Interim Results

Sorbic International Plc

("Sorbic" or the "Group" or the "Company")

Interim Results

Sorbic International plc, (AIM:SORB), the third largest sorbates producer in China, today announces its unaudited Interim Results for the six months period ended 31 March 2011.

Summary

Since period end

John McLean, Non-Executive Chairman, commented: "Sorbic has made strong progress in terms of its output, although profits have been constrained by the rising costs of raw materials, and it is expected that this will further impact the Group going forward. However, the move to Inner Mongolia will improve control of costs and the Board is confident of the ongoing demand for the Group's products.

"Although the Group has been impacted by rising commodity prices which have affected margins, these are now improving and the Board remains focused on doubling our capacity to support an expanding domestic food preservative market. The longer term prospects for the Group remain strong, given the investment that has been made in Sorbic's infrastructure and market positioning."

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Notes to Editors:

Sorbic International's principal activity is the production and sale of the food preservatives Sorbic Acid and Potassium Sorbate from its base in Linyi City, Shandong Province, People's Republic of China. Approximately half of Sorbic International's production is sold to overseas markets, across 46 countries and half into the Chinese domestic market.

Sorbic Acid is a naturally occurring organic compound that is used in all kinds of foods for its anti-decomposition and anti-fungus function and also in grains, medicines, cosmetics, toothpaste, tobacco, animal feed, latex, paper-manufacturing and pesticides. Potassium Sorbate is used to inhibit moulds and yeasts in many foods, such as cheese, wine, yogurt, dried meat, baked goods, cosmetics and pharmaceuticals.

Sorbic International operates through its wholly owned subsidiary Linyi Van Science and Technique Co., Ltd ("LVST").

Chairman's Statement

Operational overview

During the first half of the year, the plant in Linyi produced an output of 3,185 tonnes of sorbates compared to 2,637 tonnes in the same period last year. The steady production levels through the first six months of the financial year have resulted in revenue growth of 27.1% to £6.9 million (H1 2010: £5.4 million).

However against a backdrop of surging oil prices, the costs for crotonaldehyde, a key component in the production of sorbates, increased significantly between October 2010 and March 2011 and this has impacted the Group's profitability. As a result of these increased raw material costs, the gross profit margin for the period decreased to 10.7% (H1 2010: 21.8%). The Board is pleased to note that these raw material costs have stabilised over the last two months.

The Group has been negotiating with customers to increase selling prices in order to increase profitability. However, as more than 30% of the Group's sales are locked-in under long-term contracts, the pace of the price increase will lag behind the escalating raw material prices. Selling prices are starting to increase and the Company expects the firming of prices to continue during the second half of the year when next year's contracts are being negotiated.

The Group is actively managing its administrative cost base and has carried out regular reviews to reduce overheads where possible to conserve cash resources. These measures have produced positive results over the past six months.

Sorbic's balance sheet remains strong with over £7.2 million of cash to support existing operations.

Capital raised

The Company raised £1.6 million through a combination of debt and equity in February 2011 to supplement the capital expansion in Inner Mongolia. RMB16 million (£1.52 million) has been injected into the Group's China subsidiary where construction has resumed in early April 2011 and equipment ordered for delivery in July 2011.

Under IFRS 16 the Company is required to capitalise the Convertible Loan Notes interest incurred until the completion of the facilities. This interest will be amortised on a straight-line basis over ten years and is subject to review by the Board annually. The interest capitalised for the period amounted to £76,871.

New production facility

The Group's new facility in Ulanqab City, Inner Mongoila, is currently under construction and it is anticipated that this will double the existing production capacity once fully operational. Gross profit margins are also expected to increase at the new facility and the Group will benefit from lower operational costs at the Chahar Industrial Park. The new site has the capacity for further expansion of an additional six lines at a later stage in the Company's development.

The anticipated costs of the new production facility continued to be within planned budgets.

Outlook

China's economic outlook remains favorable with real GDP growth projected at 9.3% in 2011 and 8.7% in 2012. While consumption growth slowed in early 2011, overall domestic demand has remained strong. However, as much of the impact of the higher oil and industrial commodity prices is yet to be fully realised and inflation expectations are high, the Group is expected to incur an overall small loss for the current financial year.

The move to Inner Mongolia will place Sorbic in a strong position in the market, particularly related to competitors who are located in higher cost environments.The Board remains optimistic about the longer term prospects for the Group and firmly believes that Sorbic has the right internal infrastructure and skills in place to continue its focus on doubling our capacity to support an expanding food preservative market.

John McLean

Non-Executive Chairman

23 June 2011

Unaudited condensed consolidated statement of comprehensive income

For the six month period ended 31 March 2011

Unaudited consolidated statement of financial position

As at 31 March 2011

Unaudited condensed statement of cash flows

For the six month period ended31 March 2010

Unaudited condensed consolidated statement of changes in equity

For the six month period ended31 March2011

Basis of Presentation and Summary of Significant Accounting Policies

The Company was established to seek to acquire a controlling interest in a company located in Europe, North America or Asia. Following the change of name from Ninety plc to Sorbic International plc and the completion of the acquisition of Honour Field International Limited ("HF") and its subsidiary ("Honour Field Group") on 29 September 2008, the Group's principal activities comprise the production and sale of food preservatives, namely Sorbic Acid and Potassium Sorbate. The Group's main operations are in the People's Republic of China.

Sorbic International, a public limited company, is the Group's ultimate parent company. It is incorporated and domiciled in the United Kingdom. The address of Sorbic International's registered office is 3rd Floor, 49 Whitehall, London SW1A 2BX. Sorbic International's shares are traded on the AIM market of the London Stock Exchange.

The financial information for the six months ended 31 March 2010 and 31 March 2011 set out in this interim financial information is unaudited and does not constitute statutory financial statements. The financial information for the year ended 30 September 2010 set out in this interim financial information does not comprise the Group's statutory financial statements as defined in Section 435 Companies Act 2006 but has been extracted from those financial statements.

The directors approved the interim financial information for the six months ended 31 March 2011 on 23 June 2011.

Copies of this interim financial information will be available on the Company's website: www.sorbicinternational.com

The interim financial information has been prepared in accordance with IAS 34 "Interim financial reporting" as adopted by the European Union. The standards have been applied consistently (except as otherwise stated).

The statutory financial statements for the year ended 30 September 2010, which have been filed at Companies House, were prepared under IFRS and IFRIC interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies preparing their financial statements under IFRS. The auditors reported on those financial statements; their Audit Report was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.

The Group has adopted the following new interpretations, revisions and amendments to IFRS issued by the International Accounting Standards Board, which are relevant to and effective for the Group's financial statement for the financial year beginning 1 October 2010:

- IFRS 3 Business Combinations (Revised 2008)

- IAS 27 Consolidated and Separate Financial Statements (Revised 2008)

- Improvements to IFRS 2009

a. IFRS 3 - Business Combinations (Revised 2008)

The revised standard on business combination (IFRS 3) introduced major changes to the accounting requirement for business combinations. It retains the major features of the purchase method of accounting, now referred to as the acquisition method. The most significant changes in IFRS 3 that will have an impact on the Group's acquisition in future are as follows:

·; acquisition-related costs of the combination are recorded as an expense in the income statement. Previously, these costs would have been accounted for as part of the cost of the acquisition

·; any contingent consideration, is measured at fair value at the acquisition date. If the contingent consideration arrangement gives rise to a financial liability, any subsequent changes are generally recognised in profit or loss. Previously, contingent consideration was recognised only once its payment was probable and changes were recognised as an adjustment to goodwill

·; the measurement of assets acquired and liabilities assumed at their acquisition-date fair values is retained. However, IFRS 3R includes certain exceptions and provides specific measurement rules.

For the period ended 31 March 2011, the adoption of IFRS 3R has no effect on the Group's financial statements, as there was no acquisition during the period.

b. Improvements to IFRS (2009 and 2010)

The improvement to IFRS 2009 & 2010 made several minor amendments to IFRSs. The adoption of these did not have any material effect in these interim consolidated financial statements.

The Group has adopted IFRS 8, Operating Segments for the March 2011 interim reporting. IFRS 8 requires that segments represent the level at which financial information is reported to the Board of directors ("The Board") of the Group, being the chief operating decision maker as defined in IFRS 8. The Board consists of the Chairman, the President, the Chief Executive Officer, the Chief Financial Officer and the independent director. The Board determines the operating segments based on reports reviewed and used by the Board for strategic decision making and resource allocation.

Segment information is presented in respect of the Group's geographical and operating segments.

The Group's operating segments are as follows:

(i) Sorbic acid

(ii) Potassium sorbate

There were no inter-segment sales and transfers during the six month period ended 31 March 2011.

Operating Segments - Six months ended 31 March 2011

Operating Segments - Six months ended 31 March 2010

Operating Segments - Year ended 30 September 2011

The taxation charge for the six months ended 31 March 2011 has been based on the estimated effective rate of 25% from October 2010 to March 2011.

The Group's subsidiary, Linyi Van Science and Technique Company Limited ("LVST") has had the benefit of a tax holiday from 2004 in which it is entitled to be exempted from the Enterprise Income Tax ("EIT") for tax years starting from the first profit making year followed by a 50% tax relief for the next three years. The tax holiday granted expired from 1 January 2010 onwards.

The balance due from Hermes Financial of £301,625 being the remaining amount that Hermes Financial owed in relation to the reverse acquisition exercise was netted-off against the amount due to Hermes Capital with a resultant nil balance.

In respect to the work that Hermes Capital carried out for Sorbic International in relation to the reverse acquisition exercise, a final amount of £137,202 was recognised in addition to £73,917 of expenses reimbursement, and £90,506 of advisory and consultancy service fees to Honour Field International.

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