14 Nov 2019 07:40
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
14 November 2019
Company update
PureCircle (LSE: PURE) (the "Company" and together with its subsidiary undertakings, the "Group"), the world's leading producer and innovator of great tasting stevia sweeteners for the global food and beverage industry, provides the following update further to the announcements of 20 September, 25 October and 28 October 2019.
The Company appointed KPMG LLP to investigate the issues announced on 20 September 2019 relating to the classification and valuation of inventory. In line with the Company's previous guidance, KPMG's provisional assessment is that those issues have had the cumulative effect of reducing inventory by approximately US$23 million and consequently increasing cost of goods sold by the same amount, spread across financial years 2018 and 2019, with potentially a relatively modest adjustment to 2017.
The Company does not expect this amount to change materially, but it has yet to be signed off by the Group's auditors, PricewaterhouseCoopers. The adjustments will have consequential effects on the potential carrying value of some of the Group's intangible assets and inventory items, some of which may be material. The adjustments will be reflected in the Group's audited financial statements for the year ended 30 June 2019.
The Company and its professional advisers have seen no indication that the issues identified will have any impact on the net debt of the Group or the cash generation of the business.
The Company is in ongoing discussions with its banks and is seeking appropriate waivers with regard to certain covenants under its banking arrangements.
During the course of the work of KPMG and PricewaterhouseCoopers, matters of concern have recently been identified in relation to how certain other transactions have been constructed and/or reflected in the Group's accounting records. Some of these matters indicate potential impropriety. The Company and its professional advisers are now investigating these matters further, both to examine them fully and to quantify their potential impact.
The Group's CEO, Magomet Malsagov, has voluntarily agreed to stand aside on a temporary basis with immediate effect as Group CEO and as a director of Group companies, pending further investigation of the issues that have been identified. The Company's Chairman, John Slosar, has assumed the role of Interim Group CEO with immediate effect. Mr. Malsagov, acting in the capacity of Adviser to the Chairman, will assist John Slosar in this role.
Further updates will be made in due course.
Enquiries:
Investors/Analysts
John Slosar, Chairman and Interim CEO
Phone: +603 2166 2206
Newgate Communications, Media Relations
Elisabeth Cowell
Giles Croot
Email: purecircle@newgatecomms.com
Phone: +44 (0) 20 3757 6880
Notes to Editors
About PureCircle
·; PureCircle is the only company that combines advanced R&D with full vertical integration from farm to high-quality, great-tasting innovative stevia sweeteners.
·; The Company collaborates with farmers who grow the stevia plants and with food and beverage companies which seek to improve their low- and no-calorie formulations using a sweetener from plants.
·; PureCircle will continue to: lead in research, development and innovation; produce a growing supply of multiple varieties of stevia sweeteners with sugar-like taste, using all necessary and appropriate methods of production; and be a resource and innovation partner for food and beverage companies.
·; PureCircle stevia flavor modifiers work in synergy with sweeteners to improve the taste, mouthfeel and calorie profile, and enhance the cost effectiveness, of beverage and food products.
·; Founded in 2002, PureCircle is continually investing in breakthrough research and development and it has been granted over 100 stevia-related patents with more than 250 applied for patents pending.
·; PureCircle has offices around the world with the global headquarters in Chicago, Illinois.
·; To meet growing demand for stevia sweeteners, PureCircle is rapidly ramping up its supply capability. It completed expansion of its Malaysian stevia extract facility in March 2017, increasing its capacity to rapidly supply the newer and great-tasting specialty stevia sweeteners and helping provide ever-increasing value to its customers.
·; PureCircle's shares are listed on the main market of the London Stock Exchange.
·; For more information, visit: www.purecircle.com
About stevia
·; Given the growing global concerns about obesity and diabetes, beverage and food companies are working responsibly to reduce sugar and calories in their products, responding to both consumers and health and wellness advocates. Sweeteners from the stevia plant offer sugar-like taste and are becoming an increasingly important tool for these companies.
·; Like sugar, stevia sweeteners are from plants. But unlike sugar, they enable low-calorie and zero-calorie formulations of beverages and foods.
·; Stevia leaf extract is a natural-based, zero calorie, high-intensity sweetener, used by global food and beverage companies as a great-tasting zero-calorie alternative to sugar and artificial sweeteners.
·; Stevia is a naturally sweet plant native to South America; today, it is grown around the world, notably in Kenya, China and the US.
·; The sweet-tasting parts of the stevia leaf are up to 350 times sweeter than sugar: stevia's high-intensity sweetness means it requires far less water and land than sugar.
·; Research has shown that the molecules of the stevia leaf are present and unchanged in the dried stevia leaf, through the commercial extraction and purification process, and in the final stevia leaf extract product. All major global regulatory organisations, across 65 countries, have approved the use of high-purity stevia leaf extracts in food and beverages.
For more information on the science of stevia, please visit https://www.purecirclesteviainstitute.com/