MOVING FORWARDS,STRONGERFull Year Results 2017
Presented by
Paul Selway-Swift
Magomet Malsagov
Rakesh Sinha 19 September 2017
1
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2
Presented by
Magomet Malsagov, Chief Executive Officer
OVERVIEW
3
CEO OVERVIEW
• Sales $118.9m
(2016: $138.6m)
• Results should be seen
in the context of being
denied access to the US
market for 8 months
(now fully resolved)
• PureCircle grew outside
the US +8%
• Gross margin 38.5%
(2016: 41.1%)
• Positive Operating Cash
Flow $17.1m
(2016: $19m)
• Strategic drive to higher
value added products
progressed well
Financial Highlights
• Completed the $42m
expansion of our stevia
refinery in Malaysia on
time, on budget
• Opened new labs/offices
in Shanghai and Delhi
• 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
StarLeaf stevia and
vanilla and cocoa flavour
enhancers and
antioxidants
Operational
Highlights
• FTSE Small Cap and All
Share indexation
granted (Aug ’17)
• New $200m financing
facility secured enabling
a strong, stable financial
platform to fund future
growth (Sept ‘17)
Post Balance
Sheet Event
• 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
Plant Breeding
Breeding
proprietary Stevia
varieties with
higher sweet
glycoside content
Harvesting
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
Finished
products
Providing our
customers with a
level of
transparency that
is superior to any
other stevia
manufacturer
1. 2. 3. 4. 5. 6.
6
HOW WE CREATE VALUE
We have
successfully
commercialised a
portfolio that
includes natural
sweeteners,
flavours and
speciality
ingredients based
on high purity
stevia, and have
deep expertise
across the value
chain, from seeding
to sweetener.
Research & Development (R&D)Multi-disciplinary approach spanning plant breeding, agronomy, biotechnology, biochemistry,
food technology and sensory analysis
Commercialisation• Scientific and Regulatory Affairs
• Sales & Marketing
7
WHO WE SELL TO
*PureCircle has over 300 customers in total
8
Big Brand Examples Category Innovation
Coca-Cola Life (CSD)
TCCC
Canada, Columbia, Saudi
Arabia, South Aftrica, and
Greece
50%, 56%, 50%,
37% and 50% reduction,
respectively
7UP (CSD)
Pepsi
India, France, Germany
30% Sugar Reduction
Activia
Danone
Brazil
20% Sugar Reduction
Nature Sweet
(Stevia + Monk Fruit
Tabletop)
Whole Earth
USA
Herdez (Ice Cream)
Nestle
Mexico
25% Sugar Reduction
The London Essence Co
Britvic
UK
Reduced calories
(less than 20 calories per
100ml)
Kids Tomato Ketchup
Kraft Heinz
Austria
50% Sugar reduction
Lactobacillus Drink
Weiquan
China
45% Sugar Reduction
McKay Nutriactive
Nestle
Chile
New Product
NesteaNestle
United States
30% Reduction
Tropicana 50 Multi-vitamin
Pepsi
UK/Ireland
50% Sugar Reduction
STEVIA ADOPTIONS: Penetration of big brands, more diverse categories
NescafeNestle
Canada
New Product
9
THE FOLLOWING WINDS
10
EMERGENCE OF SUGAR TAX
Sugar-related taxes in effect
Barbados
Belgium
Brunei
Chile
Dominica
Egypt
Fiji
Finland
France
Hungary
Mauritius
Mexico
Nauru
Norway
Philippines
Samoa
Saudi Arabia
St. Helena
US AREAS
Albany
Berkeley
Boulder
Cook County
Oakland
Philadelphia
San Francisco
Seattle, Washington
Proposed/raised for discussion
Australia
Estonia
India
Indonesia
Ireland
Malaysia
New Zealand
Portugal
South Africa
Spain
Thailand
UK (2018)
11
FINANCIALREVIEW
Presented by
Rakesh Sinha, Chief Financial Officer
• Revenue of $119m; challenging CBP
impacted environment ($30-35m), resulting
in lower volumes and operating profit.
• Revenue growth (excl. US) of +8%.
• Gross Margin of 38.5%
• Higher margin product volumes
particularly impacted due to no access to
US market for 8-months
• Benefit of moderating leaf cost diluted by
higher logistics and 3P sourcing.
• SG&A increase represents investment in
Commercial personnel.
• $5.3m Exceptional Items
• Net Profit of $7.2m
• Post Balance Sheet Events
- Inclusion in FTSE Small Cap & All-
Share Index
- $200m HSBC Finance Facility,
replacing existing facilities, allowing
greater flexibility and enabling a
stronger platform for growth.
PROFIT & LOSS FY2017
Revenue
Gross Profit
Gross Margin %
US$ (millions)
Other income
SG&A
Operating Profit
Operating margin %
Other Expenses
Finance Costs
Taxation
Share of Profit/(Loss) in JV
Forex
Net Profit
Net Profit %
EPS – Diluted (US Cents/Share)
Adjusted EBITDA
FY17 FY16
138.6
57.8
41.7%
0.3
(24.9)
33.2
24.0%
(10.2)
(5.3)
(3.3)
(1.2)
1.4
14.6
10.5%
8.4
34.2
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
2017
2016
Basic Ingredients
42%
Value Added23%
Flavour30%
Breakthrough2%
Custom Blend1%
Low Purity2%
Revenue Mix by Product Category
North America
16%
EMEA44%
Latin America
26%
Asia12%
South Asia2%
Revenue Mix by Geographic Region
Basic Ingredients
46%
Value Added18%
Flavour33%
Breakthrough2%
Custom Blend0%
Low Purity1%
Revenue Mix by Product Category
North America
34%
EMEA29%
Latin America
23%
Asia13%
South Asia1%
Revenue Mix by Geographic Region
DIVERSIFIED REVENUE STREAMS
Strong Europe Growth.
Higher margin Value Added products form greater part of the portfolio.Product Categories
▪ Basic Ingredients
▪ Breakthrough
▪ Custom Blends
▪ Flavours
▪ Low Purity
▪ Value Added
NON – CURRENT ASSETS
- Property Plant & Equipment
- Intangible Assets
- Other non-current assets
TOTAL EQUITY
TOTAL LIABILITIES & EQUITY
BALANCE SHEET
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
156.2
90.6
54.7
10.9
207.6
362.0
205.8
106.0
58.0
33.0
8.8
362.0
39.6
39.0
0.6
114.8
11.1
78.7
25.0
154.4
125.5
65.7
48.5
11.3
203.8
345.8
220.3
84.6
62.7
61.0
12.0
345.8
86.1
84.9
1.2
55.9
5.5
29.0
21.4
142.0
US$ (millions) FY17 FY16
• PPE: Refinery capacity
expansion
• Intangibles: Leaf development &
R&D
• Inventories have increased due
to lower US sales (CBP
impacted)
• Improved receivables
management
• Cash: Refinery capacity
expansion
• Improved payables management
• Re-classification between L-T &
S-T borrowings (New finance
facility will change this)
Operating cash flow before
working capital changes
US$ (millions) FY17 FY16
21.8 31.9
Increase in inventories
Decrease/(Increase) in trade and
other receivables
Increase in trade
and other payables
(21.6)
4.6
12.3
(22.4)
(2.5)
12.0
Net cash from operations
before interest and tax 17.1 19.0
Net cash from operations after
interest and tax
Investing activities
Financing activities
10.3
(43.9)
8.7
13.1
(24.4)
14.8
Net cash flow (24.9) 3.5
Gross cash
Headroom
33.0
76.7
61.0
76.3
• $17.1m positive operating cash flow
despite business disruption and
lower margins
• Improved collections management
• Better payables management
• Investing:
Represents the investment in new
production line for capacity
expansion plus R&D projects.
• Financing:
$8.7m represents the net of
$120.8m repayment and $129.5m
drawdown on banking facilities.
CASH FLOW
16
MARKET DRIVERS
Powerful and dynamic
17
• Worldwide obesity has more
than doubled
since 1980.
• In 2014, 1.9+ billion adults
were overweight.
Of these 600+ million were
obese.
• Worldwide diabetes is at 415
million, will rise
to 642 million by 2040.
• Consumers seeking natural
sustainable sources
for their sweeteners.
http://www.who.int/mediacentre/factsheets/fs311/en/
http://www.diabetesatlas.org/, 7th Ed.
Growth prospects for the market has grown considerably versus 12 months ago.
CONSIDERABLE GROWTH in the stevia market
• Stevia approved in
Brazil and India. Now 5
billion consumers have
access to Stevia.
• Sugar taxes being
imposed in major
markets.
• F&B industry now
publicly committing to
reduce added sugar and
artificial sweeteners
from their product
portfolios.
• Stevia increasingly
being used as part of
the solution.
• Mintel report: > 13,000
products now launched
with Stevia: > 75%
within the last four
fiscal years.
• All major F&B
categories now
adopting across all
geographic regions.
Global obesity and diabetes
continue to increase
Potential of Stevia market materially enhanced
Potential of Stevia market materially enhanced
Growing number of products adopting Stevia
18
Global new product launches with stevia Top 10 global category by number of product launches
75% of
launches
occurred in
the past 4
fiscal years
MEA +94% +22%
LTAM +39% +2%
NTAM +28% +40%
Europe +25% +5%
APAC +19% +10%
5 yr CAGR 1yr
2 year CAGR
14%
33%
8%
11%
27%
18%
11%
8%
13%
16%
Growth in number of launches driven by NTAM, LTAM, and Europe, while beverages represent the fastest growing categories.
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
2,2322,408
2,792
3,144
251 368494
990
1,315
Total +26% +12%
485
364
323
306
219
206
186
168
118
117
Snacks
Juice Drinks
Other Beverages
Dairy
Carbonated Soft Drinks
Bakery
RTDs
Sweeteners & Sugar
Hot Beverages
Sugar & Gum Confectionery
23%
NEW PRODUCT LAUNCHES continue to roll out globally
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FY2017 FY2018
Sigma-Beverage
• Improves taste profile in
beverage applications with
sugar-like taste.
• Launched at Food Matters
Live London.
INNOVATION: New introductions enabling adoption of Stevia across F&B industry
StarLeafTM Stevia Variety
• Successful commercialization of best
tasting stevia variety
• >20x of the most sugar-like steviol
glycosides
• Unlock taste challenges for zero
calorie and no sugar added products
• Launched at Beverage Digest
New York
Stevia Antioxidant
• Developed first commercially available stevia antioxidant product
• Provides consumers access to a new health and wellness ingredient
• Offers a plant-based solution to stabilize flavors with cleaner taste profile
• Launched at IFT
New Stevia Flavor Modifiers
• Launched stevia flavour modifiers to
enhance cocoa and vanilla flavours
• Deliver cost savings as cocoa and vanilla
prices rise
• Help diversify customer’s risk around
supply volatility for these ingredients
Sigma-XceleratorTM
• New analytical tool helps customers
formulate
• Offers best tasting stevia solutions with
reduced development times
• Launched at DrinkTec
20
• 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
21
Lowest Carbon Footprint Lowest Water Footprint Lowest Land Footprint
12-82% 88% 1/5Less 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
22
OPERATIONALOVERVIEWGreatest tasting stevia
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1. Aligned (de-centralised) Customer Service to 5 regional sales hubs to maximise order fulfilment
and enable greater customer centricity (e.g. time zone, language etc.)
2. Completed C-TPAT Certification of our China extraction plant (Customs trade partnership against
terrorism). Supply chain security compliance programme endorsed by the CBP. This is supported
by our major customers.
• Continued investment in Enterprise Resource Planning (ERP) integration to improve
customer service.
• Acceleration ERP automation to increase our total system throughput. (e.g. automated
invoicing).
• Improved S&OP process targeting forecast accuracy and production prioritisation.
• Expanding C-TPAT certification to our Malaysia plant to achieve end-to-end supply chain
certification and reduce lead time.
OPERATIONS: Supply Chain Review
24
• Expansion completed on time and on budget, performing at design capacity
• Full automation will be completed in Q2
• Once completed, the process control technology will maximize quality, improve higher efficiency and
lower manufacturing costs.
• Production capacity will be able to support revenue of approximately $450 to $500m.
• The new state of the art, fully automated plant will incorporate more advanced technology
that will drive higher efficiency and lower manufacturing costs.
REFINERY EXPANSION COMPLETED
25
• Process development team introduced new manufacturing
schemes with 300% improved throughput.
• Developed new product categories and respective
production processes for novel high value ingredients
derived from stevia plant.
• Successful pilot scale trials for new sweetener and flavour
ingredients based on proprietary technologies.
• Trial plot cultivation of new varieties, developed by our
agriculture R&D team stevia breeding program, to
increase content of better tasting steviol glycosides.
• Proprietary bioinformatics resource developed, as a result
of continued studies of stevia plant at molecular level, to
identify new mechanisms of steviol glycosides
biosynthesis regulation.
RESEARCH & DEVELOPMENT
26
AGRICULTURE: From PureCircle R&D to commercial reality
Our unique proprietary StarLeafTM Stevia is the next generation
of stevia products.
• PureCircle’s new products allow up to 100% reduction in sugar or
artificial sweeteners.
• Through our leaf-focused R&D, we create improved varieties to deliver
better taste and increased sweetness content from the leaf.
• Following successful global commercial trials this fiscal year, we are now
starting seedling production (in billions) for our farmers
• We are focused on commercial growing partners, supported by our
technical growing knowledge
• We invest in mechanisation for our agricultural partners to help
scalability of production
• We provide our farming partners with the latest generation of StarLeafTM
Stevia varieties to give them the competitive edge for a profitable future
• Our geographic locations take advantage of both the Northern and
Southern hemispheres for future consistency of leaf supply
• Plan for leaf supply to be 100% StarLeafTM within three years
27
SUMMARY & OUTLOOK
Significant opportunities for growth
28
SUMMARY & OUTLOOK
Outlook
• Our Innovation pipeline is strong
• New $200m finance facility enables
a strong, stable financial platform 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 one knows more about the stevia
leaf than we do
• Moving forwards, stronger
Increased Market Opportunities
• Obesity. According to the WHO:
• At least 2.8m people die each year as
a result of being overweight or obese
• 39% of adults aged 18yrs and over
were overweight in 2014, and 13%
were obese
• 41m children under the age of 5 were
overweight or obese in 2014
• Diabetes. According to the WHO:
• The estimated diabetes prevalence
for adults between the ages of 20 and
70 worldwide for 2015 was 415 million
and it is expected to affect one person
in 10 by 2040 – 642m
• Sugar taxes:
• 8 countries have implemented a
sugar tax; in addition, 8 localities in
the US and 8 island nations/territories
Summary
• CBP issue resulted in missing some
US customers’ innovation cycles but
we used the time to invest in
creating an even stronger business
with the best-tasting, most-
consistent stevia in the market and
added significant capacity
• Everything we do is about helping
our customers achieve their goals of
reducing sugar/calories/cost of
ingredients without compromising
taste through high purity stevia
solutions
• Continually innovating – 2017:
StarLeaf stevia, cocoa/vanilla
flavours and antioxidants
29
NOTES I
30
NOTES II