Interim Results 1H FY2018 Presented by Paul Selway-Swift Magomet - - PowerPoint PPT Presentation

Interim Results 1H FY2018

6 March 2018

Presented by Paul Selway-Swift Magomet Malsagov Rakesh Sinha

1

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Presented by Magomet Malsagov, Chief Executive Officer

OVERVIEW

CEO OVERVIEW

• Sales H1 FY18: $53.5m, +13.3%

(H1 FY17: $47.2m)

• Back to double-digit growth

trajectory

• Strong recovery in US post CBP
• Gross profit increased to $19.7m
• EBITDA improved +22% to $7.8m
• Positive operating cash flow

$7.7m

• New $200m financing facility fully
• perational providing greater

financial stability and flexibility to fund future growth

• FTSE Small Cap and All Share

indexation granted (Aug ’17)

• FTSE 250 entry in Dec’17

Financial Highlights

• Significant IP – 72 patents and 200

patents pending worldwide

• Significant investment in PureCircle

Stevia Agronomy Program ensuring consistency of best-tasting products and new innovative ingredients, such as StarleafTM stevia and vanilla and cocoa flavour enhancers and antioxidants

• Launch of PureCircle’s StarleafTM, a

proprietary non-GMO stevia plant, which will offer superior tasting solutions to our food and beverage customers

• Strategic drive to higher value added

products progressed well

Operational Highlights

• Structural & fundamental shift in

the market to reduce sugar in core brands

• No natural alternative to stevia
• Stevia is a force for good in the

world

• Highly efficient and cost effective

source of sweetness, and 100% natural alternative to sugar with great taste

• Much smaller land, carbon and

water footprint than sugar

• No calories, tooth friendly
• Low glycemic index, safe for

diabetics

Why Stevia?

4

OUR GLOBAL FOOTPRINT

5

VERTICAL INTEGRATION

Agronomy Breeding proprietary Stevia varieties with higher sweet glycoside content Farming Cultivating best sustainability practices and providing training and materials to ensure success with local farmers across four continents Extraction Producing our own extract to ensure quality standards are met Purification Purifying steviol glycosides with an unmatched scale and consistency Application Providing formulation expertise to deliver great-tasting products Consumer products Providing our customers with a level of transparency that is superior to any

• ther stevia

manufacturer

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HOW WE CREATE VALUE

We have successfully commercialised a portfolio that includes natural sweeteners, flavours and specialty ingredients based

• n high purity stevia, and

have deep expertise across the value chain, from seeding to sweetener.

Research & Development (R&D)

Multidisciplinary approach spanning plant breeding, agronomy, biotechnology, biochemistry, food technology and sensory analysis

Commercialisation

• Technical Services
• Scientific and Regulatory Affairs
• Sales & Marketing

7

WHO WE SELL TO

* Over 300 customers serviced globally

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Big Brand Examples Category Innovation

Coca- Cola with Stevia TCCC Singapore and Malaysia 35% Sugar Reduction 7UP (CSD) Pepsi Saudi Arabia, UAE, Poland, Netherlands, Greece 30% Sugar Reduction Light and Fit Zero Danone USA No Sugar Added Sweet Granules with Stevia, Brown Sugar with Stevia, Honey with Stevia, Sweet Mini Cubes with Stevia (Stevia + Monk Fruit Tabletop) Whole Earth UK Vegan ProBar Integralmedica New Product Brazil Lipton/Pureleaf China, Turkey, Belgium, France, South Korea, Poland, Czech Republic 50% Sugar Reduction Skinny Cow Nestle USA 50% Sugar reduction Quaker Good Start Pepsi New Product Phillipines

STEVIA ADOPTIONS: Penetration of big brands, more diverse categories

Nestea Nestle European Union 30% Sugar Reduction Levite Danone Argentina No Sugar Added Wattie’s Kraft Heinz New Zealand 50% Sugar Reduction Heinz Tomato Ketchup Kraft Heinz Norway, Italy 50% Sugar Reduction

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THE FOLLOWING WINDS

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LEGISLATION

* N.B. Unverified content – for guidance only.

SSB or soft drink taxes in effect

Barbados Belgium Brunei Chile Dominica Fiji Finland France Hungary Mauritius Mexico Nauru Norway Portugal Philippines Samoa

• St. Helena

Thailand Sri Lanka Spain Turkey US AREAS Albany Berkeley Boulder Cook County Oakland Philadelphia San Francisco Seattle, Washington

Proposed/raised for discussion

Australia Canada Estonia India Indonesia Ireland Malaysia Singapore New Zealand South Africa Spain UK UAE Vietnam Russia Saudi Arabia

Warning Labels Malaysia Chile Egypt Singapore Ecuador UK Thailand Peru India Canada Algeria

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FINANCIAL REVIEW

Presented by Rakesh Sinha, Chief Financial Officer

PROFIT & LOSS 1H FY2018

Revenue Gross Profit Gross Margin %

US$ (millions)

Other income SG&A Operating Profit Operating margin % Other Expenses Finance Costs Taxation Share of (Loss)/Profit in JV Forex Net (Loss) / Profit Net (Loss)/Profit% EPS – Diluted (US Cents/Share) Adjusted EBITDA

FY17

118.9 45.8 38.5% 0.5 (28.7) 17.6 14.8% (5.9) (5.0) (0.4) 0.1 0.8 7.2 6.1% 4.1 27.1

1H FY 17 1H FY 18

47.2 19.1 40.4% 0.3 (13.9) 5.5 11.6% (5.1) (2.3) 1.5 0.2 (0.4) (0.7)

• 1.4%

(0.4) 6.4 53.5 19.7 36.8% 0.5 (17.1) 3.1 5.7% (2.5) (3.2) (2.2) (0.4) 1.2 (4.0)

• 7.5%

(2.3) 7.8

• Revenue of $53.5m; back to double-digit

growth at +13.3%

• Regionally, US and Europe driving

growth with good performance in GKAs and Flavour houses.

• Gross profit up at $19.7m. Margins at

36.8% impacted adversely by currency fluctuations, sales mix and transition to StarleafTM, which will yield higher margin products going forward

• SG&A increase represents higher

deprecation relating amortisation of PC South America and investment in Legal services, Sales and Marketing personnel.

• Taxation – increased due to reversal of

$2.1m deferred tax assets resulting from US Tax Reform.

• Forex gain recorded due to settlement of

USD loan.

• EBITDA up 22% to $7.8m; Net Loss of

$4.0m

H1 FY18 H1 FY17

DIVERSIFIED REVENUE STREAMS

US Market Recovering Basic ingredients taking share from low margin Low Purity products.

Basic Ingredients Gamma Reb A Family SG95 Breakthrough Delta Reb M Zeta Family Custom Blends PCS and PSB - XXXX 7 custom ingredients Flavors NSF Family Low Purity Feed/Alt. market Value Added Alpha Family Reb A 99 SG95 Family Sigma Family

Basic Ingredients 43% Value Added 22% Flavour 31% Breakthrough 3% Custom Blend 1%

Revenue Mix by Product Category North America 27% EMEA 43% Latin America 19% Asia 8% South Asia 3% Revenue Mix by Geographic Region

Basic Ingredients 38% Value Added 22% Flavour 31% Breakthrough 3% Custom Blend 2% Low Purity 4%

Revenue Mix by Product Category North America 14% EMEA 39% Latin America 34% Asia 12% South Asia 1% Revenue Mix by Geographic Region

NON – CURRENT ASSETS

• Property Plant & Equipment
• Intangible Assets
• Other non-current assets

TOTAL EQUITY TOTAL LIABILITIES & EQUITY NON - CURRENT LIABILITIES

• Long-term borrowings
• Other payables & accruals

CURRENT ASSETS

• Inventories
• Trade Receivables
• Cash and bank balances
• Other current assets

TOTAL ASSETS CURRENT LIABILITIES

• Trade payables
• Short-term borrowings
• Other payables & accruals

TOTAL LIABILITIES

US$ (millions) 1H FY17 1H FY18

BALANCE SHEET

141.4 80.6 49.6 11.2 192.4 342.4 201.0 102.6 50.1 30.3 18.0 342.4 72.7 72.2 0.5 77.3 19.4 38.2 19.7 150.0 155.6 90.6 54.7 10.3 207.6 362.0 206.4 106.0 58.0 33.0 9.4 362.0 39.6 39.0 0.6 114.8 11.1 78.7 25.0 154.4

FY17

• PPE: Capacity expansion
• Intangibles: Investment in Leaf

development, IP and R&D

• Inventories: same seasonal H2

weighted sales trend continues, hence leaf stock build

• Inventories: Volumes down, value up

due Starleaf purchase – higher yielding margin products

• Trade receivables: continued

improvement in receivables management.

• L-T Borrowings: restructuring of

finance facility

• Trade Payables: longer credit with

suppliers

• Net debt: $98.4m

168.9 99.5 60.9 8.5 212.1 378.1 209.2 128.4 37.7 28.0 15.1 378.1 84.2 83.1 1.1 81.8 20.8 43.3 17.7 166.0

Operating cash flow before working capital changes

US$ (millions) FY17

22.3 Increase in inventories Decrease in trade and other receivables Increase in trade and other payables (21.6) 4.6 11.8 Net cash from operations before interest and tax 17.1 Net cash from operations after interest and tax Investing activities Financing activities 10.3 (43.9) 8.7 Net cash flow (24.9) Gross cash Headroom 33.0 76.7

CASH FLOW

1H FY17 1H FY18

• Operating cash flow of +$7.7m
• Inventories increase due to

StarleafTM purchase & preparation for H2 (seasonality).

• Strong receivables management
• Positive Net operating cash flow
• f $3.0m
• Investing activities:

represents the investment in refinery and R&D projects.

• Financing: drawdown on the

banking facilities.

4.7 (18.0) 11.9 9.9 8.5 5.4 (28.3) (6.4) (29.3) 30.0 74.6 7.7 (22.2) 15.9 1.6 3.0 0.2 (14.2) 5.3 (8.7) 27.7 93.0

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Evolution of Strategy Introducing StarleafTM Stevia

Presented by Faith Son, Global VP Marketing & Innovation Avetik Markosyan, Global VP Research & Development James Foxton, VP Agricultural Operations

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FOOD AND BEVERAGE INDUSTRY:

In need of sweetener innovation

• Global obesity crisis
• Sugar tax (passed/proposed)
• Activist advocacy groups
• Good for me
• Good for others
• Good for the planet

proposed new label highlighting calories and added sugars

• Sugar
• Artificial Sweeteners

RISING PUBLIC HEALTH CONCERNS CONSUMERS REDEFINE HEALTH & WELLBEING SWEET UNDER FIRE

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Zero-calorie sweetness from nature

Lowest Carbon Footprint Lowest Water Footprint Lowest Land Footprint

12-82% 88% 1/5

Less carbon than other natural sweeteners. Less water than other natural sweeteners. Size of Delaware = Amount of stevia needed to replace 20% of today’s sugar consumption.

2015 Carbon Study KgCo2-e/kg SE* Comparative Carbon Footprints 2015 Carbon Study Liters/Kg SE* Comparative Water Footprints

At least Uses the land of sugar cane

12% 48% 82%

WATER

SUSTAINABILITY: Impact of PureCircle Stevia vs Sugar

3,700 1,464 1,452 1,339 1,066 1,039 960 884 674 603

Snacks Other Beverages Juice Drinks Dairy Sweeteners & Sugar RTDs Carbonated Soft Drinks Bakery Sugar & Gum Confectionery Hot Beverages

Global new product launches with stevia Top 10 global category by number of product launches

70% of launches

• ccurred in

the past 4 years

MEA

+71%

+17% LTAM +50% +22% NTAM +29%

• 2%

Europe +25% +14% APAC +23% +9% 5 yr CAGR 1yr

2 year CAGR

2% 8% 20% 15% 5% 6% 22% 15% 33%

11%

'09 '10 '11 '12 '13 '14 '15 '16 '17

311 479 623 1,005 1,883 2,504 2,842 3,193 3,526

Total

+29% +10%

33%

POSITIVE MARKET RESPONSE

Growth in number of launches driven by NTAM, LTAM, and Europe, while key beverage categories represent the fastest growing categories.

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WE HAVE MOVED BEYOND Reb A taste challenges

REB A

DELAYED ONSET

BITTER INTENSE LINGER

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STEVIA LEAF HAS MORE TO OFFER THAN REB A

• 40+ Steviol Glycosides in the Leaf
• Taste Synergies
• Each with Unique Attributes

VERTICALLY INTEGRATED SUPPLY CHAIN

PLANT BREEDING AND AGRONOMY FARMING APPLICATION EXTRACTION & PURIFICATION CONSUMER PRODUCTS

Our Supply Chain

Farm to Consumer

…gave us insight from multiple perspectives.

24

INTRODUCING STARLEAFTM STEVIA

StarleafTM Stevia Variety 2017 >20x most sugar-like glycosides (Reb M, Reb D, others)

• vs. conventional leaf

25

PURECIRCLE STEVIA AGRONOMY PROGRAMME

StarleafTM is the result of significant investment for nearly 2 decades

Stevia Expertise From Seed to Leaf The science of naturally developing new stevia leaf varieties with more of the best tasting steviol glycosides. Sustainable Expansion for Commercial Viability Growing and scaling the best stevia varieties to support food and beverage needs.

RESEARCH & DEVELOPMENT

SCALING NATURALLY FARMERS

Our PureCircle Stevia Agronomy Program was created to cultivate and grow the best tasting stevia at global scale Our Commitments

Livelihood + Community Enhancement The commitment to grow high-quality stevia leaf while contributing positively to the farming communities.

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PureCircle BEES (Video)

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PURECIRCLE AGRONOMY PROGRAMME: SCIENCE AND RESEARCH

Agriculture Process

• Supply based on proprietary varieties
• Transformation from Stevioside leaf to

Reb A leaf ( Reb A increased from 15% to >80%)

• Replacement of Stevioside and Reb A

with Increased level of better taste molecules (from <2% to >60%)

• From 5,500 discovered Stevia genes to

>45,000 (Stevia genome mapping)

• Next generation manufacturing plants

featuring proprietary extraction and purification technologies

• Application of biotechnology in Stevia

processing

• From single-molecule value chain to

mass balance based processing

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PURECIRCLE MAPS THE STEVIA GENOME

Key Benefits

• A deep understanding of the genetic blueprint

to the stevia plant

• Unlocking a targeted approach to traditional

cross breeding

• Development of stevia varieties with the highly

desired traits News Headlines

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INNOVATION DIFFERENCE

• Multidisciplinary approach (agriculture, chemistry,

biotechnology, food technology)

• 55 people in diverse teams (plant breeders, agronomists,

chemists, biotechnologists, food technologists)

• Strategically located R&D facilities

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STARLEAFTM BREEDING PROGRAM: Traditional, non-GMO, intelligent plant breeding

Typical Stevia Variety StarleafTM Stevia Variety Current Next Gen

Content of eb A Content of Sugar- Like Glycosides

Parity >20X Parity >40X

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PROCESS INNOVATION BREAKTHROUGHS

• Starleaf™ downstream processing technology commercialisation to

large scale

• Better tasting steviol glycosides (Reb M, Reb D etc.) biomanufacturing

technology commercialisation to large scale

• New functional molecules (antioxidants, flavours) recovery technology

development

32

WE TAKE MEASURES TO PROTECT OUR IP

• 12 new patents granted in last 12 months
• 93 granted patents and >200 pending patent applications worldwide
• Steviol glycosides production (extraction, biotransformation, fermentation etc.)
• Steviol glycosides sweetener and flavor compositions
• Steviol glycosides use and applications
• Stevia varieties

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STARLEAFTM STEVIA (Video)

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WE WILL SCALE STARLEAF: Leveraging learnings & capabilities from scaling Reb A

Conventional Variety 2002 StarleafTM Stevia Variety 2017

>20x most sugar-like glycosides

(Reb M, Reb D, others)

• vs. conventional leaf

PureCircle Reb A Variety 2010

7x Reb A vs. conventional leaf

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WHAT IT TAKES TO FARM STARLEAFTM

PLANT BREEDING & AGRONOMY PROGRAM FARMING APPLICATION EXTRACTION & PURIFICATION CONSUMER PRODUCTS

Our Supply Chain

Farm to Consumer

Plant material Seedling

Transplant Plantation Production

36

GLOBAL STARLEAFTM SCALE UP & DIVERSIFICATION PLAN

FY'18F FY’19 FY’20 FY’21

Diversification Scale Up

PureCircle Reb A Variety StarleafTM Variety

China Zambia US India/Other

FY'18F FY’19 FY’20 FY’21

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SCALING STARLEAFTM: MECHANISATION

• StarleafTM plantation development
• Requires mechanisation of varying degrees

depending on each regions requirements

• Labour cost is the main driver
• Adaptation of existing farm equipment
• Innovation on farm to provide cost effective

solutions

• USA plantations require full mechanisation
• Sharing of global solutions

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Digitization of production sites, real-time monitoring and traceability

Harvest Projection and Yield Estimation modules

Sustainability and Quality Compliance e.g. GLOBALGAP, SAGP, ETI

Alternate sources of data: satellite, weather intelligence, water probes

Custom dashboards, reports and analytics to track key agronomy metrics

SCALING STARLEAFTM: IT

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OUR COMMITMENT TO STEVIA FARMING COMMUNITIES

40

40

Zero-calorie sweetness from nature…now with a more sugar-like taste

41

41

• Rich in extracts with more sugar-like in taste.

Fuller sweetness without linger and aftertaste

• Easier to work with, shorter development times
• Less processed vs. other plant based sweeteners

STARLEAFTM: WHAT IT MEANS FOR OUR CUSTOMERS

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OUR NEW Starleaf SIGMA LINE USES MOST SUGAR-LIKE EXTRACTS WHILE BUILDING ON SUCCESS FROM ORIGINAL SIGMA LINE

Sigma Approach

• Most sugar-like

extracts, with >20X

• vs. conventional leaf
• Scaling globally

StarleafTM Variety StarleafTM Sigma

=

StarleafTM Sigma – Beverage StarleafTM Sigma – Tea StarleafTM Sigma – Dairy

• Optimised taste profiles

based on combination of glycosides, for different applications

• 10+ years of stevia

research on glycosides and taste performance and product development experience across F&B industry

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• All steviol glycosides (50+), including relatively new

sugar-like tasting molecules from stevia leaf approved by US, Canada, Australia, New Zealand authorities for food and beverage applications

• Joint (FAO & WHO) Expert Committee on Food Additives

(JECFA) has also approved all Steviol Glycosides (50+) from stevia leaf in June 2017.

• JECFA approval facilitates the approval of sugar-like

tasting molecules from stevia leaf in major Latin America, Asia and Africa markets in near future.

• EFSA is currently evaluating PureCircle petition for

approval of all steviol glycosides from stevia leaf and for approval of enzyme modified stevia leaf extract (GSG).

• Argentina and Israel approved Reb M for food and

beverage applications

• Stevia leaf has been approved as food in tea, herbal tea

and fruit infusion in Europe.

REGULATORY PROGRESS in expanding the use of stevia

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SUMMARY & OUTLOOK

SUMMARY & OUTLOOK

Outlook

• Our Innovation pipeline is strong
• Our newly evolved StarleafTM strategy

enables us to provide the best tasting solutions for our food and beverage customers looking to reduce sugar naturally

• $200m finance facility provides greater

financial stability and flexibility for PureCircle to fund future growth

• Robust business model – geographic

diversification reduces significant exposure to geopolitical and climate risks

• We have a unique market position – no
• ne knows more about the stevia leaf

than we do

• Moving forwards, stronger

Increased Market Opportunities

• Obesity. According to the WHO:
• Rates have tripled since 1975
• At least 2.8m people die each

year as a result of being

• verweight or obese
• 1.9Bn adults are overweight,

650Bn are obese and

• 380m children are overweight
• Diabetes. According to the WHO:
• 425m people have diabetes today

which is expected to rise to 629m by 2045

• $627Bn estimated healthcare

costs in combating diabetes

• Sugar taxes:
• 8 countries have implemented a

sugar tax; in addition, 8 localities in the US and 8 island nations/territories

Summary

• Business is back on track with

double-digit growth at +13.3%

• Everything we do is about helping
• ur customers achieve their goals of

reducing sugar/calories/cost of ingredients without compromising taste through high purity stevia solutions

• Starleaf stevia enables a step

change improvement in the availability of sugar-like taste for the global F&B industry.

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Q&A

NOTES I

NOTES II