Interim Management Statement
July 27 2010 - 2:00AM
UK Regulatory
TIDMPURE
RNS Number : 9585P
PureCircle Limited
27 July 2010
PureCircle Limited
("PureCircle or the Company")
MANAGEMENT STATEMENT
PureCircle (LSE:PURE), the world's largest producer and marketer of high quality
stevia products, today provides a trading update for its financial year ended 30
June 2010 and announces further acceleration in its strategic developments.
FY 2010 Trading Update
The group will announce its preliminary results for the year ended 30 June 2010
("FY 2010") on Wednesday 22 September 2010. In advance we provide today an
unaudited trading update.
We expect to report sales for FY2010 in line with those of the year to 30 June
2009 ("FY 2009"). The FY 2009 Reb A business was based substantially on sales to
just two customers. Almost 60 per cent of FY 2009 Group sales were to a trading
partner, as opposed to an end user Food and Beverage customer. Although our
supply contract with that trading partner ran through to 30 June 2010, no sales
were made to them during the FY 2010 year. The Company's sales strategy post
2008 has been to work directly with end user Food and Beverage clients. In line
with this strategy, the contract with the trading partner has been discontinued.
During FY 2010 our customer base expanded significantly. We now have more than
100 invoicing customers globally: this is the premium customer base in our
industry. Most customers are currently conducting trials and testing launches.
But those consumer products already launched are performing well and as their
volume needs expand, they provide an excellent platform for strong growth in FY
2011 and future years.
FY 2010 profitability will be below FY 2009 levels. FY 2010 profits have been
held back by our significantly increased investment in production overhead,
sales and marketing compared to FY 2009 amounts coupled with the fact that the
company is running under capacity. PureCircle's strategy is to build a large
global business and we have invested heavily to do so. The current company
infrastructure is designed to support a business with turnover of $250m or more.
FY 2010 has been another year of rapid progress in the strengthening and
expansion of our global supply chain. Our major production capacity investments
in FY 2009 have all performed well with actual production doubling in line with
investment plans. The yields and steviolglycoside flexibility that our
investments allow continue to lead the industry by some margin. We expect
further strong gains in FY 2011.
Our leaf expansion and diversification strategy accelerated again in FY 2010.
There is now stevia being grown for PureCircle in some 15 countries in four
continents. The steviolglycoside content of the leaf is increasing as is the
proportion of our leaf supply being sourced from PureCircle proprietary high
quality strains.
The Company has a strong balance sheet and is well placed to expand as the
stevia market accelerates. In November 2009 we raised new capital to support new
expansion. We ended FY 2010 with gross cash of $65m in the balance sheet and are
fully funded for existing expansion plans, particularly with the FY2009
investments still not fully utilised.
Strategy developments - major sugar joint ventures established
In February 2010 we announced the creation of Natural Sweet Ventures ("NSV") our
joint venture with Imperial Sugar of the USA. NSV is the first company to market
a combined sucrose and stevia product range. Customer response in the important
NAFTA market has been strongly supportive.
Today we have announced the signing of a Memorandum Of Understanding (MOU) with
British Sugar Group Plc for the creation of The Natural Sweetness Company
("TNSC"). TNSC will be a 50:50 Joint Venture and will be the first company to
market sucrose stevia product combinations in the UK, Ireland, Spain, Portugal,
Africa and China markets.
More details on the TNSC MOU are included in the separate RNS issued today.
The NSV and TNSC joint ventures provide a clear blueprint for how we see our
strategy developing and we expect to be able to announce further strategic
relationships in the coming months.
Strategy developments - major new global customer account gains
During FY 2010 we have won contracts with major new global account customers. In
addition to our multi-year contracts with PepsiCo Inc and Merisant Inc, we have
secured supply contracts with more major F&B companies and have secured
important initial relationships with a number of major retailers. These contract
wins demonstrate that PureCircle continues to secure the leading share of major
F&B company relationships in the global stevia market.
A separate announcement on the new contracts will follow.
Strategy developments - industry marketing leadership
We have accelerated our industry marketing leadership during FY 2010 with the
successful launch of a series of major initiatives.
In June 2010 we supported the launch of the Global Stevia Institute. This will
provide independent industry- wide knowledge and consumer information
leadership. Staffed and managed by highly respected medical and nutritional
professionals and operating across all continents, the Global Stevia Institute
is already seen as the leader in stevia thought leadership.
During FY 2010 we launched the Stevia by PureCircle industry trustmark. This
provides robust consumer trust benefits and has been well received by our
growing list of F&B clients. We expect to announce strong developments on this
initiative in the near future.
Strategic developments - accelerating stevia product launches and approvals
During FY 2010 we widened the range of our high quality stevia product portfolio
and we are accelerating the number and pace of product launches and regulatory
approvals. The recent FDA GRAS no objection clearance for our new SG95 product
is a good example of this. We expect more material product developments and
clearances in FY 2011.
On the wider regulatory front, FY 2010 saw important progress in the important
European markets. In September France gave clearance for Reb A to be sold as an
ingredient. Then in March 2010 the European Food and Safety Authority (EFSA)
recommended approval for 95% purity steviolglycosides. The EFSA recommendation
is an important milestone towards full EU clearance for stevia.
Strategic developments - leaf research
During FY 2010 we accelerated our research and investment into improved stevia
varieties. In April we announced a major research programme with Michigan State
University which will complement the extensive leaf improvement work being
undertaken in our operating units across the world.
We expect to be able to make announcements about further progress with our leaf
strategy in the near future.
Auditors
With strong growth plans ahead and with a more complex international sphere of
operations the Group has changed its auditors to PricewaterhouseCoopers from
Crowe Horwath. The change is effective for the audit of the FY 2010 financial
statements.
Outlook
FY 2010 has seen stevia become recognised as a core part of the global mass
volume natural sweetener industry. All major F&B companies are now using stevia
and most are now integrating stevia into their long term sweetener strategies
along with sugar and corn.
With more than one hundred customers actively working on projects and with a
high success rate for consumer product launches using PureCircle stevia, we
expect sales to our existing customer base to grow strongly in FY 2011 and
future years. In addition the full opening of the European market expected in FY
2011, the wider product portfolio that SG95 clearances allow and our strong
sugar partnerships will each provide additional major sources of revenue growth.
We expect accelerated strategic progress in FY 2011, starting with the TNSC MOU
announced separately today. In turn this provides the global F&B companies with
further confidence that they can design stevia into their larger global brands.
We have a significant new product innovation pipeline. These coupled with a
growing range of stevia regulatory clearances will keep PureCircle at the
forefront of customer service and application development.
Going forward we expect to see more customers launching more products in more
countries and accelerating the growth of the overall market. PureCircle is well
placed to secure a major share of this growth. We have the balance sheet and the
global infrastructure in place to support this
We look forward to reporting on further progress
Chairman comment
"FY 2010 has seen a real acceleration in the execution of our long term
corporate strategy. Our sugar partnerships and our excellent client
relationships confirm our leadership position. 2011 and future years will see
real market acceleration. PureCircle is well placed to secure share as this
happens"
CEO comment
"We have put in place the strategy, the organisation, the capacity, the product
portfolio and the partnerships for a major global business. The benefits of
these will come through strongly as market demand accelerates"
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| Enquiries: | |
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+--------------------------------------+----------------------------+
| PureCircle Limited | |
| (www.purecircle.com) | |
+--------------------------------------+----------------------------+
| Magomet Malsagov, CEO | +60 1 2388 8049 |
+--------------------------------------+----------------------------+
| William Mitchell, CFO | +44 7974 005 163 |
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| | |
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| RFC Corporate Finance (NOMAD) | +61 8 9480 2500 |
+--------------------------------------+----------------------------+
| Steve Allen | |
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| | |
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| | |
+--------------------------------------+----------------------------+
| Westport Communications | +44 20 7065 2690 |
+--------------------------------------+----------------------------+
| Alan Frame | alan@westportcomms.com |
+--------------------------------------+----------------------------+
| Jeanette Bishop | jeanette@westportcomms.com |
+--------------------------------------+----------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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