Final Results

Date: 18 September 2018

PURECIRCLE LIMITED ("PureCircle" or "the Company")

FINAL RESULTS 2018

PureCircle (LSE: PURE), the world's leading producer and innovator of great-tasting stevia sweeteners for the global beverage and food industry, today announced its final results for the financial year ended 30 June 2018 ("FY18").

FINANCIAL HIGHLIGHTS

*Net debt, Operating profit and Adjusted EBITDA are alternative performance measures which the directors believe are helpful in understanding the performance of the business. Refer to note 4b and note 28 for more details.

OPERATIONAL HIGHLIGHTS

· +10% growth in sales, with strong recovery growth in North America

· +20% growth in net profit after tax

· +17% growth in volume

· Net cash from operations of $16.1m

· Gross margin held up well despite challenging market conditions

· Operating profit of $17.9m

· Implementation of new strategy centered around best tasting products from Starleaf™ is off to a strong start with meaningful contribution in FY18 sales and profits. Foods and Beverages containing best tasting products from Starleaf™ launched in markets including major flagship brands

· Developed patented production technology to produce great tasting Starleaf™- Reb M at sufficiently large scale  to sweeten circa 500 million cases of zero-calorie carbonated soft drinks annually

· PureCircle continues to invest in breakthrough research and development and currently holds more than 117 stevia related patents with a further 295 pending

· More than 17,000 products with stevia launched by food and beverage companies worldwide

· In May 2018 the company opened a new headquarters with a state of the art innovation facility in downtown Chicago and moved its leadership team including CEO and CFO from Malaysia to USA in order to consolidate its global leadership closer to major market and key customers

· To further strengthen its leadership ranks, the Company appointed Stephane Ducroux as Chief Commercial Officer

· Continued investment and innovation to create new high purity, best-tasting products - Starleaf™ Stevia - 16,000 tonnes of proprietary Starleaf™ planted in FY18, a 200% increase over the prior year

Commenting on the final results, PureCircle's Chairman Paul Selway-Swift, said:

"I am pleased that, as announced separately, for my final financial year as Chairman our results show a return to growth in both revenue and net profit after tax to $131.1m (2017: $118.9m) and $8.7m (2017: $7.2m) respectively despite continued challenging market conditions. Adjusted EBITDA increased by 6.3% to $28.8m, translating into fully diluted earnings per share of US 4.95 cents (2017: US 4.13 cents). I believe that this bodes well for PureCircle's future."

Commenting on the final results, PureCircle's CEO Magomet Malsagov, said:

"I am delighted that PureCircle has delivered a strong set of results with double-digit revenue and profit growth. The successful launch of Starleaf™, our fourth generation of natural-origin stevia, is significant, as it enables our customers to achieve "no added sugar" and 100% calorific reduction in their products whilst ensuring best taste. Everything we do is about helping our customers achieve their goals of reducing sugar, calories and the cost of ingredients without compromising taste.

Our commitment to continued innovation will ensure we remain the industry leader and provide our strong diversified customer base with the breadth and depth of applications it requires. We continue to invest in our systems, our people and our organisation in order that we can achieve our aspirations.

Stevia is a force for good in the world - we are excited about the year ahead for both the industry and for PureCircle and look forward to the future with confidence."

DisclaimerThis document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and operating profit, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. Any forward-looking statement is based on information available to PureCircle as of the date of the statement. All written or oral forward-looking statements attributable to PureCircle are qualified by this caution. PureCircle does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances.

Investors/Analysts Enquiries:

Webcast and Conference Call Details

A presentation of the results by Chief Executive, Magomet Malsagov and Chief Financial Officer, Rakesh Sinha will be audio webcast live at 9.30 (UK time) on Tuesday 18 September 2018. To view and/or listen to a live audio-cast of the presentation, visit https://www.investis-live.com/purecircle/5b73ff9f5bdb551000a329ce/intr . Please note that remote listeners will not be able to ask questions during the Q&A session.

A webcast replay of the presentation will be available at 2.00 pm of the end of the live broadcast on the link above.

For those unable to view the webcast, there will also be a teleconference facility for the presentation. Details are given below:

Dial in details:

United Kingdom (Local): +44 (0)20 3936 2999

US (Local): +1 845 709 8568

All other locations: +44 20 3936 2999

Participant Access Code: 067399

Participants are requested to dial into the call at least 15 minutes prior to the conference start time.

Rakesh Sinha, CFO

Email: [email protected] Phone: +60 1232 60005 (Malaysia)

+1 630 827 1515 (USA)

Media Enquiries

Emma Kane (Redleaf), Media Relations

Email: [email protected] Phone: +44 (0)20 3757 6860

Notes to Editors

About PureCircle

§ PureCircle is the only company that combines advanced R&D with full vertical integration from farm to high-quality, great-tasting innovative stevia sweeteners.

§ The Company collaborates with farmers who grow the stevia plants and with food and beverage companies which seek to improve their low- and no-calorie formulations using a sweetener from plants.

§ PureCircle will continue to: lead in research, development and innovation; produce a growing supply of multiple varieties of stevia sweeteners with sugar-like taste, using all necessary and appropriate methods of production; and be a resource and innovation partner for food and beverage companies.

§ PureCircle stevia flavor modifiers work in synergy with sweeteners to improve the taste, mouthfeel and calorie profile, and enhance the cost effectiveness, of beverage and food products.

§ Founded in 2002, PureCircle is continually investing in breakthrough research and development and it currently more than 100 stevia-related approved patents and more than 200 pending.

§ PureCircle has offices around the world with the global headquarters in Chicago, Illinois.

§ To meet growing demand for stevia sweeteners, PureCircle is rapidly ramping up its supply capability. It completed expansion of its Malaysian stevia extract facility in March 2017, increasing its capacity to rapidly supply the newer and great-tasting specialty stevia sweeteners and helping provide ever-increasing value to its customers.

§ PureCircle's shares are listed on the main market of the London Stock Exchange.

§ For more information, visit: www.purecircle.com

About stevia

§ Given the growing global concerns about obesity and diabetes, beverage and food companies are working responsibly to reduce sugar and calories in their products, responding to both consumers and health and wellness advocates. Sweeteners from the stevia plant offer sugar-like taste and are becoming an increasingly important tool for these companies.

§ Like sugar, stevia sweeteners are from plants. But unlike sugar, they enable low-calorie and zero-calorie formulations of beverages and foods.

§ Stevia leaf extract is a natural-based, zero calorie, high-intensity sweetener, used by global food and beverage companies as a great-tasting zero-calorie alternative to sugar and artificial sweeteners.

§ Stevia is a naturally sweet plant native to South America; today, it is grown around the world, notably in Kenya, China and the US.

§ The sweet-tasting parts of the stevia leaf are up to 400 times sweeter than sugar: stevia's high-intensity sweetness means it requires far less water and land than sugar.

§ Research has shown that the molecules of the stevia leaf are present and unchanged in the dried stevia leaf, through the commercial extraction and purification process, and in the final stevia leaf extract product. All major global regulatory organisations, across 65 countries, have approved the use of high-purity stevia leaf extracts in food and beverages.

§ For more information on the science of stevia, please visit https://www.purecirclesteviainstitute.com/

Chief Executive Officer Review

PureCircle has delivered a strong set of results with double-digit revenue and net profit growth in FY18 after a challenging prior year which was adversely impacted by factors beyond the Company's control. I said at the time we would be moving forward, stronger, and that is what PureCircle has done. I am particularly pleased with our +17% profitable volume growth. It indicates that the market is certainly in need of, and receptive to, the right stevia taste and price profile. Hence our success in planting over 16,000 tonnes of proprietary Starleaf™ through 3rd party farmers in the year is very exciting. Apart from being the best tasting stevia, it enables our customers to reach 100% calorific reduction for their products. In addition, the high purity nature of Starleaf™ stevia accommodates its usage to a wider platform of applications across the food and beverage industry. 

We have previously identified these exciting opportunities, and have been investing significantly into our business to ensure we are well positioned to take advantage of these opportunities. We have recently fully commissioned our new Line 2 in Kuala Lumpur, at the same time as moving our planting and procurement focus to materially increase the proportion of our proprietary Starleaf™ used in our production process, both of which have increased our inventory level. This increased gearing of the business is now supported by a $200m syndicated facility which we secured in FY18, providing a strong financial platform to support the future growth of our business.

That said, these investments have also increased the level of net debt in our business, and whilst at manageable levels, we recognise the need to closely monitor our cash flows and compliance with banking covenants. In doing so, we have improved the quality of cash flow reporting and forecasting available to the business. We plan to reduce our level of gearing over the coming year, in part through reducing the levels of inventory carried by the business. Alongside this, we stress test our cash flow forecasts and ensure we have clearly identified actions which can be readily implemented if necessary, to protect the financial position of the business.

Our expertise results from our ongoing investment in R&D into all aspects of the stevia plant. Everything we do is about helping our customers achieve their goals of reducing sugar, calories and the cost of ingredients without compromising taste. With our highest purity stevia solutions we work in partnership with our customers to achieve the taste profile they require for their products in their different markets around the globe.

The global Stevia market continues to grow and we believe that we are better placed than our competitors to deliver to the world's food and beverage companies the low calorie, great tasting natural sweeteners that their consumers demand.

Powerful Market Trends

The ongoing global fight against obesity and diabetes through sugar taxes and increased regulation continues to gather pace. More than 600 million people are now estimated to be obese and 425 million estimated to have diabetes; this number is expected to rise to 629 million by 2045. Regulatory action to address these public health issues is increasing and this is coupled with consumers actively seeking natural sustainable ingredients instead of using artificial ones.

Innovation

Stevia has come a long way from the commoditised product of Reb A. Today the third and fourth generation stevia solutions have superb taste profiles and go further to help unlock demand to help moderate calories naturally. This is enabling companies such as The Coca-Cola Company to launch Coca-Cola with no added sugar sweetened only with sweetener derived from the stevia leaf as they have done in New Zealand. During the year, we continued focus on innovation, specifically Starleaf™ stevia and our new Sigma tools that greatly facilitate our customers' work with stevia.

Our commitment to continued innovation is what will ensure we remain industry leaders and provide our strong diversified customer base with the breadth and depth of applications they require.

Strategy Evolution Resulting from Starleaf™

Whilst demand for stevia from food and beverage companies has continued to increase, its utilisation has been constrained primarily through challenges in delivering deeper sugar reduction whilst maintaining excellent taste and flavor. Early stevia variants proved inadequate in this key area which is why PureCircle has continued to develop better tasting solutions. Our innovative approach, insight and technical knowhow is protected by strong IP, creating a leading competitive position for PureCircle.

Starleaf™ stevia is PureCircle's newest proprietary variety which contains more of the best tasting stevia molecules compared to conventional stevia varieties. Extracts from Starleaf™ enable our customers to have a taste advantage and the ability to produce no-added-sugar products with a plant-based, non-GMO ingredient. This year PureCircle announced increases in Starleaf™ planting to nearly 16,000 tonnes, an increase of about 200% over the prior year. Expanding the planting and use of its proprietary Starleaf™ stevia leaf will help enable the Company to meet the increasing demand of food and beverage industries for the best tasting - and most sugar-like - zero calorie, stevia sweeteners like Reb M.

PureCircle has developed technology to increase supply of Reb M by converting the plentiful Reb A found in Starleaf™ into better tasting Reb M, just as happens in the stevia leaf.

Using beverages as an example, PureCircle can now supply enough Reb M to sweeten circa 500 million cases of zero-calorie carbonated soft drinks. PureCircle is continuing to build production capacity, and it estimates that three years from now, it could supply enough Reb M to sweeten 1billion cases of zero-calorie carbonated soft drinks or the equivalent in beverages and foods using Reb M as the sweetener.

A number of beverage and food companies are already using PureCircle's Reb M in their products. PureCircle's expansion in production of Reb M will help beverage and food companies obtain supplies of an ingredient they need, as they continue to respond to their consumers' desires for more zero- and low-calorie products using plant based sweeteners.

Agronomy

In everything we do, we seek to ensure that our growth is scaled in a sustainable way. Today we work with thousands of farmers around the world. By diversifying and expanding our stevia leaf supply across three continents, PureCircle has reduced geopolitical and climate risks ensuring it has the flexibility, capacity and robustness to cope with global market volatility, in whatever form that takes.

PureCircle utilizes a wide and expanding global agricultural network for its stevia supply, sourcing it from an increasing number of countries around the world. Part of the increase in Starleaf™ planting this year is the result of our new farming partnerships in North Carolina. Some farmers there - working with PureCircle - are starting to use land that once grew tobacco, to grow Starleaf™. Planting stevia enables them to grow and sell a highly-sought after crop, the demand for which is growing, and to productively use their farming acreage.

Sustainability : Farmers, Communities & Planet

Stevia is a force for good in the world. Our supply chain enables us to be a key leader in corporate social responsibility. Because stevia is 250 to 350 times sweeter than sugar; a little goes a long waywhich means that one fifth of the land provides the same amount of sweetness achieved from other sweeteners. Less land means less water and less energy. This major impact is not just on the land but also the communities and co-operatives we work with.

PureCircle works with thousands of farmers around the world. Our stevia crops are one of the most lucrative crops a farmer can grow - they have multiple harvest cycles per annum, use considerably less land and water and, because of our vertically integrated supply chain and the way we work with co-operatives ensures we have full traceability of our stevia, with respect for farmers and their communities. An example is our recently launched new stevia farming program in the US and Zambia.

Our commitment to corporate social responsibility is embedded in our corporate practices.

Our Chairman

After 11 years on the Board as Chairman, Paul Selway-Swift will be retiring from the Board at the conclusion of this year's Annual General Meeting which will be held on 30th November. With his broad range of skills, Paul helped steer PureCircle through its listing on the AIM market in 2007 and subsequently its listing on the premium segment of London Stock Exchange plc's Main Market in 2015 and has been invaluable in navigating us through many rocky waters as we have built a new industry. He leaves us a strong business in a sound position.

On behalf of my colleagues, I would like to record our thanks for his leadership, support and challenge.

Outlook

We are a long-term business in a new industry. With stevia regulatory clearances achieved in all major markets across the globe, the adoption and application of stevia as an ingredient is accelerating. We expect strong growth, however, this growth may not be linear as products incorporating stevia move from innovation to base-line products. Global food and beverage brands continue to launch increasing numbers of products incorporating stevia. The foundations of our business are robust, underpinned by our world class research and Innovation. Our ability to find solutions for our customers has increased with the emergence of Starleaf™ offering deeper calorific reductions and wider applications. We are market leaders, we have the most advanced technology, and we continue to invest to ensure we consistently deliver the best-tasting stevia. We are moving forwards, stronger, are excited about the year ahead, and look forward to the future with confidence.

Magomet Malsagov

Chief Executive Officer

18 September 2018

Group Financial Review

The Group's FY18 financial year covers the year from 1 July 2017 to 30 June 2018. FY17 comparatives are for the year from 1 July 2016 to 30 June 2017.

Set out below is an extract from the audited FY18 financial statement. The complete financial statement and its accompanying notes are in the Appendix.

Sales: FY18 sales increased $12.2m (+10%) to $131.1m. Sales growth has primarily been driven by North America and reflects the continued positive mix benefit of the growth of Custom Blend and Breakthrough products. Our innovation continues to enable new Food and Beverage adoption of stevia and support continued roll-outs of products already launched.

Gross margin and Gross Profit: Gross profit increased by $3.4m to $49.2m driven by the increase in sales. Gross margin decreased 1% to 38% (FY17: 39%) due to higher production costs.

Operating profit: FY18 Operating profit increased to $17.9m (FY17: $17.6m) primarily due to increase in sales, offset with the increase in administrative expenses.

Other expenses: FY18 Other expenses principally comprise non-cash costs of the Group's LTIP scheme, STIP as well as the restructuring costs.

Finance costs: In FY18 finance costs were $7.4m (FY17: $5.0m). The higher finance cost was due to higher loan and amortisation of arrangement fees.

Net profit after tax: The Group recorded a $8.7m net profit in FY18, an increase in $1.5m (+21%) compare to FY17.

Financing and funding headroom: The Group ended FY18 with net debt of $98.1m (FY17 $84.7m) and cash and facility headroom of $89.0m (FY17: $76.7m). Net debt increased mainly due to higher operating expenditure.

RISKS AND UNCERTAINTIES

The Group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity. Within this the principal risks and uncertainties which may affect the business activities of the Group are summarised below.

The Group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity. Within this the principal risks and uncertainties which may affect the business activities of the Group are summarised below.

· Managing environment, health and safety

PureCircle sites are committed to meet or exceed all applicable laws, regulations, and other requirements; as we continue to improve on our environmental, safety and health programs

The Group manages its health and safety requirements actively through clearly defined employee safety engagement strategies; safety protocols and standards that are set and monitored regularly by the Quality, Environmental, Healthy and Safety Leadership Team. At the functional level, there is a SafetyCommittee who oversee operational matters and execute the Group's overall health and strategy in each geographical location. FY'18 saw solid progress in PureCircle's Health & Safety environment. Actual Lost Time Injury Index at Group and manufacturing entity levels were within benchmark standards. Entities are in full compliance with initiatives such as training, toolbox completion and root cause analysis. In addition, the closure rate of the Hazard and Operational Studies at the new production line, is significantly above the benchmark best practice.

· Managing quality

PureCircle is committed towards manufacturing safe products that meets legal and regulatory compliance. In addition, PureCircle sites are committed towards continuous improvement of quality objectives.

The Group actively manages its quality requirements actively through clearly defined quality objectives, quality protocols and standards that are set and monitored regularly by its Quality Leadership Team. This includes an integrated quality system, periodic audits and compliance towards high standards expected in the food manufacturing industry, including requirements from customers, independent third party certification bodies and government agencies. Suppliers are required to comply with the various quality standards and CSR requirements of the Group, including Anti-Bribery and Corruption policy and suppliers' Code of Conduct. Regular quality audits are performed to ensure compliance to legal and regulatory requirements. In addition, the Group have established a Corporate Safety and Quality Procedures as a framework for all our sites.

· Cyber security

Information Technology (IT) security threats are becoming ever more advanced and frequent with breaches expanding their reach with more sophisticated methods. PureCircle being in a new, progressive industry, needs to ensure that its existing IT landscape is protected whilst being highly vigilant to new threats.

The Group continues to invest in security technologies to detect and prevent cyber security threats through advanced threat protection, integrated circuits, data encryption and cyber insurance as well as partnering with cyber security specialist to ensure that PureCircle's IT landscape is protected.

· Working capital funding to support growth plans

PureCircle fully controls the end-to-end process of its entire supply chain from leaf sourcing to manufacturing; sales; distribution and customer relationship management. PureCircle is in a fast growing business which requires product innovation and investment in technology to stay ahead of competition. The Company needs to fund its working capital from leaf purchase to sales receivables and inventory holding. In view of the Company's growth plans and recent plant expansion, working capital requirements have increased. In addition, PureCircle needs to maintain sufficient liquidity to balance operating requirements with financial obligations and covenants.

The Group manages its cash flow through a series of on-going policies which includes continued focus on sales collection from customers, emphasis on excellent operations and sales forecast to ensure timely identification of any potential working capital deficiency and increased control over discretional spending and maintaining regular dialogue with lead banking partner to ensure a positive and open relationship is sustained.

· Inventory management

Inventory management is a key area of the business. Ensuring PureCircle manufactures the "right" inventory is of paramount importance as failure to do so may result in high level of cash being tied up in the business. Inventory turnover is an important measure of business performance and ascertains how many times average inventory is "turned" or sold during a period. This needs to be shortened as far as possible across all inventory categories.

The company's strategic move to StarLeaf, which has a significantly higher Reb A content will reduce the level of inventory held as work-in-progress, as StarLeaf only requires a 1 staged refinery process. This combined with the consumption of existing work-in-progress, will facilitate a reduction in inventory levels.

· Agriculture sustainability, including sustainable sourcing

PureCircle is committed towards corporate social responsibility (CSR) pro-activeness and vigilance. Post CBP clearance, the Company has increased its footprint on controlled leaf plantations, thus increasing the transparency over leaf sourcing arrangements. In addition, the Group's CSR programme includes the sourcing of critical non leaf supplies such as critical materials and chemicals. These heightened activities run through the entire supply chain.

The Group perform yearly evaluation on its supplier to ensure that suppliers are committed to PureCircle's Code of Conduct and have relevant credentials to operate business with PureCircle. All leaf contracts provide for leaf suppliers' obligation in meeting PureCircle's CSR requirements and compliance towards established Farm Sustainability Assessment guilines with specifically defined actions for each requirement. Product Traceability form leaf suppliers to end product is also available.

· Continued growth in the Stevia Market

PureCircle has pioneered the development of the high purity stevia market and is focused on the further development of the market in terms of product innovation and investment in technology. In addition, PureCircle has an operationally leveraged business model in which viability of the business is sensitive to volumes. The Company's future profitability is sensitive to the continued growth of the stevia market

Management mitigates this risk with an active programme of new stevia product innovation to support further adoption of stevia and to enable future food and beverage formulation projects. This is supported by investment in new or expanded innovation labs (e.g. India, China), where customers are able to co- develop solutions. External evidence, such as Mintel Data, shows continued strong growth in F&B product launches using stevia which provides confidence in there being sustainable stevia market growth over the long-term. With the removal of PureCircle from the Withhold Release Order (WRO), sales to the US has now resumed. Recovery of volumes in this market is fully expected.

· Competition

As pioneers in the development of the stevia market, PureCircle is currently believed to have a majority share of the Global stevia market. As stevia becomes more established as a large volume mainstream food and beverage (F&B) ingredient, more competitors may enter the stevia market with the potential to reduce the Company's market share. In addition, the emergence of cheaper alternatives of stevia (artificial, genetically modified variants) could undermine our business performance. PureCircle is committed to providing the best tasting stevia for it's customers' applications. Our continued investment in R&D, innovation will maintain and develop our strong working relationships with existing and new customers.

· Management reliance and talent development and retention

Stevia is a relatively new industry and PureCircle is a high growth market leader in the industry. Attracting quality talent, developing and retaining key personnel will be a cornerstone of the Company's future success. There is a risk that as the Organisation grows and becomes more successful, our talent will be highly sought after in the growing industry.

Greater management focus on recruitment quality, industry background and internal career development. The Group has ongoing investment in senior management retention programmes for all key managers, including the Group's Long Term Incentive Programme (LTIP).

· Manufacturing capacity

PureCircle is a fast growing company with production chain covering both extraction and refinery activities. It is imperative that our capacity keeps up with increasing customer demand.

Robust plant preventive maintenance program, including policy and process governing environmental; health and safety requirements; hazard and operability studies has been put in place to ensure that the production capacity keeps up with the demand. The completion of the refinery expansion in FY17 will facilitate the increase in the production capacity for the next 5 years.

The Group has explored alternative manufacturing options including 3rd Party toll manufacturing and had successfully trialed, and available for the Group if required on short notice.

· Leaf procurement and sourcing

Dried leaf is PureCircle's primary raw material and constitutes a significant proportion of the Company's variable costs of production. The Company's financial performance can be materially impacted by rising leaf cost and nature of contractual conditions, if not managed effectively. A significant majority of PureCircle's total leaf supply is sourced from China. Over reliance of leaf supply from China and inconsistent quality of leaf from other sources of supply, may pose supply risk, in the event of supply shortage/ disruption.

To better manage the leaf supply from China, the Group has expanded the leaf contract to include volume, quality, pricie control and minimum take up volume. In addition, the Group continue to diversify its leaf supply outside China, namely in Latin America, Africa and the US while India is under early stages of evaluation.

· Intellectual property (IP) and innovation

Innovation is essential part of PureCircle's success. Protecting the results of research & development (R&D) and innovation activity is critical since fast growth of the industry, inevitably, attracts new players seeking to fast track to a market leading position using the latest innovations in this category. PureCircle remains in the leading position for global stevia-related patent publications. Focusing on intellectual property (IP) protection at all levels is needed to ensure all of the Company's IP, whether patentable or not, is protected.

Directors' responsibility statement

The Directors are responsible for the preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards ("IFRS"), and the Parent Company Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the Parent Company and of the results of the profit or loss of the Group and Parent Company for that period. In preparing these financial statements, the Directors are required to:

(a) select suitable accounting policies and then apply them consistently;

(b) make judgements and estimates that are reasonable and prudent;

(c) state whether IFRS and applicable UK Accounting Standards, including FRS 101, have been followed, subject to any material departures disclosed and explained in the Group and Parent Company Financial Statements respectively; and

(d) prepare the Group and Parent Company financial statements on the going concern basis unless it is inappropriate to assume that the Group and Parent Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and to enable them to ensure that the financial statements comply with IFRS and UK Accounting Standards including FRS 101. The Directors are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of fraud or other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom and Bermuda governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed in the Governance Report, confirm that to the best of their knowledge:

· the Group financial statements, which have been prepared in accordance with IFRS, give a true and fair view of the assets and liabilities, financial position and profit of the Group; and

· the Strategic Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

· So far as each Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and he or she has taken all the steps that he or she ought to have taken as a Director in order to make himself or herself aware of any relevant audit information and to establish that the Group and Company's auditors are aware of that information.

Signed on behalf of the Board of Directors in accordance with their resolution dated 17 September 2018.

Additions in intangible assets during the financial year includes a consideration of USD970,000 for the purchase of an intellectual property and USD763,000 incurred in relation to development costs. Both these amounts remained unpaid as at 30 June 2018 and have been included as changes in working capital within the statement of cash flows.  

1 GENERAL INFORMATION

The Company was incorporated and registered as a private limited company in Bermuda, under the Companies (Bermuda) Law 1981. The registered office and principal place of business are as follows:-

Registered office : Clarendon House, 2 Church Street,

Hamilton HM 11, Bermuda.

Principal place of business : 200 West Jackson Boulevard

Chicago 60606 , USA

The Company's shares are publicly traded on the Main Market of the London Stock Exchange.

In the financial statement, "Company" refers to PureCircle Ltd. and "Group" refers to PureCircle Ltd and its subsidiaries.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 17 September 2018.

2 PRINCIPAL ACTIVITIES

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 ingredient including sweeteners and flavours.

There are no significant changes in the nature of these activities during the financial year.

3 BASIS OF PREPARATION

The Group has prepared its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") Interpretations. The financial statements have been prepared on the going concern basis under the historical cost convention, land and buildings and financial assets and financial liabilities (including derivative instruments) are measured at fair value through profit or loss.

The group meets its day-to-day working capital requirements through its bank facilities. The Group has strong liquidity and has positive operating cash flow. As at 30 June 2018, the Group had $65million of committed undrawn facilities and $24million unrestricted cash, as well as future cash flows which support the Group's ability to meet its obligations as they become due. Optimising working capital and adhering to covenants are priorities for the business. The current economic conditions continue to create uncertainty, particularly over (a) the level of demand for the Group's products, and (b) the availability of bank finance for the foreseeable future. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current facilities. Having assessed the principal risks and the other matters discussed in connection with the viability statement, the directors considered it appropriate to adopt the going concern basis of accounting in preparing its consolidated financial statements. Further information on the Group's borrowings is given in Note 21.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 6.

(a) The new accounting standards, amendments and interpretations

No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 July 2017, have had a material impact on the Group or Parent Company.

(b) Standards, amendments and interpretations that have been issued and are applicable to the Group but are not yet effective:

The Group will apply the new standards, amendments to standards and interpretations in the following period:

(i) Financial year beginning on 1 July 2018

· IFRS 15 "Revenue from Contracts with Customers" replaces IAS 18 "Revenue" and IAS 11 'Construction contracts' and related interpretations. The core principle in IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

Variable consideration is included in the transaction price if it is highly probable that there will be no significant reversal of the cumulative revenue recognised when the uncertainty is resolved. The standard replaces IAS 18, "Revenue", and IAS 11, "Construction contracts", and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2018, and earlier application is permitted.

During the year ended 30 June 2018, the Group carried out a detailed review of the recognition criteria for revenue applying the requirements of IFRS 15 to ensure that the same principles were being applied consistently across the group, particularly where variable consideration receivable applies to the agreements with customers. The new Standard is not expected to have a material impact on the amount or timing of recognition of reported revenue as the Group's current accounting policy in relation to variable consideration conforms with the requirements of IFRS 15. In its financial statements for 2019, PureCircle will adopt IFRS 15 applying the full retrospective approach. There is no adjustment required on equity at 1 July 2018 arising from the adoption of IFRS 15.

· IFRS 9 "Financial Instruments" will replace IAS 39 "Financial Instruments: Recognition and Measurement".

IFRS 9 retains but simplifies the mixed measurement model in IAS 39 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ("OCI"). The basis of classification depends on the entity's business model and the cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the IAS 39 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright-line hedge effectiveness tests. To qualify for hedge accounting, it requires an economic relationship between the hedged item and hedging instrument, and for the 'hedged ratio' to be the same as the one that management actually uses for risk management purposes. Contemporaneous documentation is still required, but it is different from that currently prepared under IAS 39. There is an accounting policy choice to continue to account for all hedges under IAS 39.

IFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in IAS 39. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

In its financial statements for 2019, the Group will adopt IFRS 9 retrospectively, but with certain permitted exceptions. The adoption of IFRS 9 hedge accounting principles did not result in a restatement of the group's results and the impact on the financial year ended 30 June 2018 is not material. The adoption of IFRS 9 did not result in any changes in the measurement or classification of financial instruments as at 1 July 2017. All classes of financial assets and financial liabilities as at 1 July 2017 have the same carrying values under IFRS 9 as they had under IAS 39.

 (ii) Financial year beginning on 1 July 2019

· IFRS 16 "Leases" supersedes IAS 17 "Leases" and the related interpretations.

Under IFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

IFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off balance sheet). IFRS 16 requires a lessee to recognise a "right-of-use" of the underlying asset and a lease liability reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in IAS 16 "Property, Plant and Equipment" and the lease liability is accreted over time with interest expense recognised in the income statement.

For lessors, IFRS 16 retains most of the requirements in IAS 17. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently.

The Group is currently assessing the impact to its financial statements.

4 FINANCIAL RISK MANAGEMENT

The Group's activities are exposed to a variety of financial risks including foreign currency risk, interest rate risk, credit risk, liquidity and cash flow risk, and capital risk management. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

(a) Financial risk management policies

(i) Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk when the Company and its subsidiaries enter into transactions that are not denominated in their functional currencies. Foreign exchange risk arises from commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group manages its foreign exchange exposure by taking advantage of any natural offsets of the Group's foreign exchange revenue and expenses and from time to time enters into foreign exchange forward contracts for a portion of the remaining exposure relating to these forecast transactions when deemed appropriate.

The following table demonstrates the sensitivity of financial instruments to a reasonably possible change in foreign currencies exchange rates, with all other variables held constant of the Group's result:

The above represents favourable effects on the results of the Group should the respective currencies strengthen against the functional currencies of the entities within the Group, whilst weakening of the above currencies would have an equal but opposite effect to the amount shown above, on the basis that all other variables remain constant.

The foreign currency exposure profile represents the carrying amounts arising from currencies other than the functional currency of the respective entities in the Group. The foreign currency exposure profile of the Group at the reporting date was as follows:

(ii) Interest rate risk

Interest rate risk is the risk that the future cash flows of the Group's financial instruments will fluctuate because of changes in market interest rates.

The Group's exposure to interest rate risk arises mainly from interest-bearing borrowings at floating rates. The Group's interest rate profile is set out below:

Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable rates. The Group actively reviews its debt portfolio to mitigate the impact of interest risk. Based on the above scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings form floating rates to fixed rates. Generally, the Group raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the group borrowed at fixed rates directly. Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (primarily monthly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts. USD82,500,000 from term loan have been swapped under such arrangement.

As at balance sheet date, if interest rates on borrowings are 1% higher/lower for a year with all other variables held constant post-tax profit for the financial year would be USD1,220,920 lower/higher (2017: post-tax profit for the financial year would be USD1,177,000 higher/lower), mainly as a result of higher/lower interest expense on floating rate borrowing.

(iii) Credit risk

The Group trades only with recognised, creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, the payment profile of the customers and credit exposure are monitored on an ongoing basis with the result that the Group's exposure to bad debt is not significant. The Group also establishes an allowance account for impairment that represents its estimate of losses in respect of trade and other receivables. The Group's maximum exposure is the carrying amount as disclosed in Notes 13 and 14 to the financial statements.

At 30 June 2018, 5 customers (2017: 2) comprised more than 30% of total receivables and 29 customers (2017: 13) comprised 75% of total receivables. See Note 13 for ageing of trade receivables that are past due but not impaired.

The Group's and the Company's cash and cash equivalents are placed with creditworthy financial institutions and the risks arising thereof are minimised in view of the financial strength of these financial institutions.

The credit quality of the short-term deposits placed with licensed banks and cash at bank can be assessed by reference to external credit ratings.

(iv) Liquidity and cash flow risks

Liquidity and cash flow risks arise mainly from general funding and business activities. The Group's cash flow is reviewed regularly to ensure commitments are settled when they fall due.

Cash flow forecasting is performed both in the operating entities and on a Group consolidated basis. The Group monitors rolling forecasts of its liquidity requirements including projected sales revenues, inventory and capital expenditure requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or financial covenants on any of its borrowing facilities. The Group invest surplus cash into financial interest bearing accounts and money market deposits.

The following tables detail the remaining contractual maturities at the reporting date of the Group's non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the reporting date) and the earliest date the Group can be required to pay and net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows:

(b) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debts, which include the borrowings disclosed in Note 21, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, share premium, reserves and retained earnings.

The Group monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total equity.

The gearing ratio at the financial year end was as follows:

(i) Borrowings are disclosed in Note 21 to the financial statements.

(ii) Gross cash includes restricted cash and cash and cash equivalents disclosed in Note 16 to the financial statements.

(iii) Net debt are calculated as total borrowings including current and non-current borrowings are in the consolidated statement of financial position less gross cash.

(iv) Equity includes all capital and reserves of the Group attributable to the equity holders of the Company.

(c) Fair value estimation

Fair value is defined as the amount at which the assets/liabilities could be exchanged in a current transaction between knowledgeable willing parties in an arm's length transaction, other than in a forced sale or liquidation.

The fair value measurement hierarchy for assets/liabilities stated in the balance sheet is as follows:

· Level 1: Quoted price (unadjusted) in active markets for identical assets or liabilities.

· Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset and liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

· Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

There are no significant fair value estimates at level 3 made for the financial instruments measured at fair value for the Group as at the reporting date.

5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the financial statements are set out below. These policies have been consistently applied to all the financial years presented, unless otherwise stated.

(a) Financial assets

(i) Classification

The Group classifies its financial assets in the following categories: loans and receivables and at Fair Value through profit and loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets. The Group's loans and receivables comprise 'trade receivables', 'Other receivables and deposits (excluding prepayments)' and 'cash and cash equivalents' in the statement of financial position (Notes 13, 14 and 16 respectively).

Financial assets at fair value through profit or loss

The Company classifies financial assets at fair value through profit or loss if they are acquired principally for the purpose of selling in the short term, i.e. are held for trading. They are presented as current assets if they are expected to be sold within 12 months after the end of the reporting period; otherwise they are presented as non-current assets.

(ii) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement.

(iii) Subsequent measurement - Gains and losses

Loans and receivable are subsequently carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of the "financial assets at fair value through profit or loss" category are presented in the income statement within 'Other (losses)/gains - net' in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of other income when the group's right to receive payments is established.

(iv) Subsequent measurement - Impairment

The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loan and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in statement of comprehensive income. If 'loans and receivables' has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument's fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in consolidated income statement.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

(v) Subsequent measurement - Derecognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

(b) Financial liabilities

(i) Payables

Liabilities for trade and other payables and accruals, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(ii) Interest-bearing loans and borrowings

All loans and borrowings are recognised initially at fair value of the consideration received, net of directly attributable transaction cost incurred, and are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction cost) and the redemption value is recognised in the profit or loss over the period of the loans and borrowings using the effective interest method.

(c) Foreign currency translation

(i) Functional and presentation currency

The functional currency of each of the Group's entities is measured using the currency of the primary economic environment in which the entities operate.

The consolidated financial statements are presented in United States Dollar ("USD") which is the Group's presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation (where items are remeasured). Foreign exchange gains and losses resulting from the settlement of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Transactions in foreign currency are measured in the respective functional currencies of the Group's entities and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates.

Monetary assets and liabilities at the reporting date are translated at the rates ruling as of that date. Exchange differences arising from the translation of monetary assets and liabilities are recognised in the profit or loss. All exchange gains and losses are presented in the income statement within "Other income/expenses".

Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

(ii) income and expenses for each statement of comprehensive income or statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting exchange differences are recognised as a separate component of other comprehensive income. Goodwill and fair value adjustments arising on the acquisitions of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

(iv) On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income.

(d) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries.

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.

The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If, after reassessment, the Group's interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Where necessary, amounts reported by subsidiaries have been adjusted to conform with the group's accounting policies.

(ii) Transactions with non-controlling interests

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(iii) Disposal of subsidiaries

When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(iv) Joint ventures

The Group's interest in a joint venture is accounted for in the financial statements using the equity method of accounting. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group's share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group's net investment in the joint ventures), the Group recognise the further losses to the extent of its incurred obligations.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group's interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

(e) Goodwill on consolidation

Goodwill that arises upon acquisition of subsidiaries is included in intangible assets. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate a potential impairment. Impairment losses on goodwill are recognised immediately in the profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent year. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.

Acquisition of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transaction.

(f) Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets with finite useful lives are carried at cost less any accumulated amortisation and any accumulated impairment losses.

(i) Intellectual property

The intellectual property consists of the internal investment and external acquisition costs of the patents, trademarks, technological processes and all intellectual and industrial property rights ("intellectual property rights") in connection therewith on the production of natural sweeteners, pharmaceutical products and chemical derivatives of bio-organic and physiologically active compounds. The acquisition cost is capitalised as an intangible asset as it is able to generate future economic benefits to the Group.

The useful life of technology know how is considered to be indefinite based on the Directors' annual reassessment of the useful life; there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows of the Group. Technology know how is stated at cost less impairment losses. Technology know how is not amortised but tested for impairment annually or more frequently when indicators of impairment are identified. The technology know how is assessed to have an indefinite useful life because it relates to the extraction and refinery intellectual property and it forms the basis of all natural sweeteners. The Group's natural sweeteners and flavours are expected to become mass volume ingredients in all foods and beverage categories. Similar to the sugar market, there is no expected end to the useful life of the natural sweeteners and flavours such as stevia. Accordingly, the Directors believe the useful life for technology know how is indefinite. The Directors will continue to reassess the basis of that useful life of the technology know how on an annual basis.

Patented development costs are subject to estimated useful life of no more than 20 years and amortised starting from the financial year when the product is first viable for commercial use.

(ii) Development costs

All research costs are recognised in the profit or loss as incurred.

Development costs consist of fees charged by external research and development company, material cost, payroll cost, legal and professional fees incurred on product development and leaf development projects.

Expenditure incurred on these projects are capitalised as intangible assets only when the Group can demonstrate the technical feasibility of completing the intangible assets so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the developments. Expenditures which do not meet these criteria are recognised in the profit or loss when incurred.

Product development costs are amortised on a straight line basis over their estimated useful life of no more than 20 years starting from the financial year when the product are first viable for commercial use.

Leaf development costs are amortised on a straight line basis over their estimated useful life of no more than 20 years starting from the financial year when stevia plant demonstrates capability of producing high yielding strains of stevia leaf at reasonable consistency on a volume production basis. A leaf development project in Paraguay had completed and commenced amortisation during the financial year. The remaining development projects remain on-going as the development targets have not been fully met and no amortisation has been charged.

(g) Property, plant and equipment

Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and impairment losses, if any. Freehold land is stated at cost less impairment losses, if any, and is not depreciated. Cost includes expenditure that is directly attributable to the acquisition of the items. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is included in the profit or loss in the financial year the asset is derecognised.

Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and they are recognized within "Other income/expenses" in the income statement.

Capital work-in-progress represents assets under construction, and which are not ready for commercial use at the reporting date. Capital work-in-progress is stated at cost, and will be transferred to the relevant category of long-term assets and depreciated accordingly when the assets are completed and ready for commercial use.

(h) Impairment of non-financial assets

Intangible assets that have indefinite useful life intangible assets not ready in use are subject to amortisation and tested annually for impairment.

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation but are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal of the impairment at each reporting date.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost of raw materials is determined based on the weighted average basis, and comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition. Cost of finished goods and work-in-progress includes the cost of materials, labour and production overheads. Net realisable value represents the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale.

Where necessary, due allowance is made for all damaged, obsolete and slow-moving items.

(j) Current and deferred tax

Income taxes for the year comprise current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the applicable tax rates that have been enacted or substantively enacted at the reporting date in each of the jurisdictions in which the Group operates.

Deferred tax is provided in full, using the liability method, on the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to be applicable in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the reporting date.

Deferred tax is recognised in the statement of comprehensive income, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or excess of the acquirer's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities over the business combination costs. The carrying amounts of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable that the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities and there is an intention to settle the balances on a net basis.

(k) Equity instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(l) Restricted cash

Restricted cash comprise cash balances held in an account solely for the purpose of utilising credit card facility provided by a licensed financial institution.

(m) Cash and cash equivalents

For the purpose of the statement of cash flows, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Cash and cash equivalents comprise cash in hand, deposits held at call with banks, short-term deposits with licensed banks with maturities of three month or less, and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents exclude restricted cash.

(n) Employee benefits

(i) Short-term benefits

Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as 'Other payables and accruals' in the statement of financial position.

(ii) Defined contribution plans

The Group's contributions to defined contribution plans are charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans. The Group has no defined benefit plan.

(o) Share-based payment

The Group operates a long term incentive programme which is an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (share awards) of the Company. The fair value of the employee services received in exchange for the grant of the share awards is recognised as an expense over the vesting period. The total amount to be expensed is determined by reference to the fair value of the shares granted excluding the impact of any non-market vesting conditions and the number of shares expected to vest. Non-market vesting conditions are included in assumptions about the number of share awards that are expected to become exercisable.

When the share awards are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the share awards are exercised.

(p) Provisions

A provision is recognised if, as a result of past event, the Group has a present legal and constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost.

(q) Leases

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which the termination takes place.

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownerships are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges.

The corresponding rental obligations, net of finance charges, are included as borrowings. The interest element of the finance charge is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Plant and equipment acquired under a finance lease is depreciated over the shorter of the estimated useful life of the asset and the lease term.

The prepaid land lease payments represent the Group's right to use the land for 20 years. Accordingly, the amortisation of the prepaid land lease payments is on a straight line basis over 20 years.

(r) Segmental information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (i.e. the Chief Executive Officer ("CEO"). The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

(s) Revenue recognition

(i) Sale of goods

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured and when it is probable that future economic benefits will flow to the entity.

In practice, this means that sales of stevia products are recognised once the contractual terms, typically Free On Board or Ex-Works, have been met and the stevia product has been delivered to a specified location (usually the carrier of the port of departure) or leaves the refinery.

(ii) Interest income

Interest income is recognised on an accrual basis, based on the effective yield on the investment.

(t) Government grants

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Grants that compensate the Group for the cost of an asset are recognised in profit or loss on a systematic basis over the useful life of the asset.

(u) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(v) Borrowings costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(w) Trade receivables

Trade receivables are amounts due from customers for goods sold in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised costs using the effective interest method, less provision for impairment.

(x) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business, if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised costs using the effective interest method.

(y) Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date when a derivative contract is entered into, and they are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The group designates certain derivatives as either:

(i) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);

(ii) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or

(iii) hedges of a net investment in a foreign operation (net investment hedge).

At the inception of the transaction, the group documents the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of derivative instruments used for hedging purposes are disclosed in note 30. Trading derivatives are classified as a current asset or liability.

(a) Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the effective portion of interest rate swaps hedging variable-rate borrowings is recognised in the income statement within "Finance income/cost".

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within "Finance income/cost".