1. food and drink
2. beverages

2
PureCircle Annual Report 2013
Everything Stevia
EVERYTHING
STEVIA
Everything Stevia – we introduced this theme in last year’s annual
report to encapsulate PureCircle’s dedication and engagement with
customers, stevia partners and end consumers.
This year, we are proud to report on the progress of our continued
journey in establishing PureCircle’s stevia based ingredients, a
relatively young natural ingredient in a dynamic and vibrant food
and beverage industry. To this end, we have focused relentlessly
on the key dynamics in the food and beverage industry – delivering
great taste, ensuring consumer acceptance, fostering ingredient
advocacy. Our knowledge and systematic approach to eliminating
barriers to stevia growth, has set us apart. In 2013, we have
strengthened our position as the Everything Stevia company.
To maintain leadership as the Everything Stevia company, we have
continued our focus on the pillars that have fueled our growth.
But we have not stood still. Our technical expertise is deeper. Our
innovation pipeline is richer. Our trust mark is more visible. Our
advocacy work is more ubiquitous. Our sustainability benefits are
clearer. And our consumer insights are even more insightful.
As a result, we’re developing deeper calorie reduction solutions
and deeper partnerships with our customers than ever before.
Most importantly, our results can be seen on grocery store shelves
around the world.
www.purecircle.com
We focus on the following platforms to
engage with customers, stevia partners,
and end consumers:
1
Everything
Stevia
Platforms
Innovation and
Technical Support
Creating competitive advantage through
world class innovation and customer
technical support
2
Trust Communication
3
Health Professional Advocacy
4
Sustainability Solutions
5
Everything Stevia
Expanding the adoption of the Stevia
PureCircle trustmark to support compelling
consumer communications
Providing confidence to the industry through
the Global Stevia Institute
Translating supply chain integration into
environmental advantage
Establishing ourselves as the “Everything
Stevia” company – from marketing services
to integrated communications
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PureCircle Annual Report 2013
Platform 1: Innovation and Technical Support
PureCircle
Stevia 3.0™
20+
new products in the pipeline
Technical
resource
lab facilities
1
Innovation and
Technical Support
www.purecircle.com
Providing the World, World-Class Innovation
and Technical Support
Our customers pride themselves on their unique food and beverage
formulations. They tell us that their core consumers are discerning. Their new
launches must delight them and reformulations are to be carefully considered.
A single stevia ingredient, as we had offered in the past, was not fully meeting
their needs. We responded with technical development and innovation
solutions to meet this challenge. The results are evident with a greater
diversification of our sales and better tasting products being launched, with
deeper reductions than were possible in the past.
It has been said, “The future is already here, it’s just not widely distributed
yet”. PureCircle’s innovations are bringing forward the future of great-tasting,
natural, calorie reduction. At its core, PureCircle is an innovation company.
We believe the future is now here through the expansion of our portfolio
across PureCircle sweeteners and flavors. Notable portfolio additions in 2013,
included breakthrough innovation that can be used in zero calorie products
like carbonated soft drinks, with Reb X and Reb D. And our pipeline remains
rich with new sweeteners and flavors that will launch in 2014.
We are also strengthening our ability to apply these innovations. In 2013, we
greatly expanded our lab infrastructure in the United States, China and the UK.
It has enabled us to expand our execution of PureCircle Stevia 3.0™ which
offers tailored sweetening solutions blended to fit any application. Rather than
providing ‘one-size-fits-all’ stevia sweetening, we have learned that to get
the best stevia-sweetened product, a blended approach can be the answer.
Knowing the particular stevia ingredients which work best in specific food
and beverage matrices, lets our product developers achieve deeper calorie
reductions with better taste profiles than ever before.
We are delivering this new approach through an extensive side by side
development program, with our customers, called PureCircle University.
In 2013 we held over 70 PureCircle University programs around the world,
partnering with our customers to develop the right concepts and right
formulations to bring to market.
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PureCircle Annual Report 2013
Platform 2: Trust Communication
Trustmark use
Licensing
More product
launches
Launch campaigns
across marketing media
2
Trust
Communication
www.purecircle.com
Stevia PureCircle Trustmark integrated into
activities of prominent product launches
Approval of stevia for use as a sweetener in food and beverage products has
continued to expand into new markets around the globe and the Stevia PureCircle
Trustmark program has also expanded over the past fiscal year. The Stevia
PureCircle Trustmark continues to provide a strong base of trust and source of
consumer communication around stevia for PureCircle customers as part of their
brand launches.
Harnessing new market insight studies and continued market intelligence,
the Stevia PureCircle Trustmark program not only supports customers in
communicating key consumer messages but also helps ensure they understand
the correct way to label stevia and describe it in key markets with specific, local
regulatory guidelines.
While the trustmark continues to be utilized by products in over 30 countries,
it is finding its way into the campaigns of notable product launches. In 2013 the
Stevia PureCircle trustmark was licensed for use in the world’s first major stevia
cola launches by PepsiCo with Pepsi Next in both Australia and France. The Stevia
PureCircle Trustmark was an integral part of the company’s consumer launch
campaigns, appearing prominently across a range of marketing media including
in-store, digital, sampling and print advertising. With consumers directed to
www.steviapurecircle.com, PureCircle was able to reinforce the quality of the
natural origin stevia they use from the leader in the industry.
Origin of supply, traceability, quality and trust of ingredients are an increasing
focus within the global food and beverage industry. Via the PureCircle Trustmark
program, our customers are able to share rich information with their consumers
about high-purity stevia from the leader in the industry.
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PureCircle Annual Report 2013
Platform 3: Health Professional Advocacy
26,000
subscribers of
GSI newsletter
73,000
visits to website
®
4000+ KOLs*
reached at scientific forums
3
Health Professional
Advocacy
www.purecircle.com
Proactive Ingredient Advocacy through
The Global Stevia Institute
The Global Stevia Institute has established itself as the leading resource for
science-based information about stevia and plays an essential role in ingredient
advocacy and protection in emerging and developed markets. The GSI is
advised by a board of internationally-known nutrition and health specialists with
expertise in key functional areas and established credibility in priority markets. In
2013, the Board was further strengthened with the appointment of an ingredient
safety expert, a local advisor in Mexico, and an Advisory Board Chair to guide
GSI strategy.
The GSI disseminates science-based information about stevia, its safety and
natural origin, and its role in improving and encouraging healthy diets through
multiple channels globally. The GSI reaches 26,000 readers with proactive stevia
messages through its online newsletters and updates. GSI’s resources are targeted
to healthcare professionals, media, and consumers, yet also provide an important
source of support for customers. In 2013, companies like Coca-Cola chose the
GSI website as its expert stevia resource to support launch activities in South
America and has expanded its references to GSI resources in markets around the
world. The GSI’s website (www.globalsteviainstitute.com) has received over 73,000
visits from 169 countries since its launch.
The value of GSI’s resources have been further recognized by customers who have
partnered with the GSI to promote scientific discussion about stevia among health
and nutrition organizations, at scientific forums and with the media. The GSI also
collaborates with leading health information organizations like the Calorie Control
Working Group to protect the reputation of stevia as a naturally sourced ingredient
suitable for the whole family.
Market/Advisor Expansion
Global Digital Outreach
• 7 countries across 3 continents
• Recent addition of Mexico chair and functional experts
•6 languages, newsletter reaches 26,000+
•Website traffic from 169 countries
•Recognized by major customers as the
leading resource about stevia
Global Speaker Circuit
•4000+ KOLs* reached at scientific forums
and meetings in 11 countries
Media and Coverage
•15+ million media impressions
* KOLs: Key Opinion Leaders
Strategic Partnerships
•Building credibility through partnerships
and expanding stevia education to
45,000+ KOLs* and consumers via
collaborations with leading health and
nutrition organizations.
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PureCircle Annual Report 2013
Platform 4: Sustainability Solutions
1million
Reduction of
metric tonnes of carbon
CO2e
Reduction of
2 trillion
litres of water
20% footprint
reduction
PureCircle
2020
Sustainability
Goals
0% landfill
waste
Supporting
100,000 farmers
4
Sustainability
Solutions
Reduction of
13 trillion
calories
100%
traceability
www.purecircle.com
Reducing Food and Beverage Impacts –Translating
our Sustainability Advantage to Customer Advantage
It is our vision to lead the global expansion of stevia as the next mass volume
natural sweetener and to encourage healthier diets through the supply of
natural ingredients to the global food and beverage industry. And it is our
mission to scale stevia as the next mainstream natural sweetener sustainably.
With completion of industry-pioneering farm to gate carbon and water
footprints for fiscal 2011 followed by another detailed farm to gate carbon foot
printing in fiscal 2012, we have established ambitious goals that will positively
benefit the wider food and beverage industry and communities we operate in.
These goals cover each aspect of our operation from farm to product.
Briefly, our goals are to:
Achieve a cumulative Reduction in the Food & Beverage Industry’s
• Carbon emissions by 1 million metric tons by 2020
• Water consumption by 2 trillion liters by 2020
• Calories in global diets by 13 trillion by 2020
While
• Reducing our own Carbon, Energy and Water intensity by 20% by 2020
from our 2011 baseline
• Ensuring zero untreated landfill waste from across our supply chain by 2015
• Adopting a Sustainable Agricultural policy that empowers and offers up to
100,000 small scale farmers a fair market to participate in
• Maintaining and extending our traceability program as we grow
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PureCircle Annual Report 2013
Platform 5: Everything Stevia
Stevia awareness:
64%
of people in France
surveyed in March 2013
Innovation
Customization
Realization
more than
500
top food and beverage
manufacturers worldwide
5
Everything
Stevia
www.purecircle.com
Maintaining industry leadership as the “Everything Stevia”
company through innovation • customization • realization
While 2012 marked the launch of PureCircle’s Everything Stevia campaign,
2013 saw the company strengthen its position as the market leader through global
communications and successful engagement of the PureCircle Insights Group with
customers.
The Everything Stevia campaign reached major customers around the world
through integrated communication efforts across event, digital, print social media,
and speaker positions at leading conferences globally. PureCircle expanded its
successful Everything Stevia conference series with full day events across both
China and the newly approved Canadian market. These events demonstrated
PureCircle’s innovative portfolio and formulation expertise to thousands of
delegates from more than 500 top food and beverage manufacturers worldwide.
The PureCircle Insights Group is recognized as the leading authority for consumer
and market insights on stevia. The group invested in extensive proprietary
consumer research and market data to provide actionable insights that drive
concept development and messaging strategy for our customers. In 2013, the
PureCircle Insights Group conducted consumer research in 10 countries across
Europe, Asia, Latin America and the United States, including expansion of our
coverage into 3 new markets. With the expansion of our internal capabilities and
integration of cutting edge social media trackers, PureCircle is able to share up to
the minute insights with its customers on stevia and their brands around the world.
Stevia awareness
64%
FRANCE
62%
US
55%
GERMANY
43%
CHINA
33%
ARGENTINA
UK
26%
SPAIN
26%
ITALY
26%
POLAND
MEXICO
23%
21%
Source: PureCircle Insights Group, 2013
13
14
PureCircle’s Integrated Supply Chain:
From Seedling to Sweetener
1
2
1 Plant Breeding
Breeding proprietary Stevia varieties
with higher sweet glycoside content
2Harvesting
Working directly with local farmers
across four continents
3Extraction
Producing our own extract to ensure
quality standards are met
3
4Purification
Purifying steviol glycosides with an
unmatched scale and consistency
5Application
Providing formulation expertise to
deliver great-tasting products
6 Finished Product
4
Supporting consumer communications
with powerful Stevia by PureCircle
trustmark equity
5
6
Contents
1
Our Business and Strategy
16
1.1 Vision and Strategy17
1.2 Our Market17
2
Our Performance
18
2.1 Highlights for the Year18
2.2 Chairman’s Statement21
2.3 CEO Review
21
3
28
Our Governance
3.1 Corporate Governance Report28
3.2 Report of the Remuneration Committee31
3.3 Director’s Report34
3.4 Board of Directors36
4
Our Financials
39
4.1 Independent Auditors Report39
4.2 Statement of Financial Position40
4.3 Consolidated Statement of Comprehensive Income42
4.4 Consolidated Statement of Changes in Equity43
4.5 Consolidated Statement of Cash Flows46
4.6 Notes to the Consolidated Financial Statements48
5
Shareholder’s Information
90
16
PureCircle Annual Report 2013
1 Our Business and Strategy
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.
•
•
•
•
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 for 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.
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
solutions.
Our Business and Strategy
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.
Our Performance
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:
Our Governance
1.2 Our Market
Our Financials
1.1 Vision and Strategy
17
Shareholder’s Information
www.purecircle.com
18
PureCircle Annual Report 2013
2 Our Performance
2.1 Highlights for the Year
Financial highlights
The audited results for FY13 comprising the Group’s consolidated statement of comprehensive income, statement of
financial position and statement of cash flows are set out on page 25 to 27. A summary of the financials for FY13 with
FY12 comparatives is set out below.
Summary financials
FY 2013
USD’000
FY 2012
USD’000
Sales
71,206
45,412
Gross profit
18,808
4,922
Adjusted operating profit/(loss)
2,679
(13,200)
EBITDA
4,851
(15,171)
Adjusted EBITDA
8,768
(9,166)
Net loss after tax
(9,428)
(23,278)
Operating cash-flow before working capital changes
5,941
(16,642)
Inventories
92,802
73,656
Cash and short term deposits
49,198
24,288
Net debt
Gross assets
Sales: FY13 sales increased $25.8m (57%) to $71.2m.
$68m of the sales were high purity stevia sweeteners and
natural flavors, a 74% improvement against FY12.There was
growth in sales across all high purity ingredients primarily
driven by new innovations in our Stevia PureCircle proprietary
portfolio of all-natural sweetener and flavor ingredients, under
the PureCircle Stevia 3.0 range. All regions (EMEA, Latin
America, Asia Pacific and USA) recorded sales growth.
Sales of lower value co-products reduced year-on-year
in line with our strategy of focusing on high purity stevia
ingredients.
During FY13 there has been a series of important launches
including Carbonated Soft Drinks using blends of proprietary
ingredients developed by PureCircle which further
accelerated market adoption. As expected, PureCircle’s
FY13 sales do not yet fully reflect growth in market usage of
Reb A due to the continued unwinding of Beverage Global
Key Accounts’ inventories.
Sales volumes: In FY13 total volumes of high purity stevia
increased by 89%. Volume increases were led by the sales
(76,288)
(78,063)
289,407
233,349
of new proprietary ingredients introduced to the market over
the past 24 months. In addition we continued to grow our
customer base and in FY13 serviced over 300 customers
worldwide, including the first full year of in market sales from
our EU based Joint Ventures.
Gross margin: In FY13 gross margin was $18.8m, an
increase of $13.9m (282%) over FY12 reflecting increased
volumes and improved sales mix, with a higher proportion
of high purity stevia ingredients. At 26% of sales, gross profit
% more than doubled against FY12. However our FY13
sales were still modest against our $300m sales production
capacity and so we expect further improvements in gross
profit margin as volumes increase.
Adjusted EBITDA: FY13’s adjusted EBITDA was $8.8m
positive, a $18m improvement on the FY12 adjusted
EBITDA loss of $9.2m. The EBITDA improvement reflected
strong growth in sales volumes and in gross profit as
well as reduction in other operating costs and foreign
exchange charges. In FY12 the Group incurred $5.7m net of
exceptional costs relating to the temporary slowing down of
Reb A production.
Other F&B product launches: Datamonitor reported
2,600 new products with high purity stevia in CY2012,
a major acceleration over prior years. Adoption is broadening
across all regions and Food and Beverage categories. More
products are mainstream reformulations.
Funding headroom and net debt: The Group ended FY13
with cash and facility headroom of $55m (FY12 $44m) and
net debt of $76m (FY12 $78m). The Group is sufficiently
funded for its current expansion plans.
Customer base: PureCircle has again increased our
customer base significantly: in FY13 we sold to more than
300 different customers around the world: an increase
of more than 200 against FY12. The number of orders
processed increased proportionately. Moving forward our
direct sales focus is on the larger F&B customers worldwide
while our distributor partners will service smaller customers.
Business developments
Overview: Market adoption of PureCircle high purity
stevia ingredients continues to accelerate across all Food
and Beverage categories and all regions of the world. Of
particular note in FY13 has been the increasing take up
within the large Carbonated Soft Drinks (CSD) category and
in major brand reformulations. There is growing acceptance
of stevia as a mainstream ingredient. Many of the new
launches with stevia have been enabled by our Stevia 3.0
innovation approach launched over the past 24 months to
address market formulation needs.
PureCircle’s business model is designed to operate on a
mass volume basis, underpinned by continued product
innovation. Perhaps FY13 has provided the first tangible
indications of the sales volume growth that can flow from
that innovation. Going forward our business development
priorities will continue to focus on sustainable sales volumes
growth underpinned by innovation.
Carbonated Soft Drinks: Carbonated Soft Drinks are likely
to represent the largest single category volume for high purity
stevia. FY13 saw significant breakthroughs in Carbonated
Soft Drink adoption of high purity stevia. The reformulation
of Sprite in France was extended to the UK, Ireland, Benelux
and Switzerland; and Pepsi Next was launched in Australia
and France. In the United States Sprite and Fanta Select
were test marketed. Notable expansion took place in Latin
America as well with Fanta, Fresca and Sprite reformulations
in Mexico; and in June Coca-Cola Life was launched in
In FY13, the company announced a joint development
agreement and a 5-year supply agreement with the CocaCola Company. The supply agreement encompasses high
purity stevia sweeteners produced by the Company and the
joint development agreement resulted in the discovery and
development of a new food ingredient named Rebaudioside
X (Reb X), with potential for use in zero calorie food and
beverage products.
Regulatory: Regulatory approvals for high purity stevia
continue with almost 1.6 billion additional consumers given
regulatory access to stevia in FY13 following approvals
published in Philippines, Thailand, South Africa and Canada;
whilst Indonesia and India have also approved and will
publish approval in the coming months.
In FY13 PureCircle progressed the next generation of
innovation to achieve no calorie formulations, with new
regulatory approvals for Reb D in June 2013, and a GRAS
submission for new sweetener Reb X, with expected
approval in October 2013. Investments and assets are
in place from agriculture to manufacturing to be ready to
commercialize these products in FY14.
PureCircle product portfolio: We have launched a portfolio
of new ingredients across the last 24 months under the
Stevia 3.0 range. These have been developed specifically to
address customer application needs and they are proprietary.
Our Business and Strategy
Inventories: At $93m FY13 inventories were $19m higher
than at June 2012. This reflects management decisions to
build inventories of new innovations introduced to the market
recently in anticipation of higher and sustained sales growth
in FY14 and FY15, in line with accelerating market usage.
Our Performance
Net cash from operations, before financing: Reflecting
positive EBITDA, the Group’s FY13 base operating cashflow
was positive $6m. In FY13 the Group built inventories ahead
of projected sales growth in FY14 and FY15, which led to a
net $10.6m operating cash-outflow.
EU impact: FY13 was the first full year of stevia sales in the
EU, the world’s largest single sweetener market. EU adoption
of high purity stevia has been fast and is accelerating with
almost 1,000 launches in Calendar Year 2012 (CY2012)
alone, the highest of any region. Consumer awareness of
stevia in the EU is accelerating rapidly and has more than
doubled over the year in all surveyed countries.
Our Governance
Argentina. Numerous other Carbonated Soft Drink adoptions
have been launched or are ready in development pipelines
for launch.
Our Financials
Net loss after tax: FY13’s net loss of $9.4m was a $13.9m
(60%) improvement on FY12. The Group’s business model
and production capacity is highly leveraged towards volumes
and as sales demand increases the Group’s profitability is
expected to continue to improve strongly.
19
Shareholder’s Information
www.purecircle.com
20
PureCircle Annual Report 2013
In FY13 they represented more than 50% of total sales, their
volume growth was well in excess of 100% and their future
pipeline growth is expected to be even higher.
PureCircle’s innovation is helping accelerate market adoption
by providing clients combinations of our products to achieve
optimum taste results. The combination of our innovation and
formulation expertise provides unique formulation options
that cannot be matched. Our innovation underpins our
business model and we have further innovative products in
the pipeline.
Technical support – PureCircle University (PCU):
Having expanded our technical support in FY12 by opening
application laboratories in key markets, in FY13 we held
more than 70 PureCircle University customer events.
The PCU programme will accelerate further in FY14 in
response to strong customer demand for direct access to
our technical support, including deeper understanding of
product combination options and innovation developments.
The efforts have been further supported by continued
expansion of our commercial and technical footprint. In FY13
PureCircle expanded lab capabilities in the United States
and China, opened a new office and laboratory in the UK
and established a new entity in Mexico to better service our
growing customer base.
Stevia advocacy and sustainability initiatives:
PureCircle has continued to integrate advocacy and
sustainability initiatives with our customer to deliver long
term value.
•The PureCircle Stevia Trustmark ™ has reached more than
30 countries. In 2013 it was integrated on pack or as
marketing support in customer advertising and included
in the marketing of Pepsi Next launches in both Australia
and France.
• Our Sustainability leadership has resulted in several joint
sustainability initiatives with our customers along with
a clear vision for how our footprint can have material
reductions in carbon, water and calories for the global
food and beverage industry as part of our published 2020
Vision.
•Our Insights Group is building market studies directly in
partnership with key customers, with new studies across
9 markets including such markets as India, Argentina and
China.
•The Global Stevia Institute (GSI) has continued to expand
its reach and position as the leading source on the
science and safety of stevia, including new advisers in
North America, Europe and Latin America and now has
a monthly reach of over 26,000 readers to its monthly
newsletter. The website is now highlighted with health
professionals around the world through The Coca-Cola
Beverage Institute and on packaging of leading ketchup
introductions by Unilever across Europe.
Supply chain: In FY13 our core production facilities were
successfully re-configured to enable mass volume supply
of all products in our widening portfolio. At the same time
the facilities delivered overall sales volume increases of 89%
with reduced unit costs and they increased production in
anticipation of strong market growth in FY14 and FY15.
This provides a strong platform for future profitable growth.
Commenting on the audited results, the Chairman Paul
Selway-Swift said:
“FY 13 saw encouraging growth in usage of PureCircle’s
high purity stevia in all major markets and the first
tangible market indications of stevia developing into a
mainstream ingredient.
Whilst sales still remain modest compared to our
invested production capacity, the strong improvements
in financial result seen in FY13 provide strong evidence
of the scalability of our business model. Further
improvements in profitability should arise as volumes
increase.
We remain confident of the future of our high purity
stevia business. Recent product launches, particularly
in the Carbonated Soft Drink category, are leading to
improved visibility on future sales prospects which, when
realised, would drive future profitability.”
At a market level FY13 saw good quality progress on many
fronts: for example 2,600 products launched in CY 2012 and
major new markets such as Canada opening up. Probably
the most notable milestones have been the increased size
and breadth of new activity in the Carbonated Soft Drinks
category. These have the potential to develop into significant
future volumes.
At a Company level in FY13 PureCircle has again broadened
its already leading product portfolio, further increased our
innovation pipeline, further diversified our customer base
and increased sales volumes by more than 100%, whilst
continuing to expand leaf development.
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.
Recent product launches, particularly in the Carbonated Soft
Drink category, are leading to improved visibility on future
sales prospects which, when realised, would drive future
profitability.
2.3 CEO Review
Operations
Market
In less than two years stevia awareness in major European
markets has grown to nearly 1/3rd of the population with
awareness in France at over 60%.
Regulatory
Regulatory approvals for high purity stevia continue with
almost 1.6 billion additional consumers given regulatory
access to stevia in FY13 following approvals published
in Philippines, Thailand, South Africa and Canada; whilst
Indonesia and India have also approved and will publish
approval in the coming months. In FY13 PureCircle secured
important new regulatory approvals for Reb D and other
proprietary ingredients that will further accelerate market
adoption.
Sales: FY13 sales increased $25.8m 57% to $71.2m. $68m
of the sales were high purity stevia sweeteners and natural
flavors, a 74% improvement against FY12.There was growth
in sales in all regions and across all high purity ingredients
primarily driven by new innovations in our Stevia PureCircle
proprietary portfolio of all-natural sweetener and flavor
ingredients, under the PureCircle Stevia 3.0 range.
Sales of lower value co-products reduced year-on-year
in line with our strategy of focusing on high purity stevia
ingredients.
Our market continues to grow as stevia moves toward
becoming a mainstream sweetener. This growth is driven
by new innovations brought to market by PureCircle, end
consumer demand for healthier options and global food and
beverage industry’s increased acceptance of stevia. FY13
saw important developments in our market such as greater
usage in key categories, major brand launches, and increased
consumer awareness for high purity stevia in key markets.
During FY13 there has been a series of important launches
including Carbonated Soft Drinks using proprietary
ingredients developed by PureCircle which further
accelerated market adoption. As expected, PureCircle’s
FY13 sales do not yet fully reflect growth in market usage
due to the continued unwinding of Beverage Global Key
Accounts inventories.
Based on data from Mintel’s GNPD database, we estimate
that more than 1,600 foods and beverages sweetened
with stevia will launch globally in CY 2013 (more than 900
launches reported to date). This represents over 50+%
growth compared to CY 2012, maintaining a 57% compound
annual growth rate (CAGR) since 2009. To date, more than
Sales volumes: In FY 2013 total volumes of high purity
stevia increased by 89%. Volume increases were led by the
sales of new proprietary ingredients introduced to the market
over the past 24 months. In addition we continued to grow
our customer base and in FY13 serviced over 300 customers
worldwide, including the first full year of contribution from our
EU based Joint Ventures.
Our Business and Strategy
While the number of stevia launches is on the rise across
categories, the landscape of the global stevia market is
evolving as certain categories are growing faster than others.
In particular, carbonated soft drink launches have begun
to develop more aggressively in CY 2013 with over 50+
products launched around the world as well as the first major
introductions into the Cola category behind Pepsi Next and
Coca-Cola Life.
Our Performance
FY 13 has been another 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. With strongly improved volumes and margins, FY13
has perhaps also provided the first indication of PureCircle’s
potential in our reported financial results.
Our Governance
4,500 food and beverages have launched using high purity
stevia as an ingredient.
Our Financials
2.2 Chairman’s Statement
21
Shareholder’s Information
www.purecircle.com
22
PureCircle Annual Report 2013
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 twenty four months.
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 open, Mexico. Our pipeline of
customer technical projects is growing and the number of
customer working sessions has increased significantly.
In FY13 we held more than 70 PureCircle University customer
events to ensure our customers develop winning food and
beverage formulations and bring them quickly to market. The
PCU programme will accelerate further in FY14 in response to
strong customer interest in having support to help incorporate
our leading Stevia 3.0 portfolio into their products.
PureCircle has continued to integrate advocacy and
sustainability initiatives with our customer to deliver long term
value.
•The PureCircle Stevia Trustmark ™ can be found across
more than 30 countries and has been highlighted on
notable product launched including Pepsi Next in Australia
and France.
•Our Sustainability Programs are resulting in deeper
partnerships with our customers along with a clear vision
for how our stevia can reduce carbon, water and calories
in our customers’ food and beverage products.
•Our Insights Group is building market studies directly in
partnership with key customers, with new studies across
9 markets including India, Argentina and China.
•The Global Stevia Institute (GSI) has continued to expand
its position as the leading source on the science and
safety of stevia, with a reach of over 26,000 readers to its
monthly newsletter. The website is now highlighted with
health professionals around the world through The CocaCola Beverage Institute and even on packaging of leading
ketchup introductions by Unilever across Europe.
Joint Ventures
Sales by our EU joint ventures grew by more than 130%,
benefitting from FY13 being the first full year of operation
in the world’s largest single sweetener market.
On 13 September, the Group sold its interests in the joint
venture NSV to our partner, Imperial Sugar. Going forward,
PureCircle will supply stevia to Imperial without the need for
a JV structure.
Supply chain
In FY13 our supply chain successfully delivered an 89%
increase in sales volumes whilst simultaneously re-configuring
our production capacity to enable scaled production of a much
wider product portfolio. Two years ago our factories were
configured to manufacture just two high purity stevia products.
In FY13 they produced to scale six high purity stevia ingredients
and the new configuration has been tested successfully for
additional products currently in our innovation pipeline.
At the same time supply chain supported a $19m increase
in inventories, ahead of the anticipated growth in FY14 and
FY15 demand. The volume increases have been achieved
at reduced unit costs. Both Extraction and Purification
Plants continued their focus on the KPI’s (Key Performance
Indicators) to improve efficiency while maintaining flexibility to
the changes in demand for our finished goods.
During FY13 we restructured our global leaf buying operations
so as to reduce supply volatility, improve leaf quality and
increase volumes. The benefits of this will start being evident
from FY14 onwards.
After slowing down development in FY12 pending alignment
of market stevia inventories, both our Paraguay and Kenya leaf
operations increased volumes of leaf shipped, improved leaf
quality, and started aggressive plantation development plans
to increase the supply capacity for FY14 and future years.
In FY13 we recruited Randy Cook as Corporate VP Supply
Chain and Logistics. Randy previously held a number of
executive positions within The Coca-Cola Company and
its bottling system in Hong Kong and the United States.
Randy is spearheading further development and continuous
improvement of the entire supply chain and logistics activities
within the Group with focus on Strategy, Process and
People. He has already made a number of senior operational
management appointments that will focus on these value
drivers.
R&D
Research and development is and will always be at the core
of the PureCircle business. We continue to invest actively
in all aspects of R&D from pure research through to core
product development, specific application development and,
by no means least, leaf research and development. In FY13
our investment levels increased both in absolute terms and
as a % of sales.
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. During FY13 our investments have had
particular functional emphasis on product application development, supply chain process and efficiency, customer service
and logistics and management reporting
Moving forward we will extend further our global sales coverage, upgrade our IT systems and further strengthen our supply
chain and logistics to better service the anticipated increase in demand.
Group Financial review
The Group’s FY 2013 financial year covers the year from 1 July 2012 to 30 June 2013. FY 2012 comparatives are for the
year from 1 July 2011 to 30 June 2012.
Set out below is an extract from the audited FY 2013 accounts. The full consolidated statement of comprehensive income,
statement of financial position and statement of cash flows follow in pages 25 to 27.
Trading
FY 2013
USD’000
FY 2012
USD’000
Revenue
71,206
45,412
Cost of sales
(52,398)
(40,490)
Gross margin
18,808
4,922
26%
11%
Gross margin %
Other income and foreign exchange
2,789
(1,104)
Selling and administrative expenses
(18,918)
(17,018)
Adjusted operating profit/(loss)
2,679
(13,200)
Other expenses
(3,917)
(6,005)
Finance costs
(8,240)
(7,452)
Taxation
50
3,379
(9,428)
(23,278)
EBITDA
4,851
(15,171)
Adjusted EBITDA
8,768
(9,166)
Loss for the financial year
Adjusted EBITDA comprises EBITDA adjusted for other expenses
Our Business and Strategy
Management
Our Performance
We expect our R&D, innovation and patent programs to accelerate again in FY14 and FY15.
Our Governance
Our R&D capability is backed up by a comprehensive patent and Intellectual Property protection program. This too expanded
in activity and registrations across FY13.
Our Financials
Our R&D capability is being recognized increasingly as a unique point of difference in the industry by our customers. New
innovative ingredients successfully introduced in the market as well as the September 2012 Joint Development Agreement
with The Coca-Cola Company are clearly milestones in this respect. But the success of our PureCircle University programme,
the pace of our new product and application launches show clearly the wider picture.
23
Shareholder’s Information
www.purecircle.com
24
PureCircle Annual Report 2013
Segmental reporting: The Group operates as a single segment company comprising the integrated production and
marketing of high purity stevia products.
Sales: In FY13 sales of $71.2m were $25.8m (57%) higher than FY12, with High Purity Stevia sales totalling $68m, up $29m
on FY12. Sales increased in all geographies and included the Group’s share of the first full year of EU operations.
Sales volumes: In FY13 high purity stevia volumes increased 89%, led by the growth in proprietary new products launched
within the last 24 months. Our customer base increased and in FY13 we serviced over 300 customers worldwide.
Gross margin: In FY13 gross margin was $18.8m, an increase of $13.9m (282%) over FY12. The improvement reflects
higher sales volumes; improved sales mix with less low margin co-products, and lower unit costs. Whilst strongly improved
in FY13 from 11% to 26% of sales, gross profit margins are expected to improve further as sales volumes increase to better
reflect the Group’s current invested production capacity.
Other income and foreign exchange: In FY13 the Group had other income of $2.8m, which reflect foreign exchange gains
of $2.5m.
Other expenses: FY13 other expenses comprise $2.4m of LTIP and related discretionary remuneration payments, a $0.9m
charge related to the unwinding of the Group’s Natural Sweet Ventures joint venture and a $0.6m write down on biological
asset. In FY12, other expenses principally comprised $5.9m of exceptional production costs charged to profit relating to the
temporary slowdown in Reb A production.
Adjusted EBITDA: In FY13 the Group’s adjusted EBITDA was a gain of $8.8m, an $18m improvement on the FY12 EBITDA
loss of $9.2m. This reflects the sales volume increases and gross margin improvements noted earlier, together with the
absence of FY12 exceptional production costs charged to profit.
FY 2013
USD’000
FY 2012
USD’000
5,941
(16,642)
Changes in working capital
(16,542)
20,772
Inventories
92,802
73,656
Cash-flow and statement of financial position
Operating cash-flow before working capital changes
Net debt
Gross assets
Net cash from operations, before financing: The Group
generated $6m of operating cash-flow in FY13 before
inventories, reflecting positive EBITDA. Production of
inventories was increased by $19m in FY13 ahead of
stronger sales demand in FY14 and FY15, resulting in an
operating cash-outflow before interest of $10.6m. Adjusting
for inventory movements underlying operating cash-flow in
FY13 was $8.4m favourable on FY12.
Inventories: At $93m inventories are $19m higher than at
June 2012 as production of new innovations introduced to
the market recently was increased in FY13 in anticipation of
future sales.
76,288
78,063
289,407
233,349
Funding headroom and net debt: The Group ended FY13
with cash and facility headroom of $55m (FY12: $44m), net
debt of $76m (FY12 $78m). Gross cash and net debt were
strengthened in FY13 by the $31m share issue in August
2012, partially offset by the decision to boost production
ahead of future sales growth.
Gross assets: The Group has gross assets of $289m
representing the fully invested supply chain capable of
delivering 2,800 tonnes of high purity stevia. When running
at capacity the existing supply chain can support sales of
$250 to $300 million.
The Group is sufficiently funded for its current expansion
plans.
www.purecircle.com
25
Revenue
71,206
45,412
Cost of sales
(53,023)
(40,516)
Gross profit
18,183
4,896
Other income
2,789
1,040
Other expenses
(1,538)
(8,045)
(20,672)
(17,096)
180
377
Administrative expenses
Finance income
Finance costs
(8,420)
(7,829)
Loss before taxation
(9,478)
(26,657)
50
3,379
(9,428)
(23,278)
(432)
297
(9,860)
(22,981)
(9,492)
(23,255)
Income tax
Loss for the financial year
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)
Our Performance
2012
USD’000
Our Governance
2013
USD’000
Our Business and Strategy
Audited Consolidated Statement of Comprehensive Income
Non-controlling interest
64
(23)
(9,428)
(23,278)
(9,928)
(22,971)
68
(10)
(9,860)
(22,981)
- Basic
(5.80)
(15.06)
- Diluted
(5.80)
(15.06)
Total comprehensive loss attributable to:
Owners of the company
Non-controlling interest
Loss per share (US cents)
Shareholder’s Information
Owners of the company
Our Financials
Loss for the financial year attributable to:
26
PureCircle Annual Report 2013
Audited Statement of Financial Position
2013
USD’000
2012
USD’000
Intangible assets
32,472
26,812
Property, plant and equipment
65,889
66,586
Biological assets
4,172
6,047
Prepaid land lease payments
3,181
3,102
Deferred tax assets
5,979
6,209
111,693
108,756
Inventories
92,802
73,656
Trade receivables
29,352
21,827
6,315
4,778
ASSETS
Non-Current Assets
Current Assets
Other receivables, deposits and prepayments
Tax recoverable
Short-term deposits with licensed banks
Cash and bank balances
Total Assets
47
44
37,599
9,733
11,599
14,555
177,714
124,593
289,407
233,349
EQUITY AND LIABILITIES
Equity
Share capital
16,460
15,449
162,898
132,330
Foreign exchange translation reserve
1,432
1,868
Share option reserve
1,530
204
Accumulated losses
(40,519)
(31,027)
141,801
118,824
Share premium
Equity Attributable to Owners of the Company
Non-Controlling Interest
Total Equity
715
652
142,516
119,476
59
594
96,581
84,026
483
548
97,123
85,168
12,532
3,625
7,566
5,932
517
789
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
248
34
28,905
18,325
49,768
28,705
Total Liabilities
146,891
113,873
Total Equity And Liabilities
289,407
233,349
0.86
0.77
Net Assets Per Share (USD)
www.purecircle.com
27
Audited Consolidated Statement of Cashflows
2013
USD’000
2012
USD’000
(9,478)
(26,657)
134
Amortisation of deferred income
(88)
(77)
Amortisation of intangible assets
160
-
Depreciation of property, plant and equipment
5,793
3,900
Interest expense
8,420
7,829
(180)
(377)
Interest income
Loss on disposal of plant and equipment
Share based payment expense/(credit)
Intangible assets written off
Inventories written off
Change in fair value of biological asset
Unrealised exchange gain
Operating cash flow before working capital changes
(Increase)/Decrease in inventories
Decrease/(Increase) in biological assets
Increase in trade and other receivables
54
50
1,481
(595)
40
-
209
291
628
(1)
(1,234)
(1,139)
5,941
(16,642)
(19,355)
24,330
1,353
(1,009)
(8,966)
(6,284)
10,426
3,735
(10,601)
4,130
180
377
(8,420)
(7,829)
(28)
(23)
(18,869)
(3,345)
Addition of intangible assets
(5,949)
(2,573)
Addition of property, plant and equipment
(4,299)
(2,070)
147
106
(10,101)
(4,537)
Increase in trade and other payables
Net cash (for)/from operations
Interest received
Interest paid
Tax paid
Net cash for operating activities
CASH FLOWS FOR INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment
Net cash for investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of borrowings
44,046
11,233
Repayment of borrowings
(21,264)
(21,254)
Repayment of hire purchase
(40)
(61)
31,322
-
102
-
(1,373)
383
Net cash from/(for) financing activities
52,793
(9,699)
Net increase/(decrease) in cash and cash equivalents
23,823
(17,581)
(313)
(1,061)
Cash and cash equivalents at beginning of the year
23,171
41,813
Cash and cash equivalents at end of the financial year
46,681
23,171
Proceeds from private placement
Proceeds from share options exercised
(Increase)/Decrease in restricted cash
Effects of foreign exchange rate changes on cash and cash equivalents
Our Performance
136
Our Governance
Amortisation of prepaid land lease payments
Our Financials
Adjustments for:
Shareholder’s Information
Loss before taxation
Our Business and Strategy
CASH FLOWS FROM OPERATING ACTIVITIES
28
PureCircle Annual Report 2013
3 Our Governance
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 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 four 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,
the Board considers all the Non-Executive Directors to be
independent.
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 FY2013
5
Paul Selway-Swift
5
Magomet Malsagov
5
William Mitchell
5
Olivier Maes
4
At the date of this report, Sunny Verghese is the Group
Managing Director of Olam International Limited (“Olam”).
Olam holds 18.6% equity interest in the Company.
John Slosar
5
Peter Lai Hock Meng
5
Sunny Verghese
5
The roles of the Chairman and Chief Executive are separate
and clearly defined.
Tan Boon Seng
2*
*Tan Boon Seng resigned as a Non-Executive Director on 28 December 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.
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, one-third of the
Board is required to retire by rotation each year, but if any
Director has, at the start of the AGM, been in office for three
years or more since his last appointment or re-appointment,
he shall retire at the AGM. 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;
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.
The Chairman of each Committee provides a report of that
Committee at the next Board meeting.
2
Peter Lai (Chairman)
2
John Slosar
2
Olivier Maes
1
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;
•monitoring 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
•a review of the means by which employees may raise
concerns regarding the systems of internal financial
control.
Our Business and Strategy
The Independent Directors are Paul Selway-Swift,
Olivier Maes, Peter Lai Hock Meng and John Slosar.
Number of meetings held in FY2013
Our Performance
Independent directors
Audit Committee
Our Governance
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.
A summary of the Committees of the Board and their
membership is set out below:
Our Financials
Chief Executive Officer
29
Shareholder’s Information
www.purecircle.com
30
PureCircle Annual Report 2013
The Report of the Remuneration Committee can be found on
pages 31 to 33 of the Report.
Nomination Committee
Number of meetings held in FY2013
2
Paul Selway-Swift (Chairman)
2
Magomet Malsagov
2
Olivier Maes
1
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
Internal control and risk management
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.
of the Chairman and Non-Executive Directors,
The Company and its Shareholders
undertaking the performance evaluation of the Board
The Board is committed to a continuing dialogue with its
shareholders.
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 FY2013
2
Olivier Maes (Chairman)
1
Paul Selway-Swift
2
John Slosar
2
The Remuneration Committee held two 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.
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).
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 bonus that relates to performance of the
Company and other internal targets; and
c) Share awards or options under the Long-Term Incentive Plan (“LTIP”) that are approved by the Remuneration Committee.
The aggregate amount of emoluments received by Directors of the Group during the financial year are as follows:
FY 2013
USD’000
FY 2012
USD’000
Magomet Malsagov
260
271
William Mitchell
294
270
Executive Directors
Non-Executive Directors
Paul Selway-Swift
88
88
John Slosar
40
34
Olivier Maes
45
39
Peter Lai Hock Meng
50
43
Sunny Verghese
Nil
Nil
777
756
Our Business and Strategy
The Executive Directors’ remuneration packages comprise the following components:-
Our Performance
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.
Our Governance
Remuneration Policy
Our Financials
3.2 Report of the Remuneration Committee
31
Shareholder’s Information
www.purecircle.com
32
PureCircle Annual Report 2013
Directors’ interests in share options/awards
1 July
2012
Granted
Exercised
30 June
2013
Exercise
price
Date from which
exercisable
Expiry date
Note
30,000
-
-
30,000
158p
16 Apr 2010
16 Apr 2015
1
215,000
-
-
215,000
Nil
30 Nov 2013
30 Jun 2015
2
211,000
-
-
211,000
Nil
20 Sept 2014
30 Jun 2015
2
-
126,000
-
126,000
Nil
30 Jun 2015
30 Jun 2015
3
456,000
126,000
-
582,000
215,000
-
-
215,000
Nil
30 Nov 2013
30 Jun 2015
2
66,000
-
-
66,000
Nil
20 Sept 2014
30 Jun 2015
2
-
35,000
-
35,000
Nil
7 Jun 2015
7 Jun 2015
4
-
121,000
-
121,000
Nil
30 Jun 2015
30 Jun 2015
3
281,000
156,000
-
437,000
John Slosar
10,850
14,500
(20,250)
5,100
Nil
3 July 2013
3 July 2013
5
Olivier Maes
12,200
-
(12,200)
-
N/A
N/A
N/A
Peter Lai Hock Meng
13,550
18,100
(25,250)
6,400
Nil
3 July 2013
3 July 2013
36,600
32,600
(57,700)
11,500
Magomet Malsagov
William Mitchell
Non-Executive
Directors
5
www.purecircle.com
If the actual Group turnover is below the lower band,
then the awards shall not vest and shall lapse at the end
of the awards’ life. If the Group’s actual turnover is at the
lower band, then the awards shall be exercisable as to
50%. If the Group’s actual turnover is at the upper band,
then the awards shall be exercisable as to 100%. If the
Group’s actual turnover is between the upper and lower
band, a percentage above 50% and up to 100% of the
awards shall vest.
3. Similar to Note 2 above, the awards granted can only
be exercised if certain Group Sales Turnover target
(performance condition) is satisfied.
If the actual Group turnover is below the lower band,
then the awards shall not vest and shall lapse at the end
of the awards’ life. If the Group’s actual turnover is at
the lower band, then the awards shall be exercisable as
to 100%. If the Group’s actual turnover is at the upper
band, then the awards shall be exercisable as to 200%.
If the Group’s actual turnover is between the upper and
lower band, a percentage above 100% and up to 200%
of the awards shall vest.
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 awards (due to unmet performance condition)
do not count in calculating the total number of awards or
options issued under the LTIP.
Please refer to Note 23 Share Option Reserve of the Notes
to the Financial Statements.
Our Business and Strategy
Our Performance
The Group Sales Turnover target (performance condition)
that has been approved by the Remuneration Committee
has a yearly upper and lower band. PureCircle’s Group
actual turnover will be measured against these “turnover
target”.
Subsequent to the FY2013 financial year-end but prior
to signing of the audited accounts, these options were
converted to shares. Additional share options totalling
12,700 options were granted, namely to John Slosar
(3,800), Olivier Maes (4,200); and Peter Lai Hock Meng
(4,700); in lieu of fees for period July to December 2013
at 20-days VWAP of GBP3.44 (or US$5.32 per share).
Our Governance
2. Awards granted 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 awards and ends on 30 June
2015.
5. The share options outstanding to Non-Executive
Directors were issued in lieu of fees for period from
January to June 2013 and were calculated using the
20-days volume weighted average price (“VWAP”) to
31 December 2012 of GBP2.43 per share (US$3.92
per share).
Our Financials
1. Options granted on 15 April 2008.
4. Awards granted on 10 July 2012.
Shareholder’s Information
Share awards or options to Executive Directors are awarded
by the Remuneration Committee under the Company’s LongTerm Incentive Plan. The following notes provide details of
each option or award scheme in the table on page 32:
33
34
PureCircle Annual Report 2013
3.3 Director’s Report
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 2013.
Directors and their interests
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 2013 are as follows:
Number of
shares
Directors
412,1713
-
14,855,6121
582,0001
Peter Lai Hock Meng
180,3001
6,4001
Olivier Phillipe Marie Maes
404,1201
-
Paul Selway-Swift
Principal activities
Magomet Malsagov
The Company is engaged principally in the business of
investment holding whilst the principal activities of the rest
of the Group are the production, marketing and distribution
of natural sweeteners and flavors. There have been no
significant changes in the nature of these activities during
the financial year.
Number of
options
John Robert Slosar
William Mitchell
2
5,1001
887,0001
437,0001
1,562,302
Held directly.
143,600 held directly and 1,418,702 held directly by his wife.
3
200,000 held directly and 212,171 held directly by his wife.
1
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 2013 was USD71.2 million. The PureCircle Group’s
loss attributable to the owners of the Company was USD9.5
million, equivalent to a loss per share of USD5.8 cents.
The Group ended the year with net assets of USD142
million, gross assets of USD289 million and gross cash
balances of USD49 million.
The Directors do not recommend payment of a dividend in
respect of the year ended 30 June 2013.
2
Significant shareholders
At 30 June 2013, the Company had been notified of the
following interests of 3% or more in its ordinary shares.
Interest
in Issued
Shares
Interest
Wang Tak Company Limited
31,470,399
19.12%
Olam International Limited
Asian Investment Management
Services Ltd and related parties
30,544,609
18.56%
15,969,229
9.70%
Magomet Malsagov
14,855,612
9.02%
Half Moon Bay Capital Ltd
Wellington Management
Company LLP
12,768,734
7.76%
7,261,801
4.41%
5,800,000
3.52%
Beneficial Shareholders
Swire Beverages Holdings Ltd
www.purecircle.com
35
(d)prepare 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.
Auditors
The auditors, Messrs. PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 14 September 2013.
Magomet Malsagov
Chief Executive Officer
William Mitchell
Chief Financial Officer
Our Performance
(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
Our Governance
(b)make judgements and estimates that are reasonable and prudent
Our Financials
(a)select suitable accounting policies and then apply them consistently;
Shareholder’s Information
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:
Our Business and Strategy
Statement of directors’ responsibilities
36
PureCircle Annual Report 2013
3.4 Board of Directors
Paul Selway-Swift
Magomet Malsagov
William Mitchell
Peter Lai Hock Meng
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Paul worked with the
HSBC Group for 30 years.
He was a director of The
Hong Kong & 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.
Peter Lai Hock Meng
has more than 30 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. He was appointed Chairman
of the Company in December
2007 and also chairs the
Nomination 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.
He is a FCA who trained with
PriceWaterhouse London. 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 team
that acquired Tetley Tea, the
number two global tea brand,
from Allied Domecq.
As Chief Financial Officer, he
supports the Chief Executive
and his responsibilities
include financial planning and
reporting, group treasury,
investor relations and the
development of the Group’s
joint ventures.
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.
John Slosar
Sunny Verghese
Non-Executive Director
Non-Executive Director
Non-Executive Director
Olivier is a French national
who joined PureCircle in
November 2006. He read
business at Ecole des
Hautes Etudes Commerciales
(MBA HEC) Paris. Olivier
has more than 25 years
of experience in FMCGs
markets. He formerly held
CEO positions of various
companies in Europe and
Asia for Campofrio Food
Group, Danone Group and
Kraft Group.
John is a Non-Executive
Director who joined
PureCircle in November
2006.
Sunny is the Group Managing
Director and Chief Executive
Officer of Olam International
Limited, a leading global
supply chain manager of
agricultural products and
food ingredients that is
listed on the main board of
the Singapore Exchange
(SGX) and ranks amongst
the top 40 companies
in Singapore in terms of
market capitalization.
Sunny is responsible for
the strategic planning,
business development and
overall management for the
Olam group of companies
worldwide. Sunny is also
the Chairman of International
Enterprise Singapore,
a statutory board under
the Ministry of Trade and
Industry, as well as Chairman
of the Board of the Human
Capital Leadership Institute.
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.
He was appointed as a
Non-Executive Director of
PureCircle in October 2008.
Our Financials
Shareholder’s Information
Olivier chairs the
Remuneration Committee.
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.
Our Governance
Our Performance
Olivier Maes
37
Our Business and Strategy
www.purecircle.com
Our Financials
www.purecircle.com
39
•the consolidated financial statements of PureCircle
Limited (“the Company”) which comprise the consolidated
statements of financial position as of 30 June 2013, 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 2013 and a summary of significant accounting
policies and other explanatory notes
set out on pages 40 to 89 (collectively referred to as the
“Financial Information”).
Directors’ responsibility for the Financial Information
The Directors of the Company are responsible for
the preparation and fair presentation of the Financial
Information in accordance with International Financial
Reporting Standards. This responsibility includes designing,
implementing and maintaining internal control relevant to
the preparation and fair presentation of Financial Information
that are free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are
reasonable in the circumstances.
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 as to whether the Financial Information are free
from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the Financial
Information. The procedures selected depend on the
auditor’s 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,
the auditor considers internal control relevant to the entity’s
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 give a true and fair
view of the financial position of the Company and of the
Group as of 30 June 2013, and of the Group’s financial
performance and cash flows for the year then ended in
accordance with International Financial Reporting Standards.
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.
PricewaterhouseCoopers
(No. AF: 1146)
Chartered Accountants
Kuala Lumpur
14 September 2013
Our Performance
We have audited:
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.
Our Governance
(Incorporated in Bermuda)
Registration No: 40431
Our Financials
Independent Auditors’ Report to the
Shareholders of Purecircle Limited
preparation and fair presentation of the Financial Information
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 internal control.
Shareholder’s Information
4.1 Independent Auditors Report
Our Business and Strategy
4 Our Financials
40
PureCircle Annual Report 2013
4.2 Statements of Financial Position
at 30 June 2013
The Group
The Company
Note
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
Investment in subsidiaries
7
-
-
107,299
33,173
Investment in joint ventures
8
-
-
70
70
ASSETS
Non-Current Assets
Intangible assets
9
32,472
26,812
1,165
1,034
Property, plant and equipment
10
65,889
66,586
184
174
Biological assets
11
4,172
6,047
-
-
Prepaid land lease payments
12
3,181
3,102
-
-
Deferred tax assets
13
5,979
6,209
-
-
111,693
108,756
108,718
34,451
-
-
Current Assets
Inventories
14
92,802
73,656
Trade receivables
15
29,352
21,827
-
-
Other receivables, deposits and prepayments
16
6,315
4,778
168
127
Tax recoverable
47
44
-
-
Amount owing by subsidiaries
17
-
-
52,950
98,308
Short-term deposits with licensed banks
19
37,599
9,733
2
690
Cash and bank balances
19
11,599
14,555
995
554
177,714
124,593
54,115
99,679
289,407
233,349
162,833
134,130
Total Assets
EQUITY AND LIABILITIES
Equity
Share capital
20
16,460
15,449
16,460
15,449
Share premium
21
162,898
132,330
162,898
132,330
Foreign exchange translation reserve
22
1,432
1,868
-
-
Share option reserve
23
1,530
204
1,530
204
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.
(40,519)
(31,027)
(18,929)
(14,420)
141,801
118,824
161,959
133,563
715
652
-
-
142,516
119,476
161,959
133,563
www.purecircle.com
41
2012
USD’000
Deferred tax liabilities
13
59
594
-
-
Long-term borrowings
24
96,581
84,026
-
-
Deferred income
26
483
548
-
-
97,123
85,168
-
-
Non-Current Liabilities
Current Liabilities
Trade payables
25
12,532
3,625
-
-
Other payables and accruals
26
7,566
5,932
874
567
Amount due to joint venture partners
517
789
-
-
Income tax liabilities
248
34
-
-
28,905
18,325
-
-
49,768
28,705
874
567
Total Liabilities
146,891
113,873
874
567
Total Equity and Liabilities
289,407
233,349
162,833
134,130
0.86
0.77
Short-term borrowings
Net Assets Per Share (USD)
24
27
Approved and authorised for issue by the board of directors on 14 September 2013.
Magomet Malsagov
Chief Executive Officer
William Mitchell
Chief Financial Officer
The annexed notes form an integral part of these financial statements.
Our Performance
2013
USD’000
Our Governance
Note
Our Financials
The Company
2012
USD’000
Shareholder’s Information
The Group
2013
USD’000
Our Business and Strategy
4.2 Statements of Financial Position
at 30 June 2013 continued
42
PureCircle Annual Report 2013
4.3 Consolidated Statement of Comprehensive Income
for the Financial Year Ended 30 June 2013
The Group
Note
Revenue
28
2013
USD’000
2012
USD’000
71,206
45,412
Cost of sales
(53,023)
(40,516)
Gross profit
18,183
4,896
Administrative expenses
(20,672)
(17,096)
Other income
2,789
1,040
Other expenses
(1,538)
(8,045)
Finance income
180
377
(8,420)
(7,829)
Finance costs
Loss before taxation
30
(9,478)
(26,657)
Income tax
29
50
3,379
(9,428)
(23,278)
Exchange differences arising on translation of foreign operations
(432)
297
Total comprehensive loss for the financial year (net of tax)
(9,860)
(22,981)
Owners of the company
(9,492)
(23,255)
Non-controlling interest
64
(23)
(9,428)
(23,278)
(9,928)
(22,971)
Loss for the financial year
Other comprehensive (loss)/income (net of tax):
Items that may be reclassified subsequently to profit or loss:
Loss for the financial year attributable to:
Total comprehensive loss attributable to:
Owners of the company
Non-controlling interest
68
(10)
(9,860)
(22,981)
Loss per share (US cents)
- Basic
31
(5.80)
(15.06)
- Diluted
31
(5.80)
(15.06)
The annexed notes form an integral part of these financial statements.
www.purecircle.com
43
4.4 Consolidated Statement of Changes in Equity
Share
Premium
USD’000
15,449
132,330
Share
Option
Reserve
USD’000
(Accumulated
Loss)
USD’000
Sub-total
USD’000
Noncontrolling
Interests
USD’000
Total
Equity
USD’000
The Group
1,868
204
(31,027)
118,824
652
119,476
-
-
-
-
(9,492)
(9,492)
64
(9,428)
Exchange difference arising on
translation of foreign operations
-
-
(436)
-
-
(436)
4
(432)
Total comprehensive income
for the financial year
-
-
(436)
-
(9,492)
(9,928)
68
(9,860)
Balance at 01.07.2012
Loss for the financial year
Other comprehensive income:
Transactions with owners:
Share option scheme compensation
expense for the financial year
Exercise of share options
Issuance of shares
Dilution of non-controlling interests
-
-
1,481
-
1,481
-
1,481
246
-
(155)
-
102
-
102
1,000
30,322
-
-
-
31,322
-
31,322
-
-
-
-
-
-
(5)
(5)
1,011
30,568
-
1,326
-
32,905
(5)
32,900
16,460
162,898
1,432
1,530
(40,519) 141,801
715
142,516
Shareholder’s Information
Balance at 30.06.2013
-
11
Our Performance
Share
Capital
USD’000
Our Governance
Attributable to owners of the Company
Foreign
Currency
Translation
Reserve
USD’000
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Our Financials
The annexed notes form an integral part of these financial statements.
44
PureCircle Annual Report 2013
4.4 Consolidated Statement of Changes in Equity
for the Financial Year Ended 30 June 2013
continued
Attributable to owners of the Company
Share
Capital
USD’000
Share
Premium
USD’000
15,406
131,620
Foreign
Currency
Translation
Reserve
USD’000
Share
Option
Reserve
USD’000
Sub-total
USD’000
Noncontrolling
Interests
USD’000
Total
Equity
USD’000
(7,772) 142,390
(Accumulated
Loss)
USD’000
The Group
1,584
1,552
668
143,058
-
-
-
-
(23,255)
(23,255)
(23)
(23,278)
Exchange difference arising on
translation of foreign operations
-
-
284
-
-
284
13
297
Total comprehensive income
for the financial year
-
-
284
-
(23,255)
(22,971)
(10)
(22,981)
(595)
-
(595)
Balance at 01.07.2011
Loss for the financial year
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
-
-
-
(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
The annexed notes form an integral part of these financial statements.
www.purecircle.com
45
4.4 Consolidated Statement of Changes in Equity
Share
Premium
USD’000
15,449
132,330
Share
Option
Reserve
USD’000
(Accumulated
Losses)
USD’000
Total
USD’000
The Company
Balance at 01.07.2012
Loss for the financial year
-
204
(14,420)
133,563
-
-
(4,509)
(4,509)
Transactions with owners:
Share option scheme compensation
expense for the financial year
-
-
1,481
-
1,481
1,000
30,322
-
-
31,322
Exercise of share option
11
246
(155)
-
102
1,011
30,568
1,326
-
32,905
Balance at 30.06.2013
16,460
162,898
1,530
(18,929)
161,959
15,406
131,620
1,552
(12,651)
135,927
-
-
-
(1,769)
(1,769)
-
-
(595)
-
(595)
Exercise of share option
43
710
(753)
-
-
43
710
(1,348)
-
(595)
Balance at 30.06.2012
15,449
132,330
204
(14,420)
133,563
Issuance of shares
The Company
Balance at 01.07.2011
Loss for the financial year
Transactions with owners:
Share option scheme compensation
expense for the financial year
The annexed notes form an integral part of these financial statements.
Our Performance
Share
Capital
USD’000
Our Governance
Attributable to owners of the Company
Our Business and Strategy
continued
Our Financials
for the Financial Year Ended 30 June 2013
Shareholder’s Information
46
PureCircle Annual Report 2013
4.5 Consolidated Statement of Cash Flows
for the Financial Year Ended 30 June 2013
The Group
Note
2013
USD’000
2012
USD’000
(9,478)
(26,657)
136
134
(88)
(77)
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation
Adjustments for:
Amortisation of prepaid land lease payments
Amortisation of deferred income
160
-
Depreciation of property, plant and equipment
Amortisation of intangible assets
5,793
3,900
Interest expense
8,420
7,829
Interest income
(180)
(377)
54
50
1,481
(595)
40
-
Inventories written off
209
291
Change in fair value of biological asset
628
(1)
Unrealised exchange gain
(1,234)
(1,139)
Operating cash flow before working capital changes
5,941
(16,642)
(19,355)
24,330
Decrease/(Increase) in biological assets
1,352
(1,009)
Increase in trade and other receivables
(8,965)
(6,284)
Increase in trade and other payables
10,426
3,735
Net cash (used in)/from operations
(10,601)
4,130
180
377
(8,420)
(7,829)
(28)
(23)
(18,869)
(3,345)
(5,949)
(2,573)
(4,299)
(2,070)
147
106
(10,101)
(4,537)
Loss on disposal of plant and equipment
Share based payment expense/(credit)
Intangible assets written off
(Increase)/Decrease in inventories
Interest received
Interest paid
Tax paid
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Addition of intangible assets
Addition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
The annexed notes form an integral part of these financial statements.
10
www.purecircle.com
47
4.5 Consolidated Statement of Cash Flows
The Group
2013
USD’000
2012
USD’000
Drawdown of borrowings
44,046
11,233
Repayment of borrowings
(21,264)
(21,254)
(40)
(61)
31,322
-
102
-
(1,373)
383
Net cash from/(used in) financing activities
52,793
(9,699)
Net increase/(decrease) in cash and cash equivalents
23,823
(17,581)
(313)
(1,061)
23,171
41,813
46,681
23,171
Note
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of hire purchase
Proceeds from private placement
Proceeds from share options exercised
(Increase)/Decrease in restricted cash
Effects of foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
19
Shareholder’s Information
Our Financials
Cash and cash equivalents at end of the financial year
Our Business and Strategy
continued
Our Performance
for the Financial Year Ended 30 June 2013
Our Governance
The annexed notes form an integral part of these financial statements.
48
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
1 General Information
The Company was incorporated and registered as a private
limited company in Bermuda, under the Companies (Bermuda)
Law 1981. The registered office and principal place of
business are as follows:
Registered office:
Clarendon House, 2 Church Street,
Hamilton HM 11, Bermuda.
(a) Standards, amendments and interpretations that are effective for the current financial year
• Amendment to IAS 1, ‘Presentation of Items of Other
Comprehensive Income’ (effective from 1 July 2012)
requires entities to separate items presented in ‘other
comprehensive income’ (‘OCI’) in the statement of
comprehensive income into two groups, based on
whether or not they may be recycled to profit or loss in
the future. The amendments do not address which items
are presented in OCI.
Principal place of business:
PT23419, Lengkuk Teknologi,
Techpark @ Enstek,
71760, Bandar Enstek,
Negeri Sembilan, Malaysia.
(b) Standards, amendments and interpretations that
have been issued and are relevant to the Group’s
operations but are not yet effective
The Company’s shares are publicly traded on the Alternative
Investment Market (“AIM”) division of the London Stock
Exchange.
(i) Financial year beginning on/after 1 July 2013
The financial statements were authorised for issue by the Board
of Directors in accordance with a resolution of the Directors
dated 14 September 2013.
2 Principal Activities
The Company is engaged principally in the business of
investment holding whilst the principal activities of the rest
of the Group are the production, marketing and distribution
of natural ingredient including sweeteners and flavors.
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.
3 Basis of Preparation
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.
he Group will apply the new standards, amendments to
T
standards and interpretations in the following period:
• IFRS 10, ‘Consolidated Financial Statements’ (effective
from 1 January 2013) changes the definition of control.
An investor controls an investee when it is exposed, or
has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns
through its power over the investee. It establishes
control as the basis for determining which entities are
consolidated in the consolidated financial statements
and sets out the accounting requirements for the
preparation of consolidated financial statements. It
replaces all the guidance on control and consolidation
in IAS 27, ‘Consolidated and Separate Financial
Statements’ and IC Interpretation 112, ‘Consolidation–
Special Purpose Entities’.
• IFRS 11 “Joint arrangements” (effective from 1 January
2013) requires a party to a joint arrangement to
determine the type of joint arrangement in which it is
involved by assessing its rights and obligations arising
from the arrangement, rather than its legal form. There
are two types of joint arrangement: joint operations
and joint ventures. Joint operations arise where a
joint operator has rights to the assets and obligations
relating to the arrangement and hence accounts for
its interest in assets, liabilities, revenue and expenses.
Joint ventures arise where the joint operator has rights
to the net assets of the arrangement and hence equity
accounts for its interest. Proportionate consolidation
of joint ventures is no longer allowed. The Group shall
recognise its interests in joint ventures using the equity
method, as disclosed below.
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49
4.6 Notes to the Consolidated Financial Statements
•IFRS 13, ‘Fair Value Measurement’ (effective from 1
January 2013) aims to improve consistency and reduce
complexity by providing a precise definition of fair
value and a single source of fair value measurement
and disclosure requirements for use across IFRSs.
The requirements do not extend the use of fair value
accounting but provide guidance on how it should be
applied where its use is already required or permitted
by other standards. The enhanced disclosure
requirements are similar to those in IFRS 7, ‘Financial
Instruments: Disclosures’, but apply to all assets and
liabilities measured at fair value, not just financial ones.
•The revised IAS 27, ‘Separate Financial Statements’
(effective from 1 January 2013) includes the provisions
on separate financial statements that are left after the
control provisions of IAS 27 have been included in the
new IFRS 10.
•The revised IAS 28, ‘Investments in Associates
and Joint Ventures’ (effective from 1 January 2013)
includes the requirements for joint ventures, as well as
associates, to be equity accounted following the issue
of IFRS 11.
•Amendment to IAS 19, ‘Employee benefits’ (effective
from 1 January 2013) makes significant changes to
the recognition and measurement of defined benefit
pension expense and termination benefits, and to the
disclosures for all employee benefits. Actuarial gains
and losses will no longer be deferred using the corridor
approach. IAS 19 shall be withdrawn on application of
this amendment.
(ii) Financial year beginning on/after 1 July 2014
•Amendment to IAS 32, ‘Financial Instruments:
Presentation’ (effective from 1 January 2014) does not
change the current offsetting model in IAS 32. It clarifies
the meaning of ‘currently has a legally enforceable right
of set-off’ that the right of set-off must be available today
(not contingent on a future event) and legally enforceable
for all counterparties in the normal course of business.
It clarifies that some gross settlement mechanisms with
features that are effectively equivalent to net settlement
will satisfy the IAS 32 offsetting criteria.
(iii)Financial year beginning on/after 1 July 2015
•IFRS 9, ‘Financial Instruments - Classification and
Measurement of Financial Asset and Financial
Liabilities’ (effective from 1 January 2015) replaces the
multiple classification and measurement models in IAS
39 with a single model that has only two classification
categories: amortised cost and fair value. The basis of
classification depends on the entity’s business model
for managing the financial assets and the contractual
cash flow characteristics of the financial asset. The
accounting and presentation for financial liabilities
and for de-recognising financial instruments has been
relocated from IAS 39, without change, except for
financial liabilities that are designated at fair value
through profit or loss (‘FVTPL’). Entities with financial
liabilities designated at FVTPL recognise changes in
the fair value due to changes in the liability’s credit risk
directly in OCI. There is no subsequent recycling of the
amounts in OCI to profit or loss, but accumulated gains
or losses may be transferred within equity.
The guidance in IAS 39 on impairment of financial
assets and hedge accounting continues to apply.
IFRS 7 requires disclosures on transition from IAS 39
to IFRS 9.
Our Performance
• IFRS 12, ‘Disclosures of Interests in Other Entities’
(effective from 1 January 2013) sets out the required
disclosures for entities reporting under the two new
standards, IFRS 10 and IFRS 11, and replaces the
disclosure requirements currently found in IAS 28,
‘Investments in Associates’. It requires entities to
disclose information that helps financial statement
readers to evaluate the nature, risks and financial
effects associated with the entity’s interests in
subsidiaries, associates, joint arrangements and
unconsolidated structured entities.
•Amendment to IFRS 7, ‘Financial Instruments:
Disclosures’ (effective from 1 January 2013) requires
more extensive disclosures focusing on quantitative
information about recognised financial instruments
that are offset in the statement of financial position
and those that are subject to master netting or similar
arrangements irrespective of whether they are offset.
Our Governance
continued
Our Financials
3 Basis of Preparation
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
50
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
3 Basis of Preparation
continued
Except for IFRS 11 and IFRS 12, the directors expect
that the adoption of the other above standards and
interpretations will have no material impact on the financial
statements in the period of initial application. The nature of
the impending changes in accounting policy on adoption of
IFRS 11 and IFRS 12 are described below.
IFRS 11 “Joint arrangements”
Under IFRS 11, the Group will change its accounting
policy for recognising its interests in joint ventures from
proportionate consolidation to equity method. Under the
equity method, the investment in associates is measured
in the balance sheet at cost plus post-acquisition changes
in the Group’s share of net assets of the associate. The
results of the joint ventures will no longer be proportionately
consolidated but presented in one line as the Group’s share
of profit or loss in Joint Ventures. Under the equity method,
the Group’s revenue would decrease by USD1 million and the
Group’s total assets and liabilities would decrease by USD7.
6 million and USD8.7 million respectively as at 30 June 2013.
The Group is also currently in the process of assessing the
full impact arising from the adoption of IFRS 11.
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,
Chinese Renminbi, Euro and Sterling Pound exchange
rates, with all other variables held constant of the
Group’s loss:
Changes in
exchange rate
Effect on profit
after taxation
USD ‘000
2013
United States Dollar
Chinese Renminbi
Sterling Pound
Euro
9%
9%
20%
11%
915
2,402
165
257
2012
United States Dollar
Euro
10%
10%
1,451
316
IFRS 12 “Disclosures of Interests in Other Entities”
As the new standard only affect disclosures, it will not have
any impact on the financial position or financial performance
of the Group upon adoption.
4 Financial Risk Management
The Group’s activities are exposed to a variety of financial
risks including foreign currency risk, interest rate risk,
credit risk, liquidity and cash flow risk, and capital risk
management. The Group’s overall risk management
programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects
on the Group’s financial performance.
(a) Financial Risk Management Policies
(i) Foreign Currency Risk
The Group operates internationally and is exposed
to foreign exchange risk when the Company and
its subsidiaries enter into transactions that are not
denominated in their functional currencies. Foreign
exchange risk arises from commercial transactions,
recognised assets and liabilities and net investments
in foreign operations.
Management considered the current economic
environment in arriving at the reasonable possible change
in the above exchange rates.
(ii) Interest Rate Risk
The Group’s exposure to interest rate risk arises mainly
from interest-bearing borrowings at floating rates. The
Group’s interest rate profile is set out below:
2013
2012
Effective Interest Rate (%)
Term loans
7.44
2013
USD ‘000
2012
USD ‘000
7.29 125,178 102,030
Borrowings issued at variables rates expose the Group to
cash flow interest rate risk which is partially offset by cash
held at variable rates. The Group analyses its interest rate
exposure on a regular basis by taking into consideration
refinancing, renewal of existing position and alternative
financing. Based on these scenarios, the Group calculates
the impact on the income statement of a defined interest
rate shift on the Group’s borrowing position.
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51
4.6 Notes to the Consolidated Financial Statements
(iii)Credit Risk
The Group trades only with recognised, creditworthy
third parties. It is the Group’s policy that all customers
who wish to trade on credit terms are subject to credit
verification procedures. In addition, the payment profile of
the customers and credit exposure are monitored on an
ongoing basis with the result that the Group’s exposure
to bad debt is not significant. The Group also establishes
an allowance account for impairment that represents
its estimate of losses in respect of trade and other
receivables. The Group and the Company’s maximum
exposure is the carrying amount as disclosed in Notes
15, 16 and 17 to the financial statements.
At 30 June 2013, one customer comprised 11% of total
receivables and it took 18 customers (FY2012: 7) to
comprise 81% (FY2012: 63%) of total receivables. See
Note 15 for ageing of trade receivables that are past due
but not impaired.
The Group’s cash and cash equivalents and short-term
deposits are placed with creditworthy financial institutions
and the risks arising thereof are minimised in view of the
financial strength of these 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.
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 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:
Our Performance
As at balance sheet date, if interest rates on borrowings
is 1% higher/lower for a year with all other variables
held constant, post-tax profit for the year would be
USD1,232,000 (2012: USD922,000) lower/higher, mainly
as a result of higher/lower interest expense on floating
rate borrowing.
(iv)Liquidity and cash flow risks
Our Governance
continued
Our Financials
4 Financial Risk Management
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
52
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
4 Financial Risk Management
(iv)Liquidity and cash flow risks
continued
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
517
517
517
-
-
-
20,098
20,098
20,098
-
-
-
125,486
141,025
37,285
103,694
46
-
The Group 2013
At 30 June 2013
Financial liabilities:
Amount due to joint venture partners
Trade and other payables
Borrowings
The Group 2012
At 30 June 2012
Financial liabilities:
Amount due to joint venture partners
Trade and other payables
Borrowings
789
789
789
-
-
-
9,557
9,557
9,557
-
-
-
102,351
121,944
25,753
12,407
83,780
4
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
874
874
874
-
-
567
567
567
-
-
The Company 2013
At 30 June 2013
Other payables and accruals
The Company 2012
At 30 June 2012
Other payables and accruals
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53
4.6 Notes to the Consolidated Financial Statements
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 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.
The capital structure of the Group consists of debts, which
include the borrowings disclosed in Note 24, cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital, share premium, reserves
and retained earnings.
(a) Financial assets
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:
Debts (i)
Less: Gross cash
Net debt (ii)
Equity (iii)
Net debt to equity ratio
2013
USD ‘000
2012
USD ‘000
125,486
(49,198)
102,351
(24,288)
76,288
78,063
141,801
118,824
54%
66%
(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
(i) Debts relate to borrowings disclosed in Note 24 to the
financial statements.
(ii)Net debt is calculated as total borrowings (including
“current and non-current borrowings”) as shown in the
consolidated statement of financial position less cash and
cash equivalents
(iii)Equity includes all capital and reserves of the Group
attributable to the equity holders of the Company.
(c) Fair value estimation
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.
Liabilities for trade and other payables, including
amounts owing to related parties, are recognised initially
at fair value and subsequently measured at amortised
cost using the effective interest method.
(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.
Our Performance
(b)Capital risk management
Our Governance
5 Summary Of Significant Accounting Policies
continued
Our Financials
4 Financial Risk Management
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
54
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
5 Summary Of Significant Accounting Policies continued
(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.
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 Company’s presentation currency.
(ii) Transactions and balances
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
and liabilities 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:
(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;
(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 consolidated financial statements include the financial
statements of the Company and its subsidiaries.
(i)Subsidiaries
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.
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.
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, 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.
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55
4.6 Notes to the Consolidated Financial Statements
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 non-controlling interests are also recorded
in equity.
When the Group ceases to have control or significant
influence, any retained interest in the entity is remeasured 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.
(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.
Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made to
those cash-generating 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 recognised as a result of
such transaction.
(f) Investments in subsidiaries, associates and
joint venture
Investments in subsidiaries, associates and joint venture 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.
On the disposal of the investments in subsidiaries,
associates and joint venture, 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.
Our Performance
(ii) Transactions with non-controlling interests
Goodwill that arises upon acquisition of subsidiaries is
included in intangible assets. 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.
Our Governance
Inter-company transactions, balances and unrealised gains
and losses on transactions between Group companies are
eliminated. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the
policies adopted by the Group.
(e)Goodwill on consolidation
Our Financials
5 Summary Of Significant Accounting Policies continued
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
56
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
5 Summary Of Significant Accounting Policies continued
(i) Intellectual property
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 (“intellectual 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, other
than patented development costs 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 flavors 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 flavors such
as stevia. Accordingly, the Directors believe the useful life
for intellectual property rights is indefinite. The Directors
will continue to reassess the basis of that useful life of the
intellectual property rights on an annual basis.
Patented development costs are subject to estimated
useful life of no more than 20 years and amortised
starting from the financial year when the product are
first viable for commercial use.
(ii) Product development
All research costs are recognised in the profit or loss as
incurred.
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 no more than 20 years
starting from the financial year when the product are first
viable for commercial 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.
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57
4.6 Notes to the Consolidated Financial Statements
Extraction and refinery plant and
machinery
Office equipment, furniture and fittings
and motor vehicles
2%– 5%
5%–10%
20%
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 longterm 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 but 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
(j) Biological assets
Biological assets comprise stevia plants in the Group’s
controlled nurseries (nursery plants) that are used to mass
produce seedlings for third party farmers.
Seedlings produced from the nursery plants are deducted
from the biological assets at fair value less cost to sell.
Seedlings harvested from nursery plants are carried at their
deemed cost under IAS 2 as inventories, which are then
stated at lower of this deemed cost and net realisable value
subject to any impairment loss.
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 incurrences, or the impact of the biological
transformation on price is not expected to be material, the
cost of the biological assets is considered by management
to approximate fair value.
(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.
Our Performance
Buildings
Our Governance
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:
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.
Our Financials
5 Summary Of Significant Accounting Policies continued
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
58
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
5 Summary Of Significant Accounting Policies continued
(l) Income taxes
Income taxes for the year comprise current and deferred tax.
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.
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.
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)Equity 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.
Dividends on ordinary shares are recognised as liabilities
when approved for appropriation.
(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,
trade finance facility and credit card 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. The Group has no defined benefit plan.
(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
the options or shares granted excluding the impact of any
non-market vesting conditions and the number of shares
expected to vest. Non-market vesting conditions are
included in assumptions about the number of options that
are expected to become exercisable.
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59
4.6 Notes to the Consolidated Financial Statements
(q)Provisions
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 recognised as an expense in the
period in which the termination takes place.
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 capitalised
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.
(s)Segmental information
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision-maker (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
(i) Sale of goods
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 and
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.
Our Performance
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 in the
subsidiary. The fair value of employee services received,
measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to
investment in subsidiary undertakings, with a corresponding
credit to equity.
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.
Our Governance
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.
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.
Our Financials
5 Summary Of Significant Accounting Policies continued
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
60
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
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
management covering a 5-year period including a terminal
value as required by IAS 36 ‘Impairment of Assets’. The key
assumptions used in the CGU’s value-in-use computation are:
(i) Growth rate
The average sales growth rate used is based on planned
capacity and forecasted demands. The short to medium
term growth rates used are in the range of 25% to 30%
per annum (2012: 30% to 50%). The long term growth
rate used is 2% (2012: 2.0%) per annum, based on
sweetener industry’s long term growth rate ranging from
2% to 4% per annum.
(ii) Gross margin
Changes in selling price and direct costs are based on past
results and expectations of future changes in the market.
(iii)Discount rate
The discount rate used is 12% (2012: 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.
(ii)Indefinite useful life of intellectual property rights
The intellectual property rights are assessed to have
indefinite useful lives because over the long term the
Group’s natural sweeteners and flavors 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 flavors
such as stevia. Accordingly, the Directors believe the useful
life for intellectual property rights is indefinite. The Directors
will continue to reassess the basis of the useful life of the
intellectual property rights on an annual basis.
7 Investment in Subsidiaries
The Company
At 1 July
Addition during the financial year
Advances to subsidiaries treated
as quasi-investment
At 30 June
2013
USD’000
2012
USD’000
33,173
22,156
29,445
11,017
44,681
107,299
33,173
The advances to subsidiaries are treated as an extension of
its investments in subsidiaries.
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61
4.6 Notes to the Consolidated Financial Statements
Name of Company
Country of Incorporation
Effective Equity Interest
2013
2012
Principal Activities
Held directly by PCL
PureCircle Sdn. Bhd. (“PCSB”)
PureCircle Mexico Inc. (“PCMEX”)*
Malaysia
100%
100%
Production and distribution of natural
sweeteners and flavors.
Mexico
100%
-
Sales and marketing of natural
sweeteners and flavors.
PureCircle S.A.
Switzerland
100%
100%
Investment holding and sales and
marketing of natural sweeteners
and flavors.
PureCircle Australia Pty. Ltd.
Australia
100%
100%
Sales and marketing of natural
sweeteners and flavors.
PureCircle USA Holdings Inc.
United States of
America (“USA”)
100%
100%
Investment holding.
PureCircle (UK) Limited
England and Wales
100%
100%
Sales and marketing of natural
sweeteners and flavors.
PureCircle Kenya Limited (“PCK”)
Kenya
100%
100%
Supply and development of stevia
agronomy.
PureCircle South America Sociedad
Anonima (“PCSAM”)
Paraguay
100%
100%
Supply and development of stevia
agronomy.
PureCircle (China) Limited (“PCC”)
Hong Kong
100%
100%
Investment holding.
PureCircle USA Inc.
United States of
America (“USA”)
100%
100%
Sales and marketing of natural
sweeteners and flavors.
Held by PCSB
PureCircle (Jiangxi) Co. Ltd.
(“PCJX”)**
The People’s Republic
of China (“The PRC”)
98.62%
98.58%
Supply chain, production and
distribution of natural sweeteners
and flavors.
PureCircle (Shanghai) Co. Ltd.***
The People’s Republic
of China (“The PRC”)
100%
100%
Sales and marketing of natural
sweeteners and flavors.
PureCircle Stevia Sdn. Bhd.
Malaysia
51%
51%
Dormant.
Held by PCC
PureCircle China Agriculture
Development Co. Ltd
The People’s Republic
of China (“The PRC”)
100%
100%
Supply and development of stevia
agronomy.
During the financial year:
(i) the Company incorporated a wholly-owned subsidiary (99.8% held through PCSB), PureCircle Mexico Inc. for sales and
marketing of natural sweeteners and flavors; and
(ii) the Company increased its investment by USD29 million in PCSB through the capitalisation of prior years’ intercompany
loan by way of redeemable preference shares;
* 0.2% held directly by the Company and 99.8% held through PCSB
** Held through PCSB. During the year, it 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 98.58% to 98.62%.
***Held through PCSB. During the year, it increased its investment in PureCircle (Shanghai) Co. Ltd. by USD1 million in paid-
up capital.
Our Performance
Details of the subsidiaries are as follows:
Our Governance
continued
Our Financials
7 Investment in Subsidiaries
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
62
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
8 Investment in Joint Ventures
Details of joint ventures are as follows:
Name of Company
Country of Incorporation
Effective Equity Interest
2013
2012
Principal Activities
Natural Sweet Ventures LLC (“NSV”)
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:
2013
USD’000
2012
USD’000
509
289
Assets/(liabilities)
Non-current assets
Current assets
7,407
8,421
Current liabilities
(8,733)
(9,607)
(817)
(897)
2013
USD’000
2012
USD’000
Revenue
2,550
1,233
Expenses
(3,083)
(2,531)
(533)
(1,298)
Net assets/(liabilities)
Income/(expenses)
Loss for the financial year
The Group recognises its interests in joint ventures using the proportionate consolidation method.
On 13 September 2013, the Group sold its 50% shareholding interest in Natural Sweet Ventures (“NSV”) to its partner
Imperial Sugar. See note 35 – Events after the Reporting Period.
www.purecircle.com
63
4.6 Notes to the Consolidated Financial Statements
Goodwill
USD’000
Total
USD’000
13,445
12,031
1,806
27,282
465
5,484
-
5,949
The Group
Cost
At 1 July 2012
Additions
Write off
(30)
(10)
-
(40)
Foreign exchange translation difference
256
(347)
-
(91)
14,136
17,158
1,806
33,100
470
-
-
470
43
117
-
160
2
(4)
-
(2)
515
113
-
628
13,621
17,045
1,806
32,472
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
At 30 June 2013
Accumulated amortisation
At 1 July 2012
Charge for the financial year
Foreign exchange translation difference
At 30 June 2013
Net carrying amount
at 30 June 2013
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
(26)
-
-
(26)
At 30 June 2012
470
-
-
470
12,975
12,031
1,806
26,812
Net carrying amount
at 30 June 2012
Our Performance
Product
Development
USD’000
Our Governance
Intellectual
Property
Rights
USD’000
Our Financials
9 Intangible Assets
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
64
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
9 Intangible Assets
continued
Intellectual
Property
Rights
USD’000
Product
Development
USD’000
Total
USD’000
472
562
1,034
The Company
At 1 July 2012
Additions during the financial year
At 30 June 2013
-
131
131
472
693
1,165
Intellectual
Property
Rights
USD’000
Product
Development
USD’000
Total
USD’000
472
531
1,003
-
31
31
472
562
1,034
The Company
At 1 July 2011
Additions during the financial year
At 30 June 2012
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 bioorganic and physiologically active compounds. As at 30 June 2013, the carrying value of indefinite life intangible assets is
USD11,094,000.
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.
www.purecircle.com
65
4.6 Notes to the Consolidated Financial Statements
1,158
20,225
61,428
Capital
Work-in
Progress
USD’000
Total
USD’000
3,453
996
87,260
933
1,922
The Group
Cost
At 1 July 2012
Additions
8
16
1,420
Disposals/write-offs
-
(18)
(605)
(422)
-
4,299
(1,045)
Reclassification
-
-
733
162
(895)
-
Foreign exchange translation reserve
3
500
901
33
(32)
1,405
1,169
20,723
63,877
4,159
1,991
91,919
-
1,911
16,830
1,933
-
20,674
Charge for the financial year
-
367
4,646
780
-
5,793
Disposals/write-offs
-
(4)
(523)
(317)
-
(844)
At 30 June 2013
Accumulated depreciation
At 1 July 2012
Foreign exchange translation reserve
-
81
313
10
-
404
At 30 June 2013
-
2,355
21,266
2,406
-
26,027
At 30 June 2013
1,169
18,368
42,611
1,750
1,991
65,889
At 30 June 2012
1,158
18,314
44,598
1,520
996
66,586
Net book value
Our Performance
Buildings
USD’000
Extraction
and Refinery
Plants
USD’000
Our Governance
Freehold
Land
USD’000
Office
Equipment,
Furniture
and Fittings
and Motor
Vehicles
USD’000
Our Financials
10 Property, Plant and Equipment
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
66
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
10 Property, Plant and Equipment
continued
Office
Equipment,
Furniture
and Fittings
and Motor
Vehicles
USD’000
Capital
Work-in
Progress
USD’000
Total
USD’000
3,704
3,065
86,866
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
208
Disposals
-
-
(12)
(283)
-
The Group
Cost:
At 1 July 2011
Reclassification
(295)
-
2,699
304
-
(3,003)
-
(46)
307
(1,466)
(176)
-
(1,381)
1,158
20,225
61,428
3,453
996
87,260
-
1,909
12,709
1,550
-
16,168
Charge for the financial year
-
873
3,493
584
-
4,950
Disposals
-
-
(7)
(132)
-
(139)
Foreign exchange translation reserve
At 30 June 2012
Accumulated depreciation:
At 1 July 2011
Reclassification
-
(882)
899
(17)
-
-
Foreign exchange translation reserve
-
11
(264)
(52)
-
(305)
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
Net book value
www.purecircle.com
67
4.6 Notes to the Consolidated Financial Statements
10 Property, Plant and Equipment
continued
Office
Equipment,
Furniture and
Fittings and
Motor Vehicles
USD’000
Capital
Work-in
Progress
USD’000
Total
USD’000
At 1 July 2012
13
162
175
Additions
50
-
50
Reclassification
162
(162)
-
At 30 June 2013
225
-
225
1
-
1
The Company
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Our Performance
Cost:
Charge for the financial year
40
-
40
At 30 June 2013
41
-
41
At 30 June 2013
184
-
184
At 30 June 2012
12
162
174
67
-
67
Additions
13
162
175
Disposals
(67)
-
(67)
At 30 June 2012
13
162
175
2
-
2
Charge for the financial year
12
-
12
Disposals
(13)
-
(13)
1
-
1
At 30 June 2012
12
162
174
At 30 June 2011
65
-
65
Net book value:
The Company
Our Financials
At 1 July 2012
Our Governance
Accumulated depreciation:
Cost:
At 1 July 2011
Accumulated depreciation:
At 1 July 2011
At 30 June 2012
Net book value:
Shareholder’s Information
68
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
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
2013
USD’000
Freehold land
2012
USD’000
607
604
Building
14,844
14,683
Extraction and refinery plants
42,501
44,355
842
950
Office equipment, furniture & fittings
Capital work-in progress
1,992
244
60,786
60,836
The carrying values of plant and equipment acquired under hire purchase terms are as follows:
The Group
Motor vehicles
2013
USD’000
2012
USD’000
51
120
11 Biological Assets
The Group
2013
USD’000
2012
USD’000
Non-current
At fair value
At 1 July
Expenditure incurred
(Loss)/gain arising from changes in fair value
Seedlings transferred and sold
Foreign exchange translation reserve
At 30 June
6,047
5,229
-
1,666
(628)
1
(1,352)
(655)
105
(194)
4,172
6,047
There were approximately 41 million seedlings have been transferred and sold from the nursery plants in FY2013 (FY2012: 20
million) with a fair value of USD1.4 million (FY2012: USD0.7 million).
At the end of financial year, the Group’s nursery plant material comprised:
2013
USD’000
2013
Million
2012
USD’000
2012
Million
4,172
5.4
6,047
4.1
The Group
Nursery plants
www.purecircle.com
69
4.6 Notes to the Consolidated Financial Statements
The Group
2013
USD’000
2012
USD’000
At 1 July
3,102
3,094
Additions
38
-
(136)
(134)
177
142
At 30 June
3,181
3,102
Cost
3,476
3,008
(511)
(375)
Accumulated amortisation
Foreign exchange translation reserve
At 30 June
216
469
3,181
3,102
Our Governance
Foreign exchange translation reserve
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
2013
USD’000
2012
USD’000
6,209
3,573
(254)
2,636
24
-
5,979
6,209
At 1 July
594
1,458
Credit to profit or loss (Note 29)
(540)
(864)
5
-
59
594
5,858
6,209
121
-
Deferred tax assets
At 1 July
Credit to profit or loss (Note 29)
Foreign exchange translation reserve
At 30 June
Deferred tax liabilities
Foreign exchange translation reserve
At 30 June
Represented by:
Deferred tax assets
Tax losses
Others
Offsetting
-
-
5,979
6,209
59
594
Deferred tax liabilities
Intangible assets
Offsetting
-
-
59
594
Our Financials
Amortisation for the financial year
Our Performance
12 Prepaid Land Lease Payments
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
70
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
13 Deferred Tax
continued
Deferred tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit
through future tax profit is probable based on projections and forecasts prepared by management and taking into
consideration the expiry dates of carry forward losses. The group did not recognise deferred tax assets of USD4,843,686
(2012: USD4,351,588) in respect of losses amounting to USD19,374,746 (2012: USD17,406,352) that can be carried
forward against future taxable income.
An analysis of tax losses with expiry dates for which deferred tax assets have been recognised is as follows:
The Group
2013
USD’000
2012
USD’000
FY2016
234
288
FY2017
397
1,724
FY2018
-
140
FY2019
-
54
FY2029
1,677
1,726
FY2030
1,325
1,319
FY2031
732
850
FY2032
728
-
Indefinite
Total
765
108
5,858
6,209
14 Inventories
The Group
Raw materials
2013
USD’000
2012
USD’000
13,687
12,946
Work-in-progress
11,569
10,863
Finished goods
67,546
49,847
92,802
73,656
www.purecircle.com
71
4.6 Notes to the Consolidated Financial Statements
Jointly controlled entities
At 30 June
22,852
14,473
6,500
7,354
29,352
21,827
The Group’s normal trade credit terms range from 30 to 60 days (2012: 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-bycase 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 2013, trade receivables
amounting to USD7,533,000 (2012: USD1,226,000) 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
2013
USD’000
2012
USD’000
6,911
777
Past due but not impaired:
Up to 3 months
3 to 6 months
314
280
6 months and above
308
169
7,533
1,226
At 30 June
Of the past due amounts outstanding as at 30 June 2013, USD7 million (2012: USD484,000) had been received in cash by 7
September 2013.
The foreign currency exposure profile represents the carrying amounts arising from currencies other than the functional
currency of the respective entities in the Group. The foreign currency exposure profile of the trade receivables at the reporting
date was as follows:
The Group
2013
USD’000
2012
USD’000
United States Dollar
8,510
9,756
Euro
2,364
2,861
Our Performance
Third party trade receivables
2012
USD’000
Our Governance
The Group
2013
USD’000
Our Financials
15 Trade Receivables
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
72
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
16 Other Receivables, Deposits and Prepayments
The Group
2013
USD’000
Other receivables
Prepayments
Deposits
As at 30 June
4,571
1,435
The Company
2012
USD’000
2013
USD’000
2012
USD’000
3,412
-
-
1,160
119
84
309
206
49
43
6,315
4,778
168
127
Other receivables include amounts due from farmers for planting material and other miscellaneous amounts due to the
Group. These receivables have a different credit risk profile from the Group’s core trade customer base.
Receivables from farmers are assessed by the Group’s 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.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above.
The foreign currency exposure profile represents the carrying amounts arising from currencies other than the functional
currency of the respective entities in the Group. The foreign currency exposure profile of the other receivables at the reporting
date was as follows:
The Group
2013
USD’000
Australian Dollar
United States Dollar
Euro
Ringgit Malaysia
Sterling Pound
The Company
2012
USD’000
2013
USD’000
2012
USD’000
19
-
19
-
267
68
-
-
-
13
-
-
71
58
71
58
9
17
9
17
17 Amount Owing by Subsidiaries
The amounts owing by subsidiaries are unsecured, repayable on demand and are denominated in United States Dollars.
www.purecircle.com
73
4.6 Notes to the Consolidated Financial Statements
2013
USD’000
2012
USD’000
Trade receivables
29,352
21,827
-
-
Other receivables
4,571
3,412
-
-
-
-
52,950
98,308
49,198
24,288
997
1,244
83,121
49,527
53,947
99,552
517
789
-
-
12,532
3,625
-
-
7,566
5,932
874
567
125,486
102,351
-
-
146,101
112,697
874
567
Loans and receivables at amortised cost
Amount owing by subsidiaries
Cash and bank balances
Other financial liabilities at amortised cost
Amount due to joint venture partners
Trade payables
Other payables and accruals
Borrowings
19 Cash and Cash Equivalents
The Group
2013
USD’000
2012
USD’000
Short term deposits with licensed banks (a)
37,599
9,733
Cash at bank and on hand (b)
11,599
14,555
Deposits, cash and bank balances
49,198
24,288
(203)
(176)
Bank overdraft (Note 24)
Restricted cash
Cash and cash equivalents
(2,314)
(941)
46,681
23,171
Cash deposit of USD2,314,000 (2012: USD941,000) is pledged as security for banking facilities.
Our Performance
The Company
2012
USD’000
Our Governance
The Group
2013
USD’000
Our Financials
18 Financial Instruments by Category
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
74
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
19 Cash and Cash Equivalents
continued
(a) Short term deposits with licensed banks
The weighted average interest rates of the short-term deposits at the reporting date was 1.44% (2012: 1.78%) per annum.
The short-term deposits have weighted maturity period of 37 days (2012: 32 days).
The foreign currency exposure profile represents the carrying amounts arising from currencies other than the functional
currency of the respective entities in the Group. The foreign currency exposure profile of the short-term deposits with
licensed banks at reporting date was as follows:
The Group
United States Dollar
Ringgit Malaysia
Sterling Pound
Chinese Renminbi
The Company
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
61
-
-
-
2
-
2
-
761
690
761
690
26,297
-
-
-
(b)Cash at bank and on hand
The foreign currency exposure profile represents the carrying amounts arising from currencies other than the functional
currency of the respective entities in the Group. The foreign currency exposure profile of the cash at bank and on hand at
reporting date was as follows:
The Group
United States Dollar
Euro
Sterling Pound
Ringgit Malaysia
Chinese Renminbi
The Company
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
3,322
5,574
-
-
294
367
-
-
96
64
89
64
26
16
26
16
388
-
-
-
www.purecircle.com
75
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
20 Share Capital
The movements in the authorised and paid-up share capital are as follows:
The Group
2013
Par
Value
USD
Number
of Shares
(’000)
0.10
At 1 July
0.10
Exercise of share options
0.10
Issuance of shares
0.10
At 30 June
0.10
164,602
The Company
2013
USD’000
Number
of Shares
(’000)
USD’000
250,000
25,000
250,000
25,000
154,492
15,449
154,062
15,406
110
11
430
43
10,000
1,000
-
-
16,460
154,492
15,449
Our Business and Strategy
The Group
At 1 July
Exercise of share options
Issuance of shares
At 30 June
The Company
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
132,330
131,620
132,330
131,620
246
710
246
710
30,322
-
30,322
-
162,898
132,330
162,898
132,330
22 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 2011
Exchange differences arising on translation of foreign
operations for the financial year ended 30 June 2012
At 30 June 2012
Exchange differences arising on translation of foreign
operations for the financial year ended 30 June 2013
At 30 June 2013
1,584
284
1,868
(436)
1,432
Our Governance
21 Share Premium
Our Financials
Issued and fully paid-up
Shareholder’s Information
At 1 July/30 June
Our Performance
Authorised
76
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
23 Share Option Reserve
The expense recognised for employee services received during the year is shown in the following table:
The Group
Expense/(credit) arising from equity-settled
share-based payment transactions
The Company
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
1,481
(595)
1,270
(1,522)
The Group
At 1 July
Share option scheme compensation expense/(credit)
Transfer to share capital and share premium
At 30 June
The Company
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
204
1,552
204
1,552
1,481
(595)
1,481
(595)
1,685
957
1,685
957
(155)
(753)
(155)
(753)
1,530
204
1,530
204
The Company maintains a Long-Term Incentive Plan (LTIP), the principal terms include a restriction on the Company
issuing (or granting rights to issue) no more than 10 per cent of its issued ordinary share capital under the LTIP (and
any other employee share plan) in any ten calendar year period. It is currently intended that, other than in exceptional
circumstances, such as senior executive recruitment, all awards will be subject to performance conditions and that,
the performance conditions will be linked principally to the Company’s share price and/or sales growth. The awards are
conditional on employment service requirements. However, in the future the LTIP also allows for internal target measures
to be used 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, taking into account the
terms and conditions upon which the options were granted.
2013
2012
Weighted
average
exercise
price per
share
Number
of options
‘000
Weighted
average
exercise
price per
Number of
options
‘000
At 1 July
0.06
4,773
0.11
2,577
Granted
-
1,904
-
2,983
Exercised
-
(113)
-
(430)
Lapsed
-
(208)
-
(357)
0.05
6,356
0.06
4,773
At 30 June
www.purecircle.com
77
4.6 Notes to the Consolidated Financial Statements
Weighted
average fair
value at grant
date (Sterling
pound)
Exercise
price per
share
Vesting
requirements
Expiry
132
0.51
Sterling
pound 1.58
Remain as employee
of the Company
17 April
2015
Award 2
30 November 2010–
30 June 2015
1,748
1.29
Nil
Sales target and
three years’ service
-NA-
Award 3
20 September 2011–
30 June 2015
2,298
0.81
Nil
Sales target and
three years’ service
-NA-
Award 4
14 March 2012–
14 September 2015
105
2.53
Nil
Three years’ services
-NA-
Award 5
7 June 2012–
7 June 2015
320
1.36
Nil
Three years’ services
-NA-
Award 6
1 July 2012–
7 June 2015
35
1.46
Nil
Services rendered
-NA-
Award 7
1 July 2012–
30 June 2013
11
2.43
Nil
Services rendered
30 June
2013
Award 8
8 August 2012–
31 July 2015
75
2.01
Nil
Three years’ service
-NA-
Award 9
3 October 2012–
4 July 2015
1,632
2.10
Nil
Sales target and
three years’ service
-NA-
Total
6,356
Number of
options
outstanding
Grant-vest
Award 1
15 April 2008 –
15 April 2010
The number of exercisable options as at the reporting date was 132,500 (2012: 212,705).
The related weighted average share price at the time of exercise was GBP2.41 (2012: GBP1.08) per share.
Our Performance
Details of share options granted that are outstanding as at 30 June 2013 are as follows:
Our Governance
continued
Our Financials
23 Share Option Reserve
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
78
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
24 Borrowings
The Group
2013
USD’000
2012
USD’000
203
176
28,665
18,109
37
40
28,905
18,325
96,513
83,921
68
105
Current portion:
- Bank overdraft (a)
- Term loans (b)
- Hire Purchase (c)
Non-current portion:
- Term loans (b)
- Hire Purchase (c)
Total non-current portion
96,581
84,026
125,486
102,351
There is no foreign currency exposure in relation to the borrowings of the Group in 2013 and 2012.
(a) Bank overdraft
Bank overdraft is secured by corporate guarantee of the Company.
(b)Term Loans
The term loans bore a weighted average effective interest rate of 7.44% (2012: 7.29%) per annum at the reporting date.
www.purecircle.com
79
4.6 Notes to the Consolidated Financial Statements
The Group
2013
USD’000
2012
USD’000
- Term loan 1
-
1,458
- Term loan 2
1,527
838
Current portion:
Secured:
- Term loan 3
5,271
5,247
- Term loan 4
20,654
9,486
- Term loan 5
-
287
Unsecured:
- Term loan 6
Total current portion
1,213
793
28,665
18,109
3,758
3,110
Non-current portion:
Secured:
- Term loan 2
- Term loan 3
92,755
80,811
Total non-current portion
96,513
83,921
125,178
102,030
Our Performance
continued
Our Governance
24 Borrowings
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Our Financials
(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 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 2013, this has a monthly revolving service requirement covering USD10.5 million of
repayments up to June 2015 and then a USD87.5 million lump sum repayment in June 2015.
Term loan 4 is secured as follows:(i) a legal charge over certain assets of a subsidiary; and
(ii)a legal charge over the prepaid land lease payments of a subsidiary.
Term loan 5 is secured by corporate guarantee of the Company. There is no outstanding amount in 2013.
Term loan 6 is unsecured.
Shareholder’s Information
Term loans 1 to 3 are secured by way of:-
80
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
24 Borrowings
continued
(c) Hire Purchase
The Group leases motor vehicles under finance leases with lease terms of 5 to 9 years (2012: 5 to 9 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
2013
USD’000
2012
USD’000
Analysis of hire purchase:
- No later than one year
46
50
- Later than 1 year and no later than 5 years
85
125
- Later than 5 years
Less: Future finance charges
Present value
-
5
131
180
(26)
(35)
105
145
The present value of hire purchase is as follows:
- No later than one year
37
40
- Later than 1 year and no later than 5 years
68
-101
- Later than 5 years
-
4
105
145
The hire purchases 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 3.34% (2012: 3.13%) per annum at the reporting date.
25 Trade Payables
The normal trade credit terms granted to the Group range from 0 to 90 days (2012: 0 to 90 days).
The foreign currency exposure profile represents the carrying amounts arising from currencies other than the functional
currency of the respective entities in the Group. The foreign currency exposure profile of the trade payables at the reporting
date was as follows:
The Group
United States Dollars
2013
USD’000
2012
USD’000
814
51
Chinese Renminbi
40
-
Sterling Pound
64
-
www.purecircle.com
81
4.6 Notes to the Consolidated Financial Statements
The Company
2012
USD’000
2013
USD’000
2012
USD’000
483
548
-
-
1,857
2,112
149
124
Non-current
Deferred income
Current
Deferred income
Accruals
38
39
-
-
5,671
3,781
725
443
7,566
5,932
874
567
Our Governance
Other payables
Deferred income as at the reporting date represents a form of regional government financial assistance for the purchase of
high technology plant equipment. The deferred income will be amortised over the useful life of 20 years.
The foreign currency exposure profile of other payables at the reporting date was as follows:
The Group
The Company
2013
USD’000
2012
USD’000
1,179
840
-
-
318
80
16
16
Sterling pound
43
32
43
32
Australian Dollars
37
21
37
21
Ringgit Malaysia
67
34
67
34
United States Dollars
Euro
2013
USD’000
2012
USD’000
27 Net Assets Per Share
The net assets per share is calculated based on the net assets book value at the reporting date of USD141,801,000
(2012: USD118,824,000) divided by the number of ordinary shares in issue at the reporting date of 164,601,552 (2012:
154,491,552).
Our Financials
The Group
2013
USD’000
Our Performance
26 Other Payables, Accruals and Deferred Income
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
82
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
28 Revenue
Revenue represents the invoiced value of products sold less sales tax, returns and trade discounts.
29 Income Tax Expense/(Credit)
The Group
2013
USD’000
2012
USD’000
325
96
Current tax:
Current tax on profits for the year
(Over)/under accruals in respect of prior years
(89)
25
236
121
Deferred tax:
(203)
(176)
Origination and reversal of temporary differences
(286)
(3,500)
(50)
(3,379)
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.
A reconciliation of income tax expense applicable to the loss before taxation at the applicable tax rate to income tax expense
at the effective tax rate of the Group is as follows:
The Group
2013
USD’000
2012
USD’000
Loss before taxation
(9,478)
(26,657)
Tax at the applicable tax rates in the respective countries
(1,226)
(3,103)
Tax effects of:
Non-deductible expenses
897
739
Non-taxable income
(124)
(709)
Overprovision of taxation
(89)
(605)
Tax losses not recognised
492
299
Income tax expense
(50)
(3,379)
www.purecircle.com
83
4.6 Notes to the Consolidated Financial Statements
2012
USD’000
31,545
26,644
6,089
4,034
Charges:
Raw materials and consumables used
Depreciation and amortisation
777
745
Share based payment expense
Directors remuneration
1,481
-
Interest expenses
8,420
7,829
Loss on fair value of biological assets
Changes in inventories of finished goods
Foreign exchange loss
Wages and salaries
Defined contribution retirement plan
Operating lease
628
-
17,699
13,872
-
2,144
10,860
9,357
925
766
91
30
Credits:
Amortisation of deferred income
Foreign exchange gain
Gain on fair value of biological assets
Interest income
Share based payment credit
88
77
2,500
-
-
1
180
377
-
595
31 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
Loss attributable to equity holders of the Company (USD’000)
Weighted average number of ordinary shares in issue (thousands)
Basic/Diluted loss per share (US Cents)
2013
USD’000
2012
USD’000
(9,492)
(23,255)
163,515
154,395
(5.80)
(15.06)
The calculation of diluted earnings per share does not assume the issue of potential ordinary shares under the Company’s
Long Term Incentive Plan as it would have an anti-dilutive effect.
Our Performance
The Group
2013
USD’000
Our Governance
Included in the loss from ordinary activities before taxation are the following charges and credits:
Our Financials
30 Loss from Ordinary Activities Before Taxation
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Shareholder’s Information
84
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
32 Significant Related Party Transactions
(a) Identities of related parties
The Group has 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; and
(iii) the directors who are the key management personnel
(b) In addition to the information detailed elsewhere in the financial statements, details of the Group’s transactions and
balances with related parties during the financial year are set out below:
(i) Related Parties
The Group
2013
USD’000
2012
USD’000
Gross sales of goods to jointly controlled entities
3,080
8,796
Proportionate accounting
(1,540)
(4,398)
1,540
4,398
Related Parties
Net sales of goods to jointly controlled entities recognised
(ii) Key management personnel
K ey 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
Magomet Malsagov
John Robert Slosar
Olivier Phillipe Marie Maes
Peter Lai Hock Meng
William Mitchell
2013
USD’000
2012
USD’000
88
88
260
271
40
45
50
34
39
43
294
270
777
745
The Group
Remuneration
Professional services rendered
Share based payment expense
2013
USD’000
2012
USD’000
687
617
-
11
90
117
777
745
www.purecircle.com
85
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
32 Significant Related Party Transactions
Our Business and Strategy
continued
(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:
(ii) Key management personnel
The interests of the Directors as at 30 June 2013 are as follows:
continued
continued
At
30.6.2013
308,171
104,000
-
412,171
Magomet Malsagov
15,055,612
-
(200,000)
14,855,612
John Robert Slosar
1,442,052
120,250
-
1,562,302
377,010
27,200
-
404,210
Olivier Phillipe Marie Maes
Peter Lai Hock Meng
145,050
35,250
-
180,300
William Mitchell
757,000
130,000
-
887,000
Number of option over ordinary share of USD0.10 each
At
1.7.2012
Award
Exercise
At
30.6.2013
Magomet Malsagov
456,000
126,000
-
582,000
John Robert Slosar
10,850
14,500
(20,250)
5,100
Olivier Phillipe Marie Maes
12,200
-
(12,200)
-
13,550
18,100
(25,250)
6,400
281,000
156,000
-
437,000
The Company
Direct Interests
Peter Lai Hock Meng
William Mitchell
(iii) Balances with related parties
The Group
2013
USD’000
2012
USD’000
Amount due from jointly controlled entities
13,000
14,708
Proportionate accounting
(6,500)
(7,354)
6,500
7,354
(517)
(789)
Amount due to joint venture partners
Our Governance
Sold/
transfer
Our Financials
Paul Selway-Swift
Bought/options
exercised
Shareholder’s Information
The Company
Direct Interests
Our Performance
Number of ordinary share of USD0.10 each
At
1.7.2012
86
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
33 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 flavowwrs.
From a geographical perspective, the Group is a multinational with operations located on all continents, but managed as one
unified global organization. The Group’s markets and its supply chain are based in the Americas, EMEA (Europe, Middle East
and Africa) and Asia Pacific.
2013
USD’000
2012
USD’000
Trading
Revenue
71,206
45,412
Cost of sales
(52,398)
(40,490)
Gross margin
18,808
4,922
26%
11%
Gross margin %
Other income and foreign exchange
2,789
(1,104)
Selling and administrative expenses
(18,918)
(17,018)
2,679
(13,200)
EBITDA
4,851
(15,171)
Adjusted EBITDA
8,768
(9,166)
8,768
(9,166)
Adjusted operating profit/(loss)
Reconciliation of Adjusted EBITDA to loss for the financial year:
Adjusted EBITDA
Other expenses:
- Share based and related
(2,379)
(104)
- Other
(1,538)
(5,901)
(3,917)
(6,005)
4,851
(8,240)
50
(15,171)
(7,452)
3,379
EBITDA
Finance costs
Taxation
Depreciation and amortisation
(6,089)
(4,034)
Loss for the financial year
(9,428)
(23,278)
www.purecircle.com
87
4.6 Notes to the Consolidated Financial Statements
33 Segmental Reporting
continued
2013
USD’000
2012
USD’000
Cash Flow
Operating cash flow before working capital changes
(Increase)/Decrease in inventories
5,941
(16,642)
(19,355)
24,330
(Increase)/Decrease in receivables
(8,966)
(6,284)
Increase/(Decrease) in payables
10,426
3,735
Net cash (for)/from operations
(10,601)
4,130
Net cash from/(used in) financing activities
52,793
(9,699)
Gross cash at end of the financial year
49,198
24,288
65,889
66,586
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Our Performance
92,802
73,656
22,852
14,473
6,500
7,354
Receivables from jointly controlled entities
49,198
24,288
Total assets
Cash and bank balances
289,407
233,349
Borrowings
125,486
102,351
76,288
78,063
Net debts
Geographical information
30 June 2013
Sales
Non-current assets
30 June 2012
Sales
Non-current assets
Bermuda
USD’000
Asia
USD’000
Europe
USD’000
Americas
USD’000
Goodwill
Total
USD’000
-
14,933
7,808
48,465
1,084
91,111
1,807
15,885
1,806
111,693
Bermuda
USD’000
Asia
USD’000
Europe
USD’000
Americas
USD’000
Goodwill
Total
USD’000
1,806
108,756
-
16,510
5,195
23,707
949
85,274
5,083
15,644
71,206
45,412
Basis of attributing sales by geographical region is based on location of sales.
The primary performance indicators used by the Group are revenues, gross margin %, adjusted EBITDA, net cash from
operations, gross cash and borrowings.
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.
Our Financials
Inventories
Third party trade receivables
Shareholder’s Information
Property, plant and equipment
Our Governance
Statement of financial position
88
PureCircle Annual Report 2013
4.6 Notes to the Consolidated Financial Statements
for the Financial Year Ended 30 June 2013
33 Segmental Reporting
continued
In prior year, 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 gain
of $2.5m in FY2013 due to US$ currency strengthened against Ringgit Malaysia. In FY2012 the Group recorded foreign
exchange loss of $2.1m due to currency weakening against the US$ 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 Europe segment includes sales to and results of the Group’s European jointly controlled entities – see note 32.
34 Commitments
(a) Capital commitments
Capital expenditure at the reporting date is as follows:
The Group
Approved and contracted for Property, plant and equipment
2013
USD’000
2012
USD’000
544
1,741
(b)Operating lease commitments
he group also leases corporate office under non-cancellable operating lease agreements. The lease expenditure charged to
T
the income statement during the year is disclosed in note 30.
The future aggregate minimum lease payments under non-cancellable operating lease are as follows:
Group and Company
2013
2012
91
91
308
399
399
490
The present value of operating lease is as follows:
- No later than one year
- Later than 1 year and no later than 5 years
www.purecircle.com
89
4.6 Notes to the Consolidated Financial Statements
35 Events After the Reporting Period
(a) Disposal of Joint Venture
On 13 September the Group sold its 50% shareholding interest in Natural Sweet Ventures (“NSV”) to its partner Imperial
Sugar. Consideration of USD1 for the disposal resulted in a USD0.8 million non-cash book loss. The impairment loss of
USD0.8 million has been reflected fully in the Group’s results to 30 June 2013. Going forward PureCircle will supply stevia
to Imperial Sugar.
(b)Long-Term Incentive Plan (LTIP) Options – new options granted to directors
he Board of the Company had on 8 July 2013 granted options under the Group’s Long-Term Incentive Plan (LTIP) to certain
T
Non-Executive Directors in lieu of their fees covering six months period from 1 July 2013 to 31 December 2013 amounting
to 12,700 shares. These options have an exercise price of GBP3.44 per share (USD5.25 per share), calculated based on 20
days volume weighted average price (“VWAP”) to 1 July 2013 and shall vest on 1 January 2014.
Our Business and Strategy
for the Financial Year Ended 30 June 2013
Our Performance
(a) Short-Term Receivables/Payables
The carrying amounts approximate their fair values due to the relatively short-term maturity.
(b)Long-Term Borrowings
he carrying amounts approximate the fair values of these instruments as the long-term borrowings are based on floating
T
market interest rates.
Our Financials
The following methods and assumptions are used to estimate the fair value of each class of financial instruments:
Shareholder’s Information
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.
Our Governance
36 Fair Values of Financial Assets and Liabilities
90
PureCircle Annual Report 2013
5 Shareholder’s Information
Internet
PureCircle Offices
Nominated adviser
PureCircle Group operates three
websites which are updated regularly
to cater for different information needs:
Registered office
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda.
RFC Corporate Finance Limited
Level 14, 19-31 Pitt Street
Sydney NSW 2000, Australia
Level 15, QV1 Building.
Investors and corporate stakeholders
www.purecircle.com
Consumers
www.steviapurecircle.com
Corporate Head Quarters
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
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 2 December 2013, a
formal notice of AGM will be sent to
shareholders together with the annual
report for financial year 2013.
2014 Financial Year and
Corporate Calendar
Half year end 31 December 2013
Interim results March 2014
Year end 30 June 2014
Final results September 2014
Malaysia
Sales & Marketing
Head Office
USA
915 Harger Road, Suite 250
Oak Brook, IL 60523, USA.
T +630 361 0374
F +630 361 0384
Regional Sales
Contact details:
US or Canada:
[email protected]
Latin America:
[email protected]
Europe, Middle East or Africa:
[email protected]
Asia Pacific:
[email protected]
Auditors
PricewaterhouseCoopers
Chartered Accountants
Level 10, 1 Sentral
Jalan Travers, Kuala Lumpur Sentral
PO Box 10192
50706 Kuala Lumpur, Malaysia.
This report has been printed on FSC certified paper that is
environmentally-friendly ECF (elemental chlorine free) and recyclable.
Level 15, QV1 Building
250 St George’s Terrace
Perth WA 6000
Australia.
Brokers
Mirabaud Securities Limited
33 Grosvenor Place
London SW1X 7HY
United Kingdom.
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London EC2Y 9LY
United Kingdom.
Macquarie Capital (Europe) Limited
Ropemaker Place
28 Ropemaker Street
London EC2Y 9HD
United Kingdom.
Share Registrar
In Jersey (Shares)
Computershare Investor Services
(Channel Islands) Limited
PO Box 83, Ordnance House
31 Pier Road, St Helier
Jersey JE4 8PW, Channel Islands.
In the UK (Depositary Interests)
Computershare Investor Services plc
The Pavilions, Bridgwater Road
Bristol BS13 8AE, United Kingdom.
designed and produced by dewende.com
Shareholder’s Information
Our Financials
Our Governance
Our Performance
Our Business and Strategy
www.purecircle.com
91
92
PureCircle Annual Report 2013