4th Mar 2009 07:00
PURECIRCLE LIMITED
("PureCircle" or "the Company")
Half yearly report for the six months ended 31 December 2008
PureCircle (www.purecircle.com), the world's leading producer of Natural High Intensity Sweeteners, including Reb A ('NHIS'), today announces results for the six months ended 31 December 2008.
IN JUST SIX MONTHS
Global brand launches using PureCircle's Reb A confirm $10 billion market taking off
Regulatory approvals around the world
Australia, New Zealand, Switzerland, US FDA…Europe expected to follow
Global brands launched with Reb A
PepsiCo (Sobe LifeWater, Tropicana Juice)
The Coca-Cola Company (Sprite Green, Vitaminwater, Odwalla)
Whole Earth (PureVia table-top)
Cargill (Truvia table-top)
Unprecedented rate of new product launches in just months since regulatory clearances
Strong consumer pull-through indicates growing market demand
PureCircle is the clear industry leader in this fast-growth market
Q2 production exceeded annual rate of 300MT (Q2 FY 2008 90MT)
On track for Q4 annual rate of 700MT (Q4 FY 2008 200MT)
Multi-year, multi-$m contracts secured with Pepsico, Whole Earth, Cargill
Exclusive PureVia brand marketing & supply contracts signed
Strategic partnership agreed with Firmenich
Scaling-up the business to meet demand and maintain market leading position now key priority
Expectation that customers will launch a succession of products using NHIS
Focus will be on ensuring that PureCircle remains the market's supplier partner of choice
Scaling business in line with industry demand
2,000 MT refinery by end 2009
4,000 MT extraction plant on stream April 2009
Leaf supply secured
Worldwide footprint in place to support global customers
SUMMARY FINANCIALS
|
Six months ended 31 December (US$m) |
2008 (H1 FY 2009) |
2007 (H1 FY 2008) |
% growth FY 2009 vs FY 2008 |
|
Revenue |
21.6 |
14.5* |
49% |
|
Gross Profit |
8.6 |
4.5 |
91% |
|
Net Profit after tax and minority |
2.0 |
1.2 |
75% |
*Included $5m of crude stevia sales now discontinued: like for like sales growth is 127%
Achieved Budget and strong growth against FY 2008 across all key performance measures
Paul Selway-Swift, Chairman of PureCircle, commented:
"We are pleased to report a strong first half performance. The Company achieved its budget targets and recorded significant growth in all key targets compared to a year ago.
Events are moving on at a pace in the wider market. With widespread regulatory clearances and many major product launches, it is clear that this is going to be a large global industry.
PureCircle is the undisputed market leader. We are demonstrably scaling our business rapidly and we have robust plans in place to keep doing so.
This is an exciting time for PureCircle. As with all businesses, challenges remain but we look forward to reporting on further progress."
4 March 2009
Enquiries
|
PureCircle Limited |
|
|
Magomet Malsagov, Managing Director |
+60 1 2388 8049 |
|
William Mitchell, Finance Director |
+44 7974 005 163 |
|
CollegeHill |
+44 20 7457 2020 |
|
Mark Garraway |
|
|
Adam Aljewicz |
|
|
RFC Corporate Finance Ltd |
+61 8 9480 2500 |
|
Stephen Allen |
Chairman's & Chief Executive's Statement
Overview
We are pleased to present the first half year results for financial year ending 30 June 2009 (FY2009) covering the period from 1 July 2008 to 31 December 2008.
This is an exciting new industry with significant growth potential. Moreover, PureCircle is the clear leader in developing the industry. At the time of our IPO in December 2007, we identified a number of hurdles that needed to be overcome if the industry were to take off. These were:
regulatory clearances
product launches by major F&B producers
consumer pull-through
the ability to successfully scale-up the business
During the period, regulatory clearances were received in substantially all key markets culminating in the FDA's approval of Reb A in December, and we immediately saw a rapid launch of major global brands by F&B companies. With consumer pull-through on the back of these launches, we expect to see the rate of new product launches gathering momentum.
With the market firmly established, our priority now is to ensure that we successfully scale-up the business to meet the expected demand and to ensure that we maintain our industry leading position.
Results
The first half FY 2009 saw a strong performance. The Group achieved its budget targets and recorded significant growth compared to FY 2008 across all our key performance indicators.
Revenues were up by 49% to US$21.6 million (H1 FY2008: $14.5 million) reflecting increasing demand for our natural sweeteners. FY2008 sales included US$5 million of crude stevia extract sales in China now discontinued, therefore underlying sales growth was over 127%. Reb-A volumes were up over 125% at 95 MT (H1 FY2008: 42 MT). This compares to 115 MT sold in the whole of FY2008.
With four months of the FY to run, the Group has 250 MT contracted being just over two thirds of the projected FY 2009 total. The Group is focused on securing the remaining 100MT.
The Group's long-term sales strategy is to secure a widely diversified customer base. Since 1 July 2008, the Group has started trading a number of multi-year non-exclusive contracts with major F&B companies including PepsiCo, Whole Earth and Cargill.
Gross margins improved 9 percentage points from 31% to 40% but, with projected volumes for FY2009 running at just 17.5% of December 2009 refinery capacity, the Group has significant potential to improve margins further as refining throughput increases and the Group reaps the benefits of economies of scale.
The Group has a robust balance sheet with net assets of US$86.0 million and a strong cash position of US$27.3 million.
While the Company is growing its business, the Board deems working capital to be a priority. The Company will not be paying an interim dividend. This will be reviewed in the future in light of the Group's progress and funding requirements.
Business Review
The period saw a number of exciting market and business developments. In summary there is undeniably now a global market for NHIS and PureCircle is the undisputed market leader.
Regulatory Approval and Product Launches
In December 2008 the US Food & Drug Administration ('FDA') gave Generally Recognised As Safe ('GRAS') clearance for high purity (97%) Reb-A.
Within days of the FDA's approval, early adopter F&B producers were unveiling plans for major brand launches into the US market. Product launches have so far included SoBe LifeWater and Tropicana Juice drinks by PepsiCo, Sprite Green, Odwalla and Vitaminwater by The Coca-Cola Company as well as PureVia and Truvia table-top products by Whole Earth and Cargill respectively.
Multi-million dollar advertising and promotional programmes have been launched to support these brands, including Sobe Lifewater's advertising during coverage of this year's NFL Super Bowl XLIII. We expect more brands to be launched utilising our NHIS products over the next twelve months.
Customer Development
The global F&B market recognises that NHIS solutions will become the ideal complement to sugar in mainstream F&B production and that they will allow for the systematic reduction of calorific content across a range of categories and segments. This recognition provides for a major expansion of PureCircle's target customer base across a diverse F&B industry.
An integral part of the Group's marketing strategy is the provision of high value added products. To that end, the Group recently announced a strategic partnership with Firmenich, the world's largest privately-owned fragrance and flavouring company, to accelerate the commercialisation of the Group's NHIS solutions. The focus of the partnership will be the interaction between sweetener development and specific F&B category needs.
Supply Chain
The Group is already the world's largest producer of NHIS. We continue to make progress on scaling our supply chain further.
The Group has secured sufficient leaf to deliver projected FY2009 volumes. Progress continues in diversifying leaf sources, particularly in Kenya and Paraguay where both quality and yields are highly encouraging. The Group is also investigating plantation-scale growing opportunities across a number of regions including South East Asia, South America and Africa.
The Group's expanded 4,000 MT extraction plant in China will be operational, as scheduled, in April 2009. The Group's capacity of 4,000 MT compares with an estimated rest of industry total of just over 3,500 MT and which is highly fragmented.
The extension of the Group's refinery in Malaysia, to 2,000 MT is on schedule for completion by the end of 2009.
Management and Organisation
The Group has made a number of senior appointments in the last six months. It is notable that all of the appointees have joined from major companies in the F&B industry including a number from world-leading ingredients businesses.
The Group also established a sales presence in a number of countries including the United States, Paraguay, Australia, Japan and Switzerland.
Outlook
Developments over just the last few months have further strengthened our view that PureCircle has an exciting future as a mainstream food and beverage ingredients producer.
Recognition of NHIS as the long-awaited solution to a huge and growing global epidemic, places PureCircle in a strong position to leverage its first mover advantage based on an established supply chain, leading technology, strong market position, strategic partnerships and robust balance sheet. The prize is a slice of a rapidly growing $10 billion marketplace.
This is an exciting time for PureCircle. As with all businesses, challenges remain but we look forward to reporting on further progress.
Paul Selway-Swift, Chairman
Magomet Malsagov, Chief Executive
4 March 2009
Half Year Financial Results
For Financial Year Ending 30 June 2009
|
Unaudited |
Pro-forma* |
||||
|
For 6 month |
For 6 month |
||||
|
period to |
period to |
||||
|
31 Dec 2008 |
31 Dec 2007 |
||||
|
USD '000 |
USD '000 |
||||
|
Continuing Operations |
|||||
|
Revenue |
21,564 |
14,458 |
** |
||
|
Cost of sales |
(12,915) |
(9,912) |
|||
|
Gross profit |
|
8,649 |
|
4,546 |
|
|
Other income |
- |
1,316 |
|||
|
Administrative expenses |
(6,527) |
(3,272) |
|||
|
|
|
|
|
|
|
|
Operating profit before finance expenses |
2,122 |
2,590 |
|||
|
Finance costs (net of foreign exchange) |
(82) |
(1,410) |
|||
|
|
|
|
|
|
|
|
Profit before taxation |
2,040 |
1,180 |
|||
|
Profit before taxation |
|
2,040 |
|
1,180 |
|
|
Income tax expense |
(13) |
789 |
|||
|
Profit after taxation |
|
2,027 |
|
1,969 |
|
|
Attributable to: |
|||||
|
Equity holders of the Company |
2,063 |
1,220 |
|||
|
Minority interests |
|
(36) |
|
749 |
|
|
Earnings per share (US cents) |
|||||
|
Basic |
1.57 |
0.94 |
|||
|
Diluted |
|
1.55 |
|
0.94 |
*PureCircle Limited was incorporated on 23 July 2007 and acquired PureCircle Sdn Bhd ("PCSB") Group on 27 September 2007. Accordingly the Pro-forma for the period ended 31 December 2007 consolidated income statement covers the results for PureCicle Limited Group from 1 October 2007 to 31 December 2007 aggregated with the results for the PCSB Group from 1 July 2007 to 30 September 2007.
**Includes $5m of sales of crude stevia extract now discontinued. Condensed Consolidated Balance Sheets
As at 31 December 2008
|
Restated¹ |
Restated¹ |
||||
|
Unaudited |
Audited |
Audited |
|||
|
31 Dec 2008 |
30 Jun 2008 |
31 Dec 2007 |
|||
|
USD '000 |
USD '000 |
USD '000 |
|||
|
Assets |
|||||
|
Non-Current Assets |
|||||
|
Property, plant and equipment |
48,837 |
31,912 |
25,825 |
||
|
Prepaid land lease payments |
2,311 |
2,285 |
1,457 |
||
|
Investment in associate |
101 |
126 |
145 |
||
|
Intangible assets |
11,401 |
7,987 |
7,654 |
||
|
|
62,650 |
|
42,310 |
|
35,081 |
|
Current Assets |
|||||
|
Inventories |
36,081 |
9,582 |
12,499 |
||
|
Trade receivables |
14,997 |
7,430 |
3,406 |
||
|
Other receivables |
10,599 |
7,642 |
8,343 |
||
|
Amount Due from Related Party |
- |
1,433 |
2,137 |
||
|
Fixed deposits |
14,927 |
13,563 |
31,543 |
||
|
Cash and bank balances |
12,418 |
30,888 |
12,721 |
||
|
|
89,022 |
|
70,538 |
|
70,649 |
|
Total Assets |
151,672 |
|
112,848 |
|
105,730 |
|
Equity and Liabilities |
|||||
|
Equity attributable to equity holders of the Company |
|||||
|
Share capital |
13,272 |
13,272 |
13,029 |
||
|
Share premium |
64,224 |
64,104 |
55,697 |
||
|
Treasury shares |
* |
* |
* |
||
|
Foreign currency translation reserve |
1,367 |
1,439 |
181 |
||
|
Share option reserve |
1,169 |
480 |
- |
||
|
Retained profit |
3,136 |
1,073 |
213 |
||
|
Shareholders' Equity |
83,168 |
|
80,368 |
|
69,120 |
|
Minority Interests |
2,821 |
1,381 |
11,612 |
||
|
Total Equity |
85,989 |
|
81,749 |
|
80,732 |
|
Non-Current Liabilities |
|||||
|
Long-term borrowings |
11,098 |
11,888 |
10,615 |
||
|
|
11,098 |
|
11,888 |
|
10,615 |
|
Current Liabilities |
|||||
|
Trade payables |
1,789 |
1,186 |
777 |
||
|
Other payables and accruals |
4,866 |
2,030 |
1,470 |
||
|
Short-term borrowings |
47,930 |
15,995 |
12,136 |
||
|
|
54,585 |
|
19,211 |
|
14,383 |
|
Total Liabilities |
65,683 |
|
31,099 |
|
24,998 |
|
Total Equity and Liabilities |
151,672 |
|
112,848 |
|
105,730 |
|
Net assets per share (USD) |
0.64 |
0.61 |
0.53 |
*Represents less than USD1.00.
¹ During the period the principal subsidiaries adopted US Dollar as their functional currency effective 1 July 2007. Under IAS21, the comparative audited financial information has been restated. No material adjustments resulted from the restatement. Full disclosure of the effects of the adjustments is set out in Note 2 of the Notes to the Interim Financial Statements.
Condensed Consolidated Cash Flow Statement
For the Period Ended 31 December 2008
|
Restated¹ |
Restated¹ |
||||
|
Unaudited |
Audited |
Audited |
|||
|
31 Dec 2008 |
30 Jun 2008 |
31 Dec 2007 |
|||
|
USD '000 |
USD '000 |
USD '000 |
|||
|
Cash Flows (for)/from Operating Activities |
|||||
|
Profit before taxation |
2,040 |
1,130 |
295 |
||
|
Adjustments for:- |
|||||
|
Amortisation of intangible assets |
(32) |
33 |
16 |
||
|
Amortisation of prepaid land lease payments |
- |
- |
18 |
||
|
Depreciation of property, plant & equipment |
1,097 |
973 |
459 |
||
|
Equipment written off |
- |
- |
40 |
||
|
Interest expense |
2,195 |
1,039 |
381 |
||
|
Interest income |
(277) |
(600) |
(127) |
||
|
Unrealised gain on foreign exchange |
(1,655) |
- |
- |
||
|
Share of loss of an associate |
25 |
19 |
- |
||
|
Excess of Group's interest in the net fair value of acquiree's identifiable |
|||||
|
assets, liabilities and and contingent liabilities over cost of acquisition |
- |
(1,971) |
- |
||
|
Share option reserve |
689 |
480 |
- |
||
|
|
|
|
|
|
|
|
Operating cash flow before working capital changes |
4,082 |
1,103 |
1,082 |
||
|
(Increase)/Decrease in inventories |
(26,239) |
2,917 |
(1,288) |
||
|
Increase in trade and other receivables |
(10,539) |
(2,620) |
(6,928) |
||
|
Increase/(Decrease) in trade and other payables |
3,445 |
969 |
(2,057) |
||
|
|
|
|
|
|
|
|
Net cash (for)/ from operations |
(29,251) |
2,369 |
(9,191) |
||
|
Interest received |
277 |
600 |
127 |
||
|
Interest paid |
(2,195) |
(1,039) |
(381) |
||
|
Tax paid |
(13) |
- |
- |
||
|
|
|||||
|
Net cash (for)/from operating activities |
(31,182) |
|
1,930 |
|
(9,445) |
|
Cash flows for investing activities |
|||||
|
Acquisition of net assets in a subsidiary, net of cash acquired |
- |
- |
(6,708) |
||
|
Acquisition of intangible assets |
(1,130) |
(366) |
(2,951) |
||
|
Purchase of leasehold land |
(26) |
(828) |
(851) |
||
|
Purchase of property, plant & equipment |
(17,611) |
(5,027) |
(2,658) |
||
|
Net cash for investing activities |
(18,767) |
|
(6,221) |
|
(13,168) |
|
Cash flows from financing activities |
|||||
|
Proceeds from issuance of shares |
- |
- |
60,920 |
||
|
Admission to AIM market expenses |
- |
- |
(3,318) |
||
|
Proceeds from disposal of treasury shares |
120 |
120 |
84 |
||
|
Net drawdown of term loans |
33,183 |
3,685 |
3,348 |
||
|
Proceeds of issuance of share to MI |
- |
- |
5,830 |
||
|
Net cash from financing activities |
33,303 |
|
3,805 |
|
66,864 |
|
Effect of foreign exchange rate changes on cash and cash equivalents |
(72) |
805 |
(507) |
||
|
Net (Decrease)/Increase in cash and cash equivalents |
(16,718) |
- |
319 |
43,744 |
|
|
Cash & cash equivalents at beginning of period |
44,063 |
43,744 |
- |
||
|
Cash & cash equivalents at end of period |
27,345 |
- |
44,063 |
- |
43,744 |
¹ During the period the principal subsidiaries adopted US Dollar as their functional currency effective 1 July 2007. Under IAS21, the comparative audited financial information has been restated. No material adjustments resulted from the restatement. Full disclosure of the effects of the adjustments is set out in Note 2 of the Notes to the Interim Financial Statements.
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