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
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