Sorbic International Regulatory News (SORB)

Sorbic International Plc

("Sorbic" or the "Group" or the "Company")

Interim Results

Sorbic International plc, (AIM:SORB), the third largest sorbates producer in China, today announces its unaudited Interim Results for the six month period ended 31 March 2012.

Summary

John McLean, Non-Executive Chairman of Sorbic International, commented: "The Board is pleased to report a strong increase in revenue and continued demand for the Group's products, despite the challenges faced by the Group in the period under review. As previously announced, the Group's manufacturing facility in Inner Mongolia is currently subject to uncertainty. As a consequence, the final installation stage of this manufacturing facility did not resume in May 2012 as originally scheduled. The Board is working with local authorities to clarify the situation and the potential compensation plan and will update shareholders as soon as possible.

"The fundamentals of the business remain robust. Sorbic has net assets of approximately £16.22 million and the Board is confident that with its team in place that knows the domestic market well, the Group will continue to capitalise on the growing consumer demand in China."

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Notes to Editors:

Sorbic International's principal activity is the production and sale of the food preservatives Sorbic Acid and Potassium Sorbate from its base in Linyi City, Shandong Province, Peoples Republic of China. Approximately half of Sorbic International's production is sold to overseas markets, across 46 countries and half into the Chinese domestic market.

Sorbic Acid is a naturally occurring organic compound that is used in all kinds of foods for its anti-decomposition and anti-fungus function and also in grains, medicines, cosmetics, toothpaste, tobacco, animal feed, latex, paper-manufacturing and pesticides. Potassium Sorbate is used to inhibit moulds and yeasts in many foods, such as cheese, wine, yogurt, dried meat, baked goods, cosmetics and pharmaceuticals.

Chairman's statement

Operational overview

The Group is pleased to report that its half year results showed significant growth in revenues.

During the first half of the year, uninterrupted production at the Linyi plant resulted in a total output of 3,514 tonnes (H1 2011:3,185 tonnes) of sorbates. Improved efficiency and plant utilisation throughout the first six months of the financial year led to higher levels of production and corresponding revenue growth of 20.4% to £8.3 million (H1 2010: £6.9million).

However, the six-month period to 31 March 2012 was dominated by concern over the US and European economies and the sustainability of China's growth. Together these fears created an uncertain environment for trading and these factors have adversely affected the Company's ability to increase its prices and margins against a relatively stagnant raw material market. Sorbic has actively chosen not to enter into any long-term contracts during the current year following the price adjustment situation encountered last year, when the Group's gross margin suffered as the Group was unable to pass the burden of the inflationary pressure from volatile raw material prices to its customers due to long-term contractual obligations.

The strengthening of sterling has had a negative impact on the Group's overall financial performance with resulting net losses after tax and exchange difference of £0.31 million compared to a net profit after tax and exchange difference of £0.03 million in the same period last year.

As at 31 March 2012 Sorbic held £6.52 million of cash to support existing operations. As part of its continuous cash management process, the Board conducts regular reviews to reduce overheads where possible.

Capital raised

The Company raised £714,000 through equity in February 2012 for general working capital purposes and to support the further development of the business.

New production facility

The final installation stage of the Group's new facility in Ulanqab City, Inner Mongolia, did not resume in May 2012 as originally scheduled. On 26 March 2012 the Company announced that it had received notification that the industrial zone in which Sorbic's manufacturing facility is situated has been identified as an area that may be rezoned as a city zone for urban planning. The local authorities have confirmed to the Board that construction will now cease.

The Company has taken a number of steps in order to actively evaluate and explore the possible options for Sorbic's new production facility going forward. The Board has approached the Chinese Embassy, is using diplomatic channels in China, appointed professional advisors in China and is in discussion with the foreign affairs office in Ulanqab, Inner Mongolia. Consequently, all potential avenues are now open to the Company and the Board is actively pursuing a satisfactory resolution.

Following on from the above, the options available to the Company include (but are not limited to):

1. continuing to build a facility at another site in Ulanquab, Inner Mongolia;

2. commencing construction in Linyi, where the Company's existing facility is based;

3. building at another location in China.

The Board's decision will ultimately be dependent on the outcome of negotiations in Inner Mongolia, but as stated when the original decision was made to construct the facility in Inner Mongolia, issues such as environmental standards and power outages are significant factors in determining the location.

A final decision will be made only after receiving the official proposal from the Ulanqab authority and the accompanying compensation plan. The Board will provide a further update to shareholders as soon as possible.

Outlook

Moving forward, the global economic outlook remains uncertain as European officials continue to seek a sustainable conclusion to the debt crisis. However, the underlying fundamentals of the industry remain encouraging, namely:

·; The supply / demand balance for quality products supports the prospect of capacity expansion;

·; Chinese consumer demand remains robust and could be further boosted if China continues a policy of monetary easing.

To develop its overseas markets, the Group is currently in advanced discussions with a key client regarding a potential strategic cooperation. The Board believes that a successful alliance such as this would help to generate stable demand and enable the Group to expand its distribution network and secure larger global customers.

Despite the temporary setback in Inner Mongolia, the Board is encouraged by the significant progress Sorbic has made over recent years to develop the business from a manufacturer into a sales focused group. The Board remains optimistic about the longer-term prospects of the Group in an expanding food preservative market. According to a new report from business research firm Markets and Markets, the global food preservatives market is set to grow at an annual compound growth rate of 2.5% in the next five years, and the Board believes that Sorbic is ideally placed to benefit from this increased demand.

The potential rezoning in respect of the new facility in Ulanqab City and the disruption this has caused will impact on the results to 30 September 2012 and the Board now anticipates that the outcome will be similar to that achieved last year.

John McLean

Non-Executive Chairman

28 June 2012

Unaudited condensed consolidated statement of comprehensive income

For the six month period ended 31 March 2012

Unaudited consolidated statement of financial position

As at 31 March 2012

Unaudited condensed statement of cash flows

For the six month period ended 31 March 2012

Unaudited condensed consolidated statement of changes in equity

For the six month period ended 31 March 2012

Basis of Presentation and Summary of Significant Accounting Policies

The Company was established to seek to acquire a controlling interest in a company located in Europe, North America or Asia. Following the change of name from Ninety plc to Sorbic International plc and the completion of the acquisition of Honour Field International Limited ("HF") and its subsidiary ("Honour Field Group") on 29 September 2008, the Group's principal activities comprise the production and sale of food preservatives, namely Sorbic Acid and Potassium Sorbate. The Group's main operations are in the People's Republic of China.

Sorbic International, a public limited company, is the Group's ultimate parent company. It is incorporated and domiciled in the United Kingdom. The address of Sorbic International's registered office is 3rd Floor, 49 Whitehall, London SW1A 2BX. Sorbic International's shares are traded on the AIM market of the London Stock Exchange.

The financial information for the six months ended 31 March 2011 and 31 March 2012 set out in this interim financial information is unaudited and does not constitute statutory financial statements. The financial information for the year ended 30 September 2011 set out in this interim financial information does not comprise the Group's statutory financial statements as defined in Section 435 Companies Act 2006 but has been extracted from those financial statements.

The directors approved the interim financial information for the six months ended 31 March 2012 on 27 June 2012.

Copies of this interim financial information will be available on the Company's website: www.sorbicinternational.com

The interim financial information has been prepared in accordance with IAS 34 "Interim financial reporting" as adopted by the European Union. The standards have been applied consistently (except as otherwise stated).

The statutory financial statements for the year ended 30 September 2011, which have been filed at Companies House, were prepared under IFRS and IFRIC interpretations as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies preparing their financial statements under IFRS. The auditors reported on those financial statements; their Audit Report was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.

The accounting policies adopted by the Group are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of IFRS that are effective for annual periods beginning on or after 1 October 2011. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company.

The Group has adopted IFRS 8, Operating Segments for the March 2012 interim reporting. IFRS 8 requires that segments represent the level at which financial information is reported to the Board of directors ("The Board") of the Group, being the chief operating decision maker as defined in IFRS 8. The Board consists of the Chairman, the Chief Executive Officer, the Chief Financial Officer and the independent director. The Board determines the operating segments based on reports reviewed and used by the Board for strategic decision-making and resource allocation.

Segment information is presented in respect of the Group's geographical and operating segments. The Group's operating segments are as follows:

(i) Sorbic acid

(ii) Potassium sorbate

(iii) Head office and other adjustments, which incorporates a measure of assets and liabilities not included in the other segments.

There were no inter-segment sales and transfers during the six-month period ended 31 March 2011.

Operating Segments - Six months ended 31 March 2012

Operating Segments - Six months ended 31 March 2011

Operating Segments - Year ended 30 September 2011

The taxation charge for the six months ended 31 March 2012 has been based on the estimated effective rate of 25% from October 2011 to March 2012.

(a) Basic

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 during the period:

Loss attributable to equity holders of the company: £143,526 (2011: £57,146)

Weighted average number of ordinary shares in issue: 39,664,851 (2011: 34,133,967)

Loss per share: 0.36 pence (2011: 0.17 pence)

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted number of ordinary shares in issue to assume conversion of all potential dilutive ordinary shares during the period.

Loss attributable to equity holders of the Company: £143,526 (2011: £57,146)

Weighted average number of ordinary shares in issue: 39,664,851 (2011: 34,133,967)

Diluted loss per share: 0.36 pence (2011: 0.17 pence)

The dilutive effect of the options granted to Hermes Capital and Finn Cap to subscribe 400,000 shares and 200,000 shares respectively at 75 pence per share has no impact on the calculation of the earnings per share.

There were no potential dilutive share arrangements in place during the six months ended 31 March 2012.

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