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Pure Circle has requested an upgrade from the London AIM to the LSE, as a result of their anticipated short-term profitability. A few analysts have upgraded their ratings on PURE.L.
However, a Swiss competitor is hot on their tails with a more scientific approach, and they just might capture more of the CSD (carbonated soft drink) market than Pure Circle expected to.
http://www.foodingredientsfirst.com/news/Cargill-Launches-Stevia-Based-Sweetener-With-Desirable-Taste.html
Furthermore, Coke's "Coke Life" doesn't use Pure's Stevia, but Cargill's... the company that partnered with Evolva for this new novel approach.
I have sold my position in PURE (held since ~ 1 GBP), and put some of it into Evolva Holding. They may be overpriced today, but their yeast-based platform has a lot of applications and over the long-term I think they may put a serious dent in PureCircle's ambitions to commercialize Stevia.
Thanks for your insight. It looks good to me. Have been reading up on both this and s&w.
Looking forward to showing patience. : )
That's a start, and good to hear.
For years, i've told places they should start offering it. I ususally have packets with me, and sometimes the liquid. In slow times at coffee shops , restaurants, or even at a hotel, people have asked what it is. At the hotel, i told the manager on duty after asking about it, you should look into getting it for the breakfast and the 24 hr coffee bar, your brand of hotels would be the first, and it might be a gold star for you to suggest it. Wonder if she did? It's good business to be at the start of a new concept / product growth.
Have a great day.
It's definitely not an artificial sweetener, but indeed people tend to associate it with them simply because it's a non-sugar sweetener. And you're right, global adoption is still at beginning of the growth curve.
After years of never seeing Stevia in any restaurant or café, I finally had a coffee the other day in a restaurant, and they had Stevia packets in the little jar. A PureCircle brand, too!
Thanks.
I honestly believe the populace has not caught up to the use of this plant.
It has become more available in products and as a recipe alternative, so it's getting there.
I've heard people say it's still an artificial sweetner, and artificial sweetners are bad. Of course, the response , here, being, well, no it isn't artificial . . .
(Sugar has them brain-washed)
Thanks again.
PureCircle is the dominant player in the Stevia space, globally, as that's all they do and they have a business to scale to the size required by the Coke's of the world. But their share price has more than caught up with their mid-term potential IMO. I still haven't sold my position, but then I tend to hold shares a very long time (5+ years). I think there is still great long-term upside if you have the patience.
Other Stevia plays you might want to check out are S&W Seed (SANW on NASDAQ) and Evolva (EVE on the Swiss Exchange). There are likely more, but those are the two I know & follow (but don't have a position in).
Good luck to you.
I was looking up stevia, trying to find legit opps to buy, and Pure Circle came up.
Funny thing is, last night, it seems there was a current article from Forbes.com , but i did not bookmark it. Now I can't get back to it. Darn thing is, i did not read it late last night. The article brought up this morning, while searching, is from last year.
In looking this morning, i noticed there are articles from March 2015 from FoodNavigator.com and ChicagoBusiness.com.
Will have to check this out more.
I am stevia long in life, I was thinking I should try to be stevia long in a company share. : )
Pence vs Pounds and 1:1
WOW, thank you for the quick reply! I figured that no one here was still following this thread because there a very few new posts.
I knew that this was an OTC listing but wasn’t sure of the relationship because I don’t trade a lot of International stocks. Your information about the London shares being listed in Pence instead of Pounds certainly clears up a lot.
Thank you so much for sharing this information!
Best regards,
Robear
These are not ADRs, so the ratio is 1:1, although I am unsure about any "verifiable" relationship between PRCTF and PURE.L (the website and all corporate information only makes reference to the London shares "PURE").
PURE in London (AIM) is currently trading at GBX522 (Pence, or 1/100th of a Pound), or GBP5.22, which is about $7.90 today.
They are also traded in Germany under the symbol 4PC, in Euros. (again, unsure about the verifiable connection to PURE.L).
Liquidity is misable for PRCTF, and the price can be as much as 20% off the London shares (not in the buyer/seller's favor I suppose). German volume is also not great, but in London up to 500k shares are traded in a normal day lately.
Hope that helps.
What is the ratio of PCRTF to PURE.L shares?
PCRTF appears to be an OTC proxy for PURE.L but trades near 1/100 the price of PURE.L.
Does anyone here know if PCRTF is a proxy for 1/100th of a share of PURE.L or does it represent slightly more/less shares?
Does anyone here have a link that verifies the relationship of the two securities?
Thank you for any information you can share!
By the way, I see that a number of people here have tried to pick up shares on the London exchange. Personally I prefer to invest in the OTC because its much easier and given enough time the slight premium I'll pay isn't much compared to the potential growth I'm hoping for here.
The following is an excellent article on OTC investments for those who want to learn more:
Going Global: Trading Foreign Stocks OTC
Hopefully someone here is still participating in conversations about PureCircle.
Thank you again for any information you can share... By the way, if my questions were already answered in another thread then I would truly appreciate a link for that thread.
Cheers!
PureCircle (AIM:PURE) is a hard stock to buy.. I had to search for a broker that let me own it. That is the case anyway for the London-based shares.
It also trades in Germany under 4PC, and in US OTC under PCRTF, though both of these are far more illiquid than in London.
If your broker allows it, I would buy the London shares.
Good luck to you.
Long on PURE.
Yes it has been I went to buy some of this stock today and got this message and need to call my broker
Canadian securities may be routed to a local broker or a U.S. broker for execution. If your order is executed by a local broker a currency exchange from US dollars to Canadian dollars is required.
For trades in Canadian securities routed to a local broker for execution, the transaction price reported to you will reflect the currency exchange rate and include a local broker commission. Currency exchanges may be effected by Fidelity FOREX, on a principal basis. Fidelity FOREX, an affiliate of Fidelity, may impose a commission or markup to the price they receive in the interbank market. The local broker may be an affiliate of Fidelity.
All other foreign securities will be routed to a U.S. market maker for execution.
The price for this security may not be current. Please call 800-544-2976 for updated prices.
Welcome.. sure been a lonely board here the past few years, despite amazing gains.
Guess what I am going to be a new investor to the company welcome me aboard I just found the stock so please forgive us American's for slacking on buying such a great stock with a huge potential
Anyone out there?
PureCircle is on fire: up 40% in the past few months and 141% YTD.
With major CSD reformulations expected to be announced soon, hundreds of other products hitting the shelves in Europe, Indian approval of Stevia pending, production capacity at multiples of today's volumes, and profitability around the corner, this is a great investment today folks.
"Folks" ... ha ha.. there is nobody here but me. Am I the only one on iHub who is benefiting from these great gains??
Conf call slides & transcript available:
http://www.purecircle.com/investors/events
Insider buying in recent weeks, just after the CocaCola agreement was signed.
Mr. Peter Lai Hock Meng 1,000 @ GBP 2.10 on 7 October 2012
Mr. Peter Lai Hock Meng 9,000 @ GBP 2.15 on 8 October 2012
Mr. Tan Boon Seng 10,000 @ GBP 2.13 on 8 October 2012
Mr Tan Boon Seng 60,000 @ GBP 2.12 on 4 October 2012
Ms Mei Sian Tan 20,000 @ GBP 2.15 on 2 October 2012
Mr P Selway-Swift 48,000 @ GBP 2.10 on 28 September 2012
Mr O Maes 15,000 @ GBP 2.10 on 28 September 2012
As David Lynch said, there are many reasons for insiders to sell their shares, but only one reason for them to be buying some.
and from the conf call transcript:
PURE results for FY2012 are in:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11324907
Noteworthy: on the conf call yesterday, they mentioned a "major [CSD] reformulation announcement in the next few weeks". As we know, although they have solid Y/Y growth, and markets are still in their infancy, it will be CSD launches that will make this company realize its full potential.
PURE up 120% YTD. The just raised $20m cash by selling new shares to an institutional investor (now holding 11% of the company) -- the shares are locked for 3 years and the offer price was at 200GBX (slightly above market price at the time).
PureCircle is finally on fire.. after years of building their infrastructure & supply-chain, they are finally reaping the rewards of their investments.
In their own words, the Stevia market is a $10bn market in a few years, and PURE is uniquely positioned to dominate (they expect to grab 30% of that market). Current market cap (at GBX210) is GBP326m. Expect CFP in CY 2013, and before then the share price could easily see new highs IMO (+50% from today's price).
Long term, this could be a $10bn company.. a multi-bagger hold long, IMO.
Article on Stevia: http://www.trust.org/alertnet/news/miracle-sweetener-stevia-may-have-a-sour-note
Notable items found therein:
Stevia's market share among high-intensive sweeteners is still less than 1 percent but growth rates are impressive. Volumes jumped over 50 percent in France last year, and are expected to more than double in 2012 and quadruple by 2014.
Coca-Cola's flagship drinks Sprite and Nestea's recipes have been modified to include stevia in a bid to cut the sugar level by up to 30 percent and will soon be available in French stores, Claire Meunier, nutrition manager at Coca-Cola France said.
Pure Circle now available to trade on Interactive Brokers (symbol 4PC in Frankfurt, quoted in Euros)!
check ISIN: BMG7300G1096
PURE.LON up 100% in the past 3 months; some large buys by existing institutional investors.
New Significant Shareholding
Wow... talk about taking a position!!
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11165642
PureCircle (LSE: PURE), the world's leading supplier and marketer of high purity stevia products was notified on Monday 2 April 2012 by Wang Tak Company Limited that it has purchased shares in PureCircle Limited that constitute a new significant shareholding.
Wang Tak Company Limited has purchased 7,656,800 (seven million six hundred and fifty six thousand and eight hundred) shares on the open market at an average price per share of UKP 1.1868 in the period up to and including 29 March 2012. The 7,656,800 shares are Wang Tak Company Limited's total holding of shares in PureCircle Limited and represents 4.95% of the issued share capital of the Company.
This bit sums up the opportunity for me:
Full transcript & recording + slides available here: http://www.purecircle.com/investors/events
Interim resutls for the 6 months ended 31 December 2011
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11160616
PureCircle (LSE: PURE) the world's largest producer and marketer of high purity stevia today announces its unaudited interim results for the six month period from 1 July 2011 to 31 December 2011 ("H1 FY 2012").
The unaudited financial statements comprising profit and loss account and cashflow for the six months to 31 December 2011 and the balance sheet at 31 December 2011 are set out in page 5 to 21 to this announcement, together with unaudited profit and loss and cashflow comparatives for the six months to 31 December 2010 ("H1 FY 2011") and the audited balance sheet at 30 June 2011.
SUMMARY FINANCIALS
SUMMARY FINANCIALS
Six months ended 31 December (millions US dollars)
(H1 FY 2012)
(H1 FY 2011)
Sales
15.2
13.6
Gross profit
1.7
0.9
EBITDA before exceptional costs*
(4.1)
(4.2)
Net loss after tax before exceptional costs*
(6.8)
(7.0)
Exceptional costs*
(6.3)
-
Net loss after tax
(13.1)
(7.0)
Cash and short term deposits
27.1
30.8
Net debt
(70.7)
(76.7)
Gross assets
238.1
270.4
Net assets
130.8
152.0
Net assets per share (US cents)
0.85
0.98
Sales: H1 FY 12 sales of $15.2m were in line with expectations and $1.6m (11%) higher than prior year. As expected there were no sales to the Company's Global Beverage Key Accounts (GBKA's) in H1, as they continue to use existing inventories. All our new products Natural Flavors and new natural sweeteners launched in Calendar Year 2011 (CY 2011) performed strongly and together contributed $6m (39%) of the total sales.
Gross Profit: H1 FY12 gross profit of $1.7m is $0.8m (88%) ahead of H1 FY 11. This reflects diversification and mix of sales with new products and improved variable contributions. However absolute gross profit margin % is below the Group's long term business model due to low production capacity utilization.
Exceptional costs: As was previously announced, having successfully scaled production across CY 2009 and CY 2010, since January 2011 the Group has temporarily slowed down production of Reb A until inventories are better aligned with market demand. As a result in H1 FY 12 the Group has charged $6.3m net of production overhead and related costs to profit that would ordinarily have been charged to inventory production.
Inventories: inventories reduced $9m from 30 June 2011 and at $87m are now $26m (23%) lower than their peak at 31 December 2010. Management expects them to reduce further across the next twelve months.
Cash and net debt: The Group ended H1 FY 12 with gross cash of $27m and net debt of $71m. Net debt is the same as at 30 June 2011 and $6m lower than at 31 December 2010 ($77m), confirming that the Group has been a net cash generator across CY 2011, despite the exceptional costs. At 31 December 2011 the Group had $60m of cash and facility headroom (31 December 2010: $50m) and is adequately funded to meet all its current plans.
Balance sheet: the Group's balance sheet reflects fully invested production capacity that can support volumes equivalent to more than $250m sales.
BUSINESS DEVELOPMENTS
Supply Chain: Although we reduced Reb A production temporarily, our supply chain has been busy with new products. Our production teams have been successful in scaling production of these new products. Our leaf growing regions both in Kenya and Paraguay are progressing well. The supply chain is robust and in place to support sales in excess of $250m as the market matures.
Regulatory: the EU market secured regulatory clearance in December 2011 thereby opening up the world's largest sweetener market to high purity stevia. Continued regulatory progress in other regions means that all principal markets in the world are expected to be open by the end of CY 2012.
Market adoption: the number of Food and Beverage products and the range of product categories using high purity stevia as a sweetening ingredient or flavor continue to increase in all markets. This includes the important Carbonated Soft Drink (CSD) market where we have seen major CSD household brands beginning to adopt stevia as their sweetening option worldwide. As expected, early launches in the EU since approval are more numerous and cover more companies than was seen when the USA market first opened. (edit: EU approval came in November 2011)
Consumer demand: Nielsen and other market data shows consumption of high purity stevia based products increasing in all categories. Higher demand is backed up by strong growth in awareness of stevia in all major markets. In France for example awareness has increased 20% across the last twelve months.
PureCircle product portfolio: during CY 2011 PureCircle launched a range of new products designed in close consultation with clients and meeting specific market needs, both as natural sweeteners and flavors. Each of the products has been well received, particularly the natural flavors that have been adopted into two billion dollar brands in USA within six months of the launch. Taken together they provide our customers with a flexible formulation tool kit across major price and calorie reduction points. For PureCircle they will provide a well balanced revenue portfolio going forward.
Application support: we continue to expand our application support capabilities through our Oak Brook, Illinois Application Center. Our uniquely deep knowledge of formulating with high purity stevia is being recognized increasingly in the market with more and more customers now working actively on projects with our application specialists.
Everything Stevia: our inaugural Everything Stevia conference was held in London in November and attracted more than a hundred delegates from major EMEA Food and Beverage companies. Everything Stevia is now being rolled out across Europe with events already held in Spain and Italy and more planned.
Customer base: we continue to secure more customers and to build repeat business. Most customers are still at relatively early development stages. But, data shows underlying demand building steadily as customers' launches expand. Excluding the BGKAs, we estimate that we are working on two to three times as many projects today as a year ago and that our regular order levels are almost five times those of two years ago.
Beverage Global Key Accounts (BGKAs): we have highlighted previously that the BGKAs will be the largest long term users of high purity stevia but that whilst they work through their existing stevia inventories, their current demand will be low. This has been the case in H1 FY 12. Whilst their existing product usage is growing particularly with high purity stevia now being adopted into major CSD brands and whilst we expect to see a series of new launches in CY 12, in the EU, Asia and Latin America, we do not expect any significant BGKA demand in FY12. We believe significant BGKA demand will now only kick in from CY 2013 and CY 2014.
Joint Ventures: activity levels in both our Joint Ventures (JVs) with Tereos (TPCS) and Nordzucker (NPS) have accelerated sharply with the opening of the EU. Both have rapidly expanding project pipelines and a growing list of customer launches across many EU countries. Our USA JV, NSV, is working to develop both a retail Table-top offer and an industrial B2B business. The JVs will make an initial sales contribution in FY 12, but reflecting the project roll-out timings, it will be FY 13 and FY 14 before their sales are material.
Partners: PureCircle has a first class suite of flavor, formulation and distribution partners, including Firmenich, Dohler and Prinova. Across H1 FY 12 all our partners have seen sharp increases in project activity and growing customer demand pipelines. As these roll-out they will provide strong additional sales, but it is expected to be FY 13 and FY 14 before these are material.
Outlook:
With the opening of the important EU market and continued growth in usage across all regions and Food and Beverage categories including major CSD brands we remain confident of the long term future of high purity stevia. The success of our expanded product portfolio and our continued customer acquisition supports our confidence in PureCircle's leading role in that future.
We do not however expect to see rapid sales growth until CY 2013 and CY 2014 when the combination of EU approval, the launches of major stevia sweetened CSDs and the unwinding of BGKA's inventories take fuller effect.
Our business model is sensitive to sales volumes. Whilst sales remain modest relative to our supply chain capacity, our margins too will remain substantially below those of our long term business model.
Looking at FY12, we expect H2 to show much stronger revenues than H1. However with BGKA demand tracking later than expected this is likely to impact FY 13 and FY 14 revenues not FY 12. Accordingly our sales guidance for H2 FY12 is in the range of $30m to $50m.
"CY 2011 has been a challenging year with PureCircle sales not reflecting the underlying strong growth in the global high purity stevia market, which accelerated further in December 2011 with the opening of the important EU market. We have a highly scaled business that leaves our results sensitive to sales volumes.
Across CY 2011 we have seen continued progress of high purity stevia becoming a natural sweetener of choice across more categories, companies and countries. CY 2011 has also seen the early but strong market adoption of our proprietary natural flavor products.
CY 2012 has started well with early evidence of the adoption of high purity stevia by the important carbonated soft drink (CSD) category.
As we mentioned in our Outlook, we remain confident of the long term future of high purity stevia and of our business. But it will be CY 2013 and CY 2014 before the strong sales growth is apparent."
My notes from the conf call:
Revenue grew despite no sales to GKA, and customer base is far more diverse.
Most customers are in early stages and have only made small orders compared with what they'll need in the future.
EU market had no impact on FY H1 sales and not likely for H2 either.
Regulatory approval expected in India and Canada -- will accelerate growth further.
In 2011 new products introduced all of which were well received.
Cost base is lower and margin is better.
Company was cashflow positive in CY 2012.
Supply chain is fully invested, can support $250m in sales.
Existing inventories support $150m in sales w/o additional cash spend!
The number and quality of new SKUs is much greater today than 1 year ago.
200 active clients globally, many is USA, Mexico, China
Growth in retail sales of products containing Stevaia is double-digits (48%) in a market that was otherwise not growing at all (consumer foods)
Europe is currently undergoing significant launch activity, and PureCircle will be dominant in EU.
Since EU approval, many new SKUs from Danone and CocaCola (Sprite in France)
CSD area had major launches in last 3 months. Across multiple countries and products incl. recipe reformulation of some famous drinks !
Carbon and water footprint study done and being touted as very advantageous for the Stevia plant.
PureCirlce's supply chain covers everthing from leaf to marketing, and their GKAs are strong because of this.
Broad product portfolio
Outlook: little visibility until industry is established. Rapid growth not until 2013/2014 (prudent)
H2FY12 expect 30-50m in sales (Edit: the high-end of which would give PureCircle a record year despite no orders from GKAs)
Long term focused. Confidence never higher. Portfolio of products and customers is basis for confidence.
Q&A
BGKA (beverage global key accounts) inventory was ~290 tonnes. They expect that by end of CY12 GKA's inventories will not be sufficient and thus new orders will follow.
CapEx is at maintenance level - no more needed (2-3m$ max). Net debt may increase modestly until June 2012.
Full year rev guidance same as last year. Margins and SG&A expected to be the same as H1.
Debt schedule in SEC filing. Principal paid is $6m per year with a lump of $65m due in 2016.
Q: How much RebA do Coke & Pepsi use today? What % is that of global use?
A: Several 100's of tonnes annually today. That is 60-70%. Marketshare (use of Stevia) of Coke & Pepsi dropping.
Tonnage will increase dramatically in next 6 months as new products hit shelves
Q: Low production today - will it continue long? What about exceptional costs?
A: Already resuming production will remain lower until CY2013.
Q: Why will gross margins not improve over H1?
A: Margin targets in biz model are 40%+.
Q: CSD launches: limited visibility but when will you have more visibility?
A: We are in close consultation with all BGKA's! At all levels: CxO, Marketing, Applications, Logistics, etc. 2 of the biggest BGKA's still have inventories - that is the issue today. We expect inventories to drop soon.
Recent "unstoppable trends" of core brand new product launches.
Advantage of PureCircle: refining capability, complementary products for taste and volume capability.
Industry in 10-15 yrs is $10-$15 billion, and PureCircle expects to have 30% of that.
Barrier to entry is high today. Competition needs IP to compete and nobody has what PureCircle has.
Q: Monk fruit potential to displace Stevia as sweetener?
A: PureCircle already has 1 molecule launched in 2010 base on monk fruit extract. But it is expensive (500$. / kg) so
Monk Fruit will remain a niche product. Furthermore, it's hard to grow. Legally protected in china (?) Commercially
it is not a threat to Stevia, and in face "Monk fruit needs stevia to succeed".
From the same website, an article about the market potential of Stevia
http://www.just-food.com/management-briefing/stevia-analysing-the-markets-potential_id118750.aspx
The natural and zero-calorie stevia has been dubbed the holy grail of intense sweeteners and suppliers argue food and drink manufacturers will increasingly turn to the ingredient, not least now it can be used in the EU following regulatory approval last year. In part one of this month's just-food briefing, Jonathan Thomas looks at stevia's potential.
A key trend affecting the global market for sweeteners at present is the growing influence of products featuring stevia, a shrub herb native to parts of South America. Stevia has been used in the manufacture of food and drinks for decades in regions such as the Far East and Latin America, but awareness levels were heightened significantly by its approval for use in food manufacture in the US during 2008. The EU followed suit towards the end of 2011, although it should be noted that stevia had previously gained regulatory clearance in France.
The leaves of the stevia plant contain steviol glycosides, sweet-tasting compounds of which there are at least 10. The best-tasting and perhaps most well-known type is rebaudioside A (or reb A for short), while other varieties include stevioside and rebaudioside C (or reb C). It is steviol glycosides such as reb A that are now making the greatest impact upon the global food and drinks industry, as more people worldwide aim to reduce their sugar intake on health grounds, while at the same time seeking out more natural food ingredients and additives.
Market Size
Owing to the relatively early stage of the market's development, estimates regarding global sales of stevia-based products remain thin on the ground and vary according to source. The picture is further complicated by differing definitions of the market - for example, some sources refer solely to sales of reb A.
Data from Leatherhead Food Research valued the world stevia market (defined as including both crude extracts and high purity products such as reb A) at US$100m in 2010, up by nearly 27% from $79m the previous year. During this time, volume sales rose from less than 2,300 tonnes to 2,400 tonnes, with crude extracts accounting for up to 80% of this figure.
Separate data from Zenith International (another UK-based consultancy) suggests that global market value reached $285m in 2010, with volume sales worth in the region of 3,500 tonnes.
Meanwhile, a report from Packaged Facts of the US estimates the world stevia market (defined as including sales through both retail and wholesale channels) as lying somewhere between $800m and $2bn in 2011, up from just $20m in 2008. Much of this growth was attributed to stevia having gained regulatory approval in the potentially sizeable US market, where sales of intense sweeteners such as sucralose and aspartame remain above the global average.
However, according to Charles Tremewen, director of marketing and communications for stevia supplier GLG Life Tech Corp., the market "witnessed a slight lull during 2011… this was because many leading US manufacturers weren't too impressed with stevia after it gained regulatory approval". This was largely on the grounds of stevia's purity and near-sugar levels, concerns that have in turn slowed the market's development.
Despite this, the US has been a significant contributor towards much of the recent growth in usage of stevia by the food industry since 2008. At present, the US is thought to account for more than 80% of worldwide sales of reb A, with the market expected to reach up to $700m within the next five years. Furthermore, annual retail sales of US food and drinks promoted as containing stevia have grown from practically zero to over $1bn since regulatory approval was granted.
As yet, sales of stevia-based sweeteners remain limited in the EU outside France. However, according to GLG Life Tech, "the global perspective on stevia has changed given the situation in Europe… and sales now appear set to take off". This view is echoed by Sue Bancroft, global marketing director for the EMEA and LATAM regions for PureCircle, who says: "The EU approval will surely accelerate [global market] growth as it is the largest sweetener market in the world… we anticipate that the EU market will show even greater growth than we’ve seen in the past."
Since the end of 2011, stevia-based products have started to appear within the EU market for table-top sweeteners – leading supplier Merisant expects sales to reach $100m by the end of 2012. This would equate to a 20% share of the European market for table-top sweeteners, which is worth approximately $500m at present. Furthermore, according to PureCircle, the EU has accounted for 14% of global new product activity featuring stevia in the three months since the ingredient gained regulatory approval.
Future Prospects
It remains to be seen whether initial projections regarding growth in demand for stevia-based sweeteners live up to reality. According to Zenith International, the global market for stevia is forecast to reach 11,000 tonnes by the middle of the current decade, equivalent to value sales worth $825m. Meanwhile, a recent industry presentation from PureCircle CFO William Mitchell predicted that world demand for stevia leaves would exceed 8m tonnes by 2020, while global sales of reb A may reach as high as $10bn over the next few years.
Williams also says reb A has the potential to penetrate up to 25% of the world sugar market. It is true that sugar consumption has fallen of late in many parts of the world – according to German sugar refiner Südzucker, per capita consumption of white sugar in Europe declined from almost 39 kg in 2005 to under 38 kg in 2011, while a similar decrease has been recorded across the Americas. Furthermore, sugar's appeal among food and drink manufacturers has also diminished on cost grounds – at the start of 2011, world sugar prices were their highest for 30 years at approximately $700 per tonne.
The industry is making serious efforts to further develop the world stevia market – for example, 2010 saw the establishment of the Global Stevia Institute, which aims to promote and provide scientific information about stevia and its benefits to health professionals, consumers and food and drink producers. From a geographical perspective, new markets for stevia-based sweeteners are expected to open up in India and parts of the Middle East in the near future, following on from the EU.
Article about Stevia suppliers from just-food.com
http://www.just-food.com/management-briefing/from-cargill-to-purecircle_id118747.aspx
... here is a snippit of the part mentioning PureCircle...
PureCircle claims leadership of the world market for high-purity stevia ingredients supplied to the global food and drinks industry. Its share of the world market for reb A, for example, amounts to nearly 80%. Headquartered in Malaysia and listed in London, the company's stevia is grown throughout South America, Africa, Asia and the US, while its Jiangxi facility in China has an annual capacity approaching 4,000 tonnes of high-purity stevia extracts, and is the world's largest of its kind.
Pure Circle has been active in developing the global stevia market, having helped to establish and provide support to the Global Stevia Institute in 2010. It has also pioneered Stevia PureCircle, an industry trust mark that it claims serves as a symbol of quality and sustainable sourcing and also educates consumers about the benefits of stevia.
According to Pure Circle, its reb A is up to 400 times sweeter than sucrose, and is supplied to customers such as PepsiCo and Merisant under the PureVia brand. Its range also comprises other ingredients based on stevia extracts, examples of which include SG95 (which is described as ideal for partial replacement of calories when blended with sugar) and Pure Circle Alpha, which is described as up to 250 times sweeter than sucrose and is also ideal for reduced-calorie products. The company has over 100 customers within the global food and drinks industry, examples of which include Unilever, Danone and Dean Foods.
In recent years, Pure Circle's global footprint has been extended via a series of major partnerships and/or joint ventures. The main examples are listed below:
Natural Sweet Ventures – this North American joint venture was established in partnership with Imperial Sugar Company in February 2010.
The Natural Sweetness Company – this joint venture was established in partnership with British Sugar in July 2010. It operates in Western European countries such as the UK, Ireland and Spain, as well as in China and Africa.
Tereos Pure Circle Solutions – this joint venture was established with sugar producer Tereos in September 2010. Based in France, Tereos Pure Circle Solutions was set up to market stevia-based sweeteners in European countries such as Italy, Belgium, Switzerland and the Czech Republic.
NP Sweet – this joint venture was established with Nordzucker in March 2011. Based in Denmark, NP Sweet produces stevia extracts and steviasucrose to clients across the more northern and eastern parts of Europe, with production concentrated in Germany and Scandinavia.
Interim resutls for the 6 months ended 31 December 2011
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11160616
(with emphasis added)
PureCircle (LSE: PURE) the world's largest producer and marketer of high purity stevia today announces its unaudited interim results for the six month period from 1 July 2011 to 31 December 2011 ("H1 FY 2012").
The unaudited financial statements comprising profit and loss account and cashflow for the six months to 31 December 2011 and the balance sheet at 31 December 2011 are set out in page 5 to 21 to this announcement, together with unaudited profit and loss and cashflow comparatives for the six months to 31 December 2010 ("H1 FY 2011") and the audited balance sheet at 30 June 2011.
SUMMARY FINANCIALS
SUMMARY FINANCIALS
Six months ended 31 December (millions US dollars)
(H1 FY 2012)
(H1 FY 2011)
Sales
15.2
13.6
Gross profit
1.7
0.9
EBITDA before exceptional costs*
(4.1)
(4.2)
Net loss after tax before exceptional costs*
(6.8)
(7.0)
Exceptional costs*
(6.3)
-
Net loss after tax
(13.1)
(7.0)
Cash and short term deposits
27.1
30.8
Net debt
(70.7)
(76.7)
Gross assets
238.1
270.4
Net assets
130.8
152.0
Net assets per share (US cents)
0.85
0.98
Sales: H1 FY 12 sales of $15.2m were in line with expectations and $1.6m (11%) higher than prior year. As expected there were no sales to the Company's Global Beverage Key Accounts (GBKA's) in H1, as they continue to use existing inventories. All our new products Natural Flavors and new natural sweeteners launched in Calendar Year 2011 (CY 2011) performed strongly and together contributed $6m (39%) of the total sales.
Gross Profit: H1 FY12 gross profit of $1.7m is $0.8m (88%) ahead of H1 FY 11. This reflects diversification and mix of sales with new products and improved variable contributions. However absolute gross profit margin % is below the Group's long term business model due to low production capacity utilization.
Exceptional costs: As was previously announced, having successfully scaled production across CY 2009 and CY 2010, since January 2011 the Group has temporarily slowed down production of Reb A until inventories are better aligned with market demand. As a result in H1 FY 12 the Group has charged $6.3m net of production overhead and related costs to profit that would ordinarily have been charged to inventory production.
Inventories: inventories reduced $9m from 30 June 2011 and at $87m are now $26m (23%) lower than their peak at 31 December 2010. Management expects them to reduce further across the next twelve months.
Cash and net debt: The Group ended H1 FY 12 with gross cash of $27m and net debt of $71m. Net debt is the same as at 30 June 2011 and $6m lower than at 31 December 2010 ($77m), confirming that the Group has been a net cash generator across CY 2011, despite the exceptional costs. At 31 December 2011 the Group had $60m of cash and facility headroom (31 December 2010: $50m) and is adequately funded to meet all its current plans.
Balance sheet: the Group's balance sheet reflects fully invested production capacity that can support volumes equivalent to more than $250m sales.
BUSINESS DEVELOPMENTS
Supply Chain: Although we reduced Reb A production temporarily, our supply chain has been busy with new products. Our production teams have been successful in scaling production of these new products. Our leaf growing regions both in Kenya and Paraguay are progressing well. The supply chain is robust and in place to support sales in excess of $250m as the market matures.
Regulatory: the EU market secured regulatory clearance in December 2011 thereby opening up the world's largest sweetener market to high purity stevia. Continued regulatory progress in other regions means that all principal markets in the world are expected to be open by the end of CY 2012.
Market adoption: the number of Food and Beverage products and the range of product categories using high purity stevia as a sweetening ingredient or flavor continue to increase in all markets. This includes the important Carbonated Soft Drink (CSD) market where we have seen major CSD household brands beginning to adopt stevia as their sweetening option worldwide. As expected, early launches in the EU since approval are more numerous and cover more companies than was seen when the USA market first opened. (edit: EU approval came in November 2011)
Consumer demand: Nielsen and other market data shows consumption of high purity stevia based products increasing in all categories. Higher demand is backed up by strong growth in awareness of stevia in all major markets. In France for example awareness has increased 20% across the last twelve months.
PureCircle product portfolio: during CY 2011 PureCircle launched a range of new products designed in close consultation with clients and meeting specific market needs, both as natural sweeteners and flavors. Each of the products has been well received, particularly the natural flavors that have been adopted into two billion dollar brands in USA within six months of the launch. Taken together they provide our customers with a flexible formulation tool kit across major price and calorie reduction points. For PureCircle they will provide a well balanced revenue portfolio going forward.
Application support: we continue to expand our application support capabilities through our Oak Brook, Illinois Application Center. Our uniquely deep knowledge of formulating with high purity stevia is being recognized increasingly in the market with more and more customers now working actively on projects with our application specialists.
Everything Stevia: our inaugural Everything Stevia conference was held in London in November and attracted more than a hundred delegates from major EMEA Food and Beverage companies. Everything Stevia is now being rolled out across Europe with events already held in Spain and Italy and more planned.
Customer base: we continue to secure more customers and to build repeat business. Most customers are still at relatively early development stages. But, data shows underlying demand building steadily as customers' launches expand. Excluding the BGKAs, we estimate that we are working on two to three times as many projects today as a year ago and that our regular order levels are almost five times those of two years ago.
Beverage Global Key Accounts (BGKAs): we have highlighted previously that the BGKAs will be the largest long term users of high purity stevia but that whilst they work through their existing stevia inventories, their current demand will be low. This has been the case in H1 FY 12. Whilst their existing product usage is growing particularly with high purity stevia now being adopted into major CSD brands and whilst we expect to see a series of new launches in CY 12, in the EU, Asia and Latin America, we do not expect any significant BGKA demand in FY12. We believe significant BGKA demand will now only kick in from CY 2013 and CY 2014.
Joint Ventures: activity levels in both our Joint Ventures (JVs) with Tereos (TPCS) and Nordzucker (NPS) have accelerated sharply with the opening of the EU. Both have rapidly expanding project pipelines and a growing list of customer launches across many EU countries. Our USA JV, NSV, is working to develop both a retail Table-top offer and an industrial B2B business. The JVs will make an initial sales contribution in FY 12, but reflecting the project roll-out timings, it will be FY 13 and FY 14 before their sales are material.
Partners: PureCircle has a first class suite of flavor, formulation and distribution partners, including Firmenich, Dohler and Prinova. Across H1 FY 12 all our partners have seen sharp increases in project activity and growing customer demand pipelines. As these roll-out they will provide strong additional sales, but it is expected to be FY 13 and FY 14 before these are material.
Outlook:
With the opening of the important EU market and continued growth in usage across all regions and Food and Beverage categories including major CSD brands we remain confident of the long term future of high purity stevia. The success of our expanded product portfolio and our continued customer acquisition supports our confidence in PureCircle's leading role in that future.
We do not however expect to see rapid sales growth until CY 2013 and CY 2014 when the combination of EU approval, the launches of major stevia sweetened CSDs and the unwinding of BGKA's inventories take fuller effect.
Our business model is sensitive to sales volumes. Whilst sales remain modest relative to our supply chain capacity, our margins too will remain substantially below those of our long term business model.
Looking at FY12, we expect H2 to show much stronger revenues than H1. However with BGKA demand tracking later than expected this is likely to impact FY 13 and FY 14 revenues not FY 12. Accordingly our sales guidance for H2 FY12 is in the range of $30m to $50m.
"CY 2011 has been a challenging year with PureCircle sales not reflecting the underlying strong growth in the global high purity stevia market, which accelerated further in December 2011 with the opening of the important EU market. We have a highly scaled business that leaves our results sensitive to sales volumes.
Across CY 2011 we have seen continued progress of high purity stevia becoming a natural sweetener of choice across more categories, companies and countries. CY 2011 has also seen the early but strong market adoption of our proprietary natural flavor products.
CY 2012 has started well with early evidence of the adoption of high purity stevia by the important carbonated soft drink (CSD) category.
As we mentioned in our Outlook, we remain confident of the long term future of high purity stevia and of our business. But it will be CY 2013 and CY 2014 before the strong sales growth is apparent."
"The first products sweetened with the new ingredient are expected on shelves by June" -- which implies orders are already underway. Could be a breakthrough 6 months for PureCircle, and hopefully the beginning of a strong & steady ascent of their valuation & share price.
Article: PureCircle Alpha leads industry into next generation of stevia
(March 15, 2012)
http://purecircle.com/news/general-news/purecircle-alpha-leads-industry-into-next-generation-of-stevia
PureCircle, the world’s leading producer and marketer of high purity stevia ingredients, announces it has increased production of its new breakthrough ingredient, PureCircle Alpha, in response to market demand. PureCircle Alpha is a proprietary combination of steviol glycosides, with a clean, sugar-like taste capable of achieving deeper calorie reductions in foods and beverages. The ingredient was officially launched in September 2011.
“Early on, PureCircle was the pioneer of broad scale Reb A production and we are still the largest producer in the world. But we have learned that Reb A is not the right solution for all product applications. Our search for a better performing stevia sweetener led us to PureCircle Alpha, which has unquestionably become the next generation of stevia beyond Reb A. It was conceived from our deep knowledge of stevia from leaf through final production,” explains Jason Hecker, VP Global Marketing & Innovation, PureCircle Limited.
PureCircle’s customers seem to agree. The first products sweetened with the new ingredient are expected on shelves by June, just nine months after introduction—a testament to the difference PureCircle Alpha is making in product formulations.
In preparation for its introduction, the company’s Global Technical Center developed dozens of ready-to-go formulations across food and beverage categories, including carbonated soft drinks, tea and dairy products. Rigorous testing and sensory evaluation have shown an improved taste and sweetness profile compared with other stevia ingredients.
“We are greatly pleased with the market’s early response to PureCircle Alpha,” adds Hecker. “Our focus on innovation has enabled us to rapidly bring new and exciting natural solutions to our customers – first Reb A, then SG95 and PureCircle Flavors. Continuous innovation provides our customers with the confidence that PureCircle is helping them bring the very best food and beverages to the market and confirms that stevia derived sweeteners are on their way to become a mass mainstream solution.”
Announcement of Interim Results and Investor Conference Call
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11141743
PureCircle (LSE: PURE), the world's leading supplier and marketer of high purity stevia products, will be announcing its Interim Results for the six months ended 31 December 2011 ("1H FY 2012") on Thursday, 29 March 2012. The Company will host an investor conference call at 2.00 p.m. London (9.00 a.m. New York) on the same day.
The Company invites investors to dial in to the conference call, details of which are set out below:
Dial in Number: +44 (0) 20 3140 0668
Participant Pin: 485743#
The results presentation will be available to download from PureCircle's website at www.purecircle.com, prior to the conference call on Thursday, 29 March 2012.
A downloadable audiocast and transcript will also be available within 48 hours after the call on PureCircle's website.
Great call tykun (are you talking to yourself again?).. PURE.LON up 33% since that post.
Incidentally, to all my listeners out there, looks lie PCRTF is back on google finance. You can also pick these up in Paris under the symbol 4PC.
1H2012 report due out soon, likely with a conf call. I'm keen to learn some stats such as new GKA's or SKU count, etc, and hopeful for a soft-drink product launch too!
Great article about US-based S&W Seed Co (supplier to PureCircle).
http://www.npr.org/blogs/thesalt/2012/02/06/146309816/californias-stevia-growers-bet-on-fast-track-to-sweetener-success
It's stevia time!
At least that's what food industry newsletters are saying. Regulatory barriers that once blocked many uses of this all-natural sweetener have fallen. The European Union approved the use of stevia in food late last year. In the U.S., the U.S. Food and Drug Administration gave stevia a green light in 2008. Sales are soaring.
Stevia's charm? It's the only zero-calorie sugar substitute with a fresh, clean, green image. It comes from the leaves of the bushy stevia plant, a native of Paraguay. (It still grows wild there.) The other nonsugar sweeteners — saccharin, sucralose, and aspartame — all were born in a laboratory somewhere.
Lots of companies are part of the new stevia gold rush, but S&W Seed Co., in Five Points, Calif., may be the most interesting and entertaining.
"Our feeling is, we can use our advantages in soil, and climate, and weather, to make a natural, clean, good product that people really want right now," says Grover Wickersham, S&W's chairman.
I met Wickersham in The Village Pub in the town of Woodside. It's a Silicon Valley kind of place; a venture capital hangout.
Wickersham has one foot in this big-money part of California. He's a deal-making securities lawyer. But the other foot is firmly planted in the farmland of California's Central Valley. He's the son of a rancher. The main business of the S&W Seed Co. is growing and selling alfalfa seed.
When Wickersham heard about stevia a few years ago, the Silicon Valley side of him recognized its attraction to consumers. "It could be the biggest nonsugar sweetener. That's really big!" he says.
And his Central Valley side was pretty sure that California farmers could grow stevia better, and more profitably, than anyone else.
"California's famous for being able to grow pretty much anything as well or better than any other place in the world," he says, before taking a big bite of burger. "We may not be able to compete with all the things that they make in China, but one area where California does compete, really effectively, is agriculture."
Today, Wickersham's company has thousands of little stevia seedlings growing in a cavernous rented greenhouse south of Salinas.
"This is just the beginning of our spring planting. We're making more and more plants," says Koren Sihota, gesturing toward a carpet of green vegetation. Sihota is in charge of S&W's stevia project.
"How many plants?" I ask.
"Millions!"
Someone else is visiting the greenhouse today, a bearded man in a floppy hat who has a longer history with stevia than almost anyone else in the United States.
His name is Clint Shock. He's a researcher Oregon State University. But when he first saw stevia, more than 40 years ago, he was working with the Methodist Church among poor farmers who lived along the border between Brazil and Paraguay.
Some of the farmers were growing stevia in their gardens. "They gave me some plants. They also explained where it grew in nature," says Shock.
A few years later, Shock went to those places where stevia grew wild, and picked up a whole truckload of plants. He started a plantation of them. But the business flopped. Shock blames marketing problems.
Now, decades later, he has another chance, working as a consultant for S&W Seeds.
The company is trying to turn this semiwild plant into an industrial crop at Silicon Valley speed. Sihota and his team are figuring out how to plant and harvest it mechanically. They're trying to breed new varieties of stevia, turning the plant into a better biological sweetness factory.
"Ideally, what we would want is very little leaf, with 10 times the sweetness," says Sihota. "One big plant that's got a lot of sweetness and we harvest it once."
That harvest — dried leaves that look like hay — goes to a big stevia processor named Pure Circle.
It's up to Pure Circle to extract the sweet compounds from these leaves and make something that tastes just like sugar.
As it happens, this is quite a challenge.
Paul Breslin, a psychologist of taste at Rutgers University and the Monell Chemical Senses Center, in Philadelphia, says people don't really think about how sugar tastes — how quickly they sense its sweetness, and how quickly it fades.
"But if you give them something that differs from [sugar], like something that just lingers way too long, they'll notice that immediately, and they'll say, 'That really lingers in my mouth!' "
Breslin proposes a little taste test with stevia.
We rip open two little green packets of it and mix the sweet powder into cups of hot water. Then we take five sips, one right after the other, to see if each sip tastes the same.
The first sip tastes sweet. But by the fifth sip, something funny happens. The sweetness somehow disappears.
It's a phenomenon called adaptation, Breslin says. It doesn't happen much with sugar, but it does with all of the zero-calorie sweeteners, including stevia.
Pure Circle, the big stevia processor, says it's working on ways to deal with this problem. Sidd Purkayastha, the company's vice president for global technical development, says stevia leaves actually contain a whole family of different sweet molecules, called steviol glycosides. So you can create mixtures of different molecules, tweaking the taste.
"We found that, as we bring together different steviol glycoside molecules, they start performing better, in many cases, and more like sugar," he says.
Maybe the perfect combination, he adds, is a mixture of stevia and regular sugar.
You'd have some calories, but a lot fewer than if you used only sugar. You'd have the sweetness that people crave. And you could still put these valuable words on the label: "All-natural."
A report in the journal Nature says sugar should be taxed and regulated
http://www.news1130.com/news/local/article/326261--scientists-call-for-sugar-regulation
Which would be outstanding news for Stevia producers, chief among them PureCircle who is the largest producer selling into the US market.
You know what they say about insiders buying/selling: there's plenty of reasons for a director to sell shares, but there's only one reason a director is buying:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11100148
Mr Olivier Maes purchased 100,000 shares @ £0.90 in October.
2012 is without a doubt the turn-around year for PureCircle, and the stock is a major bargain at these prices. I expect it will start to rise during the course of this quarter, and more significantly during the summer.
From Jan 12: Trading Update - H1 FY 2012
(taken from: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11085069 )
PURECIRCLE LIMITED
("PureCircle" or the "Company")
TRADING UPDATE - H1 FY 2012
PureCircle (LSE: PURE), the world's largest producer and marketer of high purity stevia today provides a trading update in respect of the six month period from 1 July 2011 to 31 December 2011, being the first half of its Financial Year 2012 (1H FY 12). The Company's interim results for 1H FY 12 will be announced on Thursday 29 March 2012.
Sales
Sales were in line with expectations at $15m (H1 FY 11: $13m). There were no sales to the Company's Global Beverage Key Accounts (GBKA's) in H1, as they continue to use existing inventories. There was strong growth across the Group's new product range, particularly Natural Flavours and SG95 products. Alpha is receiving good market feedback. Launched in September 2011, this product will begin to make initial sales contributions in H2 FY 12. By region, sales saw strong growth in Latin America, Asia Pacific and some initial uptake in Europe. USA continues to grow, despite absence of sales to GBKA's, reflecting our increased diversified customer base.
One off costs
As reported in its FY 11 results, the Group has slowed down the production of Reb A temporarily across calendar 2011 so as to align inventories with current market demand. As a result production overheads and related costs have been charged to profit in H1 FY 12 that would ordinarily be charged to inventory. The one off costs are estimated at between $5 and $10m.
Foreign exchange
The Group has incurred foreign exchange costs of $3m (H1 FY 11 gains of $2.9m) on its fixed production economic hedges due to strengthening of the US$ against production currencies. This is expected to unwind, at least partially in H2 FY 12.
Operating margin and EBITDA
The Group's variable contribution and gross profit, before one off costs and foreign exchange, both strengthened in H1 FY 12 against H1 FY 11, reflecting improved product mix and lower variable costs.
Despite increased sales and marketing investments in our EU Joint Ventures ahead of the EU opening in December 2011, our general and administrative costs are expected to be lower than H1 FY 11. As a result, after adjusting for foreign exchange and one off costs, the Group expects to report improved operating margins and EBITDA against H1 FY 11.
Cash, net debt and funding headroom
The Group ends H1 FY12 with net debt of less than $72m (H1 FY 11 $77m). The positive operating cashflow across calendar 2011 principally reflects the reduction in inventories, which are expected to end 2011 at least $20m lower than their peak at 31 December 2010. In addition, with its $300m supply chain fully invested, the Group's capital expenditure requirements are low.
The Group has cash and facility headroom of more than $60m (H1 FY11 $50m) and is fully funded for its foreseeable growth plans.
Commenting on the H1 FY 12 trading, the Group CEO Magomet Malsagov said "Nielsen market data confirms there is continued strong growth in consumer market usage of high purity stevia based food and beverage products. Although our H1 FY12 sales were higher than comparable period in FY11, they were still modest as expected due to GBKA's inventories and late EU regulatory approval. With the EU market now open, with our new innovations clearly gaining market share and with our diversified customer base we expect an uptick in growth from H2 FY 12. However our guidance for sustained high levels of market demand remains mid to long term based."
Quarterly Stevia Market Update
(taken from: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11064327 )
PureCircle (LSE: PURE), the world's leading supplier and marketer of high purity stevia products, provides an update on the global high purity stevia market covering the quarter to 30 September 2011.
US and Global Consumption Estimates
· Based on Nielsen USA consumer retail sales for the quarter to 30 September 2011 and internal PureCircle data, the Company estimates annualized USA consumer usage of 260 tonnes high purity stevia. This represents a +52% increase from the annualized consumption for the quarter to 30 September 2010.
· In the US, the high purity industrial sales volumes translate to consumer retail consumption of an estimated $1.34bn in annualized Food and Beverage products sweetened with stevia. This compares to $995m of annualized consumer retail sales in the quarter to 30 September 2010.
· Analysis of the ingredient usage by non-table top food and beverage companies indicates that PureCircle is direct or indirect supplier to 87% of the products by volume and 84% by value.
· As a result, estimated annual global consumer usage, including retailer store and distributor inventory, is approximately 400 tonnes in Reb A sweetness equivalent volume. Note that this volume is currently driven primarily by the United States, Mexico, France and Australia. It does not yet include the newly opened European market or significant development of the carbonated soft drink market.
· PureCircle internal data further indicates that market adoption of ingredients has quickly diversified beyond only Reb A. PureCircle's SG 95 is experiencing increasingly greater brand adoption in new launches and reformulations. Further, PureCircle's flavors, NSF-01, and NSF-02, have already been adopted by several leading $1bn+ brands.
The global market analysis of current high purity stevia consumption is based on estimates derived from current Nielsen and internal PureCircle data from the US market and extrapolated to the global market, for the quarter ending 30 September 2011. The analysis captures historical market development and is not a forecast of future market growth. Note that all figures are captured in "Reb A Sweetness equivalents" to standardize reporting measures. Though, significant development is noted below in the growth of PureCircle's new sweetener and flavor ingredients, including SG 95 and NSF-02.
Market Drivers of Growth
· The market is experiencing growth across all key categories. Assessing data from categories that saw launches at least one year ago, it is clear that there is strong repeat purchase and growth in usage. Examples from US Nielsen data include:
o Juices: The category has reached nearly $270m in estimated annualized sales, up +25% over the prior quarter and +87% on the quarter to 30 September 2010, largely driven by growth of Trop50 and new launches.
o Flavored Waters: The category has reached $580m in estimated annualized sales, up $30m over the prior quarter to 30 June 2011, driven by strong growth in Sobe Lifewater and Vitamin Water Zero.
o RTD Tea: The category has grown to $35m in estimated annualized sales, up +65% over the prior quarter, driven by the growth of Lipton 100% Natural.
o Sugar Substitutes: The US table top market annualized retail sales are +45% over the quarter to 30 June 2010, reaching $97m.
· Globally, there is a broadening of category usage, with new launches seen within the last quarter in the following categories: Flavored Water, Fruit Flavored Drinks, RTD Tea, Alcoholic beverages, Juice, Yogurt, Powdered Drink Mix, Baked Goods, Energy Drinks, Smoothies, Cereal Bars, and niche Carbonated Soft Drinks.
· According to Datamonitor, 300+ products sweetened with high purity stevia launched in the US and 630 around the world in the 12 months to 30 September 2011. Note that these launches have been primarily driven by markets including the United States, Mexico, France and Australia.
Regulatory Approvals
· The EU Commission has given regulatory approval for the use of steviol glycosides as a sweetener in foods and beverages in the European Union. The regulation permitting the sale and use of steviol glycosides has now been published in the Official Journal of the European Union as of November 12th and came into force, allowing for sale of products formulated with steviol glycosides as of December 2nd. This approval opens a new market for stevia in which annual sweetener consumption is equal to over 125,000 tonnes of high purity stevia.
Consumer Developments
Recent studies in France, the UK, and Spain indicate the following key developments:
· France: Consumer aided stevia awareness has now reached 47% across the general population (July 2011), up from 23% one year earlier (July 2011).
· UK: Awareness of stevia is low but among those aware, stevia is viewed positively relative to other sweetening options.
· Spain: Stevia compares favorably to sugar on key ingredient attributes including being good for a healthy lifestyle.
Commenting on the stevia market update, Magomet Malsogav, CEO PureCircle Limited said "The sustained growth of the stevia market speaks to its mainstream potential and success in delivering naturally lower calorie solutions that consumers demand. PureCircle continues to drive this growth with new innovative solutions. We anticipate continued market growth to come with the opening of new markets, and launch of larger brands and supported by the introductions of new innovative stevia ingredients from PureCircle, such as PureCircle Alpha and Natural Flavor NSF-02."
Up 20%: Flip 'em if you got 'em!
Then buy back in a few weeks IMO and hold long -- this is a great company with a bright future.
Stevia gets EU approval, PureCircle shares up 10% in London!
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11032890
Regulatory Approval for Stevia in the European Union
PureCircle (LSE: PURE), the world's leading supplier and marketer of high purity stevia products announces the EU Commission's regulatory approval for the use of steviol glycosides in foods and beverages in the European Union.
The regulation permitting the sale and use of steviol glycosides has now been published in the Official Journal of the European Union as of November 12th. Twenty calendar days following this publication date, the regulation will enter into force and will be binding in its entirety and directly applicable in the EU Member States, allowing for sale of products formulated with steviol glycosides as early as December 2nd.
The number of food and beverage products sweetened with stevia continues to grow rapidly across markets and categories. Globally over 1,000 stevia sweetened products have launched and are now available across five continents and all major food and beverage categories. Products are now beginning to launch in larger brands and becoming more established through line extensions and increasing marketing support. In the US, the annual retail sales of stevia sweetened products have grown to more than $1.2B. In the EU, France allowed for an interim approval of high purity stevia extract, Reb A, in 2009. Since then, stevia has enjoyed similar success with consumers. In July 2011, awareness of the sweetener among the general population had already reached 47%, up from 23% just a year earlier.
Magomet Malsagov, CEO of PureCircle Limited stated, "The approval of stevia in the European Union marks a major milestone for PureCircle and the industry. The EU is the largest single market for sweeteners in the world. EU approval effectively increases the current addressable market for high purity stevia by more than 50%. We have been actively preparing with our customers and partners for the opening of the market with our broad portfolio of solutions. In partnership with sugar industry leaders, Nordzucker and Tereos, we have established a strong foundation of EU coverage. Consumers in Europe, as in the rest of the world, will soon be able to enjoy great tasting foods and beverages made with our no-calorie, natural ingredients."
Looks like PCRTF trades no more in the US... otcmarkets.com shows it as grey. But rest assured it trades as PURE on the London AIM.
With EU approval for RebA expected within the month (and the huge market that opens up), the $300MM/yr capacity they have already invested in, and all the insider buying going on... I'd say it's a great time to pick up some Pure Circle!
For the record, I cannot buy PURE.L shares with Interactive Brokers, nor with SwissQuote, but Internaxx in Luxembourg will do it.
But I still get the feeling I'm all alone here. Hello? Anyone...?
<snif> too bad... a great stock to own IMO, even in this economy. I'm looking for the PPS to more than double before the end of 2012, assuming there are no obstacles with EU approval.
And a director picked-up a modest £10k worth in late September at 85p:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10988643
More buying by major shareholders:
AIMS recently bought GBP 1.7 million worth of shares since June, at an average of GBP 0.96:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10989574
Investec is now a major shareholder, with just over 5%:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10992442
Halfmoon Bay Capital bought 500k shares at GBP 0.91 (now hold 8%):
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11024379
With EU approval of RebA expected this month, and CSD's (carbonated soft drinks) expected to start using Stevia in 2012 in Europe (also to avoid a 'health' tax from countries such as France), I suspect we're seeing the end of the sub-pound share price for good. I'm buying more at these levels, and expect we'll see at least a doubling in the share price before the end of 2012.
Article: Spotlight on R&D: A Culture of Innovation Fuels PureCircle’s Industry Leadership
http://www.4-traders.com/PURECIRCLE-4007769/news/PURECIRCLE-Spotlight-on-R-D-A-Culture-of-Innovation-Fuels-PureCircle-s-Industry-Leadership-13833883/
Spotlight on R&D: A Culture of Innovation Fuels PureCircle’s Industry Leadership
10-Oct-2011
Deriving a competitive advantage from a fully integrated supply chain depends on both tight control and continuous innovation across every “link” in that chain. This is especially true for PureCircle, whose research and development impact starts in the field and continues through to formulations suited to meet specific, often customized needs for global food and beverage manufacturers.
Between these ends of the supply chain, the R&D team has two principal goals: to create new, better stevia ingredients for use in a broad range of applications and to design the most efficient methods for full-scale commercial production. In doing so, the team serves as a conduit of communication and an engine of innovation.
“Our mission is to provide leadership through innovation,” says Dr. Avetik A. Markosyan, M.D., Ph.D., Vice President, R&D & Process Development. “Beyond advancing the industry as the world’s largest vertically integrated supplier, we are unmatched in our focus on continuous stevia innovation from leaf to product.”
Industry “firsts” are a byproduct of this culture of innovation, evidenced by the R&D teams’ role in many of PureCircle’s accomplishments. These include being the first company to produce high-purity Reb A at commercial scale; the development of SG95, the first combination of steviol glycosides optimized for blending with sugar for partial calorie reduction; the first stevia producer to develop their own natural flavors, NSF-01 and NSF-02, designed to work with stevia; and PureCircle Alpha, the first proprietary combination of steviol glycosides specifically developed for 50-100% calorie reductions in foods and beverages. The R&D team also partners with select customers to develop next generation natural sweeteners and flavors that are perfectly tailored to meet manufacturers’ needs.
Global, multidisciplinary diversity
Diversity plays an important role in PureCircle R&D, starting with the multidisciplinary make-up of the team. “Beyond the pure chemistry of extracting and purifying glycosides from the stevia plant, creating new derivatives and developing new application solutions requires knowledge of biotechnology, enzymology, biocatalysis, microbiology and other specialties," says Markosyan, whose expertise includes microbiology and biotechnology. He adds: “We consider it a major strength that various members on our team reflect all of these competencies; their combined abilities complement one another’s efforts.”
R&D at PureCircle is geographically diverse as well, with operations that span the globe. Markosyan’s staff works with Agricultural Development teams in the United States, Paraguay, Kenya and China to develop new leaf varieties and optimize processes. Glycosides extracted from plant material at PureCircle’s China extraction facility, are then sent to the team’s home base, which is co-located with PureCircle’s refinement facility in Malaysia. There, the team brings new products from laboratory to pilot scale before delivering a full technological portfolio to the Production Department, which produces and delivers the final product to food and beverage companies worldwide.
R&D operations further extend to collaboration with Michigan State University, one of the world’s premier horticulture research institutions, where research focuses on proprietary varietal development and the next generation of steviol glycosides beyond Reb A. Additionally, Markosyan’s team is in continuous communication with PureCircle’s Application Laboratory in the United States, in effect completing a loop that spans every step in the supply chain, from plant to finished product.
Insider buying:
Mr Lai Hock Meng bought 10k shares in September:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10988643
Asian Investment Management Services bought 1.8 million shares between June and September, and now holds 10.3%.
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10989574
And Investec Asset Management Ltd now holds 5.06%:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10992442
Snippets from the results:
Progress in the key EU and CODEX regulatory bodies mean that it is likely that high purity stevia will have been approved for use in all major remaining markets within the next 12-18 months. In particular EU approval now seems certain before the end of 2011.
Nielsen data of products containing stevia sold in USA retail outlets shows consumer purchases increasing by more than 100% in total and purchases increasing across all categories where launches have been made.
At 30 June 2011 the Group had over 150 high purity stevia customers, an increase of 50% from 30 June 2010 and from just 25 at 30 June 2009.
Our patent and intellectual property team, led by Professor Varuzhan Abelyan, has successfully filed [70] key patents in the year. These extend the breadth and depth of PureCircle's proprietary protected intellectual property considerably; not just for the existing product portfolio and processes; but also for key future pipeline innovations. ... Our portfolio of Patents at the end of FY2011 stands at more than 60 across the world.
The Group's balance sheet is fully capitalized for current plans. The Group's tangible fixed assets of $70m represents production capacity sufficient to support a $300m revenue business and inventories of $96m are sufficient to generate more than $150m of revenues.
Net cash for operating activities was a cash outflow of $18.6m in FY 2011, a $17m improvement on FY 2010. The FY 2011 outflow was principally due to $17m increase in inventories, which peaked at December 2010 and will now reduce systematically.
We think it will be late 2012 or 2013 before the true velocity of sales is fully evident. But the expected opening of the EU and other markets, the strong growth in retail consumption of stevia sweetened products in all open markets and our enhanced customer and product base will each provide stimulus for sales growth. Sales will accelerate further when the Beverage Global Key Accounts need to replenish their inventories.
Our business model is designed for a mass volume natural sweetener market. The investments have been made and we are ready to prosper as sales volumes increase.
AUDITED RESULTS FOR FY ENDED 30 JUNE 2011
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10980370
PureCircle Limited
('PureCircle' or 'the Company')
AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 ('FY 2011')
1. HIGHLIGHTS FOR THE YEAR
Financial Highlights
PureCircle (www.purecircle.com) the world's leading producer and marketer of high purity stevia products, announced its audited results for the financial year to 30 June 2011 (FY 2011) together with audited comparatives for the year ended 30 June FY 2010 (FY2010).
The audited results for FY2011 comprising profit and loss account, balance sheet and cashflow are set out in Appendix 1. A summary of the financials for FY 2011 with FY 2010 comparatives is set out below.
SUMMARY FINANCIALS
USD'000 FY 2011 FY 2010
Sales 53,262 60,773
Gross margin 18,349 24,067
EBITDA 5,232 10,486
Net loss after tax before exceptional costs (3,657) 1,231
Exceptional Costs (14,845) Nil
Net loss after tax (18,502) 1,231
Cash and short term deposits 43,137 63,601
Gross assets 266,719 273,900
Net assets 143,058 158,570
Net assets per share (US Cents) 0.93 1.03
· Sales: In FY 2011 high purity stevia sales were 12% lower than FY2010. Sales were lower than anticipated due to delays in EU approval (now expected in November/December 2011), delays in launch of major Carbonated Soft Drinks (CSD's) (now expected in FY2012) and estimated current inventory at Beverage Global Key Account's (BGKAs).
· Sales Break Down: Mix of sales in FY2011 included sales of three new products that were introduced by the company this year: our new natural sweetener SG95 and two natural flavors NSF01 & NSF02 in the newly formed PureCircle Flavors Division. These three new products contributed 13% of sales in FY2011. We expect these three new products as well as recently announced novel natural sweetener Alpha to increase significantly the diversity of sales in FY2012 and beyond thus further reducing the dependence of sales on any one product.
Reb A contributed 74% of sales in FY2011: of this BGKA's sales were 34% which is 25% lower than in FY2010 largely due to delays in EU approval, launches of major CSD's and high inventory levels as explained above. Reb A sales to all other customers contributed 40% of sales, an increase of over 100% on FY2010.
Co-products were 13% of FY 2011 revenues, which is 73% less than in FY2010 largely due to lower production volumes of Reb A.
FY 2011 $m % FY 2010 $m %
BGKAs 18.1 34% 24.2 40%
Others 21.2 40% 10.1 17%
Total Reb A 39.3 74% 34.3 57%
SG95,NSF01, NSF02 6.9 13% - -
Co-products 7.1 13% 26.4 43%
Total sales 53.3 100% 60.7 100%
· Gross margin: was 34%. This is 6 % points lower than FY2010, mainly due to a $6m lower gain on Biological assets.
· EBITDA: The Group's EBITDA was $5.2m (10%).
· Exceptional costs: : As announced on 17 June 2011, exceptional costs are associated with the decision to slow down Reb A production temporarily to reduce inventory to levels better aligned with the current market usage. Having scaled production across 2009 and 2010 to demonstrate that high purity stevia could be produced in mass market volumes, it was right to slow production in FY 2011. In addition the Group has reconfigured its production capacity to better suit its portfolio of products, now enlarged with the new PureCircle Flavors NSF01 & NSF02 and additional two novel natural sweeteners SG95 and Alpha. The exceptional costs of $14.8m include $11.5m of production costs and attributable overheads that would ordinarily have been charged to inventory and other costs of slowing production. $10.2m of the exceptional costs were non cash costs.
· Cash: the Group ended FY 2011 with cash and short term deposits of $43m, net debt of $71m and cash and bank facility headroom of over $60m. The Group is sufficiently funded for its foreseeable expansion plans.
· Inventories: of $96m are 15% lower than at December 2010 and will further reduce over the coming months as sales velocities increase. 30 June 2011 inventories can convert to more than $150m of sales value.
· All major investments made: we have invested almost $300m building our supply chain and diversified portfolio of products. The capacity and infrastructure is in place to support sales of more than $250m, without significant further investment.
Business developments
· Regulatory: Progress in the key EU and CODEX regulatory bodies mean that it is likely that high purity stevia will have been approved for use in all major remaining markets within the next 12-18 months. In particular EU approval now seems certain before the end of 2011.
· Consumer demand: Nielsen data of products containing stevia sold in USA retail outlets shows consumer purchases increasing by more than 100% in total and purchases increasing across all categories where launches have been made.
· New F&B category launches: First reformulations of big CSD brands using PureCircle's stevia in Australia and Turkey. Test marketing of CSD's in USA and LATAM. Nielsen data indicates that stevia sweetened products were launched into 8 new F&B categories during FY 2011. The new categories included: snacks, drinkable yogurt, energy drink, dessert mix and ice cream.
· Customer base: At 30 June 2011 the Group had over 150 high purity stevia customers, an increase of 50% from 30 June 2010 and from just 25 at 30 June 2009.
· Contract wins: During FY 2011 PureCircle has continued to secure additional contracts with major F&B companies. A feature of FY 2011 has been securing contracts for new natural sweetener SG95 and two natural flavors NSF01 & NSF02 as well as signing Reb A contracts with regional and local customer accounts to complement our strong global customer portfolio.
· PCL product launches: FY 2011 saw an acceleration of product launches to complement Reb A, including SG95 which secured FDA GRAS approval in July 2010.
· Launch of new flavor range: In June 2011we launched PureCircle's range of natural flavor enhancers NSF01 & NSF02. Both have secured USA FEMA approval and are excellent complements to our natural sweetener portfolio.
· Stevia by PureCircle TM Trustmark: The range and depth of customer products licensing the Stevia by PureCircle TM trustmark has increased significantly. From just one product licensing the trust mark in 2010 in one country, the program expanded during FY 2011 to licensing across more than 50 products across seven countries.
· JV setup: Our important steviasugar partnerships with Tereos and Nordzucker were formalized in October 2010 and March 2011 respectively. Both are up and running and ready to accelerate growth when the EU market opens which is expected later in 2011.
· UK business: In the UK we have chosen to go direct to market to service our portfolio of Global Key Accounts in the UK supported by our distribution agreement with Prinova who will service other customers.
· Partnerships: We continue to work closely with our partners Dohler and Firminich on various projects globally to assist our customers with best solutions.
· Supply Chain: Our leaf development continues in Kenya and Paraguay with large hectarage of stevia plantations being cultivated. We have added USA to the list of countries that grow leaf for PureCircle through partnership with S&W. The Company's plans include planting and producing stevia in EU and evaluation of stevia cultivation in various regions is being conducted. After successfully testing large scale production of Reb A, in line with decisions highlighted previously the Group has slowed down Reb A production temporarily to reduce inventory to levels better aligned with the current market usage. Concurrently production facilities have been reconfigured to better suit its portfolio of products, now enlarged with the new PureCircle Flavors NSF01 & NSF02 and additional two novel natural sweeteners SG95 and Alpha.
· R&D: Innovation and development is a fundamental part of the company and we continue our activities in various fields globally. Leaf development continues in our green houses in China, South America and East Africa. A joint project with Michigan State University (MSU) to develop new varieties of stevia for the future production of new novel natural sweeteners is well underway. Our new product development team is based in our Malaysian laboratories and has been instrumental in successfully developing and scaling the production of all new innovations announced recently, they continue to work on many other new products that will be commercialized in due time. Our application and formulation team is based at our Oak Brook IL laboratory and has been key in getting regulatory approvals for new products as well as helping various clients globally to formulate new products using our natural sweeteners and flavors.
· Patents: Our Intellectual Property has increased substantially. Our portfolio of Patents at the end of FY2011 stands at more than 60 across the world.
Commenting on the audited results, the Chairman Paul Selway-Swift said:
"Our FY 2011 results were impacted by the tough but correct decisions we have taken to reduce inventories. But we end FY 2011 with a sound business and with encouraging prospects.
"Our sales will benefit from the growing retail consumption of stevia, the expected opening of the EU market, our increased customer base and our enhanced product portfolio.
"We remain confident about the long term future for stevia."
Enquiries:
PureCircle Limited (www.purecircle.com)
Magomet Malsagov, CEO
+60 1 2388 8049
William Mitchell, CFO
+44 7974 005 163
RFC Corporate Finance (NOMAD)
+61 8 9480 2500
Steve Allen
2. BUSINESS REVIEW
2.1 CHAIRMAN'S STATEMENT
Our FY 2011 results were impacted by the tough but important decisions we have taken to reduce production until inventories are better aligned with current market demand. Having scaled production across 2009 and 2010 to demonstrate that high purity stevia could be produced in mass market volumes, it was right to slow production in FY 2011. Our decisions will generate stronger cashflow and provide further headroom on our cash and banking facilities.
We end FY 2011 with a sound business platform and encouraging prospects:
- Our customer base continues to expand and to diversify; increasing more than 50% to 159. We have secured as valued clients many of the world's global Food and Beverage companies and during FY 2011 have complemented these with many regional and local accounts;
- Our product portfolio has strengthened and deepened with the approval of SG95 as a complement to Reb A and with launching of our proprietary and new natural flavors portfolio;
- Our innovation pipeline from in-house development has an established track record and the rate of successful launches is increasing;
- Our sales and marketing team is in place and has been strengthened this year with skilled application and formulation support;
- Our stevia-sugar partnerships are developing well ; and
- We have the cash and banking headroom to meet all our forecast requirements.
High purity stevia is still a young market, being less than three years old. Consumer demand is accelerating in all open markets. With more new markets due to open in the next twelve months, notably the EU, consumer demand will increase further. As demand reaches critical mass we will be well placed to lead the industry profitably.
We remain confident of the long term future of stevia: but it remains a mid to long term growth story and there may continue to be some sales and profit volatility along the way.
2.2 CHIEF EXECUTIVE REVIEW
1. OPERATIONS
1.1 Market
PureCircle's market is defined as the consumption of high purity stevia based sweeteners and flavours by the world's Food and Beverage companies. In turn the size of this market is determined by the levels of end consumer demand for products containing high purity stevia. PureCircle's sales growth is determined by the pace of growth in the market and on our direct share of Food and Beverage high purity stevia usage.
FY 2011 has seen important progress in these long term performance indicators:
· Stevia continues to secure further regulatory approvals that open up additional markets.
· Consumer demand for products using high purity stevia, as measured by Nielsen data from USA retail stores, is accelerating at more than 100% per year.
· The number and range of Food and Beverage products using high purity stevia has expanded in all open markets.
· PureCircle continues to expand its customer base, with particular momentum made in FY 2011 in securing regional customers to complement our portfolio of global clients.
· The level and frequency of "regular" repeat orders from customers is increasing.
In addition increased volatility in commodity prices for sugar and corn continue to strengthen the long term rationale for stevia to be used as a cost effective component of the mass volume natural sweetener market.
However, when compared to the long term opportunity for high purity stevia, the current market is still small and in a development phase with the consequent implications for sales demand and volatility.
Regulatory
During FY 2011 regulatory approval progressed in all markets that have yet to approve the use of high purity stevia as an ingredient. In particular:
· EU approval which was originally expected early 2011 is now expected in late 2011 following technical approval by EFSA and an approval recommendation by the EU standing committee on food additives. PureCircle was directly involved with EU regulators in securing this very important approval.
· Saudi Arabia approval granted in April 2011 opened up a large Middle Eastern market. This approval was obtained in close collaboration with our partners.
· The issuing of CODEX usage recommendations opens the way for other remaining markets, such as Indonesia and the Philippines, to approve the use of stevia. PureCircle was directly involved in this process working closely with the Malaysian government.
· PureCircle and TCCC have made joint application to FSSAI (Food Safety and Standard Authority of India) to seek approval for high purity stevia and this is expected during calendar 2012.
During FY 2011 PureCircle successfully secured approval for its new innovations in USA. During FY2011 USA FDA gave GRAS approval for PureCircle's SG95 product and USA FEMA gave approval for PureCircle's new natural flavor products.
Growing consumer demand
Actual retail consumption of high purity stevia is growing in all markets that are open. Nielsen data from USA retailers indicates that 2010 consumption in the USA was 146 tonnes (2009 64 - an increase of 128%). By 31 March 2011 the annualized consumption rate had increased further to 195 tonnes. In retail USDollar terms for the Food and Beverage products containing stevia, annualized sales for the quarter to 31 March 2011 were running at $1.1bn, up from $459m a year earlier.
Although similar detailed retail data is not available for other markets, individual product case studies indicate that retail consumption of high purity stevia is growing in all other markets: for example beverage launches in Mexico and Argentina, table top launches in France and an array of launches in China and Australia are growing sales.
PureCircle estimates that the global consumption of high purity stevia for 2010 was about 195 tonnes (2009 85 tonnes, an increase of 129%). The annualized global consumption rate is estimated to have increased to 260 tonnes by 31 March 2011.
As actual demand is increasing, so is consumer awareness of stevia. In all markets where surveys have been carried out, consumer awareness is higher now than it was a year ago. For example in the USA consumer awareness has increased from 43% to 62%: and similar trends are evident in Mexico and France.
Stevia is being used in more categories and products
Food and Beverage usage of high purity stevia is widening into more categories and a larger number of individual products. Further this trend is evident in all open countries. For example, in the USA, at the end of 2009 just three product categories had annualized retail sales of stevia ingredient products of more than $10m. By the end of 2010 there were 10 such product categories. In 2009 PureCircle sold directly into 3 categories: by the end of 2010 this had increased to 13 categories.
Higher commodity sweetener prices
FY2011 has seen a tightening of supply against demand for sugar in all major markets. This has resulted in higher input prices for Food and Beverage users, even allowing for hedges and forward contracts. Market feedback suggests that higher prices may be a feature of the medium and longer term. If so, then this will help the further adoption of high purity stevia.
1.2 Sales
Sales: In FY 2011 our high purity stevia sales were $53.2m; $7m lower than FY2010. The sales were lower than anticipated due to the delay in EU approval (now expected in November/December 2011), delays in launch of major Carbonated Soft Drinks (CSD's) with stevia (now expected in FY2012) and estimated current inventory at Beverage Global Key Account's (BGKAs). PureCircle has been diligently working with EU regulators and BGKAs to accelerate the EU approval and to assist GKAs with their launch plans. We believe these delays are related more to phasing issues than to fundamental problems and therefore it is just a matter of time before we see required approval and major launches fall into place.
Sales Break Down: Our mix of sales in FY2011 included sales of three new products that were introduced by the company this year: our new natural sweetener SG95 and two natural flavors NSF01 & NSF02 in the newly formed PureCircle Flavors Division. These three new products contributed 13% of sales in FY2011. We expect these three new products as well as recently announced novel natural sweetener Alpha to increase significantly the diversity of sales in FY2012 and beyond thus further reducing the dependence of sales on any one product.
Reb A contributed 74% of sales in FY2011: of this beverage GKA's sales were 34% which is 22% lower than in FY2010 largely due to delays in EU approval, launches of major CSD's and high inventory levels as explained above. Reb A sales to all other customers contributed 40% of revenues, an increase of 109% over FY2010.
Co-products were 13% of FY 2011 revenues, which is 73% less than in FY2010 largely due to lower production volumes of Reb A.
During FY 2011 PureCircle has secured new customers in all markets and retained the diversified customer base established in FY 2010. We ended FY 2011 with more than 150 customers globally, up from 100 at 30 June 2010 and just 25 at 30 June 2009. In the USA we increased our customer base from 49 to 84 separate companies. Excluding sales to strategic beverage accounts, the number of orders placed in the year more than doubled.
Outside the USA FY 2011 saw customer numbers and sales grow more than 100% in Mexico, Argentina, France and China. Reviewing the range of products launched that are using high purity stevia, it is clear that PureCircle continues to secure the major share of market.
1.3 Products, new products and application support
In FY 2011 Reb A provided the core of our sales revenues. Customer usage of Reb A increased in all markets compared to FY 2010. Usage is expected to increase further in FY 2012, particularly with the expected opening of the EU market. We also expect beverage GKA's to significantly reduce their current Reb A inventories and to increase their purchases from us during calendar 2012.
During FY 2011 we extended our product range by adding three new innovations to our portfolio SG95, NSF01 & NSF02. We have USA FDA GRAS clearance for our SG95 natural sweetener product and USA FEMA approval for both our natural flavor products.
SG95 provides customers with a highly cost effective sweetening solution for partial calorie reductions and it complements sugar and High Fructose Corn Syrup ("HFCS") well. With a sweetness equivalent price positioned below that of sugar or HFCS, SG95 is ideally suited for mass volume partially reduced calorie formulations, particularly in lower per capita income geographies.
NSF01- is a FEMA approved natural flavor derived from the stevia plant. NSF-01 can be used across a range of food and beverage categories from carbonated soft drinks to cereal to naturally enhance flavors and sweetness. Customers have used NSF-01 to help reduce calories by up 10% and develop "improved" product claims.
NSF02 is the most recent breakthrough in our natural flavor product range. NSF02 naturally enhances the sweetness of sugar, HFCS and high purity stevia sweeteners, hence enabling calorie reductions to be achieved by up to 25% without any change in the ingredient labeling. Further the bulk of NSF-02 flavor enhancement properties have the added benefit of helping reduce costs associated with higher cost flavors and bulking ingredients such as erythritol in food and beverage formulations.
SG95, NSF01 & NSF02 complement Reb A well. As a portfolio they offer customers a range of natural sweetener and flavour options covering key calorie reduction and price point targets. All three products have been developed by PureCircle using proprietary technology and processes. We have more innovative products in the pipeline.
Our strategy is to provide customers with in-depth and practical hands-on support with their formulation needs. In FY 2011 we have invested to expand our application support capabilities in Oakbrook, Illinois in co-ordination with our Kuala Lumpur based stevia development science team. The range of formulation projects that we are working on, the range of food and beverage categories that they cover and the number of customers we are supporting have all increased during FY 2011.
We complement our in-house application support with a strong roster of formulation partners. During FY 2011 the Dohler Group of Germany integrated our high purity stevia into a large range of innovative formulations. Firmenich of Switzerland is taking the lead in applications using our proprietary NSF02 natural flavor.
PureCircle believes that there is a large market opportunity for high purity stevia in combination with sugar. Further we believe there are real formulation and usage benefits for customers using products developed with steviasucrose technologies rather than "in-house" simple blends. Working with our sugar Joint Venture partners we have made significant product development progress in this area during FY 2011.
1.4 Marketing
Our marketing strategy is to promote the growth of the overall high purity stevia industry and to promote PureCircle as leader within that industry. Building on the foundations established in FY 2010, during FY 2011 we have maintained this strategy and accelerated progress in achieving it.
Global Stevia Institute:
FY2011 was the first full year of operation for The Global Stevia Institute (GSI) (www.globalsteviainstitute.com). The Institute has already established itself as the leading source for credible science based information on stevia. It is in full operation as an impactful platform for health professional, key opinion leader education and media response for the fast growing global stevia industry. In the past year the GSI has reached thousands of stakeholders through webinars that provided professionals with education credit, consumer and health professional surveys, television and print media interviews and conference speaking engagements. The GSI's monthly newsletter, website and social media vehicles extend the Institutes' reach to thousands each month, across multiple languages, sharing the latest stevia news from science to regulatory.
The value of the GSI has been clearly recognized by the industry as board members are now regularly called on to speak to health professionals at product launch events and consultant on important industry challenges. Recently the GSI has extended its influence and focus in anticipation of the opening of the European market with important new additions to the board such as Dr. Margaret Ashwell OBE, former science Director for the British Nutrition Foundation.
Stevia PureCircle Trustmark:
Just one year ago PureCircle first introduced its customers to its consumer insight driven licensing program of the Stevia PureCircle trustmark and "We Grow Joy" campaign.
PureCircle recognized early on the positive acceptance of the naturalness of the stevia leaf and the importance of providing consumers information on the integrity of the source of supply of the ingredient.
From just one product licensing the trust mark in 2010 in one country, the program has expanded to licensing across more than 50 products across 7 countries. The trustmark is now being shared with consumers across such leading brands as Silk Light Soy Milk in the United States, Canderel and Beghin Say in France, Equal in Argentina and Go CoCo in Australia. More are planned in the coming year, particularly as new geographies open up.
Market Moving Insights
PureCircle has continued to place the consumer front and center of our strategies, just as our customers do. Building on the foundation of industry leading Mom's study in 2009, we further established PureCircle's ability to partner with our customers through the establishment of the PureCircle Insights Group TM. The group recognizes at its core that consumer insights must be understood locally, but that there is also predictive power in understanding trends from a global perspective as well. In the past year, PureCircle has extended its insights across the United States, Latin America, Asia and throughout Europe. The company is sought by customers and regularly by industry conferences to help Food and Beverage Manufacturers better position their products to the end consumer.
1.5 Sales and Marketing Joint Ventures
Our three sales and marketing joint ventures form an integral part of our go to market strategy and are managed within the overall sales and marketing processes. FY2011 has been a year of progress for each of them.
Natural Sweet Ventures
Our Natural Sweet Ventures (NSV) partnership with Imperial Sugar of the USA launched the Steviacane TM consumer table top product into trial across 300 stores in Texas. Sales have been ahead of internal plans since the trial launched and the product will be rolled out into more regional retails chains across the South East and the South West USA in early FY 2012. Steviacane TM is offered both in "stick" form and in 2lb granulated form, each providing a 2/3rd calorie reduction for the sweetness equivalence.
On the industrial (ie B2B side) NSV has made some important product development breakthroughs, particularly for the liquid steviasucrose market. A patented new product "Duet Master Batch" TM was shown at the important IFT show in New Orleans in June 2011 to strong reviews.
Tereos PureCircle Solutions
Our Tereos PureCircle Solutions (TPCS) partnership with Tereos of France was formed in October 2010. TPCS is our route to market for France, Spain, Italy and southern Europe. Progress in FY 2011 focused on the development and production planning for a core steviasucrose product portfolio and on supporting customers prepare for launches once the EU market opens.
With our partners, TPCS has developed a proprietary Steviasucres TM industrial steviasugar combination that will be launched formally in the fall of 2011. In addition Tereos has launched Ligne Beghin Say as a consumer table-top steviasugar product that is performing well in the French market.
NP Sweet
Our NP Sweet (NPS) Partnership with Nordzucker AG of Germany was formed in March 2011. NPS is our route to market for Germany, Poland, Scandanavia and Northern and Eastern Europe. Progress in FY 2011 has focused on initial customer contacts and supporting their projects ahead of the EU launch later in 2011.
1.6 Production
When the USA market for high purity stevia first opened in January 2009, the annual global supply of high purity stevia was approximately 200 tonnes. At these small levels the global Food and Beverage companies were not able to contemplate using high purity stevia in their larger brands: or indeed to invest time formulating with stevia in their R&D laboratories. It was therefore a strategic imperative for PureCircle to demonstrate that the supply of high purity stevia could be scaled on a sustainable basis.
We demonstrated this successfully across 2009 and 2010 producing more than 900 tonnes in large scale batches with high levels of product quality and consistency. Further we demonstrated that we could produce at rates of thousands of tonnes a year as required. Our production teams and processes have shown that stevia can be scaled on a sustainable basis.
Having had two years of "stress testing" the factories and supply chain successfully, in FY 2011 we decided to cut back production temporarily so as to bring inventory levels more in line with current market demand. During FY 2011 we have therefore scaled back production temporarily. This has been undertaken across our supply chain: from lower volumes of leaf purchase and leaf planting, to reduced extract and Reb A production. This has led to the $15m of exceptional costs described in more detail in the Group Financial review section following. In particular we have charged $11.5m of production costs and attributable overheads to profit and loss account that would ordinarily have been capitalized within inventory and other costs of associated with reducing inventory.
Whilst volumes of Reb A production have been eased back temporarily, the pace of our production innovation has accelerated. During FY 2011 we have configured our factories to be able to produce SG95 NSF01 and NSF02 in scale as well as the core Reb A. We end FY 2011 with our factories configured to produce a highly flexible and profitable product portfolio that supports fully our marketing proposition and customer service requirements across all calorie reduction and price points.
During FY 2011 we have centralized our production management into one team and we are already seeing significant synergies from all the production processes being seen in an integrated manner. We know this gives PureCircle a real point of difference in the industry.
Core to our long term business model is that our variable cost of production reduces over time. During FY 2011 we again made progress with this important performance measure and progress remains on track for our long term objectives.
1.7 Research & Development
During FY 2011 we have accelerated our research and development activities in two key areas:
- Patent filing and intellectual property protection; and
- Development of new products ready to come to market.
Our patent and intellectual property team, led by Professor Varuzhan Abelyan, has successfully filed [70] key patents in the year. These extend the breadth and depth of PureCircle's proprietary protected intellectual property considerably; not just for the existing product portfolio and processes; but also for key future pipeline innovations.
The scope of the registrations completed successfully in FY 2011 confirms again our leadership in this emerging global market.
During FY 2011 our development team, led by Dr Avetik Markosyan, have launched successfully both SG95 and NSF02 including securing USA FDA and FEMA approvals. In addition the pipeline of future development launches has expanded and further important products will come on stream during FY 2012 and future years.
2. Leaf Development
The leaf development activities encompass our leaf operations and supplier partner activities in Africa, the Americas and South East Asia. The focus of our development operations is two fold:
- Firstly to expand the volume and geographical spread of stevia as a global agricultural crop; and
- Secondly to increase the quality of stevia leaf being grown, particularly leaf being grown for PureCircle use.
Our policy is to focus our in-house resources on leaf R&D and propagation activities and to work with supplier partners to develop and secure stable long term supplies of quality leaf.
During FY 2011 the volume of stevia leaf being grown for PureCircle expanded in all the development continents and initial harvests were made for export to PureCircle's production facilities. It is clear that since our IPO in December 2007 the foundations have been put in place for rapid expansion of quality stevia leaf supply when required.
Due to the temporary scaling back of Reb A production, in FY 2011 the Group slowed down the pace of its leaf development expansion. This is a temporary slow-down whilst Reb A inventories are better aligned with current market demand.
During FY 2011 we made sound progress in developing more high yielding strains of stevia leaf. Through a combination of internal resourcing and external (e.g. University) partnerships our pipeline of improved yield strains is expanding.
3. Management
The Group has ambitious long term growth plans. To deliver these we will continue to invest in management with the skills and experience to support and drive all aspects of our growth. The priority during FY 2011 has been sales and marketing personnel including product application, formulation expertise and logistics to support our fast growing diversified customer base. Centred in Oakbrook, Illinois, USA, over the past eighteen months we have built a genuinely global sales and marketing team with coverage across all continents and all major markets.
As part of our temporary cut back in Reb A production we have had to reduce employee numbers, particularly in our factories. But we have ensured all core skills have been retained and we hope to increase production employment again in the near future.
4. Group Financial Review
The Group's financial year runs from 1 July to 30 June. The Group's audited results cover the year from 1 July 2010 to 30 June 2011 ("FY 2011"), with audited comparatives for 1 July 2009 to 30 June 2010 ("FY 2010"). The audited profit and loss account, balance sheet and cashflow are set out in Appendix 1.
Set out below is the Group's Consolidated Income statement for FY 2011 with FY 2010 comparatives.
INCOME STATEMENT
FY11
FY10
Base
Exceptional
Total
USD'000
USD'000
USD'000
USD'000
Revenue
53,262
-
53,262
60,773
Gain/(loss) on biological assets
358
(374)
(16)
6,543
Cost of sales
(40,512)
(8,634)
(49,146)
(45,213)
Economic hedge gain
5,241
-
5,241
1,964
Gross margin
18,349
(9,008)
9,341
24,067
Gross margin %
34%
NA
18%
40%
Other income and expenses
2,972
(4,566)
(1,594)
941
Selling and administrative expenses
(18,085)
(1,271)
(19,356)
(17,402)
Operating (loss)/profit
3,236
(14,845)
(11,609)
7,606
EBITDA
5,232
(14,845)
(9,613)
10,486
Adjusted EBITDA
6,289
(14,471)
(8,182)
5,069
Reconciliation of Adjusted EBITDA to (loss)/profit for the financial year:
Adjusted EBITDA
6,289
(14,471)
(8,182)
5,069
Share based payment expense
(1,415)
-
(1,415)
(1,126)
Gain/(loss) on biological assets
358
(374)
(16)
6,543
EBITDA
5,232
(14,845)
(9,613)
10,486
Finance costs
(7,933)
-
(7,933)
(6,437)
Depreciation and amortization
(5,166)
-
(5,166)
(5,002)
Less: Depreciation not charged to income
3,170
-
3,170
2,122
(Loss)/profit before tax
(4,697))
(14,845)
(19,542)
1,169
Taxation
1,040
-
1,040
62
(Loss) / profit after tax
(3,657)
(14,845)
(18,502)
1,231
Segmental reporting
PureCircle is a single segment business comprising the integrated production and marketing of high purity stevia products.
Revenues
FY 2011 sales at $53m were $7m (12%) below FY 2010. Sales were lower than anticipated due to late EU approval (now expected in November / December 2011), delays in Carbonated Soft Drinks (CSDs) launches (now expected in FY 2012) and estimated current inventory at Beverage Global Key Accounts.
Revenues included sales of three additional new innovations that were introduced during FY 2011: the new natural sweetener SG95 and two natural flavors NSF01 & NSF02 in our new flavor portfolio. These three new products contributed 13% of sales in FY2011. We expect these three new products together with the recently announced novel natural sweetener Alpha to further diversify our sales going forward and hence reduce our dependence on any one product.
Reb A contributed 74% of sales in FY2011, of which beverage GKA's sales were 34% (lower by 25% than sales in FY2010 largely due to delay in EU approval, delayed launch of major CSD's and high beverage customer inventory levels) and non beverage GKA's sales 40% . The non beverage GKA sales represent a 109% increase in revenues compared to FY2010, reflecting growth in the end user market and an enlarged customer base.
Co-product revenues were 74% lower than FY 2010 due to lower production volumes of Reb A.
Exceptional costs
To enable larger Food and Beverage brands to trial formulations with high purity stevia, the Group has been required to prove the scalability and sustainability of its supply chain. This process was undertaken successfully across 2009 and 2010. The significant increases in production in those years resulted in the Group holding inventories in excess of the then market demand.
The exceptional costs reflect the costs associated with the decision to scale back production temporarily so as to reduce inventories to levels that are better aligned with current market usage. The exceptional costs of $14.8m include $11.5m of production costs and attributable overheads that would ordinarily have been charged to inventory and other costs associated with reducing inventory.
Exceptional costs also include $2.1m of costs reconfiguring certain assets to enable production of a more flexible product portfolio.
All costs associated with the slow-down of production have been charged to profit as one off costs. $10.2m of the exceptional costs were non cash costs.
Margins and EBITDA
Economic hedge gain: As a US$ reporting Group, it is the Group's policy is to put US$ denominated long term intercompany loans from the parent company into operating subsidiaries as natural economic hedges against movements in local currency which impact local operating costs when reported in US$. In FY 2011 the Group recorded economic hedge gains of $5.2m which substantially offset higher operational costs due to currency appreciations against the US$ in Malaysia and Paraguay.
Gross margin of $18m was $6m lower than in FY 2010, mainly due to a $6m lower gain on Biological assets, reflecting the temporary slowdown in supply chain expansion.
The Group's EBITDA before one off costs was $5.2m (10% of sales) confirming the robustness of our business model, namely that increased sales volumes should translate to enhanced profitability.
Loss before and after tax
Finance charges increased $1.5m to $7.9m reflecting the Group's higher net indebtedness, which in turn is due to the higher working capital employed across FY2010 and FY2011. The measures taken to reduce inventories better in line with current demand are expected to reduce working capital employed and indebtedness gradually.
The Group's other income of $2m mainly comprises proceeds from an insurance claim relating to prior years.
The Group has recognized deferred tax assets of $1m in FY 2011 (FY2010 $0.1m). The deferred tax asset is lower than the headline rate of tax might suggest due to the tax exemptions enjoyed by the Group in its principal operating regions.
Balance Sheet
The Group's balance sheet is fully capitalized for current plans. The Group's tangible fixed assets of $70m represents production capacity sufficient to support a $300m revenue business and inventories of $96m are sufficient to generate more than $150m of revenues.
Inventories have reduced $16m (15%) from their December 2010 peak and will continue to do so in the coming months. Their reduction is being accelerated by the steps taken in FY 2011. Long term the Group expects inventories to approximate to three months forward sales demand.
The Group ended FY 2011 with cash and short term deposits of $43m, net debt of $71m and headroom on its cash and banking facilities of over $61m. The group's principal bank facilities are seven year facilities with maturity in June 2015. The principal repayments on the main facilities are bullet payments at expiry of the facilities. The $15.5m drawdown facility with expiry in August 2011 has been repaid after the 30 June 2011 year end and substantially refinanced with a new loan prior to signing of the FY 2011 accounts. Net debt is expected to reduce gradually as working capital employed decreases, particularly inventories.
Cashflow
Net cash for operating activities was a cash outflow of $18.6m in FY 2011, a $17m improvement on FY 2010. The FY 2011 outflow was principally due to $17m increase in inventories, which peaked at December 2010 and will now reduce systematically.
Capital expenditure of $6.2m was an $8m reduction from FY 2010. Our FY2011 capex focused on accelerated intellectual property rights activity and configuring our production capacity for the more flexible product portfolio.
Our operating cashoutflow after capex of $25m was a $25m improvement on FY 2010 confirming that all major infrastructure investments have been made. The Group's production footprint is ready to support a $300m sales business.
Cashflows relating to financing in FY 2011 all related to repayments and drawdowns of the Group's revolving credit facilities. These were transacted in FY 2011 with full compliance of all requirements. FY 2010 financing included the equity private placement completed in November 2009.
The Group ended FY 2011 with $43m in cash and short term deposits ($42m net of a committed deposit) and $61m of headroom on its cash and banking facilities. The Group is fully funded for its current plans.
5. Strategic developments
Our long term belief is that stevia will play an integral part in the global natural sweetener industry. As this develops the Group expects to see significant opportunities to consolidate and accelerate our leadership position through partnerships and alliances.
6. Outlook
Whilst our run rate sales continue to increase, they remain modest. Accordingly we remain cautious in the immediate term. Our slowdown in Reb A production will continue into the first half of FY 2012 and so some production costs and attributable overheads will again be charged to profits in 1H FY 2012.
We think it will be late 2012 or 2013 before the true velocity of sales is fully evident. But the expected opening of the EU and other markets, the strong growth in retail consumption of stevia sweetened products in all open markets and our enhanced customer and product base will each provide stimulus for sales growth. Sales will accelerate further when the Beverage Global Key Accounts need to replenish their inventories.
Longer term we remain confident that stevia will emerge as a major global industry. Our business model is designed for a mass volume natural sweetener market. The investments have been made and we are ready to prosper as sales volumes increase.
Paul Selway-Swift Magomet Malsagov
Chairman Chief Executive Officer
APPENDIX 1 - AUDITED PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND CASHFLOW
AUDITED PROFIT AND LOSS ACCOUNT
30.06.2011
30.06.2010
USD'000
USD'000
REVENUE
53,262
60,773
FAIR VALUE (LOSS)/GAIN ON BIOLOGICAL ASSETS
(16)
6,543
COST OF SALES
(49,146)
(45,213)
GROSS PROFIT
4,100
22,103
ADMINISTRATIVE EXPENSES
(19,356)
(17,402)
OTHER INCOME
7,924
2,678
OTHER EXPENSES
(4,566)
-
FINANCE INCOME
289
118
FINANCE COSTS
(7,933)
(6,437)
SHARE OF PROFIT OF ASSOCIATE
-
109
(LOSS)/PROFIT BEFORE TAXATION
(19,542)
1,169
INCOME TAX
1,040
62
(LOSS)/PROFIT FOR THE FINANCIAL YEAR
(18,502)
1,231
OTHER COMPREHENSIVE (LOSS)/INCOME (NET OF TAX)
EXCHANGE DIFFERENCES ARISING ON
TRANSLATION OF FOREIGN OPERATIONS
1,331
(763)
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE FINANCIAL YEAR (NET OF TAX)
(17,171)
468
(LOSS)/PROFIT FOR THE FINANCIAL YEAR ATTRIBUTABLE TO
OWNERS OF THE COMPANY
(18,362)
1,034
NON-CONTROLLING INTEREST
(140)
197
(18,502)
1,231
TOTAL COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO
OWNERS OF THE COMPANY
(17,042)
266
NON-CONTROLLING INTEREST
(129)
202
(17,171)
468
(LOSS)/EARNINGS PER SHARE (US CENTS)
- Basic
(11.93)
0.71
- Diluted
(11.74)
0.71
AUDITED CONSOLIDATED BALANCE SHEET
30.06.2011
30.06.2010
USD'000
USD'000
ASSETS
NON-CURRENT ASSETS
Intangible assets
24,674
21,188
Property, plant and equipment
70,698
69,761
Biological assets
5,229
8,621
Prepaid land lease payments
3,094
3,113
Deferred tax assets
3,573
2,043
107,268
104,726
CURRENT ASSETS
Derivatives financial instrument
-
72
Inventories
96,503
78,892
Trade receivables
14,160
19,990
Other receivables, deposits and prepayments
5,527
6,619
Tax recoverable
124
-
Short-term deposits with licensed banks
11,817
48,032
Cash and bank balances
31,320
15,569
159,451
169,174
TOTAL ASSETS
266,719
273,900
EQUITY AND LIABILITIES
EQUITY
Share capital
15,406
15,358
Share premium
131,620
130,490
Foreign exchange translation reserve
1,584
264
Share option reserve
1,552
994
(Accumulated losses)/retained earnings
(7,772)
10,590
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
142,390
157,696
NON-CONTROLLING INTEREST
668
874
TOTAL EQUITY
143,058
158,570
AUDITED CONSOLIDATED BALANCE SHEET (CONT'D)
30.06.2011
30.06.2010
USD'000
USD'000
NON-CURRENT LIABILITIES
Deferred tax liabilities
1,458
1,216
Long-term borrowings
Deferred income
88,997
612
79,690
969
91,067
81,875
CURRENT LIABILITIES
Trade payables
2,541
4,115
Other payables and accruals
4,581
4,318
Amount due to joint venture partners
423
-
Income tax liabilities
38
811
Short-term borrowings
25,011
24,211
32,594
33,455
TOTAL LIABILITIES
123,661
115,330
TOTAL EQUITY AND LIABILITIES
266,719
273,900
NET ASSETS PER SHARE (USD)
0.93
1.03
CONSOLIDATED CASHFLOW
30.06.2011
30.06.2010
USD'000
USD'000
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit before taxation
(19,542)
1,169
Adjustments for:-
Amortisation of prepaid land lease payments
148
30
Amortisation of deferred income
(76)
-
Depreciation of property, plant and equipment
5,018
4,972
Interest expense
7,933
6,437
Interest income
(289)
(118)
Loss on disposal of plant and equipment
112
631
Share of (income)/loss of an associate
-
(109)
Share based payment expense
1,415
1,126
Intangible assets written off
271
-
Inventories written off
33
256
Plant and equipment written off
2,079
-
Write off of biological assets
1,046
-
Change in fair value of biological asset
16
(6,543)
Unrealised exchange gain
(5,658)
(694)
Operating cash flow before working capital changes
(7,494)
7,157
Increase in inventories
(17,217)
(46,468)
Decrease in biological assets
3,142
-
Decrease in trade and other receivables
12,324
12,810
Increase in trade and other payables
(811)
(1,579)
Increase in restricted cash
(397)
(927)
NET CASH FOR OPERATIONS
(10,453)
(29,007)
Interest received
289
118
Interest paid
(7,933)
(6,437)
Tax paid
(587)
(559)
NET CASH FOR OPERATING ACTIVITIES
(18,684)
(35,885)
CASH FLOWS FOR INVESTING ACTIVITIES
Addition of intangible assets
(2,392)
(4,874)
Addition of property, plant and equipment
(4,098)
(6,836)
Addition of leasehold land
-
(324)
Addition of biological assets
-
(2,078)
Increase in investment in subsidiaries
-
(503)
Proceeds from disposal of property, plant and equipment
308
63
Proceeds from liquidation of an associate
-
157
NET CASH FOR INVESTING ACTIVITIES
(6,182)
(14,395)
BALANCE CARRIED FORWARD
(24,866)
(50,280)
CONSOLIDATED CASHFLOW (CONT'D)
30.06.2011
30.06.2010
USD'000
USD'000
BALANCE BROUGHT FORWARD
(24,866)
(50,280)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share options
-
505
Proceeds from issuance of shares to non-controlling interests
-
80
Drawdown of borrowings
29,800
81,337
Repayment of borrowings
(26,957)
(51,645)
Proceeds from private placement
-
63,882
Repayment of hire purchase
(141)
(82)
NET CASH FROM FINANCING ACTIVITIES
2,702
94,077
Effects of foreign exchange rate changes on
cash and cash equivalents
1,303
(43)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR
62,674
18,920
CASH AND CASH EQUIVALENTS
AT END OF THE FINANCIAL YEAR
41,813
62,674
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