PureCircle Ltd. (PCRTF)

[tykundegex]

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."