1. food and drink
2. beverages

PureCircle Annual Report 2012
EVERYTHING
STEVIA
PureCircle has established itself as the world’s
leading producer of high purity stevia ingredient –
no-calorie ingredients that provide a great-tasting
way to reduce calories. Our sights are firmly set on
leading the development of stevia as a mainstream
natural ingredient around the world. To do so, we
have passionately shaped a company that is
capable of building an industry and importantly,
acting as a global partner to our clients.
It is our focus on Everything Stevia that sets us
apart. While it has been several years in the
making, 2012 marked the year that PureCircle truly
completed the evolution to become the leading
partner for the world’s most recognised companies.
We have invested extensively to support customers
through five key platforms – 1. Innovation &
Technical Development 2. Trust Communications
3. Health Professional Advocacy 4. Sustainability
Solutions and 5. Everything Stevia.
Building on the industry’s leading vertically
integrated supply chain, more than ever, we are
successfully helping our customers take advantage
of Everything Stevia from PureCircle.
P URECIRCLE HAS ESTABLISHED
ITSELF AS THE WORLD’S LEADING
PRODUCER AND MARKETER OF HIGH
PURITY STEVIA INGREDIENTS
1.Innovation & Technical
Development
Creating competitive advantage through
world class innovation and customer
technical support
2.Trust Communications
Expanding the adoption of the Stevia
PureCircle trustmark to support compelling
consumer communications
3.Health Professional Advocacy
Providing confidence to the industry through
the Global Stevia Institute
4.Sustainability Solutions
Translating supply chain integration into
environmental advantage
5.Everything Stevia
Establishing ourselves as the “Everything
Stevia” company – from marketing services
to integrated communications
Everything Stevia’s Platforms
Everything Stevia
By focusing on the following
platforms to engage with
customers, stevia partners,
and end consumers :
PureCircle Annual Report 2012
INNOVATION &
TECHNICAL
DEVELOPMENT
CREATING COMPETITIVE
ADVANTAGE THROUGH
WORLD CLASS INNOVATION
AND CUSTOMER TECHNICAL
SUPPORT
1
Deepening R&D Partnership
•New formalised program to engage
customers to develop better solutions
Accelerating Application
Development
•Developed suite of nearly 200 “turn-key”
applications across food and beverages
categories
At its core, PureCircle is an Innovation company.
Pioneering the mass scaling of PureCircle Reb A
from the stevia leaf was only the beginning. Today,
the Company has developed a rich portfolio of
high purity stevia products ranging from Stevia
PureCircle sweeteners to PureCircle Flavors.
PureCircle Innovation leadership was reinforced
in 2012 with the launch of a breakthrough new
ingredient PureCircle Alpha, which is enabling
deeper calorie reductions. In combination
with PureCircle’s other sweet ingredients and
flavours, it provides a powerful tool kit to address
customers’ product development needs. Through
the development of our proprietary portfolio of
ingredients we have paved the way to a new way
of developing with stevia – Stevia 3.0. We have
moved beyond low grade stevia extract and even
moved beyond Reb A as the sole tool for high
purity stevia development. Our customers are
now taking advantage of PureCircle’s unmatched
suite of stevia solutions, combining our offering
Technical
resource and
lab facilities
expanded
beyond the
like SG95, NSF-02, Reb A and PureCircle Alpha
to develop the optimal formulation. And with a
portfolio of over 20 new products under evaluation,
the Company developed a rich pipeline of future
new offerings.
PureCircle’s dedicated focus on Everything Stevia
is evident in the quality of the technical support
capabilities we expanded in 2012. Technical
resource and lab facilities expanded beyond the
US, to Asia, Europe and Latin America allowing
PureCircle to extensively partner with customers
to develop great tasting food and beverage new
products and reformulations. PureCircle’s global
technical team has further developed over 200
“turn-key” applications for use across food and
beverage applications. And through the launch
of new customer programs such as PureCircle
University, the Company’s scientists are directly
engaging many of the world’s leading food and
beverage manufacturers directly in their labs
as well as in ours.
UNITED STATES,
TO ASIA ,
EUROPE AND
LATIN AMERICA
PureCircle Portfolio
Expanding our Expertise
•Research on PureCircle’s ingredient solutions
for greater calorie reductions
SG95
NSF-01
REB A
NSF-02
PureCircle Alpha
Next Generation Research
•Continuous evaluation of next generation
natural sweeteners and flavours
Platform 1 : Innovation & Technical Development
PURECIRCLE’S INNOVATION LEADERSHIP
DEVELOPMENT OF PROPRIETARY PORTFOLIO
OF INGREDIENTS – STEVIA 3.0
PureCircle Annual Report 2012
TRUST
COMMUNICATIONS
EXPANDING THE ADOPTION
OF THE STEVIA PURECIRCLE
TRUSTMARK TO SUPPORT
COMPELLING CONSUMER
COMMUNICATIONS
2
Stevia PureCircle Trustmark
We Grow Joy
As part of our leadership within the stevia
industry, PureCircle has pioneered an
industry trustmark that educates consumers
about the benefits of stevia and provides a
strong basis for trust with both consumers
and manufacturers alike.
We Grow Joy is a marketing campaign
designed to promote stevia as a better
sweet choice and educate the market place
about the Stevia PureCircle trustmark,
appearing on the packaging of leading
global manufacturers.
Platform 2 : Trust Communications
STEVIA PURECIRCLE TRUSTMARK
HAS NOW REACHED MORE PRODUCTS
AND MARKETS THAN ANY OTHER
IN THE INDUSTRY
Global Licensing
•Rapid global expansion through
table top partnership
•160 products licensed across
32 countries
Trademarks Secured
Globally
• Registered in 18 regions
(44 countries) in four continents
PureCircle’s investment in trust communications has
continued to play a critical role in helping customers
to understand exactly when and how stevia can play a
role in providing benefits to consumers. The launch of
the Stevia PureCircle trustmark was built on insights
from proprietary studies conducted by the PureCircle
Insights Group. Using these insights PureCircle has
continued to tailor its communication guidance to align
with country specific learnings. We recognised that
while nothing is more appealing than communicating
the natural source of stevia sweetness, no one can
share the story of these benefits with consumers better
than PureCircle. Our vertical integration, quality controls
and traceability provide reassurance to consumer
and brand owners that Stevia PureCircle provides
a trusted source of sweetness.
In 2012, the Stevia PureCircle Trustmark was
used on 160 products launched across 32 countries,
from table top sweetener products to flavoured
waters, with additional product launches in the
pipeline for FY 2013. The associated We Grow Joy
(www.steviapurecircle.com) consumer campaign
was further localised to support new major markets
including Latin America and China. And with
trademark registrations secured across four continents, the brand is poised for further expansion.
Stevia PureCircle Trustmark
was used on
160
products launched across
32
countries
PureCircle Annual Report 2012
HEALTH
PROFESSIONAL
ADVOCACY
PROVIDING CONFIDENCE
TO THE INDUSTRY
THROUGH THE GLOBAL
STEVIA INSTITUTE
Market / Advisor Expansion
•6 countries across 3 continents
•Recent addition of UK and Italy
Global Speaker Circuit
•Chosen to speak at leading industry
conferences and launch events
Media and Coverage
•10+ million media impressions
Global Digital Outreach
•4 languages, newsletter reaches 2,700+
•Website traffic from 138 countries
F&B Industry Recognition
3
•Distribution to 450,000+ consumers
via health care professionals
3,000
Leading
subscribers to its monthly newsletter
source of reliable science
based information
Provide Industry Leadership
The Global Stevia Institute is a resource designed to
promote accurate and consistent information and to
educate people about the natural, no-calorie
sweetener, stevia.
Led by an advisory board of esteemed international
health professionals including MDs, PhDs, RNs
university professors, nutritionists, award winning
authors and other influential health professionals
with experience in the areas of obesity, nutrition,
endocrinology, biochemistry and food regulations.
As the global market for stevia has developed, the
role that the Global Stevia Institute (GSI) plays across
regions for independent, scientific, ingredient advocacy
and protection has become fundamental. The GSI is
now firmly established with internationally recognised
health professional Advisory Board Members active
across 4 continents. In 2012, the Board was further
strengthened with local Expert Advisors within Europe
and is expanding further into South America and China
as major brands are launching with stevia.
The GSI now attracts 3,000 subscribers to its monthly
newsletter and remains the leading source of reliable
science based information around the safety of stevia
and its important role in improving and encouraging
healthier diets around the globe. The GSI resources
are referenced not only by healthcare professionals
and key opinion formers, they also provide an
important source of accurate information and support
for customers launching stevia-sweetened products. In
2012, companies like Unilever have included reference
to the GSI website on the packaging of new products
they have launched across Europe.
Working in conjunction with major companies, GSI
materials have been distributed to hundreds of
thousands of consumers via health professionals and
the GSI’s website (www.globalsteviainstitute.com) has
been visited now by interested viewers from over
120 different countries.
Platform 3 : Health Professional Advocacy
Attracts
PureCircle Annual Report 2012
SUSTAINABILITY
SOLUTIONS
TRANSLATING SUPPLY
CHAIN INTEGRATION
INTO ENVIRONMENTAL
ADVANTAGE
Corporate Social Responsibility
Our Commitment
4
PureCircle is dedicated to minimise the
impact and to maximise the social, economic
and environmental benefits of its business
operations beyond compliance with minimum
legal requirements.
Impact on Ecosystem
Investing in rural farming communities
Impact on Public Health
Encouraging natural and healthy
consumption
Impact on Environment
Treating the environment with respect
82%
than sugar and a
* lower
water footprint that is as
much as
97%
than sugar and
* lower
high fructose corn syrup
*as compared to public benchmarks
OUR SUSTAINABILITY
LEADERSHIP HAS
BEEN REINFORCED
WITH CUSTOMER
PARTNERSHIPS
PureCircle is involved in every stage of our stevia
supply chain–breeding, cultivating and harvesting
stevia leaf, extracting and purifying the glycosides
and creating products. Our integrated supply chain
allows – and obligates – us to understand and
minimise our environmental impacts. This enables
us to provide our customers a level of transparency
and accountability across all sourcing regions that is
unmatched by any other stevia manufacturer.
In 2012, PureCircle completed the stevia industry’s
first-ever published farm to sweetener carbon and
water footprint, covering each stage of our own
vertically integrated supply chain. We are proud to
provide the food and beverage industry with
ingredients that can help reduce environmental
impact. The peer-reviewed results revealed that
PureCircle’s high purity stevia sweeteners can help
manufacturers significantly reduce carbon and water
footprints with product reformulations.
Our unique, integrated farm to finished ingredient
supply chain allowed the measurement of carbon
emissions and water consumption beginning from
the initial stages of farming, through extraction and
purification, to PureCircle high purity stevia ingredient.
The findings revealed that PureCircle’s high purity
stevia ingredients have a carbon footprint that is as
much as 82% lower than sugar and a water footprint
that is as much as 97% lower than sugar and high
fructose corn syrup (as compared to public
benchmarks).
Now that we have completed our footprint, we are
closely partnering with our customers to translate
these benefits into impacts toward their own
sustainability targets. And we are developing carbon
and water impact reduction targets for measurable
improvements over the next few years. These focused
goals will build upon our current industry-leading
sustainability efforts. For PureCircle, sustainability is
an integral part of our global supply chain and we are
committed to continuous improvement along every
stage.
Platform 4 : Sustainability Solutions
Carbon footprint that
is as much as
PureCircle Annual Report 2012
EVERYTHING
STEVIA
ESTABLISHING OURSELVES
AS THE “EVERYTHING STEVIA”
COMPANY – FROM MARKETING
SERVICES TO INTEGRATED
COMMUNICATIONS
5
Global Communications
Marketing Services & Solutions
•Campaign extended across all elements of
PureCircle Communications
•New insights driving Europe (Spain, UK,
France)
•Expanding our reach through alternative
channels such as Twitter
•Tool kits of solutions for customers to
enhance solution selling force
Everything Stevia Conferences
•Held in London, Spain, Italy, Germany
•Reaching over 250 delegates from 150 top
EU Food and Beverage Manufacturers
Globally, our global communications were tailored
to address challenges and opportunities wherever
they originate. The PureCircle Insights Group has
further established itself as the go to source for
consumer and market insights on stevia. Through
new insight studies across key global markets, such
as Europe, the United States and Latin America,
PureCircle is providing the insights that are directly
helping to drive our customers’ launch decisions
and communication plans.
In Europe, taking advantage of stevia’s new European
approval, PureCircle launched a series of events
across major markets including London, Spain,
Italy and Germany reaching over 150 top European
companies. The events served to help accelerate the
market, showcasing PureCircle and its joint venture
partners’ expertise on topics ranging from regulatory
to product development. Messages have been further
reinforced through the implementation of innovative
and engaging communications from Twitter to
custom iPad applications.
STEVIA AWARENESS IS GROWING IN
MAJOR MARKETS WORLDWIDE
70
40
20
10
0
DEC
2010
JUL
2011
JUN
2012
MAY
2011
% OF PEOPLE SURVEYED
UNITED STATES
AUG
2012
GERMANY
FRANCE
FEB
2012
50
30
CHINA
JUL
2012
UNITED KINGDOM
MEXICO
POLAND
JUL
2012
ITALY
SPAIN
YEAR
JUL
2011
60
Platform 5 : Everything Stevia
Launch of PureCircle’s Everything Stevia campaign
in 2012 allowed the Company to showcase its ability
to provide unique solutions around the world. The
Company successfully launched a mix of globally
integrated communication efforts to reach thousands
of customers through such rich channels as event,
digital and social media.
Nature’s Gift
PureCircle Annual Report 2012
PureCircle’s Integrated Supply Chain:
From Seedling To Sweetener
Plant Breeding
Breeding proprietary Stevia varieties
with higher sweet glycoside content
Harvesting
Working directly with local farmers
across four continents
Extraction
Producing our own extract to ensure
quality standards are met
Purification
Purifying steviol glycosides with an
unmatched scale and consistency
Application
Providing formulation expertise to
deliver great-tasting products
Finished Product
Supporting consumer communications with
powerful stevia by PureCircle trustmark equity
Table of Contents
1.0
Overview
1.1 Vision and strategy
018...021
1.2 Our market
1.3 Highlights for the year
Business review
2.2 Chief Executive’s review
2.0
022...028
2.1 Chairman’s statement
Corporate governance
3.2 Report of the Remuneration Committee
3.3 Director’s report
3.4 Board of directors
3.0
029...037
3.1 Corporate governance report
4.0
5.0
6.0
Independent auditors’ report
038
Accounts and notes
040...091
Shareholder information
092
PureCircle Annual Report 2012
1.0
Overview
PureCircle is the global leader in the
production, marketing and distribution of
high purity stevia ingredients, the world’s
first all natural sweetener and flavour
solutions regarded as a viable complement
to sugar and corn (High Fructose Corn
Syrup) in mainstream food and beverage
production.
Through our innovative technologies and
processes we are able to extract the highest
purity natural sweeteners and flavour from
the stevia plant, enabling our customers to
develop healthier, lower calorie formulations
for their mainstream consumer products.
As leaders in this industry, we are
continually developing this global market
in partnership with our blue chip customers
and business partners in a transparent
and responsible manner.
1.1 Vision and Strategy
PureCircle’s vision is to lead the global expansion of stevia
as the next mass volume natural sweetener. All mass volume
sweeteners have four characteristics:
• Great taste
• Economic pricing
• Scalable supply
• Sustainable supply
Only sugar, corn and stevia fulfill these four criteria. Of
these only stevia has the added advantage of contributing
no calories to food and beverage and has a low glycemic
index, making it safe for diabetics. Additionally stevia has the
benefit of having excellent application synergies with sugar
and corn as well as cost advantages that can offset corn
and sugar sweetener input costs. In today’s market where
consumers are requiring healthier, more natural choices
and manufacturers are looking to meet this demand while
continually driving cost efficiencies, stevia is a clear solution.
Our vision is to grow stevia to become a multi-billion dollar
global market. With sustained growth over several decades,
we expect it to take a significant share of the USD60 billion
natural mass volume sweetener market. In achieving this
vision, it is expected stevia will be commonly used as a
complement to sugar and corn sweeteners – reducing
calories in major mainstream brands around the world.
With this vision in mind, PureCircle is focused on three
core strategies:
1. Developing the global stevia market and securing
market share – Our sales and marketing activities are
directed towards contracts with the world’s leading food
and beverage manufacturers and supporting them with
consumer insights and education and technical support
and innovation for their product development.
2. Scaling and sustaining supply – Our supply chain focus
is on all elements necessary to ensure we are prepared to
scale rapidly in line with global demand on a sustainable
basis, through such activities as plant breeding, agricultural
diversification, processing efficiencies and expansion. In the
process, we will deliver mass volume supply at economic
prices.
3. Delivering innovation leadership – The high purity stevia
industry will develop over many decades. Innovation
will enable wider and deeper usage across all food and
beverage categories. Innovation is at the core of our
business and we will use innovation to continue to lead
the growth of the industry.
18
1.0 Overview
1.2 Our Market
Consumers are seeking an ingredient that provides great
tasting sweetness but which also supports the natural and
healthy lifestyle characteristics being demanded of 21st
century food and beverage products. Stevia ingredients
are well positioned to meet the mainstream consumer
requirements for a complementary ingredient to sugar
and corn.
ingredients at high quality, in the high quantity and with the
high reliability required by food and beverage companies
worldwide.
As well as looking to address the growing health concerns
of consumers, food and beverage producers are continually
seeking for efficient solutions to offset commodity price
increases of recent years.
Stevia is a plant-based, no-calorie, natural ingredient
that has been used for hundreds of years as a regular part
of some regional diets. Extracts from stevia have been
used as forms of sweetener for many centuries without
ever becoming mainstream. PureCircle has addressed the
technological issues and overcome the hurdles associated
with developing a major new ingredient market.
High purity stevia is the only viable mass volume natural
ingredient complement to sugar and corn currently in
commercial development. PureCircle believes it is unique
in its ability to produce a portfolio of high purity stevia
1.3 Highlights For The Year
Financial highlights
The audited results for FY 2012 comprising the Group’s consolidated statement of comprehensive income, statement of
financial position and statement of cash flows are set out on pages 25 to 28. A summary of the financials for FY 2012
with FY 2011 comparatives is set out below.
Summary financials
Sales
FY 2012
USD’000
FY 2011
USD’000
45,412
53,262
Gross profit
4,897
4,100
Foreign exchange
(2,144)
5,241
EBITDA
(15,171)
(9,902)
Net loss after tax
(23,278)
(18,502)
4,513
(10,453)
Net cash from/(for) operations, before interest and financing
Inventories
73,656
96,503
Cash and short-term deposits
24,288
43,137
Net debt
(78,063)
(70,871)
Gross assets
233,349
266,719
Net assets
119,476
143,058
13
19
PureCircle Annual Report 2012
Sales: In FY 2012 sales were USD7.8m (15%) lower than
FY 2011. This reflected FY 2012 being the first year in the
Company’s history with no pre-committed “Take or Pay”
contracted sales, which had totalled USD22m in FY 2011
(USD29m in FY 2010 and USD54m in FY 2009). Our non
“Take or Pay” high purity stevia sales have increased from
USD6m in FY 2010 to USD39m in FY 2012, with FY 2012
volume growth of 125%.
Sales volumes: In FY 2012 total volumes of high purity
stevia increased by 26%. Volume increases were led
by sales of the portfolio of proprietary new ingredients
introduced over the past eighteen months (Alpha, SG95,
Natural Flavor™ range), each of which increased by more
than 100%. The Group has established a portfolio of
ingredients and a well balanced mix of sales is
anticipated going forward.
Despite the volume increase, FY 2012 sales levels remained
sub-scale and did not reflect the strong growth in end
market usage of high purity stevia. This is principally due
to the continued impact of inventory at Beverage Global
Key Accounts (BGKAs).
Gross profit: In FY 2012 gross profit was USD4.9m
(11% of sales), an increase of USD0.8m (19%) over FY
2011, despite the lower sales revenues. The Group’s
variable contribution margin for high purity stevia revenues
improved by ten percentage points over FY 2011, reflecting
improved product mix and lower variable costs.
Foreign exchange: In FY 2012 the Group incurred foreign
exchange costs of USD2.1m against gains in FY 2011 of
USD5.2m, a year-on-year profit impact of USD7.3m.
EBITDA: In FY 2012 the Group’s EBITDA was a loss
of USD15.2m which was USD5.3m higher than the loss
of USD9.9m reported in FY 2011, reflecting the foreign
exchange noted earlier. Both years have been impacted
by the exceptional costs relating to the temporary slowing
down of Reb A production which was effected across
CY 2011 so as to reduce Reb A inventory to levels better
aligned with current market demand. Production of
Reb A increased in early calendar 2012.
In FY 2012 the Group’s total cost base reduced by USD3m
despite supporting higher sales volumes and the Group’s
USD1m share of sales and marketing investment in our EU
Joint Ventures.
Net cash from operations, before financing: The Group
generated USD4.5m of operating cash flow before interest
and financing, a USD15m cash flow improvement on prior
year.
Inventories: At USD74m inventories are USD23m lower
than at June 2011 and USD40m lower than their peak at
December 2010. Further reductions are expected as sales
20
volumes increase before they stabilise at a consistent
proportion of sales demand.
Cash and net debt: The Group ended FY 2012 with
gross cash of USD24m, net debt of USD78m and cash
and facility headroom of USD44m. Headroom was further
boosted after the year end with the USD31m proceeds
of our Private Placement completed in August 2012. The
Group is sufficiently funded for its current expansion plans.
Business developments
Overview: With our technologies proven and our production
scaled, our business development focus is concentrated
on increasing global usage of high purity stevia. There were
encouraging developments in usage across FY 2012 that
suggests large scale adoption will be apparent during CY
2013 and CY 2014.
F&B product launches: Up to August 2012 F&B
product launches with high purity stevia are running at a
rate of 1,000 new launches for CY 2012, a 65% increase
over CY 2011 and taking total products launched with high
purity stevia to more than 2,600 (source Datamonitor).
Encouragingly PureCircle stevia ingredients are being used
across the full range of F&B product innovation including
reformulations of existing mainstream products, brand
extensions and new product launches.
EU impact: EU clearance for high purity stevia was achieved
in December 2011, thus opening up the world’s largest single
sweetener market. Although it had only modest impact on
FY 2012 sales, EU adoption of high purity stevia has been
fast and is accelerating with almost 400 launches in the EU.
High purity stevia ingredient products are now on sale in 49
countries (both sources Datamonitor).
Carbonated Soft Drinks (CSDs): Due to their global
ubiquity, CSDs are likely to represent the largest single
category volume for high purity stevia. FY 2012 saw
encouraging progress with a number of high purity
stevia sweetened CSD launches notably including the
reformulation of Sprite in France in April 2012 and
Fanta in China in February 2012.
Wider F&B category penetration: In FY 2012 F&B
launches were made in a number of new categories
including confectionery, ketchups and dairy.
Customer base: PureCircle is building a diversified
customer base. In FY 2012 we sold to 121 different
customers around the world, counting each Global Key
Accounts as just one customer. Our largest customer in FY
2012 represented 8.5% of revenues and was not a Beverage
GKA and our top ten customers amounted for only 60% of
sales. The numbers of orders we process has increased with
a current monthly average in excess of 100 customer orders.
1.0 Overview
Geographical spread: In FY 2012 the Group sold to 47
different countries of destination. The USA now represents
40% of total sales, with strong growth in sales to China,
Mexico, Europe and Brazil.
Regulatory: High purity stevia now has regulatory
approval in most major markets. FY 2012 approvals
included Indonesia and Philippines as well as the EU.
The key remaining countries are India, Canada, Thailand
and South Africa. Approval is expected in all of these
before end June 2013 and will provide a further 1.6 billion
new consumers with access to high purity stevia.
PureCircle product portfolio: FY 2012 was the first
full year of sales for our proprietary ingredients SG95 and
Natural Flavor™ range; in addition in FY 2012 we launched
Alpha. Reb A represented just 40% of our total revenues
(FY 2009: 90%). Our enhanced ingredient range comprises
new products developed specifically in response to
customer needs and they are proprietary. Market response
has been positive, with year-on-year sales growth well in
excess of 100% and pipeline growth even higher.
PureCircle’s innovation is what sets us apart in the industry
and we have further innovative product plans in the pipeline.
Technical support: We have expanded our technical
support opening application laboratories in key markets such
as Europe (UK), China and soon Mexico. We have developed
the PureCircle University programme in response to customer
demand for direct access to our technical support. Launched
in FY 2012 this already has a strong pipeline of customer
participation and is building deep relationships.
Stevia advocacy and sustainability initiatives: Our
initiatives continue to provide real industry leadership and
long-term value for PureCircle.
• T he PureCircle Stevia Trustmark™ is now used on 160
products launched across 32 countries with additional
product launches in the pipeline for FY 2013.
Supply chain: In FY 2012 our supply chain supported
overall sales volume increases of over 26% and delivered
new product volumes up more than 100% on a lower cost
base and with reduced variable costs. This provides a
platform for improved profitability as sales volumes increase.
The true extent of the production efficiency gains made
in FY 2012 is masked by the one-off costs and the higher
production overheads charged to profit due to lower
inventory levels.
Commenting on the audited results, the Chairman Paul
Selway-Swift said:
“FY 2012 was the first year that our sales
were not supported by committed “Take or
Pay” contracts. Despite this our high purity
stevia sales volumes increased. Further
some 85% of sales comprised demand that
did not exist three years ago. This augurs
well for future sales growth.
Our recent results have been impacted by
the tough decisions we made in 2011 to
slowdown Reb A production temporarily to
better align inventories to current market
demand. Results should improve as the
evident growth in market usage of our
products starts to translate into higher
sales.
We remain confident of the future of our
high purity stevia business but continue our
guidance that this should be seen as a mid
to long-term opportunity.”
• Our carbon and water footprint audits are being
developed further to provide clear consumer benefits to
our customers.
• O ur Insights Group is building market studies directly in
partnership with key customers.
• T he Global Stevia Institute (GSI) is now established with
advisers active across 4 continents. The GSI now attracts
3,000 subscribers to its monthly newsletter.
Joint Ventures: With the opening of the EU market,
FY 2012 saw the first sales contributions from our Joint
Ventures. The pace of F&B launches in the EU suggests
that the JVs will experience sales growth in future years.
21
PureCircle Annual Report 2012
2.0
Business
Review
Datamonitor reports F&B products using high purity stevia
launching across CY 2012 to-date at an annual rate of 1,000
new products, an increase of 65% on a year ago and 606%
increase since the start of 2009. More than 2,600 products
have now been launched using high purity stevia as an
ingredient.
2.1 Chairman’s Statement
Stevia product launches have been reported in more than
49 countries in CY 2012, boosted by the opening of the
EU market in December 2011. The EU, which is the world’s
largest market for sweeteners, has seen more than 40% of
the total new launches made to-date in CY 2012.
FY 2012 has been a year of considerable progress in the
development of the high purity stevia industry and in the
establishment of PureCircle as the leading company in the
industry, although clearly that progress is not yet evident
in our reported financial results.
Consumer awareness of stevia continues to grow sharply.
In the USA consumer awareness is over 62%, up more than
30 percentage points from 3 years ago. In Germany and
France awareness is already at or above 50%, almost 30
percentage points higher than in 2010.
Notable milestones for the high purity stevia industry have
included regulatory approval for the EU market in December
2011, which opens up the world’s largest sweetener market,
and the first launches of major Carbonated Soft Drinks
containing high purity stevia. Each of these developments
increases materially the addressable market for high purity
stevia.
Regulatory
During FY 2012 PureCircle has further diversified its
customer base, delivered new proprietary ingredients
to market, increased sales volumes by more than 26%
and reduced its cost base, whilst continuing to invest in
innovation and leaf development. These developments
all provide confidence in the robustness and
sustainability of our business model.
We remain confident about the long-term future of the high
purity stevia industry and of the opportunity for PureCircle
to play the leading role in it. PureCircle is operationally
geared and our financial results are sensitive to sales
revenues. Our guidance remains that it is likely to be CY
2013 or 2014 before mass volume adoption of high purity
stevia is evident and the benefits of increased usage
starts to be reflected in our results.
2.2 Chief Executive’s Review
1. Operations
1.1 Market
Our market is defined by the demand for our proprietary
ingredients by the world’s food and beverage (F&B)
companies. In turn the size and dynamics of this market
are influenced by the end-consumer demand for F&B
products using PureCircle ingredients. FY 2012 saw
important growth in our market and in consumer
demand for high purity stevia.
22
With the opening of the EU, Indonesia and Philippines
markets, high purity stevia is now approved in almost all
major consumer markets. India, Thailand, Canada and
South Africa, which are the principal countries still awaiting
clearances are each expected to secure approval within
twelve months. When they do so, approval will grant about
1.6billion new potential consumers access to high purity
stevia, representing almost 23% of the world’s population.
Other commodity sweeteners
In FY 2012 both sugar and high fructose corn syrup
continued to experience tightening of supply against
demand and volatility in their pricing. These trends can
only help the future development of mass volume
demand for PureCircle ingredients.
1.2 Sales
In FY 2012 our sales of USD45.4m were USD8m (15%)
lower than FY 2011. This reflected FY 2012 being the first
year in the Company’s history with no pre-committed “Take
or Pay” contracted sales, which had totalled USD22m in FY
2011, USD29m in FY 2010 and USD54m in FY 2009. Our
non “Take or Pay” high purity stevia sales have increased
from USD6m in FY 2010 to USD39m in FY 2012, with FY
2012 volume growth of 125%.
In FY 2012 total volumes of high purity stevia increased by
26%. Volume increases were led by sales of the portfolio
of proprietary new ingredients introduced over the past
eighteen months (Alpha, SG95, Natural Flavor™ range),
each of which increased by more than 100%. Reb A
contributed just 40% of revenues in FY 2012. This portfolio
of ingredients will help the Group to have a well balanced
mix of sales going forward.
Sales included USD1.1m share of sales by Joint Ventures,
principally from our EU partnerships with Tereos and
Nordzucker which benefitted from the opening of the EU
market in December 2011.
During FY 2012 PureCircle further extended its customer
base in all markets, with the largest increases seen in the
newly opened EU market, where customers are serviced
principally through our Joint Ventures, China and in Latin
America. In FY 2012 we serviced more than 121 customers,
with each Global Key Account counting as just one. Our
largest customer represented just 8.5% of sales and was
not a Beverage Global Key Account. In FY 2012 PureCircle
sold into 47 countries: the USA represented 40% of sales,
followed by China, Mexico and the EU.
Reviewing the food and beverage products launched into
market that are using high purity stevia, it is clear that
PureCircle and our partners continue to secure the major
share of market. This has been further underpinned by the
successes of our proprietary new products launched
within the last eighteen months.
1.3 Marketing and technical support
We have expanded out technical support and further
developed our stevia advocacy and sustainability platforms.
We have opened application support laboratories in Europe
(UK) and China and, soon to be opened, Mexico. Our
pipeline of customer technical projects is growing and
the number of customer working sessions has increased
significantly.
Our stevia technical support, advocacy and sustainability
initiatives are based on the five platforms of the Global
Stevia Institute, the PureCircle Insights Group, the
PureCircle Trustmark solutions, PureCircle University and
our sustainable partnerships. Each have developed strongly
during the year under review and are now each recognised
as industry leaders in their own right. Each provides an
excellent basis for deeper partnership relationships with our
customers.
• T he PureCircle Stevia Trustmark™ is now used on 160
products launched across 32 countries with additional
product launches in the pipeline for FY 2013.
• O ur carbon and water footprint audits are being
developed further to provide clear consumer benefits
to our customers.
advisers active across 4 continents. The GSI now attracts
3,000 subscribers to its monthly newsletter.
2.0 Business Review
Co-products were USD6m (15%) of FY 2012 revenues
(FY 2011 USD7m).
• The PureCircle University programme was developed in
response to customer demand for direct access to our
technical support. Launched in FY 2012 this already has
a strong pipeline of customer participation and is building
deep relationships.
1.4 Supply chain
In FY 2012 leaf supply has been further diversified and
strengthened with Kenya, Paraguay and USA being added
to China. Although Reb A production was slowed down in
CY 2011 production of other products in portfolio increased
strongly as reflected in the higher overall volume of high
purity stevia sold. This was achieved on a lower total cost
base and with lower variable costs.
Overall the supply chain is in robust shape and ready to
respond to increased market demand in the future.
1.5 R&D
The Group actively continued to invest in innovation and
is working to commercialize new and exciting products to
further strengthen its portfolio and enhance future earnings.
2. Management
The Group has ambitious long-term growth plans. To deliver
these we will continue to invest in management with the
skills and experience to drive and support our growth plans
in all aspects of our business. Our priority in FY 2012 has
been sales and marketing with investment focusing on
our EU, China and Latin America sales businesses and on
expanding our technical and application capacity.
Moving forward we will strengthen further our global supply
chain and logistics to better service the anticipated increase
in demand.
3. Group Financial Review
The Group’s FY 2012 financial year covers the period from
1 July 2011 to 30 June 2012. FY 2011 comparatives are for
the period from 1 July 2010 to 30 June 2011.
Set out on page 24 is an extract from the audited FY 2012
accounts. The full consolidated statement of comprehensive
income, statement of financial position and statement of
cash flows follow in pages 25 to 28.
• Our Insights Group is building market studies directly
in partnership with key customers.
• T he Global Stevia Institute (GSI) is now established with
23
PureCircle Annual Report 2012
Trading
FY 2012
USD ‘000
FY 2011
USD ‘000
Revenue
45,412
53,262
Gain/(loss) on biological assets
Cost of sales
Gross profit
Gross profit margin %
Other income and expenses
(16)
(40,516)
(49,146)
4,897
4,100
11%
8%
(7,006)
3,647
Selling and administrative expenses
(17,096)
(19,356)
Operating loss
(19,205)
(11,898)
Finance costs
(7,452)
(7,644)
Taxation
3,379
1,040
Loss for the financial year
(23,278)
(18,502)
EBITDA
(15,171)
(9,902)
Segmental reporting: The Group operates as a single
segment company comprising the integrated production
and marketing of high purity stevia products.
Sales: Sales for FY 2012 were USD8m (15%) lower than
FY 2011. This reflected FY 2012 being the first year in the
Company’s history with no pre-committed “Take or Pay”
contracted sales, which had totalled USD22m in FY 2011
(USD29m in FY 2010 and USD54m in FY 2009). Our non
“Take or Pay” high purity stevia sales have increased from
USD6m in FY 2010 to USD39m in FY 2012, with FY 2012
volume growth of 125%.
Sales volumes: In FY 2012 total volumes of high purity
stevia increased by 26%. Volume increases were led by sales
of the portfolio of proprietary new products introduced over the
past eighteen months (Alpha, SG95, Natural Flavor™ range),
each of which increased by more than 100%. The Group has
established a portfolio of products and a well balanced mix
of sales is anticipated going forward.
Despite the volume increase, FY 2012 sales levels
remained sub-scale and did not reflect the strong growth
in end market usage of high purity stevia. This is principally
due to the continued impact of inventory at Beverage
Global Key Accounts (BGKAs).
24
1
EBITDA: In FY 2012 the Group’s EBITDA was a loss
of USD15.2m which was USD5.3m higher than the loss
of USD9.9m reported in FY 2011, reflecting the foreign
exchange noted earlier. Both years have been impacted
by the exceptional costs relating to the temporary slowing
down of Reb A production which was effected across
CY 2011 so as to reduce Reb A inventory to levels better
aligned with current market demand. Production of Reb A
increased back to normal levels in early calendar 2012.
In FY 2012 the Group’s total cost base reduced by USD3m
despite supporting higher sales volumes and the Group’s
USD1m share of sales and marketing investment in our EU
Joint Ventures.
Net cash from operations, before financing: The Group
generated USD4.5m of operating cash flow before interest
and financing, a USD15m cash flow improvement on prior
year.
Inventories: At USD74m inventories are USD23m lower
than at June 2011 and USD40m lower than their peak at
December 2010. Further reductions are expected as sales
volumes increase before they stabilise at a consistent
proportion of sales demand.
Gross profit: In FY 2012 gross profit was USD4.9m (11%
of sales), an increase of USD0.8m (19%) over FY 2011,
despite the lower sales revenues. The Group’s variable
contribution margin for high purity stevia revenues improved
by ten percentage points over FY 2011, reflecting improved
product mix and lower variable costs.
Cash and net debt: The Group ended FY 2012 with gross
cash of USD24m, net debt of USD78m and cash and facility
headroom of USD44m. The Group’s net debt has remained
constant since December 2010, USD77m reflecting the
Group being operating cash flow neutral across the period,
despite the relatively low sales volumes and the temporary
production slowdown.
Foreign exchange: In FY 2012 the Group incurred foreign
exchange costs of USD2.1m against gains in FY 2011 of
USD5.2m, a year-on-year profit impact of USD7.3m. This is
included in other income and expenses.
Our cash and facility headroom was further boosted after
the year end with the USD31m proceeds of the Private
Placement completed in August 2012. The Group is
sufficiently funded for its current expansion plans.
2.0 Business Review
Gross assets: The Group has gross assets of USD233m.
This represents the fully invested supply chain that is
capable of delivering 2,800 tonnes of high purity stevia in a
flexible manner reflecting the Group’s portfolio of proprietary
products. When running at capacity the existing supply
chain can support sales of at least USD280 million to
USD300 million.
Audited Consolidated Statement of Comprehensive Income
30.06.2012
USD’000
30.06.2011
USD’000
Revenue
Fair value gain/(loss) on biological assets
Cost of sales
Gross profit
45,412
1
(40,516)
4,897
53,262
(16)
(49,146)
4,100
Selling and administrative expenses
Other income
Other expenses
Finance income
Finance costs
Loss before taxation
Income tax
Loss for the financial year
(17,096)
1,040
(8,046)
377
(7,829)
(26,657)
3,379
(23,278)
(19,356)
7,924
(4,566)
289
(7,933)
(19,542)
1,040
(18,502)
Other comprehensive (loss)/income (net of tax)
Exchange differences arising on translation of foreign operations
Total comprehensive loss for the financial year (net of tax)
297
(22,981)
1,331
(17,171)
(23,255)
(23)
(23,278)
(18,362)
(140)
(18,502)
(22,971)
(10)
(22,981)
(17,042)
(129)
(17,171)
(15.06)
NA
(11.93)
NA
Loss for the financial year attributable to
Owners of the Company
Non-controlling interest
Total comprehensive loss attributable to
Owners of the Company
Non-controlling interest
Loss per share (US cents)
- Basic
- Diluted
Note: NA denotes Not Applicable.
25
PureCircle Annual Report 2012
Audited Statement of Financial Position
30.06.2012
USD’000
30.06.2011
USD’000
26,812
66,586
6,047
3,102
6,209
108,756
24,674
70,698
5,229
3,094
3,573
107,268
Total Assets
73,656
21,827
4,778
44
9,733
14,555
124,593
233,349
96,503
14,160
5,527
124
11,817
31,320
159,451
266,719
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Foreign exchange translation reserve
Share option reserve
Accumulated losses
Equity attributable to owners of the Company
Non-controlling interest
Total Equity
15,449
132,330
1,868
204
(31,027)
118,824
652
119,476
15,406
131,620
1,584
1,552
(7,772)
142,390
668
143,058
594
84,026
548
85,168
1,458
88,997
612
91,067
3,625
5,932
789
34
18,325
28,705
2,541
4,581
423
38
25,011
32,594
113,873
233,349
0.77
123,661
266,719
0.93
ASSETS
Non-Current Assets
Intangible assets
Property, plant and equipment
Biological assets
Prepaid land lease payments
Deferred tax assets
Current Assets
Inventories
Trade receivables
Other receivables, deposits and prepayments
Tax recoverable
Short-term deposits with licensed banks
Cash and bank balances
Non-Current Liabilities
Deferred tax liabilities
Long-term borrowings
Deferred income
Current Liabilities
Trade payables
Other payables and accruals
Amount due to joint venture partners
Income tax liabilities
Short-term borrowings
Total Liabilities
Total Equity and Liabilities
Net Assets Per Share (USD)
26
30.06.2012
USD’000
30.06.2011
USD’000
2.0 Business Review
Audited Consolidated Statement of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation
(26,657)
(19,542)
134
148
Adjustments for:
Amortisation of prepaid land lease payments
Amortisation of deferred income
(77)
(76)
Depreciation of property, plant and equipment
3,900
5,018
Interest expense
7,829
7,933
Interest income
Loss on disposal of plant and equipment
Share-based payment (credit)/expense
Intangible assets written-off
(377)
50
(595)
(289)
112
1,415
-
271
291
33
Plant and equipment written-off
-
2,079
Write-off of biological assets
-
1,046
Inventories written-off
Change in fair value of biological asset
Unrealised exchange gain
(1)
16
(1,139)
(5,658)
Operating cash flow before working capital changes
(16,642)
(7,494)
Decrease/(Increase) in inventories
24,330
(17,217)
(Increase)/Decrease in biological assets
(1,009)
3,142
(Increase)/Decrease in trade and other receivables
(6,284)
12,324
Increase/(Decrease) in trade and other payables
3,735
(811)
383
(397)
4,513
(10,453)
Decrease/(Increase) in restricted cash
Net cash from/(for) operations
Interest received
Interest paid
Tax paid
377
(7,829)
289
(7,933)
(23)
(587)
(2,962)
(18,684)
Addition of intangible assets
(2,573)
(2,392)
Addition of property, plant and equipment
(2,070)
(4,098)
Net cash for operating activities
CASH FLOWS FOR INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment
106
308
Net cash for investing activities
(4,537)
(6,182)
Balance carried forward
(7,499)
(24,866)
27
PureCircle Annual Report 2012
Audited Condolidated Statement of Cash Flows (continued)
30.06.2012
USD’000
Balance brought forward
30.06.2011
USD’000
(7,499)
(24,866)
Drawdown of borrowings
11,233
29,800
Repayment of borrowings
(21,254)
(26,957)
(61)
(141)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of hire purchase
Net cash (for)/from financing activities
Effects of foreign exchange rate changes on cash and cash equivalents
28
(10,082)
2,702
(1,061)
1,303
Cash and cash equivalents at beginning of the year
41,813
62,674
Cash and cash equivalents at end of the financial year
23,171
41,813
Corporate
Governance
• Tan Boon Seng is the Chairman and Managing Director
of Lee Hing Development Limited, a company listed on
the Hong Kong Stock Exchange and the holding company
of Wang Tak Company Limited ("Wang Tak"), of which he
is also a director. Wang Tak holds 11.7% equity interest
in the Company.
3.0 Corporate Governance
3.0
The roles of the Chairman and Chief Executive are separate
and clearly defined.
3.1 Corporate Governance Report
The Financial Services Authority requires London Stock
Exchange main Board listed companies incorporated in
the UK to state in their report and accounts whether they
comply with the UK Corporate Governance Code (formerly
the Combined Code) and identify and give reasons for
any areas of non-compliance. PureCircle is listed on AIM
and incorporated in Bermuda and therefore, no formal
disclosures are required.
However, the Board is fully aware and is committed to
achieving good standards of corporate governance, integrity
and business ethics for all activities. The Directors of
PureCircle regard corporate governance as important to
the success of the Company’s business and are committed
to applying the principles necessary to ensure that good
governance is practised in all of its business dealings in
respect of all its stakeholders.
The following section sets out how PureCircle has applied
the principles and provisions of the Code in the running of
the Board.
The Board
Board composition and Board independence
The Board comprises a Non-Executive Chairman, two
Executive Directors and five other Non-Executive Directors.
Collectively, they have a diverse range of knowledge and
commercial experience and serve the function of bringing
objective judgement on the development, performance and
risk management of the Group through their contributions
in board meetings. With the exception of Sunny Verghese,
John Slosar and Tan Boon Seng, the Board considers all
the Non-Executive Directors to be independent.
At the date of this report:
• S unny Verghese is the Group Managing Director of Olam
International Limited (“Olam”). Olam holds 18.6% equity
interest in the Company.
• J ohn Slosar is the Chief Executive Officer of Cathay
Pacific Ltd and Chairman of Swire Beverages which
are partly owned by the Swire Group. Swire Beverages
Holdings Ltd holds a total of 3.5% equity interest in the
Company.
The role of the Board
The Board’s principal responsibility is to deliver shareholder
value and provide an overall vision and leadership for the
Group. It also has an oversight role, monitoring operational
plans and ensuring internal controls and risk management
are effective. There is a formal schedule of matters reserved
for the Board, which provides a framework for it to oversee
the control of the Group’s direction and affairs.
The schedule of matters reserved include the approval of
the financial statements and dividends, strategy, acquisitions
and disposals, major projects, contracts, delegated
authorities, major capital expenditure, risk management
strategies, health and safety and succession planning.
Whilst the CEO and Executive Directors are responsible for
recommending the overall strategy of the Group, the Board
meets at least once a year to review strategy and the future
of the business. Implementation of the strategy is delegated
by the CEO and Executive Directors to the Executive
management team.
The Directors are satisfied that the Board continues to
deliver a strategic vision and effective leadership for the
Group.
Meeting attendance
The table below shows the number of board meetings held
during the year and the attendance of individual Directors.
Number of Board meetings held in FY 2012
4
Paul Selway-Swift
4
Magomet Malsagov
4
William Mitchell
4
Olivier Maes
4
John Slosar
4
Peter Lai Hock Meng
4
Sunny Verghese
4
Tan Boon Seng
*
*Tan Boon Seng was appointed on 9 August 2012 which is after the
financial year has ended.
29
PureCircle Annual Report 2012
Chairman
Paul Selway-Swift who is the Chairman of PureCircle Limited
also chairs the Nomination Committee.
The Chairman carries responsibility for ensuring the efficient
operation of the Board and its Committees, for ensuring
that corporate governance matters are addressed, and for
representing the Group externally and communicating with
shareholders when required.
The Chairman of each Committee provides a report of that
Committee at the next Board meeting.
Chief Executive Officer
Audit Committee
The CEO, Magomet Malsagov, is responsible for the
Executive management of the Group. He has responsibility
to recommend and to implement the Group’s strategic
objectives.
Independent directors
The Independent Directors are Paul Selway-Swift, Olivier
Maes and Peter Lai Hock Meng.
Their responsibilities include being available to liaise with
shareholders should this be necessary.
Board processes
The Board is scheduled to meet on a quarterly basis, and in
any event no less than four times a year. The Board will meet
at least once a year to review the strategic direction of the
Group. In addition to normal scheduled meetings, the Board
will convene as required.
All Directors have access to and may, in furtherance of
their duties, seek independent professional advice at the
Company’s expense.
The Chairman and Non-Executive Directors will meet
annually without the Executive Directors present. In
accordance with the Company’s Bye-Law, at each AGM, up
to one-third of the Directors are required to retire by rotation
each year, with priority for retirement being those Directors
who have been in office longest since last appointment
or re-appointment. In addition, any Director appointed
during the year is subject to election at the AGM after their
appointment. The Non-Executive Directors are appointed
for an initial three-year term after which they are subject to
annual re-appointment.
Board performance and evaluation
The Board is committed to evaluating its own performance.
This is an ongoing process led by the Chairman and the
Independent Directors.
Board Committees
The Board is assisted in discharging its responsibilities
through three principal committees: Audit Committee;
30
Remuneration Committee and Nomination Committee which
were formally established in March 2008. Membership of
the Audit and Remuneration Committees consists wholly of
Non-Executive Directors.
A summary of the Committees of the Board and their
membership is set out below:
Number of meetings held in FY 2012
2
Peter Lai Hock Meng (Chairman)
2
John Slosar
2
Olivier Maes
2
The Audit Committee is responsible for making
recommendations to the Board on the appointment and
terms of reference of the auditors and to receive and review
reports from management and the Company’s auditors on
the financial accounts and internal control systems used
throughout the Company. The Board believes that members
of the Committee have recent and relevant financial
experience.
The external Auditors, the CEO, CFO and VP-Group
Controller will regularly attend meetings at the invitation of
the Committee.
Group financial statements
The Audit Committee is responsible for the integrity of the
financial statements and the Group’s internal controls and
risk management structure. The Committee’s deliberations
will include the following matters:
• the review of the financial results in advance of their
consideration by the Board, paying particular attention to
significant financial reporting judgements, any changes in
accounting policies and practices and any findings post
audit;
• the review of the nature and scope of the external audit
and the findings of the Auditors in respect of Annual and
Interim Reports;
• the review of the Auditors’ independence and the policy
on the provision of non-audit services;
• m onitoring the Group’s financial and non-financial risk and
internal controls;
• the review of the effectiveness of the internal systems with
respect to financial control and Group risk;
• a review of the necessity for an internal audit function; and
The Report of the Remuneration Committee can be found
on pages 32 to 33 of the Report.
Internal control and risk management
Nomination Committee
Number of meetings held in FY 2012
Nil
Paul Selway-Swift (Chairman)
Nil
Magomet Malsagov
Nil
Olivier Maes
Nil
The Committee met once after the financial year end but
prior to the date of this report.
3.0 Corporate Governance
• a review of the means by which employees may raise
concerns regarding the systems of internal financial
control.
The Board is responsible for establishing, reviewing and
maintaining the Group’s systems of internal control and risk
management and ensuring that these systems are effective
for managing the business risk within the Group.
The Group will annually review the effectiveness of the risk
management system and its internal controls to safeguard
shareholders’ investments and the Group’s assets whilst
ensuring that proper accounting records are maintained.
The Company and its shareholders
The Committee is responsible for reviewing the structure,
size, composition and skills of the Board, presenting suitable
candidates to fill Board vacancies, reviewing succession
planning for the Board and senior managers, evaluating
the time commitment of the Chairman and Non-Executive
Directors, undertaking the performance evaluation of the
Board and reviewing the reappointment of Non-Executive
Directors.
The Committee is responsible for assessing the composition,
diversity and skill set of the Board and is aware that as the
Company grows there may be a future need to expand the
size of the Board. The Committee will regularly review this
need. There is a robust procedure for selecting candidates
for vacancies. The Committee’s performance is evaluated
as part of the overall Board evaluation exercise.
Remuneration Committee
Number of meetings held in FY 2012
3
Olivier Maes (Chairman)
3
Paul Selway-Swift
3
John Slosar
3
The Board is committed to a continuing dialogue with its
shareholders.
Following the announcement and presentation of the
year-end results, there are a series of formal meetings with
shareholders. These meetings are a two-way dialogue
whereby the Executive Directors can apprise the investors of
the Group’s business and future plans and the shareholders
can communicate any concerns they may have. The NonExecutive Directors and Chairman are available to attend
these meetings if requested. The Company’s brokers provide
feedback from the shareholder and analyst meetings and
present the results to the Board.
The Group’s investor relations section on its website
contains information on the Group’s financial results, its
corporate policies, its press releases and announcements
as well as analysts’ presentations.
The Group holds a series of meeting with institutional
investors whereas the principal method of communication
with private investors are by way of Annual Report and
Accounts, press releases and announcements, the Annual
General Meeting and the Group’s corporate website
(www.purecircle.com).
The Remuneration Committee held three meetings during
the financial year as set out above. The Executive Directors
and relevant management attend the meeting by invitation
as required. No individual is present when his or her own
remuneration is under consideration.
The role of the Remuneration Committee is to review the
performance of the Executive Directors and other senior
executives and to set the scale and structure of their
remuneration, including annual bonus arrangements and
Long-Term Incentive Plan with due regard to the interest of
shareholders. The Remuneration Committee administers
and establishes performance targets for share incentive
schemes and determine the allocation of share incentives
to employees.
31
PureCircle Annual Report 2012
3.2Report of the Remuneration Committee
The Company’s Remuneration Committee is chaired by Olivier Maes with Paul Selway-Swift and John Slosar as members.
The Remuneration Committee meets at least once a year and is tasked to advise on remuneration policy for the Executive
Directors and senior management. It also reviews and approves Long-Term Incentive Plan for eligible employees.
Remuneration policy
The Remuneration Committee sets the overall remuneration policy designed in line with the Company’s long-term
business goals. Individual remuneration packages are determined by the Remuneration Committee within the framework
of the following policy.
The Executive Directors’ remuneration packages comprise the following components:
a.Annual salary – the actual salary for each of the Executive Director that reflects the experience and performance of each
individual and taking into account of market competitiveness;
b.Annual incentive payment – the Executive Directors are entitled to annual bonuses relates to performance of the
Company and other internal targets; and
c.Share options under the Long-Term Incentive Plan (“LTIP”) that is approved by the Remuneration Committee.
The aggregate amount of emoluments received by Directors of the Group during the financial year are as follows:
FY 2012
USD’000
FY 2011
USD’000
Magomet Malsagov
271
126
WIlliam Mitchell
270
313
Paul Selway-Swift
88
88
John Slosar
34
39
Olivier Maes
39
43
54*
43
Nil
Nil
756
652
Executive Directors
Non-Executive Directors
Peter Lai Hock Meng
Sunny Verghese
*includes USD11,000 of professional fees
32
3.0 Corporate Governance
Directors’ interests in share options
Directors’ interests in share options of the Company as at 30 June 2012 were as follows:
Magomet Malsagov
William Mitchell
1 July
2011
Granted
Exercised
30 June 2012
Exercise
price
Date from which
exerciseable
Expiry date
30,000
-
-
30,000
158p
16 Apr 2010
16 Apr 2015
42,436
-
-
Nil
N/A
N/A
212,872
-
-
212,872
Nil
30 Nov 2013
30 Jun 2015
-
213,128
-
213,128
Nil
20 Sept 2014
30 Jun 2015
285,308
213,128
215,000
Nil
30 Nov 2013
30 Jun 2015
-
Nil
N/A
N/A
66,000
Nil
20 Sept 2014
30 Jun 2015
215,000
-
20,227
6,678
(42,436)
(42,436)
(26,905)
-
456,000
-
66,000
235,227
72,678
(26,905)
281,000
John Slosar
12,500
21,700
(23,350)
10,850
Nil
10 July 2012
10 July 2012
Olivier Maes
14,000
24,400
(26,200)
12,200
Nil
10 July 2012
10 July 2012
Peter Lai Hock Meng
21,500
27,100
(35,050)
13,550
Nil
10 July 2012
10 July 2012
48,000
73,200
(84,600)
36,600
Non-Executive Directors
Share options to Executive Directors are awarded by the
Remuneration Committee under the Company’s Long-Term
Incentive Plan. Except for the options with exercise price of
158 pence, options awarded to Executive Directors can only
be exercised if certain Performance Conditions are satisfied.
The Performance Conditions are measured every year
commencing from the date of grant of the Options and ends
on 30 June 2015.
The Group Sales Turnover target (Performance Condition)
that has been approved by the Remuneration Committee
has a yearly upper and lower band. PureCircle’s actual
Group Sales turnover will be measured against these
“turnover target”.
If the actual Group Sales turnover is below the lower band,
then the Options shall not vest and shall lapse at the end
of the Options life. If the actual Group Sales turnover is at
the lower band, then the Options shall be exercisable as
to 50%. If the actual Group Sales turnover is at the upper
band, then the Options shall be exercisable as to 100%. If
the actual Group Sales turnover is between the upper and
lower band, a percentage above 50% and up to 100% of
the Options shall vest.
The share options to Non-Executive Directors were issued
in lieu of fees (including professional fees) for financial year
ended 30 June 2012 and were calculated using the market
price during July 2011 of GBP1.15 per share (USD1.84 per
share).
The Company’s Remuneration Committee is responsible
for administering the Long-Term Incentive Plan ("LTIP")
approved by the Board in June 2008. LTIP is a 10-year
discretionary benefit offered by the Company to eligible
employees, including the Executive Directors. The principal
terms of the LTIP include:
• A restriction on the Company issuing (or granting rights to
issue) 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; and
• Lapsed options (due to unmet performance condition) do
not count in calculating the total number of options issued
under the LTIP.
Please refer to Note 24 Share Option Reserve of the Notes
to the Financial Statements.
On 10 July 2012, a discretionary award of 35,000 options
was awarded to William Mitchell which will vest on 10 July
2015 at nil exercise price subject to him still being in
employment in the Company.
33
PureCircle Annual Report 2012
3.3 Director’s Report
Significant shareholders
The Directors hereby submit their report and the audited
financial statements of the Group and the statement of
financial position and summary of significant accounting
policies and other explanatory notes of the Company for
the financial year ended 30 June 2012.
At 30 June 2012, the Company had been notified of the
following interests of 3% or more in its ordinary shares.
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 sweeteners and flavours. There have been no
significant changes in the nature of these activities during
the financial year.
Business review and future developments
The financial results of the Group and the financial position
of the Group and of the Company for the financial year are
shown in the annexed financial statements.
Results and dividends
PureCircle Group’s turnover for the financial year ended
30 June 2012 was USD45 million. The PureCircle Group’s
loss attributable to the owners of the Company was USD23
million, equivalent to a loss per share of USD15.06 cents.
The Group ended the year with net assets of USD119
million, gross assets of USD233 million and gross cash
balances of USD24 million.
The Directors do not recommend payment of a dividend in
respect of the year ended 30 June 2012.
Directors and their interests
Number of Shares
Paul Selway-Swift³
Magomet Malsagov¹
308,171
15,055,612
Peter Lai Hock Meng¹
145,050
Olivier Phillipe Marie Maes¹
377,010
John Robert Slosar²
1,442,052
William Mitchell¹
1
2
3
34
Interest
Olam International Ltd
30,544,609
19.8%
Magomet Malsagov
15,055,612
9.7%
Asian Investment Management
Services Ltd and related parties
15,994,229
10.3%
Half Moon Bay Capital Ltd
12,568,734
8.1%
Wellington Management
Company LLP
8,802,712
5.7%
Investec Asset Management Ltd
9,788,227
6.3%
Wang Tak Company Limited
7,725,650
5.0%
Swire Beverages Holdings Ltd
5,800,000
3.8%
Subsequent to year end, the Company completed a private
placement (“Placement”) of 10 million new ordinary shares
at GBP2.00 per share to Wang Tak Company Limited. The
Placement raised USD31 million in new equity. At completion
Wang Tak Company Limited owns 19,276,150 shares
representing 11.7% of the issued share capital. As part
of the Placement, Mr. Tan Boon Seng, a Director of Wang
Tak Company Limited and its holding company Lee Hing
Development Limited, was invited to join the Company’s
Board which he did so at completion. Ms. Mei Sian Tan
was appointed alternate director for Mr. Tan Boon Seng.
Following the Placement the Company’s issued share
capital increased to 164,566,294 shares (of which 38,142
are currently held by the Company in treasury).
Statement of directors’ responsibilities
The interests (all of which are beneficial interests save
as otherwise stated) of the Directors and of the persons
connected with them as at 30 June 2012 are as follows:
Director
Interest in
Issued Shares
Beneficial Shareholders
Held directly.
23,350 held directly and 1,418,702 held directly by his wife.
180,000 held directly and 128,171 held directly by his wife.
757,000
The Directors are responsible for the preparation of the
financial statements for each financial year which give a true
and fair view of the state of affairs of the Company and of
the Group at the end of the year and of the results of the
Group for the year. In preparing those financial statements,
the Directors are required to:
a.select suitable accounting policies and then apply them
consistently;
b.m ake judgements and estimates that are reasonable and
prudent;
c.state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Group financial statements, Company
statement of financial position and the summary of
significant accounting policies and other explanatory
notes; and
3.0 Corporate Governance
d.p repare the Group financial statements, Company
statement of financial position and the summary of
significant accounting policies and other explanatory
notes on the going concern basis unless it is
inappropriate to assume that the Group will
continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any
time the financial position of the Group and Company and
to enable them to ensure that the financial statements
comply with International Financial Reporting Standards. The
Directors are also responsible for safeguarding the assets of
the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud or other
irregularities.
The Directors are responsible for information contained in
the directors’ report and other information contained in the
accounts.
Payment of creditors
It is the policy of the Group in respect of all its creditors,
where it is reasonably practicable, to settle the payment with
those creditors according to the terms formally agreed with
them.
The creditors’ payment periods for the Group throughout
the financial year under review range from 0 to 90 days
(2011: 0 to 90 days).
Auditors
The auditors, Messrs. PricewaterhouseCoopers, have
expressed their willingness to continue in office.
SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 10 SEPTEMBER 2012
Magomet Malsagov
Chief Executive Officer
William Mitchell
Chief Financial Officer
35
3.4 Board of Directors
(Standing L–R) Tan Mei Sian, Peter Lai Hock Meng, Olivier Maes, John Slosar, Tan Boon Seng, Sunny Verghese
(Seated L–R) William Mitchell, Paul Selway-Swift, Magomet Malsagov
Paul Selway-Swift
Magomet Malsagov
William Mitchell
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Paul worked with the HSBC Group
for 30 years. He was a director of
The Hongkong & Shanghai Banking
Corporation from 1990 to 1998 and of
HSBC Investment Bank plc from 1996
to 1998. He is currently the Chairman
and a Director of Atlantis Investment
Management (Ireland) Ltd and Li &
Fung Ltd.
Magomet has held the position of
Chief Executive since founding the
business in 2001.
William joined PureCircle in June
2008 as Chief Financial Officer.
He was appointed Chairman of the
Company in December 2007 and also
chairs the Nomination Committee.
He is primarily responsible for leading
the successful establishment of the
Group’s entire supply chain from the
plantations and extraction facilities
to the refinery plants around the
world. As CEO, he further establishes
the Group’s business direction and
strategies along with his management
team and is responsible for managing
the growth and development of the
Group’s business.
He is a FCA who trained with
PriceWaterhouse London and has
extensive experience in the global food
and beverage and technology industries.
At PriceWaterhouse, he advised
major international food and beverage
businesses and private equity firms
on mergers and acquisitions and post
acquisition integrations. William was then
part of the management buyin-buyout
team that acquired Tetley Tea, the number
2 global tea brand, from Allied Domecq.
As Chief Financial Officer, he supports
the Chief Executive on determining
strategy and has responsibilities for
the development of the Group’s joint
ventures.
Peter Lai Hock Meng
Olivier Maes
John Slosar
Non-Executive Director
Non-Executive Director
Non-Executive Director
Peter Lai Hock Meng has more than
28 years experience in financial services
industry including central banking,
investment banking, private banking,
stock broking, venture capital, asset
management, treasury management and
private equity investments. He currently
manages his own boutique corporate
advisory firm based in Singapore and sits
on the board of several other companies
listed on the Singapore Exchange and
the Hong Kong Stock Exchange as
Independent Director.
Olivier joined PureCircle in November
2006 as a Non-Executive Director.
John joined PureCircle in November
2006 as a Non-Executive Director.
He read business at Ecole des
Hautes Etudes Commerciales (MBA
HEC) Paris and is presently the Chief
Executive Officer of Groupe Aoste, the
leader of processed meat industry in
France and member of the executive
team of Campofrio Group, European
leader of processed meat market.
He is also currently on the Boards of
Cathay Pacific Airways Ltd, John Swire
& Sons (H.K.) Ltd, Swire Pacific Ltd and
Swire Beverages. He joined the Swire
Group in 1980 and has worked with the
Group’s Aviation Division in Hong Kong,
the United States and Thailand.
Peter graduated with a BA in Economics
from the University of Cambridge,
England. He is also a CFA charter holder
from the CFA Institute, USA, and a Fellow
of the Chartered Institute of Marketing,
UK. He joined PureCircle in June
2008 and is the Chairman of the Audit
Committee.
Olivier has more than 20 years of
experience in FMCGs markets. He
formerly held CEO positions of various
companies in Europe and Asia for
Danone Group and Kraft Group.
Olivier chairs the Remuneration
Committee.
He was appointed Managing Director
of Hong Kong Aircraft Engineering
Co Ltd in 1996. In July 1998, he was
appointed Managing Director of Swire
Pacific’s Beverages Division. He was
appointed Chairman of Swire Beverages
on 1 July 2010 and Chairman of Hong
Kong Dragon Airlines on 31 March 2011
in addition to his current role as Chief
Executive of Cathay Pacific.
John was a graduate of both Columbia
University and Cambridge University.
Sunny Verghese
Tan Boon Seng
Tan Mei Sian
Non-Executive Director
Non-Executive Director
Non-Executive Director
Sunny is the Group Managing Director
and Chief Executive Officer of Olam,
a leading Asia based international
agribusiness listed on the Singapore
Stock Exchange (“SGX”). He is
responsible for the strategic planning,
business development and overall
management for the Olam group of
companies worldwide. He is also the
Chairman of International Enterprise
Singapore, a statutory board under
the Ministry of Trade and Industry, as
well as Chairman of the Human Capital
Leadership Institute and serves on
the Board of Trustees of the National
University of Singapore.
Tan Boon Seng was appointed to
the Board in August 2012. He is the
Chairman and Managing Director of
Lee Hing Development Limited, a
company listed on the Hong Kong
Stock Exchange and the holding
company of Wang Tak Company
Limited, of which Boon Seng is
also a Director.
Tan Mei Sian is the alternate director to
Tan Boon Seng.
He was appointed as a Non-Executive
Director of PureCircle in October 2008.
He is also an Executive Director of
IGB Corporation Berhad, a company
listed on the Bursa Malaysia (the
Malaysian Stock Exchange), and a
Director of Wo Kee Hong (Holdings)
Limited and Genting Hong Kong
Limited, each listed on the Hong
Kong Stock Exchange.
Mei Sian is a Manager of Goldis Berhad,
a company listed on the Bursa Malaysia
(the Malaysian Stock Exchange), and
is responsible for managing corporate
and private equity investments. She was
previously an Engagement Manager at
Oliver Wyman where she specialised in
financial services and risk management
consulting and worked with major
financial institutions in the United States,
United Kingdom, Netherlands, China,
Taiwan, Hong Kong, Singapore, Malaysia
and Australia.
In addition, Mei Sian is the Chairman of
Master Games International, a privately
held computer games company, and is a
director of Lautan Bumimas Sdn Bhd, a
subsidiary of Goldis Berhad.
37
PureCircle Annual Report 2012
4.0
Independent
Auditors’
Report
Independent Auditors’ Report
to The Shareholders
of PureCircle Limited
(Incorporated in Bermuda)
Registration No: 40431
We have audited:
• t he consolidated financial statements of PureCircle
Limited (“the Company”) which comprise the consolidated
statements of financial position as of 30 June 2012, and
the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then
ended, and a summary of significant accounting policies
and other explanatory notes, and
• the statement of financial position of the Company as of
30 June 2012 and a summary of significant accounting
policies and other explanatory notes
set out on pages 40 to 91 (collectively referred to as the
“Financial Information”).
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the Financial
Information. The procedures selected depend on our
judgment, including the assessment of the risks of material
misstatement of the Financial Information, whether due
to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation
of the Financial Information that give a true and fair view in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s interval control.
An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well
as evaluating the overall presentation of the Financial
Information.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the Financial Information have been
properly drawn up in accordance with International Financial
Reporting Standards so as to give a true and fair view of the
financial position of the Group and of the Company as of
30 June 2012, and of the Group’s financial perfomance and
cash flows for the year then ended.
Other matters
This report, including the opinion, has been prepared for and
only for you, as a body and for no other purpose. We do not
assume responsibility towards or accept liability to any other
person for the contents of this report.
Directors’ responsibility for the Financial Information
The Directors of the Company are responsible for the
preparation of the Financial Information that give a true
and fair view in accordance with International Financial
Reporting Standards and for such internal control as the
Directors determine as necessary to enable the preparation
of Financial Information that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on the Financial
Information based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable
assurance whether the Financial Information are free
from material misstatement.
38
PricewaterhouseCoopers
(No. AF: 1146)
Chartered Accountants
Kuala Lumpur
10 September 2012
Financial
Statements
13
39
PureCircle Annual Report 2012
5.0
Accounts and Notes
Statements of Financial Position
at 30 June 2012
The Group
The Company
Note
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
7
-
-
33,173
22,156
ASSETS
Non-Current Assets
Investment in subsidiaries
Investment in joint ventures
8
-
-
70
70
Intangible assets
9
26,812
24,674
1,034
1,003
Property, plant and equipment
10
66,586
70,698
174
65
Biological assets
11
6,047
5,229
-
-
Prepaid land lease payments
12
3,102
3,094
-
-
Deferred tax assets
13
6,209
3,573
-
-
108,756
107,268
34,451
23,294
-
-
Current Assets
Inventories
14
73,656
96,503
Trade receivables
15
21,827
14,160
-
-
Other receivables, deposits and prepayments
16
4,778
5,527
127
55
44
124
-
-
Tax recoverable
Amount owing by subsidiaries
17
-
-
98,308
110,177
Short-term deposits with licensed banks
Cash and bank balances
19
9,733
11,817
690
2,220
20
Total Assets
14,555
31,320
554
931
124,593
159,451
99,679
113,383
233,349
266,719
134,130
136,677
EQUITY AND LIABILITIES
Equity
Share capital
21
15,449
15,406
15,449
15,406
Share premium
22
132,330
131,620
132,330
131,620
Foreign exchange translation reserve
23
1,868
1,584
-
-
Share option reserve
24
Accumulated losses
Equity attributable to owners of the Company
Non-controlling interest
Total Equity
The annexed notes form an integral part of these financial statements.
40
204
(31,027)
1,552
(7,772)
204
(14,420)
1,552
(12,651)
118,824
142,390
133,563
135,927
652
668
-
-
119,476
143,058
133,563
135,927
5.0 Accounts and notes
Statements of Financial Position
at 30 June 2012 continued
The Group
The Company
Note
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
Deferred tax liabilities
13
594
1,458
-
-
Long-term borrowings
25
84,026
88,997
-
-
Deferred income
27
Non-Current Liabilities
548
612
-
-
85,168
91,067
-
-
Current Liabilities
Trade payables
26
3,625
2,541
-
-
Other payables and accruals
27
5,932
4,581
567
750
789
423
-
-
34
38
-
-
Amount due to joint venture partners
Income tax liabilities
Short-term borrowings
18,325
25,011
-
-
28,705
32,594
567
750
Total Liabilities
113,873
123,661
567
750
Total Equity and Liabilities
233,349
266,719
134,130
136,677
0.77
0.93
Net Assets Per Share (USD)
28
29
Approved and authorised for issue by the Board of Directors on 10 September 2012.
Magomet Malsagov
Chief Executive Officer
William Mitchell
Chief Financial Officer
The annexed notes form an integral part of these financial statements.
41
PureCircle Annual Report 2012
Consolidated Statement of Comprehensive Income
For The Financial Year Ended 30 June 2012
The Group
Note
30.06.2012
USD’000
30.06.2011
USD’000
Revenue
30
45,412
53,262
Fair value gain/(loss) on biological assets
11
1
(16)
(40,516)
(49,146)
4,897
4,100
Cost of sales
Gross profit
Selling and administrative expenses
(17,096)
(19,356)
Other income
1,040
7,924
Other expenses
(8,046)
(4,566)
Finance income
Finance costs
377
289
(7,829)
(7,933)
Loss before taxation
32
(26,657)
(19,542)
Income tax
31
3,379
1,040
(23,278)
(18,502)
297
1,331
(22,981)
(17,171)
(23,255)
(18,362)
(23)
(140)
(23,278)
(18,502)
(22,971)
(17,042)
Loss for the financial year
Other comprehensive loss (net of tax)
Exchange differences arising on translation of foreign operations
Total comprehensive loss for the financial year (net of tax)
Loss for the financial year attributable to
Owners of the Company
Non-controlling interest
Total comprehensive loss attributable to
Owners of the Company
Non-controlling interest
(10)
(129)
(22,981)
(17,171)
(11.93)
Los per share (US cents)
- Basic
33
(15.06)
- Diluted
33
NA
Note: NA denotes Not Applicable.
The annexed notes form an integral part of these financial statements.
42
NA
5.0 Accounts and notes
Consolidated Statement Of Changes In Equity
For The Financial Year Ended 30 June 2012
Attributable to owners of the Company
Share
Premium
USD’000
Foreign
Currency
Translation
Reserve
USD’000
Share
Option
Reserve
USD’000
(Accumulated
Losses)
USD’000
15,406 131,620
1,584
1,552
Share
Capital
USD’000
The Group
Balance at 01.07.2011
Loss for the financial year
Sub-Total
USD’000
NonControlling
Interests
USD’000
Total
Equity
USD’000
(7,772)
142,390
668
143,058
-
-
-
-
(23,255)
(23,255)
(23)
(23,278)
Exchange difference arising
on translation of foreign operations
-
-
284
-
-
284
13
297
Total comprehensive loss
for the financial year
-
-
284
-
(23,255)
(22,971)
(10)
(22,981)
-
-
-
(595)
-
(595)
-
(595)
43
710
-
(753)
-
-
-
-
-
-
-
-
-
-
(6)
(6)
43
710
-
(1,348)
-
(595)
(6)
(601)
15,449 132,330
1,868
204
(31,027)
118,824
652
119,476
Other comprehensive income:
Transactions with owners:
Share option scheme
compensation expense
for the financial year
Exercise of share options
Dilution of non-controlling interests
Balance at 30.06.2012
The annexed notes form an integral part of these financial statements.
43
PureCircle Annual Report 2012
Consolidated Statement Of Changes In Equity
For The Financial Year Ended 30 June 2012 continued
Attributable to owners of the Company
Share
Premium
USD’000
Foreign
Currency
Translation
Reserve
USD’000
Share
Option
Reserve
USD’000
15,358 130,490
264
Share
Capital
USD’000
The Group
Balance at 01.07.2010
Loss for the financial year
Retained
Earnings/
(Accumulated
Losses)
USD’000
Sub-Total
USD’000
NonControlling
Interests
USD’000
Total
Equity
USD’000
994
10,590 157,696
874
158,570
(18,362) (18,362)
(140)
(18,502)
1,320
11
1,331
(18,362) (17,042)
(129)
(17,171)
-
-
-
-
Exchange difference arising on
translation of foreign operations
-
-
1,320
-
Total comprehensive loss
for the financial year
-
-
1,320
-
-
-
-
2,074
-
2,074
-
2,074
48
1,130
-
(857)
-
321
-
321
Other comprehensive income:
-
Transactions with owners:
Share option scheme compensation
expense for the financial year
Exercise of share options
Share options lapsed
-
-
-
(659)
-
(659)
-
(659)
Dilution of non-controlling interests
-
-
-
-
-
-
(77)
(77)
48
1,130
-
558
-
1,736
(77)
1,659
15,406 131,620
1,584
1,552
(7,772) 142,390
668
143,058
Balance at 30.06.2011
The annexed notes form an integral part of these financial statements.
44
5.0 Accounts and notes
Company Statement Of Changes In Equity
For The Financial Year Ended 30 June 2012
The Company
Balance at 01.07.2011
Share
Capital
USD’000
Share
Premium
USD’000
Share
Option
Reserve
USD’000
15,406
131,620
1,552
(12,651)
-
-
-
(1,769)
-
-
Loss for the financial year
Accumulated
Losses
USD’000
Total
USD’000
135,927
(1,769)
Transactions with owners:
Share option scheme compensation expense
for the financial year
Exercise of share option
Balance at 30.06.2012
(595)
-
43
710
(753)
-
43
710
(1,348)
-
15,449
132,330
204
(14,420)
(595)
(595)
133,563
The annexed notes form an integral part of these financial statements.
45
PureCircle Annual Report 2012
Company Statement Of Changes In Equity
For The Financial Year Ended 30 June 2012 continued
Share
Capital
USD’000
Share
Premium
USD’000
Share
Option
Reserve
USD’000
15,358
130,490
994
(7,871)
138,971
-
-
-
(4,780)
(4,780)
-
-
2,074
-
2,074
48
1,130
(857)
-
321
Accumulated
Losses
USD’000
Total
USD’000
The Company
Balance at 01.07.2010
Loss for the financial year
Transactions with owners:
Share option scheme compensation expense
for the financial year
Exercise of share option
Share options lapsed
Balance at 30.06.2011
-
-
(659)
-
(659)
48
1,130
558
-
1,736
15,406
131,620
1,552
The annexed notes form an integral part of these financial statements.
46
(12,651)
135,927
5.0 Accounts and notes
Consolidated Statement Of Cash Flows
For The Financial Year Ended 30 June 2012
The Group
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation
30.06.2012
USD’000
30.06.2011
USD’000
(26,657)
(19,542)
134
(77)
3,900
7,829
(377)
50
(595)
291
(1)
(1,139)
148
(76)
5,018
7,933
(289)
112
1,415
271
33
2,079
1,046
16
(5,658)
Operating cash flow before working capital changes
(16,642)
(7,494)
Decrease/(Increase)
(Increase)/Decrease
(Increase)/Decrease
Increase/(Decrease)
Decrease/(Increase)
24,330
(1,009)
(6,284)
3,735
383
(17,217)
3,142
12,324
(811)
(397)
Net cash from/(for) operations
Interest received
Interest paid
Tax paid
4,513
377
(7,829)
(23)
(10,453)
289
(7,933)
(587)
Net cash for operating activities
(2,962)
(18,684)
(2,573)
(2,070)
106
(4,537)
(2,392)
(4,098)
308
(6,182)
(7,499)
(24,866)
Adjustments for:
Amortisation of prepaid land lease payments
Amortisation of deferred income
Depreciation of property, plant and equipment
Interest expense
Interest income
Loss on disposal of plant and equipment
Share-based payment (credit)/expense
Intangible assets written-off
Inventories written-off
Plant and equipment written-off
Write-off of biological assets
Change in fair value of biological asset
Unrealised exchange gain
in
in
in
in
in
inventories
biological assets
trade and other receivables
trade and other payables
restricted cash
CASH FLOWS FOR INVESTING ACTIVITIES
Addition of intangible assets
Addition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash for investing activities
Balance carried forward
10
The annexed notes form an integral part of these financial statements.
47
PureCircle Annual Report 2012
Consolidated Statement Of Cash Flows
For The Financial Year Ended 30 June 2012 continued
The Group
Note
Balance brought forward
(7,499)
30.06.2011
USD’000
(24,866)
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of borrowings
11,233
29,800
Repayment of borrowings
(21,254)
(26,957)
(61)
(141)
Repayment of hire purchase
Net cash (for)/from financing activities
Effects of foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the financial year
The annexed notes form an integral part of these financial statements.
48
30.06.2012
USD’000
34
(10,082)
2,702
(1,061)
1,303
41,813
62,674
23,171
41,813
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
1.General Information
3. Basis of Preparation
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:
The financial statements of the Group and Company have
been prepared under the historical cost convention unless
otherwise indicated in the significant accounting policies,
and in compliance with International Financial Reporting
Standards (“IFRSs”) and IFRIC Interpretations.
Registered office :
Clarendon House, 2 Church Street,
Hamilton HM 11, Bermuda.
(a)Standards, amendments and interpretations that are
effective for the current financial year
The Company’s shares are publicly traded on the Alternative
Investment Market (“AIM”) division of the London Stock Exchange.
During the current financial year, the Group has adopted the
following new, revised and amended standards on 1 July 2011:
• IAS 24 (revised) - Related party disclosures
• Annual improvements 2010
• Amendment to IFRS 7 - Financial instruments: Disclosures
• Amendment to IFRS 1 - Hyperinflation and fixed dates
• Amendment to IFRIC 14 - Pre-payments of a Minimum
Funding Requirement
The financial statements were authorised for issue by the
Board of Directors in accordance with a resolution of the
Directors dated 10 September 2012.
The adoption of the above revised and amended standards
did not have a significant impact to the financial statements
of the Group and Company.
The number of employees in the Group at the end of the
financial year amounted to 758 (2011: 779) employees.
(b)Standards adopted early
Principal place of business:
PT23419, Lengkuk Teknologi,
Techpark @ Enstek,
71760, Bandar Enstek,
Negeri Sembilan, Malaysia.
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 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 ventures are set out in Notes 7 and
8 to the financial statements.
here have been no standards adopted early by the Group or
T
the Company.
(c)Standards, amendments and interpretations that
have been issued and are relevant to the Company’s
operations but are not yet effective
he Group and Company have not adopted early the
T
following revised standards, amendments and interpretations
that have been issued but are not yet effective for the current
financial year.
Effective for annual periods beginning on or after
1 January 2012
• Amendment to IAS 12 - Income taxes on deferred tax
Effective for annual periods beginning on or after 1 July 2012
• A
mendment to IAS 1 - Presentation of financial
statements on OCI
49
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
Effective for annual periods beginning on or after
1 January 2013
•
•
•
•
•
•
•
•
•
IFRS 10 - Consolidated financial statements
IFRS 11 - Joint arrangements
IFRS 12 - Disclosures of interests in other entities
IFRS 13 - Fair value measurement
IFRS 9 - Financial instruments
IAS 19 (revised 2011) - Employee benefits
IAS 27 (revised 2011) - Separate financial statements
IAS 28 (revised 2011) - Associates and joint ventures
Amendment to IFRS 1 - First time adoption on
government grants
• Amendments to IFRS 7 - Financial instruments asset and
liability offsetting
• Amendments to IAS 32 - Financial instruments asset and
liability offsetting
• Annual improvements 2011
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 to a
reasonably possible change in the United States Dollar, Euro
and Sterling Pound exchange rates, with all other variables
held constant on the Group’s loss:
Increase /
(decrease) in
exchange rate
2012
United States Dollar
Euro
Management is currently assessing the impact of these new
accounting standards, amendments and improvements to
published standards and interpretations.
4.Financial Risk Management
2011
United States Dollar
Sterlling Pound
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.
50
(Increase)/
decrease in loss
after taxation
USD ‘000
+10%
-10%
+10%
-10%
1,451
(1,451)
316
(316)
+10%
-10%
+10%
-10%
2,209
(2,209)
219
(219)
Management considered the current economic environment
and has concluded 10% (2011: 10%) as the reasonable
possible change in the United States Dollar, Euro and Sterling
Pound exchange rates.
(ii) Interest Rate Risk
The Group’s exposure to interest rate risk arises mainly from
interest-bearing deposits, loans and borrowings. The Group’s
interest rate profile is set out below:
30.06.2012
30.06.2011 30.06.2012 30.06.2011
Effective Interest Rate (%)
USD ‘000
USD ‘000
9,733
11,817
Short-term deposits
1.78
2.01
Term loans
7.29
7.38 102,206 113,792
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
The Group manages interest rate risk by entering into a mix
of fixed and floating rate borrowings. On a regular basis the
Group calculates the impact on the income statement of a
defined interest rate shift on the Group’s borrowing position.
Based on the forecasts performed, if interest rates on
borrowings is 1% higher/lower for a year with all other
variables held constant post-tax loss for the year would be
USD922,000 (2011: USD954,000) 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, receivable balances are monitored
on an ongoing basis with the result that the Group’s exposure
to bad debt is not significant. The Group and the Company’s
maximum exposure is the carrying amount as disclosed in
Notes 15, 16 and 17 to the financial statements.
The Group’s concentration to credit risk has reduced significantly
as the diversified customer base has expanded. As at 30 June
2012, the seven (2011: two) largest customers constituted 63%
(2011: 62%) and it required 72 (2011: 21) customers to constitute
91% of the outstanding third party receivables.
(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, and 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 and the
Company’s non-derivative financial assets and 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 and the
Company can be required to receive or pay:
See Note 15 for ageing of trade receivables.
The Group’s cash and cash equivalents and short-term
deposits are placed with creditworthy financial institutions.
The Group and Company consider that the credit risk
relating to amounts due from jointly controlled entities and
subsidiaries respectively to be low. Both the jointly controlled
entities and subsidiaries are expected to repay fully the
amounts owed to the Group and Company respectively as
these related entities are expected to continue on a going
concern basis. At year end, the Group believes there is no
credit risk provision required for these receivables.
51
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
(iv)Liquidity and Cash Flow Risks continued
Carrying
Amount
USD’000
Total
Contractual
Undiscounted
Cash Flow
USD’000
Within
1 Year or
on Demand
USD’000
More than
1 Year but
Less than
2 Years
USD’000
More than
2 Years but
Less than
5 Years
USD’000
More than
5 Years
USD’000
21,827
21,927
20,437
1,490
-
-
789
789
789
-
-
-
The Group 2012
At 30 June 2012
Financial asset:
Trade receivables
Financial liabilities:
Amount due to joint venture partners
Trade and other payables
Borrowings
9,557
9,557
9,557
-
-
-
102,351
121,944
25,753
12,407
83,780
4
The Group 2011
At 30 June 2011
Amount due to joint venture partners
Trade and other payables
Borrowings
423
423
423
-
-
-
7,122
7,122
7,122
-
-
-
114,008
139,967
25,870
10,102
103,968
27
Carrying
Amount
USD’000
Total
Contractual
Undiscounted
Cash Flow
USD’000
Within
1 year or
on Demand
USD’000
More than
1 Year but
Less than
2 Years
USD’000
More than
2 Years but
Less than
5 Years
USD’000
567
567
567
-
-
750
750
750
-
-
The Company 2012
At 30 June 2012
Other payables and accruals
The Company 2011
At 30 June 2011
Other payables and accruals
52
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
(v) Price Risk
(c) Fair Value Estimation
The Group is exposed to price risk relating to leaf purchases
which are included in raw materials in Note 14. The Group
reviews sourcing strategy on an ongoing basis to manage
any adverse exposures and to optimise pricing opportunities.
In the long-term as stevia becomes a mass volume
commodity supply and pricing are expected to evolve to the
profile of other similar commodities.
There are no significant fair value estimates to be made for
the financial instruments measured at fair value for the Group
and the Company as at the reporting date.
(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 Notes 25 and 28, 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:
30.06.2012
USD ‘000
30.06.2011
USD ‘000
102,351
(24,288)
114,008
(43,137)
Net debt
78,063
70,871
Equity (ii)
118,824
142,390
66%
50%
Debts (i)
Less: Gross cash
Net debt to equity ratio
(i)Debts relate to borrowings disclosed in Notes 25 and 28
to the financial statements.
(ii) Equity includes all capital and reserves of the Group.
5.Summary of Significant
Accounting Policies
The principal accounting policies applied in the preparation
of the financial statements are set out below. These policies
have been consistently applied to all the years presented,
unless otherwise stated.
(a) Financial Assets
(i)Receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using
the effective interest method, less allowance for impairment.
An allowance for impairment of receivables is established
when there is objective evidence that the Group will not be
able to collect all amounts due according to the original
terms of the receivables.
(ii) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of
selling in the short-term. Derivatives are also categorised as
held for trading unless they are designated as hedges. Assets
in this category are classified as current assets if expected to
be settled within 12 months; otherwise, they are classified as
non-current.
(b)Financial Liabilities
(i)Payables
Liabilities for trade and other payables, including amounts
owing to associates and related parties, are recognised
initially at fair value and subsequently measured at amortised
cost using the effective interest method.
Subsequent to the year end the Company raised GBP20million,
approximately USD31million in new equity. Using 30 June 2012
debt data, this had the effect of changing the gearing ratio to 31%.
53
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
(ii) Interest-bearing loans and borrowings
All loans and borrowings are recognised initially at fair value
of the consideration received, net of directly attributable
transaction cost incurred, and are subsequently stated at
amortised cost. Any difference between the proceeds (net of
transaction cost) and the redemption value is recognised in
the profit or loss over the period of the loans and borrowings
using the effective interest method.
(c) Foreign Currency Translation
(i) Functional and presentation currency
The functional currency of each of the Group’s entities
is measured using the currency of the primary economic
environment in which the entity operates.
(b)income and expenses for each profit or loss are translated
at the average exchange rates for the year;
(c) all resulting exchange differences are recognised as a
separate component of equity; and
(d)on disposal, accumulated translation differences are
recognised in the profit or loss as part of the gain or loss
on sale of the foreign operation.
(d)Basis of Consolidation
The functional and presentation currency of the Company
is United States Dollar (“USD”). The consolidated financial
statements are presented in United States Dollar (“USD”)
which is the parent’s presentation currency.
The consolidated financial statements include the financial
statements of the Company and its subsidiaries.
(ii) Transactions and balances
Subsidiaries are all entities over which the Group has the
power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are
considered when assessing whether the Group controls
another entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
Transactions of the Company in foreign currency are
converted into USD at the approximate rates of exchange
ruling at the transaction dates.
Transactions in foreign currency are measured in the
respective functional currencies of the Group’s entities and
are recorded on initial recognition in the functional currencies
at exchange rates approximating those ruling at the
transaction dates.
Monetary assets and liabilities at the reporting date are
translated at the rates ruling as of that date. Exchange
differences arising from the translation of monetary assets are
recognised in the profit or loss.
Non-monetary assets and liabilities are translated using
exchange rates that existed when the values were
determined.
(iii)Foreign Operations
The results and financial position of the subsidiaries are
translated into the presentation currency as follows:-
54
(a)assets and liabilities, including goodwill and fair value
adjustments arising on the acquisition of foreign
operations, for each statement of financial position
presented are translated at the closing rate at the
reporting date;
(i)Subsidiaries
The Group uses the acquisition method of accounting to
account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values
of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from
a contingent consideration arrangement. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. On an acquisition-by-acquisition basis,
the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets. Investments
in subsidiaries are accounted for at cost less impairment.
Cost is adjusted to reflect changes in consideration arising
from contingent consideration amendments. Cost also
includes direct attributable costs of investment.
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
The excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in
the acquiree over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill. If this
is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is
recognised directly in the profit or loss (refer Note 5(e)).
Inter-company transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(iii)Jointly controlled entities
Jointly controlled entities are those entities over whose
activities the Group has joint control, established by
contractual agreement and requiring unanimous consent for
strategic financial and operating decisions.
The Group’s interests in jointly controlled entities are
accounted for by proportionate consolidation. The Group
combines its share of the joint venture’s individual income
and expenses, assets and liabilities and cash flows on a
line-by-line basis with similar items in the Group’s financial
statements.
(e) Goodwill on Consolidation
(ii) Transactions with non-controlling interests
The Group treats transactions with non-controlling interests
as transactions with equity owners of the Group. For
purchases from non-controlling interests, the difference
between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary
is recorded in equity. Gains or losses on disposals to noncontrolling interests are also recorded in equity.
When the Group ceases to have control or significant
influence, any retained interest in the entity is re-measured to
its fair value, with the change in carrying amount recognised
in profit or loss. The fair value is the initial carrying amount
for the purposes of subsequently accounting for the retained
interest as an associate, joint venture or financial asset.
In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted
for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to
profit or loss.
If the ownership interest in an associate is reduced but
significant influence is retained, only a proportionate share of
the amounts previously recognised in other comprehensive
income are reclassified to profit or loss where appropriate.
Goodwill that arises upon acquisition of subsidiaries is
included in intangible assets. Goodwill on acquisition of joint
venture is included in the carrying amount of the investment
and is tested for impairment as part of the investment.
Goodwill on consolidation represents the excess of the
cost of acquisition over the Group’s share of the fair values
of the identifiable net assets of the subsidiaries at the date
of acquisition.
The carrying value of goodwill is reviewed for impairment
annually. Impairment losses on goodwill are recognised
immediately in the profit or loss. An impairment loss
recognised for goodwill is not reversed in a subsequent year.
Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
If, after reassessment, the Group’s interest in the fair values
of the identifiable net assets of the subsidiaries exceeds the
cost of the business combinations, the excess is recognised
immediately in the profit or loss.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cashgenerating units or groups of cash-generating units that are
expected to benefit from the business combination in which
the goodwill arose identified according to operating segment.
Acquisition of non-controlling interests are accounted for as
transactions with equity holders in their capacity as equity
holders and therefore no goodwill is recognized as a result of
such transaction.
55
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
(f) Investments in Subsidiaries and Joint Ventures
(ii) Product Development
Investments in subsidiaries and joint ventures are stated at
cost in the statement of financial position of the Company,
and are reviewed for impairment at the end of the financial
year if events or changes in circumstances indicate that their
carrying values may not be recoverable.
All research costs are recognised in the profit or loss as incurred.
On the disposal of the investments in subsidiaries and joint
ventures, the difference between the net disposal proceeds
and the carrying amount of the investments is taken to the
profit or loss.
(g)Intangible Assets (other than Goodwill)
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in
a business combination is their fair values as at the date of
acquisition. Following initial recognition, intangible assets with
finite useful lives are carried at cost less any accumulated
amortisation and any accumulated impairment losses.
(i) Intellectual Property Rights
The intellectual property consists of the internal investment
and external acquisition costs of the patents, trademarks,
technological processes and all intellectual and industrial
property rights in connection therewith on the production
of natural sweetener, pharmaceutical products and
chemical derivatives of bio-organic and physiologically
active compounds. The acquisition cost is capitalised as an
intangible asset as it is able to generate future economic
benefits to the Group.
The useful life of these intellectual property rights is
considered to be indefinite based on the Directors’ annual
reassessment of the useful life; there is no foreseeable limit
to the period over which the asset is expected to generate
net cash inflows for the Group. Intellectual property rights are
stated at cost less impairment losses. They are not amortised
but tested for impairment annually or more frequently when
indicators of impairment are identified.The intellectual
property rights are assessed to have an indefinite useful life
because 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 useful life of the
intellectual property rights on an annual basis.
56
Expenditure incurred on projects to develop new products
is capitalised as intangible assets only when the Group
can demonstrate the technical feasibility of completing the
intangible assets so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset,
how the asset will generate future economic benefits, the
availability of resource to complete the project and the ability
to measure reliably the expenditure during the developments.
These intangible assets are amortised on a straight line basis
over their estimated useful life of 20 years starting from the
financial year when the product are ready for its intended use.
Product development expenditures which do not meet these
criteria are recognised in the profit or loss when incurred.
(h) Property, Plant and Equipment
Property, plant and equipment, other than freehold land, are
stated at cost less accumulated depreciation and impairment
losses, if any. Freehold land is stated at cost less impairment
losses, if any, and is not depreciated. Cost includes
expenditure that is directly attributable to the acquisition of
the items. The cost of self-constructed assets includes the
cost of materials and direct labour, any other costs directly
attributable to bringing the assets to working condition for its
intended use, and the costs of dismantling and removing the
items and restoring the site on which they are located.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can
be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are
charged to the profit or loss during the financial period in
which they are incurred.
Depreciation is calculated under the straight-line method
to write-off the depreciable amount of the assets over their
estimated useful lives. Depreciation of an asset does not
cease when the asset becomes idle or is retired from active
use unless the asset is fully depreciated. The principal annual
rates used for this purpose are:
Buildings
Extraction and refinery plants
Office equipment, furniture and fittings
and motor vehicles
5%
2% - 20%
20%
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
The depreciation method, useful life and residual values are
reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits
are expected from its use. Any gain or loss arising from
derecognition of the asset is included in the profit or loss in
the year the asset is derecognised.
Capital work-in-progress represents assets under
construction, and which are not ready for commercial use at
the reporting date. Capital work-in-progress is stated at cost,
and will be transferred to the relevant category of long-term
assets and depreciated accordingly when the assets are
completed and ready for commercial use.
Cost of capital work-in-progress includes direct cost, related
expenditure and interest cost on borrowings taken specifically
to finance the purchase of the assets, net of interest income
on the temporary investment of those borrowings.
(i) Impairment of Non-financial Assets
Assets that have an indefinite useful life, for example
goodwill, are not subject to amortisation and are tested
annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). Non-financial assets
other than goodwill that suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.
(j) Biological Asset
Biological assets are stated at fair value less cost to sell. Fair
value gains or losses on biological assets are recognised in the
profit or loss. Where little biological transformation has taken
place since initial cost incurrence, or the impact of the biological
transformation on price is not expected to be material, the fair
value of the biological assets approximate cost.
Seedlings produced from the nursery plants with an intention
of delivery to farmers or other buyers are transferred from
biological assets to inventories at its proportion of fair value
less cost to sell, which becomes the deemed cost under IAS 2.
These inventories comprising seedlings are then stated at the
lower of this deemed cost and net realisable value. Seedlings
which are maintained for further cultivation process in the
Group’s controlled nurseries remain as biological assets
of the Group and the fair value of these biological assets
approximate cost.
(k)Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined on the weighted average basis,
and comprises the purchase price and incidentals incurred in
bringing the inventories to their present location and condition.
Cost of finished goods and work-in-progress includes the cost
of materials, labour and production overheads.
Net realisable value represents the estimated selling price
less the estimated costs of completion and the estimated
costs necessary to make the sale.
Where necessary, due allowance is made for all damaged,
obsolete and slow-moving items.
(l) Income Taxes
Income taxes for the year comprise current and deferred tax.
Biological assets comprise primarily stevia plants in the
Group’s controlled nurseries (nursery plants) that are used to
mass produce seedlings for third party farmers.
Current tax is the expected amount of income taxes payable
in respect of the taxable profit for the year and is measured
using the applicable tax rates that have been enacted or
substantively enacted at the reporting date in each of the
jurisdictions in which the Group operates.
All expenditure on the nursery plants up to maturity and
through the productive life of the plants is treated as an
addition to the nursery plants. Such costs include seedlings,
fertiliser, planting materials, water and labour.
Deferred tax is provided in full, using the liability method,
on the temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the
financial statements.
57
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
Deferred tax liabilities are recognised for all taxable temporary
differences other than those that arise from goodwill or excess
of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over the
business combination costs or from the initial recognition of
an asset or liability in a transaction which is not a business
combination and at the time of the transaction, affects neither
accounting profit nor taxable profit.
Deferred tax assets are recognised for all deductible
temporary differences, unused tax losses and unused tax
credits to the extent that it is probable that future taxable
profits will be available against which the deductible
temporary differences, unused tax losses and unused tax
credits can be utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to be applicable in the period when
the asset is realised or the liability is settled, based on the tax
rates that have been enacted or substantively enacted at the
reporting date.
Deferred tax is recognised in the profit or loss, except when
it arises from a transaction which is recognised directly in
equity, in which case the deferred tax is also charged or
credited directly to equity, or when it arises from a business
combination that is an acquisition, in which case the deferred
tax is included in the resulting goodwill or excess of the
acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over
the business combination costs. The carrying amounts of
deferred tax assets are reviewed at each reporting date
and reduced to the extent that it is no longer probable that
sufficient future taxable profits will be available to allow all or
part of the deferred tax assets to be utilised.
(m)E quity Instruments
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from proceeds.
Own equity instruments which are reacquired (treasury
shares) are deducted from equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or
cancellation of the Group’s own equity instruments.
Dividends on ordinary shares are recognised as liabilities
when approved for appropriation.
58
Where the Company purchases any of its own equity share
capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of income
taxes) is shown as a deduction from equity attributable to
shareholders of the Company until the shares are cancelled
or reissued. Where such ordinary shares are subsequently
reissued, any consideration received, net of any directly
attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the
Company’s equity holders.
(n) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, deposits
held at call with banks, short-term deposits with licensed
banks with maturities of three month or less, and highly liquid
investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes
in value. Cash and cash equivalents exclude restricted cash.
Restricted cash comprise cash balances held in an account
solely for the purpose of utilising the forward contract facility
provided by a licensed financial institution.
(o)Employee Benefits
(i) Short-term Benefits
Wages, salaries, paid annual leave, bonuses and nonmonetary benefits are accrued in the period in which the
associated services are rendered by employees of the Group.
(ii)Defined Contribution Plans
The Group’s contributions to defined contribution plans
are charged to the profit or loss in the period to which they
relate. Once the contributions have been paid, the Group has
no further liability in respect of the defined contribution plans.
(p)Share-Based Payment
The Group operates one long-term incentive programme
which is an equity-settled, share-based compensation plan,
under which the entity receives services from employees as
consideration for equity instruments (options) of the Group.
The fair value of the employee services received in exchange
for the grant of the options or shares is recognised as an
expense over the vesting period. The total amount to be
expensed is determined by reference to the fair value of
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
the options or shares granted at the reporting date and the
number of shares vested, excluding the impact at any nonmarket vesting conditions. Non-market vesting conditions are
included in assumptions about the number of options that are
expected to become exercisable.
The corresponding rental obligations, net of finance charges,
are included as borrowings. The interest element of the
finance charge is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
When the options are exercised, the Company issues new
shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value)
and share premium when the options are exercised.
Plant and equipment acquired under a finance lease is
depreciated over the shorter of the estimated useful life of the
asset and the lease term.
(s) Segmental Information
The grant by the Company of options over its equity
instruments to the employees of subsidiary undertakings in
the Group is treated as a capital contribution. The fair value
of employee services received, measured by reference to the
grant date fair value, is recognised over the vesting period
as an amount due from the subsidiary, with a corresponding
credit to equity.
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decisionmaker (i.e. the Chief Executive Officer (“CEO”)). The chief
operating decision-maker is responsible for allocating resources
and assessing performance of the operating segments.
(t) Revenue Recognition
(q)Provisions
(i) Sale of Goods
A provision is recognised if, as a result of past event, the
Group has a present legal and constructive obligation that
can be estimated reliably, and it is probable that an outflow
of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the
risks specific to the liability. The unwinding of the discount is
recognised as finance cost.
(r)Leases
Leases where a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases
are charged to profit or loss on a straight-line basis over the
period of the lease.
When an operating lease is terminated before the lease
period has expired, any payment required to be made to the
lessor by way of penalty is recognized as an expense in the
period in which the termination takes place.
Revenue from the sale of stevia products is recognised when
the significant risks and rewards of ownership of the stevia
products have passed to the buyer along with customers’
acceptance and where applicable, net of sales tax, returns
and trade discounts.
(ii) Interest Income
Interest income is recognised on an accrual basis, based on
the effective yield on the investment.
(u) Government Grants
Government grants are recognised initially as deferred income
at fair value when there is reasonable assurance that they will
be received and the Group will comply with the conditions
associated with the grant. Grants that compensate the Group
for expenses incurred are recognised in the profit or loss as
other income on a systematic basis in the same periods in
which the expenses are recognised. Grants that compensate
the Group for the cost of an asset are recognised in profit or
loss on a systematic basis over the useful life of the asset.
Leases of property, plant and equipment where the Group
has substantially all the risks and rewards of ownerships are
classified as finance leases. Finance leases are capitalized
at the inception of the lease at the lower of the fair value
and the present value of the minimum lease payments. Each
lease payment is allocated between the liability and finance
charges so as to achieve a constant rate of interest on the
finance lease balance outstanding.
59
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
6.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 the
Directors covering an appropriate period. 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 in the range of 30% to 50% per annum
(2011: 30% to 50%). The long-term growth rate used is 2.0%
(2011: 2.0%) per annum, based on sweetener industry’s
long-term growth rate ranging from 2.0% to 4.0% per annum.
(ii) Gross margin
(ii) Biological assets
The fair value of the controlled nursery plants is estimated by
reference to valuations using the discounted cash flows of
the biological assets. The expected cash flows from the life
cycle of the nursery plants is determined using the contract
price and the estimated yield of the agricultural produce (i.e.
the seedlings produced in the nursery), net of maintenance
costs and any costs required to bring the nursery plants
to maturity. The estimated yield of the nursery plant is
dependent on the age of the stevia plant, the locations of
the nurseries, soil type and infrastructure. The contract price
of the seedlings is ultimately dependent on the agricultural
demand for quality stevia seedlings.
The fair value of the nursery plants would be an estimated
USD210,000 (2011: USD82,000) lower or USD221,000
(2011: USD52,000) higher if the discount rate used in
the discounted cash flow analysis differs by 1% from
management’s estimate.
(iii)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 useful life
of the intellectual property rights on an annual basis.
7.Investment In Subsidiaries
Changes in selling price and direct costs are based on past
results and expectations of future changes in the market.
The Company
(iii)Discount rate
The discount rate used is 12.0% (2011: 12.0%) per annum which
approximates the CGUs’ average cost of funds and risk factor.
(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.
60
30.06.2012
USD’000
30.06.2011
USD’000
At 1 July
22,156
22,154
Addition during the financial year
11,017
2
At 30 June
33,173
22,156
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
7.Investment In Subsidiaries
continued
Details of the subsidiaries are as follows:
Name of Company
Country of Incorporation
Effective Equity Interest
Principal Activities
2012
2011
Malaysia
100%
100%
Production and distribution of
natural sweeteners and flavours.
Held by PCSB
PureCircle (Jiangxi) Co. Ltd.
(“PCJX”)*
The People’s Republic
of China (“The PRC”)
98.58%
98.54%
Supply chain, production and
distribution of natural sweeteners
and flavours.
PureCircle Stevia Sdn. Bhd.
Malaysia
51%
51%
Development of stevia agronomy.
PureCircle (Shanghai) Co. Ltd.**
The People’s Republic
of China (“The PRC”)
100%
100%
Sales and marketing of natural
sweeteners and flavours.
PureCircle S.A.
Switzerland
100%
100%
Investment holding and sales and
marketing of natural sweeteners
and flavours.
PureCircle Australia Pty. Ltd.
Australia
100%
100%
Sales and marketing of natural
sweeteners and flavours.
PureCircle USA
Holdings Inc.
United States of
America (“USA”)
100%
100%
Investment holding.
PureCircle (UK) Limited
England and Wales
100%
-
Sales and marketing of natural
sweeteners and flavours.
PureCircle China Agriculture
Development Co. Ltd.
The People’s Republic
of China (“The PRC”)
100%
-
Development of stevia agronomy.
United States of
America (“USA”)
100%
100%
Sales and marketing of natural
sweeteners and flavours.
PureCircle Kenya Limited (“PCK”)
Kenya
100%
100%
Development of stevia agronomy.
PureCircle South America
Sociedad Anonima (“PCSAM”)
Paraguay
100%
100%
Development of stevia agronomy.
PureCircle (China)
Limited (“PCC”)
Hong Kong
100%
100%
Investment holding.
PureCircle Sdn. Bhd.
(“PCSB”)
Held by PureCircle USA
Holdings Inc.
PureCircle USA Inc.
During the financial year:
(i)a wholly-owned subsidiary, PureCircle (UK) Limited, was incorporated for sales and marketing of natural sweeteners and flavours;
(ii)the Company incorporated a wholly-owned subsidiary, PureCircle China Agriculture Development Co. Ltd. as an development of
stevia agronomy; and
(iii)the Company increased its investment by USD3.4 million and USD7.6 million in PCK and PCSAM respectively through the
capitalization of prior years’ intercompany loan.
*Held through PCSB. During the year, PCSB increased its investment in PCJX by USD1 million in paid-up capital. The non-controlling
interest of PCJX did not fully match this investment so the Group’s interest increased from 98.54% to 98.58%.
** Held through PCSB. During the year, PCSB increased its investment in PureCircle (Shanghai) Co. Ltd. by USD170,000 in paid-up capital.
61
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
8.Investment In Joint Ventures
Details of joint ventures are as follows:
Name of Company
Country of Incorporation
Effective Equity Interest
2012
2011
Principal Activities
Natural Sweet Ventures LLC
United States of
America (“USA”)
50%
50%
Production, marketing and
distribution of natural sweeteners.
Tereos PureCircle Solutions
France
50%
50%
Production, marketing and
distribution of natural sweeteners.
NP Sweet AS
Denmark
50%
50%
Production, marketing and
distribution of natural sweeteners.
The Group’s share of the results of the joint ventures, each of which is unlisted, and their aggregated assets and liabilities as at the
reporting date, are as follows:
30.06.2012
USD’000
30.06.2011
USD’000
Assets/(liabilities)
Non-current assets
289
43
Current assets
8,421
5,107
Current liabilities
(9,607)
(5,086)
Net (liabilities)/assets
(897)
64
30.06.2012
USD’000
30.06.2011
USD’000
1,233
153
Income/(expenses)
Revenue
Expenses
(2,531)
(966)
Loss for the financial year
(1,298)
(813)
The Group recognises its interests in joint ventures using the proportionate consolidation method.
62
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
9. Intangible Assets
Intellectual
Property
Rights
USD’000
Product
Development
USD’000
Goodwill
USD’000
Total
USD’000
13,178
10,186
1,806
25,170
351
2,222
-
2,573
The Group
Cost:
At 1 July 2011
Additions
Foreign exchange translation difference
At 30 June 2012
(84)
(377)
-
(461)
13,445
12,031
1,806
27,282
496
-
-
496
Accumulated amortisation:
At 1 July 2011
Foreign exchange translation difference
At 30 June 2012
Net carrying amount at 30 June 2012
-
-
470
(26)
-
-
470
(26)
12,975
12,031
1,806
26,812
Intellectual
Property
Rights
USD’000
Product
Development
USD’000
Goodwill
USD’000
Total
USD’000
11,935
7,910
1,806
21,651
542
2,016
-
2,558
The Group
Cost:
At 1 July 2010
Additions
Write-off
Foreign exchange translation difference
At 30 June 2011
(271)
-
701
-
531
-
1,232
(271)
13,178
10,186
1,806
25,170
463
-
-
463
Accumulated amortisation:
At 1 July 2010
Foreign exchange translation difference
At 30 June 2011
Net carrying amount at 30 June 2011
33
-
-
33
496
-
-
496
12,682
10,186
1,806
24,674
63
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
9. Intangible Assets
continued
Intellectual
Property
Rights
USD’000
Product
Development
USD’000
Total
USD’000
472
531
1,003
-
31
31
At 30 June 2012
472
562
1,034
At 1 July 2010
151
386
537
Additions during the financial year
321
145
466
At 30 June 2011
472
531
1,003
The Company
At 1 July 2011
Additions during the financial year
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, pharmaceutical products and derivatives of bio-organic and physiologically
active compounds.
Goodwill is allocated to the Group’s single cash-generating unit (CGU) identified according to its only operating segment. See Note 6(i)
for key assumptions used in the value-in-use calculations.
64
5.0 Accounts
Accounts
and and
notes
notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
10.Property, Plant and Equipment
Office
Equipment,
Furniture
and Fittings
and Motor
Vehicles
USD’000
Capital Workin-Progress
USD’000
Total
USD’000
3,704
3,065
86,866
208
934
2,070
Freehold
Land
USD’000
Buildings
USD’000
Extraction
and Refinery
Plants
USD’000
1,204
17,145
61,748
Additions
-
74
854
Disposals
-
-
(12)
(283)
2,699
307
304
(1,466)
(176)
The Group
Cost:
At 1 July 2011
Reclassification
Foreign exchange translation reserve
At 30 June 2012
(46)
(3,003)
-
(295)
(1,381)
1,158
20,225
61,428
3,453
996
87,260
-
1,909
12,709
1,550
-
16,168
Charge for the year
-
873
3,493
584
-
4,950
Disposals
-
-
(132)
-
Less:
Accumulated depreciation:
At 1 July 2011
(7)
(139)
Reclassification
-
(882)
899
(17)
-
Foreign exchange translation reserve
-
11
(264)
(52)
-
-
At 30 June 2012
-
1,911
16,830
1,933
-
20,674
At 30 June 2012
1,158
18,314
44,598
1,520
996
66,586
At 30 June 2011
1,204
15,236
49,039
2,154
3,065
70,698
(305)
Net book value:
65
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
10. Property, Plant and Equipment
continued
Freehold
Land
USD’000
Buildings
USD’000
Extraction
and Refinery
Plants
USD’000
672
16,412
59,782
265
1,908
Office
Equipment,
Furniture
and Fittings
and Motor
Vehicles
USD’000
Capital Workin-Progress
USD’000
Total
USD’000
3,259
1,879
82,004
674
1,343
4,201
The Group
Cost:
At 1 July 2010
Additions
11
Disposals
-
(132)
(136)
(273)
521
(246)
846
(3,726)
3,920
(226)
270
Write-off
Foreign exchange translation reserve
At 30 June 2011
(163)
6
(541)
(4,361)
5,563
1,204
17,145
61,748
3,704
3,065
86,866
-
1,064
10,032
1,147
-
12,243
Charge for the year
-
930
4,100
640
-
5,670
Disposals
-
-
Less:
Accumulated depreciation:
At 1 July 2010
Write-off
-
(72)
Foreign exchange translation reserve
-
(13)
At 30 June 2011
-
At 30 June 2011
At 30 June 2010
(23)
(98)
(2,003)
-
(121)
(207)
-
(2,282)
603
68
-
658
1,909
12,709
1,550
-
16,168
1,204
15,236
49,039
2,154
3,065
70,698
672
15,348
49,750
2,112
1,879
69,761
Net book value:
66
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
10. Property, Plant and Equipment
continued
Office Equipment,
Furniture and
Fittings
USD’000
Capital
Work-inProgress
USD’000
Total
USD’000
67
-
67
Additions
13
162
175
Disposals
(67)
-
(67)
At 30 June 2012
13
162
175
The Company
Cost:
At 1 July 2011
Less:
Accumulated depreciation:
At 1 July 2011
2
-
2
Charge for the year
12
-
12
Disposals
(13)
-
(13)
1
-
1
At 30 June 2012
12
162
174
At 30 June 2011
65
-
65
-
-
-
At 30 June 2012
Net book value:
The Company
Cost:
At 1 July 2010
Additions
67
-
67
At 30 June 2011
67
-
67
At 1 July 2010
-
-
-
Charge for the year
2
-
2
At 30 June 2011
2
-
2
65
-
65
Less:
Accumulated depreciation:
Net book value:
At 30 June 2011
67
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
10. Property, Plant and Equipment
continued
The carrying values of plant and equipment charged to financial institutions to secure banking facilities granted to the Group are as follows:
The Group
30.06.2012
USD’000
Freehold land
30.06.2011
USD’000
604
638
Building
14,683
14,787
Extraction and refinery plants
44,355
47,846
950
1,164
Office equipment, furniture and fittings
Capital work-in-progress
244
513
60,836
64,948
The carrying values of plant and equipment acquired under hire purchase terms are as follows:
The Group
Motor vehicles
30.06.2012
USD’000
30.06.2011
USD’000
120
273
The financing of property, plant and equipment purchased during the financial year are as follows:
The Group
Cost of property, plant and equipment
Amount financed through hire purchase
Cash disbursed for purchase of property, plant and equipment
30.06.2012
USD’000
30.06.2011
USD’000
2,070
4,201
2,070
(103)
4,098
The Group did not have capitalised borrowing costs directly attributable to the construction of a qualifying asset as part of the cost of
that asset in 2012 and 2011.
68
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
11. Biological Assets
The Group
30.06.2012
USD’000
30.06.2011
USD’000
At 1 July
5,229
8,621
Expenditure incurred
1,666
3,982
Non-current
At fair value
Gain/(loss) arising from changes in fair value
Write-off of biological assets
Agricultural products
1
(16)
-
(1,046)
(655)
Foreign exchange translation reserve
(6,818)
(194)
At 30 June
6,047
506
5,229
The Group’s biological assets include a gain of USD1,000 (2011: loss of USD16,000) representing changes in the fair value of
nursery plants.
The current market determined post-tax rates used to discount expected future net cash flows from the market value-in-use of
controlled nursery plants are 12%-15% (2011: 12%-15%) per annum. If the post-tax rate used to discount expected future net cash
flows from the sale of seedlings were to increase or decrease by 1%, the effect to the profit or loss would be a decrease or increase of
USD210,000 (2011: USD82,000) and USD221,000 (2011: USD52,000) respectively.
Approximately 20 million seedlings have been produced from the nursery plants in FY 2012 with a fair value of USD0.7 million. In FY
2011, the principal agricultural products comprised stevia leaves harvested in China. These had a tonnage of 8,518 tonnes with a fair
value of USD6.8 million. There were no China leaf biological assets at 30 June 2012 (2011: Nil).
At the end of financial year, the Group’s nursery plant material comprised:
2012
USD’000
2012
Hectares
2011
USD’000
2011
Hectares
6,047
49
5,229
42
The Group
Nursery plant material
69
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
12. Prepaid Land Lease Payments
The Group
At 1 July
30.06.2012
USD’000
30.06.2011
USD’000
3,094
3,113
Amortisation for the financial year
(134)
(148)
Foreign exchange translation reserve
142
129
At 30 June
3,102
3,094
Cost
3,008
3,008
Accumulated amortisation
Foreign exchange translation reserve
At 30 June
(375)
(241)
469
327
3,102
3,094
The prepaid land lease payments represent the Group’s right to use the land for 20 years. Accordingly, the amortisation of the prepaid
land lease payments is on a straight line basis over 20 years. The prepaid land lease payments have been pledged as security for
banking facilities granted to the Group.
13. Deferred Tax
The Group
30.06.2012
USD’000
30.06.2011
USD’000
At 1 July
3,573
2,043
Credit to profit or loss (Note 31)
2,636
1,530
At 30 June
6,209
3,573
1,458
1,216
Deferred Tax Assets – unutilised tax losses
Deferred Tax Liabilities – intangible assets
At 1 July
70
(Credit)/charge to profit or loss (Note 31)
(864)
At 30 June
594
242
1,458
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
13. Deferred Tax
continued
An analysis of tax losses with expiry dates for which deferred tax assets have been recognised is as follows:
The Group
30.06.2012
USD’000
30.06.2011
USD’000
FY 2016
288
340
FY 2017
1,724
-
FY 2018
140
188
FY 2019
54
-
FY 2029
1,726
1,726
FY 2030
1,319
1,319
FY 2031
850
-
Indefinite
Total
108
-
6,209
3,573
The deferred tax assets comprising unused tax losses are recognised as it is probable that the Group is able to generate sufficient
future taxable profits to utilise the deductible temporary differences in the respective subsidiary companies.
14. Inventories
The Group
30.06.2012
USD’000
30.06.2011
USD’000
Raw materials
12,946
17,820
Work-in-progress
10,863
14,964
Finished goods
49,847
63,719
73,656
96,503
71
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
15. Trade Receivables
The Group
Third party trade receivables
Jointly controlled entities
30.06.2012
USD’000
30.06.2011
USD’000
14,473
9,734
7,354
4,426
21,827
14,160
The Group’s normal trade credit terms range from 30 to 60 days (2011: 30 to 60 days). Terms for jointly controlled entities are 30 days
after consumption or onward sales of products. Other credit terms are assessed and approved on a case-by-case basis.
In line with all business, 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.
Trade receivables that are three months past due or less are not considered impaired. As of 30 June 2012, trade receivables amounting
to USD1,226,000 (2011: USD1,662,000) were past due but not impaired. These related 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:
The Group
30.06.2012
USD’000
30.06.2011
USD’000
Past due but not impaired:
Up to 3 months
777
1,614
3 to 6 months
280
33
6 months and above
169
15
1,226
1,662
Of the past due amounts outstanding as at 30 June 2012, USD484,000 (2011: USD1,259,000) had been received in cash by
31 August 2012.
There are no trade receivables which have been impaired as at 30 June 2012 (2011: Nil).
The foreign currency exposure profile of the trade receivables at the reporting date was as follows:
The Group
30.06.2012
USD’000
30.06.2011
USD’000
United States Dollar
9,756
8,860
Euro
2,861
100
-
69
Swiss Franc
The foreign currency exposure profile of the trade receivables shown above represents the carrying amounts arising from currencies
other than the functional currency of the respective entities in the Group.
72
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
16. Other Receivables, Deposits and Prepayments
The Group
The Company
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
Other receivables
3,412
3,040
-
44
Prepayments
1,160
1,959
84
-
Deposits
As at 30 June
206
4,778
528
5,527
43
127
11
55
Other receivables include amounts due from farmers for planting material and other miscellaneous amounts due to the Group, for
example amounts due from suppliers. The nature of these receivables mean they have a different credit risk profile from the Group’s
core trade customer base, but also are less significant in magnitude.
Receivables from farmers are assessed by the local agricultural management who assess credit risk at an individual debtor level on the
basis of knowledge of each farmer’s circumstances.
Other amounts due are assessed on a specific balance by balance basis. Management’s assessment includes judgements about the
nature of the relationship with a counterparty, the nature of the company’s receivable and the likely timescale required for settlement.
The foreign currency exposure profile of the other receivables at the reporting date was as follows:
The Group
The Company
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
United States Dollar
68
51
-
-
Euro
13
36
-
-
Ringgit Malaysia
Sterling Pound
58
17
13
12
58
17
13
11
The foreign currency exposure profile of the other receivables shown above represents the carrying amounts arising from currencies
other than the functional currency of the respective entities in the Group.
17. Amount Owing by Subsidiaries
The amounts owing by subsidiaries are unsecured, interest-free, repayable on demand and are denominated in United States Dollar.
73
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
18. Financial Instruments by Category
The Group
The Company
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
Trade receivables
21,827
14,160
-
-
Other receivables
3,412
3,040
-
44
Loans and receivables at amortised cost
Amount owing by subsidiaries
Cash and cash equivalents (including restricted cash)
Other financial liabilities at amortised cost
Amount due to joint venture partners
Trade payables
Other payables and accruals
Borrowings
-
-
98,308
110,177
24,112
49,351
43,137
60,337
1,244
99,552
3,151
113,372
789
3,625
5,932
102,351
112,697
423
2,541
4,581
114,008
121,553
567
567
750
750
19. Short-Term Deposits with Licensed Banks
The weighted average interest rates of the short-term deposits at the reporting date was 1.78% (2011: 2.01%) per annum.
The short-term deposits have weighted maturity period of 28 days (2011: 88 days).
The foreign currency exposure profile of the short-term deposits with licensed banks at reporting date was as follows:
The Group
Ringgit Malaysia
Sterling Pound
The Company
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
-
69
-
69
690
2,152
690
2,152
20. Cash and Bank Balances
Of the Group’s cash and bank balances of USD14.6 million (2011: USD31.3 million), the following were balances not held in the
functional currencies of the respective entities:
The Group
United States Dollar
Euro
Sterling Pound
Ringgit Malaysia
74
The Company
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
5,574
13,491
-
-
367
586
-
-
64
16
55
47
64
16
55
47
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
21. Share Capital
The movements in the authorised and paid-up share capital are as follows:
The Company
30.06.2012
Par Value
USD
Number
of Shares
(‘000)
0.10
At 1 July
Issuance of shares
At 30 June
The Company
30.06.2011
USD’000
Number
of Shares
(‘000)
USD’000
250,000
25,000
250,000
25,000
0.10
154,062
15,406
153,576
15,358
0.10
0.10
430
154,492
43
15,449
486
154,062
48
15,406
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
At 1 July
131,620
130,490
131,620
130,490
Exercise of share options
At 30 June
710
132,330
1,130
131,620
710
132,330
1,130
131,620
Authorised
At 1 July/30 June
Issued and Fully Paid-Up
22. Share Premium
The Group
The Company
23. Foreign Exchange Translation Reserve
The foreign exchange translation reserve arose from the translation of the financial statements of the foreign subsidiaries into the
Group’s presentation currency of USD.
The Group
USD’000
At 1 July 2010
264
Exchange differences arising on translation of foreign operations
for the financial year ended 30 June 2011
1,320
At 30 June 2011
1,584
Exchange differences arising on translation of foreign operations
for the financial year ended 30 June 2012
At 30 June 2012
284
1,868
75
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
24. Share Option Reserve
The expense recognised for employee services received during the year is shown in the following table:
The Group
30.06.2012
USD’000
(Credit)/expense arising from equity-settled
share-based payment transactions
At 1 July
Share option scheme compensation (credit)/expense
Share option lapsed
Transfer to share capital and share premium
At 30 June
(595)
1,552
(595)
-
The Company
30.06.2011
USD’000
1,415
994
2,074
(659)
30.06.2012
USD’000
30.06.2011
USD’000
(1,522)
915
1,552
994
(595)
-
2,074
(659)
(595)
1,415
(595)
1,415
(753)
204
(857)
1,552
(753)
204
(857)
1,552
The Company maintains a Long-Term Incentive Plan (LTIP), the principal terms include a restriction on the Company issuing (or granting
rights to issue) 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 Company’s share
price and/or sales growth. The awards are conditional on employment service requirements and internal target measures, where such
measures are themselves drivers of shareholder value.
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 options granted is estimated at the date of the grant using Black-Scholes, Monte-Carlo and Stochastic valuation
models, taking into account the terms and conditions upon which the options were granted.
30.06.2012
Weighted average
exercise price
per share
Options
‘000
Weighted average
exercise price
per share
Options
‘000
At 1 July
0.11
2,577
0.81
986
Granted
-
2,983
-
2,919
Exercised
Expired
At 30 June
76
30.06.2011
0.06
(430)
(357)
4,773
0.60
0.11
(486)
(842)
2,577
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
24. Share Option Reserve
continued
Details of share options granted that are outstanding as at 30 June 2012 are as follows:
Scheme
Number of
options
outstanding
‘000
Weighted average
fair value at
grant date
(Sterling pound)
Exercise
price per share
Vesting requirements
Vesting period
177
0.51
Sterling pound
1.58
Remain as employee
of the Company
15/04/08 – 15/04/10
Award 2
- 1 July 2011
35
1.00
Nil
Services rendered
01/07/11 – 30/06/12
Award 3
- 5 March 2012
10
1.23
Nil
One year service
05/03/12 – 05/03/13
Award 4
- 12 March 2012
2
1.04
Nil
Services rendered
29/03/12 – 01/07/12
Award 5
- 30 November 2010
1,773
1.29
Nil
Sales target and
three years’ service
30/11/10 – 30/06/15
Award 6
- 20 September 2011
2,451
0.81
Nil
Sales target and
three years’ service
20/09/11 – 30/06/15
325
1.36
Nil
Three years’ service
08/06/12 – 08/06/15
Award 1
- 15 April 2008
Award 7
- 8 June 2012
Total
4,773
The number of exercisable options as at the reporting date was 212,705 (2011: 467,290).
The weighted average fair value of options granted was determined using the share price on date of grant.
The related weighted average share price at the time of exercise was GBP1.08 (2011: GBP1.11) per share.
25. Long-Term Borrowings
The Group
Lease and hire purchase payables (Note 36)
Term loans (Note 35)
30.06.2012
USD’000
30.06.2011
USD’000
105
167
83,921
88,830
84,026
88,997
There is no foreign currency exposure in relation to the long-term borrowings of the Group in FY 2012 and FY 2011.
77
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
26. Trade Payables
The normal trade credit terms granted to the Group range from 0 to 90 days (2011: 0 to 90 days).
The foreign currency exposure profile of the trade payables at the reporting date was as follows:
The Group
United States Dollar
30.06.2012
USD’000
30.06.2011
USD’000
51
57
27. Other Payables, Accruals and Deferred Income
The Group
The Company
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
548
612
-
-
2,112
1,899
124
87
Non-current
Deferred income
Current
Other payables
Deferred income
Accruals
39
38
-
-
3,781
5,932
2,644
4,581
443
567
663
750
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 the high technology plant of 20 years.
The foreign currency exposure profile of the other payables at the reporting date was as follows:
The Group
United States Dollar
78
The Company
30.06.2012
USD’000
30.06.2011
USD’000
30.06.2012
USD’000
30.06.2011
USD’000
840
250
-
-
Euro
80
62
16
-
Swiss Franc
Sterling Pound
Australian Dollar
Ringgit Malaysia
32
21
34
33
26
7
32
21
34
33
26
7
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
28. Short-Term Borrowings
The Group
Lease and hire purchase payables (Note 36)
Bank overdraft
Term loans (Note 35)
30.06.2012
USD’000
30.06.2011
USD’000
40
49
176
-
18,109
24,962
18,325
25,011
There is no foreign currency exposure relating to the short-term borrowings in FY 2012 and FY 2011.
29. Net Assets Per Share
The net assets per share is calculated based on the net assets book value at the reporting date of USD118,824,000 (2011:
USD142,390,000) divided by the number of ordinary shares in issue at the reporting date of 154,491,552 (2011: 154,062,044).
30. Revenue
Revenue represents the invoiced value of products sold less sales tax, returns and trade discounts.
31. Income Tax Expense
The Group
01.07.2011
to
30.06.2012
USD’000
01.07.2010
to
30.06.2011
USD’000
Current tax on profits for the year
96
168
Under accruals in respect of prior years
25
80
121
248
Current tax:
Deferred tax:
Origination and reversal of temporary differences
Over accruals in respect of prior years
(2,870)
(630)
(1,312)
24
(3,500)
(1,288)
(3,379)
(1,040)
79
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
31. Income Tax Expense
continued
The Company was granted a tax assurance certificate dated 18 August 2007 under the Exempted Undertakings Tax Protection Act
1966 pursuant to which it is exempted from any Bermuda taxes (other than local property taxes) until 28 March 2016.
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 2009. Upon the expiry of
the 10-year incentive period, PCSB will be entitled to a concessionary tax rate of 20% on income derived from qualifying activities for a
further period of 10 years.
The other subsidiary, PCJX, has also been granted a 50% exemption on corporate tax from 1 January 2009 to 31 December 2011.
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:
The Group
30.06.2012
USD’000
Loss before taxation
Tax at the applicable tax rates in the respective countries
30.06.2011
USD’000
(26,657)
(19,542)
(3,103)
(2,508)
Tax effects of:
Non-deductible expenses
1,863
Non-taxable income
(709)
(432)
(Over)/Under provision of taxation
(605)
80
Utilisation of previously unrecognised tax losses
Tax losses not recognised
Income tax expense
80
739
299
(3,379)
(43)
(1,040)
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
32. Loss From Ordinary Activities Before Taxation
Included in the loss from ordinary activities before taxation are the following charges and credits:
The Group
30.06.2012
USD’000
30.06.2011
USD’000
26,644
56,994
3,900
5,018
Charges:
Raw materials and consumables used
Depreciation of property, plant and equipment
Directors remuneration
Share-based payment expense
Interest expenses
Write-off of biological assets
Loss on fair value of biological assets
Changes in inventories of finished goods
Foreign exchange loss
745
652
-
1,415
7,829
7,933
-
1,046
-
16
13,872
-
2,144
-
Credits:
Changes in inventories of finished goods
-
7,848
Foreign exchange gain
-
5,241
Gain on fair value of biological assets
1
-
Insurance compensation
-
2,071
Interest income
377
289
Share-based payment credit
595
-
81
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
33. Loss Per Share
The basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue:
The Group
30.06.2012
Loss attributable to equity holders of the Company (USD’000)
Weighted average number of ordinary shares in issue (thousands)
Basic loss per share (US Cents)
30.06.2011
(23,255)
(18,362)
154,395
153,879
(15.06)
(11.93)
Diluted earnings per share is not applicable as the potential ordinary shares under the Company’s Long-Term Incentive Plan would have
an anti dilutive effect.
34. Cash And Cash Equivalents
For the purpose of the cash flow statements, cash and cash equivalents comprise the following:
The Group
Short-term deposits with licensed banks
30.06.2012
USD’000
30.06.2011
USD’000
9,733
11,817
Cash and bank balances
14,555
31,320
Gross cash
24,288
43,137
(176)
-
Less: Bank overdraft (Note 35)
Less: Restricted cash
Cash and cash equivalents
(941)
(1,324)
23,171
41,813
Cash deposit of USD941,000 (2011: USD1,324,000) is pledged as security for foreign currency forward contract facilities.
82
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
35. Term Loans
The Group
30.06.2012
USD’000
30.06.2011
USD’000
Current portion (Note 28):
- Bank overdraft
- Term loans
176
-
18,109
24,962
18,285
24,962
Non-current portion (Note 25):
- repayable between one and two years
6,154
8,705
- repayable between two and five years
77,767
80,125
Total non-current portion
83,921
88,830
102,206
113,792
The term loans bore a weighted average effective interest rate of 7.29% (2011: 7.38%) per annum at the reporting date.
Details of the repayment terms of the term loans are as follows:
The Group
30.06.2012
Term loan
Number of monthly repayment
Monthly repayment amount
USD’000
Commencement date of repayment
Amount outstanding
USD’000
1
84
130
July 08
1,458
2
84
94
August 09
3,948
3
60
437
June 10
86,057
4
1
6,324
August 12
6,324
5
1
2,372
March 13
2,372
6
1
277
March 13
277
7
1
316
April 13
316
8
1
197
May 13
197
9
1
287
June 13
287
10
1
286
July 12
286
11
1
254
July 12
254
12
1
254
July 12
254
13
1
176
July 12
176
102,206
83
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
35. Term Loans
continued
The Group
30.06.2011
Term loan
Number of monthly repayment
Monthly repayment amount
USD’000
Commencement date of repayment
Amount outstanding
USD’000
1
84
189
April 05
500
2
72
137
July 08
2,993
3
60
525
June 10
90,472
4
84
88
August 09
4,376
5
1
15,451
August 11
15,451
113,792
Term loans 1 to 3 are secured by way of:
(i) a fixed and floating charge over present and future assets and the freehold property of a subsidiary;
(ii) corporate guarantee by the Company; and
(iii)legal charge over landed property of a subsidiary.
Term loan 4 to 8 are 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 loan 9 is secured by corporate guarantee of the Company.
Term loan 10 to 13 are unsecured.
Term loan 3 is a five year working capital facility starting from June 2010 with four year drawdown period to June 2014. Based on the
drawdown on 30 June 2012, this has a monthly revolving service requirement covering USD15.7 million of repayments up to June 2015
and then a USD70.4 million lump sum repayment in June 2015.
84
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
36. Hire Purchase
The Group leases motor vehicles under finance leases with lease terms of seven to nine years (2011: five to nine years). At the end of
the lease term, title to the assets will be transferred to the Group upon full payment being made.
The Group
30.06.2012
USD’000
30.06.2011
USD’000
Analysis of hire purchase (Note 25 and 28):
- repayable within one year
- repayable between one to five years
- repayable after five years
Less: Future finance charges
Present value
50
60
125
180
5
27
180
267
(35)
(51)
145
216
40
49
105
167
145
216
40
49
101
146
4
21
145
216
Representing hire purchase:
- Current (Note 28)
- Non-current (Note 25)
Maturity profile:
- repayable within one year
- repayable between one to five years
- repayable after five years
The hire purchase are secured by the rights to the leased motor vehicles which revert to the lessor in the event of defaults.
The hire purchase bore a weighted average effective interest rate of 3.13% (2011: 3.14%) per annum at the reporting date.
85
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
37. Significant Related Party Transactions
(a)Identities of related parties
The Group and/or the Company have related party relationships with:
(i) its subsidiaries as disclosed in Note 7 to the financial statements;
(ii) its joint ventures as disclosed in Note 8 to the financial statements;
(iii) the directors who are the key management personnel; and
(iv) companies in which certain directors are common directors and/or substantial shareholders.
(b)In addition to the information detailed elsewhere in the financial statements, details of the Group’s transactions and balances with
related parties during the financial year are set out below:
(i) Related parties
The Group
30.06.2012
USD’000
30.06.2011
USD’000
Gross sales of goods to jointly controlled entities
8,796
5,364
Proportionate accounting
(4,398)
(2,682)
Net sales of goods to jointly controlled entities recognised
4,398
2,682
Effective May 2012 the Company through its subsidiary PureCircle Sdn. Bhd. has taken a five year office lease from the sister
company of a significant shareholder, Half Moon Bay Capital Limited, at an annual rental of USD100,000 a year.
(ii) Key management personnel
Key management includes executive and non-executive directors. The compensation paid or payable to key management for
employee services is shown as below:
The Group
Paul Selway-Swift
01.07.2010
to
30.06.2011
USD’000
USD’000
88
88
Magomet Malsagov
271
126
John Robert Slosar
34
39
Olivier Phillippe Marie Maes
39
43
Peter Lai Hock Meng
43
43
Sunny Verghese
William Mitchell
86
01.07.2011
to
30.06.2012
-
-
270
313
745
652
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
37. Significant Related Party Transactions
continued
The Group
Remuneration
Professional services rendered
30.06.2012
USD’000
30.06.2011
USD’000
745
652
11
-
756
652
The interests of the Directors as at 30 June 2012 are as follows:
Number Of Ordinary Shares Of USD0.10 Each
The Company
Direct Interests:
Paul Selway-Swift
Magomet Malsagov
John Robert Slosar
Olivier Phillippe Marie Maes
Peter Lai Hock Meng
Sunny Verghese
William Mitchell
At 01.07.2011
Bought /
Options exercised
Sold
At 30.06.2012
308,171
15,013,176
1,418,702
250,810
100,000
730,095
42,436
23,350
126,200
45,050
26,905
-
308,171
15,055,612
1,442,052
377,010
145,050
757,000
Number Of Option Over Ordinary Shares Of USD0.10 Each
The Company
Direct Interests:
Paul Selway-Swift
Magomet Malsagov
John Robert Slosar
Olivier Phillippe Marie Maes
Peter Lai Hock Meng
Sunny Verghese
William Mitchell
At 01.07.2011
Award
Exercise
At 30.06.2012
285,308
12,500
14,000
21,500
235,227
213,128
21,700
24,400
27,100
72,678
(42,436)
(23,350)
(26,200)
(35,050)
(26,905)
456,000
10,850
12,200
13,550
281,000
(iii) Balances with related parties
The Group
Amount due from jointly controlled entities
Proportionate accounting
Amount due to joint venture partners
30.06.2012
USD’000
30.06.2011
USD’000
14,708
8,852
(7,354)
(4,426)
7,354
4,426
(789)
(423)
87
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
38. 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.
FY 2012
USD’000
FY 2011
USD’000
45,412
53,262
1
(16)
Cost of sales
(40,516)
(49,146)
Gross profit
4,897
4,100
Trading
Revenue
Gain/(loss) on biological assets
Gross profit %
11%
8%
(7,006)
3,647
Selling and administrative expenses
(17,096)
(19,356)
Operating loss
(19,205)
(11,898)
EBITDA
(15,171)
(9,902)
Adjusted EBITDA
(15,767)
(8,471)
(15,767)
(8,471)
595
(1,415)
1
(16)
(15,171)
(9,902)
(7,452)
(7,644)
Other income and expenses
Reconciliation of Adjusted EBITDA to loss for the financial year:
Adjusted EBITDA
Share-based payment credit /(expense)
Gain/(loss) on biological assets
EBITDA
Finance costs
Taxation
3,379
1,040
Depreciation and amortisation
(5,084)
(5,166)
Production depreciation in inventory
Loss for the financial year
Net debts
88
1,050
3,170
(23,278)
(18,502)
78,063
70,871
5.0 Accounts and notes
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
38. Segmental Reporting
continued
30.06.2012
USD’000
Cash Flow
Operating cash flow before working capital changes
30.06.2011
USD’000
(16,642)
(7,494)
Decrease/(Increase) in inventories
24,330
(17,217)
(Increase)/Decrease in receivables
(6,284)
12,324
Increase/(Decrease) in payables
3,735
(811)
Net cash from/(for) operations
4,513
(10,453)
Net cash (for)/from financing activities
(10,082)
2,702
Gross cash at end of the financial year
24,288
43,137
30.06.2012
USD’000
30.06.2011
USD’000
66,586
70,698
Inventories
73,656
96,503
Third party trade receivables
14,473
9,734
Statement of Financial Position
Property, plant and equipment
Receivables from jointly controlled entities
Total assets
Cash and bank balances
Borrowings
Net debts
7,354
4,426
233,349
266,719
24,288
43,137
102,351
114,008
78,063
70,871
Geographical information
The geographical information noted below is by reference to the locations of the entities:
30.06.2012
Sales
Loss for the financial year
Capital employed
Non-current assets
30.06.2011
Sales
(Loss)/Profit for the financial year
Capital employed
Non-current assets
Americas
Asia Pacific*
Unallocated
Elimination
Total
USD'000
USD'000
USD'000
USD'000
USD'000
23,986
82,874
-
(61,448)
45,412
(5,009)
(11,784)
-
(6,485)
(23,278)
137,833
50,474
-
(69,483)
118,824
12,716
88,025
1,806
-
102,547
Americas
Asia Pacific*
Unallocated
Elimination
Total
USD'000
USD'000
USD'000
USD'000
USD'000
36,792
80,677
-
(64,207)
53,262
(6,793)
(15,900)
-
4,191
(18,502)
136,011
63,183
-
(56,804)
142,390
11,578
90,311
1,806
-
103,695
89
PureCircle Annual Report 2012
Notes To The Financial Statements
For The Financial Year Ended 30 June 2012
38. Segmental Reporting
continued
The primary performance indicators used by the Group are revenues, gross profit %, adjusted EBITDA, net cash from operations,
and net debts.
EBITDA is calculated as net profit for the year reported on the face of the profit and loss account, adjusted for interest, taxation,
depreciation and amortisation.
Adjusted EBITDA is calculated as EBITDA adjusted for the non-cash items of share-based payment expense and gain/(loss)
on biological assets.
The other expenses reflect the costs associated with the decision to scale back production temporarily so as to reduce inventories
to levels better aligned with current market usage.
Foreign exchange: As a US$ reporting Group, it is the Group’s policy to put US$ denominated long-term intercompany loans from
the parent company into operating subsidiaries as natural economic foreign exchange hedges against movements in local currency
which impact local operating costs when reported in US$. The Group recorded foreign exchange loss of $2.1m in FY 2012 due to
currency weakening against the US$ in Malaysia. In FY 2011 the Group recorded foreign exchange gains of $5.2m due to currency
appreciations against the US$ principally in Malaysia.
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 Asia Pacific segment includes sales to and results of the Group’s European jointly controlled entities - see Note 37.
39. Capital Commitment
Capital expenditure at the reporting date is as follows:
The Group
Approved and contracted for Property, plant and equipment
Approved but not contracted for Property, plant and equipment
90
30.06.2012
USD’000
30.06.2011
USD’000
1,741
389
-
97
For The Financial Year Ended 30 June 2012
5.0 Accounts and notes
Notes To The Financial Statements
40. Events After The Reporting Period
(a)Placing of GBP20 million to Support accelerated growth
On 9 August 2012 the Company completed a private placement (“Placement”) of 10 million new ordinary shares at GBP2.00 per
share to Wang Tak Company Limited. The Placement raised USD31 million in new equity. The proceeds of the Placement will be to
support working capital and the future growth of the Company. As part of the Placement Mr. Tan Boon Seng, a Director of Wang Tak
Company Limited and its holding company Lee Hing Development Limited, was invited to join the Company’s Board which he did so
at completion. Ms. Mei Sian Tan was appointed alternate director for Mr. Tan Boon Seng. Following the Placement the Company’s
issued share capital increased to 164,566,294 shares (of which 38,142 are currently held by the Company in treasury). At completion
Wang Tak Company Limited owns 19,276,150 shares representing 11.7% of the issued share capital.
(b)Long-Term Incentive Plan (LTIP) Options – new options granted to directors
The Board of the Company had on 10 July 2012 granted options under the Group’s Long-Term Incentive Plan (LTIP).
These options include:
(i) Discretionary LTIP award granted to an Executive Director amounting to 35,000 shares which shall vest on the third anniversary
of the grant at Nil exercise price; and
(ii) Options granted to certain Non-Executive Directors in lieu of their fees covering six months period from 1 July 2012
to 31 December 2012 amounting to 21,100 shares. These options have an exercise price of GBP1.3715 per share
(USD2.1343 per share), calculated based on 20 days weighted average closing price prior to 1 July 2012.
These options shall vest on 1 January 2013.
(c)Increase investment in NP Sweet AS
On 10 August 2012, the Company increased its investment in NP Sweet AS by Euro250,000 in paid-up capital and share premium
through its subsidiary, PureCircle S.A.
41. Fair Values Of Financial Assets And Liabilities
Fair value is defined as the amount at which the financial instrument 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 following methods and assumptions are used to estimate the fair value of each class of financial instruments:
(a)Short-term receivables/payables
The carrying amounts approximate their fair values due to the relatively short-term maturity.
(b)Long-term borrowings
The carrying amounts approximate the fair values of these instruments as the long-term borrowings are based on floating market
interest rates.
91
PureCircle Annual Report 2012
6.0
Shareholder Information
Internet
PureCircle Offices
Nominated adviser
PureCircle Group operates three websites
which are updated regularly to cater for
different information needs:
Registered office
RFC Ambrian Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda.
Level 15, QV1 Building
250 St Georges Terrace
Perth WA 6000
Australia.
Consumers
www.steviapurecircle.com
Corporate Head Quarters
Malaysia
Health professionals, customers, policy
makers, consumers
www.globalsteviainstitute.com
10th Floor, West Wing
Rohas Perkasa
No. 9 Jalan P. Ramlee
50250 Kuala Lumpur
Malaysia.
T +603 2166 2206
F +603 2166 2207
Level 14, 19-31 Pitt Street
Sydney NSW 2000
Australia.
Investors and corporate stakeholders
www.purecircle.com
Investor Relations
Request for further copies of the annual
report or other investor relations matters
should be addressed to PureCircle’s office.
Annual General Meeting
The Annual General Meeting (AGM)
will be held on 12 December 2012, a
formal notice of AGM had been sent to
shareholders together with a copy of the
annual report for financial year 2012.
2013 Financial Year and
Corporate Calendar
Half year end 31 December 2012
Interim results March 2013
Year end 30 June 2013
Final results September 2013
Sales & Marketing Head Office
USA
12th Floor, 1 Angel Court
London EC2R 7HJ
United Kingdom.
Mirabaud Securities LLP
Regional Sales
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
United Kingdom.
Contact details:
US or Canada:
[email protected]
33 Grosvenor Place
London SW1X 7HY
United Kingdom.
Liberum Capital Limited
Latin America:
[email protected]
Share Registrar
Europe, Middle East or Africa:
[email protected]
In Jersey (Shares)
Asia Pacific:
[email protected]
PricewaterhouseCoopers
Chartered Accountants
Level 10, 1 Sentral
Jalan Travers, Kuala Lumpur Sentral
PO Box 10192
50706 Kuala Lumpur
Malaysia.
92
Westhouse Securities Limited
915 Harger Road, Suite 250
Oak Brook, IL 60523
USA.
T +1 630 361 0374
F +1 630 361 0384
Auditors
Printed on recycled paper
Brokers
Computershare Investor Services
(Jersey)
Queensway House, Hilgrove Street
St. Helier, Jersey, JE1 1ES.
In the UK (Depositary Interests)
Computershare Investor
Services plc
The Pavilions, Bridgwater Road
Bristol BS13 8AE
United Kingdom.
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