Interim Results

Purecircle Limited

("PureCircle" or the "Company")

Interim results for the six months ended 31 December 2012

PureCircle (LSE: PURE) the world's largest producer and marketer of high purity stevia today announces its unaudited interim results for the six month period from 1 July 2012 to 31 December 2012 ("1H FY 2013").

The unaudited financial statements comprising profit and loss account and cashflow for the six months to 31 December 2012 and the balance sheet at 31 December 2012 are set out in pages 4 to 19 to this announcement, together with unaudited profit and loss and cashflow comparatives for the six months to 31 December 2011 ("1H FY 2012") and the audited balance sheet at 30 June 2012.

SUMMARY FINANCIALS

Sales: H1 FY 13 sales were $27.4m an increase of 80% against 1H FY12 ($15.2m). $26m of the sales were high purity stevia sweeteners and natural flavors, a 120% improvement against 1H FY12.There was growth in sales across all high purity ingredients primarily driven by new innovations in our Stevia PureCircle proprietary portfolio of all-natural, no-calorie sweeteners and natural flavor systems, under the PureCircle Flavors range. By region, EMEA, Latin America, Asia Pacific and USA all recorded sales growth.

Sales volumes: In 1H FY13 total volumes of high purity stevia sweeteners and natural flavors increased by 135% against 1H FY12. Volume increases were led by sales of new proprietary ingredients introduced over the past twenty-four months.

Gross Profit: H1 FY13 gross profit of $5.2m is $3.5m (206%) ahead of H1 FY 12 ($1.7m). This reflects increased volumes and improved mix of sales. At 19%, gross profit % is 8 percentage points ahead of 1H FY 12 gross profit % of 11%. With our scaled production capacity further improvements in gross profit % are expected as sales volumes increase.

EBITDA: In H1 FY13 the Group reported an EBITDA loss of $0.5m, representing a $8.1m (94%) improvement on 1HFY12. The improvement reflects the $3.5m gross margin improvement and the absence of other expenses in 1H FY 13. In 1H FY12 the group incurred other expenses of $5.7m relating to production costs being charged to profit that would ordinarily be charged to inventory.

Inventories: Inventories increased by $15m from June 2012 to $89m, due to seasonal leaf purchases and production of finished goods ahead of higher 2H FY13 sales.

Cash and net debt: The Group ended 1H FY 13 with gross cash of $45.8m (1H FY12 $27.1m) and net debt of $66.3m (1H FY12 $70.7m). Cash balances were boosted by the $31m share placement completed in August 2012. At 31 December 2012 the Group had $70m of cash and facility headroom (31 December 2011: $60m) and is adequately funded to meet its current plans.

Gross assets: The Group's gross assets at 31 December 2012 were $274.6m an increase of $41m over 30 June 2012, represented by the $31m placement proceeds and $15m increase in inventories.

Balance sheet: the Group's balance sheet reflects fully invested production capacity that can support volumes equivalent to more than $250m sales.

BUSINESS DEVELOPMENTS

Market usage: Global F&B usage of PureCircle's high purity stevia solutions continues to grow strongly in all regions and in more categories. By region the EU has seen the highest number of new launches in its first full year since regulatory clearance in December 2011. By category beverages continues to have highest usage with Carbonated Soft Drinks including global Cola and lemon flavored brands, Iced Teas, Juices and Flavored Waters all growing.

Regulatory: Important regulatory clearances since 30 June 2012 have included Indonesia (August 2012), and Canada (November 2012). Further clearances are expected in CY13.

Customer base: The Group continues to secure new customers and now has almost 200 more customers than at end 1H FY12, with our EU joint ventures and the Americas each contributing strongly to this growth.

Innovation: The breadth and scale of our innovation pipeline is beginning to become apparent in the market within our successful Stevia 3.0 strategy. Sales volumes of proprietary new products launched within the last 24 months increased well in excess of 100%. In March 2013 we announced plans to commercialize high purity Reb D, the natural sweetener having one of the best sweetness profiles which is expected to come to the market in FY14. We have a rich pipeline of future innovations to come

Marketing and Application: Our core marketing and service platforms including Global Stevia Institute, the Stevia by PureCircle Trustmark, PureCircle University and PureCircle Insights Group are being used actively by clients to support their stevia launches and planning. Our service and application support for customers has been boosted by the opening of our UK office and application laboratory.

Supply Chain: After the slow-down of production in FY12 our supply chain has picked up pace and production volumes increased in 1H FY13 with further increases expected in 2H FY13. During 1H FY13 we have also expanded leaf supply and strengthened supply chain management with the appointment of Randy Cook as VP Supply Chain. 

Outlook:

With the continued opening of new markets, growth in usage across all regions and Food and Beverage categories, including major CSD brands, we are confident of the long term future of high purity stevia solutions. There is a clear global drive by the F&B industry to reduce the caloric content of their products and PureCircle with its natural and healthy ingredient solutions is playing an important role helping its clients to achieve their goals.

Our strategy is to have a fully integrated supply chain, to address market needs with new proprietary natural sweeteners and flavors, to invest in applications and formulations and global marketing and customer service capabilities. The success of our expanded product portfolio and customer acquisition drive supports our confidence in that strategy and in PureCircle's likely leading role in the emerging market of healthy and good for you ingredient solutions.

Our business model is sensitive to sales volumes. Whilst sales remain modest relative to our supply chain capacity, our margins too will remain below those of our long term business model.

We have been consistent in our guidance that it would be mid to long term before PureCircle saw rapid sales growth which we expect to result from the combination of major CSD usage, the unwinding of Beverage Global Key Account (BGKA) inventories and further regulatory clearances. 1H FY 13 sales volumes are perhaps the first indication of that growth emerging.

Looking at H2 FY13 we expect to show stronger revenues than 1H FY13, but expect these revenues to continue to be impacted by some BGKA inventory overhang. Accordingly our sales guidance for H2 FY13 is in the range of $35m to $45m.

Commenting on the 1H FY13 trading, the Group CEO Magomet Malsagov said:  Our strategy of having a fully controlled, vertically integrated supply chain from leaf to finished products, of successfully developing and introducing to the market new proprietary natural sweeteners and flavors, of investing in applications and formulations as well as in global marketing and customer service capabilities, is beginning to yield results as can be seen by our performance in the first half of this fiscal year. New long term supply and joint development agreements with major global food and beverage (F&B) companies have been signed adding to our already strong portfolio of Global Key Accounts. Across the world, large F&B brands began to adopt our ingredients, most notably carbonated soft drinks (CSD's) including the important Cola and lemon flavored brands. We generate revenues from a wide range of natural sweeteners and flavors and we service globally hundreds of customers directly and through our business partners.

Our production capacity and customer service infrastructure are designed to deliver even greater volumes and revenues. As we continue to build on recent momentum, our guidance for sustained higher levels of market demand remains mid to long-term based.

NOTES TO EDITORS

PureCircle is the global leader in the production of high purity Stevia sweeteners and natural flavors. PureCircle is leading the industry with the development of a sustainable, vertically integrated supply chain operating in four continents. Across these regions, PureCircle sources dry stevia leaves, undertakes extraction processes and refines the extract into sweeteners which it markets as a mainstream ingredient to Food and Beverage manufacturers worldwide. PureCircle provides a sustainable cash crop for rural farming communities in each region and works closely with these communities to maximize the social, economic, and environmental benefits of its operations. PureCircle's investment in research and development has given it a leadership position in the Stevia industry and its scientists are globally recognized experts in their field. PureCircle has pioneered the industry trust mark "Stevia PureCircle" that educates consumers about the benefits of Stevia and provides a strong base of trust for both consumers and Food & Beverage companies alike. PureCircle also funds the Global Stevia Institute (globalsteviainstitute.com) which provides a global platform for stevia education and outreach, led by internationally recognized health professionals. PureCircle's corporate offices are located in Chicago, USA; Asuncion, Paraguay; Kuala Lumpur, Malaysia; Ganzhou, China; Shanghai, China and Kericho, Kenya. PureCircle is listed on the London Stock Exchange AiM market under the ticker symbol: PURE. For more information on PureCircle visit: www.purecircle.com. 

Condensed consolidated statement of comprehensive income

for the period ended 31 December 2012

Note: NA denotes Not Applicable.

Condensed consolidated statement of financial position

As at 31 December 2012

Condensed consolidated statement of changes in equity

as at 31 December 2012

Condensed Consolidated Statement of Changes in Equity

as at 31 December 2011

Condensed consolidated cash flow statement for the period ended 31 December 2012

Condensed consolidated cash flow statement for the period ended 31 December 2012 (continued)

Notes to interim financial statements

1. General information

The Company was incorporated and registered as a private limited company in Bermuda, under the Companies (Bermuda) Law 1991 (as amended). The Company has its primary listing on the Alternative Investment Market (AiM) operated by the London Stock Exchange, plc.

The Company is engaged principally in the business of investment holding whilst the principal activities of the rest of the Group are the production, marketing and distribution of natural sweeteners and flavors.

The unaudited condensed consolidated interim financial statements have been authorised for issue by the Board of Directors on 13 March 2013.

2. Basis of preparation

The condensed consolidated interim financial statements for the six months ended 31 December 2012 have been prepared in accordance with IAS 34, "Interim financial reporting". The condensed consolidated interim financial statements should be read in conjunction with the Group's annual financial statements for the year ended 30 June 2012, which have been prepared in accordance with IFRSs.

3. Accounting policies

The following standards and amendments to standards are mandatory for the financial year beginning 1 July 2012:

·; Amendment to IAS 12, Deferred tax: recovery of underlying assets (effective 1 January 2012)

·; Amendment to IAS 1, Presentation of items of other comprehensive income (effective 1 July 2012)

The adoption of the revisions and amendments to standards above did not have a material impact on the condensed consolidated interim financial statements for the six months ended 31 December 2011.

4. Other income

In H1 FY 12 other income represents a partial write back of a prior year provision and receipt of government development grants. There were no other income in H1 FY 13.

5. Other expenses

There were no other expenses in H1 FY 13. In H1 FY 12 other expenses of USD5.7mil represent production cost and attributable overheads that would ordinarily have been charged to inventory, but due to the temporary slowing down of Reb A production were charged to profit and loss account.

6. Principal risks and uncertainties

The Group set out in its 2012 Annual Report and Financial Statements the principal risks and uncertainties that could impact its performance; these remain unchanged since the Annual Report was published. The Group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity.

7. Seasonality

At 31 December 2012 the Group had gross cash of USD45.8m (31 December 2011: USD27.1m) and net debt of USD66.3m (31 December 2011: USD 70.7m). Net debt is defined as short-term and long-term borrowings less cash and bank balances. The Group's sales are seasonally weighted towards the H2 of each year and net debt is expected to reduce over time as sales increase and then convert to cash. At 31 December 2012, the Group had more than USD70m cash and banking facilities headroom. The Directors believe the banking facilities to be sufficient for projected funding requirements.

8. Segmental information

Management determines the Group's operating segments based on the criteria used by the Chief Operating Decision Maker who has been identified as the Chief Executive Officer (CEO) for making strategic decisions. Management considers the Group to be a single operating segment whose activities are the production, marketing and distribution of natural sweeteners and flavors.

From a geographical perspective, the Group is a multinational with operations located on all continents, but managed as one unified global organization. The Group's markets and its supply chain are based in the Americas, EMEA (Europe, Middle East and Africa) and Asia Pacific.

8. Segmental information (Cont'd)

Geographical information

The primary performance indicators used by the Group are revenues, gross margin, adjusted EBITDA, net cash from operations, gross cash, gross borrowings and net debt.

Gross margin is calculated as the gross profit reported on the face of the profit and loss account, adjusted for the effect of the economic hedges against the Group's production operations. EBITDA is calculated as net profit for the year reported on the face of the profit and loss account, adjusted for interest, taxation, depreciation and amortization and foreign exchange hedging.

Adjusted EBITDA is calculated as EBITDA adjusted for the non cash items of share based payments and gain/ (loss) on biological assets.

The entity is domiciled in Bermuda. The entity's non-current assets are located in countries other than Bermuda. There is no revenue from Bermuda.

9. Property, plant and equipment and intangible assets

During the period, the Group invested USD2.3 million in property, plant and equipment.

The addition to intangible assets is in respect of capitalisation of project developments during the period, net of amortisation for projects now launched successfully.

10. Inventories

11. Biological assets

12. Borrowings

During the period, the Group repaid bank loan amounting to USD10.01 million, in line with previously disclosed repayment terms. The Group then drew down a bank loan amounting to USD16.1million at an interest rate of 7.89% per annum. The proceeds were used to meet working capital. The stronger Ringgit Malaysia against United States Dollar during the period resulted in higher carrying amount of borrowings amounting to USD3.8 million.

13. Income taxes

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The Group has no estimated assessable profit.

The Company was granted a tax assurance certificate dated 18 August 2007 under the Exempted Undertakings Tax Protection Act 1966 pursuant to which it is exempted from any Bermuda taxes (other than local property taxes) until 28 March 2016. Subsequent to the six months period ended 31 December 2011, a tax assurance certificate dated 1st February 2012 was received that the Company tax exemption was extended to 31st March 2035 following the enactment of the Exempted Undertakings Tax Protection Amendment Act 2011.

A subsidiary of the Group, PureCircle Sdn Bhd (PCSB), has been granted the Bio-Nexus Status by the Malaysian Biotechnology Corporation Sdn Bhd in which PCSB is entitled to a 100% income tax exemption for a period of 10 years on its first statutory income commencing in 2009. Upon the expiry of the 10-year incentive period, PCSB will be entitled to a concessionary tax rate of 20% on income derived from qualifying activities for a further period of 10 years.

Another subsidiary of the Group, PureCircle (Jiangxi) Co. Ltd. (PCJX), has also been granted a 100% exemption on corporate tax from 1 January to 31 December 2008 and 50% exemption on corporate tax from 1 January 2009 to 31 December 2011. Beginning 1 January 2012, PCJX will be taxed at the normal rate of 25%.

14. Share capital and share premium

On 9 August 2012, the Company completed a private placement of 10 million new ordinary shares at GBP2.00 per share to Wang Tak Company Limited. The Placement raised USD31 million in new equity. At completion, Wang Tak Company Limited owns 19,276,150 shares representing 11.7% of the issued share capital.

In accordance with the Company's Long Term Incentive Plan (LTIP) implemented for the employees, options exercised during the period to 31 December 2012 resulted in 54,555 shares being issued (31 December 2010: 398,948). In accordance with the terms and conditions of the LTIP, options were exercised at a consideration of USD71,883.

15. Earnings per share

The basic earnings per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share is not applicable as the potential ordinary shares under the Company's Long Term Incentive Plan would have an anti dilutive effect.

16. Dividends

No dividends were declared or paid by the Company during the interim period.

17. Contingent liabilities and capital commitments

At the end of the period, there are no material contingent liabilities which, upon becoming enforceable, may have a material impact on the financial position of the Group.

Capital commitments amounting to approximately USD 1,013,000 is approved and contracted for, these are incurred for the purchase of land and upgrading of plant and machinery in Malaysia and China.

18. Events after the end of the reporting period

There were no events that had a material impact to the condensed consolidated interim financial statements after the end of the reporting period.

19. Significant related party transactions

(a) Identities of related parties:

The Group and / or the Company have related party relationships with:

(i) its subsidiaries and joint ventures;

(ii) the directors who are the key management personnel; and

(iii) companies in which certain directors are common directors and / or substantial shareholders.

The following transactions were carried out by the Group during the period:

19. Significant related party transactions (Cont'd)

(b) Related parties

(i) Related Parties

(ii) Key Management Personnel

Key management includes executive and non-executive directors. The compensation paid or payable to key management for employee services is shown as below:

19. Significant related party transactions (Cont'd)

(b) Related parties (Cont'd)

 (ii) Key Management Personnel (Cont'd)

The interests of the Directors as at 31 December 2012 were as follows:-

iii) Balances with related parties

20. Changes in Composition of the Group

There were no changes in the composition of the Group during the period under review.

Independent review report to PureCircle Limited

PureCircle Limited

(Incorporated in Bermuda)

Registration No.: 40431

Introduction

We have been engaged by the Company to review the condensed consolidated interim financial statements for the six months ended 31 December 2012 set out on pages 4 to 19, which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and related notes..

Directors' responsibilities

The condensed consolidated interim financial statements are the responsibility of, and have been approved by, the directors of PureCircle Limited. The directors are responsible for preparing the condensed consolidated interim financial statements in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the Company's annual financial statements.

As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards. The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34").

The maintenance and integrity of the PureCircle Limited website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the condensed consolidated interim financial statements since they were initially presented on the website.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial statements based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of preparing the condensed consolidated interim financial statements under IAS 34 and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing 

PureCircle Limited

(Incorporated in Bermuda)

Registration No.: 40431

Scope of review

 We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

 Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements for the six months ended on 31 December 2012 are not prepared, in all material respects, in accordance with IAS 34.

PricewaterhouseCoopers

(No. AF: 1146)

Chartered Accountants

Kuala Lumpur

Malaysia

12 March 2013

Corporate information

BOARD OF DIRECTORS

Non-executive Chairman

Paul Selway-Swift

Executive Directors

Magomet Malsagov, Chief Executive

William Mitchell, Chief Financial Officer

Non-executive Directors

Peter Lai Hock Meng

Olivier Maes

John Slosar

Sunny Verghese

Audit Committee

Peter Lai Hock Meng (Chairman)

Olivier Maes

John Slosar

Remuneration Committee

Olivier Maes (Chairman)

Paul Selway-Swift

John Slosar

CORPORATE BROKERS

Westhouse Securities Limited

12th Floor, 1 Angel Court

London EC2R 7HJ

United Kingdom

Mirabaud Securities Limited

33 Grosvenor Place

London SW1X 7HY

United Kingdom

Liberum Capital Limited

Ropemaker Place, Level 1225 Ropemaker Street

London EC2Y 9LY

AUDITORS

PricewaterhouseCoopers

Chartered Accountants

Level 10, 1 Sentral

Jalan Travers, Kuala Lumpur Sentral

PO Box 10192

50706 Kuala Lumpur

Malaysia

Nomination Committee

Paul Selway-Swift (Chairman)

Magomet Malsagov

Olivier Maes

NOMINATED ADVISER

RFC Corporate Finance Limited

Level 14, 19-31 Pitt Street

Sydney NSW 2000

Australia

Level 15, QV1 Building

250 St George's Terrace

Perth WA 6000

Australia