PURE.L Regulatory News (PURE)

8 Jul 2009 07:00



PureCircle Limited

("PureCircle" or "the Company")

Trading Update

London: 8 July 2009

PureCircle (LSE:PURE), the world's leading producer of Natural High Intensity Sweeteners, including Reb A ('NHIS'), will announce results for the year ended 30 June 2009 ("FY 2009") on Wednesday 23 September 2009.

The Board is taking the opportunity to provide the market with a summary of progress during the year, the first full fiscal year of trading since the Company's IPO in December 2007.

Overview

FY 2009, as expected, was a transformational year for our market and for the Company. PureCircle has established a strong platform from which to lead the future growth of this global industry.

For FY 2009 the Company expects to report:

Sales of 264 MT of Reb A (FY 2008: 115 MT), an increase of 130%

Sales of not less than $62 million (FY 2008: $33 million), an increase of 85%

Net profit of not less than $11 million (FY2008: $2 million), an increase of 420%

Net debt of not more than $49 million (FY 2008: net cash of $27 million)

Net assets of not less than $94 million (FY 2008: $83 million)

The NHIS market has been clearly established. The US Food & Drug Administration ("FDA") approval in December 2008 was followed by product launches and strong consumer pull-through.

However, the December 2008 timing of the FDA approval came too late for any new customers to plan Reb A sweetened product launches into their calendar 2009 budgets.

With discussions in progress with over 100 F&B brands, indications are that the expected new product launches, above existing committed volumes, will commence during calendar 2010. 

Sales & Marketing

i. Regulatory Approvals

During FY 2009, key regulatory approvals were achieved. Clearances were granted by:

FAO / WHO Expert Committee on Food Additives (JECFA)

Switzerland 

Australia & New Zealand

US FDA 

France, the UK and the wider European Union and Canada are expected to be secured soon.

Essentially, regulatory approval is no longer a barrier to the market's development.

ii. Product Launches & Consumer Pull Through

Product launches into the US market so far have included:

SoBe LifeWater and Tropicana Juice drinks by PepsiCo

Sprite Green, Odwalla and Vitaminwater by The Coca-Cola Company

All Sport by Dr. Pepper Snapple Group

PureVia, Truvia and Stevia In The Raw table-top products by Whole Earth, Cargill and Cumberland Packing Corp. respectively.

The launches have been backed by multi-million dollar advertising and promotional support and are seeing strong consumer pull through.  Reb A based products now account for upwards of 10% of the USA table top segment and Reb A flavoured soft drink products are outperforming their categories.

iii. Diversified customer base

PureCircle's aim is to secure a highly diversified customer base. At 30 June 2008, the Company was selling Reb A to just one customer. Today, the Company is selling Reb A to more than 25 customers, albeit most on a formulation trial basis. We are in discussions with over 100 national and international F&B brands covering all F&B categories.

iv. Global sales & marketing organisation

The Company has established a global sales and marketing footprint:

Americas (USA, Paraguay)

EMEA (Switzerland, Russia) 

Asia Pacific (Japan, Australia, Malaysia, China)

During FY 2009, PureCircle has recruited a highly experienced sales and marketing leadership team. The Company is pleased to announce a further strengthening of that team with the appointment of:

Jason Hecker, formerly of Kraft Foods, as Marketing director for The Americas

Mike Wolff, formerly of NutraSweet, as Sales Director USA

Mauricio Bacigaluppo from Tate & Lyle as Sales Director, Latin America

Supply Chain

PureCircle has consolidated its clear global supply chain leadership during FY 2009.

i. Extract

The Company quadrupled the capacity of its Jiangxi extraction plant complex to 4,000 MT. The $35 million investment, which includes water and biomass recycling plants, has been developed on a modular basis providing a platform for further expansion as required.

ii. Refining

In Q4 FY 2009, actual refinery production equated to an annualised rate of over 500 MT a year. This represents a scaling of more than 300% on the equivalent period to 30 June 2008.

Investment to expand the refinery's capacity to 2,000 MT per annum is on track and scheduled for completion by 31 December 2009.

iii. Leaf

PureCircle purchased more than 20,000 MT of leaf during FY 09, making the Company the world's dominant buyer.

The Company's aim is to have a highly diversified leaf supply base. At 30 June 2008, the Company was buying leaf from just China. Today, the Company has established potential sources of leaf in seven countries and is in discussions with a further ten.

Finance

i. Profitability

During FY 2009, the Company's net profits are expected to be not less than $11 million (FY 2008: $2 million), an increase of over 420%. 

This result, achieved in a year with low production capacity utilisation, confirms the robustness of the business model.

ii. Investment and funding

FY 2009 has been a year of transformational investment as the Company consolidated its supply chain platform to lead the growth of the emerging global industry.

During FY 2009, the Company has invested $39 million in capital expenditure and expansion of its leaf supply chain, $23 million in receivables and $14 million in inventories, principally leaf.

The investment results in net debt at the year-end of not more than $49 million (FY 2008: net cash $27 million).

The Company has secured expanded banking facilities of $110 million for a five-year period of which over $45 million remains available for draw down.  The Company is also in advanced discussions regarding additional facilities.

At 30 June 2009, the Company had net assets of not less than $94 million. PureCircle is therefore well capitalised and has the funding headroom for current planned expansion.

Summary 

Magomet Malsagov, Chief Executive, commented:

"This was a transformational year for the NHIS market and for PureCircle.

"We have established PureCircle as the world's leading supplier of Reb A. We have world class infrastructure in place and an excellent management team leading the business.

"We expect the world's F&B companies to increase the rate of launches using Reb A during 2010 and 2011.

"We are witnessing the emergence of a major new global industry. PureCircle is the undisputed market leader and we are well placed for further growth."

For further information please visit the company website: www.purecircle.com