Annual Report 2009 · 2015-05-05 · 7 1.2 Our product and market PureCircle is the world’s...
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Annual Report 2009
Transcript of Annual Report 2009 · 2015-05-05 · 7 1.2 Our product and market PureCircle is the world’s...
Annual Report 2009
1
: contents
3. Governance
3.1 Corporate governance report 423.2 Report of the Remuneration Committee 463.3 Directors’ report 483.4 Board of directors 52
4. Independent auditors’ report 56
5. Accounts and notes 58
6. Shareholder information 96
2. Business review
2.1 Chairman’s statement 11 2.2 Chief Executive’s review 182.3 Corporate responsibility 292.4 Group financial review 32
1. Overview
1.1 Vision and strategy 06 1.2 Our product and market 071.3 Highlights for the year 08
2
3
: market share
From selling to 1 customer to more than 25 and in discussion with over 100 potential customers
4
5
6
: 1.Overview
PureCircle is the world’s leading developer and producer of Reb A, the world’s fi rst all-natural high intensity sweetener regarded as a viable complement to sugar in mainstream food and beverage production.
Through our innovative technologies and processes we are able to
extract the highest purity natural sweeteners from plants, enabling our
customers to develop new products and consumers to choose natural
healthier diets.
As leaders in this field, we will strive to continue developing this rapidly
growing global market in partnership with our blue chip customers and
business partners in a transparent and responsible manner.
1.1 Vision and strategy
Our vision is to provide consumers
around the world with a portfolio
of natural and healthy mainstream
food and beverage ingredients
that meet fully their needs for
great tasting and lower calorie
products aligned to their 21st
century lifestyles.
PureCircle is the world’s leading
producer and distributor of Reb A,
the world’s fi rst all-natural high
intensity sweetener regarded as
a viable complement to sugar in
mainstream food and beverage
products. We are a business to
business company that builds
strong and deep relationships with
our customers, who are the leading
food and beverage companies.
Our strategy is to provide
the world’s leading consumer
marketing companies with an
excellent portfolio of natural
and healthy ingredients that
enables them to offer food
and beverage formulations that
more than meet their consumer
needs. We recognise that their
ingredients have to be delivered at
high quality, in high quantity, with
high reliability and be supported
with high ongoing innovation. We
will expand our business in parallel
with the growing level of demand
for Reb A. Through our marketing of
the PureVia™ brand we will further
support consumers’ demand for
healthy and natural mainstream
food and beverage ingredients.
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1.2 Our product and market
PureCircle is the world’s leading producer and distributor of high
purity Reb A, the world’s fi rst all-natural high intensity sweetener
regarded as a viable complement to sugar in mainstream food
and beverage products.
Reb A possesses the following unique combination of characteristics:
• It is 100% natural
• It has zero calories, zero carbohydrates and has a low glycemic index
• It is 200 to 400 times sweeter than sugar on a kilo for kilo basis
• It is pleasant tasting, providing the consumer with a similar taste to sugar
• It has a high level of stability at extreme temperatures, making it suitable for cooking, baking and freezing
Consumers are seeking an ingredient that provides
great tasting sweetness but which also supports
the natural and healthy lifestyle characteristics
being demanded of 21st century food and beverage
products. High purity Reb A is well positioned to
meet the mainstream consumer requirements for a
complementary ingredient to sugar.
As well as looking to address the growing health
concerns of consumers, food and beverage
producers are urgently reviewing their product
formulations in light of the sharp increases in
commodity prices over the last two years.
Reb A is refined from the Stevia rebaudiana plant
(Stevia), which is native to certain regions of
South America, where it is known locally as the
“honey leaf”. During growth sweet glycosides
naturally produced by the plant accumulate in the
leaf. The most commercially important of these
glycosides is Rebaudioside A (“Reb A”).
Extracts from Stevia have been used as forms of
sweetener around the world for many centuries,
without ever becoming mainstream. Historically,
because the extract contains a mixture of different
molecules that vary depending upon climate and
growing conditions, it was impossible to come up
with the clear and consistent specifications of the
product needed to make it a reliable ingredient.
PureCircle has addressed this issue and has
overcome the hurdles associated with developing
a major new ingredient market. Firstly by identifying
the molecule with the best taste profile, Reb A;
and secondly by developing innovative and unique
process technologies to separate and to purify
Reb A to pharmaceutical levels of purity on a reliable
and consistent basis: and, importantly, to do so in
commercially viable volumes.
Reb A therefore enables our customers to develop
new formulation platforms to meet consumer
demands for healthy products.
High purity Reb A is at present the only viable
natural alternative to sugar currently in commercial
development and PureCircle believes it is unique
in its ability to produce Reb A to this purity on a
commercial scale.
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Business developments
• Clear establishment of a NHIS market, the fi rst step
in the development of the long term USD10 billion
complementary with sugar market
• Regulatory clearances during the year in USA,
Switzerland, Russia and Australia. In essence only
the EU and Canada of major markets still to clear.
France’s clearance in September 2009 supports
our opinion that remaining clearances will follow
within 2 years
• All product launches are outperforming their
categories: albeit so far just niche products and
small volumes
• Step change achieved in the planned diversifi cation
of our customer base
• Global sales and marketing organisation established
• Stevia extract capacity quadrupled; believed to be
over 50% of the total industry capacity
• Major USD35 million factory expansion
commissioned within 21 months of project starting
• Leaf supply diversified: leaf now being grown on
three continents for PureCircle
• Group executive management team strengthened
with key international hires; all drawn from relevant
F&B multinationals
• Transformational year of investment: over USD63
million invested in operating assets. As planned,
the investments made have taken Group into
net debt position
• New 5 year banking facilities negotiated May 2009
provide significant funding headroom
1.3 Highlights for the year
PureCircle (www.purecircle.com), the world’s leading producer of Natural
High Intensity Sweeteners (“NHIS”), including Reb A, announced its results
for fi nancial year ended 30 June 2009 (“FY 2009”). All comparatives shown
are for the pro-forma twelve months to 30 June 2008 (“FY 2008”). Results
for the Company’s last audited financial period covering just the six
months to 30 June 2008 are set out in the Group Financial Review section
that follows and the full annual report.
Summary of financials
The audited results for FY 2009 are set out in the
Group Financial Review on page 32. Summary of
financials for FY 2009 with comparatives for FY
2008 follow below:
FY 2009, as expected, was a transformational year for both the NHIS
market and for the Company. We start FY 2010 with a robust platform in
place to continue to lead the future growth of the industry.
Financial highlights
• Sales of 266 MT of Reb A (FY 2008: 115 MT), an
increase of 131%
• Sales of USD60 million (FY 2008: USD34 million),
an increase of 76%
• Net profi t of USD11 million (FY2008: USD2.1
million), an increase of 428%
• Net debt USD48 million (FY 2008: net cash of
USD17 million)
• Net assets of USD95 million (FY 2008: USD82 million)
FY 2009USDm
FY 2008*USDm
Revenue 60.0 34.1
Gross profit 25.6 9.1
Gross profit % 42.6 26.8
Net profit attributable to shareholders
11.2 2.1
Net operating cash flow after capital expenditure
(63.9) (38.8)
Net (debt) / cash (47.5) 16.6
Net assets 95.2 81.7
Note: * Pro-forma comparatives for FY 2008
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Paul Selway–Swift, Chairman of PureCircle, commented:
“This was a transformational year for the NHIS market and for PureCircle.
We have established PureCircle as the world’s leading supplier of NHIS ingredients,
including Reb A. We have world class supply chain infrastructure in place, a global
sales organisation established and an excellent international management team
leading the business.
Importantly over the past year nearly all major global Food & Beverage companies
have engaged with us on how best to exploit the potential of NHIS ingredients for their
businesses. Their strong enthusiasm to develop NHIS is underpinned by a growing
understanding of just how environmentally and socially sustainable a crop stevia is
and the opportunities it offers to both consumers and rural supplier communities.
In the medium term we are confident that this will be a major new global industry.
PureCircle is the undisputed market leader and we are ideally placed for significant
long term growth.
In the short term volume take-up depends on the speed of our customers getting new
products to market. These launches will inevitably be tougher to programme against
the current economic backdrop. Sales growth may therefore be volatile. We are hard
at work supporting our customers on the development of larger volume products
that will trigger use of Reb A in mass market products. We expect the world’s F&B
companies to increase the rate of launches using Reb A during calendar 2010 and
2011. Growing concerns about the levels of consumer obesity, about the safety of
artificial sweeteners and the unpredictability of sugar prices can only support and
encourage the development of the NHIS market in which PureCircle intends to remain
the leader.”
• Strong opening leaf inventories will reduce the FY
2010 working capital inventory requirements
• Strong opportunities sales pipeline in all geographies
• September 2009 French clearance suggests
European momentum increasing
• Significant roll out of new launches and new
categories not expected until calendar 2010
• Strong growth prospects over the next 3-5 years;
the pace of shorter term sales depends on the
rate of new product launches to market
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Bringing you nature’s best
Recycling leaf mulch to biomass for energy generation with residue converted to natural fertilisers and animal feed
Water treatment and recycling
Helping ruralfarming communities
Stevia Farming
Dry Leaves
Water Based Extraction
Processed Stevia
Natural Refining
Packaging & Shipping
Customer Blending
Natural, HealthyConsumer Diets
Developing innovations to get the best out of nature
Encouraging natural healthy diets by supplying high purity Reb A
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: 2. Business review
2.1 Chairman’s statement
This was a transformational year both for the Natural High Intensity
Sweetener (“NHIS”) market and for PureCircle.
• Regulatory: In September 2009 France cleared Rebaudioside A 97%
to join previous clearances in Switzerland, Australia, USA and Russia.
We believe that the remaining key market clearances, including
Europe, should follow within two years.
• Market development: Since FDA clearance there has been a
succession of product launches nationally across the USA. All these
new products are outperforming their categories, albeit the brands
are relatively small at this stage. We end FY 2009 with a NHIS market
clearly established and we are leading it.
• Customer base: We have made progress in building a quality diversifi ed
customer base. We ended FY 2008 selling Reb A to just one customer:
in contrast we ended FY 2009 with meaningful discussions with over
100 across all regions and major F&B categories.
• Sales organisation: Over the year we have moved from a single
location sales force in Kuala Lumpur to a global operation selling from
eight countries across five continents.
• Supply chain scale: We have consolidated and accelerated our
global supply chain leadership. We have completed the expansion
to 4,000 MT capacity of our stevia extraction facility at PureCircle
Jiangxi in southern China.
• Diversified stevia leaf supply: From a single country source supply
in FY 2008, we finish FY 2009 with stevia leaf being grown for us in
seven countries across three continents and in so doing we support a
network of small independent farmers across the world.
Each of these developments is reviewed below and in greater detail in
the Chief Executive’s review.
12
Regulatory
Regulatory clearances are no longer a material
barrier to the development of the NHIS market
or the continued growth of PureCircle. The
highly influential WHO and FDA clearances were
achieved. With USA, Switzerland, Japan and
key Asian and South American countries and
Australia and New Zealand all approved, it is just
the EU and Canada outstanding of the major
markets. Indications are that these will also secure
regulatory clearances within a couple of years. The
September 2009 French clearance is evidence of
the regulatory momentum.
Results
Revenues for FY 2009 were up by 76% to USD60
million, principally Reb A sales where volumes
increased over 150 MT. We were pleased to
welcome PepsiCo and Merisant as new clients.
Operating margins improved to 20% even though
our overall capacity utilisation was only about
30%. We have plenty of room for growth and the
potential to improve margins further as growth
drives economies of scale.
The Company invested over USD65 million in capital
expenditure and working capital to support the
business transformation.
The Group has a robust balance sheet with net
assets of USD94 million (FY 2008: USD82 million).
PureCircle ends FY 2009 with net debt of USD48
million. We have headroom of over USD50 million
on our long term banking facilities which were
increased and extended in May 2009.
While the Company is growing its business the
Board deems working capital to be a priority. The
Board will therefore not be recommending the
payment of a dividend. This policy will be reviewed
in the future in light of the Group’s progress and
funding requirements.
PureCircle’s stevia farm in Paraguay.
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Market development
Major beverage and table top companies have
been swift to launch products, particularly in the
important USA market. All products launched
have been well received by the consumer and are
outperforming their respective categories. These
are still early days but the successes to date
confirm that a NHIS market has undoubtedly
been established.
Importantly over the past year nearly all major
global Food & Beverage companies have engaged
with us on how best to exploit the potential of
NHIS ingredients for their businesses. Their strong
enthusiasm to develop NHIS is underpinned
by a growing understanding of just how
environmentally and socially sustainable a crop
stevia is and the opportunities it offers to both
consumers and rural supplier communities.
Consumer support for NHIS is growing. Tailored
research we have undertaken in FY 2009 shows
clearly the strong widespread support among key
consumer groups, notably mothers, for a Natural
lower calorie sweetener solution. Enthusiasm for
the concept is supported by strong commitments
to purchase once natural lower calorie sweetened
products are available at retail at sustainable
affordable prices.
We are clear that such a proposition can be
delivered and that this strong consumer demand will
underpin the development of a major NHIS industry.
The question now is how fast will it take off?
In the medium term we are confident that this
will be a major new global industry. PureCircle is
the undisputed market leader and we are ideally
placed for significant long term growth.
In the short term volume take up depends on the
speed of our customers getting new products to
market. These launches will inevitably be tougher
to programme against the current economic
backdrop. Sales growth may therefore be volatile.
We are hard at work supporting our customers on
the development of larger volume products that
will trigger use of Reb A in mass market products.
We expect the world’s F&B companies to increase
the rate of launches using Reb A during calendar
2010 and 2011. Growing concerns about the
levels of consumer obesity, about the safety of
artificial sweeteners and the unpredictability of
sugar prices can only support and encourage
the development of the NHIS market in which
PureCircle intends to remain the leader.
Customer base
Our sales strategy is to secure a highly diversified
customer base across all F&B categories
internationally. We made significant progress
towards this goal in FY 2009. From one Reb A
customer at the start of the year we ended in
discussions with more than 100 spread across
all F&B categories. We are doing this from eight
countries in five continents.
We were pleased to welcome PepsiCo and Merisant
as new clients in FY 2009. Many other household
names are in discussions with us and we look
forward to establishing strong relationships with
them all in the future.
14
Supply chain & technology
When the NHIS market really takes off scale and
reliability of supply will be essential. A year ago
there were questions about our ability to scale up
successfully and about whether we could access
sufficient global stevia leaf supply.
The rapid expansion of our extraction factory in
Jiangxi, completed in just 21 months, confirms
that we can scale at pace. And our diversification
of stevia leaf growing across continents has given
confidence that leaf supply can indeed keep pace
with increasing demand.
At the same time, in supporting the small farming
communities we are making a positive impact on
local economies.
Our supply chain is not only the largest in the
industry but it is the only technologically integrated
supply chain in the industry. As customers get more
involved with NHIS ingredients there is growing
understanding of the importance of the integrated
approach. Put simply, we can offer clients a
breadth and depth of stevia based solutions and a
consistency of quality and delivery that competitors
cannot. We shall continue to invest heavily to keep
our technology ahead of the industry.
Board & Management
The management team has been strengthened by
the recruitment of Dorn Wenninger and Arne Lugeon
to the Group Executive team and by the creation
of a global sales and marketing organisation. We
are indebted to the leadership of Chief Executive
Magomet Malsagov whose Review looks in detail at
the developments during the period.
Outlook
FY 2009 has been a transformational year for the
NHIS market and particularly for PureCircle. A global
NHIS market has clearly been established and we
have achieved clear leadership. The next 18 to 24
months will give greater clarity on how fast the large
long term market will grow.
We believe that PureCircle is well placed to lead
the development of the NHIS industry and that our
robust integrated business platform will ensure that
we continue to secure the majority share of market.
I look forward to reporting on further progress.
Paul Selway-Swift
Chairman
15
: extraction & refi ning
China stevia extraction capacity from 1,000 MT to 4,000 MT
Malaysia NHIS refi ning capacity from 1,000 MT to 2,000 MT
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This has been a transformational year for the PureCircle Group
of Companies.
We have led the development of a new global industry.
We started the year as industry leaders. During FY 2009 we
changed all aspects of our business and organisation with the
sole aim of accelerating our leadership of the industry. We end
the year, as planned, at the forefront of the market and the
preferred Natural High Intensity Sweetener (“NHIS”) supplier of
choice for the major Food & Beverage (“F&B”) companies.
The scale of our ambition is significant. To achieve our goals we
will undoubtedly face many challenges. Some will be daunting.
But we are determined to resolve each of them successfully.
In so doing we aim to provide long term quality service to
our clients, fair and sustainable earnings to our supplier
communities, major value for our shareholders, stimulating
careers for our people and to be socially and environmentally
responsible in the communities in which we operate.
2.2 Chief Executive’s review
1. Sales & Marketing
1.1 Global sales & marketing organisation established
We have created a global sales and marketing organisation:
- We now operate from seven offices across five continents including Chicago (USA), Geneva (Switzerland),
Sydney (Australia), Kuala Lumpur (Malaysia), Moscow (Russia), Buenos Aires (Argentina) , Asuncion
(Paraguay) and Guangzhou (China);
- We have recruited top management talent from the best F&B companies including Tate & Lyle, Nestle, Kraft,
Wrigleys, NutraSweet, Firmenich, O’Driscolls;
- We have hired 20 new sales and marketing managers to secure and then service clients in all countries;
- In the USA:
• We have established full national coverage with regional sales in all relevant areas;
• We have put in place a full service team with applications specialists, dedicated customer service and
logistics as well as marketing; and
• We started the year working with an outsourced warehouse and customer service provider. Now all these
key activities are being brought in-house to improve the quality and strengthen our control of service.
- We have put in place quality distributor relations to cover Japan, Eastern Europe and China.
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1.2 Aiming to be supplier of choice
Our policy is for PureCircle to be the supplier of choice
for the Global F&B industry. We will establish our USA
model of full service offer in each region including
application capabilities, local inventories and logistics
and tailored regional marketing support.
1.3 Marketing
- Launch of PureCircle USA: We undertook a successful
launch of our USA business in November 2008 getting
the PureCircle story to over 50 influential specialist
trade journals.
- Ground breaking consumer research: We recruited
a senior marketing executive from Kraft to head
up our USA marketing. In just five months he has
commissioned and delivered a groundbreaking
consumer research project. This has generated hugely
positive reaction from our clients who recognise it as
insightful, helpful to their propositions and thought
leading for industry.
- Overhauled website: We have completely overhauled
our corporate website and introduced another website
with technical information for application teams.
- The industry perspective: We have established
close relationships with key industry news media,
particularly internet and trade journals. Through this
we are recognised as the thought leaders for the
emerging stevia industry and the people to turn to
for comment and perspective when this is breaking
industry news.
- We are actively leading the development of our
wider industry :
• We were keynote speakers at, and principal sponsors of,
the stevia world conference in Shanghai in May 2009;
• We are actively participating in the European Stevia
Association (EUSTAS);
• We have made important contributions to the
dialogue with the sugar industry, including speaking
at a global sugar conference;
• We held a major webinar on the technical
applications and uses of stevia and Rebaudioside
A. This attracted a record audience for any F&B
ingredient webinar; and
• We have established a partnership with Cerilliant
and are working closely with the United States
Pharmacopeia (USP) to help determine and set
independent industry standards and quality testing.
1.4 Application partnerships
We have established an important partnership with
Firmenich, the world’s second largest flavor company, to
promote stevia based sweetener applications across all
F&B categories. With Firmenich we are:
• Developing ranges of category specifi c product solutions
• Making joint client presentations and developing projects
We expect to report some innovative client launches
resulting from our collaboration during calendar year 2010.
Beyond our strong partnership with Firmenich we
remain flexible and able to work with other application
formulators. We are building with these companies a
growing pipeline of potential product launches and
category specialisations for 2010 and beyond.
1.5 Sales pipeline
- Our long term sales policy is to have a highly diversifi ed
customer base.
- We have transformed our sales pipeline in the
last twelve months. A year ago we had just one
Rebaudioside A client, now we have 25 clients, albeit
most are for small trial samples at this stage, and are
actively engaged with over a hundred potential clients
in the USA alone.
- We have substantive discussions with brands and
businesses that are leaders across all F&B categories.
These include:
• Beverage: Carbonated Soft Drinks, powdered drinks,
iced tea, hydration and energy drinks
• Dairy: Yogurt, ice creams, milk shakes
• Confectionary: Gums, candies, chocolates
• Cereal : Across the range
• Sauces: Across the range
• Other food: Biscuits, cakes, soups and others
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2. Refi nery
FY 2009 has been a year of tremendous progress for our
refining operations, based at Enstek, near Kuala Lumpur,
in Malaysia.
2.1 Refi ning capacity
- Run rate: In the fourth quarter we achieved production
equivalent to an annual run rate of 500 MT. This is five
times the level of just two years ago and confirms that
we are scaling at pace.
- Batch technology scaled: We completed the scaling of
our batch technology. This is vital as future expansion
is now based on commercially proven technology. This
puts us years ahead of our industry.
- Bottlenecks removed: With batches scaled, emphasis
switched to removing production bottlenecks. In FY
2009 we invested USD8 million in capital expenditure
to install additional machinery to address this.
- Recycling investment: Investment was also made in
recycling. This will save over USD1 million a year in
running costs and importantly will further enhance
the sustainability footprint of our refinery activities.
1.6 Customer feedback
- The customer feedback we are getting is consistent:
• We have a clear leadership position;
• We are credible as a long term supplier partner;
• Our recruited expertise is the highest quality in
the industry;
• Our scale and security of supply is significantly
ahead of the competition; and
• The investments we are making now to research
beyond Reb A is recognised as demonstrating
PureCircle’s commitment for the long term.
- The challenge will be to deliver consistently high
quality service to our expanding client base.
1.7 Looking forward
- Long term we expect deep momentum to grow.
We expect wide take up across all F&B categories
and all regions.
- The planning and launch lead times for F&B products
are such that it will be calendar years 2010 and 2011
before material new launches occur.
- We have much work to do to grow the world class
customer service and application support facilities that our
clients rightly will expect as this industry develops.
1.8 Overall
- We started FY 2009 with the industry’s leading
contract and the highest sales volumes;
- We have transformed our sales team from a single
office to a global organisation;
- We are well on the way to transforming from single
customer to highly diversified customer base;
- We have confirmed the significance of our unique and
globally scaled supply chain; and
- The challenge going forward will be embedding
PureCircle into our clients as the leading NHIS full
service supplier.
21
2.2 Refi ning organisation
- During FY 2009 we have recruited and trained more
than 100 people into the refining organisation. At
the same time we have introduced extensive new
working practices. These deliver better flows of work
in progress;
- We have reorganised the production shift teams to put
more focus on specialist activities;
- We have designed and implemented automated
loading systems. These eliminate manual intervention
and deliver faster flow;
- The factory is certified ISO 22000, ISO 9000, GMP, Halal
and Kosher. During FY 2009 we have again passed
multiple audits by major international F&B companies
to become certified supplier; and
- Overall we reduced the production cost per kilo of
high purity Reb A in FY 2009 and plans are in place to
do so again in FY 2010.
2.3 Looking forward
- We have purchased the land adjacent to our refinery
at Enstek to allow for expansion of the facility at an
appropriate juncture.
- We recognise the service challenges that face our refi nery
operations moving to a diversifi ed customer base and we
are committed to addressing them ahead of the curve.
2.4 Overall
- Our refi nery started the year as the largest in the industry
both in capacity and actual production run rate;
- During FY 2009 we have accelerated our leadership
and actually increased the pace of our own
acceleration; and
- We remain the only NHIS refinery that can produce
at scale.
3. Stevia Extraction
3.1 Industry leading capacity expansion
- In late April 2009 we commissioned the 3,000 MT
stevia extraction capacity “Line 5” expansion of our
PureCircle Jiangxi extraction facility, taking total
capacity of stevia extraction to 4,000 MT per year;
- The expansion is physically large in that it comprises
a series of buildings and activities altogether covering
20 hectares. These include:
• A major water treatment and recycling plant that
allows us to recycle over 60% of our water directly
and ensures that all of the water used is treated and
returned in clean form;
• A state of the art biogas facility that takes leaf mulch
and converts it into electricity which is supplied
directly into the local grid. This is an environmentally
sound solution to large scale extraction from leaf and
saves money; and
• Large new warehouse capacity on site for improved
leaf storage and tracking.
- Overall our intelligence suggests that the PureCircle
Jiangxi site expansion has the leading environmental
and sustainability footprint in the NHIS industry;
- The “Line 5” expansion is a USD35 million project of
which, in cash terms, USD25 million has been invested
in this year; and
- To meet the expanded capacity we have recruited
and trained 300 employees. The project has included
building hostels for their accommodation.
Refi nery in Enstek near Kuala Lumpur, Malaysia.
22
4. Leaf
4.1 China
- Stronger new management team: Since our last report
we have resolved the historic management issues in
our China leaf business. A new professional organisation
has been installed. We have hired and trained 40 people
under the leadership of Mr Yan Dong Wei, a highly
experienced Chinese agricultural professional.
- Dominant buyer in the 2008 harvest: In the 2008
Chinese harvest (our FY 2009) we were again the
dominant buyer in the market securing well in
excess of 60% share of leaf. Importantly we bought
all the leaf we needed with no supply issues. With
our management team in transition at the time our
strategic partners, Wilmar, provided additional logistics
and buying resource so that operationally we did not
miss a beat.
3.2 Stronger organisation
- We have implemented a new management structure
in PureCircle Jiangxi;
- We have recruited stronger support management for
the extract team; and
- To reflect the changes, we have changed the name of
our facility to PureCircle Jiangxi.
3.3 Looking forward
- We have designed and implemented a suite of
proprietary new technology processes in the Line
5 extract facility. These were only possible due to
the synergies we obtain from a virtually integrated
production and R&D system using our integrated
extraction and refinery production model.
- The new technologies have undoubtedly accelerated
our leadership in the stevia extraction industry and will
provide significant further synergies with our refinery
operations going forward.
3.4 Overall
- We started the year as the largest and most technologically
advanced extract factory in the NHIS industry;
- With major capital investment we have accelerated our
leadership significantly;
- The proprietary technology advances we have
designed will deliver huge benefits in the years
to come both from a cost perspective and from
production flexibility;
- The FY 2009 developments in our extraction business
confirm fully the value of our integrated model; and
- Our pace of expansion at PureCircle Jiangxi confirms
that the NHIS industry can scale at the pace needed to
meet demand.
Li is responsible for the overall operation
of the stevia extraction facility at PCJX
and spearheaded the design and
construction of the Line 5 extract facility.
Mr. Li Shan WangExecutive Director of PureCircle Jiangxi
23
4.2 Kenya
- Growing potential confirmed: FY 2009 was the first full
year of our stevia growing business based in Kericho,
Kenya. During the year we have set up a company
organisation from scratch and put in place the firm
foundations for accelerated growth from FY 2010
onwards. Critically the year has confirmed that stevia
can be grown in Kenya and that good strains of leaf can
produce quality yields in line with our requirements.
- Foundations for growth business put in place: The
important actions completed include:
• Successful environmental and plant cultivation
accreditation with the appropriate Kenyan
governmental authorities (NEMA and KEPHIS);
• The creation of a sizeable quality outgrower farmer
programme. This includes building a comprehensive
information database covering over 7,000 hectares
of potential stevia cultivation. Further we have
negotiated and implemented a tailored third party
micro finance project for our outgrowers to help with
initial working capital needs; and
• 50 direct employees have been recruited and trained
to manage the stevia agricultural research and
outgrower farmer programme.
- Taken full control of the company to accelerate growth:
We have ambitious plans for stevia in the wider East
Africa region and the pace of our growth plans is
different from those of James Finlay Ltd, our partner in
Kenya. Accordingly on 22 September 2009 we bought
out the shares in our Finlay PureCircle Kenya business
that we did not already own. The shares were bought
at cost.
The Kenya operations will be renamed to PureCircle
Kenya. We will move to new offices in Kericho and keep
full access to the employees, managers and network of
outgrowers that we have established in the area.
- Looking forward: With progressive roll outs scheduled
over the coming months we plan to receive initial
Kenya leaf volumes from late FY 2010. Thereafter we
see Kenya stevia expanding rapidly.
- Better placed for 2009 harvest: Since the 2008 harvest
we have invested heavily in improving processes and
infrastructure so that we are even better placed for the
2009 (our FY 2010) harvest.
• We have put in place quality warehousing in key buying
regions to better secure leaf at point of purchase;
• We have significantly expanded propagation and
cuttings distribution of high quality varieties to areas
favourable to our Jiangxi extraction facility;
• We have expanded stevia planting from the traditional
three regions to fi ve;
• Co-operation from and with central and local
government has increased as recognition of our
industry leadership status has grown; and
• We have implemented inventory tagging and
traceability systems to provide the full traceability
throughout our supply chain our major F&B clients
demand. Again this is leading the NHIS industry.
- Looking forward: we will reap major benefits in FY 2010
from steps taken in FY 2009:
• Our improved control in the growing regions,
coupled with increased supply of leaf, are already
resulting in lower levels of leaf impurities for FY 2010;
• Having controlled warehouses and local QC team in
situ is already delivering better negotiating leverage;
• Our investment in propagation units extends the leaf
under our control; and
• Our Jiangxi buying operation provides for further
momentum in this important region.
- Overall:
• We started the year as industry leader;
• We have accelerated that leadership both as
dominant buyer and as leading advances in leaf
technology; and
• We are confident that we can buy what we want for
FY 2010.
One of PureCircle’s stevia farms in China.
24
4.3 Paraguay
- Viable operations set up successfully: FY 2009 was also
the first full year of our operations in Paraguay. We
have built a new organisation from scratch including
the recruitment of 30 employees and the creation of
a major outgrower farmer programme. As with Kenya,
this has been supported by appropriate database and
tailored finance support systems.
- Proprietary plants performing well: As part of the
Paraguay joint venture we secured ownership rights
to certain proprietary stevia leaf strains: (e.g. PC1
and PC4). Commercial scale planting of these high
SteviolGlycoside and high Rebaudioside A varieties
began in FY 2009.
- To better manage the growth and control in Paraguay
we have bought out our partners: Our plans for stevia
expansion in Paraguay and South America are
ambitious. To better manage the pace of growth
we have bought out the shares in PureCircle South
America that we did not already own. Consideration
was USD1.5 million in cash, which broadly equated to
the share of net assets acquired.
4.4 Leaf – rest of world
- PureCircle is leading the expansion and diversification of leaf supply across the world. Planting of stevia leaf for
supply to PureCircle is in progress in Thailand, Vietnam, Indonesia, Colombia and Peru. In addition we are in active
discussions with potential leaf suppliers in a further 10 countries across three continents. Looking forward we are
working with our strategic shareholders Wilmar and Olam on developing stevia plantations in South East Asia.
- Our strategic shareholders Olam are helping us accelerate our stevia expansion, including partnering with us in
Laos. We are exploring further opportunities with them to leverage their significant infrastructure in Africa and
South America.
- At the Board level we are grateful for the active and insightful contributions of Sunny Verghese, the Group
Managing Director and Chief Executive Officer of Olam.
- We are setting up a leaf growers association for PureCircle stevia suppliers whose objectives are to:
• Spread best practice;
• Share leaf technologies; and
• Generally lead the industry.
- To support our expansion we have recruited new management at an executive level, bringing specialist horticulture
expertise and are putting in a new support organisation.
- Looking forward: In the short term we are investing in propagation, tissue culture and other techniques to
accelerate the expansion of quality leaf. We have also kick started a number of longer term leaf projects with
focused research experts.
- Looking forward: With progressive roll outs scheduled
over the coming months, and with significant acreage
available through the outgrower programme, we plan
to receive initial Paraguay leaf volumes from late FY
2010. Thereafter we see South America sourced stevia
expanding rapidly.
Local farmers at work at PureCircle’s stevia farm in Paraguay.
25
- Supporting sustainable rural agricultural communities:
Accelerating levels of urbanisation is a major social and
environmental issue around the world. The development
of sustainable environmentally effi cient cash crops for
rural communities is a primary solution to this issue.
Stevia off ers considerable hope here and PureCircle is
leading the way in making the possibility real;
- Our reviews of Kenya and Paraguay earlier highlighted
the extensive outgrower programmes we have put in
place, supported by tailored micro fi nance facilities; and
- We are also working with charitable organisations to
deliver tailored projects to the communities working
with PureCircle. An early example of this is the Amigos de
las Americas Community Development project in 27 rural
villages of the San Pedro growing regions in Paraguay.
We are actively looking for suitable equivalent projects to
work with our partner communities in Asia and Africa.
4.5 Leaf overall
- Leaf supply in better balance with demand: In our
annual report a year ago we highlighted a number of
potential leaf supply issues. Based on the significant
progress we have made and the overall expansion
in global leaf supply, one year later we believe that
supply is already in better balance with demand.
- Clear global leadership: We started FY 2009 as the
largest purchaser of leaf in China and were again the
dominant buyer in the Chinese 2008 harvest. We end
the year as the clear leader in the global development
of stevia leaf supply.
5. Sustainability
- Stevia – a highly efficient and sustainable plant: Stevia
is highly efficient plant; delivering sugar equivalent
sweetness naturally for no more than one half of the
total land and water resources of sugar;
- To give a wider perspective, stevia is an effi cient crop
versus most other comparable agricultural commodities;
- To put this in context, even when a global mass market,
stevia will require only a small land usage: indicatively
just one million hectares being required;
- PureCircle: committed to a sustainable production model:
During the year we made further improvements to the
sustainability of our production model:
• At our Enstek refinery near Kuala Lumpur, we invested
over USD3 million in recycling capacity; and
• At PureCircle Jiangxi we installed large water
recycling and purification capacity and a leaf mulch
biogas facility to further improve the environmental
footprint of our extraction activities.
- Foundations in place for significant future benefits: Our
progress in FY 2009 has laid strong foundations for
our leaf strategy that will provide significant future
benefits. We are leading the diversification of leaf from
China and leading the quest for quality improvement.
These strategies will improve yields, consistency, costs
and working capital in the years to come.
AMIGOS volunteers at a school in the town of Ita Kuatia, Paraguay.
AMIGOS volunteers in Sao Pedro, Paraguay in the reforestation project.
26
Dr. Abelyan has been instrumental in
designing the technologies used to scale
the production of high purity Reb A
commercially. He is head of our industry
leading R&D team and is responsible
for determining the optimum production
process strategies to support our growth.
Dr. Varuzhan AbelyanCorporate VP, Process Innovation & R&D
6. R&D and Process Innovation
- Science, the technology led product opportunities
and the process innovations it affords have always
underpinned the PureCircle business model.
- Our R&D and process innovation team is led by
Dr. Varuzhan Abelyan who has researched
SteviolGlycosides for over 30 years. He is acknowledged
as one of the leading scientists in the world in this fi eld.
- We have made further significant progress during
FY 2009, particularly in the delivery of major
production synergies in both our extraction and
refining operations, making full use of our integrated
production model. FY 2009 has again confirmed the
advantages we have over the separated extraction and
refining models of the competition.
- During FY 2009 we undertook an extensive series
of meetings with the R&D teams at major clients,
covering over 40 of the top F&B companies. This was
an excellent two way exchange of ideas, and provided
clarification of the challenges and opportunities for
mass adoption of SteviolGlycoside based sweeteners.
- The meetings confirm strongly the direction of our
strategic R&D plans.
- Looking forward:
• We are actively increasing the scientifi c research
projects in progress with leading partners across world.
Our aim is to stay ahead by working with the best;
• We are investing to extend our in house laboratory
capabilities and we are accelerating our application
problem solving capabilities working with partner
applications laboratories.
• We are researching beyond Reb A into the wider
uses of the stevia leaf. We see significant synergies
between SteviolGlycosides;
• The successful research and development of multiple
SteviolGlycoside applications will be a significant
feature of the PureCircle business going forward; and
• We have an active process innovation agenda going
forward, focusing on developing further improvements
across our integrated production model.
- Overall:
• We started the year as industry leaders with the
largest and most efficient production model,
underpinned by the industry’s leading R&D team;
• The signifi cant well grounded science value
underpinning our service proposition is now being
better appreciated by our growing client base as it
becomes more familiar with the practical demands and
opportunities of working with SteviolGlycosides; and
• We will continue to invest to accelerate our
leadership in this key area. We are quite clear that it
will provide significant competitive advantages to
PureCircle and our clients for many years to come.
27
7. People & Organisation
- Transformational change in the organisation: During
FY 2009 PureCircle went a long way towards our goal
of creating a multinational company. There are many
statistics that make clear the extent of the change in
our organisation. These include:
• Overall headcount increased by more than 80% from
500 to over 900; and
• Seven languages are spoken within the Company
as a matter of course. They include French, Spanish,
Chinese, Malay, Swahili, Russian and English.
- Senior management organisation implemented: During
FY 2009 we established the global Group Executive
team. This comprises seven Executives drawn from five
nationalities reporting into the Group CEO.
- Our senior manager team has been strengthened
and in filled with over 30 new direct reportees to the
Group Executive. Main areas of recruitment have been
the new global sales and marketing team and an
entirely new leaf buying organisation.
- People are key: we have invested heavily to get the best:
Successful growth is not just about numbers of
people, but it is about the Quality of the recruits. We
have invested heavily to ensure PureCircle attracts and
then retains the best:
• On the recruitment front during FY 2009 we spent
almost USD1 million in search fees, principally
towards the hiring of our Group Executive and senior
sales & marketing teams; but also in strengthening
our supply chain organization;
• We have successfully secured senior management
from the top companies. People who joined
PureCircle in FY 2009 have come from a blue chip
list of the F&B world. Companies include Tate & Lyle,
Kraft, Nestle, Firmenich, Tetley Tea, NutraSweet to
name but a few; and
• Our recruitment has secured a wide breadth of skills
including ingredient sales, marketing, applications,
research, agronomists, plant breeding, engineers,
refining, finance, logistics, production line, Human
Resources, Information Technology.
- Major progress implementing best management and
retention practices: Our ambition is to build a large world
class business. Retaining, managing and developing
the best management is core to this. During FY 2009
we implemented a suite of initiatives that will provide a
strong foundation to support this objective:
• We have designed and implemented Business Unit
based delegated authorities and accountability
tailored for each key activity and geographic region
of the Group;
• We have designed and implemented a suite of key
management reports covering:
- Key Performance Indicators aligned with overall
Corporate objectives
- Daily, weekly, monthly reporting
- Historic, current and forecasting time horizons
• Our vision for the organisation and reporting is to
secure the best combination of an entrepreneur
style fl at management structure and pace of decision
making together with the best of “blue chip”
corporate disciplines;
• We have implemented tailored performance based
management systems linked to short and long term
incentivisation. A global Short Term Incentivisation
(STI) scheme and a Long Term Incentive Plan were up
and running across FY 2009 for the first time; and
• The foundations and operating principles for
systemic training programmes are in the process of
being designed for rapid ongoing implementation.
These include Health & Safety, “How PureCircle does
business” and, most importantly, training to embed a
strong customer service culture across the Group.
28
8. Outlook
Over the medium term we are highly confident that
the NHIS market will develop into a truly mass market
industry. Our confidence is supported both by ever
accelerating macro trends, such as the need to address
obesity, by systemic trends in consumer behavior,
such as the desire to be in control of their diet, and
by the feedback we are getting from the major F&B
companies in all regions of the world.
In the short term the NHIS industry is dependent upon
getting new products launched into the consumer
market. Whilst we see a growing pipeline of such
launches, we believe it will be calendar 2010 and 2011
before the real step changes in activity occur.
We are determined to be ready and to have stayed
well ahead of the industry as the step changes
unfold. I believe we have made excellent progress
on all fronts over the past year. Whilst I am clear that
there is a great deal still to do and further challenges
to overcome, I look forward to reporting on further
successful progress towards our goals in the future.
Magomet Malsagov
Chief Executive Officer
- Overall:
• FY 2009 was a transformational year for our people
and for our organisation. We are building a genuine
multinational company, albeit one that is relatively
small today; and
• We have ambitions to grow into a large multinational
and to do so we know we must build on firm
foundations.
- Looking forward: Much still to do
- Whilst we made significant progress in FY 2009,
the work is not completed by any stretch of
the imagination and the challenges ahead are
considerable. We are clear on the agenda ahead:
• We need to invest further in skills and resources to
stay ahead of the exponential growth in the customer
service demands of our growing client base;
• Our information management systems need
automating and upgrading; and
• We need to invest further in building a strong
PureCircle culture to help bind the many different
activities and people together effectively. At the
heart of our culture is a shared desire to build a true
world leader in the fast growth natural sweetener
industry, underpinned by excellent customer service
in everything we do.
29
2.3 Corporate responsibility
PureCircle Limited endeavours to minimize the impact and to
maximise the social, economic and environmental benefits of its
operations beyond compliance with minimum legal requirements.
To that end, we have a five stage strategy in place, aimed at:
• Encouraging natural and healthy consumption
• Injecting more money into rural farming communities
• Treating the environment with respect
• Continually looking to get the best out of nature
• Ensuring commercial viability and sustainability
Encouraging natural and healthy consumption
A fundamental part of our mission is to encourage healthier diets around the world through the supply of
natural food and ingredients to the global food and beverage industry.
PureCircle is the world’s leading producer and distributor of Reb A, the world’s first all-natural high intensity
sweetener regarded as a viable complement to sugar in mainstream food and beverage products. Reb A
provides consumers with various healthy benefits including having no caloric content and a low glycemic
index, making it suitable for consumption by anyone seeking to reduce their sugar intake and also by diabetics.
High purity Reb A is an entirely natural product with a similar taste profile to sugar, yet it is between 200-400
times sweeter than sugar on a kilo for kilo basis and has zero calories.
Furthermore, it is both heat and pH stable which makes it suitable for a wide variety of applications as a
sugar complement. It therefore provides global food and beverage companies with an ideal platform for the
development of new products aimed at health conscious consumers, which represent a rapidly growing
segment of the market.
High purity Reb A can be used as a viable natural alternative to sugar, high fructose corn syrup and
artificial high intensity sweeteners (such as aspartame and sucralose) which are widely used in food and
beverages today.
Products launched by our customers that are sweetened with PureVia™ Reb A will therefore not only help
diabetics but also people who wish to reduce their calorific intake. As a natural alternative to sugar, it is also
kind to teeth and will also help to prevent tooth decay.
30
Treating the environment with respect
PureCircle’s products are based only on natural
ingredients and are strictly controlled in terms of
ownership of the supply chain from cultivation
through to distribution. No genetically modified
plants are used in the production of PureCircle’s
range of sweeteners.
Stevia is a renewable crop with minimal
environmental impact. We insist that farmers do
not use pesticides in the cultivation and care of
the stevia plants. The extraction of high purity
Reb A from stevia leaf is an entirely natural
process and does not in any way alter the product
that nature has provided in the leaf of the plant.
To produce stevia extract in scale for the mass
market requires the efficient environmental
treatment of biomass and waste water. PureCircle
has invested over USD35 million expanding
and upgrading its extraction facility, including
implementing world leading waste processes.
We have built a large scale waste water recycling
and treatment plant that ensures both that a high
percentage of water is re-used and that all water
is returned to nature at high international levels of
cleanliness. Our new large scale leaf biomass plant
converts biomass to electricity for use in the local
grid. Residual mulch is used as natural fertilisers
and animal feed.
Because refined Reb A is more than 200 times
sweeter than sugar, planting stevia also requires
less to provide the same sweetness when compared
to other crops (sugar cane, sugar beet and corn)
which in turn means a significantly reduced impact
on the environment.
Injecting more money into rural farming communities
Stevia is an attractive crop for rural farming
communities being both easy to grow and able to offer
an attractive economic return. Stevia plants grow in
any warm climate where there are large temperature
variations throughout the day. It is a hardy crop,
requiring little water and has few natural pests.
There are more than 100 types of stevia, all of
which produce glycosides of different concentration.
Successful commercialisation requires development of
plantations with high yield varieties, those with a leaf
glycoside content of 10-12%.
Stevia plants offer rapid turnaround in terms
of harvest. Stevia does produce seeds, but only a
small percentage of them germinate. Planting stevia
seedlings produced through selection techniques is
a more effective method of cultivation. Cuttings can
be planted and harvested within three-six months
providing potential for more than two harvests per
annum. Provided you have access to cuttings and
land in which to plant them, stevia farming can be up
and running in six months.
The plant’s growth cycle varies, but in China where
over 80% of the world’s stevia production is sourced,
it is planted in March with its fi rst harvest in July and
a second in September. Leaves must be harvested
before the plant fl owers. After harvesting the plants’
roots are taken up and stored for the next season.
On average, one hectare of land given to Stevia
produces 3 – 4 MT of dried stevia leaf, and 10 – 14
MT of leaf are required to produce 1 MT of raw stevia
extract. At current market rates, farmers receive much
higher revenue than for other cash crops.
Furthermore, outside of the stevia growing season,
the land can be returned to growing staple crops such
as rice, providing farmers with an additional source of
food and income.
Cultivating stevia can therefore provide a real
economic boost to rural farming communities.
31
Continually looking to get the best out of nature
PureCircle is pioneering the extraction of natural
goodness from plants and has invested in innovative
technology, plantations and a fully integrated vertical
supply chain to bring its first products, natural
high intensity sweeteners based on highly purified
extracts of stevia, to market.
For many years, food and beverage manufacturers
have been researching alternatives to sugar,
both in response to consumer demand for low
calorie products and as a direct replacement for
an increasingly expensive commodity. Until the
launch of PureVia™ Reb A, the only commercially
available high intensity sweeteners were artifi cial
sweeteners such as aspartame, saccharin and
sucralose which, although widely used, no longer gel
with consumers seeking natural food and beverages.
High purity Reb A has been called the ‘Holy Grail
of sweeteners’ because it is the only commercially
viable, natural complement to sugar sweetener.
Ensuring commercial viability and sustainability
Through its subsidiary, PureCircle Jiangxi, the
Group encourages stevia cultivation across five
Chinese provinces: namely Jiangxi, Anhui, Jiangsu,
Hubei and Heilongjiang. This spread of provinces is
deliberate and mitigates the risk of localised natural
disasters such as flooding or crop failure in a
single area. In total, the Group receives sustainable
output the output from around 60,000 farmers and
15,000 hectares of stevia farming.
PureCircle is actively developing stevia plantations
across seven countries in three continents to cater
for the increased demand of high purity Reb A.
Stevia is now grown for PureCircle in Kenya,
Paraguay as well as Thailand, Vietnam, Indonesia,
Colombia and Peru. PureCircle’s commitment in
expanding its stevia leaf supply is evident from its
work with Wilmar in South East Asia and Olam in
Laos. Proprietary research initiatives continue into
increasing the plant yield of Reb A through selective
breeding of high yield varieties, plant propagation
techniques and improved plantation practices.
PureCircle does not work with any genetically
modified (GMO) stevia leaf.
As part of its rural sustainability activities,
PureCircle works with Amigos de las Americas,
an international, volunteer based, charitable
organisation (NGO) that provides leadership and
community service opportunities for teenagers and
young adults while concurrently contributing to the
well being of hundreds of communities throughout
the Americas. In 2009, more than 700 amigos
volunteers served in 7 Latin American countries,
working alongside local youth, host communities
and partner agencies.
Purification of Reb A from raw stevia extract is
done in PureCircle’s state-of-the-art refining plant
in Malaysia. Proprietary NATURAL crystallisation
and separation technology is used to separate
the constituent glycoside molecules present in the
crude extract and isolate pure Reb A in high purity.
High purity Reb A comprises about 50% of crude
extract. The balance is ‘co-product’ which is treated
with proprietary technology and turned into SWETA
and other glycosides. The entire process is therefore
very low in waste. The ability to derive commercial
value from the entirety of the crude stevia extract
is important to production economics and provides
the Group with a robust business model.
We are committed to the highest standards in
manufacture and our Malaysia refinery is compliant
with relevant major international standards including
ISO 22000:2005 (food safety management system);
ISO9001:2000 (quality management system); CGMP
(Current Good Manufacturing Practices – to certify
compliance with the Australian Code of Good
Manufacturing Practice for Medical Products) and
HACCP (Hazards Analysis Critical Control Point
system for safe production of food products).
32
2.4 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 2008 to 30 June 2009 (“FY 2009”). To assist the better understanding of the Group’s performance
compared to prior periods, for illustrative purposes only, we are providing pro-forma consolidated income
statements for the twelve months to 30 June 2008 (“FY 2008”) as well as the audited actual results for the
six months 1 January to 30 June 2008.
Consolidated Income Statements
AuditedFY 2009
USD’000
Pro-Forma1
FY 2008USD’000
(restated)
Auditedfrom 01.01.2008
to 30.06.2008 USD’000
(restated)
Revenue 60,023 34,132 19,674
Cost of sales (34,431) (24,970) (15,058)
Gross profi t 25,592 9,162 4,616
Other income 792 4,486 3,201
26,384 13,648 7,817
Administrative expenses (14,548) (6,903) (5,691)
Finance costs (net of foreign exchange) (414) (4,435) (996)
Profi t before taxation 11,422 2,310 1,130
Income tax (expense) / credit (352) 789 -
Profi t after taxation 11,070 3,099 1,130
Attributable to:
Equity holders of the company 11,203 2,080 860
Minority interests (133) 1,019 270
11,070 3,099 1,130
Earnings per share (US cents)
- Basic 8.49 1.60 0.66
- Diluted 8.42 1.60 0.66
1 The Group adopted US Dollar as its functional currency effective 1 July 2007. Under IAS 21, the comparative audited financial information, i.e. the period to 30 June 2008 has been restated. No material adjustments resulted from the restatement.
33
30.06.2009 USD’000
30.06.2008 USD’000
(restated)
Assets
Non-Current Assets
Investment in an associate 48 126
Intangible assets 14,018 7,987
Property, plant and equipment 64,968 31,932
Prepaid land lease payments 2,776 2,265
81,810 42,310
Current Assets
Inventories 31,452 9,582
Trade receivables 27,173 7,430
Other receivables, deposits and prepayments 11,020 7,642
Amount owing by related parties - 1,433
Short-term deposits with licensed banks 14,710 13,563
Cash and bank balances 4,210 30,888
88,565 70,538
Total Assets 170,375 112,848
Equity And Liabilities
Equity
Share capital 13,272 13,272
Share premium 66,353 64,104
Treasury shares * *
Foreign exchange translation reserve 1,032 1,439
Share option reserve 1,704 480
Retained profi t 12,276 1,073
Shareholders’ Equity 94,637 80,368
Minority Interests 600 1,381
Total Equity 95,237 81,749
Note: *-represents less than USD1.00
Consolidated Balance Sheets
34
Consolidated Balance Sheets continue
30.06.2009 USD’000
30.06.2008 USD’000
(restated)
Non-Current Liability
Long-term borrowings 40,008 11,888
40,008 11,888
Current Liabilities
Trade payables 2,945 1,186
Other payables and accruals 5,766 2,029
Short-term borrowings 26,419 15,608
Bank overdraft - 388
35,130 19,211
Total Liabilities 75,138 31,099
Total Equity And Liabilities 170,375 112,848
Net Assets Per Share (USD) 0.71 0.61
35
Consolidated Cash Flow Statements
The Group
From 01.07.2008 to 30.06.2009
USD’000
From 01.01.2008 to 30.06.2008
USD’000 (restated)
Cash fl ows (for) / from operating activities
Profi t for the fi nancial year / period 11,422 1,130
Adjustments for:
Amortisation of intellectual property rights (117) 38
Amortisation of prepaid land lease payments 25 20
Depreciation of property, plant and equipment 2,453 953
Excess of Group’s interest in the net fair value of acquiree’s identifi able assets, liabilities and contingent liabilities over cost of acquisition - (1,971)
Gain on disposal of property, plant and equipment (21) -
Interest expense 3,854 1,039
Interest income (322) (600)
Share of loss of an associate 78 19
Share option reserve 1,224 480
Waiver of debts (319) -
Operating cash fl ow before working capital changes 18,277 1,108
(Increase) / Decrease in inventories (21,862) 4,667
Increase in trade and other receivables (22,638) (2,862)
Increase in trade and other payables 4,801 969
Net cash (for) / from operations (21,422) 3,882
Interest received 322 600
Interest paid (3,854) (1,039)
Tax paid (352) -
Net cash (for) / from operating activities (25,306) 3,443
Cash fl ows for investing activities
Acquisition of intangible assets (2,672) (373)
Acquisition of leasehold land (514) (716)
Increase in investment in subsidiaries (2,965) -
Acquisition of property, plant and equipment (32,438) (6,343)
Net cash for investing activities (38,589) (7,432)
Balance carried forward (63,895) (3,989)
36
Consolidated Cash Flow Statement continue
The Group
From 01.07.2008 to 30.06.2009
USD’000
From 01.01.2008 to 30.06.2008
USD’000 (restated)
Balance brought forward (63,895) (3,989)
Cash fl ows from fi nancing activities
Proceeds from disposal of treasury shares 1,598 120
Proceeds from issuance of shares to minority interest 1,500 -
Net drawdown of borrowings 35,711 3,685
Net movement of hire purchase (99) (35)
Net cash from fi nancing activities 38,710 3,770
Effects of foreign exchange rate changes on cash and cash equivalents
42 538
Cash and cash equivalents at beginning of the fi nancial year / period
44,063 43,744
Cash and cash equivalents at end of the fi nancial year / period
18,920 44,063
Net (debt) / cash at end of fi nancial year / period (47,507) (16,567)
37
Revenues
Revenues for FY 2009 were up 76% to USD60 million
reflecting increased production and sales of our
portfolio of natural sweeteners. Sales of high purity Reb
A increased in volume terms from 115 to 266 MT and
contributed just over 80% of total revenue.
In our trading update of 8 July 2009 we announced that
sales for FY 2009 would be not less than USD62 million.
Our more detailed subsequent reviews of FY 2009 cut off
highlighted that some USD2 million of revenues were
more appropriately recognized as FY 2010 transactions
and so we have reported the lower value for FY 2009.
Margins
Gross margins of 43% were 16 percentage points
higher than 27% achieved in FY 2008, reflecting the
improved utilisation of available production capacity.
However we have plenty of additional capacity and
the potential to improve margins further as growth
drives economies of scale.
Other income
In a series of transactions since December 2006
the Group has taken control of its stevia extraction
production subsidiary PureCircle Jiangxi (“PCJX”). During
FY 2009 the Group increased its holding in PCJX further
to 98.05% from 95% at 30 June 2008.
In FY 2008 the Group received other income of USD4.5
million. This represented royalty income for Intellectual
Property used by PCJX and negative goodwill on the
acquisition of shares in PCJX during FY 2008. There was
no equivalent income earned in FY 2009.
The FY 2009 other income represents development
grants awarded to PureCircle in a number of countries
across the world, principally to support our stevia
plantation initiatives.
Management and administration expenses
The Group’s selling and management expenses
increased by USD7.6 million (111%) to USD14.5 million.
This reflected the major investments made into our
global organisation, notably establishing seven offices
in five continents and recruiting a quality global sales
and marketing organisation. The full year effect of the
investments made is estimated at over USD10 million.
38
Net profit attributable to shareholders
The Group’s net profit attributable to shareholders improved USD9.1 million (428%) to USD11.2 million from USD2.1
million. The strong growth in sales, coupled with stronger margins and increasing benefits of our integrated
production model have all contributed to the improvement. The increased profitability is after investing heavily in
building our global sales, marketing and supply chain organisation.
Finance costs totalled USD3.4 million, an increase of USD2.4 million over FY 2008 due to the Group’s larger stevia
leaf purchases and other investments which increased the average debt balances across FY 2009.
The finance costs were substantially offset by USD3 million foreign exchange gains.
Cashflow and balance sheet
During FY 2009 the Group invested USD64 million in capital expenditure, higher leaf inventories and related working
capital to support growth. This transformational level of investment resulted in the Group moving from net cash of
USD17 million at 30 June 2008 to net debt of USD47 million at 30 June 2009.
The major capital expenditure project was the expansion of extraction capacity at PCJX. This is a USD35 million project,
of which USD25 million cash was expended in FY 2009, with the balance in FY 2010.
At 30 June 2009 the Group has net assets of USD95 million (FY 2008: USD82 million).
William Mitchell
Chief Financial Officer
39
: leaf supply
Diversifi ed sources of stevia leaves in 7 countries across 3 continents
40
41
42
3.1 Corporate governance report
The Directors of PureCircle regard corporate governance as
vitally important to the success of the Company’s business and
are unreservedly committed to applying the principles necessary
to ensure that good governance is practised in all of its business
dealings in respect of all its stakeholders.
The Board is committed to the principles of good corporate
governance set out in the Combined Code on Corporate
Governance adopted by the Financial Reporting Council in June
2008 (the Code). This report sets out the Company’s compliance
with the Code.
The Board
The Board comprises the Non-Executive Chairman,
three Executive Directors and four other Non-
Executive Directors.
The Non-Executive Directors have a diverse range
of knowledge and commercial experience and serve
the function of bringing objective judgement on the
development, performance and risk management
of the Group through their contributions in board
meetings. With the exception of Sunny Verghese
and John Slosar, the Board considers all the Non-
Executive Directors to be independent.
Statement of Compliance with the Combined Code
During financial year ended 30 June 2009, the Company has complied with the provisions set out in Section
1 of the Combined Code.
Sunny Verghese is the Group Managing Director of
Olam International Limited (“Olam”). Olam through
its 50% owned investment vehicle Olam Wilmar
Investment Holdings, holds 20% of equity interest in
the Company.
John Slosar is the Chief Operating Officer of Cathay
Pacific Ltd which is partly owned by the Swire
Group. The Swire Group directly and indirectly holds
a total of 8.8% equity interest in the Company.
The roles of the Chairman and Chief Executive are
separate and clearly defined.
: 3. Governance
43
Meeting attendance
Directors’ attendance at Board meetings and Committee meetings during the fi nancial year is shown in the
following table:
BoardAudit
CommitteeNomination Committee
Remuneration Committee
Number of meetings Potential Actual Potential Actual Potential Actual Potential Actual
Paul Selway-Swift 4 4 - - 1 1 4 4
Magomet Malsagov 4 4 - - 1 1 - -
Peter Milsted 4 3 - - - - - -
William Mitchell 4 4 - - - - - -
Olivier Maes 4 4 3 3 1 1 4 4
John Slosar 4 4 3 3 - - 4 4
Peter Lai Hock Meng 4 4 3 3 - - - -
Sunny Verghese* 3 3 - - - - - -
Chairman
Paul Selway-Swift who is the Chairman of PureCircle
Limited also chairs the Nomination Committee.
The Chairman carries responsibility for ensuring the
efficient operation of the Board and its Committees,
for ensuring that corporate governance matters
are addressed, and for representing the Group
externally and communicating with shareholders
when required.
Chief Executive Officer
The CEO, Magomet Malsagov, is responsible for
the Executive management of the Group. He has
responsibility to recommend and to implement the
Group’s strategic objectives.
Independent directors
The Independent Directors are Paul Selway-Swift,
Olivier Maes and Peter Lai Hock Meng. Their
responsibilities include being available to liaise with
shareholders should this be necessary.
The role of the Board
The Board’s principal responsibility is to deliver
shareholder value and provide an overall vision and
leadership for the Group. It also has an oversight role,
monitoring operational plans and ensuring internal
controls and risk management are effective. There is
a formal schedule of matters reserved for the Board,
which provides a framework for it to oversee the
control of the Group’s direction and affairs.
The schedule of matters reserved include the
approval of the financial statements and dividends,
strategy, acquisitions and disposals, major projects,
contracts, delegated authorities, major capital
expenditure, risk management strategies, health
and safety and succession planning. Whilst the
CEO and Executive Directors are responsible for the
overall strategy of the Group, the Board meets at
least once a year to review strategy and the future
of the business. Implementation of the strategy is
delegated by the CEO and Executive Directors to
the Executive management team.
The Directors are satisfied that the Board continues
to deliver a strategic vision and effective leadership
for the Group.
Note: *appointed in October 2008
44
Board processes
The Board is scheduled to meet on a quarterly
basis, and in any event no less than four times
a year. The Board will meet at least once a year
to review the strategic direction of the Group. In
addition to normal scheduled meetings, the Board
will convene as required.
All Directors have access to the advice and services
of the Company Secretary and Directors may,
in furtherance of their duties, seek independent
professional advice at the Company’s expense.
The Company Secretary is responsible for ensuring
that Board procedures and applicable rules and
regulations are followed. The Company Secretary,
in consultation with the Chairman, ensures that the
information presented to the Board is not only timely
but of sufficient quality to enable members to make
an informed decision.
The Chairman and Non-Executive Directors will
meet annually without the Executive Directors
present. In accordance with the Company’s
Bye-Law, one-third of the Board is required to
retire by rotation each year, but if any Director
has, at the start of the AGM, been in office for
three years or more since his last appointment
or re-appointment, he shall retire at the AGM.
In addition, any Director appointed during the
year is subject to election at the AGM after their
appointment. The Non-Executive Directors are
appointed for an initial three-year term after which
they are subject to annual re-appointment.
Board performance and evaluation
The Board is committed to evaluating its own
performance. This is an ongoing process led by the
Chairman and the Independent Directors.
Directors’ induction and training
In order to address the Board’s continuing
professional development, the Board is required to
meet with key senior managers regularly in order to
gain a better understanding of the businesses.
A formal schedule of annual updates on legislative
and regulatory changes with respect to Directors’
duties, listing rules, health and safety and
corporate governance is built into the Board
agenda when required.
Board members are able to attend external courses
where they feel that these will keep them updated or
will improve their effectiveness as a Director.
Board Committees
The Board is assisted in discharging its
responsibilities through the Audit Committee,
Remuneration Committee and Nomination
Committee. The Board Committees were formally
established during the Board meeting in March 2008.
Membership of the Audit and Remuneration
Committees consists wholly of Non-Executive
Directors. Each Committee has a clear defined
terms of reference which are reviewed annually.
The Board is kept fully informed of the decisions of
its Committees and the minutes are circulated with
the Board papers. A summary of the Committees of
the Board and their membership is provided below.
Audit Committee
The Audit Committee is responsible for
making recommendations to the Board on the
appointment and terms of reference of the
auditors and to receive and review reports from
management and the Company’s auditors on the
financial accounts and internal control systems
used throughout the Company. Peter Lai Hock
Meng as chairman, John Slosar and Olivier
Maes are members of the Committee. The Board
believes that members of the Committee have
recent and relevant financial experience.
The external Auditors, the CEO and the CFO will
regularly attend meetings at the invitation of the
Committee. The Audit Committee is scheduled to
meet no less than three times in a calendar year.
During the financial year, three Committee meetings
were held, with one subsequent meeting up to date
of signing of these accounts.
45
Group financial statements
The Audit Committee is responsible for the
integrity of the financial statements and the
Group’s internal controls and risk management
structure. The Committee’s deliberations will
include the following matters:
• the review of the financial results in advance
of their consideration by the Board, paying
particular attention to significant financial reporting
judgements, any changes in accounting policies
and practices and any findings post audit;
• the review of the nature and scope of the external
audit and the findings of the Auditors in respect of
Annual and Interim Reports;
• the review of the Auditors’ independence and the
policy on the provision of non-audit services;
• monitoring the Group’s financial and non-financial
risk and internal controls;
• the review of the effectiveness of the internal
systems with respect to financial control and
Group risk;
• a review of the necessity for an internal audit
function; and
• a review of the means by which employees may
raise concerns regarding the systems of internal
financial control.
Nomination Committee
The Nomination Committee is chaired by Paul
Selway-Swift and its members are the CEO and
Olivier Maes. The Committee is responsible for
reviewing the structure, size, composition and
skills of the Board, presenting suitable candidates
to fill Board vacancies, reviewing succession
planning for the Board and senior managers,
evaluating the time commitment of the Chairman
and Non-Executive Directors, undertaking the
performance evaluation of the Board and reviewing
the reappointment of Non-Executive Directors.
The Committee is responsible for assessing the
composition, diversity and skill set of the Board
and is aware that as the Company grows there
may be a future need to expand the size of the
Board. The Committee will regularly review this
need. There is a robust procedure for selecting
candidates for vacancies. The Committee’s
performance is evaluated as part of the overall
Board evaluation exercise.
One Nomination Committee meeting was held
during the financial year.
Remuneration Committee
The role of the Remuneration Committee is to
review the performance of the Executive Directors
and other senior executives and to set the scale
and structure of their remuneration, including
bonus arrangements, with due regard to the
interest of shareholders. The Remuneration
Committee administers and establishes
performance targets for share incentive schemes
and determine the allocation of share incentives
to employees. The Group is expanding rapidly.
Recruiting and retaining quality employees is an
essential part of our growth strategy.
The Remuneration Committee is chaired by
Olivier Maes. Its other members are Paul
Selway-Swift and John Slosar. The CEO and
CFO attend meetings by invitation.
There were four Remuneration Committee meetings
held during the financial year and one subsequent
prior to the date of signing of these accounts.
Details of the remuneration of each Director are
set out in the Remuneration report.
Internal control and risk management
The Board is responsible for establishing,
reviewing and maintaining the Group’s systems
of internal control and risk management and
ensuring that these systems are effective for
managing the business risk within the Group.
The Group will annually review the effectiveness
of the risk management system and its internal
controls to safeguard shareholders’ investments
and the Group’s assets whilst ensuring that
proper accounting records are maintained.
46
3.2 Report of the Remuneration Committee
The Company has established a Remuneration Committee chaired by Olivier Maes, consisting of Paul Selway-Swift
and John Slosar.
Remuneration policy
The Remuneration Committee sets the overall remuneration policy designed in line with the Company’s long
term business goals. Individual remuneration packages are determined by the Remuneration Committee
within the framework of the following policy.
The Executive Directors’ remuneration packages comprise the following components:
a) Annual salary – the actual salary for each of the Executive Directors is determined by the Remuneration
Committee; these salaries reflect experience and performance of each individual and taking into account
market competitiveness; and
b) Annual incentive payment – the Executive Directors are entitled to annual bonuses related to performance
of the Company and other internal targets. In addition, the grant of share options under the Long Term
Incentive Plan (“LTIP”) is managed by the Remuneration Committee.
The aggregate amount of emoluments received by Directors of the Group and of the Company during the
financial year are as follows:
The Group30.06.2009
USD’000
The Company30.06.2009
USD’000
Executive Directors:
- basic salary 596 414
Non-Executive Directors:
- fee 211 211
The Company and its Shareholders
The Board is committed to a continuing dialogue
with its shareholders.
Following the announcement and presentation of
the year-end results, there are a series of formal
meetings with shareholders. These meetings
are a two-way dialogue whereby the Executive
Directors can apprise the investors of the Group’s
business and future plans and the shareholders
can communicate any concerns they may have.
The Non-Executive Directors and Chairman are
available to attend these meetings if requested.
The Company’s brokers and financial PR advisers
provide feedback from the shareholder and analyst
meetings and present the results to the Board.
The Group’s investor relations section on its website
contains information on the Group’s financial
results, its corporate policies, its press releases and
announcements as well as analysts’ presentations.
The Group holds a series of meeting with institutional
investors whereas the principal method of
communication with private investors are by way of
Annual Report and Accounts, press releases and
announcements, the Annual General Meeting and the
Group’s corporate website (www.purecircle.com).
The Company’s commitment to good communication
with its shareholders is recognized by the AIM’s
Inventors International Company of the Year Award
in 2009.
47
At 1 July 2008
Exercised during the
year
Granted during the
year
At 30 June
2009Exercise
price
Earliest exercise
date
Latest exercise
date Notes
Magomet Malsagov
- Executive share option 30,000 - - 30,000 GBP1.58 16 Apr 2010 16 Apr 2015 1
- Annual 2008 LTIP - - 100,000 100,000 nil 10 Nov 2011 10 Nov 2011 2
30,000 - 100,000 130,000
Peter Milsted
- Executive share option 30,000 - - 30,000 GBP1.58 16 Apr 2010 16 Apr 2015 1
- Annual 2008 LTIP - - 90,000 90,000 nil 10 Nov 2011 10 Nov 2011 2
30,000 - 90,000 120,000
William Mitchell
- Joining awards 600,000 240,000 - 360,000 USD1.00 12 Jun 2009 12 Jun 2013 3
- Conditional awards 96,685 - - 96,685 nil 12 Jun 2009 12 Jun 2011 4
- Conditional awards 193,370 - - 193,370 nil 31 Jan 2010 12 Jun 2011 4
890,055 240,000 - 650,055
Directors’ interests in share options
Directors’ interests in share options of the Company as at 30 June 2009 were as follows:
The Company’s Remuneration Committee is responsible for administering the LTIP, a discretionary benefit
offered by the Company to selected employees, including Executive Directors of its Group. Please refer to
Note 23 Share Option Reserve of the Notes to the Financial Statements.
Note: 1. Granted on 15 April 2008. No performance conditions are attached.
2. Granted on 10 November 2008. These options are subject to performance condition of the average closing share price of at least GBP2.22 per share for 60 consecutive days. Half of the options vest on a sliding scale with 100% vests if share price is above GBP3.88 per share and 0% vests if share price is less than GBP2.22 per share. The balance half of the options vest on a sliding scale with 100% vest if annual turnover is USD150million and 0% vest if annual turnover is less than USD75million.
3. Granted on 2 June 2008. These options are subject to performance condition that each half are exercisable if the average closing share price is at least GBP2.00 and GBP2.50 for 20 consecutive days.
4. Granted on 2 June 2008. These options are subject to the performance condition of the average closing share price of at least GBP4.00 for 20 consecutive days. The options are on a sliding scale with 100% vest if the share price is GBP4.00 per share and 0% vest if the share price is below GBP2.50 per share.
Details of emoluments for the Directors of the Group and of the Group received / receivable for the fi nancial
year in bands of USD100,000 are as follows:
The Group / The Company30.06.2009
Executive Directors Non-Executive Directors
Below USD100,000 1 5
USD100,000 – USD200,000 nil nil
USD200,001 – USD300,000 2 nil
48
3.3 Directors’ Report
The directors hereby submit their report and the audited financial statements of the Group and of the
Company for the financial year ended 30 June 2009.
Principal activities
The Company is principally engaged in the business of investment holding whilst the principal activities of the
rest of the Group are the production and distribution of natural high intensity sweeteners. There have been
no significant changes in the nature of these activities during the financial year.
Business review and future developments
These are covered in detailed in the Chairman’s Statement and Chief Executive’s review.
The Chairman’s Statement on page 11 to 14, the Chief Executive’s review on page 18 to 28 and the Group
Financial Review on page 32 to 38, report the activities during the financial year. The information in these
reports, which are required to fulfil the requirements of the business review, is incorporated in this Directors’
Report by reference.
Results and dividends
PureCircle Group’s turnover for the financial year ended 30 June 2009 was USD60 million. The PureCircle
Group’s profit for the year after taxation and minority interest was USD11 million. This gives earnings per
share of US8.49 cents.
The Group ended the year with net assets of USD95million and cash balances of USD19 million.
The Directors do not recommend payment of a dividend in respect of the year ended 30 June 2009.
Directors and their interests
The current members of the Board, together with their brief profi le, are set out on page 52 and 53.
The interests (all of which are benefi cial interests save as otherwise stated) of the Directors and of the persons
connected with them as at 30 June 2009 are as follows:
1 Family interest held indirectly by Paul Selway-Swift and his wife
2 Held directly
3 Family interest held indirectly by Olivier Maes and his wife
4 Family interest held directly by his wife
Director Number of Shares
Paul Selway-Swift 1 171,171
Magomet Malsagov 2 14,813,176
Peter Robert Milsted 2 1,160,000
Peter Lai Hock Meng 2 100,000
Olivier Phillipe Marie Maes 3 667,747
John Robert Slosar 4 1,418,702
William Mitchell 2 240,000
49
Significant Shareholders
At 30 June 2009, the Company had been notifi ed of the following interests of 3% or more in its ordinary shares.
Changes to directors’ and signifi cant shareholders’ interests after 30 June 2009
On 4 September 2009, the Company announced that it has been advised by Varuzhan Abelyan that he has sold
shares through the market to a level whereby he has ceased to be a signifi cant shareholder in the Company.
Benefi cial Shareholder Interest in Issued Shares Interest
Olam Wilmar Investment Holdings Pte. Ltd. 26,544,609 20.0%
Magomet Malsagov 14,813,176 11.2%
Half Moon Bay Enterprises Ltd 12,068,734 9.1%
Asian Investment Management Services Ltd 11,706,958 8.8%
Fidelity Management and Research LLC 6,688,078 5.0%
Swire Beverages Holdings Ltd 5,800,000 4.4%
James Finlay International Holding Ltd 5,800,000 4.4%
Varuzhan Abelyan 4,389,982 3.3%
Statement of directors’ responsibilities
The directors are responsible for the preparation of
the fi nancial statements for each fi nancial year which
give a true and fair view of the state of affairs of the
Company and of the Group at the end of the year
and of the results of the Group and of the Company
for the year in preparing those fi nancial statements,
the directors are required to:
(a) select suitable accounting policies and then apply
them consistently;
(b) make judgements and estimates that are
reasonable and prudent;
(c) state whether applicable accounting standards
have been followed, subject to any material
departures disclosed and explained in the fi nancial
statements; and
(d) prepare the fi nancial statements on the going
concern basis unless it is inappropriate to assume
that the Group will continue in business.
The directors are responsible for keeping proper
accounting records which disclose with reasonable
accuracy at any time the fi nancial position of the
Company and to enable them to ensure that the
fi nancial statements comply with International Financial
Reporting Standards. The directors are also responsible
for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and
detection of fraud or other irregularities.
So far as the directors are aware, there is no relevant
audit information of which the Company’s auditors
are unaware and we have taken all the steps that
we ought to have taken as directors in to make
ourselves aware of any relevant audit information and
to establish that the Company’s auditors are aware of
that information.
The directors are responsible for information contained
in the directors’ report and other information contained
in the accounts.
50
Payment of creditors
It is the policy of the Group in respect of all its creditors, where it is reasonably
practicable, to settle the payment with those creditors according to the terms
formally agreed with them.
The creditors’ payment periods for the Group throughout the financial year
under review range from 0 to 60 days.
Auditors
The auditors, Messrs. Horwath, have expressed their willingness to continue
in office as auditors and a resolution proposing their reappointment will be
submitted to shareholders at the forthcoming Annual General Meeting.
This report was approved by the Board on 22 September 2009 and is signed
on its behalf by:
Magomet Malsagov
Chief Executive Officer
William Mitchell
Chief Financial Officer
51
: global expansion
Headcount increased by more than 80% to over 900 employees
7 languages spoken including French, Spanish, Chinese, Malay, Swahili, Russian and English
52
53
54
3.4 Board of directors
Paul Selway-SwiftNon-Executive Chairman
Paul worked with the HSBC Group for 30 years,
where he was an Executive Director of HSBC
Hong Kong until 1996 and Deputy Chairman of
HSBC Investment Bank in London until 1998.
He is currently the Chairman and a Director of
Atlantis Investment Management (Ireland) Ltd and
Non-Executive Director of Temenos Group AG.
Additionally, he is a Non-Executive Director of
Harvard International Plc, China Export Finance Ltd
and Li & Fung Ltd.
He was appointed Chairman of the Company
in December 2007 and also chairs the
Nomination Committee.
Magomet MalsagovChief Executive Officer
Magomet has held the position of Chief Executive since founding the business in 2001.
He is primarily responsible for leading the successful establishment of the Group’s entire supply chain from the plantations and extraction facilities to the refinery plants around the world. As CEO, he further establishes the Group’s business direction and strategies along with his management team and is responsible for managing the growth and development of the Group’s business.
Front row (left to right): Magomet Malsagov, Paul Selway-Swift, William Mitchell
Back row (left to right): Peter Milsted, Sunny Verghese, John Slosar, Olivier Maes, Peter Lai Hock Meng
55
William Mitchell Chief Financial Offi cer
William brings with him a wealth of relevant experience to the PureCircle team having worked extensively in the global capital markets, food and beverage and technology industries.
William is a FCA who trained with Price Waterhouse London. At PW, he advised major international food and beverage consumer package goods businesses and private equity fi rms on mergers and acquisitions and post acquisition integrations.
He was part of the management buyin-buyout team that acquired Tetley Tea, the number 2 global teabrand, from Allied Domecq in a GBP190 million leverage buyout.
Most recently William was Finance Director of EnQii Holdings PLC, a global market leader in the fast growing digital media industry. William joined PureCircle in June 2008.
Peter Milsted Sales & Marketing Director
Peter joined PureCircle in December 2006 and was appointed to the Board in December 2007.
Peter is responsible for providing leadership to the global sales and marketing functions of the Group.He also develops product strategies benchmarking and competitor analysis to better position the Group’s products in the marketplace and to develop the Group’s distribution channels.
Previously, at ICI, he was a member of the Executive Management team for Uniqema, where he held the position of Vice President Asia. Prior to joining ICI he was a divisional director of Unichema, the Unilever oleochemicals company.
From 1992 to 1995 he was Managing Director Unichema Australia and from 1988 to 1992 he was the Head of Fragrance Division for Quest Brazil.
Peter Lai Hock Meng Non-Executive Director
Peter Lai has more than 25 years experience in financial services industry including central banking, investment banking, private banking, stock broking, venture capital, asset management, treasury management and private equity investments. As a veteran investment banker, he currently sits on the board of several listed companies as independent director.
Peter graduated with a BA in Economics from the University of Cambridge, England. He is also a CFA charter holder from the CFA Institute, USA. He joined PureCircle in June 2008 and is the Chairman of the Audit Committee.
Olivier Maes Non-Executive Director
Olivier is a French national and joined PureCircle as a Non-Executive Director of PCSB in November 2006 before being appointed to the Board in December 2007. He read business at Ecole des Hautes Etudes Commerciales (MBA HEC) Paris and is presently the Chief Executive Offi cer of Groupe Aoste, the leader of processed meat industry in France and member of the executive team of Campofrio Group, European leader of processed meat market.
Olivier formerly served as CEO of General Biscuits Benelux, a leading biscuits and cereals products company and a member of the Kraft Group and held CEO positions of various companies in Europe and Asia for Danone Group.
He has more than 20 years of experience within Danone Group in the dairy, beverages and biscuits sectors in Western Europe and Asia where his responsibilities included general management, sales and marketing, mergers and acquisitions, industrial and supply chain development, as well as the expansion of its production operations.
Olivier chairs the Remuneration Committee.
John Slosar Non-Executive Director
John joined PureCircle in November 2006 and prior to his appointment as to the Board in December 2007, he was a Non-Executive Director of PCSB.
He is also currently on the Boards of Cathay Pacifi c Airways Ltd, John Swire & Sons (H.K.) Ltd and Swire Pacifi c Ltd. He joined the Swire Group in 1980 and worked with the Group’s Aviation Division in Hong Kong, the United States and Thailand.
He was appointed Managing Director of Hong Kong Aircraft Engineering Co Ltd in 1996. In July 1998, he was appointed Managing Director of Swire Pacifi c’s Beverages Division. He was appointed Chief Operating Offi cer of Cathay Pacifi c on 1st July 2007.
John was a graduate of both Columbia University and Cambridge University.
Sunny Verghese Non-Executive Director
Sunny is the Group Managing Director and Chief Executive Offi cer of Olam, a major Asia based international agribusiness listed on the Singapore Stock Exchange (“SGX”). He is responsible for the strategic planning, business development and overall management for the Olam group of companies worldwide. He is also the Chairman of International Enterprise Singapore, a statutory board under the Ministry of Trade and Industry, as well as Chairman of the SGX listed infrastructure trust, CitySpring Infrastructure Management Pte Ltd. He joined PureCircle in October 2008.
56
We have audited the financial statements of PureCircle Limited, which
comprise the Balance Sheets and Statements of Changes in Equity
as at 30 June 2009 of the Group and of the Company and the Income
Statement and Cash Flow Statement of the Group for the year then
ended, and a summary of significant accounting policies and other
explanatory notes, as set out on pages 58 to 95.
Director’s Responsibility for the Financial Statements
The directors of the Group are responsible for the
preparation and fair presentation of these financial
statements in accordance with International
Financial Reporting Standards. This responsibility
includes designing, implementing and maintaining
internal control relevant to the preparation and fair
presentation of financial statements that are free
from material misstatement, whether due to fraud or
error, selecting and applying appropriate accounting
policies, and making accounting estimates that are
reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these
fi nancial statements based on our audit and to report
our opinion to you, as a body, and for no other
purpose. We do not assume responsibility towards
any other person for the contents of this report.
We conducted our audit in accordance with
International Standards on Auditing. Those
standards require that we comply with ethical
requirements and plan and perform the audit to
obtain reasonable assurance whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures
in the financial statements. The procedures
selected depend on our judgment, including the
assessment of risks of material misstatement of
the financial statements, whether due to fraud
or error. In making those risk assessments, we
consider internal control relevant to the Group’s
preparation and fair presentation of the financial
statements in order to design audit procedures
that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
An audit also includes evaluating the
appropriateness of accounting policies used
and the reasonableness of accounting estimates
made by the directors and managers, as well as
evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Opinion
In our opinion, the financial statements have been
properly drawn up in accordance with International
Financial Reporting Standards so as to give a true
and fair view of the financial position of the Group
as of 30 June 2009 and of its financial performance
and cash flows for the financial year then ended.
Horwath
Firm No: AF 1018
Chartered Accountants
Kuala Lumpur
22 September 2009
: 4. Independent auditors’ report
57
: Financial statements
58
The Group The Company
Note
30.06.2009USD’000
30.06.2008USD’000
(restated)
30.06.2009 USD’000
30.06.2008USD’000
Assets
Non-Current Assets
Investment in subsidiaries 6 - - 21,651 18,080
Investment in an associate 7 48 126 - -
Intangible assets 8 14,018 7,987 71 -
Property, plant and equipment 9 64,968 31,932 - -
Prepaid land lease payments 10 2,776 2,265 - -
81,810 42,310 21,722 18,080
Current Assets
Inventories 11 31,452 9,582 - -
Trade receivables 12 27,173 7,430 - -
Other receivables, deposits and prepayments 13 11,020 7,642 1,145 1,250
Amount owing by a subsidiary 14 - - 53,427 28,869
Amount owing by related parties 15 - 1,433 - -
Short-term deposits with licensed banks 17 14,710 13,563 - 8,502
Cash and bank balances 18 4,210 30,888 124 19,003
88,565 70,538 54,696 57,624
Total Assets 170,375 112,848 76,418 75,704
Equity And Liabilities
Equity
Share capital 19 13,272 13,272 13,272 13,272
Share premium 20 66,353 64,104 66,353 64,104
Treasury shares 21 * * * *
Foreign exchange translation reserve 22 1,032 1,439 - -
Share option reserve 23 1,704 480 1,704 480
Retained profi t/(Accumulated loss) 12,276 1,073 (5,132) (2,215)
Shareholders’ Equity 94,637 80,368 76,197 75,641
Minority Interests 600 1,381 - -
Total Equity 95,237 81,749 76,197 75,641
Balance sheetsat 30 June 2009
Note:* - Represents less than USD1.00
The annexed notes form an integral part of these fi nancial statements.
: 5. Accounts and notes
59
Balance sheets at 30 June 2009 continue
The annexed notes form an integral part of these fi nancial statements.
The Group The Company
Note
30.06.2009USD’000
30.06.2008 USD’000
(restated)
30.06.2009USD’000
30.06.2008USD’000
Non-Current Liability
Long-term borrowings 25 40,008 11,888 - -
40,008 11,888 - -
Current Liabilities
Trade payables 26 2,945 1,186 - -
Other payables and accruals 27 5,766 2,029 221 63
Short-term borrowings 28 26,419 15,608 - -
Bank overdraft 29 - 388 - -
35,130 19,211 221 63
Total Liabilities 75,138 31,099 221 63
Total Equity And Liabilities 170,375 112,848 76,418 75,704
Net Assets Per Share (USD) 30 0.71 0.61
Approved and authorised for issue by the board of directors on 22 September 2009.
Magomet Malsagov
Chief Executive Officer
William Mitchell
Chief Financial Officer
60
Consolidated income statementsfor the financial year ended 30 June 2009
The Group
Note
From 01.07.2008 -30.06.2009
USD’000
From 01.01.2008 -30.06.2008
USD’000(restated)
Revenue 31 60,023 19,674
Cost of sales (34,431) (15,058)
Gross profi t 25,592 4,616
Other income 792 3,201
26,384 7,817
Administrative expenses (14,548) (5,691)
Finance costs 32 (414) (996)
Profi t before taxation 11,422 1,130
Income tax expense 33 (352) -
Profi t after taxation 11,070 1,130
Attributable to:-
Equity holders of the company 11,203 860
Minority interests (133) 270
11,070 1,130
Earnings per share (US Cents)
- Basic 34 8.49 0.66
- Diluted 34 8.42 0.66
The annexed notes form an integral part of these fi nancial statements.
61
Consolidated statements of changes in equityfor the financial year ended 30 June 2009
ShareCapital
USD’000
SharePremiumUSD’000
Treasury Shares
USD’000
Foreign Currency
Translation ReserveUSD’000
ShareOption
ReserveUSD’000
Retained Profi t
USD’000Total
USD’000
Minority InterestsUSD’000
TotalUSD’000
The Group
Balance at 01.07.2008 (restated) 13,272 64,104 * 1,439 480 1,073 80,368 1,381 81,749
Gain from sale of treasury shares ^ - 1,598 - - - - 1,598 - 1,598
Valuation on share option scheme granted during the period - - - - 1,224 - 1,224 - 1,224
Treasury share transferred as consideration of PCJX’s acquisition - 651 - - - - 651 - 651
Share subscription by minority interests of PCSAm - - - - - - - 1,500 1,500
Disposal of shares by minority interests of PCJX and PCSAm - - - - - - - (2,154) (2,154)
Profi t for the fi nancial year - - - - - 11,203 11,203 (133) 11,070
Exchange difference ^ - - - (407) - - (407) 6 (401)
Balance at 30.06.2009 13,272 66,353 * 1,032 1,704 12,276 94,637 600 95,237
Notes:
* - Represents less than USD1.00
^ - Gain/(Loss) not recognised in Income Statements, refer to Note 5(b)(ii).
The annexed notes form an integral part of these fi nancial statements.
62
Consolidated statements of changes in equityfor the financial year ended 30 June 2009 continue
ShareCapital
USD’000
SharePremiumUSD’000
Treasury Shares
USD’000
Foreign Currency
Translation ReserveUSD’000
ShareOption
ReserveUSD’000
Retained Profi t
USD’000Total
USD’000
Minority InterestsUSD’000
TotalUSD’000
The Group
Balance at 23.07.2007 (Date of incorporation) 10 - - - - - 10 - 10
New allotment for cash during the fi nancial period 1,530 9,390 - - - - 10,920 - 10,920
New allotment for additional shareholding in subsidiary during the fi nancial period 243 8,287 - - - - 8,530 (8,530) -
Acquisition of subsidiary, PureCircle Sdn Bhd 10,070 - - - - - 10,070 5,122 15,192
Shares subscribed by minority interest of PCJX - - - - - - - 5,900 5,900
Purchase of own shares and held as treasury shares - - * - - - * - *
Cancellation of treasury shares upon purchase (10) - - - - - (10) - (10)
Issuance of shares pursuance to admission to AIM market 1,429 48,571 - - - - 50,000 - 50,000
Admission expenses ^ - (3,318) - - - - (3,318) - (3,318)
Gain from sale of treasury shares ^ - 1,174 - - - - 1,174 - 1,174
Valuation on share option scheme granted during the period - - - - 480 - 480 - 480
Profi t for the fi nancial period - - - - - 1,073 1,073 904 1,977
Exchange difference ^ - - - 1,439 - - 1,439 (2,015) (576)
Balance at 30.06.2008 (restated) 13,272 64,104 * 1,439 480 1,073 80,368 1,381 81,749
Notes:
* - Represents less than USD1.00
^ - Gain/(Loss) not recognised in Income Statements, refer to Note 5(b)(ii).
The annexed notes form an integral part of these fi nancial statements.
63
Consolidated statements of changes in equityfor the financial year ended 30 June 2009 continue
ShareCapital
USD’000
SharePremiumUSD’000
Treasury Shares
USD’000
Foreign Currency
Translation ReserveUSD’000
ShareOption
ReserveUSD’000
Retained Profi t
USD’000Total
USD’000
Minority InterestsUSD’000
TotalUSD’000
The Group
Balance at 01.01.2008
As previously reported 13,029 55,697 * 909 - 422 70,057 11,613 81,670
Prior year adjustments - Effects of IAS 21 - - - (728) - (209) (937) (1) (938)
Balance at 01.01.2008 (restated) 13,029 55,697 - 181 - 213 69,120 11,612 80,732
New allotment for additional shareholding in subsidiary during the fi nancial period 243 8,287 - - - -
8,530 (8,530) -
Gain on sale of treasury shares - 120 * - - - 120 - 120
Valuation on share option scheme granted during the period - - - - 480 - 480 - 480
Profi t for the period - - - - - 860 860 270 1,130
Exchange difference - - - 1,258 - - 1,258 (1,971) (713)
Balance at 30.06.2008 (restated) 13,272 64,104 * 1,439 480 1,073 80,368 1,381 81,749
ShareCapital
USD’000
SharePremiumUSD’000
Treasury Shares
USD’000
ShareOption
ReserveUSD’000
Accumulated Loss
USD’000Total
USD’000
The Company
Balance at 01.07.2008 13,272 64,104 * 480 (2,215) 75,641
Valuation on share option scheme granted during the year - - - 1,224 - 1,224
Gain from sale of treasury shares ^ - 1,598 - - - 1,598
Treasury share transferred as consideration of PCJX’s acquisition - 651 - - - 651
Loss for the fi nancial year - - - - (2,917) (2,917)
Balance at 30.06.2009 13,272 66,353 * 1,704 (5,132) 76,197
Notes:
* - Represents less than USD1.00
^ - Gain/(Loss) not recognised in Income Statements, refer to Note 5(b)(ii).
ShareCapital
USD’000
SharePremiumUSD’000
Treasury Shares
USD’000
ShareOption
ReserveUSD’000
Accumulated Loss
USD’000Total
USD’000
The Company
Balance at 01.01.2008 13,029 55,697 * - (1,143) 67,583
New allotment during the fi nancial period 243 8,287 - - - 8,530
Valuation on share option scheme granted during the period - - - 480 - 480
Gain from sale of treasury shares ^ - 120 - - - 120
Loss for the fi nancial period - - - - (1,072) (1,072)
Balance at 30.06.2008 13,272 64,104 * 480 (2,215) 75,641
Notes:
* - Represents less than USD1.00
^ - Gain/(Loss) not recognised in Income Statements, refer to Note 5(b)(ii).
The annexed notes form an integral part of these fi nancial statements.
64
Consolidated cash fl ow statementsfor the financial year ended 30 June 2009
The Group
Note
From 01.07.2008 -30.06.2009
USD’000
From 01.01.200830.06.2008
USD’000(restated)
Cash fl ows (for) / from operating activities
Profi t for the fi nancial year/period 11,422 1,130
Adjustments for:
Amortisation of intellectual property rights (117) 38
Amortisation of prepaid land lease payments 25 20
Depreciation of property, plant and equipment 2,453 953
Excess of Group’s interest in the net fair value of acquiree’s identifi able assets, liabilities and contingent liabilities over cost of acquisition
- (1,971)
Gain on disposal of property, plant and equipment (21) -
Interest expense 3,854 1,039
Interest income (322) (600)
Share of loss of an associate 78 19
Share option reserve 1,224 480
Waiver of debts (319) -
Operating cash fl ow before working capital changes 18,277 1,108
(Increase) / Decrease in inventories (21,862) 4,667
Increase in trade and other receivables (22,638) (2,862)
Increase in trade and other payables 4,801 969
Net cash (for)/from operations (21,422) 3,882
Interest received 322 600
Interest paid (3,854) (1,039)
Tax paid (352) -
Net cash (for) / from operating activities (25,306) 3,443
Cash fl ows for investing activities
Acquisition of intangible assets (2,672) (373)
Acquisition of leasehold land (514) (716)
Increase in investment in subsidiaries 35 (2,965) -
Acquisition of property, plant and equipment 36 (32,438) (6,343)
Net cash for investing activities (38,589) (7,432)
Balance carried forward (63,895) (3,989)
The annexed notes form an integral part of these fi nancial statements.
65
Consolidated cash fl ow statementsfor the financial year ended 30 June 2009 continue
The annexed notes form an integral part of these fi nancial statements.
The Group
Note
From 01.07.2008 -30.06.2009
USD’000
From 01.01.200830.06.2008
USD’000(restated)
Balance brought forward (63,895) (3,989)
Cash fl ows from fi nancing activities
Proceeds from disposal of treasury shares 1,598 120
Proceeds from issuance of shares to minority interest 1,500 -
Net drawdown of borrowings 35,711 3,685
Net movement of hire purchase (99) (35)
Net cash from fi nancing activities 38,710 3,770
Effects of foreign exchange rate changes on cash and cash equivalents 42 538
Cash and cash equivalents at beginning of the fi nancial year/period 44,063 43,744
Cash and cash equivalents at end of the fi nancial year/period 37 18,920 44,063
66
The following table demonstrates the sensitivity to a reasonably possible change in the Chinese Renminbi exchange rate, with all other variables held constant of the Group’s profit and the Group’s equity:
(ii) Interest Rate Risk The Group’s exposure to interest rate risk arises mainly
from interest-bearing deposits, loans and borrowings. The Group’s interest rate profi le is set out below:
No interest rates sensitivity analysis is performed for the current financial year as the Group’s exposure to interest rates on its borrowings are based on fixed rates at the balance sheet date.
(iii) Credit Risk The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verifi cation procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debt is not signifi cant. The maximum exposure is the carrying amount as disclosed in Note 12 to the fi nancial statements.
The Group’s concentration of credit risk relates to debts owing by a major customer which constituted approximately 37% of its outstanding receivables at the balance sheet date.
The Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
(iv) Liquidity and Cash Flow Risks Liquidity and cash fl ow risks arise mainly from general funding and business activities. The Group practises prudent risk management by maintaining suffi cient cash and the availability of funding through certain committed credit facilities.
The following tables detail the remaining contractual maturities at the balance sheet date of the Group’s and the Company’s non-derivative fi nancial liabilities, which are based on contractual undiscounted cash fl ows (including interest payments computed using contractual rates or, if fl oating, based on rates current at the balance sheet date) and the earliest date the Group and the Company can be required to pay:
Notes to the financial statementsfor the financial year from 1 July 2008 to 30 June 2009
Increase / decrease in
Exchange rate
Effect on profi t after
taxation USD ‘000
Effecton equityUSD ‘000
Chinese Renminbi + 5% 211 1,540
- 5% (211) (1,540)
The Group
30.06.2009 30.06.2008 30.06.2009USD ‘000
30.06.2008USD ‘000
Effective InterestRate %
Term loans 6.93 7.78 53,608 15,376
Bank overdraft - 6.75 - 388
1. General information
The Company was incorporated and registered as a private limited company in Bermuda, under the Companies (Bermuda) Law 1991 (as amended). The registered offi ce and principal place of business are as follows:
Registered offi ce:Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
Principal place of business:Unit 19-03-02, 3rd Floor, PNB Damansara,Lorong Dungun, Damansara Heights,50490 Kuala Lumpur, Malaysia.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 22 September 2009.
The number of employees in the Group at the end of the fi nancial year amounted to 800 (2008: 489) employees.
2. Principal activities
The Company is principally engaged in the business of investment holding whilst the principal activities of the rest of the Group are the production and distribution of natural high intensity sweeteners.
There have been no significant changes in the nature of these activities during the financial year. The principal activities of the subsidiaries and associate are set out in Note 6 and 7 to the financial statements.
3. Financial instruments
The Group’s activities expose to a variety of financial risks (including foreign currency risk, interest rate risk and price risk), credit risk, liquidity and cash flow risk, and capital risk management. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.
(a) Financial Risk Management Policies
(i) Foreign Currency Risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Ringgit Malaysia and Chinese Renminbi. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.
It manages its foreign exchange exposure by a policy of matching as far as possible receipts and payments in each individual currency.
67
(c) Fair Value Estimation
All fi nancial instruments are carried at amounts not materially different from their fair values as at 30 June 2009.
Fair value estimates are made at a specific point in time and based on relevant market information and information about the financial instruments. These estimates are subjective in nature, involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
CarryingAmount
USD’000
TotalContractual
UndiscountedCash Flow
USD’000
Within1 Year or
on Demand*USD’000
More than1 Year butLess than
5 YearsUSD’000
More than5 Years
USD’000
The Group At 30.06.2009
Trade and other payables 8,711 8,711 8,711 - -
Borrowings 66,427 66,427 26,419 40,008 -
The Group At 30.06.2008
Trade and other payables 3,215 3,215 3,215 - -
Borrowings 27,496 27,496 15,606 11,336 552
Bank overdraft 388 388 388 - -
*Borrowings within 1 year or on demand are drawn down under a revolving facility.
(b) Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debts, which include the borrowings disclosed in Note 25, 28 and 29, cash and bank balances and equity attributable to equity holders of the parent, comprising issued capital, share premium, reserves and retained earnings.
The Group’s policy is to maintain a strong capital base by having low gearing. The Group monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total equity.
Notes
1. Debts relate to borrowings disclosed in Note 25, 28 and 29 to the
financial statements.
2. Equity includes all capital and reserves of the Group.
30.06.2009USD’000
30.06.2008USD’000
Debts1 (66,427) (27,884)
Cash and cash equivalents 18,920 44,451
Net debt (47,507) Not applicable
Equity2 94,637 80,368
Net debt to equity ratio 50% Not applicable
The gearing ratio at the fi nancial year end was as follows:
CarryingAmount
USD’000
TotalContractual
UndiscountedCash Flow
USD’000
Within1 Year or
on Demand*USD’000
More than1 Year butLess than
2 YearsUSD’000
More than2 Year butLess than
5 YearsUSD’000
The Company At 30.06.2009
Other payables and accruals 221 221 221 - -
The Company At 30.06.2008
Other payables and accruals 63 63 63 - -
68
4. Basis of preparation
The fi nancial statements of the Company are prepared
under the historical cost convention and modifi ed to
include other bases of valuation as disclosed in other
sections under significant accounting policies, and
in compliance with International Financial Reporting
Standards (“IFRSs”).
(a) Standards, amendments and interpretations that are
effective for the current fi nancial year
During the current fi nancial year, the Company has
adopted the following amendment and interpretations:-
IFRIC 13 Customer Loyalty Programmes
IFRIC 19 IAS 19 - The Limit on a Defi ned
Benefi t Asset, Minimum Funding
Requirements and their Interaction
Amendment to IFRIC 4 Adoption of IFRIC 12 - Service
Concession Arrangements
Amendments to IFRS 7 Reclassifi cation of Financial Assets
and IAS 39
The above new IFRICs and amendments are not relevant
to the Company’s operations.
(b) Standards, amendments and interpretations that
have been issued but are not yet effective
The Company has not yet early adopted the following
revised standards, amendments and interpretations
that have been issued but are not yet effective for the
current financial year:-
IFRS 1 (Revised) First-time Adoption
of International Financial
Reporting Standards2
IAS 1 (Revised) Presentation of
Financial Statements2
IAS 7 (Renamed) Statement of Cash Flows2
IAS 23 (Revised) Borrowing Costs2
IFRS 3 (Revised) Business Combination3
IFRS 8 Operating Segments2
IFRS 27 (Revised) Consolidated and
Separate Financial Statements3
IFRIC 15 Agreements for the Construction
of Real Estate2
IFRIC 16 Hedges of a Net Investment in
a Foreign Operation1
IFRIC 17 Distribution of Non-cash Assets
to Owners3
IFRIC 18 Transfers of Assets
from Customers3
Amendment to IFRS 1 Cost Model for Oil and Gas
(Revised) Industries and Application
of IFRIC 43
Amendments to Cost of an Investment in a
IFRS 1 and IAS 27 Subsidiary, Jointly Controlled
Entity or Associate2
Amendment to IFRS 2 Vesting Conditions and
Cancellation2
Group Cash-settled Share-based
Payment Transactions7
Amendment to IFRS 7 Improving Disclosures about
Financial Instruments2
Amendments to Reclassification of
IFRIC 9 and IAS 39 Embedded Derivatives5
Amendments to Puttable Financial Instruments
IAS 1 and IAS 32 and Obligations Arising on
Liquidation2
Amendment to IAS 39 Eligible Hedged Items3
Minor amendments to Improvements to International
various existing IFRSs Financial Reporting Standards
and IASs 20084
Minor amendments to Improvements to International
various existing IFRSs Financial Reporting Standards
and IASs 20096
1 Effective for annual periods beginning on or after
1 October 2008 2 Effective for annual periods beginning on or after
1 January 2009 3 Effective for annual periods beginning on or after
1 July 2009 4 Minor amendments to IFRSs 5 and 7 and IASs 1, 7, 8,
10, 16, 18, 19, 20, 23, 27, 28, 29, 31, 32, 34, 36, 38,
39, 40 and 41. All the minor amendments are effective
for annual periods beginning on or after 1 January
2009 with the exception of amendment to IFRS 5,
which is effective for annual periods beginning on or
after 1 July 2009 5 Effective for annual periods ending on or after 30 June 20096 Minor amendments to IFRSs 2, 5 and 8 and IASs 1, 7,
17, 18, 36, 38 and 39 and IFRICs 9 and 16. All the
minor amendments are effective for annual periods
beginning on or after 1 January 2010 with the
exception of amendments to IFRS 2, IAS 38, IFRICs 9
and 16, which are effective for annual periods
beginning on or after 1 July 20097 Effective for annual periods beginning on or after
1 January 2010
The adoption of IAS 1 (Revised) and IAS 7 (Renamed)
only impacts the form and content presented in the
financial statements. It is not expected to have any
material impact on the financial statements upon
adopting such standards.
The adoption of other revised standards, amendments
and new IFRICs is expected to have no material impact
on the financial statements upon their initial application
as they are not relevant to the Company’s operations.
69
5. Significant accounting policies
(a) Critical Accounting Estimates And Judgements
Estimates and judgements are continually evaluated
by the directors and management and are based
on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances. The estimates
and judgements that affect the application of the
Group’s accounting policies and disclosures, and have
a significant risk of causing a material adjustment to
the carrying amounts of assets, liabilities, income and
expenses are discussed below.
(i) Depreciation of Property, Plant and Equipment
The estimates for the residual values, useful lives and
related depreciation charges for the property, plant and
equipment are based on commercial and production
factors which could change significantly as a result
of technical innovations and competitors’ actions in
response to the market conditions.
Changes in the expected level of usage and technological
development could impact the economic useful lives
and the residual values of these assets, therefore future
depreciation charges could be revised.
(ii) Impairment of Assets
When the recoverable amount of an asset is
determined based on the estimate of the value-in-
use of the cash-generating unit to which the asset
is allocated, management is required to make an
estimate of the expected future cash flows from the
cash-generating unit and also to apply a suitable
discount rate in order to determine the present value of
those cash flows.
(iii) Intellectual Property Rights and Product
Development
The useful lives of the intellectual property rights
and product development of PCSB and PCJX are
estimated to be indefinite because based on the analysis
of all of the relevant factors; there is no foreseeable
limit to the period over which the asset is expected
to generate net cash inflows for PCSB and PCJX. In
addition, the estimation of the useful lives is based
on the internal technical evaluation. The estimated
useful lives are reviewed periodically and are updated
if expectations differ from previous estimates due to
obsolescence, economic, technical and legal or other
limits on the use of the intangible assets. It is possible,
however, that future results of operations could be
materially affected by changes in the estimates brought
about by changes in factors mentioned above.
(iv) Income Taxes
There are certain transactions and computations for
which the ultimate tax determination is uncertain during
the ordinary course of business. The Group recognises
tax liabilities based on estimates of whether additional
taxes will be due. Where the final outcome of these
matters is different from the amounts that were initially
recognised, such difference will impact the income tax
and deferred tax provisions in the period in which such
determination is made.
(v) Allowance for Doubtful Debts of Receivables
The Group makes allowance for doubtful debts
based on an assessment of the recoverability of
receivables. Allowances are applied to receivables
where events or changes in circumstances indicate
that the carrying amounts may not be recoverable.
Management specifi cally analyses historical bad debt,
customer concentrations, customer creditworthiness,
current economic trends and changes in customer
payment terms when making a judgement to evaluate
the adequacy of the allowance for doubtful debts of
receivables. Where the expectation is different from the
original estimate, such difference will impact the carrying
value of receivables.
(vi) Fair value estimates for certain fi nancial assets
and liabilities
The Group carries certain financial assets and liabilities
at fair value, which requires extensive use of accounting
estimates and judgement. While significant components
of fair value measurement were determined using
verifiable objective evidence, the amount of changes
in fair value would differ if the Group uses different
valuation methodologies. Any changes in fair value of
these assets and liabilities would affect profit and equity.
(vii) Share-based payments
The Group measures the cost of equity-settled
transactions with employees by reference to the fair
value of the equity instruments at the date at which they
are granted. Estimating fair value requires determining
the most appropriate valuation model for a grant
of equity instruments, which is dependent on the terms
and condit ions of the grant. This also requires
determining the most appropriate inputs to the valuation
model including the expected life of the option, volatility
and dividend yield and making assumptions about
them. The assumptions and models used are disclosed
in Note 23.
70
(b) Financial assets
(i) Receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using
the effective interest method, less allowance for impairment.
An allowance for impairment of receivables is establish
when there is objective evidence that the Group will not
be able to collect all amount due according to the original
terms of the receivables.
(ii) Treasury shares
Own equity instruments which are reacquired (treasury
shares) are deducted from equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue
or cancellation of the Group’s own equity instruments.
(c) Financial liabilities
(i) Payables
Liabilities for trade and other payables, including amounts
owing to associates and related parties, are recognised
initially at fair value and subsequently measured at
amortised cost using the effective interest method.
(ii) Interest-bearing loans and borrowings
All loans and borrowings are recognised initially
at fair value of the consideration received, net of
directly attributable transaction cost incurred, and are
subsequently stated at amortised cost. Any difference
between the proceeds (net of transaction cost) and the
redemption value is recognised in the income statement
over the period of the loans and borrowings using the
effective interest method.
(d) Functional and Foreign Currency
(i) Functional and Presentation Currency
The functional currency of each of the Group’s entities
is measured using the currency of the primary economic
environment in which the entity operates.
The functional and presentation currency of the Company
is United States Dollar (“USD”). The consolidated fi nancial
statements are presented in United States Dollar (“USD”)
which is the parent’s presentation currency.
(ii) Transactions and Balances
Transactions of the Company in foreign currency
are converted into USD at the approximate rates of
exchange ruling at the transaction dates.
Transactions in foreign currency are measured in the
respective functional currencies of the Group’s entities
and are recorded on initial recognition in the functional
currencies at exchange rates approximating those ruling
at the transaction dates.
Monetary assets and liabilities at the balance sheet date
are translated at the rates ruling as of that date.
Non-monetary assets and liabilities are translated using
exchange rates that existed when the values were
determined. All exchange differences are taken to the
income statement.
(iii) Foreign Operations
The results and financial position of the subsidiaries
engaged in foreign operations are translated into the
presentation currency as follows:-
(a) assets and liabilities, including goodwill and fair
value adjustments arising on the acquisition
of foreign operations, for each balance sheet
presented are translated at the closing rate at the
date of the balance sheet;
(b) income statement of foreign operations, including
revenue and expenses, are translated at the average
exchange rates for the year;
(c) all resulting exchange differences are recognised as a
separate component of equity, as a foreign currency
translation reserve; and
(d) on disposal, accumulated translation differences are
recognised in the consolidated income statements as
part of the gain or loss on sale of the foreign operation.
(iv) Adoption of Functional Currency
Effective 1 July 2007, the principal subsidiaries
adopted US Dollar as their functional currency. Under
IAS 21, the comparative audited financial statement
has been restated. No material adjustment resulted
from the restatement.
71
(e) Basis of Consolidation
The consolidated financial statements include the
financial statements of the Company and its subsidiaries
made up from 1 July 2008 to 30 June 2009.
(i) Subsidiaries
Subsidiaries are all entities over which the Group
has the power to govern the financial and operating
policies generally accompanying a shareholding of
more than one half of the voting rights. The existence
and effect of potential voting rights that are currently
exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
All subsidiaries are consolidated using the purchase
method of accounting. Under the purchase method of
accounting, the results of the subsidiaries acquired or
disposed of are included from the date of acquisition or
up to the date of disposal. At the date of acquisition, the
fair values of the subsidiary’s net assets are determined
and these values are reflected in the consolidated
financial statements. The cost of acquisition is
measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group
in exchange for control of the acquiree, plus any costs
directly attributable to the business combination. The
excess of the cost of acquisition over the fair value of
the Group’s share of the identifiable net assets acquired
is recorded as goodwill. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary
acquired, the difference is recognized directly in the
income statement.
Intragroup transactions, balances and unrealised gains on transactions are eliminated. Unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of the subsidiary to ensure consistency of accounting policies with those of the Group.
(ii) Transactions with minority interestsMinority interests in the consolidated balance sheets consist of the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree as at the date of acquisition and the minorities’ share of movements in the acquiree’s equity.
Minority interests are presented in the consolidated balance sheet of the Group within equity, separately from the Company’s equity holders, and are separately disclosed in the consolidated income statement of the Group.
When the Group purchases a subsidiary’s equity
from minority interest for cash consideration and
the purchase price is established at fair value,
the accretion of the Group’s interest in the subsidiary
is treated as purchases of equity interest for which the
acquisition method of accounting is applied. Disposals
to minority interest result in gains and losses for the
Group are recorded in the income statement. Purchases
from minority interest result in goodwill, being the
difference between any considerations paid and the
relevant share acquired of the carrying value of net
assets of the subsidiary.
(iii) Associates
Associates are all entities over which the Group has
significant influence but not control, generally
accompanying a shareholding of between 20% and 50%
of the voting rights. Investments in associates are
accounted for using the equity method of accounting
and are initially recognized at cost. The Group’s
investment in associates includes goodwill identifi ed on
acquisition, net of any accumulated impairment loss.
The Group’s share of its associates’ post acquisition profi ts
and losses is recognized in the income statement, and
its share of post-acquisition movements in reserves is
recognized in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of
the investment. When the Group’s share of losses in an
associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group
does not recognize further losses, unless it has incurred
obligations or made payments on behalf of the associate.
Unrealised gains or transactions between the Group
and its associate are eliminated to the extent of the
Group’s interest in the associates. Unrealised losses
are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
Dilution gains or losses arising in investments in
associates are recognised in the income statement.
72
(h) Intangible Assets
Intangible assets acquired separately are measured
on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair
values as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less
any accumulated amortisation and any accumulated
impairment losses.
The useful lives of intangible assets are either finite
or indefinite.
Intangible assets with finite lives are amortised on a
straight-line basis over the estimated economic useful
life. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are
reviewed at every balance sheet date. Intangible assets
with indefinite useful lives are not amortised.
All intangible assets are tested for impairment
annually or more frequently if the events or changes
in circumstances indicate that the carrying value
may be impaired either individually or at the cash-
generating unit level. The useful l ife of an intangible
asset with an indefinite l ife is also reviewed annually
to determine whether the useful l ife assessment
continues to be supportable.
(i) Intellectual Property Rights
Intellectual property rights of PCSB comprise the patents,
technological process, trade mark, micro-organisms
and all intellectual and industrial property rights in
connection therewith on the production of natural
enzymatically enhanced sweetener, pharmaceutical
products and chemical derivatives of bio-organic and
physiologically active compounds.
The useful life of the intellectual property rights of PCSB
is considered to be indefinite because based on
the analysis of all of the relevant factors; there is no
foreseeable limit to the period over which the asset is
expected to generate net cash inflows for the Group.
Intellectual property rights are stated at cost less
impairment losses. They are not amortised but tested
for impairment annually or more frequently when
indicators of impairment are identified.
(f) Goodwill on Consolidation
Goodwill on consolidation represents the excess of
the fair value of the purchase consideration over the
Group’s share of the fair values of the identifiable net
assets of the subsidiaries at the date of acquisition.
Goodwill is measured at cost less accumulated
impairment losses, if any. The carrying value of goodwill is
reviewed for impairment annually. The impairment value of
goodwill is recognised immediately in the consolidated
income statement. An impairment loss recognised for
goodwill is not reversed in a subsequent year.
If, after reassessment, the Group’s interest in the fair
values of the identifiable net assets of the subsidiaries
exceeds the cost of the business combinations, the
excess is recognised immediately in the consolidated
income statement.
(g) Investments in Subsidiaries
(i) Subsidiaries
Investments in subsidiaries are stated at cost in the
balance sheet of the Company, and are reviewed for
impairment at the end of the financial year if events or
changes in circumstances indicate that their carrying
values may not be recoverable.
On the disposal of the investments in subsidiaries,
the difference between the net disposal proceeds and
the carrying amount of the investments is taken to the
income statement.
(ii) Associate
An associate is an entity in which the Group has a long-
term equity interest and where it exercises significant
influence over the financial and operating policies.
The investments in associate in the consolidated fi nancial
statements are accounted for under the equity method,
based on the fi nancial statements of the associate made
up to 30 June 2009. The Group’s share of the post-
acquisition profits of the associate is included in the
consolidated income statement and the Group’s interest
in associates is stated at cost plus the Group’s share of
the post-acquisition retained profits and reserves.
Unrealised gains on transactions between the Group
and the associate are eliminated to the extent of the
Group’s interest in the associate. Unrealised losses are
eliminated unless cost cannot be recovered.
73
The depreciation method, useful life and residual values
are reviewed, and adjusted if appropriate, at each
balance sheet date to ensure that the amount, method
and period of depreciation are consistent with previous
estimates and the expected pattern of consumption of
the future economic benefits embodied in the items of
the property, plant and equipment.
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected from its use. Any
gain or loss arising from derecognition of the asset is
included in the income statement in the year the asset
is derecognised.
Capital work-in-progress represents assets under
construction, and which are not ready for commercial
use at the balance sheet date. Capital work-in-
progress is stated at cost, and will be transferred to the
relevant category of long-term assets and depreciated
accordingly when the assets are completed and ready
for commercial use.
Cost of capital work-in-progress includes direct cost,
related expenditure and interest cost on borrowings
taken specifically to finance the purchase of the assets,
net of interest income on the temporary investment of
those borrowings.
Buildings 5%
Extraction and refi nery plants 2% - 20%
Offi ce equipment, furniture and fi ttings and motor vehicles
20%
The intellectual property of PCJX consists of the
acquisition costs of the patents, technological process,
micro-organisms and all intellectual and industrial property
rights in connection therewith on the production of natural
enzymatically enhanced sweetener, pharmaceutical
products and chemical derivatives of bio-organic and
physiologically active compounds. The acquisition
cost is capitalised as an intangible asset as it is able
to generate future economic benefits to PCJX.
The useful life of the intellectual property rights of PCJX
is considered to be indefinite because based on
the analysis of all of the relevant factors; there is no
foreseeable limit to the period over which the asset is
expected to generate net cash inflows for the Group.
Intellectual property rights are stated at cost less
impairment losses. They are not amortised but tested
for impairment annually or more frequently when indicators
of impairment are identified.
(ii) Product Development
All research costs are recognised in the income statement
as incurred.
Expenditure incurred on projects to develop new
products is capitalized as intangible asset and deferred
only when the Group can demonstrate the technical
feasibility of completing the intangible asset so that
it will be available for use or sale, its intention to
complete and its ability to use or sell the asset, how
the asset will generate future economic benefits, the
availability of resource to complete the project and the
ability to measure reliably the expenditure during the
development. Product development expenditures which
do not meet these criteria are expensed when incurred.
(i) Property, Plant and Equipment
Property, plant and equipment, other than freehold
land, are stated at cost less accumulated depreciation
or amortisation and impairment losses, if any. Freehold
land is stated at cost less impairment losses, if any,
and is not depreciated. Cost includes expenditure that
is directly attributable to the acquisition of the items.
The cost of self-constructed assets includes the cost
of materials and direct labour, any other costs directly
attributable to bringing the assets to working condition
for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they
are located.
Subsequent costs are included in the asset’s
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Group and the cost of the item can
be measured reliably. The carrying amount of the
replaced part is derecognized. All other repairs and
maintenance are charged to the income statement
during the financial period in which they are incurred.
Depreciation or amortisation is calculated under the
straight-line method to write off the depreciable amount of
the assets over their estimated useful lives. Depreciation
of an asset does not cease when the asset becomes
idle or is retired from active use unless the asset is fully
depreciated. The principal annual rates used for this
purpose are:
74
(j) Impairment of Assets
The carrying values of assets, other than those to which
IAS 36 - Impairment of Assets does not apply, are
reviewed at each balance sheet date for impairment when
there is an indication that the assets might be impaired.
Impairment is measured by comparing the carrying
values of the assets with their recoverable amounts. The
recoverable amount of the assets is the higher of the
assets’ net selling price and their value-in-use, which is
measured by reference to discounted future cash flow.
An impairment loss is charged to the income
statement immediately unless the asset is carried at its
revalued amount. Any impairment loss of a revalued
asset is treated as a revaluation decrease to the extent
of a previously recognised revaluation surplus for the
same asset.
In respect of assets other than goodwill, and when
there is a change in the estimates used to determine
the recoverable amount, a subsequent increase in the
recoverable amount of an asset is treated as a reversal
of the previous impairment loss and is recognised to
the extent of the carrying amount of the asset that
would have been determined (net of amortisation and
depreciation) had no impairment loss been recognised.
The reversal is recognised in the income statement
immediately, unless the asset is carried at its revalued
amount. A reversal of an impairment loss on a revalued
asset is credited directly to the revaluation surplus.
However, to the extent that an impairment loss on
the same revalued asset was previously recognised
as an expense in the income statement, a reversal of
that impairment loss is recognised as income in the
income statement.
(k) Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost is determined on the weighted
average basis, and comprises the purchase price
and incidentals incurred in bringing the inventories to
their present location and condition. Cost of finished
goods and work-in-progress includes the cost of
materials, labour and an appropriate proportion of
production overheads.
Net realisable value represents the estimated selling
price less the estimated costs of completion and the
estimated costs necessary to make the sale.
Where necessary, due allowance is made for all
damaged, obsolete and slow-moving items.
(l) Income Taxes
Income taxes for the year comprise current and
deferred tax.
Current tax is the expected amount of income taxes
payable in respect of the taxable profi t for the year and is
measured using the tax rates that have been enacted or
substantively enacted at the balance sheet date.
Deferred tax is provided in full, using the liability
method, on the temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the financial statements.
Deferred tax liabilities are recognised for all taxable
temporary differences other than those that arise from
goodwill or excess of the acquirer’s interest in the net
fair value of the acquiree’s identifiable assets, liabilities
and contingent liabilities over the business combination
costs or from the initial recognition of an asset or liability
in a transaction which is not a business combination
and at the time of the transaction, affects neither
accounting profit nor taxable profit.
Deferred tax assets are recognised for all deductible
temporary differences, unused tax losses and unused
tax credits to the extent that it is probable that future
taxable profits will be available against which the
deductible temporary differences, unused tax losses
and unused tax credits can be utilised.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the period when
the asset is realised or the liability is settled, based on
the tax rates that have been enacted or substantively
enacted at the balance sheet date.
Deferred tax is recognised in the income statement,
except when it arises from a transaction which is
recognised directly in equity, in which case the deferred
tax is also charged or credited directly to equity, or
when it arises from a business combination that is an
acquisition, in which case the deferred tax is included in
the resulting goodwill or excess of the acquirer’s interest
in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities over the business
combination costs. The carrying amounts of deferred
tax assets are reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that
suffi cient future taxable profi ts will be available to allow all
or part of the deferred tax assets to be utilised.
75
(m) Equity Instruments
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from proceeds.
Dividends on ordinary shares are recognised as liabilities
when approved for appropriation.
Where the Company purchases any of its own equity
share capital (treasury shares), the consideration paid,
including any directly attributable incremental costs
(net of income taxes) is shown as a deduction from
equity attributable to shareholders of the Company
until the shares are cancelled or reissued. Gain or loss
from cancellation or subsequent reissue is taken as a
movement in equity.
(n) Borrowings
Borrowings are recognised initially at fair value,
net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and
the redemption value is recognised in the income
statement over the period of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement
of the liability for at least 12 months after the balance
sheet date.
(o) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand,
deposits held at call with banks, bank overdraft and
short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
(p) Employee Benefi ts
(i) Short-term Benefits
Wages, salaries, paid annual leave, bonuses and non-
monetary benefits are accrued in the period in which
the associated services are rendered by employees of
the Group.
(ii) Defined Contribution Plans
The Group’s contributions to defined contribution plans
are charged to the income statement in the period to
which they relate. Once the contributions have been
paid, the Group has no further liability in respect of the
defined contribution plans.
(q) Related Parties
For the purpose of these financial statements, a related
party is considered to be related if:
(a) directly, or indirectly through one or more
intermediaries, the party:
(i) controls, is controlled by, or is under
commoncontrol with, the entity (this includes
parents, subsidiaries and fellow subsidiaries);
(ii) has an interest in the entity that gives it significant
influence over the entity; or
(iii) has joint control over the entity.
(b) the party is an associate of the entity;
(c) the party is a joint venture in which the entity is
a venturer;
(d) the party is a member of the key management
personnel of the entity or its parent;
(e) the party is a close member of the family of any
individual referred to in (a) or (d);
(f) the party is an entity that is controlled, jointly
controlled or significantly influenced by, or for which
significant voting power in such entity resides with,
directly or indirectly, any individual referred to in (d)
or (e); or
(g) the party is a post-employment benefit plan for the
benefit of employees of the entity, or of any entity
that is a related party of the entity.
Close members of the family of an individual are those
family members who may be expected to influence, or
be influenced by, that individual in their dealings with
the entity.
76
(r) Segmental Information
Segment revenue and expenses are those directly
attributable to the segments and include any joint
revenue and expenses where a reasonable basis of
allocation exists. Segment assets include all assets
used by a segment and consist principally of property,
plant and equipment (net of accumulated depreciation,
where applicable), other investments, inventories,
receivables and cash and bank balances.
Most segment assets can be directly attributed to the
segments on a reasonable basis. Segment assets do
not include income tax assets, whilst segment liabilities
do not include income tax liabilities and borrowings from
financial institutions.
Segment revenue, expenses and results include
transfers between segments. The prices charged
on inter-segment transactions are based on normal
commercial terms. These transfers are eliminated on
consolidation.
(s) Revenue Recognition
(i) Sale of Goods
Revenue from the sale of goods is recognised when
the significant risks and rewards of ownership of the
goods have passed to the buyer, usually upon delivery
of goods to the port of loading and customers’
acceptance and where applicable, net of sales tax,
returns and trade discounts.
(ii) Interest Income
Interest income is recognised on an accrual basis,
based on the effective yield on the investment.
77
6. Investment in subsidiaries
The Company
30.06.2009USD’000
30.06.2008USD’000
At 1 July / 1 January 18,080 17,985
Acquisition during the fi nancial year/period 3,571 95
At 30 June 21,651 18,080
Details of the subsidiaries are as follows:
* - Held through PCSB. On 7 May 2009, it acquired an additional 3.05% equity interest in PCJX for a total consideration of USD2,374,624. The consideration was satisfied by way of cash consideration of USD1,464,880, 197,860 transfer of PCL shares worth of USD651,480 and motor vehicles of USD258,264 to a minority interest.
On 28 April 2008, PureCircle Limited (“PCL”) has entered
into a joint venture agreement with Finlay Extracts Limited
in Kenya via incorporating Finlay PureCircle Limited
(“FPL”) with 98% shareholding equity. The principal
activities are to develop stevia plantation and source
stevia extract for further purifi cation. On the same day,
PCL has entered into a conditional share option where
Finlay Extracts Limited shall subscribe at the option price
to 51% of the entire issued share capital of FPL.
On 21 October 2008, the Company has entered into a
joint venture arrangement by incorporating PureCircle
South America, Sociedad Anonima in the Republic of
Paraguay with 50% shareholding equity. The principal
activities are to develop stevia plantation and sales and
marketing offi ce for the South America region. On 18
June 2009, PCL acquired the remaining 50% issued
and paid-up share capital for a total consideration of
USD1,570,000.
On 7 November 2008, the Company incorporated a
wholly-owned subsidiary, PureCircle USA, Inc. as a
sales and marketing office servicing customers in the
US market.
On 6 May 2009, a wholly-owned subsidiary, PureCircle
Australia Pty. Ltd., was incorporated for sales and
marketing of natural high intensity sweeteners.
Name of Company Country of Incorporation Effective Equity Interest Principal Activities
2009 2008
PureCircle Sdn. Bhd.(“PCSB”)
Malaysia 100% 100%Production and distribution of natural high intensity sweeteners.
PureCircle (Jiangxi) Co. Ltd.( previously known asGanzhou Julong High-Tech Food Industry Co. Ltd.*) (“PCJX”)
The People’s Republic of China (“The PRC”)
98.05% 95%Manufacturing, marketing and sale of Stevioside and Stevia products.
PureCircle S.A. Switzerland 100% 100%Sales and marketing of natural high intensity sweeteners.
Finlays PureCircle Limited Kenya 98% - Development of stevia plant.
PureCircle South America Sociedad Anonima (“PCSAm”)
Paraguay 100% - Development of stevia plant.
PureCircle USA Inc.United States of America (“USA”)
100% -Sales and marketing of natural high intensity sweeteners.
PureCircle Australia Pty. Ltd. Australia 100% -Sales and marketing of natural high intensity sweeteners.
78
AssetsUSD’000
LiabilitiesUSD’000
RevenueUSD’000
LossUSD’000
SDF Limited 199 151 - 78
Details of the associate are as follows:
* Zhangzhou SDF Stevia Company Limited was liquidated on 25 June 2009 and SDF Limited is in the process of liquidation.
The Group’s share of the results of its associates, all which are unlisted, and its aggregated assets and liabilities, are as follows:
The Group
30.06.2009USD’000
30.06.2008USD’000
At 1 July / 1 January
As previously reported 126 157
Prior year adjustments - (12)
At 1 July / 1 January (restated) 126 145
Share of post-acquisition reserves (78) (19)
At 30 June 48 126
7. Investment in an associate
Name Country of Incorporation Effective Equity Interest Principal Activities
2009 2008
SDF Limited * Hong Kong 30% 30% Investment holding
Zhangzhou SDF Stevia Company Limited *
The People’s Republic of China(“The PRC”) 30% 30% Dormant
8. Intangible assets
GoodwillUSD’000
Intellectual PropertyRights
USD’000
Product Development
USD’000Total
USD’000
The Group
Cost:
At 01.07.2008 - 7,579 960 8,539
Additions during the fi nancial year 1,790 3,535 564 5,889
Foreign exchange translation difference - 19 - 19
At 30.06.2009 1,790 11,133 1,524 14,447
Accumulated amortization:
At 01.07.2008 - 552 - 552
Reversal during the year - (117) - (117)
Foreign exchange translation difference - (6) - (6)
At 30.06.2009 - 429 - 429
Net carrying amount
At 30.06.2009 (1,790) 10,704 1,524 14,018
At 30.06.2008 - 7,027 960 7,987
79
8. Intangible assets continue
Intellectual PropertyRights
USD’000
Product Development
USD’000Total
USD’000
The Group
Cost:
At 01.01.2008
As previously reported 7,417 918 8,335
Prior year adjustments – Effect of IAS 21 (135) (34) (169)
At 01.01.2008 (restated) 7,282 884 8,166
Additions during the fi nancial period - 76 76
Foreign exchange translation difference 297 - 297
At 30.06.2008 7,579 960 8,539
Accumulated amortization:
At 01.01.2008
As previously reported 546 - 546
Prior year adjustments – Effect of IAS 21 (38) - (38)
At 01.01.2008 (restated) 508 - 508
Amortisation 38 - 38
Foreign exchange translation difference 6 - 6
At 30.06.2008 552 - 552
Net carrying amount
At 30.06.2008 7,027 960 7,987
Intellectual PropertyRights
USD’000
The Company
At 01.01.2008 -
Additions during the fi nancial period 71
At 30.06.2008 71
Intellectual property rights comprise the patents, trade
mark technology process, micro-organisms and all
intellectual and industrial property rights in connection
therewith on the production of natural enzymatically
enhanced sweetener, pharmaceutical products and
chemical derivatives of bio-organic and physiologically
active compounds.
(a) Key assumptions for value-in-use calculations
The recoverable amount of a cash generating
unit (“CGU”) is determined based on value-in-use
calculations using cash flow projections based on
financial budgets approved by management covering a
five-year period. The key assumptions used for each of
the CGU’s value-in-use calculations are:
(i) Growth rate
The average growth rate used is based on the
planned capacity and forecasted demands.
(ii) Gross margin
The budgeted gross margin used is based on the
average selling prices and the fixed and variable
costs achieved in the year immediately before the
budgeted year, adjusted for market conditions and
economic conditions and internal resource efficiency.
(iii) Discount rate
The discount rates used ranged between 10% and
25% which approximate the CGUs’ average cost of
funds and risk factor.
(b) Sensitivity to changes in assumptions
The management believes that no reasonably possible
change in any of the above key assumptions would
cause the carrying value of the intangible assets to be
materially higher than its recoverable amount.
80
9. Property, plant and equipment
Freehold landUSD’000
BuildingsUSD’000
Extraction and refi nery
plantsUSD’000
Offi ce equipment,
furniture and fi ttings and motor
vehiclesUSD’000
Capital work-in-progress
USD’000Total
USD’000
The Group
Cost:
At 01.01.2008 501 2,088 27,059 1,899 5,031 36,578
Additions 95 2,370 17,898 744 14,624 35,731
Reclassifi cation - 11,413 - - (11,413) -
Disposals - - (13) (388) - (401)
Foreign exchange translation reserve - 8 21 4 23 56
At 30.06.2009 596 15,879 44,965 2,259 8,265 71,964
Accumulated depreciation:
At 01.07.2008 - 187 3,840 619 - 4,646
Charge for the year - 107 2,010 336 - 2,453
Disposals - - (1) (163) - (164)
Foreign exchange translation reserve - 5 9 47 - 61
At 30.06.2009 - 299 5,858 839 - 6,996
Net book value:
At 30.06.2009 596 15,580 39,107 1,420 8,265 64,968
At 30.06.2008 501 1,901 23,219 1,280 5,031 31,932
Depreciation charge for the year ended 30.06.2009 - 107
2,010 336 - 2,453
81
9. Property, plant and equipment continue
Freehold landUSD’000
BuildingsUSD’000
Extraction and refi nery
plantsUSD’000
Offi ce equipment,
furniture and fi ttings and motor
vehiclesUSD’000
Capital work-in-progress
USD’000Total
USD’000
The Group
Cost:
At 01.01.2008:
As previously reported 524 1,958 25,518 1,570 791 30,361
Prior year adjustments – Effect of IAS 21 (23) - (819) (37) (56) (935)
At 01.01.2008 (restated) 501 1,958 24,699 1,533 735 29,426
Additions - 23 2,713 322 4,878 7,936
Reclassifi cation - - 242 - (242) -
Foreign exchange translation reserve - 107 (595) 44 (340) (784)
At 30.06.2008 501 2,088 27,059 1,899 5,031 36,578
Accumulated depreciation:
At 01.01.2008:
As previously reported - 127 3,028 481 - 3,636
Prior year adjustments – Effect of IAS 21 - - (21) (14) - (35)
At 01.01.2008 (restated) - 127 3,007 467 - 3,601
Charge for the year - 52 759 142 - 953
Foreign exchange translation reserve - 8 74 10 - 92
At 30.06.2008 - 187 3,840 619 - 4,646
Net book value:
At 30.06.2008 501 1,901 23,219 1,280 5,031 31,932
At 01.01.2008 (restated) 501 1,831 21,692 1,066 735 25,825
Depreciation charge for the year ended 30.06.2008 - 52
759 142 - 953
82
9. Property, plant and equipment continue
The carrying values of property, plant and equipment
charged to fi nancial institutions to secure banking
facilities granted to the Group are as follows:
The Group
30.06.2009USD’000
30.06.2008USD’000
Extraction and refi nery plants 25 60
Motor vehicles 323 327
The carrying values of plant and equipment acquired
under hire purchase terms are as follows:
Interest expense capitalised during the financial year
under extraction and refinery plants of the Group
amounted to USD627,453.
The Group
30.06.2009USD’000
30.06.2008USD’000
Freehold land 501 501
Extraction and refi nery plants 26,762 18,911
27,263 19,412
The prepaid land lease payments represent the Group’s
right to use the land for 20 years. Accordingly, the
amortisation of the prepaid land lease payments is on a
straight line basis over 20 years. The prepaid land lease
payments have been pledged as security for banking
facilities granted to the Group.
10. Prepaid land lease payments
The Group
30.06.2009USD’000
30.06.2008USD’000
At 1 July / 1 January 2,265 1,457
Additions for the fi nancial year/period 514 716
Amortisation for the fi nancial year/period (25) (20)
Effect of foreign exchange translation 22 112
At 30 June 2,776 2,265
11. Inventories
The Group
30.06.2009USD’000
30.06.2008USD’000
At Cost:-
Raw materials 18,207 3,191
Work-in-progress 10,019 4,790
Finished goods 3,226 1,601
31,452 9,582
83
The Group
30.06.2009USD’000
30.06.2008USD’000
Chinese Renminbi 2,131 567
Ringgit Malaysia 125 36
The foreign currency exposure profile of the trade receivables at the balance sheet date was as follows:
The Group
30.06.2009USD’000
30.06.2008USD’000
Up to 3 months - 35
3 to 6 months 94 33
94 68
The Group’s normal trade credit terms range from 15 to 45 days. Other credit terms are assessed and approved on a case-by-case basis.
The trade receivables that are less than three months past due are not considered impaired. As of 30 June 2009,
trade receivables of USD93,949 (2008: USD68,000) were past due not impaired. These related to a number of independent customers for whom there is no recent history of default. The ageing of these trade receivables is as follows:
12. Trade receivables
The Group
30.06.2009USD’000
30.06.2008USD’000
Chinese Renminbi 6,563 4,691
Ringgit Malaysia 2,174 1,697
Swiss Franc 125 -
Kenya Shilling 8 -
Guarani 511 -
Sterling Pound - 121
The foreign currency exposure profile of the other
receivables, deposits and prepayments at the balance
sheet date was as follows:
The Group The Company
30.06.2009USD’000
30.06.2008USD’000
30.06.2009USD’000
30.06.2008USD’000
Other receivables, deposits and prepayments
As previously reported 11,044 7,682 1,145 1,250
Prior year adjustments - (16) - -
As at 1 July / 1 January 11,044 7,666 1,145 1,250
Allowance for doubtful debts (24) (24) - -
11,020 7,642 1,145 1,250
13. Other receivables, deposits and prepayments
84
14. Amount owing by a subsidiary
The amount owing is unsecured, interest-free and is
repayable on demand. The amount owing is to be settled
in cash.
15. Amount owing by related parties
The amount owing is unsecured, interest-free and is
repayable on demand. The amount owing is to be settled
in cash.
16. Loans and receivables
The Group The Company
30.06.2009USD’000
30.06.2008USD’000
30.06.2009USD’000
30.06.2008USD’000
Trade receivables 27,173 7,430 - -
Other receivables, deposits and prepayments 11,020 7,642 1,145 1,250
Trade and other receivables 38,193 15,072 1,145 1,250
Amount owing by a subsidiary - - 53,427 28,869
Amount owing by related parties - 1,433 - -
Short-term deposits with licensed banks 14,710 13,563 - 8,502
Cash and bank balances 4,210 30,888 124 19,003
57,113 60,956 54,696 57,624
The weighted average interest of the short-term deposits at the balance sheet date was 0.35% per annum. The short-term deposits have weighted maturity period of 7 days.
The foreign currency exposure profile of the short-term deposits with licensed banks at balance sheet date was as follows:
17. Short-term deposits with licensed banks
The Group
30.06.2009USD’000
30.06.2008USD’000
Chinese Renminbi 2,706 -
The Group The Company
30.06.2009USD’000
30.06.2008USD’000
30.06.2009USD’000
30.06.2008USD’000
Chinese Renminbi 162 10,315 - -
Ringgit Malaysia 290 53 20 3
Sterling Pound 15 301 14 301
Swiss Franc 67 168 - -
Kenya Shilling 8 - - -
Guarani 53 - - -
The foreign currency exposure profi le of the cash and bank balances at the balance sheet date was as follows:
18. Cash and bank balances
85
19. Share capital
The movements in the authorised and paid-up share
capital are as follows:
The Company 30.06.2009
Par ValueUSD Number of Shares USD
Authorised
At 1 July 0.10 250,000,000 25,000,000
Movement during the fi nancial year 0.10 - -
At 30 June 0.10 250,000,000 25,000,000
Issued and fully paid-up
At 1 July 0.10 132,723,044 13,272,304
Issuance of shares 0.10 - -
At 30 June 0.10 132,723,044 13,272,304
The Company 30.06.2008
Par ValueUSD Number of Shares USD
Issued and fully paid-up
At 1 January 2008 0.10 130,285,714 13,028,571
Issuance of shares for additional shareholding in a subsidiary 0.10 2,437,330 243,733
At 30 June 2008 0.10 132,723,044 13,272,304
20. Share premium
The Group / The Company
30.06.2009USD’000
30.06.2008USD’000
At beginning of fi nancial year / period 64,104 55,697
Premium arising from:
- issue of shares to fund the acquisition of subsidiary and working capital purposes - 8,287
Gain from sale of treasury shares 1,598 120
Transfer of shares 651 -
At end of fi nancial year / period 66,353 64,104
86
The Group / The Company
30.06.2009USD’000
30.06.2008USD’000
Expense arising from equity-settled share-based payment transactions 1,224 480
The Company implemented the Long Term Incentive Plan (“LTIP”), the principal terms include a restriction on the Company issuing (or granting rights to issue) more than 10 per cent of its issued ordinary share capital under the LTIP (and any other employee share plan) in any ten calendar year period. Awards may be linked to performance conditions. It is currently intended that, other than in exceptional circumstances, such as senior recruitment, all awards will be subject to performance conditions and that, initially, the performance conditions will be linked principally to the Company’s share price. However, in the future the LTIP also allows for internal target measures to be used where such measures are themselves drivers of shareholder’s value.
LTIP recognises the fast growth and changing nature of the Company and the need to recruit and retain executives in very different employment markets around the world. Accordingly, LTIP allows for the Remuneration Committee to exercise signifi cant discretion in exceptional cases where the Committee considers executives will bring particular value to shareholders. The fair value of share options granted is estimated at the date of the grant using a Black-Scholes simulation model, taking into account the terms and conditions upon which the options were granted.
23. Share option reserve
The expense recognised for employee services received during the year is shown in the following table:
30.06.2009 30.06.2008
Weighted average price per share
Options‘000
Weighted average price per share
Options‘000
At beginning of year / period 1.63 1,280 - -
Granted - 1,194 1.58 1,400
Exercised 1.00 (120) 1.00 (120)
Expired 1.00 (360) - -
At end of year / period 0.81 1,994 1.63 1,280
21. Treasury shares
During the fi nancial year, the Company sold 120,000 treasury shares to a director of the Company for a total cash consideration of USD120,000.
In addition, the Company disposed of 595,360 shares for the acquisition of 3.05% shareholding from a minority shareholder of PCJX. Refer to note 35 for more details.
At 30 June 2009, the Company held a total of 224,640 treasury shares.
22. Foreign exchange translation reserve
The foreign exchange translation reserve arose from the translation of the financial statements of the foreign subsidiaries.
87
27. Other payables and accruals
The Group
30.06.2009USD’000
30.06.2008USD’000
Chinese Renminbi 2,830 1,322
Pound Sterling - 53
Ringgit Malaysia 1,621 377
Swiss Franc 47 -
Kenya Shilling 470 -
Guarani 11 -
The foreign currency exposure profi le of the other payables and accruals at the balance sheet date was as follows:
The Group The Company
30.06.2009USD’000
30.06.2008USD’000
30.06.2009USD’000
30.06.2008USD’000
Trade payables 2,945 1,186 - -
Other payables and accruals 5,766 2,029 221 63
Total borrowings 66,427 27,884 - -
75,138 31,099 221 63
24. Financial liabilities measured at amortised cost
25. Long-term borrowings
The Group
30.06.2009USD’000
30.06.2008USD’000
Lease and hire purchase payables 230 247
Term loans (Note 38) 39,778 11,641
40,008 11,888
The Group
30.06.2009USD’000
30.06.2008USD’000
Chinese Renminbi - 4,376
Ringgit Malaysia 40,008 7,512
The foreign currency exposure profi le of the long-term borrowings at the balance sheet date was as follows:
26. Trade payables
The Group
30.06.2009USD ’000
30.06.2008USD ’000
Chinese Renminbi 854 1,044
Ringgit Malaysia 1,949 142
Euro 10 -
Guarani 22 -
The normal trade credit terms granted to the Group range from 0 to 60 days.
The foreign currency exposure profi le of the trade payables at the balance sheet date was as follows:
88
30. Net assets per share
The net assets per share is calculated based on the net assets value at the balance sheet date of USD94,637,000 (2008: USD80,368,000) divided by the number of ordinary shares in issue (excluding the treasury shares held by the Company) at the balance sheet date of 132,498,404 (2008: 131,783,044).
31. Revenue
Revenue represents the invoiced value of services rendered less returns and trade discounts.
29. Bank overdraft
The bank overdraft bore an effective interest rate of 6.5% (2008: 6.75%) per annum at the balance sheet date and is secured by way of:
(i) a fi xed and fl oating charge over present and future assets and the freehold property of a subsidiary; and
(ii) the joint and several guarantee of certain directors. The foreign currency exposure profi le of the short-term borrowings at the balance sheet date was as follows:-
The Group
30.06.2009USD’000
30.06.2008USD’000
Ringgit Malaysia - 388
32. Finance costs
Finance costs are arrived at after crediting:
The Group
01.07.2008-30.06.2009USD’000
01.01.2008-30.06.2008USD’000
(Restated)
Interest income 322 600
Foreign exchange gain 3,232 563
28. Short-term borrowings
The Group
30.06.2009USD’000
30.06.2008USD’000
Bills payable 12,528 11,808
Lease and hire purchase payables 61 65
Term loans (Note 38) 13,830 3,735
26,419 15,608
The Group
30.06.2009USD’000
30.06.2008USD’000
Chinese Renminbi 4,391 2,024
Ringgit Malaysia 22,028 13,583
The foreign currency exposure profi le of the short-term borrowings at the balance sheet date was as follows:
89
The Company was granted a tax assurance certifi cate dated 18 August 2007 under the Exempted Undertakings Tax Protection Act 1966 pursuant to which it is exempted from any Bermuda taxes (other than local property taxes) until 28 March 2016. The subsidiary, PCSB, has been granted the Bio-Nexus Status by the Malaysian Biotechnology Corporation Sdn Bhd in which PCSB is entitled to a 100% income tax exemption for a period of 10 years on its income commencing from the date of commercial operation. Upon the expiry of the 10-year incentive period, PCSB will be entitled to a concessionary tax rate of 20% on
income derived from qualifying activities for a further period of 10 years.
The other subsidiary, PCJX, has also been granted a 100% exemption on corporate tax from 1 January to 31 December 2008 and 50% exemption on corporate tax from 1 January 2009 to 31 December 2011.
A reconciliation of income tax expense applicable to the profit before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group is as follows:
33. Income tax expense
The Group
01.07.2008-30.06.2009USD’000
01.01.2008-30.06.2008USD’000
(restated)
Current tax
- foreign tax 352 -
The Group
01.07.2008-30.06.2009USD’000
01.01.2008-30.06.2008USD’000
Profi t before taxation 11,422 1,130
Tax at the statutory tax rates in the respective countries 2,288 (277)
Tax effects of:-
Non-deductible expenses 530 283
Non-taxable income (618) 83
Deferred tax assets not recognised during the fi nancial year/period - (89)
Utilisation of deferred tax assets (1,848) -
Income tax expense 352 -
The Group
30.06.2009 30.06.2008
Profi t attributable to equity holders of the Company (USD’000) 11,203 860
Weighted average number of ordinary shares in issue (thousands) 131,920 129,915
Basic earnings per share (US Cents) 8.49 0.66
The Group
30.06.2009 30.06.2008
Profi t attributable to equity holders of the Company (USD’000) 11,203 860
Weighted average number of ordinary shares in issue (thousands) 132,992 130,320
Fully diluted earnings per share (US Cents) 8.42 0.66
The basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in
issue (excluding the treasury shares) during the year as disclosed in Note 21 to the financial statements:
The fully diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary
shares that would have been in issue had all the options been exercised:
34. Earnings per share
90
35. Acquisition of a subsidiary, net of cash acquired
(a) On 21 October 2008, the Company has entered into a joint venture arrangement by incorporating PureCircle South America (“PCSAm”), SA in the Republic of Paraguay with 50% shareholding equity. On 18 June 2009, PCL acquired the remaining 50% issued and paid-up share capital for a total consideration of USD1,570,000.
(b) On 7 May 2009, the Company through its wholly-owned subsidiary acquired additional 3.05% equity interest in PCJX for a total consideration of USD2,374,624. The consideration was satisfi ed by cash of USD1,464,880, transfer of treasury shares of 197,860 worth of USD651,480 and fi xed assets of USD258,264.
36. Purchase of property, plant and equipment
The Group
30.06.2009USD’000
30.06.2008USD’000
Cost of property, plant and equipment 35,731 7,936
Amount fi nanced through term loan (3,215) (1,522)
Amount fi nanced through hire purchases (78) (71)
Cash disbursed for purchase of property, plant and equipment 32,438 6,343
38. Term loans
The Group
30.06.2009USD’000
30.06.2008USD’000
Current portion (Note 28):
- repayable within one year 13,830 3,735
Non-current portion (Note 25):
- repayable between one and two years 21,917 11,146
- repayable between two and fi ve years 17,861 495
Total non-current portion 39,778 11,641
53,608 15,376
37. Cash and cash equivalents
The Group
30.06.2009USD’000
30.06.2008USD’000
Fixed deposits 14,710 13,563
Cash and bank balances 4,210 30,888
Bank overdraft - (388)
18,920 44,063
For the purpose of the cash fl ow statements, cash and cash equivalents comprise the following:
91
The term loans bore a weighted average effective interest rate of 6.93% (2008: 7.78%) per annum at the balance sheet date.
Details of the repayment terms of the term loans are as follows:
Term Loans Number of monthly repayment Monthly repayment amountCommencement date of
repayment Amount outstanding
USD’000
The Group 30.06.2009
USD’000
1 84 175 April 05 3,982
2 48 70 July 08 4,821
3 60 799 July 09 40,414
4 1 4,391 July 09 4,391
53,608
38. Term loans continue
The fair values of the term loans approximated their carrying amounts.
Term loan 1 and 2 are secured by way of: (i) a fi xed and fl oating charge over present and future
assets and the freehold property of a subsidiary;
(ii) corporate guarantee by PCL; and
(iii) legal charge over landed property of a subsidiary.
Term loan 3 is secured by way of a legal charge over landed property of a subsidiary.
Term loan 4 is secured as follows:-(i) a legal charge over certain assets of the subsidiary;
and
(ii) a legal charge over the prepaid land lease payments of the subsidiary.
(a) Identities of related parties
The Group and/or the Company have related party relationships with:
(i) its subsidiaries as disclosed in Note 6 to the fi nancial statements.
(ii) the directors who are the key management personnel; and
(iii) companies in which certain directors are common directors and/or substantial shareholders.
39. Signifi cant related party transactions
92
(i) Related Parties
The Group
30.06.2009USD’000
30.06.2008USD’000
Sale of treasury shares to a director of the Company 120 120
Debts waiver by a director 319 -
Amount owing by a director in respect of shares sold to him 970 970
(ii) Key Management Personnel
The Group
30.06.2009USD’000
30.06.2008USD’000
Short-term employee benefi ts 596 449
Share-based payments 1,224 480
39. Signifi cant related party transactions continue
The Group
30.06.2009USD’000
30.06.2008USD’000
Amount owing by the management of the PCJX terms as disclosed in Note 15 to the fi nancial statements - 1,433
40. Signifi cant related party balances
The applicable closing foreign exchange rates used (expressed on the basis of one unit of foreign currency to United States Dollar equivalent) for the translation of
foreign currency balances at the balance sheet date are as follows:
The Group
30.06.2009 30.06.2008
Chinese Renminbi 0.1464 0.1459
Ringgit Malaysia 0.2832 0.3062
Swiss Franc 0.9000 -
Kenya Shilling 0.0130 -
Guarani 0.0002 -
Australian Dollar 0.8285 -
41. Foreign exchange rates
(b) In addition to the information detailed elsewhere in the fi nancial statements, the Group carried out the following transactions with related parties during the fi nancial year:
93
42. Segmental reporting
30.06.2009
Investment HoldingsUSD’000
Natural SweetenerUSD’000
Sales & MarketingUSD’000
EliminationsUSD’000
TotalUSD’000
Revenue - 131,137 - (71,114) 60,023
Result
Segment profi t 11,836
Finance costs (414)
Profi t before taxation 11,422
Income tax expense (352)
Profi t after taxation 11,070
Other information
Segment assets # 76,418 174,686 13,191 (93,920) 170,375
Segment liabilities * 221 113,828 14,517 (53,428) 75,138
Capital expenditure - 51,190 - - 51,190
Depreciation and amortisation - 2,453 - - 2,453
(i) Primary reporting format - business segments
30.06.2008
Investment HoldingsUSD’000
Natural SweetenerUSD’000
EliminationsUSD’000
TotalUSD’000
Revenue - 26,962 (7,288) 19,674
Result
Segment profi t 2,126
Finance costs (996)
Profi t before taxation 1,130
Income tax expense -
Profi t after taxation 1,130
Other information
Segment assets # 75,704 74,331 (37,187) 112,848
Segment liabilities * 63 31,832 (796) 31,099
Capital expenditure - 8,895 - 8,895
Depreciation and amortisation - 953 - 953
Notes
# - Segment assets comprise total current and non-current assets.
* - Segment liabilities comprise total current and long-term liabilities.
94
42. Segmental reporting continue
(ii) Secondary reporting format - geographical segments
Capital expenditure at the balance sheet date is as follows:
43. Capital commitment
The Group
30.06.2009USD’000
30.06.2008USD’000
Approved and contracted for Property, plant and equipment 5,814 2,499
Approved but not contracted for Property, plant and equipment - 12,717
The Group
30.06.2009USD’000
30.06.2008USD’000
Revenue
USA 12,433 -
Malaysia 43,410 15,220
PRC 3,842 4,454
Other countries 88 -
59,773 19,674
Total Assets
USA 12,921 -
Malaysia 74,106 16,828
PRC 78,552 38,252
Other countries 4,796 57,728
170,375 112,848
Capital expenditure
USA 2 -
Malaysia 9,153 1,986
PRC 39,952 6,909
Other countries 2,083 -
51,190 8,895
95
Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.
The following methods and assumptions are used to estimate the fair value of each class of fi nancial instruments:
(a) Cash And Cash Equivalents And Other Short-Term Receivables / Payables
The carrying amounts approximated their fair values due to the relatively short-term maturity of these investments.
(b) Long-Term Borrowings The carrying amounts approximated the fair
values of these instruments. The fair values of the long-term borrowings are determined by discounting the relevant cash flows using current interest rates for similar types of instruments at the balance sheet date.
44. Fair values of fi nancial assets and liabilities
The comparative figures are in respect of financial period from 1 January 2008 to 30 June 2008. The comparative figures have taken into effect the adoption of USD functional currency for certain subsidiaries. Accordingly, the comparative figures have been re-evaluated as follows:
45. Comparative fi gures
As previously reportedUSD’000
Effect of IAS 21 USD’000
As restated USD’000
Balance Sheet
Investment in associate 141 (15) 126
Intangible assets 8,200 (213) 7,987
Property, plant and equipment 32,947 (1,015) 31,932
Prepaid land lease payments 2,285 (20) 2,265
Inventories 9,583 (1) 9,582
Other receivables, deposits and prepayment 7,658 (16) 7,642
Cash and bank balances 30,891 (3) 30,888
Long-term borrowings (11,890) 2 (11,888)
Other payables (2,079) 50 (2,029)
Currency translation differences (2,251) 812 (1,439)
Minority interest (1,383) 2 (1,381)
Retained profi t (1,490) 417 (1,073)
Income Statement
Revenue 19,290 384 19,674
Cost of sales (15,282) 224 (15,058)
Other income 2,937 264 3,201
Administrative expenses (4,710) (981) (5,691)
96
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Horwath (Kuala Lumpur)
Level 16, Tower CMegan Avenue II12 Jalan Yap Kwan Seng50450 Kuala Lumpur, Malaysia
Auditors
RFC Corporate Finance Limited
Level 14, 19-31 Pitt StreetSydney NSW 2000, Australia
Level 15, QV1 Building250 St George’s TerracePerth WA 6000, Australia
Nominated adviser
Hanson Westhouse Limited
12th Floor, 1 Angel CourtLondon EC2R 7HJ, United Kingdom
Mirabaud Securities Limited
21 St James’s SquareLondon SW1Y 4JP, United Kingdom
Brokers
Equity Development Limited
Westport Communications Limited
65, London WallLondon EC2M 5TU, United Kingdom
Investor and Public Relations
In Jersey (Shares)Computershare Investor Services
(Channel Islands) Limited
PO Box 83, Ordnance House31 Pier Road, St HelierJersey JE4 8PW, Channel Islands
In the UK (Depositary Interests)Computershare Investor Services plc
The Pavilions, Bridgwater RoadBristol BS13 8AE, United Kingdom
Share registrar
6. Shareholder information
PureCircle Group operates three websites which are updated regularly to cater for different information needs:
Investors and corporate stakeholders www.purecircle.comCustomers and product developers www.purecircletechnical.comConsumer www.reb-a.com
Internet
Request for further copies of the annual report or other investor relations matters should be addressed to PureCircle offi ce.
Investor relations
The Annual General Meeting (AGM) will be announced following publication of the Group’s results for fi nancial year 2010.
2010 fi nancial year and corporate calendar
Half year end 31 December 2009Interim results 10 March 2010Year end 30 June 2010Final results announcement 22 September 2010
Annual general meeting
Registered offi ce
Clarendon House2 Church StreetHamilton HM 11Bermuda
United States
PureCircle USA Inc.915 Harger Road, Suite 250Oak BrookIllinois 60523, USAT +1 866 960 8242E [email protected]
Switzerland
PureCircle SARoute de Pré-Bois 20 Case Postale 1893International Center Cointrin - Bâtiment H1215 Genève15, Switzerland T +41 22 710 7475E [email protected]
Malaysia
PureCircle Sdn BhdUnit 19-03-02, 3rd Floor, PNB Damansara No.19, Lorong Dungun, Damansara Heights 50490 Kuala Lumpur, Malaysia T +603 2093 9333 E [email protected]
PureCircle Offi ces
97
98
www.purecircle.com
