TIDMPURE

RNS Number : 0956R

PureCircle Limited

19 September 2017

   Date:                           19 September 2017 
   On behalf of:               PureCircle Limited ("PureCircle" or "the Company") 
   Embargoed until:        0700hrs 

PURECIRCLE LIMITED

FINAL RESULTS 2017

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 2017 ("FY17").

These results should be seen in the context of PureCircle being denied access to a market that represented a third of its revenues in 2016 as a result of PureCircle being on the US Customs & Border Protection (CBP) Withhold Release Order (WRO) list. After an extensive investigation into this issue, CBP confirmed the removal of PureCircle from the WRO list on 30 January 2017. Whilst sales to the US have now resumed it will take some time to rebuild the previous momentum in this region.

FINANCIAL HIGHLIGHTS

 
                                      FY17     FY16 
  Financial year ended 30 June        USD'     USD' 
                                         m        m 
  Sales                              118.9    138.6 
  Gross margin*                       45.8     57.8 
  Operating profit*                   17.6     33.2 
  Adjusted EBITDA*                    27.1     34.2 
  Net profit after tax                 7.2     14.6 
  Earnings per share (US$ cents)      4.16     8.49 
  Fully diluted earnings per 
   share (US$ cents)                  4.13     8.37 
  Operating cash flow before 
   working capital changes            21.8     31.9 
  Net debt                          (84.7)   (52.9) 
  Net assets                         207.6    203.8 
 
 

* Gross margin, 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 27 for more details.

OPERATIONAL HIGHLIGHTS

-- +8% growth outside North America

-- Continued investment to drive growth by completing $42m expansion of stevia refinery in Malaysia and opened new labs and offices in Shanghai and Delhi; laboratory in Winnersh, England expanded

-- Continued investment and innovation to create new high purity, best-tasting products - Starleaf Stevia and vanilla and cocoa flavour enhancers, and antioxidants

-- 124 products launched worldwide in FY17 with PureCircle stevia

-- Potential for stevia market materially enhanced with sugar taxes being imposed in major markets

POST BALANCE SHEET EVENT

-- New $200m financing facility with HSBC secured. This enables a strong, stable financial platform for PureCircle to fund future growth

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

"PureCircle has a unique market position - no one knows more about the stevia leaf than PureCircle as demonstrated by our 72 patents and 200 patents pending. It is true that anyone can pick a stevia leaf but our competitive advantage is in what we do with it.

We have moved way beyond the first generation, commoditised product of Reb A and are onto our third and fourth generations of stevia - we are unwavering in our focus on bringing the best-tasting stevia. These new generations of natural-origin stevia products are revolutionising taste. Everything we do is about helping our customers achieve their goals of reducing sugar, calories and the cost of ingredients without compromising taste - since 2011, we have sold enough stevia sweeteners to enable a reduction of 3.8 trillion calories from global diets.

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 it requires. During the year, our continued focus on innovation unveiled both Starleaf stevia and our new Sigma tools that greatly facilitate our customers' work with stevia. We continue to invest in our systems, our people and our organisation in order that we can achieve our aspirations.

Whilst it has been a difficult year, it was not a systemic issue - it was caused by factors beyond the Company's control. We are moving forwards, stronger. Stevia is a force for good in the world - we are excited about the year ahead and look forward to the future with confidence."

Disclaimer

This 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/Analyst Enquiries:

A presentation to analysts will be held at 9:30am (UK time) today in Central London. Please contact Redleaf Communications at purecircle@redleafpr.com for further details and instructions on how to connect via a conference call facility. US and international dial-in numbers are available.

A recorded audio webcast of the presentation will be made available at www.purecircle.com/investors from 2pm today.

Magomet Malsagov, CEO

Email: malsagov@purecircle.com

Rakesh Sinha, CFO

Email: rakesh.sinha@purecircle.com

Media Enquiries

Carolyn Clark, Director of Global Marketing

Email: media@purecircle.com Phone: 1 (630) 517 0812

Emma Kane (Redleaf), Media Relations

Email: media@purecircle.com Phone: +44 (0)20 7382 4747

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 has 72 stevia-related approved patents and 200 pending.

-- To meet growing demand for stevia sweeteners, PureCircle is rapidly ramping up its supply capability. It recently completed the expansion of its Malaysian stevia extract facility, increasing its capacity to 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 http://globalsteviainstitute.com

Chairman's Statement

The downturn in sales and overall performance reported in these results should be read in the context of a severe disruption to our US business, as that market - which represented one third of sales in FY16 - was closed to us from June 2016 until January 2017, as a result of a Withhold Release Order ("WRO") issued by US Customs and Border Protection ("CBP"). We were able to respond satisfactorily to an intensive forensic examination by them which in itself took a great deal of management time until the WRO was lifted in January. The impact of this WRO on our business was significant and continues to be felt today. Outside the US, we recorded eight per cent growth; I believe that to come through as we did, indicates we have a robust business which can now move back to its pre-CBP growth trajectory.

During the year, we made significant investments in our future including the completion, on time and on budget, of our $42 million refinery expansion in Malaysia. This will ensure we have the capacity to deliver our latest products to our customers globally.

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.

The Board

Peter Lai, after serving 9 years as an Independent Non-Executive Director retired as a director in March. He will, however, continue to be associated with PureCircle in China where his knowledge will be valuable in his role as Chairman of PureCircle Jiangxi. We are fortunate to have somebody of John Gibney's experience to succeed Peter as Chairman of our Audit Committee. Following an absence of 3-years owing to other business commitments we are delighted to welcome John Slosar back to our board.

Rakesh Sinha has now completed his first year as Chief Financial Officer and is making a valuable contribution to the company.

I would like to thank everyone at PureCircle for their hard work and dedication to the Company in what has been an extremely challenging year due the WRO issued in the US.

As we move ahead following the setback from the issue of the WRO in the US the future looks bright and we look forward to reporting strong progress in the future.

Paul Selway-Swift

Chairman

Chief Executive Officer Review

PureCircle has a unique market position - no one knows more about the stevia leaf than PureCircle as demonstrated by our 72 patents and 200 patents pending. It is true that anyone can pick a stevia leaf but our competitive advantage is in what we do with it.

We have moved way beyond the first generation, commoditised product of Reb A and are onto our third and fourth generations of stevia - we are unwavering in our focus on bringing the best-tasting stevia. These new generations of natural-origin stevia products are revolutionising taste.

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. We are introducing new tools to help customers formulate with stevia more efficiently and quickly. That will reduce their development costs and accelerate speed to market for their products.

Powerful Market Trends

Powerful market trends continued to gather pace such as the global fight to combat obesity and diabetes through sugar taxes and increased regulation. Continued progress in regulatory approvals for stevia are also driving wider availability - today more than 5 billion customers globally have access to products using stevia.

There are significant opportunities for growth to support the largest food and beverage brands around the world in responding to these drivers and PureCircle is well placed to seize them.

Since 2011, we have sold enough stevia sweeteners to enable a reduction of 3.8 trillion calories from global diets. We are proud to be part of the effort to address the global obesity crisis. More than 600 million people are now estimated to be obese and 415 million estimated to have diabetes; this number is expected to more than double by 2040. 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.

As the only vertically integrated stevia business, every element of our business is of paramount importance, every element of our business requires continual investment and nurturing. Our focus is to leverage our first mover advantage, IP and patent protection to deliver the best-tasting stevia in the market.

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.

We invest in our supply chain - from leaf to product - to enable us to bring ever-improving solutions to our clients, across more food categories.

This year we developed our most advanced generation of stevia yet - Starleaf Stevia. This is a product of the Company's long-term investment of $100 million in its PureCircle Stevia Agronomy Program, announced in 2016. Starleaf stevia contains over 20 times more sugar-like glycoside content than standard stevia leaf varieties and will support developers in achieving deeper levels of calorific reduction in their final products without sacrificing taste. We have now moved to commercially scaling the leaf and are planting thousands of hectares of the third and fourth generation plants.

Farmers & Communities

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.

Production Facilities and Labs

We completed the $42m expansion of our Malaysian plant, effectively doubling capacity. These facilities are now fully operational and focused on delivering our higher margin, stevia solutions. Our state-of-the-art facilities are delivering operating efficiencies and incorporates a dedicated line, specifically designed for the high-purity Zeta family of ingredients - all this will enable us to support our long-term growth ambitions and sustain our market share.

We continued to drive the reach of our business and hence greater connectivity with local markets. We opened two new offices with innovation labs in Shanghai and New Delhi. Laboratory facilities are due to be expanded in the UK, whilst in the coming year our Chicago offices will be moving to larger premises downtown to accommodate our flagship innovation centre and laboratory.

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 further demand to help moderate calories naturally. During the year, our continued focus on innovation unveiled both Starleaf stevia and our new Sigma tools that greatly facilitate our customers' work with stevia.

We also discovered new properties in the stevia leaf - vanilla and cocoa flavour enhancers as well as antioxidants. These new solutions will unlock industries outside of the sweetener market, namely cocoa, vanilla and antioxidant markets. The vanilla and cocoa flavour enhancers will significantly benefit Food & Beverage companies who will be able to use less of the high-cost vanilla and cocoa commodities in their products by using stevia to enhance those flavours. Although it has been known that stevia plants contain antioxidants, our ability to extract them from the leaf is a major commercial advance and will further support beverage and food companies in providing their customers with health benefits and great-tasting products containing compounds commonly found in 'superfoods' such as fruits, vegetables, nuts and grains.

These products are now in customers' hands for future commercial applications. 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.

Sustainability

Stevia is a force for good in the world. Our involvement throughout the supply chain enables us to be a key leader in corporate social responsibility. Because the leaf is 250-400 times sweeter, depending on application, than sugar; a little goes a long way. That means that one fifth of the land provides the same amount of sweetness achieved from other sweeteners made from sugar cane or corn. 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.

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

Opportunities

Mintel data shows that by the end of 2016, more than 11,000 food and beverage products containing stevia had been launched in the world since 2011. These launches span all regions of the world, across both developed and developing markets. The existing products are estimated to have the potential to support a stevia industry with a market size of more than $1 billion when those products are fully rolled out and mature - so, we have only touched the surface, despite our market leading position.

India is an example of the substantial opportunities that exist for PureCircle where stevia was approved for use as a Food & Beverage ingredient in November 2015. This is just one of the markets where there is a significant opportunity to exploit the desire to combat the obesity and diabetes epidemics and the desire for a healthy lifestyle.

In early 2016, Brazil also followed suit and approved the use of stevia as an ingredient permitted to be mixed with sugar, and China and Indonesia approved the use of stevia-based flavors, opening up significant additional market potential.

All these elements open up market potential for PureCircle's innovation pipeline. And the reason why PureCircle will provide the winning solution globally, is because beverage and food companies know that they can partner with PureCircle and achieve uncompromising taste profiles tailored to their individual markets.

We continue to invest in our people, systems, and vertically-integrated supply chain in order that we can achieve our aspirations.

Outlook

Whilst it has been a challenging year, it was not a systemic issue - it was caused by factors beyond the Company's control. Every year, global food and beverage brands launch increasing numbers of products incorporating plant-based stevia. 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

Group Financial Review

The Group's FY17 financial year covers the year from 1 July 2016 to 30 June 2017. FY16 comparatives are for the year from 1 July 2015 to 30 June 2016.

Set out below is an extract from note 27 of the audited FY17 financial statements. The complete financial statements and the accompanying notes are in the Appendix.

 
                                             FY17               FY16 
                                          USD'000            USD'000 
 
 
       Revenue                            118,911            138,641 
       Cost of sales                     (73,099)           (80,797) 
                                       ----------  ----------------- 
       Gross profit                        45,812             57,844 
                                       ----------  ----------------- 
 
       Gross margin %                         39%                42% 
 
         Other income                         480                328 
       Administrative expenses           (28,670)           (24,947) 
                                       ----------  ----------------- 
       Operating profit                    17,622             33,225 
 
       Main Market Listing costs                -            (1,808) 
       Other expenses                     (5,874)            (8,396) 
       Foreign exchange gain                  782              1,358 
       Finance costs                      (4,956)            (5,315) 
       Share of profit/(loss) of 
        joint venture                          83            (1,196) 
       Taxation                             (433)            (3,295) 
                                       ----------  ----------------- 
       Profit for the financial 
        year                                7,224             14,600 
                                       ----------  ----------------- 
       Earnings Per Share (US$ cents         4.16               8.49 
        per share) 
        Fully diluted Earnings Per           4.13               8.37 
         Share (US$ cents per share) 
       Operating cash flow before 
        working capital changes            21,812             31,870 
       Working capital changes            (4,707)           (12,860) 
                                       ----------  ----------------- 
       Operating cash flow after 
        working capital changes            17,105             19,010 
                                       ----------  ----------------- 
 
       Net debt and funding headroom 
       Gross debt                         117,735            113,929 
       Gross cash                        (32,996)           (61,002) 
                                       ----------  ----------------- 
       Net debt                            84,739             52,927 
                                       ----------  ----------------- 
 
       Funding headroom                    76,743             76,271 
       Adjusted EBITDA                     27,141             34,212 
 

Sales: FY17 sales decreased $19.7m (-14%) to $118.9m. Outside of the US, growth has primarily been driven by Europe, reflecting the continued positive mix benefit of the growth of Value Added 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: Gross margin decreased $12.0m or 20.8% to $45.8m (FY16 $57.8m). This decline is primarily driven by lower margins on Basic Ingredients.

Operating profit FY17 Operating profit decreased by US$15.6m to US$17.6m primarily due to lower gross profit and increase in general & administration cost.

Other expenses: FY17 other expenses principally comprise non-cash costs of the Group's LTIP scheme and STIP.

Finance costs: In FY17 finance costs of $5.0m (FY16 $5.3m) was consistent with previous period.

Net profit after tax: The Group recorded a $7.2m net profit in FY17, a $7.4m (-51%) reduction from FY16.

Financing and funding headroom: The Group ended FY17 with net debt of US$84.7m (FY16 US$52.9m) and cash and facility headroom of US$76.7m (FY15 US$76.3m). Net debt increased mainly due to higher capital expenditure. In September 2017, the Group secured a new $200m financing facility with HSBC to replace and consolidate existing loans.

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.

   --          Managing health and safety 

PureCircle is in the food ingredient industry and operates a food grade supply chain which includes the world's largest high purity steviol glycosides extraction and refinery plant. PureCircle's manufacturing facilities in China and Malaysia operate using an integrated quality system and maintains high standards expected in the food safety management system namely FSSC 22000, FAMI-QS, SMETA, HACCP and ISO9001. It is also Halal and Kosher certified/ compliant. Health and safety considerations are of utmost importance to the Company.

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 Safety Committee who oversee operational matters and execute the Group's overall health and

strategy in each geographical location. FY17 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.

   --          Cyber security 

IT security threats are becoming evermore advanced and frequent with breaches expanding their reach with more sophisticated methods. PureCircle being in a new, progressive industry is highly vigilant to these threats.

The Group has significantly stepped up its initiatives against cyber security threats by deploying a series of preventive, detective and corrective controls which act as (1) deterrent against unauthorised access; (2) monitor and alert the Organisation of any malicious/unauthorised activity and (3) provide support for post-incident activities, close any potential control gap and prevent future occurrence. As cyber attacks are constantly evolving, the Group's strategy is in the continued investment in next generation preventive, detective and corrective controls with advanced security and responsive features to secure our IT ecosystem. Our investment includes partnering with world class solution providers in this area ensuring each layer of 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 source 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. In addition, in September 2017, the Company arranged a new financing facility to finance its working capital requirements.

   --          Corporate social responsibility (CSR) 

Allegations of Human Rights violation and Environment abuse might lead to legal actions against PureCircle; damage PureCircle's reputation; penalties including restrictions on operations.

PureCircle treats Human Rights and Environment with respect and promotes Corporate Social Responsibility (CSR) and corporate citizenship in all geographic regions whilst actively working with with local communities. Post the CBP clearance, PureCircle has not been complacent and has stepped up its whole CSR proactiveness and vigilance. The company has increased its controlled plantations thereby having greater transparency on the provenance of it's leaf sourcing. The heightened activity runs through the entire supply chain.

   --          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. Additionally, the Group has an operationally leveraged business model in which profitability 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 codevelop solutions. External evidence, such as Mintel Data, shows continued strong growth in F&Bproduct 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 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).

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, as a consequence the talent pool of management with the skills and experience of working in the stevia market is smaller than that in other more

established industries. The Group is reliant upon the performance of highly skilled personnel including its senior management team. There is a risk is that as the Organisation grows, the management talent pool does not grow in tandem with Organisation's requirements.

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).

   --          Concentrated production capacity 

PureCircle is a fast growing company with production chain covering both extraction and refinery. Ensuring capacity keeps up with increasing customer demand. Given the relatively early stages of the industry, it is inevitable that for a certain period of time, the Group's production capacity will

be concentrated into specific facilities. A catastrophic event at either facility would impact the business.

The Group completed its $42m refinery expansion on FY17 facilitating significant end product capacity increase. The Group has explored alternative manufacturing options including 3rd Party toll manufacturing. In FY17, toll manufacturing was successfully trialled.

   --          Leaf procurement and sourcing 

Dried leaf from the stevia plant is Group's primary raw material and constitutes a significant proportion of the Company's variable costs of production. It follows that the Company's financial performance can be impacted by material changes in the input costs of the stevia leaf. A significant majority of PureCircle's total leaf supply is sourced from China.

More of PureCircle's leaf is grown with larger commercial agricultural partners who are able to scale supply more quickly than traditional smallholders. This enables less variability in the sourcing, quality and hence price. Diversification of leaf supply continues in locations outside of China, namely Latin America and Africa. In both these locations, leaf yields are increasing. We are actively doing trials in the other locations too. Within China, the leaf is grown in 7 distinct regions across the country thereby mitigating the risk of a natural disaster to 1 or 2 regions.

   --          Intellectual property (IP) and innovation 

Innovation is an essential part of PureCircle's success. Protecting the results of R&D and Innovation activity is critical since fast growth of industry, inevitably, attracts new players seeking to fast-track to a market-leading position using the latest innovations in this category. PureCircle remains in a leading position for global stevia-related patent publications. Focusing on 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 responsibility statement below has been prepared in connection with the company's full Annual Report for the year ended 30 June 2017. Certain parts thereof are not included within this announcement. We confirm to the best of our knowledge:

   --       the Annual Report for the year ended 30 June 2017, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the group's performance, business model and strategy; 

-- the financial statements, prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group respectively; and

-- the Directors' Report and the Strategic Report include a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that they face.

This responsibility statement was approved by the Board of Directors on 18 September 2017 and is signed on its behalf by:

 
 Magomet Malsagov,     Rakesh Sinha, CFO 
        CEO 
 
 
 APPIX 
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS 
  AT 30 JUNE 2017 
 
                                                            Group 
                              Note       2017                2016 
                                      USD'000             USD'000 
 ASSETS 
 
 NON-CURRENT ASSETS 
 
 Intangible assets             7       54,710              48,547 
 Property, plant and 
  equipment                    8       90,627              65,662 
 Prepaid land lease 
  payments                     9        2,439               2,537 
 Deferred tax assets           10       7,200               7,388 
 Trade receivables             12         279                 523 
 Other receivables, 
  deposits 
  and prepayments              13         935                 885 
                                    ---------  ------------------ 
                                      156,190             125,542 
 CURRENT ASSETS 
 
 Inventories                   11     106,007              84,604 
 Trade receivables             12      58,019              62,743 
 Other receivables, 
  deposits 
  and prepayments              13       8,720              11,654 
 Tax recoverable                          109                 259 
 Restricted cash               15         252                 255 
 Cash and cash equivalents     15      32,744              60,747 
                                    ---------  ------------------ 
                                      205,851             220,262 
 TOTAL ASSETS                         362,041             345,804 
                                    =========  ================== 
 
 EQUITY AND LIABILITIES 
 
 EQUITY 
 
 Share capital                 16      17,371              17,211 
 Share premium                 17     222,284             214,723 
 Foreign exchange 
  translation reserve          18    (22,531)            (17,501) 
 Share-based payment 
  reserve                      19       3,719               9,776 
 Accumulated losses                  (13,195)            (20,419) 
 TOTAL EQUITY                         207,648             203,790 
                                    ---------  ------------------ 
 
 
 
                                                                      Group 
                             Note            2017                      2016 
                                          USD'000                   USD'000 
 
 NON-CURRENT LIABILITIES 
 
 Long-term borrowings         20           39,000                    84,885 
 Other payables and 
  accruals                    22              567                     1,245 
                                   --------------  ------------------------ 
                                           39,567                    86,130 
 
 CURRENT LIABILITIES 
 
 Short-term borrowings        20           78,735                    29,044 
 Trade payables               21           11,055                     5,543 
 Other payables and 
  accruals                    22           24,637                    19,977 
 Income tax liabilities                       399                     1,320 
                                   --------------  ------------------------ 
                                          114,826                    55,884 
                                   --------------  ------------------------ 
 TOTAL LIABILITIES                        154,393                   142,014 
 
 TOTAL EQUITY AND LIABILITIES             362,041                   345,804 
                                   ==============  ======================== 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
  FOR THE FINANCIAL YEARED 30 JUNE 2017 
 
                                                                           Group 
                                  Note                2017                  2016 
                                                   USD'000               USD'000 
 
 Revenue                                           118,911               138,641 
 Cost of sales                                    (73,099)              (80,797) 
                                        ------------------  -------------------- 
 Gross profit                                       45,812                57,844 
 Administrative expenses                          (31,253)              (32,695) 
 Other income                                        1,199                 1,594 
 Other expenses                                    (3,291)               (2,456) 
 Finance income                                         63                    92 
 Finance costs                                     (4,956)               (5,315) 
 Share of gain/(loss) in joint 
  venture                                               83               (1,169) 
                                        ------------------  -------------------- 
 Profit before taxation            24                7,657                17,895 
 Taxation                          23                (433)               (3,295) 
                                        ------------------  -------------------- 
 Profit for the financial 
  year                                               7,224                14,600 
 
 Other comprehensive income 
  (net of tax): 
 
 Items that may be reclassified 
  subsequently to profit or 
   loss: 
 
 Exchange differences arising 
  on 
  translation of foreign operations                (5,030)               (6,510) 
 Share of other comprehensive 
  income of joint venture                                -                   (1) 
                                        ------------------  -------------------- 
 Total comprehensive income 
  for the financial year (net of 
   tax)                                              2,194                 8,089 
                                        ==================  ==================== 
 Profit for the financial 
  year 
 Attributable to: 
  Owners of the company                              7,224                14,600 
  Non-controlling interest                               -                     - 
                                                     7,224                14,600 
                                        ==================  ==================== 
 
 Total comprehensive income 
  Attributable to: 
  Owners of the company                              2,194                 8,089 
  Non-controlling interest                               -                     - 
                                                     2,194                 8,089 
                                        ==================  ==================== 
 
 Earnings per share (US cents) 
 - Basic                           25                 4.16                  8.49 
 - Diluted                         25                 4.13                  8.37 
 
 
 
 
 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 FOR THE FINANCIAL YEARED 30 JUNE 2017 
 
                                                   Attributable to owners of the Company 
                                                            Foreign 
                                                           exchange       Share-based                                                  Non- 
                           Share            Share       translation           payment       Accumulated                         controlling            Total 
                         capital          premium           reserve           reserve            losses         Sub-total         interests           equity 
                         USD'000          USD'000           USD'000           USD'000           USD'000           USD'000           USD'000          USD'000 
 The Group 
 
 Balance at 
  01.07.2016              17,211          214,723          (17,501)             9,776          (20,419)           203,790                 -          203,790 
 
 Profit for the 
  financial 
  year                         -                -                 -                 -             7,224             7,224                 -            7,224 
 
 Other                         -                -                 -                 -                 -                 -                 -                - 
 comprehensive 
 income 
 Exchange 
 difference 
 arising on 
  translation 
   of foreign 
   operations                  -                -           (5,030)                 -                 -           (5,030)                 -          (5,030) 
                 ---------------  ---------------  ----------------  ----------------  ----------------  ----------------  ----------------  --------------- 
 
 Total 
 comprehensive 
 income 
  for the 
   financial 
   year                        -                -           (5,030)                 -             7,224             2,194                 -            2,194 
 
 Transactions 
 with 
 owners: 
  Share awards 
  scheme 
  compensation 
    expense for 
     the 
     financial 
     year                      -                -                 -             1,664                 -             1,664                 -            1,664 
  Exercise of 
   share 
   awards                    160            7,561                 -           (7,721)                 -                 -                 -                - 
                 ---------------  ---------------  ----------------  ----------------  ----------------  ----------------  ----------------  --------------- 
                             160            7,561                 -           (6,057)                 -             1,664                 -            1,664 
 Balance at 
  30.06.2017              17,371          222,284          (22,531)             3,719          (13,195)           207,648                 -          207,648 
                 ===============  ===============  ================  ================  ================  ================  ================  =============== 
 
 
 
 
                                                   Attributable to owners of the Company 
                                                            Foreign 
                                                           exchange       Share-based                                                   Non- 
                           Share            Share       translation           payment        Accumulated                         controlling            Total 
                         capital          premium           reserve           reserve             losses         Sub-total         interests           equity 
                         USD'000          USD'000           USD'000           USD'000            USD'000           USD'000           USD'000          USD'000 
 
 The Group 
 
 Balance at 
  01.07.2015              17,006          208,310          (10,990)            11,185           (35,019)           190,492                 -          190,492 
 
 Profit for the 
  financial 
  year                         -                -                 -                 -             14,600            14,600                 -           14,600 
 
 Other 
 comprehensive 
 income 
 Exchange 
 difference 
 arising on 
  translation 
   of foreign 
   operations                  -                -           (6,511)                 -                  -           (6,511)                 -          (6,511) 
                 ---------------  ---------------  ----------------  ----------------  -----------------  ----------------  ----------------  --------------- 
 
 Total 
 comprehensive 
 income 
  for the 
   financial 
   year                        -                -           (6,511)                 -             14,600             8,089                 -            8,089 
 
 Transactions 
 with 
 owners: 
  Share awards 
  scheme 
  compensation 
                 ---------------  ---------------  ----------------  ----------------  -----------------  ----------------  ----------------  --------------- 
    expense for 
     the 
     financial 
     year                      -                -                 -             5,209                  -             5,209                 -            5,209 
  Exercise of 
   share 
   awards                    205            6,413                 -           (6,618)                  -                 -                 -                - 
                 ---------------  ---------------  ----------------  ----------------  -----------------  ----------------  ----------------  --------------- 
                             205            6,413                 -           (1,409)                  -             5,209                 -            5,209 
 Balance at 
  30.06.2016              17,211          214,723          (17,501)             9,776           (20,419)           203,790                 -          203,790 
                 ===============  ===============  ================  ================  =================  ================  ================  =============== 
 
 
 
 CONSOLIDATED STATEMENT OF CASH FLOWS 
 FOR THE FINANCIAL YEARED 30 JUNE 2017 
                                                                                  Group 
                                      Note                    2017                 2016 
                                                           USD'000              USD'000 
 CASH FLOWS FROM 
  OPERATING ACTIVITIES 
 
 Profit before taxation                                      7,657               17,895 
 
 Adjustments for: 
  Amortisation of prepaid 
   land 
    lease payments                                             102                  135 
  Amortisation of deferred income                             (77)                 (96) 
  Amortisation of intangible 
   assets                                                      289                   77 
  Depreciation of property, 
    plant and equipment                                      7,220                5,557 
  Interest expense                                           4,956                5,315 
  Interest income                                             (63)                 (92) 
  Loss on disposal of property, 
    plant and equipment                                         98                   75 
  Share-based payment expense                                1,664                5,209 
  Intangible assets written                                    131                    - 
   off 
  Inventories written off/(written 
   back)                                                       179                 (68) 
  Unrealised foreign exchange 
   gain                                                    (1,628)              (3,261) 
  Share of (gain)/loss in 
   joint venture                                              (83)                1,169 
  Bad debts written-off                                          -                 (45) 
  Property, plant and equipment                                  2                    - 
   written off 
  Provision for doubtful                                     1,365                    - 
   debts 
                                               -------------------  ------------------- 
 Operating cash flow before 
  working 
  capital changes                                           21,812               31,870 
 
 Increase in inventories                                  (21,582)             (22,424) 
 (Decrease)/increase in trade 
  and other receivables                                      4,543              (2,528) 
 Increase in trade and other 
  payables                                                  12,332               12,092 
                                               -------------------  ------------------- 
 
 NET CASH FROM OPERATIONS                                   17,105               19,010 
 
 Interest received                                              63                   92 
 Interest paid                                             (5,654)              (5,315) 
 Tax paid                                                  (1,186)                (688) 
                                               -------------------  ------------------- 
 NET CASH GENERATED FROM 
  OPERATING ACTIVITIES                                      10,328               13,099 
                                               -------------------  ------------------- 
 
 
 CASH FLOWS FROM INVESTING ACTIVITIES 
 
 Increase in investment 
  in joint 
  venture                              6        (520)          (274) 
 Addition of intangible 
  assets                               7      (8,471)        (8,865) 
 Purchase of property, plant 
  and equipment                        8     (35,945)       (15,404) 
 Proceeds from disposal 
  of property, plant and equipment              1,080            113 
 NET CASH USED IN INVESTING ACTIVITIES       (43,856)       (24,430) 
                                           ----------  ------------- 
 
 CASH FLOWS FROM FINANCING ACTIVITIES 
 
 Drawdown of borrowings                       129,815        111,456 
 Repayment of borrowings                    (121,162)      (101,443) 
 Repayment of hire purchase                         -           (27) 
 Decrease in restricted 
  cash                                              3          4,840 
                                           ----------  ------------- 
 NET CASH GENERATED FROM 
  FINANCING ACTIVITIES                          8,656         14,826 
                                           ----------  ------------- 
 NET (DECREASE)/ INCREASE IN 
  CASH AND 
  CASH EQUIVALENTS                           (24,872)          3,495 
 
 Effects of foreign exchange 
  rate changes 
  on cash and cash equivalents                (3,131)        (1,929) 
 
 CASH AND CASH EQUIVALENTS 
  AT BEGINNING OF THE 
  FINANCIAL YEAR                               60,747         59,181 
                                           ----------  ------------- 
 CASH AND CASH EQUIVALENTS 
  AT OF THE FINANCIAL 
   YEAR                                16      32,744         60,747 
                                           ==========  ============= 
 
 
 
 
 
 
 
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT 
 FOR THE FINANCIAL YEARED 30 JUNE 2017 
 
   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 places of business   :     Level 12, West Wing, Rohas PureCircle 

No. 9, Jalan P. Ramlee

50250 Kuala Lumpur, Malaysia

915 Harger Road, Suite 250,

Oak Brook, IL 60523,

USA

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

In the financial statements, "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 18 September 2017.

   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 have been no significant changes in the nature of these activities during the financial year. The principal activities of the subsidiaries and joint venture are set out in Consolidated level Notes 6.

   3          BASIS OF PREPARATION 

The consolidated financial statements included in this preliminary announcement have been extracted from the Annual Report, including the audited financial statements for the year ended 30 June 2017. The report of the auditor on those Group Financial Statements was unqualified and did not contain an emphasis of matter paragraph. The Annual Report and Group Financial Statements for 2017 will be filed with the Registrar in due course. These consolidated financial statements do not constitute statutory accounts within the meaning of the Companies (Bermuda) Law 1981.

The Group has prepared its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") Interpretations. The accounting policies are consistent with those described in the Annual Report and Group financial statements 2016.

The Group has, at the date of this announcement, sufficient existing financing available for its estimated requirements for at least the next 12 months. After reviewing the Group's annual budget, plans and the new $200m financing facility arranged with HSBC in September 2017, the Directors consider that the Group has adequate resources to continue operating and that it is therefore appropriate to continue to adopt the going concern basis of accounting in preparing the consolidated financial information. The HSBC facility constitutes a $100m term loan and a $100m revolving credit facility ('RCF'). The loan replaces our existing five facilities which are with four banks. The term loan refinances existing loans, with four years to maturity. The RCF has a tenure of three years and provides additional headroom for working capital to fund growth.

The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the Group's financial year beginning on 1 July 2016 are as follows:

-- Amendments to IFRS 11 "Joint Arrangements" Accounting for acquisition of interests in joint operations

-- Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortisation"

-- Amendments to IFRS 10 and IAS 28 "Investment Entities"

-- Amendment to IAS 1 "Presentation of financial statements - Disclosure Initiative"

-- Annual Improvements to IFRSs 2012 - 2014 cycle

The adoption of these standards did not have any material effect on the financial performance or position of the Group.

   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:

 
                                  Changes in            Effect 
                                    exchange    on profit/loss 
                                        rate             after 
                                                      taxation 
                                                       USD'000 
 
 2017 
 
 Ringgit Malaysia against 
  United States Dollar                   10%             2,355 
 Chinese Renminbi against 
  United States Dollar                   10%                12 
 Pound Sterling against United 
  States Dollar                          10%             4,321 
 Euro against United States 
  Dollar                                 10%               144 
 Mexican Peso against United 
  States Dollar                          10%             2,755 
 
 2016 
 
 Ringgit Malaysia against 
  United States Dollar                   10%             1,805 
 Chinese Renminbi against 
  United States Dollar                   10%                10 
 Pound Sterling against United 
  States Dollar                          10%             1,512 
 Euro against United States 
  Dollar                                 10%               211 
 Mexican Peso against United 
  States Dollar                          10%             1,018 
                                 ===========  ================ 
 

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:

 
                                                                                                 2017                                                                                      2016 
                       United 
                       States         Ringgit         Chinese                                   Pound   United States          Ringgit          Chinese                                   Pound 
                      Dollars        Malaysia        Renminbi           Euro                 Sterling         Dollars         Malaysia         Renminbi            Euro                Sterling 
                          USD             MYR             RMB            EUR                      GBP             USD              MYR              RMB             EUR                     GBP 
                      USD'000         USD'000         USD'000        USD'000                  USD'000         USD'000          USD'000          USD'000         USD'000                 USD'000 
 Group 
 Cash and cash 
  equivalents          11,427              15              27            394                      287          12,060               58               10             818                     107 
 Trade 
  receivables          34,567               -               -          4,321                        -          26,001                -                -           6,222                       - 
 Trade 
  payables                284               -               -              1                        -              37                -                -               -                       - 
 Other 
  receivables, 
  deposits 
  And 
  prepayments           8,911             421               -          1,374                      933           2,138            1,029                -             371                      27 
 Other 
  payables and 
  accruals                439              40               -          1,127                      400             109            2,231              186           1,499                     240 
 Borrowings            37,185               -               -              -                        -           9,744                -                -               -                       - 
 
 
   (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:

 
                    2017       2016      2017      2016 
                 Effective interest   USD'000   USD'000 
                           rate (%) 
 
 Term loans         4.67       4.30   117,735   113,929 
              ==========  =========  ========  ======== 
 

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. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculation purposes.

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

USD1,177,000 lower/higher (2016: post-tax profit for the financial year would be USD1,140,000 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 12 and 13 to the financial statements.

At 30 June 2017, 2 customers (2016: 2) comprised more than 30% of total receivables and 13 customers (2016: 7) 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.

               (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:

 
                                                                More         More 
                                      Total                     than         than 
                                                                   1            2 
                                contractual      Within         year        years 
                                                                 but          but          More 
                  Carrying     undiscounted      1 year         less         less          than 
                                                     or         than         than 
                    amount             cash   on demand      2 years      5 years       5 years 
                                       flow 
                   USD'000          USD'000     USD'000      USD'000      USD'000       USD'000 
 The Group 
 
 2017 
 At 30 June 
  2017 
 Financial 
  liabilities: 
  Trade 
   and other 
    payables        36,113           36,113      36,113            -            -             - 
  Borrowings       117,735          127,683      85,654       15,132       26,987             - 
                 =========  ===============  ==========  ===========  ===========  ============ 
 
 2016 
 At 30 June 
  2016 
 Financial 
  liabilities: 
  Trade 
   and other 
    payables        26,542           26,542      26,542            -            -             - 
  Borrowings       113,929          124,405      33,327       32,540       58,538             - 
                 =========  ===============  ==========  ===========  ===========  ============ 
 
 
   (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 14, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, share premium, reserves and retained earnings.

The Group's policy is to maintain a strong capital base by having low to moderate gearing. 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:

 
                                                               Group 
                                        2017                    2016 
                                     USD'000                 USD'000 
 
 Borrowings (i)                      117,735                 113,929 
 Less: Gross cash (ii)              (32,996)                (61,002) 
 Net borrowings (iii)                 84,739                  52,927 
                            ================  ====================== 
 
 Equity (iv)                         207,648                 203,790 
                            ================  ====================== 
 
 Net borrowings to equity 
  ratio                                  41%                     26% 
                            ================  ====================== 
 
   (i)         Borrowings are disclosed in Note 20 to the financial statements. 

(ii) Gross cash includes restricted cash and cash and cash equivalents disclosed in Note 15 to the financial statements.

(iii) Net borrowings 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 2 or 3 made for the financial instruments measured at fair value for the Group as at the reporting date.

   5          CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS 

Estimates and judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group's accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below.

    (i)        Goodwill and other assets carrying values 
               (a)        Key assumptions for value-in-use calculations 

The recoverable amount of a cash generating unit ("CGU") is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a 5-year period including a terminal value as required by IAS 36 "Impairment of Assets". The key assumptions used in the CGU's value-in-use computation are:

   (i)         Growth rate 

The average sales growth rate used is based on planned capacity and forecasted demands. The short to medium term growth rates used are not more than 31% per annum (2016: 25%). The long term growth rate used is 2% (2016: 2%) per annum, based on sweetener industry's long term growth rate ranging from 2% to 4% (2016: 2% to 4%) per annum.

               (ii)        Gross margin 

Changes in selling price and direct costs are based on past results and expectations of future changes in the market.

   (iii)       Discount rate 

The discount rate used is 10% per annum.

    (b)       Sensitivity to changes in assumptions 

The Directors believes that a reasonable change in any of the above key assumptions would not cause the carrying value of the intangible assets to be impaired.

   (ii)        Indefinite useful life of intellectual property rights 

The intellectual property rights are assessed to have indefinite useful lives because over the long term, 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 intellectual property rights is indefinite. The Directors will continue to reassess the basis of the useful life of the intellectual property rights on an annual basis.

   (ii)        Useful life of product development costs 

The product development cost is 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 which consistent with useful life of intellectual property

   6          INVESTMENT IN JOINT VENTURE 

Details of joint venture are as follows:-

 
                                         Effective 
                        Country        Equity Interest 
                           of 
 Name of Company    Incorporation        2017      2016   Principal Activities 
 
                                                          Production, 
                                                           marketing and 
                                                           distribution 
 NP Sweet                                                  of natural 
  AS ("NPS")        Denmark               50%       50%    sweeteners. 
 
 
                                                                       Group 
                                                                        2017                  2016 
                                                                     USD'000               USD'000 
 
 At 1 July                                                           (1,096)                 (200) 
 Share of gain/(loss)                                                     83               (1,169) 
 Additional investment                                                   520                   274 
 Exchange differences                                                      -                   (1) 
 At 30 June                                                            (493)               (1,096) 
                                                ============================  ==================== 
 
 Analysed as follows: 
 
 Other payables (non-current)                                          (493)               (1,096) 
 At 30 June                                                            (493)               (1,096) 
                                                ============================  ==================== 
 
 Set out below are the summarised financial information 
  for Joint Venture which are accounted for using 
  the equity method: 
 
 Summarised statements of financial 
  position 
                                                                        2017                  2016 
                                                                     USD'000               USD'000 
 
 Current 
 Cash and cash equivalents                                               738                    34 
 Other current assets (excluding 
  cash)                                                                3,183                 5,911 
 Total current assets                                                  3,921                 5,945 
                                                ----------------------------  -------------------- 
 
 
 Financial liabilities (excluding 
  trade payables)                                                          -                 (404) 
 Other current liabilities 
  (including trade payables)                                         (4,016)               (6,020) 
 Total current liabilities                                           (4,016)               (6,424) 
                                                ----------------------------  -------------------- 
 
 Non-current 
 Assets                                                                    9                   555 
 Net (liabilities)/assets                                               (86)                    76 
                                                ============================  ==================== 
 
 Summarised statements of comprehensive 
  income 
                                                                        2017                  2016 
                                                                     USD'000               USD'000 
 
 Revenue                                                               3,493                 3,562 
 Depreciation and amortisation                                             -                     - 
 Interest expense                                                        (7)                   (7) 
                                                ----------------------------  -------------------- 
 Loss before taxation                                                  (683)                 (664) 
 Income tax                                                            (519)                     - 
                                                ----------------------------  -------------------- 
 Loss after taxation                                                 (1,202)                 (664) 
 Other comprehensive loss                                                  -                   (2) 
 Total comprehensive loss                                            (1,202)                 (666) 
                                                ============================  ==================== 
 
 Reconciliation of summarised financial 
  information 
                                                                        2017                  2016 
                                                                     USD'000               USD'000 
 
 Opening net assets - 1 July                                              76                   194 
 Loss for the year                                                   (1,202)                 (664) 
 Other comprehensive loss                                                  -                   (2) 
 Additional investment                                                 1,040                   548 
                                                ----------------------------  -------------------- 
 Closing net assets- 30 June                                            (86)                    76 
 
 Interest in joint venture                                               50%                   50% 
                                                ----------------------------  -------------------- 
 Share of net (liabilities)/assets                                      (43)                    38 
 Goodwill                                                                  -                     - 
 Cumulative unrealised profit                                          (450)               (1,134) 
 Carrying value                                                        (493)               (1,096) 
                                                ============================  ==================== 
 
 
   7          INTANGIBLE ASSETS 
 
                                   Intellectual 
                                       property         Development 
 Group                                   rights               costs             Goodwill                 Total 
                                        USD'000             USD'000              USD'000               USD'000 
 Cost 
 At 1 July 2016                          13,573              34,012                1,806                49,391 
 Additions                                1,029               7,442                    -                 8,471 
 Transfer                                     -                   -                    -                     - 
 Write-off                                 (17)               (114)                    -                 (131) 
 Foreign exchange 
  translation difference                  (411)             (1,516)                    -               (1,927) 
 At 30 June 2017                         14,174              39,824                1,806                55,804 
                            -------------------  ------------------  -------------------  -------------------- 
 Accumulated amortisation 
 At 1 July 2016                             398                 446                    -                   844 
 Charge for the financial 
  year                                        4                 285                    -                   289 
 Foreign exchange 
  translation difference                   (24)                (15)                    -                  (39) 
 At 30 June 2017                            378                 716                    -                 1,094 
                            -------------------  ------------------  -------------------  -------------------- 
 
 Net carrying amount 
 At 30 June 2017                         13,796              39,108                1,806                54,710 
                            ===================  ==================  ===================  ==================== 
 
                                   Intellectual 
                                       property         Development 
 Group                                   rights               costs             Goodwill                 Total 
                                        USD'000             USD'000              USD'000               USD'000 
 Cost 
 At 1 July 2015                          13,963              22,836                1,806                38,605 
 Additions                                  422               8,443                    -                 8,865 
 Transfer                                     -               4,055                    -                 4,055 
 Foreign exchange 
  translation difference                  (812)             (1,322)                    -               (2,134) 
 At 30 June 2016                         13,573              34,012                1,806                49,391 
                            -------------------  ------------------  -------------------  -------------------- 
 Accumulated amortization 
 At 1 July 2015                             418                 397                    -                   815 
 Charge for the financial 
  year                                        6                  71                    -                    77 
 Foreign exchange 
  translation difference                   (26)                (22)                    -                  (48) 
 At 30 June 2016                            398                 446                    -                   844 
                            -------------------  ------------------  -------------------  -------------------- 
 
 Net carrying amount 
 At 30 June 2016                         13,175              33,566                1,806                48,547 
                            ===================  ==================  ===================  ==================== 
 

Intellectual property rights comprise the patents, trade mark technology process and all intellectual and industrial property rights in connection therewith on the production of natural sweetener related products and derivatives of bio-organic and physiologically active compounds.

As at 30 June 2017, the carrying value of indefinite life intangible assets is USD10,434,329 (2016: USD10,613,032). The change in value was due to foreign currency translation differences.

Goodwill is allocated to the Group's single CGU identified according to its only operating segment. See Note 5(i) for key assumptions used in the value-in-use calculations.

   8          PROPERTY, PLANT AND EQUIPMENT 
 
                                                                                 Office 
                                                                             equipment, 
                                                             Extraction       furniture 
                                                                    and    and fittings          Capital 
                               Freehold                        refinery       and motor          work-in 
                                   land        Buildings         plants        vehicles         progress            Total 
                                USD'000          USD'000        USD'000         USD'000          USD'000          USD'000 
 The Group 
 
 Cost 
 At 1 July 2016                   1,535           19,380         58,449           8,217           14,210          101,791 
 Additions                            4               96          3,977           1,366           31,200           36,643 
 Disposals/write-offs                 -         (294)             (694)           (630)                -          (1,618) 
 Transfer                             -                -         41,490           1,392         (42,882)                - 
 Foreign exchange 
  translation 
   reserve                        (132)            (390)        (2,061)           (236)            (732)          (3,551) 
 At 30 June 
  2017                            1,407           18,792        101,161          10,109            1,796          133,265 
                         --------------  ---------------  -------------  --------------  ---------------  --------------- 
 
 Accumulated 
  depreciation 
 
 At 1 July 2016                       -            5,082         26,915           4,132                -           36,129 
 Charge for 
  the financial 
  year                                -            1,020          4,784           1,416                -            7,220 
 Disposals/write-offs                 -            (193)          (183)            (62)                -            (438) 
 Transfer                             -                -              -               -                -                - 
 Foreign exchange 
  translation 
   reserve                            -            (144)          (102)            (27)                -            (273) 
 At 30 June 
  2017                                -            5,765         31,414           5,459                -           42,638 
                         --------------  ---------------  -------------  --------------  ---------------  --------------- 
 
 Net carrying 
  amount 
 At 30 June 
  2017                            1,407           13,027         69,747           4,650            1,796           90,627 
                         ==============  ===============  =============  ==============  ===============  =============== 
 
 
 
 
                                                                                 Office 
                                                                             equipment, 
                                                             Extraction       furniture 
                                                                    and    and fittings          Capital 
                               Freehold                        refinery       and motor          work-in 
                                   land        Buildings         plants        vehicles         progress            Total 
                                USD'000          USD'000        USD'000         USD'000          USD'000          USD'000 
 
  The Group 
 
  Cost 
  At 1 July 
   2015                           1,615           20,608         60,303           7,186            4,976           94,688 
  Additions                           -               61          1,213           1,096           13,034           15,404 
  Disposals/write-offs                -                -        (1,783)           (476)                -          (2,259) 
  Transfer                            -             (24)          2,605             863          (3,444)                - 
  Foreign exchange 
   translation 
    reserve                        (80)          (1,265)        (3,889)           (452)            (356)          (6,042) 
  At 30 June 
   2016                           1,535           19,380         58,449           8,217           14,210          101,791 
                         --------------  ---------------  -------------  --------------  ---------------  --------------- 
 
  Accumulated 
   depreciation 
  At 1 July 
   2015                               -            4,417         26,868           3,679                -           34,964 
  Charge for 
   the financial 
   Year                               -            1,034          3,461           1,062                -            5,557 
  Disposals/write-offs                -                -         (1666)           (405)                -          (2,071) 
  Transfer                            -                -              -               -                -                - 
  Foreign exchange 
   translation 
    reserve                           -            (369)        (1,748)           (204)                -          (2,321) 
  At 30 June 
   2016                               -            5,082         26,915           4,132                -           36,129 
                         --------------  ---------------  -------------  --------------  ---------------  --------------- 
 
  Net carrying 
   amount 
  At 30 June 
   2016                           1,535           14,298         31,534           4,085           14,210           65,662 
                         ==============  ===============  =============  ==============  ===============  =============== 
 
 

The carrying values of property, plant and equipment charged to financial institutions to secure banking facilities granted to the Group are as follows:

 
                                                                      Group 
                                                  2017                 2016 
                                               USD'000              USD'000 
 
 Freehold land                                     940                1,000 
 Building                                       10,876               11,599 
 Extraction and refinery plants                 58,112               31,413 
 Office equipment, furniture and 
  fittings                                       2,167                2,106 
 Capital work in-progress                            -               13,944 
                                                72,095               60,062 
                                   ===================  =================== 
 
   9          PREPAID LAND LEASE PAYMENTS 
 
                                                                    Group 
                                                     2017            2016 
                                                  USD'000         USD'000 
 
 At 1 July                                          2,537           2,914 
 Additions                                             75               - 
 Amortisation for the financial 
  year                                              (102)           (135) 
 Foreign exchange translation reserve                (71)           (242) 
 At 30 June                                         2,439           2,537 
                                        =================  ============== 
 
 Cost                                               3,601           3,526 
 Accumulated amortisation                         (1,031)           (929) 
 Foreign exchange translation reserve               (131)            (60) 
 At 30 June                                         2,439           2,537 
                                        =================  ============== 
 

The prepaid land lease payments have been pledged as security for banking facilities granted to the Group.

   10        DEFERRED TAX 
 
                                               Group 
                                      2017      2016 
                                   USD'000   USD'000 
 
 Deferred tax assets 
 At 1 July                           8,990     9,429 
 Credit /(Charge) to profit or 
  loss (Note 23)                     1,647     (125) 
 Foreign exchange translation 
  reserve                            (173)     (314) 
 At 30 June                         10,464     8,990 
                                  ========  ======== 
 
 Deferred tax liabilities 
 At 1 July                           1,602       529 
 Charge to profit or loss (Note 
  23)                                1,662     1,073 
 Foreign exchange translation            -         - 
  reserve 
 At 30 June                          3,264     1,602 
                                  ========  ======== 
 
 Represented by: 
 
 Deferred tax assets 
 
  Tax losses                        10,331     8,850 
  Others                               133       140 
                                  --------  -------- 
                                    10,464     8,990 
 Offsetting                        (3,264)   (1,602) 
                                     7,200     7,388 
                                  ========  ======== 
 
 Deferred tax liabilities 
 Property, plant and equipment       3,264     1,602 
 Offsetting                        (3,264)   (1,602) 
                                         -         - 
                                  ========  ======== 
 
 

Deferred tax assets are recognised for tax losses carry-forward to the extent that the realisation of the related tax benefit through future tax profit is probable based on projections and forecasts prepared by management and taking into consideration the expiry dates of carry forward losses. The Group did not recognise deferred tax assets of USD2,089,718 (2016: USD74,000) in respect of losses amounting to USD13,249,620 (2016: USD598,000) that can be carried forward against future taxable income.

 
                                                             Group 
                                              2017            2016 
                                           USD'000         USD'000 
 Deferred tax assets 
 
 Deferred tax assets to be 
  recovered within 12 months                 3,481             140 
 Deferred tax assets to be 
  recovered 
  after more than 12 months                  6,983           8,850 
                                            10,464           8,990 
                               ===================  ============== 
 
 Deferred tax liabilities 
 
 Deferred tax liabilities 
  to be 
  settled within 12 months                 (3,264)               - 
 Deferred tax liabilities 
  to be settled 
  after more than 12 months                      -         (1,602) 
                                           (3,264)         (1,602) 
                               ===================  ============== 
 
 

An analysis of tax losses with expiry dates for which deferred tax assets have been recognised is as follows:

 
                                                       Group 
                                      2017              2016 
                                   USD'000           USD'000 
 
 FY2018                                 70                70 
 FY2021                                208               208 
 FY2024 to FY2037                    6,969             4,834 
 Indefinite                          3,084             3,738 
 Total                              10,331             8,850 
                    ======================  ================ 
 
   11        INVENTORIES 
 
                                                   Group 
                                   2017             2016 
                                USD'000          USD'000 
 Raw materials                    8,663           11,422 
 Work-in-progress                61,127           41,785 
 Finished goods                  36,217           31,397 
                                106,007           84,604 
                    ===================  =============== 
 
 

The cost of inventories is recognized as an expense and included in 'cost of sales' amounted to USD45 million (2016: USD49 million). There is no provision for obsolete inventories recognised during the year (2016: Nil).

The carrying value of inventories charged to financial institution to secure banking facilities granted to the Group is USD13,276,296 (2016: USD4,517,392).

   12        TRADE RECEIVABLES 
 
                                                                    Group 
                                                   2017              2016 
                                                USD'000           USD'000 
 
 Non-current 
 
 Third party trade receivables                      279               523 
                                  =====================  ================ 
 
 Current 
 
 Third party trade receivables                   55,681            57,627 
 Less: Provision for impairment                   (301)                 - 
                                  --------------------- 
                                                 55,380            57,627 
                                  ---------------------  ---------------- 
 
 Joint venture                                    3,703             5,116 
 Less: Provision for impairment                 (1,064)                 - 
                                  ---------------------  ---------------- 
                                                  2,639             5,116 
                                  ---------------------  ---------------- 
                                                 58,019            62,743 
                                  =====================  ================ 
 

The Group's normal trade credit terms range from 30 to 60 days (2016: 30 to 60 days). Terms for joint venture are 30 to 45 days (2016: 30 to 45 days) after consumption or onward sales of products. Other credit terms are assessed on a case-by-case basis and are determined by reference to past default exposure.

In line with all businesses, management reviews the credit terms and collectability of all balances on an on-going basis and exercises judgement in assessing the recoverability of amounts due.

As of 30 June 2017, trade receivables amounting to USD6,081,000 (2016: USD5,776,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing of the trade receivables that are past due but not impaired is as follows:

 
                                                                           Group 
                                    2017                                    2016 
                                 USD'000                                 USD'000 
 
 Past due but not impaired: 
 Up to 3 months                    1,550                                   3,828 
 3 to 6 months                     1,831                                     553 
 6 to 12 months                    2,091                                   1,112 
 12 months and above                 609                                     283 
                                   6,081                                   5,776 
                              ==========  ====================================== 
 
 
   13        OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS 
 
                                          Group 
                             2017          2016 
                          USD'000       USD'000 
 
 Non-current 
 
 Other receivables            935           885 
                     ============  ============ 
 
 Current 
 
 Other receivables          4,075         5,592 
 Prepayments                3,680         5,448 
 Deposits                     965           614 
 As at 30 June              8,720        11,654 
                     ============  ============ 
 
 

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. These amounts are not past due.

   14        FINANCIAL INSTRUMENTS BY CATEGORY 
 
                                                              Group 
                                Note            2017           2016 
                                             USD'000        USD'000 
 Financial assets 
 
 Trade receivables               12           58,298         63,266 
 Other receivables and 
  deposits 
  (excluding prepayments)        13            5,975          7,091 
 Cash and bank equivalents       15           32,996         61,002 
                                              97,269        131,359 
                                      ==============  ============= 
 Financial liabilities 
 
 Borrowings                      20          117,735        113,929 
 Trade payables                  21           11,055          5,543 
 Other payables and accruals 
  (excluding deferred 
   income)                       22           25,058         20,999 
                                             153,848        140,471 
                                      ==============  ============= 
 
   15        CASH AND CASH EQUIVALENTS 
 
                                                                   Group 
                                                 2017               2016 
                                              USD'000            USD'000 
 
 Short term deposits with 
  licensed banks                                    -             32,047 
 Cash at bank and on hand                      32,996             28,955 
 Deposits, cash and bank balances              32,996             61,002 
 Restricted cash                                (252)              (255) 
 Cash and cash equivalents                     32,744             60,747 
                                    =================  ================= 
 
 

Cash deposits of USD252,000 (2016: USD255,000) are pledged as security for banking facilities.

The weighted average interest rates of the short-term deposits at the reporting date was nil (2016: 0.38%) per annum. The short-term deposits have weighted maturity period of nil (2016: 40 days).

   16        SHARE CAPITAL 

The movements in the authorised and paid-up share capital are as follows:

 
                                           Group                 Group 
                                            2017                  2016 
                             ----------  -------  -----------  ------- 
                        Par   Number of      USD       Number      USD 
                      value      shares             of shares 
                        USD      ('000)   ('000)       ('000)   ('000) 
 
 Authorised 
 At 1 July/30 
  June                 0.10     250,000   25,000      250,000   25,000 
                             ==========  =======  ===========  ======= 
 
 Issued and fully 
  paid-up 
 At 1 July             0.10     172,112   17,211      170,062   17,006 
 Exercise of 
  share awards         0.10       1,587      160        2,050      205 
                             ----------  -------  -----------  ------- 
 At 30 June            0.10     173,699   17,371      172,112   17,211 
                             ==========  =======  ===========  ======= 
 
 
   17        SHARE PREMIUM 
 
                                                      Group 
                                      2017             2016 
                                   USD'000          USD'000 
 
 At 1 July                         214,723          208,310 
 Exercise of share awards            7,561            6,413 
 At 30 June                        222,284          214,723 
                            ==============  =============== 
 
   18        FOREIGN EXCHANGE TRANSLATION RESERVE 

The foreign exchange translation reserve arose from the translation of the financial statements of the foreign operations into the Group's presentation currency of USD.

During financial year end 2017, the fluctuations are due to MYR and RMB weakening against USD.

   19        SHARE-BASED PAYMENT RESERVE 

The expense arising from equity-settled share-based payment transaction recognised for employee services received during the year is as shown below:

 
                                                       Group 
                                        2017            2016 
                                     USD'000         USD'000 
 
 Expense arising from 
  equity-settled share-based 
  payment transactions                 1,664           5,209 
                               =============  ============== 
 
 

Reconciliation of movement in share-based payment reserve:

 
                                                              Group 
                                              2017             2016 
                                           USD'000          USD'000 
 
 At 1 July                                   9,776           11,185 
 Share awards scheme compensation 
  expense                                    1,664            5,209 
                                            11,440           16,394 
 Transfer to share capital 
  and share premium upon 
  exercise of share awards                 (7,721)          (6,618) 
 At 30 June                                  3,719            9,776 
                                    ==============  =============== 
 

The Company maintains a Long-Term Incentive Plan ("LTIP"), the principal terms include a restriction on the Company issuing (or granting rights to issue) no more than 10 per cent of its issued ordinary share capital under the LTIP (and any other employee share plan) in any ten calendar year period. It is currently intended that, other than in exceptional circumstances, such as senior executive recruitment, all awards will be subject to performance conditions and that, the performance conditions will be linked principally to the Group's sales growth. The awards are conditional on employment service requirements.

The LTIP recognises the fast growth and changing nature of the Company and the need to recruit and retain executives in different employment markets around the world. Accordingly, the LTIP allows for the Remuneration Committee to exercise significant discretion in exceptional cases where the Committee considers executives will bring particular value to shareholders.

The fair value of share awards granted is estimated at the date of the grant, taking into account the terms and conditions upon which the LTIPs were granted.

 
 
                            2017            2016 
                          Number       Number of 
                        of LTIPs           LTIPs 
                          ('000)          ('000) 
 
 At 1 July                 2,310           3,912 
 Granted                   2,296           1,881 
 Exercised               (1,561)         (2,050) 
 Lapsed                  (1,552)         (1,433) 
 At 30 June                1,493           2,310 
                  ==============  ============== 
 
 

Details of share awards granted that are outstanding as at 30 June 2017 are as follows:

 
                                          Weighted 
                                           average 
                               Number         fair     Exercise 
                                   of        value        price 
                                LTIPs           at          per     Vesting requirements 
                          outstanding        grant        share 
   Grant-vest                    '000         date 
                                         (Sterling 
                                            pound) 
 
 Award 3 
  4 July 2014 - 27                                                 Three years' 
   July 2017                       92         5.78          Nil     service 
 
                                                                  Sales target 
                                                                   and three years' 
 Award 4                                                           service 
  7 July 2015 - 1 
   July 2017                      476         3.95          Nil 
 
 Award 5 
                                                                   Sales target 
                                                                    and three years' 
  22 September 2015-               49         4.05          Nil     service 
  22 September 2018 
 
 Award 6 
  4 March 2016 -                                                   Three years' 
   30 August 2018                   8         3.46          Nil     service 
 
 Award 7 
  23 May 2016 - 25                                                 Three years' 
   April 2019                      27         3.83          Nil     service 
 
                                                                  Sales target 
                                                                   and three years' 
 Award 9                                                           service 
  20 January 2017 
   - 30 September 
   2020 
                                  800         2.86          Nil 
 
                                                                  Sales target 
                                                                   and three years' 
 Award 10                                                          service 
  13 March 2017 - 
   31 March 2020                   41         3.00          Nil 
                       -------------- 
 Total                          1,493 
                       ============== 
 
 

The number of exercisable share awards as at the reporting date was 89,000 (2016: Nil). The related average share price at the time of exercise was GBP5.70 (2016: Nil) per share.

   20        BORROWINGS 
 
                                                  Group 
                                  2017             2016 
                               USD'000          USD'000 
 
 Current portion: 
 - Term loans (a)               78,735           29,044 
 Non-current portion: 
 - Term loans (a)               39,000           84,885 
                               117,735          113,929 
                        ==============  =============== 
 
   (a)        Term loans 

The term loans bore a weighted average effective interest rate of 4.67% (2016: 4.30%) per annum at the reporting date. These term loans bear floating rates (base rate plus a margin as imposed by respective lenders) that fluctuate because of changes in market interest rates.

 
                                                            Group 
                                           2017              2016 
                                        USD'000           USD'000 
 Current portion: 
 Secured: 
 - Term loan 2                                -               306 
 - Term loan 3                            1,799               542 
 - Term loan 4                           11,181             4,460 
 - Term loan 5                           24,523            23,736 
 - Term loan 6                           30,015                 - 
 - Term loan 7                           11,217                 - 
 Total current portion              78,735                 29,044 
                             ------------------  ---------------- 
 
 
 
 
 
   Non-current portion: 
 Secured: 
 - Term loan 3                            4,757             2,092 
 - Term loan 4                      34,243                 53,766 
 - Term loan 6                                -            29,027 
 Total non-current portion          39,000                 84,885 
                             ------------------  ---------------- 
                                  117,735                 113,929 
                             ==================  ================ 
 
 

Term loans 2 to 4 are secured by way of:-

(i) a fixed and floating charge over present and future assets and the freehold property of a subsidiary; and

   (ii)        corporate guarantee by the Company; and 
   (iii)       legal charge over landed property of a subsidiary. 

Term loan 5 is secured as follows:-

   (i)         a legal charge over certain assets of a subsidiary; and 
   (ii)        a legal charge over the prepaid land lease payments of a subsidiary. 

Term loans 6 is working capital financing secured via receivable balances.

Term loan 7 is secured as follows:-

   (i)         a fixed and floating charge over present and future assets; and 
   (ii)        corporate guarantee by the Company. 

Term loan 3 and term loan 7 require minimum ratios of adjusted EBITDA to net borrowings and interest cover to be maintained. The Group is in full compliance with all of our borrowing covenants as at 30 June 2017.

After the year end, the Group agreed a new USD200million syndicated loan facility with HSBC to replace and consolidate existing financing arrangements. Refer to note 29 for more details.

   21        TRADE PAYABLES 

The normal trade credit terms granted to the Group range from 0 to 90 days (2016: 0 to 90 days).

   22        OTHER PAYABLES AND ACCRUALS 
 
                                              Group 
                              2017             2016 
                           USD'000          USD'000 
 Non-current 
 Other payables                494            1,096 
 Deferred income                73              149 
                               567            1,245 
                   ===============  =============== 
 Current 
 Other payables             17,685           11,962 
 Deferred income                73               74 
 Accruals                    6,879            7,941 
                            24,637           19,977 
                   ===============  =============== 
 
 

Deferred income as at the reporting date represents a form of regional government financial assistance for the purchase of high technology plant equipment. The deferred income will be amortised over the useful life of 20 years.

   23        TAXATION 
 
                                                        Group 
                                         2017            2016 
                                      USD'000         USD'000 
 Current tax: 
 Current tax on profits for 
  the years                             (319)         (2,124) 
 Over accruals in respect of 
  prior years                              99              27 
                                        (418)         (2,097) 
 
 Deferred tax: 
 Origination and reversal of 
  temporary differences                  (15)         (1,198) 
                                        (433)         (3,295) 
                               ==============  ============== 
 
 

The Company was granted a tax assurance certificate dated 1 February 2012 under the Exempted Undertakings Tax Protection Act, 1966 pursuant to which it is exempted from any Bermuda taxes (other than local property taxes) until 31 March 2035.

The subsidiary, 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 year of assessment (YA) 2008. 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.

The subsidiary, PCT has been granted the Principal Hub Status by the Malaysian Investment Development Authority in which PCT is entitled to a 100% income tax exemption for a period of 10 years on its statutory income commencing from YA 2017.

A reconciliation of income tax expense applicable to the profit before taxation at the applicable tax rate to income tax expense at the effective tax rate of the Group is as follows:-

 
                                                    Group 
                                          2017       2016 
                                       USD'000    USD'000 
 
 Profit before taxation                  7,657     17,895 
                                      ========  ========= 
 
 Tax at the applicable tax 
  rates in the respective countries        815      6,542 
 
 Tax effects of: 
 Non-deductible expenses                 1,559        251 
 Non-taxable income                    (4,130)    (4,039) 
 Under provision of taxation                99        756 
 Tax losses not recognised               2,090          - 
 Previously unrecognised tax 
  losses                                     -      (215) 
 Income tax expense                        433      3,295 
                                      ========  ========= 
 
   24        PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION 

Included in the profit from ordinary activities before taxation are the following charges and credits:

 
                                               Group 
                                      2017      2016 
                                   USD'000   USD'000 
 Charges: 
 Depreciation and amortisation       7,611     5,769 
 Directors' remuneration             1,866     1,578 
 Share-based payment 
  expense                            1,664     5,209 
 Interest expenses                   4,956     5,315 
 Cost of inventories 
  expensed                          44,980    49,440 
 Wages and salaries                 17,305    14,881 
 Defined contribution 
  retirement plan                    1,656     1,841 
 Operating lease                       672       625 
 
 Credits: 
 Amortisation of deferred 
  income                                77        96 
 Interest income                        63        92 
                                  ========  ======== 
 
 
   25        EARNINGS PER SHARE 

The basic earnings per share is calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue:

 
                                                    Group 
                                           2017      2016 
 Earnings attributable to equity 
  holders of the Company (USD'000)        7,224    14,600 
 Weighted average number of ordinary 
  shares in issue ('000)                173,584   172,035 
 Impact of share awards outstanding 
  ('000)                                  1,493     2,310 
                                       --------  -------- 
 Diluted weighted average number 
  of ordinary shares ('000)             175,077   174,345 
                                       ========  ======== 
 
 Basic profit per share (US Cents)         4.16      8.49 
 Diluted profit per share (US 
  Cents)                                   4.13      8.37 
                                       ========  ======== 
 
   26        SIGNIFICANT RELATED PARTY TRANSACTIONS 
   (a)        Identities of related parties 

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

               (i)         its subsidiaries and joint venture; and 
               (ii)        the Directors who are the key management personnel 

(b) In addition to the information detailed elsewhere in the financial statements, details of the Group's transactions and balances with related party during the financial year are set out below:

   (i)         Related party 
 
                                        Group 
                               2017      2016 
                            USD'000   USD'000 
 
 Gross sales of goods to 
  joint venture                 927     5,304 
                           ========  ======== 
 
 
   (ii)        Key management personnel compensation 

Key management personnel are executive directors of the Company. The compensation paid or payable to key management for employee services is shown as below:

 
                                            Group 
                                   2017      2016 
                                USD'000   USD'000 
 
 Remuneration                       948       998 
 Share-based payment expense         90       177 
                                  1,038     1,175 
                               ========  ======== 
 
 
   27        SEGMENTAL REPORTING 

Management determines the Group's operating segments based on the criteria used by 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 flavours.

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

 
                                                 2017                   2016 
                                              USD'000                USD'000 
 Trading 
 Revenue*                                     118,911                138,641 
 Cost of sales                               (73,099)               (80,797) 
                                 --------------------  --------------------- 
 Gross margin                                  45,812                 57,844 
                                 --------------------  --------------------- 
 
 Gross margin %                                 38.5%                  41.7% 
 
 Other income***                                  480                    328 
 Administrative expenses***                  (28,670)               (24,947) 
                                 --------------------  --------------------- 
 Operating profit                              17,622                 33,225 
 
 Main Market Listing costs                          -                (1,808) 
 Other expenses***                            (5,874)                (8,396) 
 Foreign exchange gain                            782                  1,358 
 Finance costs                                (4,956)                (5,315) 
 Share of gain/(loss) in 
  joint venture                                    83                (1,169) 
 Taxation                                       (433)                (3,295) 
                                 --------------------  --------------------- 
 Earnings for the financial 
  year                                          7,224                 14,600 
                                 --------------------  --------------------- 
 
 Adjusted EBITDA                               27,141                 34,212 
 
 Reconciliation of Adjusted 
  EBITDA to operating profit: 
 
 Earnings for the financial 
  year                                          7,224                 14,600 
 Depreciation and amortisation                  7,658                  5,769 
 Finance costs                                  4,956                  5,315 
 Taxation                                         433                  3,295 
 Share-based payment expense                    1,583                  5,233 
 Exceptional item**                             5,287                      - 
                                 --------------------  --------------------- 
 Operating profit                              27,141                 34,212 
                                 ====================  ===================== 
 
                                                 2017                   2016 
                                              USD'000                USD'000 
 
 Gross cash                                    32,996                 61,002 
 Gross borrowings                             117,735                113,929 
                                 --------------------  --------------------- 
 Net borrowings                                84,739                 52,927 
                                 ====================  ===================== 
 
 Gross cash                                    32,996                 61,002 
 Unutilised facilities                         43,747                 15,269 
                                 --------------------  --------------------- 
 Headroom                                      76,743                 76,271 
                                 ====================  ===================== 
 
 Earnings per share (US cents) 
  - Basic                                        4.16                   8.49 
  - Diluted                                      4.13                   8.37 
 

* Under segmental reporting, revenues of approximately USD77 million (2016: USD70 million) are derived from 5 external customers. These revenues are attributable to the Americas customers.

** Exceptional items of USD5.3 million have been recorded in the period directly relating to the impact of the Withhold Release Order in the period. The main components of the exceptional costs are as follows:

 
                                           2017 
                                        USD'000 
 
 Incremental production costs             1,413 
 Gross margin impact of credit notes 
  issued                                  2,917 
 Others                                     957 
                                       -------- 
 Total exceptional items                  5,287 
                                       ======== 
 

*** Other income in the table above excludes foreign exchange gains which are reported separately, and includes financial income of $63k. $2.8m of costs associated with the Group's LTIP scheme and annual bonus have been reclassed from administrative expenses to other other expenses.

Geographical information

 
                          Asia   Europe*   Americas   Goodwill     Total 
                       USD'000   USD'000    USD'000    USD'000   USD'000 
 30 June 2017 
 External revenue       16,170    52,086     50,655          -   118,911 
 Non-current assets    139,750     1,483     13,151      1,806   156,190 
                      ========  ========  =========  =========  ======== 
 
 30 June 2016 
 External revenue       18,105    32,207     88,329          -   138,641 
 Non-current assets    112,452     1,454      9,830      1,806   125,542 
                      ========  ========  =========  =========  ======== 
 

Basis of attributing sales by geographical region is based on location of sales.

The primary performance indicators used by the Group are revenues, gross margin %, adjusted EBITDA, net cash from operations, gross cash and borrowings. The Directors consider these alternative performance measures helpful in understanding the performance of the business.

Adjusted EBITDA is defined as EBITDA with other expenses (principally the charge of the Group's LTIP scheme, exceptional items, short-term incentive scheme, foreign exchange and share of gain/(loss) in joint venture) added back.

The net assets per share is calculated based on the net assets book value at the reporting date of USD207,600,000 (2016: USD203,700,000) divided by the number of ordinary shares in issue at the reporting date of 173,699,000 (2016: 172,112,000).

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.

*The Europe segment includes results and sales to the Group's European joint venture.

   28        COMMITMENTS 
               (a)        Capital commitments 

Capital expenditure at the reporting date is as follows:

 
                                                          Group 
---------------------------------  --------  ------------------ 
                                       2017                2016 
---------------------------------  --------  ------------------ 
                                    USD'000             USD'000 
---------------------------------  --------  ------------------ 
 
 Authorised capital expenditure 
  contracted for 
---------------------------------  --------  ------------------ 
 - Property, plant and equipment        475              24,109 
---------------------------------  --------  ------------------ 
 
 Authorised capital expenditure 
  not contracted for                  6,485              12,232 
---------------------------------  ========  ================== 
 
 
               (b)        Operating lease commitments 

The Group also leases corporate office under non-cancellable operating lease agreements. The lease expenditure charged to the profit or loss during the year is disclosed in note 24.

The future aggregate minimum lease payments under non-cancellable operating lease are as follows:

 
                                                                             Group 
-----------------------------------------------------  --------  ----------------- 
                                                           2017               2016 
-----------------------------------------------------  --------  ----------------- 
                                                        USD'000            USD'000 
-----------------------------------------------------  --------  ----------------- 
 
 The present value of operating lease is as follows: 
-----------------------------------------------------  --------  ----------------- 
 - No later than one year                                   521                570 
-----------------------------------------------------  --------  ----------------- 
 - Later than 1 year and no later than 5 years              922              1,257 
-----------------------------------------------------  --------  ----------------- 
 - More than 5 years                                        692                982 
-----------------------------------------------------  --------  ----------------- 
                                                          2,135              2,809 
-----------------------------------------------------  ========  ================= 
 
 
   29        EVENTS AFTER THE REPORTING PERIOD 

Events after the period end comprise:

(a) On 10 July 2017, the Group has increased its investment in share capital in PureCircle Natural Ingredient India Private Limited by 940,000 ordinary shares at INR0.01 per share, where 930,600 shares and 9,400 shares are held by PureCircle Limited and PureCircle Trading Sdn. Bhd. respectively.

(b) The Group's existing loan facility with Bank of China amounting to USD24.5 million as at 30 June 2017 was renewed on 11 September 2017 for a further 12 months with a new maturity date of 8 September 2018.

(c) In September, the Group arranged a new USD200 million syndicated loan facility with HSBC, comprising a USD100 million revolving credit facility and a USD100 million term loan which mature in 2020 and 2021 respectively, to replace and consolidate existing financing arrangements.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR UWARRBVAKAUR

(END) Dow Jones Newswires

September 19, 2017 02:01 ET (06:01 GMT)

Purecircle (LSE:PURE)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Purecircle Charts.
Purecircle (LSE:PURE)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Purecircle Charts.