PureCircle office
SHARE REGISTRAR
In Jersey (Shares)
Computershare Investor
Services (Jersey) Limited
Queensway House, Hilgrove Street
St Helier, Jersey
JE1 1ES
Channel Islands
In the UK (Depositary Interests) Computershare Investor Services plc The Pavilions, Bridgwater Road Bristol BS13 8AE, United Kingdom
ANNUAL GENERAL MEETING
The Annual General Meeting (AGM) will be announced following publication of the Group’s results for financial year 2015. 2015 financial year and corporate calendar Half year end 31 December 2014 Year end 30 June 2015
