Annual Repor t 2016 - Purecircle€¦ · Annual Report 2016 07 Overview CHAIRMAN’S INTRODUCTION...

Annual Report 2016

Annual Report 2016

THIS LEAF IS STEVIA

02 Annual Report 2016FINANCIAL HIGHLIGHTS

* Adjusted EBITDA is an alternative performance measure which the Directors believe are helpful in understanding the performance of the business. Refer to Note 31 for definitions of non-GAAP measures.

FY16

138.6

FY15

127.3

FY14

101

FY13

70.2

FY12

45.4

Sales US$m

FY16

14.6

FY15

4.1

FY14

2.3

FY13

(9.4)

FY12

(23.3)

Net Profit US$m

FY16 FY15 FY14 FY13 FY12

Operating cash flow before working capital US$m

31.9

23.8 22.7

6.6

(16.6)

FY16

37.7

FY15

22.2

FY14

22.8

FY13

9.1

FY12

(9.2)

Adjusted EBITDA* US$m

FY16

20

FY15

17

FY14

12

FY13

5

FY12

5

Products in market number of products

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03Annual Report 2016

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Strategic ReportOverview

Financial Highlights 02

At a Glance 04

Chairman’s Introduction 07

Strategic Management

Chief Executive’s Review 10

Market Trends 13

Our Strategy 14

Our Business Model 16

Our Key Performance Indicators 18

Our Principal Risks and Uncertainties 20

Our Business Performance 27

Governance

Chairman’s Governance Overview 34

Board of Directors 36

Leadership 38

Nomination Committee Report 40

Audit Committee Report 41

Remuneration Committee Report 45

Disclosure Committee 52

Treasury Committee 52

Relations with Shareholders 53

Financial StatementsFor the financial year ended 30 June 2016

Directors' Report 56

Independent Auditor’s Report to the Members of PureCircle Limited 59

Statements of Financial Position 66

Consolidated Statement of Comprehensive Income 68

Consolidated Statement of Changes in Equity 69

Company Statement of Changes in Equity 71

Consolidated Statement of Cash Flows 72

Notes to the Financial Statements 74

Shareholder’s InformationShareholder’s Information 111

EVERYTHINGSTEVIA

PureCircle’s vision is to create a global mass volume natural ingredient market based on stevia. Within this PureCircle is working towards being a long term solutions partner for the Global F&B and Flavour companies as they seek to better meet consumers growing demand for natural sustainable products with reduced or no calories.

Working with partners, customers and suppliers we are focused on what is needed to make this vision a reality; delivering great taste, reducing calories, ensuring consumer acceptance, fostering ingredient advocacy and delivering scaled supply chain in a responsible manner. We encapsulate all these activities as “Everything Stevia”

Since incorporation, PureCircle has pioneered and continues to lead the development of the high purity stevia industry globally.

Online annual reportwww.purecircle.com/investors

04 Annual Report 2016

PureCircle’s vision is to create a global mass volume natural ingredient market based on stevia

In line with its vision, the Group to date has successfully commercialised a portfolio of ingredients that include natural sweeteners and flavours based on high purity stevia. This portfolio has already established the Company as a strong presence in the world sweetener and flavour industries.

The Group is expanding this portfolio into wider complementary speciality natural ingredients that have proven to work well with stevia based natural sweeteners and flavours. This portfolio expansion is on a step by step basis, starting with ingredients that the Company has already begun to use in product formulations with stevia.

Underpinning the Company’s vision is a commitment to research and development as a core competency across all our activities.

Stevia occupies a unique position in the world of sweet as it is the first zero calorie, large volume sweetener and flavour that is natural and sustainable and so addresses consumer concerns facing artificial high intensity sweeteners (HIS). It can also moderate calories thereby helping to address the calories related issues of the other large volume natural sweeteners.

What is stevia? DO YOU KNOW?

Stevia comprises >30 different molecules with different functionality providing flexible formulation

PURECIRCLE AT A GLANCE

Stevia occupies a unique position in the world of sweet

Characteristic of Stevia

- Natural

- Stevia has zero calories

- Scalable

- Sustainable

- 200 times sweeter than sugar

- Complementary with sugar

*High Fructose Corn Syrup

Artificial Natural

Non- Caloric

Caloric

AspartameSucralose

SaccharineStevia

SugarHFCS*

Stevia is a plant that originates in Paraguay, South America. In the leaf of the plant are more than 30 naturally occurring molecules known as Steviol glycosides that, when extracted from the plant, have sweetener and flavour modifying properties.

For more information on our supply chain, go to page 31.

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*offices with in-house technical support

WAREHOUSE

ChinaMalaysiaUnited StatesSweden

France Mexico UK

MANUFACTURING PLANTS

ChinaMalaysia

OFFICES

ArgentinaAustralia BrazilChina*Colombia

FranceIndiaMalaysia*Mexico*

RussiaTurkeyUK*United States*

FARMS

ChinaKenya Paraguay

PURECIRCLE GLOBAL PRESENCE

05Annual Report 2016PureCircle at a Glance


PureCircle is a leading international producer and marketer of speciality natural ingredients based on high purity stevia

PureCircle has the most robust portfolio in the industry

The PureCircle Advantage – Everything Stevia 100% Dedicated To Stevia Development And Success

Fully Integrated Supply ChainControl from leaf to finished product

Innovative SolutionsStevia solutions and natural flavours

TrainingHands oncustomer training

InsightsProprietary consumer research to guide new product concepts and messaging

Commitment To SustainabilityCarbon & Water Footprint Study2011 Sustainability Commitment

Sweet In So Many Ways/ Stevia PureCircle Trust MarkOn-pack education and strong base of trust

Technical Support- Co-development- Experimental designs- Sensory research- SRA* Support

Global Stevia Institute NetworkPromotes science- based information about stevia

Strategic Global PartnershipsLeading sugar and application companiesOP

ERAT

IONS

SERV

ICES

ADVO

CACY

High purity stevia sweeteners to naturally reduce calories

SG95 FamilyReb A FamilyAlpha FamilyDeltaZeta Family

Flavour modifiers that offer synergies with stevia sweeteners and clean labeling options

NSF Family

Category Solutions that maximize calorie reduction in specific applications

Sigma – DairySigma – TeaCustom Solutions

Natural ingredients that provide synergies and functional benefits in combination with stevia

Monk fruit Family

PURECIRCLE AT A GLANCE (continued)

* SRA - Scientific and Regulatory Affairs

For more information on PureCircle's 2020 Sustainability Goals, visit www.purecircle.com/2020-commitments

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07Annual Report 2016

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CHAIRMAN’S INTRODUCTION

Welcome to the PureCircle FY16 Annual Report, our first as a London Stock Exchange Main Market Listed Company.

At PureCircle we are seeking to build a large global business designed to help address the world’s growing need for moderation in calories in food and beverage products using naturally sourced and sustainable ingredients. We intend to achieve this by leveraging our rich heritage of bio-technology research and development. Our ambitions are significant and long term. We intend over time to be recognised as a true leader in our fields and as a “blue chip” company in everything we do.

Some 14 years after incorporation in 2002, the Group has made some progress towards realising its long term objectives, as the performance data in the Chief Executive's review on pages 10 to 11 makes clear. Our progress to-date has been based on our first mover advantage in the stevia industry supported by a strong entrepreneurial culture based on nimble, fast decision making and an above average market risk appetite with continued investment in our bio-technology heritage. As a Board we are ever more confident about the future prospects of the Company in the long term. Our continued investment in development and in expanding production capacity is evidence that we are putting money behind this belief.

However as of today PureCircle is still a relatively small company, particularly given the global scope of our operations; our sales are below $200 million and we employ just 1,000 personnel. We live in uncertain times with political, economic and social volatility impacting all our markets, customers and stakeholders. So we are clear that our future progress will neither be easy or be secured in a “straight line”. There will be volatility along the journey.

FY16 has been a microcosm of this. Undeniably there was continued progress across a number of KPIs, be they for example further market regulatory approvals in India and Brazil or our Corporate move to the Main Market. At the same time there has been considerable volatility, notably the totally unexpected US Customs Border Protection (“US CBP”) process that has diverted considerable resource and management attention away from our core business activities. Refer to page 22 (Our principal risks and uncertainties) and page 28 (Our business performance) for discussions on US CBP matter.

Despite the volatility we end FY16 ahead of where we were a year ago. Our intention is to continue to achieve further progress annually for many years to come.

Paul Selway-Swift Chairman

Chairman’s Introduction


THIS LEAF IS POWERFUL

STRATEGIC MANAGEMENT

Strategic ReportStrategic Management

Chief Executive’s Review 10

Market Trends 13

Our Strategy 14

Our Business Model 16

Our Key Performance Indicators 18

Our Principal Risks and Uncertainties 20

Our Business Performance 27

HIGHLIGHTS FOR THE YEARFor more information, go to page 27i

OUR BUSINESS MODELFor more information, go to pages 16 to 17i

OUR STRATEGY AND PERFORMANCEFor more information, go to pages 14 to 15 and pages 18 to 19i

OUR RISKSFor more information, go to pages 20 to 23i


CHIEF EXECUTIVE’S REVIEW

Progress since incorporationThe business strategy of PureCircle is simple and has not changed since we started the business in 2002; it is to build a large long term natural ingredients business based on stevia providing sustainable moderated calorie solutions to the world’s food and beverage companies and consumers. Our strategy is underpinned by our strong bio-technology heritage that enabled us to secure first mover advantage in our industry and into which we will continue to invest so as to preserve our market leadership.

In the 14 years since incorporation we have made some progress towards our goals:

- Between 2002 and 2008 we demonstrated that large scale high purity stevia production and commercialisation was indeed possible: this period of our development culminated in 2008 with FDA and WHO approvals of stevia as a food ingredient and the effective opening up of some of our markets.

- Between 2009 and 2015 we have successfully scaled up our business and led the global expansion of the stevia industry, culminating in late 2015 with India and Brazil approvals meaning that more than 5 billion consumers now have access to stevia as a tool to moderate their calorific food load.

Looking at the Group’s key indicators we have made clear progress:

- Sales have grown by $93.2m (205%) in the 5 years since FY12;

- Adjusted EBITDA and net profit have each improved $53.5m and $37.9m respectively across the same period;

- Operating cash flow before working capital has also improved by $49m from ($16.6m) in FY12 to $31.9m in FY16;

- We now have 20 products in market all derived from the same stevia leaf, all helping widen the applications of stevia to new food categories and ever deeper calorie reductions and all enabled by our unique integrated supply chain; and

- The improvement in profit and operating cash flow across the last 5 years and our ability to mine the wonderful stevia leaf for ever more ingredient solutions has confirmed fully the operational leverage in our business model and the appropriateness of our mass balance approach.

However we still have a great deal to do. Relative to our long term ambitions we are still early on our journey. For example the global stevia market is currently only $200-250m of B2B revenues a year, representing less than 1% of the global sweetener market.

The key priorities and challengesAs CEO I consider that our primary challenges and priorities are:

- Managing growth: It is well known that growth brings new challenges. PureCircle is no different to other companies in this respect. Management’s key priority is to ensure successful sustainable execution in everything we do; this touches all activities of our business and will remain our primary challenge for many years to come.

- Coping with volatility: We need to ensure that our business has the flexibility, capacity and robustness to cope with global market volatility, in whatever form that takes.

- Competition: Our bio-technology heritage gave us first mover advantage in developing the new stevia industry. Our role now is to stay ahead of the competition so as to preserve our leadership position for as long as possible.

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Annual Report 2016

We manage these three challenges by continued investment in people and systems and by ensuring that our capital structure has continued headroom and flexibility to support our growth aspirations.

We recognise that for stevia to develop into the large scale industry that we believe it will do, the market and our customers will require the development of a well-diversified supplier base. As such we see competitor developments as important further validation of the stevia industry potential.

In FY16 there was investment into stevia by a number of well-known ingredient and soft commodity companies. However, to-date none of these companies have made investments into integrated supply chains back to stevia leaf plantations. They rely on smaller extraction and refining companies, principally based in China, to provide supply of a very limited range of steviol glycoside products. As they do not control source back to the stevia leaf they are not able to provide the range of innovative solutions that the market needs and can access from PureCircle.

Our strategy is to remain ahead of the competition by continuing to invest in innovation underpinned by our unique integrated supply chain so as to bring more cost effective solutions to our clients across more food categories.

FY16 PerformanceFY16 has been a challenging year. We have seen progress in the development of all our markets, notably India and Brazil, and in the commercialisation of further innovation including our Sigma family ingredients, which are already helping customers deliver great tasting products with deeper calorie reductions.

At the same time we have had to address the considerable external shock of the US CBP process. This is discussed on page 22 (Our principal risks and uncertainties) and on page 28 (Our business performance). I will not go into more detail on the process here, except to say that it has placed the Company and its management under sustained pressure for many months now and has undoubtedly adversely impacted our ability to progress the Company’s objectives significantly.

So, whilst performance as measured by revenues was some way below our plans at the start of the year, our ability to grow revenues and almost quadruple profits during a difficult year does provide further evidence of the robustness of our business model and with it some indication of the true potential of this business.

Looking aheadLooking ahead, and particularly across the next 5 or so years, I would summarise our plans as more of the same. We do not anticipate changes in strategy. We are committed:

- to continued growth in our business in all regions of the world;

- to continued penetration of stevia into all major food and beverage categories;

- to continued expansion of our production capacity to support demand;

- to continued diversification of leaf supply outside of China; and

- to continued investment in our people, our systems and our organisation.

If we are successful in our plans for the next 5 years then I believe we will be closer to our long term ambition of building the blue chip business that Paul referred to above (see page 7 Chairman's introduction). But I too emphasise: our development will not be a straight line. There will be volatility along the way.

Magomet Malsagov Chief Executive Officer

Chief Executive’s Review


THE GLOBAL SWEETENER AND FLAVOUR MARKETS

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Market trends in favour of steviaOverall consumption of sweeteners is growing. There is very high correlation between the growth in a country’s GDP and consumption of sweeteners in its population’s diet. Further the growth in global population adds new consumers daily. Taken together long term growth forecasts suggest demand for sweeteners will grow at 2-4 % compound for the foreseeable future, with the growth underpinned by emergence of large new middle income populations in countries like India, China, Nigeria, Indonesia etc: collectively referred to as BRIC and MINT.

Taking sugar as an example current global consumption is circa 180 million metric tonnes of sugar a year. At current growth trends this is forecasted to increase to more than 225 to 250 million tonnes a year over the next 20-25 years.

Including all other sweeteners and expressing volumes in sugar sweetness equivalent, the current total market consumption is 230-250 million tonnes of sugar. This is forecasted to grow to close to 300 million tonnes of sugar equivalent over the next 20-25 years.

Against this large potential volume, in calendar 2015 stevia consumption was estimated at just 500,000 tonnes of sugar sweetness equivalent.

Our strategy is:

- to address a large global market (the sweetener and flavour market)

- to benefit from the structural growth in those markets (needing solutions to growth in demand for sweeteners and demand for solutions to excess calories / diabetes)

- to play a market leading role in our markets

- to have a business model that will deliver profitable and sustainable growth

MARKET TRENDS

Global Sweeteners Market

Source: Euromonitor

1.4%

Sugar High Fructose Corn Syrup

Stevia

(2.6%) 2.2% 75.6%

Volume Growth (2009-14 CAGR)

$60bn

$7bn$3bn

$200m

High-IntensitySweeteners

Whilst Mintel and other external data confirms that the stevia market continues to grow strongly, it remains very small relative to the long term market opportunity. This provides confidence of strong long term growth prospects.

Refer pages 14 to 15 for discussion on our strategyi

Market Trends


OUR STRATEGY

Growing Worldwide EpidemicThe global pandemics of obesity and diabetes are increasing and solutions need to be found to address them.

Millennials’ Focus on Eating RightConsumers, notably the younger generations, are seeking natural sustainable ingredients and are increasingly demanding in how they manage their own health

RegulatoryThe regulatory environment is increasingly taxing and/or limiting the use of added sugars as an ingredient.

1 McKinsey Global Institute – Overcoming obesity: An initial economic analysis (Nov 2014) 2 World Health Organization.3 International Diabetes Foundation.4 Goldman Sachs Research, Millennial Munching Apr-2015.

Your

Defi

nitio

n of

Hea

lthy4

Obesity’s global economic impact has been estimated at roughly $2 trillion (2.8% of global GDP in 2012).1

Obesity 2

Diabetes3

2.52.01.51.00.50.0

600

500

400

300

200

100

0

(bill

ion)

2005

2005 2035

1.6bn

400m

1.9bn

600m

2015

North America/Caribbean

Southwest Asia

Middle East/North America

Western/Pacific

South & Central America

Europe

Africa

Overweight Obese

+59.5%+100.6%+37.3%+96.2%+22.4%

+70.6%

+46.0%

STRUCTURAL GROWTH

Our strategy is:

- To operate in large, sustainable growth markets;

- To secure and maintain a leadership position in the markets in which we operate;

- To maintain a highly operationally leveraged business model, such that incremental growth in revenues translates into improved profitability and cash flow generation; and

- To use the profits and cash flow generated from our business to invest to support further growth and to provide sustainable returns to our stakeholders, including shareholders, farmer suppliers, employees and the consumers of our ingredients.

At our core, PureCircle is an entrepreneurial bio-tech company committed to bringing the full benefits of the wonderful stevia plant to bear for the significant benefit of the world. All our strategic activities are underpinned by a rich heritage of bio-technology expertise in research and development across the key areas of leaf development, steviol glycoside research and product formulation.

In the process of delivering our strategic objectives we plan to

- Create significant value for our shareholders

- Provide sustainable income for our farming community and supply chain partners and employees

- Provide material water, land and carbon footprint savings for the world

- Provide attractive innovative new ingredients for our food and beverage customers and, through them

- Provide attractive innovative new food and beverage products that better support a healthy sustainable lifestyle for the worlds consumers

All our plans are large, global and long term.

Mexico Soda Tax: 1 Peso per case of Carbonated Soft Drinks

UK Traffic Light Labelling System

France Beverage Tax Legislation

USA Congress Tax Bill

Eating Right? Exercising?

Not Falling Sick? The Right Weight for Your Height?

Baby BoomersGenX

Millennials

12%

14%

24%

12%

14%

22%

Baby BoomersGenX

Millennials

41%

37%

30%

Baby BoomersGenX

Millennials

Baby BoomersGenX

Millennials

46%

43%

29%

Strategy For Profitable And Sustainable

Growth

Structural Growth

Market Leader

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Market Leader across the Supply Chain

“Everything Stevia” AdvantageDepth of customer engagement covering:

- R&D, Marketing, Supply Chain, Scientific and Regulatory Affairs, Sustainability

- Bespoke solutions

Knowledge & Innovation LeadershipPureCircle Innovation Differentiation

- Multidiscipline approach covering: plant breeding, agronomy, biotechnology, biochemistry, food technology, sensory analysis

- Strategically located R&D facilities

IP protection through patents, trade secrets, plant breeder rights registrations

- 64 granted patents and >150 pending patent applications worldwide

Broad range of intellectual property covering:

- Production

- Processing

- Composition

- Use and application

- Stevia varieties

MARKET LEADER

Market at tipping point. Clear pathway to $bn+ industry established

Sustainable long term market growth underpinned by launches to-date

The Group has significant leadership position and first mover advantage

Innovation drives customer adoption and market expansion

Unique in having vertically integrated supply chain

Next phase of capacity expansion ready FY17

Both well in progress

Operationally leveraged business model

A number of complementary ingredients already identified

Unlock the Market

OBJECTIVES STATUS

Grow Overall Stevia Market ASAP

Sustain High Market Share

Lead Innovation

Integrated Scaled Supply Chain

Improve Leaf Quality and Diversify Supply

Generate Strong Operating Margins and Cash Flow

Build New Speciality Natural Ingredients Business

The Group’s strategy is to unlock the high purity stevia market as a global natural mass volume ingredient, then grow the market as fast as possible, retain as a high a profitable market share as possible for as long as possible and have a business model that has high operational leveraged so that large revenues translate through to high profits and cash margins.

STRATEGY FOR PROFITABLE AND SUSTAINABLE GROWTH

Our Strategy


OUR BUSINESS MODEL

Everything we do is underpinned by our strong bio-tech heritage research and development, and intellectual property.

This runs across all aspects of our business:

Operate In Large Sustainable Growth Markets

Build And Maintain Leadership Position

Leaf Development

First mover advantageIt was PureCircle's innovation that opened up the high purity stevia market. We are today the market leader.

Active innovation development provides solutions for our customers that further builds the market and our share of market

Our innovation is only possible due to our unique integrated supply chain; everything starts with the stevia leaf.

Both growing long term

$70bn Sweeteners

$23bn Flavours

20 new products

PRODUCTS IN THE MARKET

2008

1

20

2016

OUR SUPPLY CHAIN

HARVESTING EXTRACTION

PURIFICATIONAPPLICATION

PLANT BREEDING

FINISHED PRODUCT

For more information on our supply chain, go to page 31

i

Market growth factors

- Sweetener demand increases with population:

- Obesity;

- Diabetes pandemic;

- Regulatory and social need for solutions; and

- Consumers demanding natural sustainable solutions.

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Highly Operational Leveraged Business Model

Expected Outputs From Our Business Model

Steviol Glycoside Development

Application Know-How

The Company has a high variable contribution margin due to our unique mass balance strategy: (ie we take many products to market all derived from the same stevia leaf source: we optimise the output from every leaf)

We have a scalable organisation: our fixed costs do not change relative to the volumes we sell

PureCircle has invested into a high fixed cost base. This was required for the industry to start as the industry requires mass volume production and genuine global reach.

So we have large capacity factories and a global sales and marketing organisation and a global supply chain

We expect our business model to deliver rapidly increasing profits as our incremental revenues increase, underpinned by expected market growth.

We expect our business model to deliver rapidly increasing operational cash flows from the incremental revenues so thatwe can:

- invest in new innovation

- invest in new production capacity

- invest in working capital to support growth

- service our banking partners

- provide our shareholders with a return for their risk capital that they have invested

- provide our other stakeholders (employees, suppliers etc) with sustainable rewards for their contributions to our business

More than

1000 employees

A lot of products come from the leaf

Reb A

Reb M

Stevioside

Dulcoside A

Reb C

Reb B

Reb F

SteviolbiosideOthers

Reb DReb E

REVENUESPROFIT

MARKET

CASH FLOW

For more information on our progress on these commitments,go to pages 27 to 30

i

For more information on our supply chain, go to page 31

i

Our Business Model


OUR KEY PERFORMANCE INDICATORS

KPI StatementLooking at the 5 year record from FY12 to FY16 there has been strong progress across all KPIs. In particular revenues are now sustainably in excess of $100 million per annum, which in turn delivers sustainable profitability and positive operating cash flow before working capital growth investment.

Financial KPIs

FY16

57

FY15

40.3

FY14

36.6

FY13

17.8

FY12

4.9

Gross margin* US$m

FY16

41%

FY15

32%

FY14

36%

FY13

26%

FY12

11%

Gross margin %

FY16

(52.90)

FY15

(45.40)

FY14

(79.90)

FY13

(75.2)

FY12

(78.10)

Net debt* US$m

FY16

76.3

FY15

88

FY14

60

FY13

55

FY12

44

Headroom* US$m

FY16

138.6

FY15

127.3

FY14

101

FY13

70.2

FY12

45.4

Sales US$m

FY16

14.6

FY15

4.1

FY14

2.3

FY13

(9.4)

FY12

(23.3)

Net profit US$m


Operating cash flow before working capital US$m

31.9

23.8 22.7

6.6

(16.6)

* Gross margin, adjusted EBITDA, net debt and headroom are alternative performance measures which the Directors believe are helpful in understanding the performance of the business. Refer to Note 31 for definitions of non-GAAP measures.

FY16

37.7

FY15

22.2

FY14

22.8

FY13

9.1

FY12

(9.2)

Adjusted EBITDA* US$m

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The Group’s KPIs link directly back to the Group’s strategy which is :

- To operate in large global growth markets of sweeteners and flavours

- To secure and maintain a leading position in our markets

- To operate a highly operationally leveraged business model

- To provide strong returns to our stakeholders from long term growing revenues

Revenues, regulatory clearances, Mintel data about launches all provide evidence of the growth of our markets and of our position within our markets.

Gross margin, gross margin %, adjusted EBITDA, operating cash flow, products in market, our production capacity and information about the global stevia leaf market all provide evidence of our highly operationally leveraged business model and our ability to provide strong returns to our stakeholders

Net debt and headroom are evidence of our management of key risks to our business, namely funding liquidity.

Non-financial KPIs

FY16: India, Brazil

FY15: Gulf Cooperation Council (GCC), Pakistan, Bangladesh

FY14: Indonesia, Egypt

FY13: Thailand, Vietnam, South Africa

FY12: Canada, Turkey, Russian Federation

Cumulative new launches with stevia - Mintel data number of launches

Cumulative global population with access to stevia billion

Regulatory clearances

FY16

FY15

FY14

FY13

FY12

Production capacity in revenue equivalent US$m


FY16

58,000

FY15

24,000

FY14

14,500

FY13

19,400

FY12

29,100

200 300

$400-500m

$400-500m

$400-500m

$250-300m

$250-300m

400 500

FY16 FY15 FY14 FY13 FY12Cumulative global population

with access to stevia

>5.0

>2.5

1.0

0.50.5

0.5

>1,000

>2,000

>4,500

>6,900

>9,700

Global stevia leaf harvest estimated metric tonnes

FY16

20

FY15

17

FY14

12

FY13

5

FY12

5

Products in market number of products

Our Key Performance Indicators


OUR PRINCIPAL RISKS AND UNCERTAINTIES

The Company vision and strategy involves the creation from scratch of a completely new industry. The development of the Company should therefore be seen in three parts:

- Phase 1 (2002 to the end of 2008): bio-tech start up

- Phase 2 (2009 to 2015): scaling up phase

- Phase 3 (2016 onwards): more normal business development with the Group operating with critical mass in ever more developing markets

Understanding these phases of development is critical to understanding the dynamics of the Company’s risk environment. To elaborate this point some risk examples are summarised below:

Regulatory: At incorporation high purity stevia was not approved for use in any major food and beverage market. In simple terms there was no market for the Company’s products; a market had to be developed including regulatory approvals being obtained. By 2016 all major markets, now covering more than 5 billion consumers, have approved stevia as a food and beverage ingredient. So the regulatory risk has diminished considerably.

A similar diminishment of risk has been seen across a wide range of risks and uncertainties, including but not limited to production scaling and food and beverage launches. In addition, given that many of the earlier risks were “fundamental” in nature, the overall risk profile of the Company has reduced considerably and the discussion following should be seen in that context.

Now principal risks are focused on execution.

The principal risks and uncertainties facing the company are discussed in the following section. - Founded in 2002

- IPO in December 2007

- FDA approvals December 2008

- Need to prove scalability of technology

- Invested $150m building supply chain

- Single customer, single product

- Mainstream market acceptance

- Mass scale and sales

- High cash margin achieved

- “Clean” investment story – all about sales growth

- Subscale market and sales

- Further $150m investment in completing capacity build-out

- High fixed costs (on a relative basis)

- Resulting complex financial performance

- BUT: story and business building

- 300 customers secured

- Generation 3.0 products launched

- Strategic partnerships established: Firmenich, Dohler

- Sugar / Stevia JV strategy put in place: Tereos, Nordzucker

“Phase 2”: 2009 to 2015Subscale, transition and high fixed costs

“Phase 1”: 2002 to 2008Proof of concept

“Phase 3”: 2016 onwardsMass value, high cash margin

2 Customers accounted

for 88% of PC Sales and

100% of Reb A Sales

We sold to 134 customers

directly and 500+ indirectly

through our partners

We sold and manufactured

only two products:

One Sweetener (Reb A) and

one as Dietary supplement

(Sweta)

We have a product portfolio

consisting of 20 different

stevia ingredients including

sweeteners and flavours

100% of Reb A sales

were through “take or

pay” contracts not actual

consumption

Our products are present

in 100’s of Food and

Beverage Products

Worldwide

We had no commercial

offices, application labs

or warehouses, just

Malaysia base

We have commercial

presence in all continents

and 5 application labs

We processed an average

of less than 4 customer

orders per month

We processed an

average of 12 customer

orders per day

Only US and Australia had

approved use of Reb A as

sweetener

Of major markets, India

approved Stevia usage as

sweetener in November

2015

Back in FY09….

The PureCircle Journey: Overview of Operations FY09-FY16

In FY16

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Annual Report 2016

Current Risk AssessmentThe Group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity. Within this the principal risks and uncertainties which may affect the business activities of the Group are summarised below. A new risk related to the failure to resolve impoundment of goods by US CBP has been included.

Continued growth in the Stevia Market

Risk description The Group has pioneered the development of the high purity stevia market and is focused on the further development of that market. Additionally the Group has an operationally leveraged business model in which profitability is sensitive to volumes. This makes the Group’s future profitability sensitive to the continued growth in the stevia market.

Mitigation activities Management mitigate this risk with an active programme of new stevia product innovation to support further consumer adoption of stevia and to enable future food and beverage formulation projects. Further the Group invests to protect and promote the natural credentials of stevia. These activities coupled with external evidence, such as Mintel data, shows continued strong growth in F&B product launches using stevia which provides confidence in there being sustainable stevia market growth over the long term.

Competition: over time more competitors may enter the stevia market with the potential to reduce the Group’s share of that market

Risk description As pioneers in the development of the stevia market, the Group is believed currently to have a majority share of the Global stevia market. There is a risk that as stevia becomes established as a large volume mainstream F&B ingredient, that more competitors may enter the stevia market with the potential to reduce the Group’s share of that market.

Mitigation activities This risk is mitigated by the significant potential growth in the total size of the stevia market. The global sweetener and flavour markets have an annual ingredient sales value in excess of $90 billion. By contrast the CY2015 global stevia market size is estimated at just $0.2 billion. This means there remains considerable growth potential for the stevia market and with it scope for the Group to grow revenues significantly even with reduced market share. Further there is limited scope for any new technologies to be labelled as naturally sourced, which is likely to significantly limit their acceptance by consumers.

Leaf costs: the Group’s financial performance can be impacted by material changes in the input costs of its primary raw material, the stevia leaf

Risk description Dried leaf from the stevia plant is the Group’s primary raw material and it constitutes the majority of the Group’s variable costs of production. It follows that the Group’s financial performance can be impacted by material changes in the input costs of the stevia leaf.

Mitigation activities Over the long term stevia is a highly efficient source of natural sweetness with excellent sustainability and agro-economic properties which will underpin a well-balanced sustainable global supply that will substantially mitigate this risk.

In the medium term, the Group is managing this risk by developing large scale diversified supply. To achieve this PureCircle continues to lead the diversification of leaf supply into new geographic regions centred on our leaf development hubs in Africa, South America and India. Further the Group is making progress working with larger commercial agricultural partners who have the potential to scale supply more quickly than traditional smallholders.

For more information on US CBP matter, go to page 28i

Our Principal Risks and Uncertainties


Current Risk Assessment (continued)

Failure to resolve impoundment of goods by US Customs Border Protection ("US CBP")

Risk description Whilst we fully expect a positive resolution to the US CBP situation, the longer the impoundment of our shipments and our name remains on the Withhold Release Order ("WRO") , the more impact it has on our route to market in the US.

Mitigation activities We are actively working with our US customers to ensure ongoing supply until this matter is resolved. Outside of the US, our business continues as usual and our expansion plans in the rest of the world is being accelerated, somewhat mitigating the US impact.

We continue to actively work with the US CBP to address the matter and have our name removed from the WRO.

Working capital funding to support large growth plans

Risk description The Group currently controls its supply chain 100% from leaf supply through extraction, purification to end customer sales relationships. This 100% control critically provides the Group with its innovation leadership. At the same time it requires the Group to fund the working capital from leaf purchases through to end sales receivables and including appropriate inventory holdings. Given the Group’s growth plans, working capital funding requirements may increase. There is always a risk that capital market conditions may make funding of such working capital hard to source.

Mitigation activities The Group manages its working capital growth risk actively through a suite of ongoing policies. These include operational policies to ensure balance between supply purchases, inventory holdings and forecast sales cash flows; that maintains appropriate gross cash and facility headroom availability at all times; and that works actively to build and maintain bank and equity relationships.

Concentrated production capacity

Risk description As pioneers in the development of the stevia industry it is inevitable that for a certain period in its development the Group’s production capacity will be concentrated into specific facilities. This situation will continue until such time as demand volumes warrant the construction of more diversified production capacity. During this period the Group is at risk of catastrophic event impacting either of its production facilities.

Mitigation activities The Group manages this risk actively through a variety of policies and practices. The Group has a policy of holding high levels of finished goods specifically and inventory generally relative to sales levels; and management work closely with larger customers to ensure that their inventory holdings are appropriate; the production facilities are designed on a modular basis so as to reduce the likelihood of any one event impacting more than a proportion of the total facility.

Management: As pioneers in the development of the stevia industry, the Group is reliant upon the performance of highly skilled personnel including its senior management team

Risk description Stevia is a relatively new industry, in consequence the talent pool of management with the skills and experience of working in the stevia market is smaller than that in other more established industries.

Mitigation activities The Group manages this risk by ongoing investment in senior management retention programmes for all key managers, including the Group’s Long Term Incentive Programme (LTIP).

OUR PRINCIPAL RISKS AND UNCERTAINTIES (continued)

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Annual Report 2016

Current Risk Assessment (continued)

Managing growth: the Group has significant growth plans, which will require more complex execution skills and processes

Risk description The Group has grown significantly (by over 205%) across the last five years and has plans to continue to do so. With such levels of growth comes the challenges of managing a more complex business including a diverse customer base and an expanded product portfolio.

Mitigation activities The Group manages these risks by investing heavily in appropriately skilled senior management and in global management information systems including the roll out of Oracle’s JD Edwards global Enterprise Resource Planning (ERP) management information system.

Managing health and safety

Risk description The Group operates in the food ingredient industry and operates a food grade supply chain, including large production facilities. As a result health and safety considerations are a significant operating factor for the Group’s business.

Mitigation activities The Group manages its health and safety requirements actively through a combination of strategy, design, policy and process management. The Group’s strategy is to be in full compliance with all health and safety requirements at all times across the Group; our supply chain, including production configuration, is designed to support this strategy and operating policies and processes are structured to re-inforce compliance on an ongoing basis.




Viability StatementThe Directors have assessed the viability of the Group in accordance with the requirements of C.2.2 of the 2014 revision of the UK Corporate Governance Code. In assessing its viability, the Directors have considered the Group’s prospects and a number of factors that affect the resilience of the Group, including the principal risks.

Assessment of prospects

The context for the assessment of prospects The Group’s market, strategy and business model are each central to an understanding of its prospects.

The nature of the Group’s activities is long-term and its market and business model are both seen as open ended. The Group’s current overall strategy has been in place since the Company was founded, subject to ongoing monitoring and fine-tuning.

The core matters relevant to assessing the Group’s prospects include:

- Stevia is a global mass volume natural sweetener: since initial regulatory approvals the stevia market has been growing steadily and is at or is close to tipping point / reaching critical mass. All indications are that it will continue to show considerable growth for decades into the future

- Successful participation in the stevia market requires scale to be feasible (including scale in leaf supply, extraction and purification production, global customer service support)

- The Group has a large invested balance sheet: > $300m invested, representing successful investment in scaled participation in the industry across our integrated supply chain from leaf supply to end customer service on a global basis

- Our business model is highly operationally leveraged

Key to viability is sustainable critical mass sales.

For more information on our principal risks and uncertainties, go to pages 20 to 23i

For more information on our market, strategy and business model, go to pages 13, 14 to 15, 16 to 17 respectivelyi

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Annual Report 2016

Assessment of sustainable critical mass salesAs noted earlier the Group achieved breakeven net profits in FY14; and since then net profits have grown strongly.

Future viability is dependent upon continued growth in the stevia market and the Group continuing to secure a reasonable share of that growing market.

This is considered entirely reasonable as the stevia market is expected to continue to grow: it is currently estimated at about $200-250m in B2B sales, representing under 1 million tonnes of sugar equivalent, against global sweetener consumption in excess of 200 million tonnes of sugar equivalent. Further Mintel and other 3rd party data continues to show strong growth in food and beverage products launched using stevia.

PureCircle currently enjoys a large market share well in excess of 50%. However the long term viability assessment is based on the Group being one of four large producers in the long term; so at present there is considerable market share upside to the viability assessment.

The assessment process and key assumptionsThe Group’s prospects are assessed primarily through its strategic planning process. This process includes the maintenance of a 5 year plan which is reviewed annually by management led by the CEO with extensive COO and CFO involvement.

Detailed financial forecasts were also prepared for the 5 year period to 30 June 2021 so that 4 years and 9 months remains at the time of the approval of this year’s annual report. The first year of the financial forecasts form the Group’s operating budget for FY17 and is subject to reforecast at the half year. The second year is in a similar level of detail and is flexed based on actual results in year one. Years’ three to five of the forecasts are extrapolated from the first two years based on the overall content of the strategic plan.

Key assumptions of the base strategic planPrincipal assumptions in the base strategic plan include:

- Continued growth in stevia market

- Continued growth in the Group's sales revenues: reflecting growth in the overall market

- After completion of the current capital expenditure programme, planned for by January 2017, the Group's invested production capacity can support $500m of sales revenue and so the Group has adequate existing capacity within which to manage sales growth

- Fixed costs: it is assumed that the Group’s non-variable factory and SG&A overhead cost base will not increase significantly

- The Group will maintain its highly operationally leveraged business model; and in particular its high variable margin meaning that increased revenues will result in higher profitability

- Working capital assumptions are that inventory levels will continue to increase in $ terms but will reduce as a % of sales. Receivables are assumed to be financeable due to the quality of the Group’s customers

The base plan assumes that positive base operating cash flow on a sustainable basis has now been achieved and will continue as sales grow until further capacity expansion is required.

Further capacity expansionAs noted above the invested production capacity when completed in January 2017 can support $500m of sales revenues. This is expected to be sufficient to support the Group’s growth plans through FY2021.

However in anticipation of significant future growth beyond FY2021, entirely at its discretion, the Group may choose to expand capacity further. If it does so then such expansion is likely to start in FY19. It is estimated that it will cost the Group $200-250m to double the current production capacity footprint in a new location. The funding of the investment would be spread over 2-3 financial years and would then support a further $500m of new revenues. The capacity expansion is not expected to commence until sales are at a level expected to produce in excess of $80 - 100m of adjusted EBITDA and so the capacity expansion is expected to be financeable through a combination of operating cash flow and debt.

The Group’s current net debt is $52.9m which represents <2 times adjusted EBITDA, <20% of gross assets and <30% net assets. Management consider that capacity expansion, supported by growth in sales and adjusted EBITDA across the next 2-3 years, will be fundable from operating cash flow and debt. If the growth in sales is not forthcoming then the discretionary investment in production capacity expansion will not occur.



Assessment of viabilityAlthough the strategic plan represents the Directors’ best estimates of the future prospects of the business they have also tested the potential impact on the Group of a number of scenarios over and above those included in the plan, including the continuing impoundment of shipments by the US CBP, by quantifying their impact and overlaying them on the detailed financial forecasts in the plan.

These scenarios which are based on aspects of the principal risks represent severe but possible circumstances that the Group could experience.

The Directors consider that in the downside scenarios the Group can continue to operate profitably and within its cash and funding headroom by:

- either cutting back on stevia leaf purchases; for example in scenarios where there is reduced demand for stevia. Purchases of stevia leaf are the Group’s principal variable cost and cash outflow. The Group has the ability to cut back purchases in line with reduced demand; or

- running down inventories: for example in scenarios where there is either reduced demand for stevia or reduced supply of stevia leaf. The Group has historically maintained inventory levels equivalent to more than 6 months costs of sales. These provide management with considerable flexibility on managing stevia procurement in scenarios of uncertain demand; or

- slowing down plans for production capacity expansion again to address potential cash flow requirements in scenarios with reduced revenues.

Viability statementBased on their assessment of prospects and viability above, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the five year period ended 30 June 2021.

Going concern statementThe Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Review. The financial position of the Group, its cash flows and liquidity position are described within the Business Performance review on pages 27 to 30. In addition note 4 to the financial statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

In making their assessment of the Group’s ability to manage its future cash requirements, the Directors have considered the Company and Group budgets and the cash flow forecast for the period to 30 June 2017. In addition they reviewed a more conservative cash flow scenario with lower revenues, lower average selling prices and higher leaf costs, whilst maintaining current committed capital expenditure, but cutting back on total leaf volume purchases and other more discretionary investments, so as to mitigate pressures on liquidity. This resulted in our current cash balances reducing over time but maintaining sufficient liquidity throughout the period.

After reviewing all the above considerations, the Directors have a reasonable expectation that management has sufficient flexibility in adverse circumstances to maintain adequate resources to continue in operational existence for the foreseeable future. The Directors therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.

If the necessity arose to employ any or all of the above mitigations for an extended period, it may be that these actions could impact the Group’s ability to achieve its base targets for revenues and production for FY18 and subsequent years.


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Annual Report 2016

Highlights for the year

- Strong sales growth and margin expansion

- Potential for stevia market materially enhanced:

- Stevia approved in Brazil and India

- Sugar taxes being imposed in major markets

- Important new PureCircle innovations launched

- H2 sales lower than anticipated due to delayed customers launches and US Customs and Border Protection (CBP) actions

- PureCircle well positioned to capture long term market expansion

OUR BUSINESS PERFORMANCE

Our Business Performance

The Group’s FY16 financial year covers the year from 1 July 2015 to 30 June 2016. FY15 comparatives are for the year from 1 July 2014 to 30 June 2015.

Set out below is an extract from the audited FY16 financial statements. The complete financial statements and its accompanying notes are on pages 56 to 110.

FY16USD’000

FY15USD’000

%+ / (-)

Trading

Revenue 138,641 127,349 9%

Cost of sales (81,634) (87,070) 6%

Gross margin* 57,007 40,279 42%

Gross margin % 41% 32%

Other income 328 760 (57%)

Administrative expenses (24,947) (24,024) (4%)

Operating profit* 32,388 17,015 90%

Main Market Listing costs (1,808) - -

Other expenses (8,396) (7,117) (18%)

Foreign exchange gain/(loss) 1,358 (757) 279%

Finance costs (5,315) (7,275) 27%

Share of loss of joint ventures (332) (818) 59%

Taxation (3,295) 3,043 (208%)

Profit for the financial year 14,600 4,091 257%

Earnings Per Share (US$ cents per share) 8.49 2.48 242%

Fully diluted Earnings Per Share (US$ cents per share) 8.37 2.42 246%

Operating cash flow before working capital changes 31,870 23,784 34%

Working capital changes (12,860) (10,016) (28%)

Operating cash flow after working capital changes 19,010 13,768 38%

Net debt and funding headroom

Gross debt 113,929 109,646 (4%)

Gross cash (61,002) (64,276) (5%)

Net debt 52,927 45,370 (17%)

Funding headroom 76,271 87,937 (13%)

Adjusted EBITDA* 37,729 22,182 70%

* Gross margin, operating profit and Adjusted EBITDA are alternative performance measures which the Directors believe are helpful in understanding the performance of the business. Refer to Note 31 for definitions of non-GAAP measures.


OUR BUSINESS PERFORMANCE (continued)

Segmental reporting: The Group operates as a single operating segment comprising of the integrated production and marketing of PureCircle Stevia 3.0™ products.

Sales: FY16 sales increased $11.3m (+9%) to $138.6m. This was driven by improved portfolio mix backed by strong innovations. Our “Value Added”category doubled in size which includes our Sigma product family which was launched in the year.Geographically, EMEA and Latin America delivered strong double-digit growth. North America suffered as a result of delayed customer launches and US CBP action, whilst Asia represents a significant growth opportunity moving forward.

Our key customer base also grew double digit helping us to increase our footprint in the marketplace.

Accelerating market adoption of stevia has been enabled by our Stevia 3.0™ range of proprietary ingredients and customizable ingredient combinations. In 2016. PureCircle continues to lead the growth of this market and our project pipeline gives us confidence that future sales growth at these rates is sustainable.

Gross margin: In FY16, the gross margin was $57.0m (FY15 $40.3m), reflecting the better portfolio mix driven by innovations and moderating leaf prices.

The FY16 gross margin percentage of 41% was 9 percentage points higher than FY15. As disclosed in last year’s RNS, gross margin in FY15 was impacted by high leaf cost in China.

Operating profit FY16 Operating profit of US$32.4m almost doubled from FY16, primarily due to higher gross profit and offset by marginal increase in general & administration cost.

Other expenses: FY16 other expenses principally comprise non cash costs of the Group’s LTIP scheme and STIP.

Finance costs: In FY16 finance costs were $5.3m (FY15 $7.3m). This reflects the full year impact of lower interest cost from the restructured banking facilities during FY15.

Net profit after tax: The Group recorded a $14.6m net profit in FY16, a $10.5m (+256%) improvement on FY15.

Financing and funding headroom: The Group ended FY16 with net debt of US$52.9m (FY15 US$45.4m) and cash and facility headroom of US$76.3m (FY15 US$87.9m). Net debt increased mainly due to higher capital expenditure.

USA Customs and Border Protection matter (“CBP”) Based on an allegation of non-compliance with the Trade Facilitation and Trade Enforcement Act (“TFTEA”), on May 20, 2016, US Customs and Border Protection issued a Withhold Release Order (“WRO”) No. 29/China that was used to initially detain two PureCircle shipments of stevia, and subsequently all PureCircle shipments of stevia. The allegations are that PureCircle was importing “Stevia and its derivatives” from the Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC (“Baoanzhao”) where there allegedly have been occurrences of forced prison labour. On June 1, 2016, US CBP issued a press release focusing on US CBP’s detention of PureCircle products, but which also stated that “importers of detained shipments are provided an opportunity to demonstrate that the merchandise was not produced with forced labour.”

US CBP did not notify PureCircle of any allegation or investigation of its labour practices and did not provide PureCircle with an opportunity to respond to the allegations before US CBP acted. We became aware of the WRO only after our shipment was detained by US CBP on May 27, 2016.

Starting on June 1, 2016, PureCircle provided to US CBP the Certificates of Origin and Consignee Statement and detailed leaf traceability information, for the detained shipments, including the names and locations of each farmer from whom PureCircle purchased stevia leaf to be made into the products that are currently under detention.

We have demonstrated that all of the stevia leaf used to make the detained products is compliant with the TFTEA and none of our imported products are or will be produced with forced labour. To ensure the independence of the information we sent to the US CBP, we had all our traceability information corroborated in audits of our supply chain conducted by third party Bureau Veritas. These audit reports have also been provided to US CBP, confirming that no forced labour is used in our supply chain.

Based on the traceability information and the audit reports, two of our detained shipments were released by US CBP on June 24, 2016. Another shipment of one of our customers was also released. Despite the first three shipments being released from detention by US CBP, PureCircle still remains named on US CBP’s WRO.

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Annual Report 2016Our Business Performance

At present, a number of our shipments remain in detention, despite US CBP already having received the same documents, the same level of traceability information, and the same audit reports for these shipments as PureCircle and its customer provided to US CBP for the three released shipments. US CBP has neither requested further information from us, nor given us a formal timetable for its decision.

We continue to actively work with the US CBP to address the matter and have our name removed from the WRO.

We are actively working with our US customers to ensure ongoing supply until this matter is resolved. Outside of the US, our business continues as usual. PureCircle remains committed to human rights and fair use of labour. As we expand our vertically integrated supply chain, we remain committed to traceability and transparency as we verify compliance with our Global Labour Policy and Supplier Code of Conduct and remain confident that this matter will be resolved in due course.

Stevia Market DevelopmentsAll macro market trends continue to develop in favour of the Company and our products. In November 2014 the McKinsey Global Institute (MGI) issued a discussion paper titled “Overcoming Obesity: an initial economic analysis” which highlighted Obesity as one of the top three social burdens generated by human beings with an estimated global economic impact of US$ 2 trillion, equivalent to 2.8% of global GDP.

Although there are a number of causes of obesity and diabetes such as genetics and lifestyles including levels of exercise undertaken, increasing scrutiny is being undertaken on calorific content of food and beverages; and within this on the levels of sugars being added to food and beverage products.

Regulatory action to reduce calorific loading of Food and Beverage productsIn FY16 there were significant regulatory steps taken to reduce the levels of calories and in particular added sugars in food and beverage products. For example:

- In the UK the government announced legislation that will tax carbonated soft drinks that have added sugars with effect from 2018;

- In Mexico the government has stated that it is reviewing the effectiveness of the so called soda tax that was introduced in 2013 with a view to increasing the levels of taxation;

- In the USA a number of influential State Governments and some cities have introduced legislation to impose taxes on calorific Carbonated Soft Drinks. including San Francisco (CA) and Philadelphia (PA);

- Other countries proposing legislation are: Columbia, Brazil, Portugal, South Africa, India, Indonesia, Malaysia, Thailand, Philippines, Australia, Saudi Arabia and Egypt.

Consumer preferences for natural ingredientsConsumers increasingly are demanding natural and sustainable sources for their food and beverage ingredients.

Stevia as a natural sustainable sweetener offers consumers the option of lower calorific loading combined with the natural sustainability that consumers rightly demand.

Material further regulatory approvals for stevia in FY16During FY16, there were a number of important regulatory approvals for stevia. These included:

- India approved the use of high purity stevia as an ingredient thereby opening up a market of more than 1 billion new consumers to products sweetened with stevia;

- Brazil approved by Presidential decree the use of stevia with sugar as an ingredient. Given that more than 90% of food and beverages launched so far using stevia use stevia in combination with sugar this change in regulation effectively opened up the mainstream Brazilian market to stevia for the first time;

- Reb M in Australia, New Zealand and Canada; and

- PureCircle Flavours in China and Indonesia.

These approvals have the effect of opening up food and beverage categories that require deeper calorie reductions than have so far been possible.

With our commitment to innovation and investment in plant and supply chain, taken together, the various developments in the stevia market during FY16 give management further confidence in the long term growth prospects for the stevia market.


OUR BUSINESS PERFORMANCE (continued)

For more information on our markets, go to page 13i

Market assessment at end FY16The Company is building a long term business intended to be substantial in size and sustainable over many decades. The total global sweetener and flavour markets continue to grow and the depth of penetration within the category by stevia is increasing, with more products and larger brands adopting stevia. Further, given the timing of many recent product launches, only a small proportion have yet secured large or full retail distribution meaning that there is considerable latent growth still to emerge from the more than 10,000 products already in market.

Stevia is gaining momentum in major categories as a large scale solution of choice. PureCircle is well positioned as a solution provider in the fight against obesity and diabetes. As more and more food and beverage companies face sugar taxes, PureCircle provides natural, low calorie, great tasting ingredient solutions.

A review of alternative sweeteners to stevia suggests that there are no large scale natural low calorie alternatives.

InnovationThe growth in stevia usage and development of high purity stevia as a mainstream ingredient of choice has largely being enabled by PureCircle’s innovation. During FY16 there were further successful developments in our product innovation.

During the year the Group launched both our Sigma product family and our portfolio of Matrix solutions. These provide category specific solutions enabling deeper calorie reductions delivering great taste. Particular success is being seen by clients in the dairy and tea categories as well as accelerating adoption in new categories such as ketchups and confectionery. PureCircle continues to invest heavily in innovation in order to offer its customers further enhanced high quality flavours and sweeteners.

Supply ChainConstruction of our new production facility is progressing well, and expected to be completed in early 2017.

The Group’s strategy to diversify and increase leaf supply globally continues to ramp up as planned. PureCircle’s strategy to invest in leaf development in order to identify and commercialise strains of stevia that have higher concentrations of particular molecules that have optimum commercial potential.

During FY16 the Group restructured our leaf supply chain infrastructure with more focus placed on larger farmer partners, defined as farmers with individual potential to commit in excess of 100 Hectares to stevia. By the end of FY16 the Company had secured trials in Africa and South America. Whilst actual FY16 supply from these sources was relatively small, the potential in the future is significant.

Management and OrganisationPureCircle has ambitious long term growth plans. These require continual investment in management and information systems to ensure the Group organisation has the capacity, skills and experience to match our growth. The Company is committed to making these investments and further significant steps were again made in FY16.

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Annual Report 2016

FINISHED PRODUCT Providing our customers

with a level of transparency that is superior to any other

stevia manufacturer

PURIFICATION Purifying steviol glycosides with an unmatched scale

and consistency

PURECIRCLE’S INTEGRATED SUPPLY CHAINFROM SEEDLING TO SWEETENER

4 6

EXTRACTION Producing our own extract to ensure quality standards

are met

PLANT BREEDINGBreeding proprietary Stevia varieties with higher sweet

glycoside content

1

APPLICATION Providing formulation expertise to deliver

great-tasting products

5

HARVESTING Cultivating best

sustainability practices and providing training

and materials to ensure success with local farmers

across four continents

2 3

Annual Report 201632

GOVERNANCEStrategic ReportGovernance

Chairman’s Governance Overview 34

Board of Directors 36

Leadership 38

Nomination Committee Report 40

Audit Committee Report 41

Remuneration Committee Report 45

Disclosure Committee 52

Treasury Committee 52

Relations with Shareholders 53

LEADERSHIP How the Board and its committees lead from the front

For more information, go to pages 36 to 39

ACCOUNTABILITY How the Audit Committee fulfils its oversight responsibilities


RELATIONS WITH SHAREHOLDERS How we maintain relations with our investors

For more information, go to page 53

REMUNERATION How we align Executive pay with our performance and the interests of our shareholders



CHAIRMAN’S GOVERNANCE OVERVIEW

Background to Governance at PureCircle At PureCircle we have ambitious long term plans to build a large sustainable global business and "doing things properly" is a major part of our philosophy. In support of those plans, my role as Chairman, supported by my Board colleagues, is to set the tone for how we do business as a Company.

Our intention is to build a “blue chip” company that over time is recognised as a true leader in its field and recognised as making a real sustainable contribution to help address some of the food related epidemics confronting the world today. Our intention is to build a business incorporating high standards of governance, aligned fully with principles of sustainability and good social behaviour. We see governance as supporting our intentions to remain highly competitive leaders in everything we do, particularly by promoting clear policies and systems across the business. In particular we plan to retain the nimble, fast decision making and strong innovation and development culture that has always been at the core of PureCircle and which has served us so well this far.

Within this as a Company we are prepared to accept market risk, but have no appetite for risks that might impact the health and safety of our employees or might impact our standing as a valued supplier partner to our customers. At PureCircle governance is not just confined to the boardroom. It is an integral part of the way we manage our business and control our activities everyday.

Across all areas the Board should be able to contribute to key decisions and provide challenge to management in a meaningful and timely way.

One of the key principles of good Corporate Governance is that the Chief Executive should run the business while the Chairman runs the Board in a way that enables it to best discharge its duties. At PureCircle we have that principle firmly in place.

Overall I am pleased to report that your Company has complied in full with the 2014 UK Corporate Governance Code with the exception of the composition of the Nomination Committee. The Board considers that the current composition is most appropriate for the Company's current requirements.

In FY16 much of the Board activity has focused on:

- Board succession planning and recruitment

- Preparation for Main Market Listing

- Further building our risk assessment and management processes into the day to day operations of PureCircle

- Board effectiveness

Board succession planning and recruitment It is eight years since PureCircle prepared for its initial IPO on the AiM market in December 2007. As a result a key priority for FY16 has been to refresh and strengthen the Board for the next phases in our development.

During FY2016 we have strengthened our Board considerably with a series of appointments that individually and collectively have brought relevant industry expertise, global business leadership experience as well as a wide range of specific functional skills.

In July 2015 we welcomed Guy Wollaert and Mitch Adamek to the Board and they were then joined in April 2016 by John Gibney. In March 2016, Olivier Maes retired from the Board after serving as

I was appointed Chairman of PureCircle in 2007 shortly before the company’s admission to the AIM market. It was with a certain amount of corporate pride that some eight years later we took PureCircle to a Main Market listing in 2015. I am therefore delighted to introduce our FY2016 Annual Report, our first as a London Stock Exchange Main Market Listed Company.


Dear Shareholder,

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Annual Report 2016Governance

Going forward, there will be more focus on strategy and it was agreed that each year the Board would have a half day discussion focussing solely on strategy.

Meetings with Shareholders Historically we have stayed in touch with our shareholders through a variety of means, conference calls, AGM, and other meetings with investors as and when requested or appropriate.

Our current objective is to increase both the depth and frequency of our investor communications and we kicked this off with our first Capital Markets day in London in September 2015 which was well attended, giving shareholders and potential investors an opportunity to meet both management and board members. This was well received and produced feedback which was both positive and useful. We have also held investor meetings at our UK Sales Office at Winnersh near Reading as well as speaking at various conferences in UK and USA. I have personally been in touch with all our largest investors and this will continue.

Remuneration Our remuneration policy is matched to our strategy. Central to this is the creation of significant sustainable value for our shareholders. Linked to this our Executives will only receive above average rewards for corresponding performance. Our strategic objective is to build a very large sustainable global business. We consider that the primary benchmark for assessing progress towards this goal is sustainable sales growth. Over time we also see adjusted EBITDA as becoming relevant, to ensure that profitability is taken into full account.

During FY16 we have undertaken a full review of our Remuneration programme. The detail findings of this review are covered in Chris Pratt’s report as Chairman of the Remuneration Committee on pages 45 to 51.

Health and Safety PureCircle employs more than a thousand people in our supply chain and operations spread across four continents. The health and safety of each and all our employees is an important priority for the Company and your Board. In that context I am pleased to report that overall safety, health and environment cases improved > 25% (21 cases FY15 and 15 FY16). Despite this we have continued to put additional investment into staff training on health and safety, particularly linked to the capacity expansion at our production facilities in Malaysia and China.

Diversity PureCircle is committed to employment on a fully diverse basis. Operating across the regions that we do, at PureCircle we have diverse staffing levels in terms of nationality, language and religion, it is the source of some disappointment to the Board that to date we do not have sufficient gender diversity. Specifically gender diversification is a key requirement in the terms of reference when we search for new Directors and Senior Management. We do not have sufficient gender diversity at Board level despite considerable efforts. At senior management level, however, there is significant gender diversity in several areas.

Further information Over the following pages we describe our corporate governance framework in more detail and we include examples of how our governance works in practice.

a Non-executive director for 8.5 years. A summary of each of the profile of the newly appointed Non-executive directors is included on pages 36 to 37. All three new Directors bring extensive relevant industry experience to PureCircle and are already making significant contributions to the Company. I have no doubt they will each provide strong leadership.

Rakesh Sinha joined PureCircle in April 2016 and succeeded William Mitchell as CFO in July 2016 following his retirement from the Board.

I would like to take this opportunity to thank the outgoing Directors for their contribution to the Board.

Main Market Listing In October 2015 PureCircle was admitted to the Main Market of the London Stock Exchange. With increasing in-market evidence of the large long term potential for stevia, we believed that, after eight successful years on AIM, the Group had now reached a size and stage of maturity at which the Main Market would provide a more appropriate platform for the next phases in the Group’s long term growth plans. Specifically we believe this will further raise the Group’s investor profile and provide PureCircle with access to a broader spectrum of investors leading to improved liquidity in its Ordinary Shares.

Risk Assessment and Management Your Board is clear on the value and importance of assessing and managing risk in everything we do. During FY16 we have made considerable additional progress in formalising and articulating our appetite and assessment of risk and of embedding this into how we do business in PureCircle on an every-day basis.

Our Audit Committee Chairman Peter Lai goes into risk in more detail in his Chairman’s report following on pages 41 to 44. So at this stage I will restrict myself to a few summary comments and observations:

- PureCircle is an entrepreneurial business. We are seeking to create a new industry from scratch and to do so globally from day one. As a Board we would like you as shareholders to be clear that we are prepared to accept industry, market and business risk because we believe that, over time the rewards that may flow from taking those risks will be substantial.

At this stage in our development this higher than average risk appetite extends across many of business activities, whether it is leaf buying, inventory management, foreign exchange hedging, or production capacity expansion to name but a few.

- However we have no appetite for any risks to the health and safety of our employees and stakeholders. Nor do we have any appetite for any risk that threatens our reputation or the long term sustainability of our business.

Board's effectiveness The Board reviewed the Board effectiveness based on a survey where all members participated except for John Gibney as he had just joined the Board in April 2016. The Board agreed that it is of the right size with an appropriate combination of Executive and Non-Executive Directors and members have the appropriate balance of skills, experience, independence and knowledge of the Company. The present Board and its committees operate effectively and that all non-independent directors remain independent with the exception of Guy Wollaert who was an employee of a material customer and has not passed the 3 years cooling off period.



Appointed in 2007

Mr. Selway-Swift worked with the HSBC Group for 30 years. He was a director of The Hongkong & Shanghai Banking Corporation from 1992 to 1996 and of HSBC Investment Bank plc from 1996 to 1998. He is currently a director of Li & Fung Ltd and Global Brands Group Ltd.

Mr. Gibney retired as Chief Financial Officer of Britvic plc in April 2016 after a 17 year career. As Chief Financial Officer, he was responsible for a broad portfolio including finance, IT, legal, estates, risk management, procurement and corporate responsibility. Prior to joining Britvic, Mr. Gibney spent 10 years with Bass plc where he held various finance and management roles.

Mr. Gibney, is a UK qualified Chartered Accountant.

BOARD OF DIRECTORS

Magomet Malsagov Chief Executive Officer

Appointed in 2007

Mr. Malsagov has held the position of Chief Executive Officer since founding the business in 2002. He is responsible for the executive management of the Group and also has the responsibility to recommend and to implement the Group's strategic objectives.

Guy WollaertNon-Executive Director

Appointed in 2015

Mr. Wollaert, has recently stepped down as a Senior Vice President and Chief Technical and Innovation Officer of The CocaCola Company after a 23 year career. He previously served as General Manager of the Global Juice Center, where he was responsible for leading various functions including business development and supply chain for its global juice and juice drink operations.

Mr. Pratt was formerly the Chairman of Swire Pacific Limited, John Swire & Sons (H.K.) Limited, Cathay Pacific Airways Limited, Hong Kong Aircraft Engineering Company Limited and Swire Properties Limited. He was also a director of The Hongkong and Shanghai Banking Corporation Limited and Air China Limited. He joined the Swire Group in 1978 and has worked with the group in Hong Kong, China, Australia and Papua New Guinea. Mr. Pratt received a CBE (Commander of the Order of the British Empire) in 2000.

Christopher Pratt Senior Independent Non-Executive Director

Appointed in 2014

Mitch AdamekIndependentNon-Executive Director

Appointed in 2015

John GibneyIndependentNon-Executive Director

Appointed in 2016

Mr. Adamek retired from PepsiCo Inc. in 2011 after a 22 years career in both a procurement and human resources role. His last role at PepsiCo was as Chief Procurement Officer. Prior to PepsiCo Inc., he spent six years in human resources leadership positions at USG Corporation. Mr. Adamek is currently a non-executive director and Chairman of Compensation Committee of Wayne Farms LLC.

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Board diversity

The table and graphics below provide a visual outline of our Board’s diversity in terms of gender, range of experience and length of tenure.

Gender Diversity

Executive Male 100%

Non-Executive Male 100%

Group BoardMale 100%

International Experience

Non-Executive Tenure

0-1 Year 20% (1 Director)

1-3 Years 60% (3 Directors)

6-9 years 20% (1 Director)

Key to Committees

Nomination

Audit

Remuneration

Committee Chair

William MitchellChief Financial Officer

Appointed in 2008 Retired in September 2016

Mr. Mitchell is a Fellow Chartered Accountant who trained with PricewaterhouseCoopers, London where he advised major international F&B businesses and private equity firms on mergers and acquisitions and post-acquisition integrations. Mr. Mitchell was part of the management buy-in team that acquired Tetley Tea, the number two global tea brand, from Allied Domecq.

Mr. Lai has more than 30 years of experience in financial services and has extensive experience as an independent non-executive director on the boards of listed companies in Singapore, Malaysia, Hong Kong and the UK. He is currently the Chief Executive Officer of EC World Asset Management Pte Ltd that manages a REIT listed on the Singapore Exchange. He is an independent non-executive director of Delong Holdings Ltd. Mr. Lai holds a BA degree majoring in Economics from the Cambridge University in UK, and is a CFA charter holder from the CFA Institute, USA.

Rakesh SinhaChief Financial Officer

Appointed 6th July 2016

Mr. Sinha is a qualified Chartered Accountant and has over 25 years’ experience in finance. He joins from Unilever Plc, for whom he worked for 17 years holding senior roles in the UK, Asia, Australasia and Europe, including Chief Financial Officer of Unilever Taiwan & Hong Kong, Finance Director for Unilever Australasia in various responsibility areas, and most recently as Chief Financial Officer of Unilever Food Solutions, covering Latin America, Southern and Eastern Europe. Prior roles to Unilever included working as Corporate Controller for BHP Billiton and Production Accountant for Time Magazine.

Mr. Sinha graduated with a degree in Chemical Engineering from the University of Leeds, UK and holds an MBA from Erasmus University, Rotterdam, Netherlands.

Peter Lai Hock MengIndependentNon-Executive Director

Appointed in 2008


Strategy

- Approved the capital expenditure for expansion of refinery plant in Bandar Enstek, Malaysia

- Reviewed the Group's 5-year strategy and business development plan

- Approved the listing of the Company on the main market of the LSE

Financial performance

- Considered the financial performance of the business, reviewed and approved budget for 2015, key performance targets and 5-year plan

- Approved the Group’s full year and half year results and its corresponding market announcements

- Maintained oversight of financial position of the Group and its performance against budget, forecast and market expectations

Leadership and people

- Reviewed the composition of the Board and its Committees, including succession planning

- Discussed talent and succession, including gender diversity across management and performance management

- Approved the appointment of Senior Independent Director and 3 new Non-Executive directors

Internal control and risk management

- Reviewed the Group’s risk profile and register, risk tracking and mitigation

- Reviewed the Group’s business procedures and controls

Governance, stakeholders and shareholders

- Reviewed the composition of and feedback from institutional shareholders at least every half year

- Engaged with shareholders at least every half year

BOARD MEETINGS

Description of key discussion of Board activity during the year:

1. SGM was held on 19 October 2015 2. AGM was held on 2 December 2015

BOARD ACTIVITIES

LEADERSHIP

1 Jul 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16Dec 15Nov 15Oct 15Sept 15Aug 15 30 Jun 16

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1 Rakesh Sinha was appointed to the Board on 6 July 2016.

2 Olivier Maes stepped down from the Board on 1 March 2016. His attendance record related to the period from 1 July 2015 to that date.

3 Mitch Adamek and Guy Wollaert were appointed to the Board on 10 July 2015. Their attendance record related to the period from that date to 30 June 2016.

4 John Gibney was appointed to the Board on 11 April 2016. His attendance record related to the period from that date to 30 June 2016.

BOARD COMPOSITION AND ROLES

BOARD AND COMMITTEE MEETING / ATTENDANCE DURING THE 2015/2016 FINANCIAL YEAR

DIRECTORS VISITING CONSTRUCTION SITE OF FACTORY EXPANSION

Chairman Paul Selway-Swift Responsible for leading the Board, its effectiveness and governance. Ensures effective communication with shareholders.

Chief Executive Magomet Malsagov Responsible for the day-to-day management of the business, developing the Group’s strategic direction for consideration and approval by the Board and implementing the agreed strategy.

Chief Financial Officer William Mitchell (retired) Rakesh Sinha

Supports the Chief Executive in developing and implementingstrategy, including financial planning and reporting, group treasury and investor relations.

Non-Executive Directors Mitch Adamek, Peter Lai Hock Meng, John Gibney, Guy Wollaert

Constructively challenge and help develop proposals on strategy. Scrutinise the performance of management in meeting agreed goals and objectives within the framework of risk and control agreed by Board and monitor the reporting of performance.

Senior Independent Director Christopher Pratt Provide a sounding board for the Chairman and to serve as an intermediary for other directors.

Director Board Audit Committee

Nomination Committee

Remuneration Committee

Paul Selway-Swift 9/9 4/4 3/3

Magomet Malsagov 9/9 4/4

William Mitchell 7/9

Rakesh Sinha1 N/A

Christopher Pratt 8/9 4/4 4/4 3/3

Olivier Maes2 5/5 2/3

Mitch Adamek3 6/8 3/3 3/3

Peter Lai Hock Meng 8/9 4/4

Guy Wollaert3 8/8

John Gibney4 1/2 1/1


by the Nomination Committee. Each search gave rise to initial long lists of possible candidates which was then reviewed and narrowed down to short lists, all of whom were then interviewed personally by the Nomination Committee, before appointment recommendations were made to the full Board.

I am delighted that the appointments made during FY16 will serve the Company well. Our Non-Executive appointments Mitch Adamek, Guy Wollaert and John Gibney all bring huge beverage industry expertise. In addition they each bring deep specific functional experience that, taken together, provides Board leadership to help challenge management across all aspects of our business from Research and Development, through Marketing, Supply Chain, Procurement, Finance and Human Resources. Plus their USA and Europe regional experience complements the already strong Board Asia heritage.

Key challengesThe Group is committed to diversity. We are a genuinely multi-cultural multi-national business. We have eight languages spoken as a first language across our 1,000 employees; we operate in 12 different geographies and time zones. Maintaining a strong diverse culture is a core foundation of our business.

The Nomination Committee is committed to increasing the proportion of female Directors and Senior management within PureCircle. Each of the searches conducted in FY2016 had terms of reference specifically requiring the inclusion of a high number of female candidates in the search process. It is with regret that despite this we were not yet able to make appropriate female Board appointments. This remains a key priority for the Board.

Paul Selway-SwiftChairman, Nomination Committee

NOMINATION COMMITTEE REPORT

Background to the Nomination CommitteeThe function of the Nomination Committee is to provide a formal, rigorous and transparent procedure for the appointment of new directors to the Board. In carrying out its duties, the Nomination Committee is primarily responsible for identifying and nominating candidates to fill Board vacancies; evaluating the structure and composition of the Board with regard to the balance of skills, board diversity, knowledge and experience and making recommendations accordingly; giving full consideration to succession planning; and reviewing the leadership of the Group. The UK Corporate Governance Code provides that a Nomination Committee should comprise a majority of members who are independent non-executive directors. I chair the Nomination Committee and its other members are the Group CEO, Magomet Malsagov and Christopher Pratt. The Nomination Committee meets no less than once a year.

Appointments to the Nomination Committee are made by the Board, are made for a period of three years, which may be extended for further periods of up to three years, provided the Director whose appointment is being considered still meets the criteria for membership.

Principal activities in FY2016 – appointment of new DirectorsFY2016 marked the eighth year since our IPO onto the LSE AiM Market in December 2007. During those eight years PureCircle has developed from a biotechnology start-up based in Malaysia to a genuinely multinational company selling to hundreds of diverse customers across all continents. In addition in October 2015 we moved to the LSE Main Market. These considerable changes in our business bring with them requirements for different skills and experience in our Board and senior management.

In FY2016 we have recruited three non-executive directors and one proposed executive director to cover the retirements and planned retirements of two non-executives and one executive director. The Committee believes we now have a well balanced board with an appropriate mix of skills and experience.For each appointment the Nomination Committee has hired external search firms operating on a global mandate specified

Dear Shareholder,

Details of member appointments and biographies, and full attendance at Committee meetings held during the year, are on pages 36, 37 and 39 respectively. The Committee's terms of reference are available on www.purecircle.com/corporate-governance

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COMMITEE MEMBERS

- Paul Selway-Swift (Chairman)

- Magomet Malsagov

- Christopher Pratt

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OverviewThe Audit Committee assists the Board in discharging its responsibilities with regard to financial reporting, external and internal controls, including reviewing and monitoring the integrity of the Group’s annual and interim financial statements, reviewing and monitoring the extent of the non-audit work undertaken by the Group’s external auditors, advising on the appointment of such external auditors, overseeing the Group’s relationship with its external auditors, reviewing the effectiveness of the external audit process and reviewing the effectiveness of the Group’s internal review and control functions. The ultimate responsibility for reviewing and approving the annual report and accounts and the half yearly reports remains with the Board.

The UK Corporate Governance Code, as it applies to the Company, recommends that an audit committee should comprise at least three members who are independent non-executive directors and that at least one member should have recent and relevant financial experience.

Appointments to the Audit Committee are made by the Board, on the recommendation of the Nomination Committee. Appointments to the Audit Committee are for a period of up to three years and may be extended for no more than two further periods of up to three years, provided the Director whose appointment is being considered still meets the criteria for membership.

Membership changes in FY16Olivier Maes retired from the Audit Committee on 1 March 2016 on his retirement from the Board of Directors after nine years of service as an independent non-executive director. As Chairman of the Audit Committee I would like to express my thanks to Olivier for his support to me as well as his significant contributions in the deliberations of the Audit Committee across the last eight years.Mitch Adamek was appointed to the Audit Committee in July 2015 and John Gibney in April 2016.

Appointment of new auditorsDuring FY16 we appointed new auditors, PricewaterhouseCoopers (PwC) UK LLP, who took over from PwC Malaysia.

Our decision to change auditors was triggered by our move to the Main Market. PwC Malaysia is not licensed by the UK Financial Reporting Council to undertake audits of Main Market listed companies and so had to resign as our auditors. PwC Malaysia had been our auditors since FY2010 and I would like to express my thanks to them for their service to the Company since 2010.

We took advantage of the required change to undertake a full review of our audit requirements including the risk management implications of our continuing business growth and expansion of our international operations. Our principal criteria focused on a need for the auditors to show a detailed knowledge and understanding of our business and its risks and dynamics. It was

AUDIT COMMITTEE REPORT

Dear Shareholder,

Welcome to this our first formal audit committee report, following our Main Market Listing in October 2015. In this report my intention is to give you a briefing on the policies we adopt to ensure that the Audit Committee supports the effective development of the Group’s long term business as well as to provide insights into the key activities of the Audit Committee this year and priorities for the coming year.


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COMMITEE MEMBERS

- Peter Lai Hock Meng (Chairman)

- Mitch Adamek

- John Gibney

- Christopher Pratt


also important for us that the auditors could demonstrate highly effective working practices, which would facilitate advanced early warning processes and efficient co-ordination between the UK based audit signing partner team and the Malaysia and international based locations where the majority of our operations are based and the audit activities are focus.

As part of the review and selection process we undertook a full tender process with all of the “Big 4” international Audit firms invited to tender. The detailed management of this process was handled by a sub-committee of the Audit Committee, comprising myself, the CEO and CFO. After initial meetings we narrowed the process down to two firms who then conducted a full proposal process. Their processes included meetings with key management and visits to our principal production units in China and Malaysia.

As part of the proposals we sought confirmation as to the independence of the audit firms and the appropriateness of the skills, experience and availability of the audit team members.After full proposal submissions and presentations by the two audit firms, the appointment of PwC UK LLP was debated and approved at a meeting of the full Audit Committee in January 2016.

Audit independence and non-audit servicesTo help safeguard the auditors’ objectivity and independence, the Company operates a non-audit services policy which sets out the circumstances and financial limits within which the Group auditor may be permitted to provide certain non-audit services (such as tax and other services). The Group policy is in line with Main Market best practice and is for non-audit services to be restricted to below 50% of the audit fee.

Subsequent to the audit tender process in December 2015 and prior to completion of the FY16 audit, we have re-confirmed the independence of the auditors PwC UK LLP and will do so again annually.

In FY16 PwC UK LLP provided non-audit services amounting to US$498,000. These principally relate to fees associated with the UK premium listing for US$366,000 and to briefings on developments in international tax.

The remuneration of the auditors was set at US$512,000 along with further non-audit assurance fees of US$99,000 for the review of the interim announcement.

The fees relating to the main market listing are a one-off, non-recurring item and occurred before PwC UK LLP were appointed auditor to the Company. Non audit fees earned since their appointment as auditors amount to just US$12,000 relating to briefings on developments in international tax. These amount to just 2% of the Group audit fee and accordingly we are comfortable that the integrity of compliance to the independence policy has not been breached.

Compliance processesDuring FY16 the Audit Committee has overseen the implementation of upgraded compliance policies and processes within the Company. These have included the formal appointment of a compliance officer for employee dealings, creation of a sensitive projects database, implementation of formal Anti Bribery and Corruption policies and reporting and development of a whistle-blower process. The policies have been rolled out across all operating entities and supported by entity specific briefings to employees since October 2015.

Risk management The Group operates a risk management process which reports to the Committee quarterly and works under the day to day supervision of the CFO.

Risks are categorised by type of risk (e.g. market, reputational, business sustainability etc), by their potential impact on the Group’s financial position and condition and by an assessment of the likelihood of their occurrence. Proposed management plans to manage the risks are kept under review by the Committee, summarised in the Group’s risk register.

The Committee receives and discusses on a quarterly basis:

- the group’s risk register, including significant emerging risks and how exposures have changed during the period; and

- summary reports and progress against agreed actions from management on managing the risks identified.

As a Group, PureCircle is seeking to create a new large global industry. In this context, as the founder pioneer for the high purity stevia industry, the Group has a moderate to high appetite for risks relating to market and business development. However we have very low risk appetite for matters relating to the health and safety of our employees and for our corporate reputation.

Internal auditHistorically, given the young nature and small size of the business, it has not been considered necessary for PureCircle to employ an internal audit function. However as we grow and expand our operations internationally with increased complexity, there is a growing need for an Internal audit function and the Audit Committee is committed to its implementation.

Our intention was to implement an Internal Audit function in quarter four of FY16. However with the appointment of a new Group Chief Financial Officer who joined the business in late April 2016, we deferred the appointment into FY17 so as to give appropriate time to the new CFO to review and make recommendations on the wider Group finance function including Internal audit. The Company’s first Head of Internal Audit, Ms. Lee-Ann Loo joins on 1st November, 2016. She joins PureCircle from USG Boral, having trained as a Chartered Accountant with KPMG. She will be based at our KL corporate office and her scope of work will cover all our operations. She will report directly into me, but, as is normal, her day to day activities will be managed through the Group CFO.

AUDIT COMMITTEE REPORT (continued)

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Principal features of Internal Control over financial reportingThe key elements of the Group’s internal control system can be summarised as follows:

- an established organisation structure with clear lines of responsibility, approval levels and delegated authorities;

- a management and committee structure which facilitates regular performance review and decision-making;

- a comprehensive strategic review and annual planning and budgeting process;

- a robust budgeting, forecasting and financial reporting process. This includes regular progress actions and performance updates versus targets and key performance indicators being reported to the CEO, Operating Committee and Board;

- a rigorous preparation process for the Group consolidated financial results involving review processes both at an entity and group stage;

- various policies, procedures and guidelines underpinning the development, financing and operation of the Group business, including legal, human resources, information services, tax, health and safety and other appropriate functional support.

The above policies and processes operate within the context of PureCircle being a relatively small organisation operating as a fully integrated business within a single business segment. This, combined with investment in real time information systems, allows for a timely and effective “hands on management” approach to be adopted by the senior management team.

Effectiveness Assisted by the Committee the Board has reviewed the effectiveness of the Group’s systems of internal control and risk management in place throughout the year and up to the date of this report. The review took into account investments made in systems and management during the year and further improvements planned for FY17 (e.g. the appointment of internal audit manager). No weaknesses or control failures significant to the Group were identified. Where areas for improvement have been identified, new procedures have been introduced to strengthen the controls and will themselves be subject to regular review as part of the ongoing assurance process.

Fair, balanced and understandableFollowing our Listing on the Main Market, in FY16 the Committee has introduced an additional Committee meeting ahead of the formal year-end review to assess the fairness, balance and understandability of the Group’s Annual Report.

Taking into account the preparation process, the information provided by management, and the opinion of the Executives and the external auditor, the Committee was able to confirm and recommend to the Board that the FY2016 Annual Report, taken as a whole, is fair, balanced and understandable and provides the

necessary information for shareholders to assess the Company’s performance, business model and strategy.

Whistleblowing policyDuring FY16 the Group introduced a specific policy which allows employees to report concerns in confidence and anonymously if preferred about suspected impropriety or wrong-doing. The Company ran an awareness programme for this as part of the roll-out of the Anti Bribery and Corruption briefing programme implemented in conjunction with the Group’s Main Market Listing.

Any matters reported to me as Committee Chairman are investigated by the Group Company Secretary and escalated to the Committee as appropriate.

During FY16 there were no whistleblowing incidents reported.

Bribery and Corruption policyThe Board has a zero tolerance policy for bribery and corruption of any sort. Across FY16 the Group has rolled out a briefing and awareness programme highlighting potential areas of vulnerability which is managed by the Secretarial team across all entities. This has been followed up with reminders and updates on a semi-annual basis, again across all operating entities and Corporate head office. The awareness programme is supported by a monthly return from each entity to Secretarial detailing all gifts and equivalent activity given or received at the entity level. The monthly report is reviewed by the CFO with any exceptions being escalated to the Committee.

New employees are required to complete an online training module when they join.

The Group has started a programme to require all principal suppliers to have similar policies and practices in place within their own businesses. Progress with this programme to secure full coverage will continue across FY17 and FY18.

Committee EffectivenessFeedback from the annual performance evaluation of the Board and its Committees, which was conducted internally this year is described earlier on page 35 of this Annual Report. This confirmed that the Audit Committee continued to be effective in fulfilling its duties.

Peter Lai Hock MengChairman, Audit Committee


Effectiveness of the external audit and how this is assessedPwC UK LLP external auditors and independent registered public accounting firm, reported in depth to the Committee on the scope and outcome of the annual audit. Their reports included accounting matters, governance and control, and accounting developments.

The Committee held independent meetings with the external auditors during the year and reviewed, discussed, challenged and agreed their audit plan, including their assessment of the financial reporting risk profile of the Group. The Committee discussed the views and conclusions of PwC UK LLP regarding management’s treatment of significant transactions and areas of judgement during the year and PwC UK LLP confirmed they were satisfied that these had been treated appropriately in the financial statements.

Discussion of significant issues discussed in FY16 and how they were addressed

SIGNIFICANT ISSUE CONSIDERED HOW ADDRESSED BY THE COMMITTEE

Impoundment of US shipments by US Customs and Border Protection (CBP)

At the Audit Committee following the impoundment of shipments by US CBP, management presented its action plan to the Audit Committee for information.

The Audit Committee was informed that revenue of $10.2m has been recognised for shipments that were either detained or on the water bound for the US as at the year end date. The terms of these sales were FOB and Ex-works. As these terms are consistent with PureCircle’s normal revenue recognition policy, the Committee, in discussion with the Company’s auditors, agreed with management’s recommendation to recognise the revenue. In the period since year end close, none of these shipments have been cancelled.

Accounting for Intangible Assets and Goodwill

The Group balance sheet includes Intangible assets and goodwill amounting to $48.5m and representing approximately 14% of the Group’s gross assets. The recognition of intangible assets, considering the useful lives and whether the assets have been subject to impairment is inherently judgemental. In particular the assumptions underpinning the valuation estimates are inherently subjective and require significant judgements by management including the long term size of the high purity stevia market, the pace of growth of that market, the Group’s long term sustainable share of that market and the future costs of investment to support that share of market.

The Committee reviewed reports from management regarding the intangible assets recognised during the period and challenged the amounts capitalised and whether such amounts were in line with the Group's accounting policies. The Committee also considered management's assessment of the value in use of the intangible assets, noting that a consistent methodology was applied year on year based on a discounted cash flow model underpinned by the Group's business plan. The Committee received a report, and discussed with, the Group's auditors on their work performed over the annual impairment assessment for indefinite lived assets and goodwill and noted the auditors comments on the key assumptions used on the model and the headroom above carrying value available in a number of downside scenarios.

Based on the above, the Committee was comfortable with the amounts recognised during the year and supported management’s judgement not to record any impairment in intangibles assets in the financial statements.

AUDIT COMMITTEE REPORT (continued)

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Key policies of Remuneration CommitteePureCircle has ambitious growth plans. It is the responsibility of the Remuneration Committee to ensure that PureCircle has the right policies in place to attract the quality and mix of people necessary to deliver this growth.

PureCircle is a global “field to table” company: it sources stevia leaf from several countries, refines it, and then sells the finished product to Food and Beverage companies in all major international markets. To do this successfully requires a high degree of organisational and cultural devolution. The specific challenge to the Remuneration Committee is to make sure that local management incentives are both competitive and aligned across the organisation, via relevant KPI’s, to PC’s growth targets.

Overall philosophy for remunerationRemuneration at PureCircle is driven by the key principle of alignment. Individual rewards must support overall corporate objectives such that:

- The structure of reward reflects an individual’s ability to effect company performance.

- An individual’s total reward depends on both personal and company performance.

For Executive and Senior management our policy is to pay adequate base salaries and benefits, typically at or below median for the local market, but to offer additional performance based short term (cash) bonus and long-term (options) incentives. If the individual and company perform as planned then remuneration over three years will be in the top quartile of comparative companies.

For middle and junior management, factory and agriculture employees, base pay and benefits are intended to be in line with the local market and are supplemented by an annual cash bonus linked to personal and business unit performance.

Key activities in FY2016

• CFO Recruitment In September 2015 we announced that Mr. William Mitchell would step down as CFO from the board in July 2016 and retire as an employee of the Group at the end of September 2016. He was paid through to his date of retirement. Upon retiring, his 44,000 outstanding options vested in full.

In February 2016 we announced the recruitment of Mr. Rakesh Sinha, who joined PureCircle in April 2016. Mr. Sinha was subsequently appointed to the Board in July 2016. Mr. Sinha’s overall remuneration package is aligned with the Remuneration Policy. His base salary is $325,000 plus pensions, allowance and expatriate benefits that are normal for expatriates working in Malaysia. He was granted 40,000 options over Ordinary Shares on 23 May 2016 under the terms of the Company's Long-Term Incentive Plan. The options may vest equally on his employment anniversary over the next 3 years at nil exercise price.

REMUNERATION COMMITTEE REPORT

On behalf of the Board, I am pleased to present our Remuneration Report for Fiscal Year 2016, my first as the Chairman of the Remuneration Committee. I succeeded Olivier Maes as Chairman of the Remuneration Committee in March 2016. Other members of the Committee are Paul Selway-Swift and Mitch Adamek, who joined the Committee in July 2015. The Remuneration Committee meets at least twice a year and has met three times during FY2016 and once subsequent to the FY2016 financial year end and prior to the signing of the audited accounts.


i

COMMITEE MEMBERS

- Christopher Pratt (Chairman and Senior Independent Non-Executive Director)

- Paul Selway-Swift

- Mitch Adamek


• HR Policy and Practice Review In September 2015 PureCircle recruited Ms. Amber Dossey to be Group Vice President, Human Resources. Ms. Dossey has led a full review of the company’s HR policies and personnel structure; and is continuing the ongoing work of updating and improving HR policies and practices throughout the organization. The company also commissioned external consultants, Hewitt New Bridge Street, to assist in this review, in particular with comparisons to the company’s industry peer group. The review broadly supported the structure of PureCircle’s HR policies but it did highlight a number of areas where change would be beneficial. These changes began in FY16, which is best considered as a transition year moving to full alignment by the end of FY17. These are discussed below.

Long term incentive plan (“LTIP”) The Group’s existing LTIP was introduced in May 2008. This plan allowed the Group to grant up to 10% of its issued share capital in the form of options to management over a ten-year period to May 2018. At the date of this report, being 8.5 years into the period, the Group has granted options that have vested equal to 5% of the issued share capital.

PureCircle has an operationally leveraged business model such that net margins quickly increase with sales growth. The period from 2008 can usefully be described as one of “proof of concept” in the life of the company; a period where sales growth depended on securing regulatory approval for stevia use in major international markets. It was also a time where PureCircle established itself as the global stevia supplier and partner of choice to the major global F&B brands. In such a context sales growth was the dominant KPI and the LTIP award reflected this. From FY2016 onwards, with PureCircle’s products now gaining acceptance in the mass market, LTIP awards will be linked to adjusted EBITDA performance as well as sales growth.

Prior to FY16, the awards were exercisable at variable rates depending on performance- with below lower band performance leading to a lapse of awards (0% exercised), lower band performance leading to 100% exercise, and upper band performance leading to 200% exercise, and corresponding percentages allotted for between lower and upper band performance. In FY16 and beyond, we continue to strengthen the link between reward and performance by introducing differentiated rewards at the threshold, target, and stretch levels- with below threshold leading to 0% exercise, threshold at 25% exercise, target at 100% exercise, and stretch at 200% exercise, and corresponding percentages allotted for performance achieved between threshold and stretch levels.

Additionally, the company has progressively reduced the pool of management qualifying for the LTIP from 160 in 2014 to 86 today to reflect more accurately the number of people who can really influence the company’s performance. The number of eligible employees will vary over time due to business growth, recruiting or re-organization.

Finally, the review noted the need to introduce the idea of sustained benefit/clawback into the Long Term Incentive Plan.

The 2014 UK Code requires all LTIP schemes to include the concept of clawback. This principle has been incorporated into our LTIP Rules which will be tabled for amendment at the 2016 Annual General Meeting, along with other administrative amendments to the plan.

As noted above the existing LTIP will expire in May 2018. The company will recommend a new ten year LTIP for shareholder approval at the 2017 Annual General Meeting.

Short term incentive plan (“STIP”) The recent review highlighted significant shortfalls with PureCircle’s STIP.

- It had not been implemented consistently across the company, either by business unit or from year to year.

- There was little linkage between the level of payment and personal and business unit performance.

- Payments were generally below market norms.

Beginning from FY2016 and strengthened further in subsequent years, the STIP has been restructured such that:

- Each employee throughout the business has personal KPIs against which they are measured.

- The STIP is linked to business unit performance. As a general rule, the more senior the employee, the more the STIP is linked to overall company performance and not just that of the local business unit.

- The potential STIP payment has been increased to reflect local market conditions.

• Discretionary awards During FY16 the Group made a discretionary STIP award to all eligible employees amounting to $1.42 million, equivalent to approximately one month’s salary per person. In addition, a discretionary LTIP award was made amounting to options over 648,854 shares. The awards were made in recognition of the general progress made by the Group in recent years which the Remuneration Committee felt had not been adequately reflected in recent STIP and LTIP payments. With the amendments to the design of these programmes noted above, further discretionary payments are not anticipated.

• Salary Review During FY16 Executive Director salaries were reviewed and discussed by the Committee, taking into account the overall Company performance, the salary review applicable to the rest of the organization, and the directors’ individual performance. Neither Executive Director’s salary was adjusted in FY16.

• FY16 Incentive Programs Long term incentive plan (“LTIP”) The Committee approved a conditional award of 1,060,063 options over shares to management, subject to Revenue and adjusted EBITDA performance conditions. In order to allow that award to be granted, the Committee approved a one-time update to the LTIP rules, amending paragraph 6.3.1 to read, “The total market value of Shares Allocated (under Awards and/or

REMUNERATION COMMITTEE REPORT (continued)

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Options) to an Eligible Employee across the 24-month period from 1 July 2014 to 30 June 2016 (“the relevant period”) shall not exceed 200% of his/her salary for the relevant period.” This was necessary because the discretionary award referenced earlier was granted in FY16, and any subsequent award may have exceeded the 200% individual limit if applied to a single fiscal year.

Subsequent to the FY2016 financial year-end and prior to the signing of the audited accounts, this award lapsed due to performance conditions not being met.

Short term incentive plan (“STIP”) The STIP for FY16 was based upon company and personal performance, with more senior individuals having a higher weighting on company versus personal achievement. Overall, while company targets did not meet threshold levels for FY16, the Committee approved an STIP award of $1.4m for management and employees, differentiated by individual personal performance. While the Committee may have approved a payment for the Executive Directors’ based on individual performance; the CEO voluntarily declined any STIP payment for either Executive Director for FY16.

We are committed to aligning our remuneration policy and practice with the strategic goals of PureCircle. As we continue the work of updating and improving our practices, we also remain committed to both a transparent reporting process and an open dialogue with our Shareholders. Further detail related to our Remuneration Policy and Executive Director Remuneration is included in the following pages.

Christopher PrattChairman, Remuneration Committee

Remuneration Policy The Remuneration Committee sets the overall remuneration policy designed to align with the Company’s long-term business goals. Individual remuneration packages are determined by the Remuneration Committee within the framework of the remuneration policy. In light of the recent review of remuneration practices conducted internally and move from AIM to Main Board, the PureCircle Remuneration Policy will strengthen in FY17. Details of both FY16 Executive Director Remuneration, aligned with current Remuneration policy as set forth in the FY15 Annual Report, and a forward-looking Remuneration Policy are provided below.

FY16 Executive Director RemunerationThe Executive Directors’ remuneration packages comprise the following components:

a) Annual salary – the actual salary for each of the Executive Directors, that reflects the experience and performance of each individual and taking into account market competitiveness;

b) Annual incentive payment – the Executive Directors may be awarded annual bonuses that relate to performance of the Company and other internal targets; and

c) Share awards or options under the Long-Term Incentive Plan (“LTIP”) that are approved by the Remuneration Committee.

Summary of FY16 Executive Director’s Remuneration:

Magomet Malsagov CEO

William MitchellOutgoing CFO

Rakesh Sinha Incoming CFO

FY16Annual Base Salary

$560,000Unchanged from FY15

£239,004Unchanged from FY15

$325,000*

FY16Short Term Incentive Plan

40% of base salary target60% of base salary max80% based on company results20% based on personal results

Final result: $0

35% of base salary target52.5% of base salary max75% based on company results25% based on personal results

Final result: $0

Not eligible**

FY16Long Term Incentive Plan

Provisional award equal to 150% of base salary (since lapsed for non-performance of conditions)

Did not receive any LTIP award due to his planned retirement

Not eligible**

* From hire date of 25 April 2016

** Not eligible for STIP or LTIP 2016 due to hire date

*** Provided to facilitate his move to Kuala Lumpur, Malaysia from the Netherlands



Summary of FY16 Executive Director’s Remuneration (continued):


William Mitchell Outgoing CFO


One-Off Awards N/A N/A 40,000 options over shares (at nil price) vesting 1/3 on each of the 1st, 2nd, and 3rd anniversary of employment

Pension 10% of base salary 10% of base salary 10% of base salary*

Benefits MedicalLife AssuranceCar Benefit

MedicalLife Assurance

MedicalLife AssuranceCar BenefitRelocation Support***Expatriate Benefits

* From hire date of 25 April 2016

** Not eligible for STIP or LTIP 2016 due to hire date

*** Provided to facilitate his move to Kuala Lumpur, Malaysia from the Netherlands

Details on FY16 Short Term Incentive Plan Company Targets

Threshold Target Stretch

% of STIP company result component paid if achieved 50% of target 100% of target 150% of target

Revenue Targets $146.4m $162.6m $195.2m

Operating Profit Targets $40.0m $37.7m $45.3m

Operating Cash Profit Targets $30.9m $34.3m $41.1m

None of the Company metrics met threshold in FY16.

Details on FY16 Long Term Incentive Plan Performance Conditions Targets

Threshold Target Stretch

% of LTIP provisional awards achieved 25% of provisional award

100% of provisional award

200% of provisional award

FY16 Revenue Targets $158.75m $162.6m $171.5m

FY16 Adjusted EBITDA Targets $47.25m $50m $52.75m

Neither performance condition met threshold level, therefore subsequent to the FY2016 financial year-end and prior to the signing of the audited accounts, this award lapsed due to performance conditions not being met.

Remuneration Philosophy Going ForwardAs we incorporate the necessary changes and improvements to our remuneration plans, we are guided by the PureCircle Global Remuneration Philosophy, which is based on the principles of:

• Alignment: remuneration at PureCircle will be grounded in our business model and strategy, create a strong tie between business-focused performance and reward, and align employee, business, and shareholder interest.

• Pay for Performance: remuneration at PureCircle will incentivize long-term, sustainable performance focused on achievement, where top performance brings more significant reward, and with seniority comes a stronger weighting toward business and shareholder interests.

• Market Competitiveness: in the markets where we do business, remuneration at PureCircle will attract, retain and engage high calibre individuals motivated by performance-based rewards.

• Affordability: remuneration programs at PureCircle are considered holistically and appropriate to the current evolution of our business.

• Fairness, Transparency, and Simplicity: remuneration at PureCircle will consist of structured but practical policies, consistently applied, simple to understand and easy to communicate.

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Summary of Remuneration Programs Going Forward

Program Summary

Annual Base Salary Annual Base Salary is reviewed each year based on market position, company, and individual performance. At senior levels, guaranteed pay such as annual base salary is intended to be slightly below the market rate, driving increased focus on the performance based elements of pay.

Short Term Incentive Plan All employees are eligible for consideration under the Short Term Incentive Plan. This discretionary annual bonus program aligns employees to company, business unit, and personal metrics for the current fiscal year. Each employee, based on job seniority, is eligible for a bonus opportunity target (based on a % of base salary), with the final bonus achievement based on the results of company, business unit, and personal metrics. More senior employees have more of their bonus based on company result versus business unit or personal performance. Actual payout of final bonus can fluctuate between 0% and 150% of the bonus opportunity target based on results.

Long Term Incentive Plan Senior Management and Executives are eligible for consideration under the Long Term Incentive Plan (LTIP). This annual plan aligns senior level employees to long-term, sustainable company performance by awarding options to shares provided certain company financial targets and retention conditions are met. Actual final award of shares can fluctuate between 0% and 200% of the initial provisional award, based on results.

One-Off Awards Under the Long Term Incentive Plan (LTIP) and in accordance with the Rules of the LTIP, awards may be made on a one-off basis in exceptional circumstances, for example joining awards.

Pension A market appropriate pension provision granted either as a contribution to a qualified plan or as a cash allowance of up to 10% of base salary.

Benefits Market appropriate benefits such as medical, life assurance, car benefit, professional membership, and if applicable, relocation assistance and appropriate expatriate support services.

Summary of FY17 Executive Director’s Remuneration:


William Mitchell Outgoing CFO


FY17Annual Base Salary

$580,000 w.e.f. 1 July 20163.5% increase from FY16

£239,004*** Unchanged from FY16

$340,000w.e.f. 1 July 20164.6% increase from FY16

FY17Short Term Incentive Plan

45% of base salary target

67.5% of base salary max

60% based on company (Revenue & adjusted EBITDA) results*

20% based on business unit results

20% based on personal results


60% of base salary max



30% based on personal results**


60% of base salary max



30% based on personal results

FY17Long Term Incentive Plan

Provisional award equal to 130% of base salary. Final award based on Revenue & adjusted EBITDA target achievement*

Will not receive any LTIP award due to his planned retirement

Provisional award equal to 100% of base salary. Final award based on Revenue & adjusted EBITDA target achievement*

Pension 10% of base salary 10% of base salary*** 10% of base salary

Benefits MedicalLife AssuranceCar Benefit

MedicalLife Assurance

MedicalLife AssuranceCar BenefitExpatriate Benefits

* Company targets for FY17 STIP and LTIP will be disclosed in the FY17 Annual Report.

** If awarded, pro-rated for period of employment in FY17.

*** Pro-rated for period of employment in FY17.


Remuneration tableThe aggregate amount of emoluments received by the Directors of the Company during the financial year 2016 were: -

FY 2016USD’000

FY 2015USD’000

Remuneration

Executive Directors

Magomet Malsagov 613 624

William Mitchell 385 401

Non-Executive Directors

Paul Selway-Swift 156 167

Olivier Maes (retired w.e.f 1 March 2016) 80 79

Peter Lai Hock Meng 124 84

Christopher Pratt 78 81

Guy Wollaert (appointed w.e.f 10 July 2015) 63 -

Mitch Adamek (appointed w.e.f 10 July 2015) 63 -

John Gibney (appointed w.e.f 11 April 2016) 16 -

Share based payment expense

Executive Directors

Magomet Malsagov 47 394

William Mitchell 130 391

1,755 2,221

Directors’ interests in share options / share awardsDirectors’ interests in share options / share awards of the Company as at 30 June 2016 were:

1 JULY 2015 GRANTED EXERCISED 30 JUNE 2016EXERCISE

PRICEDATE FROM WHICH

EXERCISABLE/ISSUED NOTE

Magomet Malsagov 128,520 - (128,520) - Nil 30 Jun 2015 1

107,456 - - 107,456 Nil 30 Jun 2016 2

- 106,714 - 106,714 Nil 1 Jul 2017 3

- 164,442 - 164,442 Nil 30 Jun 2018 4

235,976 271,156 (128,520) 378,612

William Mitchell 35,000 - (35,000) - Nil 7 Jul 2015 5

123,420 - (123,420) - Nil 30 Jun 2015 1

94,439 - - 94,439 Nil 30 Jun 2016 2

- 44,000 - 44,000 Nil 30 Sept 2016 3

252,859 44,000 (158,420) 138,439

Rakesh Sinha - 40,000 - 40,000 Nil - 6

- 40,000 - 40,000

Non-Executive Directors

Olivier Maes 4,850 6,350 (11,200) - Nil 7

Peter Lai Hock Meng 5,140 6,760 (11,900) - Nil 7

9,990 13,110 23,100 -


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Share awards or options to Executive Directors are awarded by the Remuneration Committee under the Company’s Long-Term Incentive Plan. The following notes provide details of each option or award noted above:-

1. The awards can only be exercised if certain group sales targets are met.

If sales are below the lower band the awards shall not vest and shall lapse at the end of the awards’ life. If sales are at the lower band then the awards shall be exercisable at 100% of the grant. If the Group’s actual Sales Turnover is at the upper band then the awards shall be exercisable at to 200% of the grant. If sales are between the upper and lower band, the corresponding percentage of the awards above 100% and up to 200% shall vest.

In July 2015, all of these awards had vested and 1,551,420 shares in aggregate (including employees) were issued. These shares vest at 102% as sales were between the upper and lower bands.

2. As in Note 1 above, the awards granted can only be exercised if certain sales targets are satisfied.

If the sales are below the lower band then the awards shall not vest and shall lapse at the end of the awards’ life. If sales are at the lower band then the awards shall be exercisable at 100% of the grant. If sales are at budget, then the awards shall be exercisable at 200% of the grant. If the Group’s sales are between the lower band and budget the corresponding percentage of the awards above 100% and up to 200% shall vest.

Subsequent to the FY2016 financial year-end and prior to the signing of the audited accounts, all of these awards had vested and 1,394,172 shares in aggregate (including employees) were issued. These shares vest at 105% as sales were between the lower and budget bands.

3. This discretionary time-based award was granted on 7 July 2015 and will only be exercisable on 1 July 2017 except for William Mitchell where his 44,000 options will vest in full upon his retirement on 30 September 2016.

4. The awards granted only become exercisable if certain Group Sales Turnover and EBITDA targets (performance condition) are satisfied.

Subsequent to the FY2016 financial year-end and prior to the signing of the audited accounts, this award had lapsed due to performance conditions not met.

5. This award was granted on 10 July 2012. In July 2015, this award vested and 35,000 shares were issued.

6. This joining award was granted on 23 May 2016 and may vest equally on employment anniversary over the next 3 years.

7. Certain of the Non-Executive Directors were awarded shares in lieu of fees for the period from 1st July to 31st December 2015. The number of shares was calculated using the 20-day volume weighted average price (“VWAP”) to 30 June 2015 of GBP3.94 per share. These shares were issued in January 2016.

The Company’s Remuneration Committee is responsible for administering the Long-Term Incentive Plan (‘LTIP’) approved by the Board in June 2008. The LTIP is a 10-year discretionary benefit offered by the Company to eligible employees, including the Executive Directors. The principal terms of the LTIP include:

• A restriction on the Company issuing (or granting rights to issue) more than 10 per cent of its issued ordinary share capital under the LTIP (and any other employee share plan) in any ten calendar year period; and

• Lapsed awards (due to unmet performance conditions) do not count in calculating the total number of awards or options issued under the LTIP.


The disclosure committee was established as a sub-committee of the Board on 15 September 2015. The primary role of the Disclosure Committee is to evaluate whether information communicated to it from within the Group is inside information and for determining whether the selective disclosure of inside information is permitted. It is also responsible for a number of further tasks, including approving announcements for release to the market; monitoring analysts’ expectations as to the performance of the Group; reviewing the Group’s procedures for communicating with the market; monitoring the Company’s share price; monitoring on-going developments in the business of the Group and the industry in which it operates. The members of the Committee are the Chairman, the Chief Executive Officer and the Chief Financial Officer.

TREASURY COMMITTEE

The Treasury Committee has delegated authority in relation to the banking and treasury activities of the Group. The members of the Treasury Committee are the Chief executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Vice President Group Operations Finance, the Vice President Group Financial Controller and the Group Treasury Manager. All decisions made by the Treasury Committee must be approved by at least one Executive Director who is a member of the committee and a meeting of the Treasury Com-mittee will not be quorate unless at least one Executive Director is present.

DISCLOSURE COMMITTEE

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The group is committed to a proactive open communication with its shareholders, operating within the principles and requirements of a Main Market Listed company.

The Group’s first responsibility to its shareholders is to generate value for them through the successful stewardship of their investment in PureCircle. In turn this is best effected by management building a large sustainable business in the expectation that sustained large volume sales growth will over time lead to sustained increases in profitability and operating cash flows.

The Group maintains active communication with investors through a combination of the following processes:

- Regular regulatory updates to the Market, which are each followed up in email form from the Group’s Investor relations manager to each investor

- Formal investor results presentations and briefings, held every six months at the time of the Group’s interim and final results

- Ad hoc investor meetings as and when requested by investors

- Updated news flow in the investor section of the Group’s website

The Group does not employ an external financial public relations resource, nor do management undertake extensive international investor “roadshows”. This is deliberate and reflects management assessment that it is more important for time and resources to be invested in building the business than expended in speculative investor meetings. Instead management focus on targeted meetings whereby all top 50 investors either meet or have the opportunity to meet with management at least twice a year.

In addition in FY16 the Group has appointed Mr. Chris Pratt as its UK based Senior Independent Non-Executive. All shareholders have access to the Chairman and to Mr. Pratt should they wish to meet with non executive board members.

In FY2016 the Group moved to the Main Market. The primary reasons for so doing were to provide a better long term platform for shareholders to invest and trade in PureCircle shares; in particular by increasing trading liquidity of our shares. This is seen by the Board as a mid to long term objective. It is the Board’s intention to increase the Company’s investor relations activity in support of this steadily over time in line with the future successful development of the Group’s business.

RELATIONS WITH SHAREHOLDERS

INCOME STATEMENTFor more information, go to page 68

BALANCE SHEETSFor more information, go to pages 66 to 67

NOTESFor more information, go to pages 74 to 110

Financial StatementsFor the financial year ended 30 June 2016

Directors' Report 56

Independent Auditor’s Report to the Members of PureCircle Limited 59

Statements of Financial Position 66

Consolidated Statement of Comprehensive Income 68

Consolidated Statement of Changes in Equity 69

Company Statement of Changes in Equity 71

Consolidated Statement of Cash Flows 72

Notes to the Financial Statements 74

FINANCIAL STATEMENTS


DIRECTORS' REPORT

The Directors are pleased to present their report and the audited financial statements of the Group and of the Company for the financial year ended 30 June 2016.

Principal ActivitiesThe Company is engaged principally in the business of investment holding whilst the principal activities of the rest of the Group are the production, marketing and distribution of natural sweeteners and flavours. There have been no significant changes in the nature of these activities during the financial year.

Business Review and Future DevelopmentsThe financial results of the Group and the financial position of the Group and of the Company for the financial year are shown in the annexed financial statements.

Results and DividendsPureCircle Group’s turnover for the financial year ended 30 June 2016 was USD139 million (2015: USD127 million). The PureCircle Group’s profit attributable to the owners of the Company was USD15 million (2015: USD 4 million), equivalent to a profit per share of USD8.49 cents (2015: USD 2.48 cents).

The Group ended the year with net assets of USD204 million (2015: USD190 million) , total assets of USD346 million (2015: 314 million) gross cash balances of USD61 million (2015: 64 million) and total debt of USD 114 million (2015: USD 110 million).

The Directors do not recommend payment of a dividend in respect of the year ended 30 June 2016.

DirectorsThe Directors in office since the last date of the Report are:Paul Selway-Swift Magomet Malsagov Peter Lai Hock MengChristopher Pratt Rakesh Sinha (appointed w.e.f 6 July 2016) Guy Wollaert (appointed w.e.f 10 July 2015) Mitchel Adamek (appointed w.e.f 10 July 2015) John Gibney (appointed w.e.f 11 April 2016)William Mitchell (retired w.e.f 6 July 2016)Olivier Phillipe Marie Maes (retired w.e.f 1 March 2016)

Annual Report 2016 57

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Financial Statements continued

DIRECTORS' REPORT (continued)

Directors and Their InterestsThe interests (all of which are beneficial interests save as otherwise stated) of the Directors and of the persons connected with them as at 30 June 2016 are as follows:

NUMBER OF ORDINARY SHARE OF USD0.10 EACH

THE COMPANYAT

1.7.2015

BOUGHT/OPTIONS

EXERCISEDSOLD/

TRANSFERAT

30.6.2016

Paul Selway-Swift1 210,800 - - 210,800

Magomet Malsagov2 14,896,912 138,520 - 15,035,432

Christopher Pratt3 695,696 - - 695,696

Peter Lai Hock Meng1 204,460 11,900 - 216,360

William Mitchell4 930,540 168,420 - 1,098,960

Olivier Phillipe Marie Maes1 422,620 11,200 - 433,820

NUMBER OF SHARE AWARDS OVER ORDINARY SHARE OF USD0.10 EACH

THE COMPANYAT

1.7.2015 AWARD EXERCISED LAPSEDAT

30.6.2016

Magomet Malsagov1 235,976 271,156 (128,520) - 378,612

Peter Lai Hock Meng1 5,140 6,760 (11,900) - -

William Mitchell1 252,859 44,000 (158,420) - 138,439

Olivier Phillipe Marie Maes1 4,850 6,350 (11,200) - -

Rakesh Sinha1 - 40,000 - - 40,000

1 Held directly.2 15,014,132 held directly and 21,300 held indirectly by his wife3 695,696 held indirectly by The CDP 2014 Trust.4 1,093,490 held directly and 5,470 held indirectly by his wife.

Significant ShareholderAt 30 June 2016, the Company had been notified of the following interests of 3% or more in its ordinary shares.

BENEFICIAL SHAREHOLDERS

INTERESTIN ISSUED SHARES INTEREST

Wang Tak Company Limited 46,485,614 27.0%

Olam International Limited 30,544,609 17.7%

Magomet Malsagov 15,035,432 8.7%

Halfmoon Bay Capital Limited 13,268,734 7.7%

Asian Investment Management Services Limited 9,559,314 5.6%


Statement of Directors’ ResponsibilitiesThe Directors are responsible for the preparation of the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the year and of the results of the Group and of the Company for the year in preparing those financial statements, the Directors are required to: -

(a) select suitable accounting policies and then apply them consistently;

(b) make judgements and estimates that are reasonable and prudent;

(c) state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the Group and Company financial statements, and the summary of significant accounting policies and other explanatory notes; and

(d) prepare the Group and Company financial statements, and the summary of significant accounting policies and other explanatory notes on the going concern basis unless it is inappropriate to assume that the Group and Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and Company and to enable them to ensure that the financial statements comply with International Financial Reporting Standards. The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud or other irregularities.

The Directors are responsible for information contained in the Directors’ report and other information contained in the accounts.

AuditorsThe auditors, PricewaterhouseCoopers LLP, have been appointed as external auditors for the financial year ending 30 June 2016.

In accordance with a resolution of the Board of Directors dated 20 September 2016.

Magomet Malsagov Rakesh SinhaChief Executive Officer Chief Financial Officer

DIRECTORS' REPORT (continued)


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INDEPENDENT AUDITORS’ REPORT

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PURECIRCLE LIMITED(Incorporated in Bermuda)(Registration No: 40431)

REPORT ON THE FINANCIAL STATEMENTS

Our OpinionIn our opinion:

• PureCircle Limited’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 June 2016 and of the Group’s profit and cash flows for the year then ended;

• the financial statements have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board; and

• have been prepared in accordance with the requirements of the Companies Act 1981 (Bermuda).

What We Have AuditedThe financial statements, included within the Annual Report, comprise:

• the Group and Company Statements of Financial Position as at 30 June 2016;

• the Consolidated and Company Statements of Comprehensive Income for the year then ended;

• the Consolidated and Company Statements of Changes in Equity;

• the Consolidated and Company Statements of Cash Flows for the year then ended; and

• the notes to the financial statements, which include a summary of accounting policies and other explanatory information.

The financial reporting framework that has been applied in the preparation of the financial statements is IFRSs as issued by the International Accounting Standards Board (IASB) and applicable law.

Our Audit Approach

Overview

• Overall Group materiality: $ 1,384,000 which represents 1% of Revenue.

• We have identified the following components for a full scope Audit; PureCircle Limited, PureCircle Sdn Bhd, PureCircle (Jiangxi) Co Ltd, PureCircle (S.E.A) Sdn Bhd, PureCircle USA Inc, PureCircle (UK) Ltd and PureCircle Mexico.

• The following components were subjected to specified procedures; PureCircle South America Sociedad Anonima, PureCircle (Shanghai) Co Ltd, PureCircle Kenya Limited, PureCircle China Agricultural Development Co Ltd, PureCircle Australia Pty. Ltd. and PureCircle Trading Sdn Bhd.

• Taken together, the locations and functions where we performed our audit work accounted for 100% of revenue and approximately 91% of absolute profit before tax (i.e. the sum of the numerical values without regard to whether they were profits or losses for the relevant locations and functions).

• US Custom Border Protection and impounded stevia shipments

• Intangible assets (including goodwill)

The scope of our audit and our areas of focusWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.

Materiality

Audit scope

Area of focus


INDEPENDENT AUDITORS’ REPORT (continued)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PURECIRCLE LIMITED (continued)(Incorporated in Bermuda)(Registration No: 40431)

REPORT ON THE FINANCIAL STATEMENTS (continued)

Our Audit Approach (continued)

The scope of our audit and our areas of focus (continued)The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are identified as “areas of focus” in the table below. We have also set out how we tailored our audit to address these specific areas in order to provide an opinion on the financial statements as a whole, and any comments we make on the results of our procedures should be read in this context. This is not a complete list of all risks identified by our audit.

Area of focus

US Custom Border Protection and impounded US stevia shipments

Refer to page 44 (Audit Committee Report) and page 22 (principal risks).

Shipments of the Group’s products to the US are being impounded by the US Custom Border Protection (CBP) authorities following allegations they contain stevia from an external supplier that used forced labour at the Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC.s.

This area of focus therefore considered:

- Appropriateness of revenue recognised in relation to the detained shipments and the recoverability of the related receivables;

- Considering any potential impact of the impoundment on the Group’s Going Concern assumption and viability.

How our audit addressed the area of focus

We have reviewed terms of sale and underlying documentation to confirm that the related revenue recognition criteria were met for the impacted shipments with no issues noted.

We have reviewed the third party assurance report, performed by Bureau Veritas, regarding whether there is any indication of forced labour in the Group’s supply chain and noted no indications of forced labour were identified.

We have also considered reports from independent, third party lawyers operating on the Group’s behalf who visited the region and certified that there were no indications of forced labour in the Group’s supply chain.

We have also reviewed the fact pattern surrounding the shipments that have been released compared to the shipments that remain impounded as at 30 June 2016 and considered there to be no significant variation in fact or circumstance.

We independently verified with the US legal advisor engaged by the Group to assist with the US CBP matter that the Group has fully complied with all requests from the US CBP to date and no legal action has been taken against the Group.

We have reviewed the Group’s assessment supporting the use of the Going Concern assumption and note that there is sufficient headroom to meet the Group’s obligations as they fall due over the next 12 months once applying downside sensitivity analysis relating to the US CBP matter.

We have reviewed the Group’s viability statement and associated risk disclosures and consider these to be sufficient and appropriate.


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The scope of our audit and our areas of focus (continued)

Area of focus

Accounting for Intangible Assets and Goodwill

Refer to page 44 (Audit Committee Report), page 82 (accounting policies) and pages 91 to 92 (note 9).

The Group undertakes significant research and development activities and has capitalised both indefinite lived ($10.6m) and definite lived ($36.1m) intangible assets. In addition goodwill of $1.8m continues to be recognised.

The inappropriate recognition of research and development costs that do not meet the definition of intangible assets is a risk. Such assets, once capitalised and considered indefinite, must also be tested for impairment annually.

Intangible assets with a finite life are subject to amortisation over their expected useful lives. Identifying and applying an amortisation policy is judgmental as it should reflect how the asset is consumed through the activities of the Group together with identifying the trigger point for commencing the amortisation of the development costs.

Impairment of goodwill and intangibles with indefinite useful livesGoodwill and intangible asset valuation is also a judgemental and complex area as it depends on the future financial performance of the cash generating unit (‘CGU’) and future market performance. In particular, there is uncertainty in the stevia market due to the increasing number of products and applications being developed and accepted by customers. As such, the key judgemental areas are the short term revenue and margin growth rates, terminal growth rates and the discount rate.

How our audit addressed the area of focus

Capitalisation, asset lives and amortisationWe evaluated the appropriateness of capitalisation policies, performed tests of details on costs capitalised and assessed the requirements of capitalisation in terms of the IAS 38.

There were no exceptions noted from our testing.

Our detailed testing on the application of the asset life review identified no issues. In performing these procedures, we challenged the judgements made by management including:

• the nature of underlying costs capitalised;

• the appropriateness of asset lives applied in the calculation of amortisation; and

• the appropriateness of when amortisation commenced.

No exceptions were noted from our testing

Impairment of goodwill and intangibles with indefinite useful livesWe tested management’s identification of the CGU, considering business changes that would prompt a change to the classification of CGUs.

In order to test the impairment assessment model, we challenged and evaluated the future cash flow forecasts for the identified CGU and the process by which they were drawn up and tested the accuracy of the underlying calculations.

We found that management has followed a clear process for drawing up the future cash flow forecasts, which was subject to oversight and challenge by the Directors and which was consistent with Board approved budgets, which reflect current market conditions.

As part of our testing we challenged the key assumptions as follows:

• The short term revenue and profit assumptions and how management has incorporated the impact of the recent market changes, by comparing them to historical results and the current order book, agreeing the short term growth rate to specialist third party published reports and considering the impact already observed within the market;

• Terminal growth rates in the forecasts by comparing them to historical results, economic and industry forecasts; and

• The discount rates by assessing the cost of capital assumption for comparable organisations.

We found the above assumptions to be consistent and in line with our expectations.







How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the geographic structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

The Group financial statements are a consolidation of entities covering non-trading legal entities, centralised functions, two processing facilities, regional sales offices and research and development facilities.

In establishing the overall approach to the Group audit, we considered the type of work that needed to be performed at the operating units by us, as the Group engagement team, or component auditors from other PwC network firms operating under our instruction. Where the work was performed by component auditors, we determined the extent of audit work needed at those operating units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole.

The Group’s operating units vary significantly in size and we identified 7 operating units that, in our view, required an audit of their complete financial information, due to their size or risk characteristics. Specific audit procedures over certain balances and transactions were performed at a further 6 operating units, to give appropriate coverage of all material balances at the Group level. In doing so we conducted work in 6 countries and, in addition to our work at the centralised function in Malaysia, the Group audit team visited reporting locations in Malaysia and China, along with the main sales office in the US. Further, specific audit procedures over central functions and areas of significant judgement, including taxation, treasury and impairment, were performed by the Group audit team centrally. Together, the operating units subject to audit procedures and centralised testing accounted for 100% of Group revenues and 91% of absolute Group profit before tax.

Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall Group materiality $1,384,000

How we determined it 1% of the total actual revenue for the period ended 30 June 2016

Rationale for benchmark applied PureCircle Limited is a fast-growing start-up company. The scale of the business has increased significantly over the past 4-5 years and the fluctuations in the Group's losses in its initial periods indicate that profit/loss before tax is not appropriate as a benchmark for determining overall materiality. Revenue is key indicator for the Group, and for users of the accounts, and we therefore consider this to be the most appropriate benchmark.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $138,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.


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Going concern The Directors have complied with provision C.1.3 of the UK Corporate Governance Code (‘the Code’) and provided a statement in relation to going concern, set out in the Strategic report.

The Directors have requested that we review the statement on going concern as if the Company were a UK registered Company. We have nothing to report having performed our review.

Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to the Directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the financial statements. We have nothing material to add or to draw attention to.

As noted in the Directors’ statement on page 26, the Directors have concluded that it is appropriate to adopt the going concern basis in preparing the financial statements. The going concern basis presumes that the Group and Company have adequate resources to remain in operation, and that the Directors intend them to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that the Directors’ use of the going concern basis is appropriate.

However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group’s and Company’s ability to continue as a going concern.

OTHER REQUIRED REPORTING

Consistency Of Other Information

ISAs (UK & Ireland) reporting

Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:

• information in the Annual Report is:

- materially inconsistent with the information in the audited financial statements; or

- apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group and Company acquired in the course of performing our audit; or

- otherwise misleading.

We have no exceptions to report.

• the statement given by the Directors, in accordance with provision C.1.1 of the Code, that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Group’s and Company’s position and performance, business model and strategy is materially inconsistent with our knowledge of the Group and Company acquired in the course of performing our audit.


• the section of the Annual Report on pages 41 to 44, as required by provision C.3.8 of the Code, describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.





OTHER REQUIRED REPORTING (continued)

Consistency of other information (continued)

The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or liquidity of the Group

Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:

• the Directors’ confirmation in the principal risks and uncertainties section of the Annual Report on pages 20 to 26, in accordance with provision C.2.1 of the Code, that they have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.

We have nothing material to add or to draw attention to.

• the disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.


• the Directors’ explanation on pages 24 to 26 of the Annual Report, in accordance with provision C.2.2 of the Code, as to how they have assessed the prospects of the Group, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.


Under the Listing Rules of the UK Financial Conduct Authority we are required to review the Directors’ statement that they have carried out a robust assessment of the principal risks facing the Group and we have also reviewed the statement that the Directors have made in relation to the longer-term viability of the Group. Our review was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statements; checking that the statements are in alignment with the relevant provisions of the Code; and considering whether the statements are consistent with the knowledge acquired by us in the course of performing our audit. We have nothing to report having performed our review.

Corporate governance statement Under the Listing Rules of the UK Financial Conduct Authority we are required to review the part of the Corporate Governance Statement relating to ten further provisions of the Code. We have nothing to report having performed our review.


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RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT

Our responsibilities and those of the Directors As explained more fully in the Statement of Directors’ Responsibilities on page 58, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Section 90 of the Companies Act 1981 (Bermuda) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What an audit of financial statements involves An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

• whether the accounting policies are appropriate to the Group’s and the Company’s circumstances and have been consistently applied and adequately disclosed;

• the reasonableness of significant accounting estimates made by the Directors; and

• the overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

PricewaterhouseCoopers LLPChartered Accountants

London20 September 2016

Notes:

• The maintenance and integrity of the PureCircle Limited website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

• Legislation in the United Kingdom and Bermuda governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2016

GROUP COMPANY

NOTE2016

USD’0002015

USD’0002016

USD’0002015

USD’000

ASSETS

NON-CURRENT ASSETS

Investment in subsidiaries 7 - - 142,006 140,583

Investment in joint venture 8 - - - -

Intangible assets 9 48,547 37,790 1,723 473

Property, plant and equipment 10 65,662 59,724 522 659

Biological assets 11 - 3,570 - -

Prepaid land lease payments 12 2,537 2,914 - -

Deferred tax assets 13 7,388 8,900 - -

Trade receivables 15 523 1,856 - -

Other receivables, deposits and prepayments 16 885 2,121 - -

125,542 116,875 144,251 141,715

CURRENT ASSETS

Inventories 14 84,604 62,790 - -

Trade receivables 15 62,743 62,530 - -

Other receivables, deposits and prepayments 16 11,654 7,490 1,483 1,423

Tax recoverable 259 347 - -

Amount owing by subsidiaries 17 - - 24,036 19,349

Restricted cash 19 255 5,095 - 4,831

Cash and cash equivalents 19 60,747 59,181 30,885 35,058

220,262 197,433 56,404 60,661

TOTAL ASSETS 345,804 314,308 200,655 202,376

EQUITY AND LIABILITIES

EQUITY

Share capital 20 17,211 17,006 17,211 17,006

Share premium 21 214,723 208,310 214,723 208,310

Foreign exchange translation reserve 22 (17,501) (10,990) - -

Share-based payment reserve 23 9,776 11,185 9,776 11,185

Accumulated losses (20,419) (35,019) (47,888) (37,267)

TOTAL EQUITY 203,790 190,492 193,822 199,234

The annexed notes form an integral part of these financial statements.


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STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2016 (continued)

GROUP COMPANY

NOTE2016

USD’0002015

USD’0002016

USD’0002015

USD’000

NON-CURRENT LIABILITIES

Long-term borrowings 24 84,885 83,965 - -

Other payables and accruals 26 1,245 490 - -

86,130 84,455 - -

CURRENT LIABILITIES

Short-term borrowings 24 29,044 25,681 - -

Trade payables 25 5,543 3,134 - -

Other payables and accruals 26 19,977 10,546 6,833 3,142

Income tax liabilities 1,320 - - -

55,884 39,361 6,833 3,142

TOTAL LIABILITIES 142,014 123,816 6,833 3,142

TOTAL EQUITY AND LIABILITIES 345,804 314,308 200,655 202,376

Approved and authorised for issue by the Board of Directors on 20 September 2016.

Magomet Malsagov Rakesh SinhaChief Executive Officer Chief Financial Officer



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

GROUP COMPANY

NOTE2016

USD’0002015

USD’0002016

USD’0002015

USD’000

Revenue 138,641 127,349 - -

Cost of sales (80,797) (87,016) - -

Gross profit 57,844 40,333 - -

Administrative expenses (32,695) (30,643) (8,458) (12,082)

Other income 1,594 703 - -

Other expenses (2,456) (1,255) (1,887) (1,564)

Finance income 92 57 39 30

Finance costs (5,315) (7,275) (315) (488)

Share of loss in joint ventures (1,169) (872) - -

Profit/(loss) before taxation 28 17,895 1,048 (10,621) (14,104)

Taxation 27 (3,295) 3,043 - -

Profit/(loss) for the financial year 14,600 4,091 (10,621) (14,104)

Other comprehensive income (net of tax):

Items that may be reclassified subsequently to profit or loss:

Exchange differences arising on translation of foreign operations (6,510) (11,717) - -

Share of other comprehensive income of joint ventures (1) (101) - -

Total comprehensive income/(loss) for the financial year (net of tax) 8,089 (7,727) (10,621) (14,104)

Profit for the financial year

Attributable to:

Owners of the company 14,600 4,158 (10,621) (14,104)

Non-controlling interest - (67) - -

14,600 4,091 (10,621) (14,104)

Total comprehensive income/(loss)

Attributable to:

Owners of the company 8,089 (7,662) (10,621) (14,104)

Non-controlling interest - (65) - -

8,089 (7,727) (10,621) (14,104)

Earnings per share (US cents)

- Basic 29 8.49 2.48

- Diluted 29 8.37 2.42



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CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

ATTRIBUTABLE TO OWNERS OF THE COMPANY

SHARECAPITALUSD’000

SHAREPREMIUMUSD’000

FOREIGNEXCHANGE

TRANSLATION RESERVE

USD’000

SHARE-BASEDPAYMENTRESERVEUSD’000

(ACCUMULATED LOSSES)

USD’000SUB-TOTAL

USD’000

NON-CONTROLLING INTERESTS

USD’000

TOTALEQUITY

USD’000

The Group

Balance at 01.07.2015 17,006 208,310 (10,990) 11,185 (35,019) 190,492 - 190,492

Profit for the financial year - - - - 14,600 14,600 - 14,600

Other comprehensive income

Exchange difference arising on translation of foreign operations - - (6,511) - - (6,511) - (6,511)

Total comprehensive income for the financial year - - (6,511) - 14,600 8,089 - 8,089

Transactions with owners:

Share awards scheme compensation expense for the financial year - - - 5,209 - 5,209 - 5,209

Exercise of share awards 205 6,413 - (6,618) - - - -

205 6,413 - (1,409) - 5,209 - 5,209

Balance at 30.06.2016 17,211 214,723 (17,501) 9,776 (20,419) 203,790 - 203,790



CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2016 (continued)




FOREIGNEXCHANGE

TRANSLATION RESERVE

USD’000

SHARE-BASEDPAYMENTRESERVEUSD’000

(ACCUMULATED LOSSES)

USD’000SUB-TOTAL

USD’000

NON-CONTROLLING INTERESTS

USD’000

TOTALEQUITY

USD’000

The Group

Balance at 01.07.2014 16,472 163,240 920 5,076 (38,203) 147,505 722 148,227

Profit for the financial year - - - - 4,158 4,158 (67) 4,091

Other comprehensive incomeExchange difference arising on translation of foreign operations - - (11,820) - - (11,820) 2 (11,818)

Total comprehensive income for the financial year - - (11,820) - 4,158 (7,662) (65) (7,727)


Share awards scheme compensation expense for the financial year - - - 6,412 - 6,412 - 6,412

Placement of shares 500 42,963 - - - 43,463 - 43,463

Exercise of share awards 10 410 - (303) - 117 - 117

Acquisition of non-controlling interest 24 1,697 (90) - (974) 657 (657) -

534 45,070 (90) 6,109 (974) 50,649 (657) 49,992

Balance at 30.06.2015 17,006 208,310 (10,990) 11,185 (35,019) 190,492 - 190,492



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COMPANY STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2016




SHARE-BASEDPAYMENT

RESERVEUSD’000

ACCUMULATED LOSSES

USD’000

TOTALEQUITY

USD’000

The Company

Balance at 01.07.2015 17,006 208,310 11,185 (37,267) 199,234

Loss for the financial year - - - (10,621) (10,621)


Share awards scheme compensation expense for the financial year - - 5,209 - 5,209

Exercise of share awards 205 6,413 (6,618) - -

205 6,413 (1,409) - 5,209

Balance at 30.06.2016 17,211 214,723 9,776 (47,888) 193,822

The Company

Balance at 01.07.2014 16,472 163,240 5,076 (23,163) 161,625

Loss for the financial year - - - (14,104) (14,104)


Share awards scheme compensation expense for the financial year - - 6,412 - 6,412

Placement of shares 500 42,963 - - 43,463

Exercise of share awards 10 410 (303) - 117

Acquisition of non-controlling interest 24 1,697 - - 1,721

534 45,070 6,109 - 51,713

Balance at 30.06.2015 17,006 208,310 11,185 (37,267) 199,234



GROUP COMPANY

NOTE2016

USD’0002015

USD’0002016

USD’0002015

USD’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(loss) before taxation 17,895 1,048 (10,621) (14,104)

Adjustments for:

Amortisation of prepaid land lease payments 135 143 - -

Amortisation of deferred income (96) (76) - -

Amortisation of intangible assets 77 180 - -

Depreciation of property, plant and equipment 5,557 5,738 154 81

Interest expense 5,315 7,275 315 488

Interest income (92) (57) (39) (30)

Loss/(gain) on disposal of property, plant and equipment 75 (11) 41 -

Loss on disposal of joint venture - 120 - 70

Share-based payment expense 5,209 6,412 5,209 6,412

Intangible assets written off - 45 - -

Inventories (written back)/written off (68) 14 - -

Unrealised foreign exchange (gain)/loss (3,261) 2,081 - -

Share of loss in joint ventures 1,169 872 - -

Bad debts written-off (45) - - -

Operating cash flow before working capital changes 31,870 23,784 (4,941) (7,083)

(Increase)/Decrease in inventories (22,424) 23,768 - -

Increase in trade and other receivables (2,528) (30,361) (1,254) (1,137)

Increase/(Decrease) in trade and other payables 12,092 (3,423) 4,570 1,348

NET CASH FROM OPERATIONS 19,010 13,768 (1,625) (6,872)

Interest received 92 57 39 30

Interest paid (5,315) (7,275) - -

Tax paid (688) (132) - -

NET CASH GENERATED FROM/ (USED IN)OPERATING ACTIVITIES 13,099 6,418 (1,586) (6,842)

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2016



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GROUP COMPANY

NOTE2016

USD’0002015

USD’0002016

USD’0002015

USD’000

CASH FLOWS FROM INVESTING ACTIVITIES

Increase in investment in subsidiaries 7 - - (706) -

Increase in investment in joint venture 8 (274) (342) - -

Addition of intangible assets 9 (8,865) (3,865) (1,250) (1)

Purchase of property, plant and equipment 10 (15,404) (6,651) (81) (462)

Prepayment of land lease payment 12 - (50) - -

Proceeds from disposal of property, plant and equipment 113 14 23 -

NET CASH USED IN INVESTING ACTIVITIES (24,430) (10,894) (2,014) (463)

CASH FLOWS FROM FINANCING ACTIVITIES

Drawdown of borrowings 111,456 151,800 - -

Repayment of borrowings (101,443) (171,369) - -

Repayment of hire purchase (27) (35) - -

Proceeds from placement of shares - 43,463 - 43,463

Proceeds from share awards exercised - 117 - 117

Decrease/(increase) in restricted cash 4,840 2,756 4,831 (4,831)

Advances to subsidiaries - - (16,408) (16,856)

Repayment from subsidiaries - - 11,004 6,718

NET CASH GENERATED FROM /(USED IN) FINANCING ACTIVITIES 14,826 26,732 (573) 28,611

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 3,495 22,256 (4,173) 21,306

Effects of foreign exchange rate changes on cash and cash equivalents (1,929) (1,089) - -

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 59,181 38,014 35,058 13,752

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 19 60,747 59,181 30,885 35,058

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2016 (continued)

Non-cash item:In 2015, the Company issued 240,000 units of equity shares of the Company amounting to USD 1,721,000 to acquire non-controlling interest in a subsidiary.



1 General InformationThe Company was incorporated and registered as a private limited company in Bermuda, under the Companies (Bermuda) Law 1981. The registered office and principal place of business are as follows:

Registered Office: Clarendon House, 2 Church Street,Hamilton HM 11, Bermuda.

Principal Place of Business: Level 12, West Wing, Rohas PureCircleNo. 9, Jalan P. Ramlee 50250 Kuala Lumpur, Malaysia

The Company’s shares are publicly traded on the Main Market of the London Stock Exchange.

In the financial statements, “Company” refers to PureCircle Ltd. and “Group” refers to PureCircle Ltd and its subsidiaries.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 20 September 2016.

2 Principal ActivitiesThe Company is engaged principally in the business of investment holding whilst the principal activities of the rest of the Group are the production, marketing and distribution of natural ingredient including sweeteners and flavours.

There have been no significant changes in the nature of these activities during the financial year. The principal activities of the subsidiaries and joint venture are set out in Notes 7 and 8 to the financial statements.

3 Basis of PreparationThe financial statements of the Group and Company have been prepared under the historical cost convention unless otherwise indicated in the significant accounting policies, and in compliance with International Financial Reporting Standards (“IFRSs”) and IFRIC Interpretations. The Financial statements have been prepared on a going concern basis.

(a) The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the Group and Company’s financial year beginning on or after 1 July 2015 are as follows:

• Amendments to IAS 36 ‘Recoverable Amount Disclosures for Non-Financial Assets’

• Amendments to IAS 39 ‘Novation of Derivatives and Continuation of Hedge Accounting’

• Amendments to IFRS 10, IFRS 12 and IAS 27 ‘Investment Entities’

• Amendment to IAS 19 ‘Employee Benefits’

• IC Interpretation 21 ‘Levies’

• Annual Improvement 2010 – 2012

• Annual Improvement 2011 – 2013

The adoption of these standards did not have any material effect on the financial performance or position of the Group and the Company.

(b) Standards, amendments and interpretations that have been issued and are applicable to the Group but are not yet effective

The Group will apply the new standards, amendments to standards and interpretations in the following period:

(i) Financial year beginning on 1 July 2016

• Amendments to IFRS 11 “Joint Arrangements” require an investor to apply the principles of IFRS 3 “Business Combination” when it acquires an interest in a joint operation that constitutes a business. The amendments are applicable to both the acquisition of the initial interest in a joint operation and the acquisition of additional interest in the same joint operation. However, a previously held interest is not re-measured when the acquisition of an additional interest in the same joint operation results in retaining joint control. It is not expected to have significant financial impact on the financial statements of the Group.

• Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets” clarify that the use of revenue-based methods to calculate the depreciation and amortisation of an item of property, plant and equipment and intangible are not appropriate. This is because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset.

The amendments to IAS 38 also clarify that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption can be overcome only in the limited circumstances where the intangible asset is expressed as a measure of revenue or where it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. It is not expected to have significant financial impact on the financial statements of the Group.

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016


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3 Basis Of Preparation (continued)

(b) Standards, amendments and interpretations that have been issued and are applicable to the Group but are not yet effective (continued)

The Group will apply the new standards, amendments to standards and interpretations in the following period: (continued)

(i) Financial year beginning on 1 July 2016 (continued)

• Amendments to IFRS 10 and IAS 28 regarding sale or contribution of assets between an investor and its associate or joint venture resolve a current inconsistency between IFRS 10 and IAS 28. The accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a “business”. Full gain or loss shall be recognised by the investor where the non-monetary assets constitute “business”. If the assets do not meet the definition of a business, the gain or loss is recognised by the investor to the extent of the other investors’ interests. The amendments will only apply when an investor sells or contributes assets to its associate or joint venture. They are not intended to address accounting for the sale or contribution of assets by an investor in a joint operation. It is not expected to have significant financial impact on the financial statements of the Group.

(ii) Financial year beginning on 1 July 2018

• IFRS 15 ‘Revenue from Contracts with Customers’ - An entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

Transfer of control is not the same as transfer of risks and rewards as currently considered for revenue recognition. A company would recognise revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer).

The Group is currently assessing its impact to its financial statements.

• IFRS 9 ‘Financial Instruments’ will replace IAS

39 "Financial Instruments: Recognition and Measurement". IFRS 9 retains but simplifies the mixed measurement model in IAS 39 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ("OCI"). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with a irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the IAS39 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.


(iii) Financial year beginning on 1 July 2019

• IFRS 16 ‘Leases’ supersedes IAS17 ‘Leases’ and the related interpretations.

Under IFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

IFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off balance sheet). IFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in IAS 16 ‘Property, Plant and Equipment’ and the lease liability is accreted over time with interest expense recognised in the income statement.

For lessors, IFRS 16 retains most of the requirements in IAS 17. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently.


NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016 (continued)


4 Financial Risk ManagementThe Group’s activities are exposed to a variety of financial risks including foreign currency risk, interest rate risk, credit risk, liquidity and cash flow risk, and capital risk management. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Financial risk management policies

(i) Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk when the Company and its subsidiaries enter into transactions that are not denominated in their functional currencies. Foreign exchange risk arises from commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group manages its foreign exchange exposure by taking advantage of any natural offsets of the Group’s foreign exchange revenue and expenses and from time to time enters into foreign exchange forward contracts for a portion of the remaining exposure relating to these forecast transactions when deemed appropriate.

The following table demonstrates the sensitivity to a reasonably possible change in the United States Dollar, Renminbi, Euro and Sterling Pound exchange rates, with all other variables held constant of the Group’s results:

CHANGES INEXCHANGE RATE

EFFECT ONPROFIT/LOSS

AFTER TAXATIONUSD’000

2016

Ringgit Malaysia against United States Dollar 10% 1,805

Chinese Renminbi against United States Dollar 10% 10

Sterling Pound against United States Dollar 10% 1,512

Euro against United States Dollar 10% 211

Mexican Peso against United States Dollar 10% 1,018

Sterling Pound against Euro 10% 579

2015

Ringgit Malaysia against United States Dollar 10% 1,106

Chinese Renminbi against United States Dollar 10% 484

Sterling Pound against United States Dollar 10% 970

Euro against United States Dollar 10% 94

Mexican Peso against United States Dollar 10% 764

Sterling Pound against Euro 10% 4

The above represents favourable effects on the results of the Group should the respective currencies strengthen against the functional currencies of the entities within the Group, whilst weakening of the above currencies would have an equal but opposite effect to the amount shown above, on the basis that all other variables remain constant.



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4 Financial Risk Management (continued)

(a) Financial risk management policies (continued)

(i) Foreign currency risk (continued)

The foreign currency exposure profile represents the carrying amounts arising from currencies other than the functional currency of the respective entities in the Group. The foreign currency exposure profile of the Group at the reporting date was as follows:

30 JUNE 2016 30 JUNE 2015

UNITEDSTATES

DOLLARSRINGGIT

MALAYSIACHINESE

RENMINBI EUROPOUND

STERLING

UNITEDSTATES

DOLLARSRINGGIT

MALAYSIACHINESE

RENMINBI EUROPOUND

STERLING

USDUSD'000

MYRUSD'000

RMBUSD'000

EURUSD'000

GBPUSD'000

USDUSD'000

MYRUSD'000

RMBUSD'000

EURUSD'000

GBPUSD'000

THE GROUP

Cash and cash equivalents

12,060 58 10 818 107 3,731 167 4,832 228 319

Trade receivables 26,001 - - 6,222 - 24,174 - - 879 -

Trade payables 37 - - - - 150 - - - -

Other receivables, deposits and prepayments

2,138 1,029 - 371 27 365 104 - 10 37

Other payables and accruals

109 2,231 186 1,499 240 75 146 - 1,015 9

Borrowings 9,744 - - - - 7,311 - - - -

(ii) Interest rate risk

Interest rate risk is the risk that the future cash flows of the Group’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risk arises mainly from interest-bearing borrowings at floating rates. The Group's interest rate profile is set out below:

2016 2015 2016 2015

Effective interest rate (%) USD’000 USD’000

Term loans 4.30 4.60 113,929 109,616

Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable rates. The Group actively reviews its debt portfolio to mitigate the impact of interest risk. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculation purposes.

As at balance sheet date, if interest rates on borrowings are 1% higher/lower for a year with all other variables held constant post-tax profit for the year would be USD1,140,000 lower/higher (2015: post-tax loss for the year would be USD1,096,000 higher/lower), mainly as a result of higher/lower interest expense on floating rate borrowing.





(iii) Credit risk

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, the payment profile of the customers and credit exposure are monitored on an ongoing basis with the result that the Group’s exposure to bad debt is not significant. The Group also establishes an allowance account for impairment that represents its estimate of losses in respect of trade and other receivables. The Group’s maximum exposure is the carrying amount as disclosed in Notes 15, 16 and 17 to the financial statements.

At 30 June 2016, 2 customers (2015: 2) comprised more than 30% of total receivables and 7 customers (2015: 16) comprised 75% of total receivables. See Note 15 for ageing of trade receivables that are past due but not impaired.

The Group’s and the Company’s cash and cash equivalents are placed with creditworthy financial institutions and the risks arising thereof are minimised in view of the financial strength of these financial institutions.

The Group and Company consider that the credit risk relating to amounts due from joint ventures and subsidiaries respectively to be low. Both the joint ventures and subsidiaries are expected to repay fully the amounts owed to the Group and Company respectively as these related entities are expected to continue on a going concern basis. At year end, the Group believes there is no credit risk provision required for these receivables.

(iv) Liquidityandcashflowrisks

Liquidity and cash flow risks arise mainly from general funding and business activities. The Group’s cash flow is reviewed regularly to ensure commitments are settled when they fall due.

Cash flow forecasting is performed both in the operating entities and on a Group consolidated basis. The Group monitors rolling forecasts of its liquidity requirements including projected sales revenues, inventory and capital expenditure requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or financial covenants on any of its borrowing facilities. The Group invest surplus cash into financial interest bearing accounts and money market deposits.

The following tables detail the remaining contractual maturities at the reporting date of the Group's non-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the reporting date) and the earliest date the Group can be required to pay:

CARRYING AMOUNT

USD’000

TOTALCONTRACTUAL

UNDISCOUNTED CASH FLOW

USD’000

WITHIN1 YEAR OR

ON DEMANDUSD’000

MORETHAN 1

YEAR BUTLESS THAN 2 YEARS

USD’000

MORETHAN 2

YEARS BUTLESS THAN 5 YEARS

USD’000

MORE THAN 5 YEARS

USD’000

THE GROUP

2016

At 30 June 2016

Financial liabilities:

Trade and other payables 26,542 26,542 26,542 - - -

Borrowings 113,929 124,405 33,327 32,540 58,538 -

2015

At 30 June 2015

Financial liabilities:

Trade and other payables 13,851 13,851 13,851 - - -

Borrowings 109,646 122,940 30,509 24,642 67,789 -



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(iii)Liquidityandcashflowrisks(continued)

Coupled with projected operating cash-flows, the new facility is expected to provide the Group with sufficient liquidity to fund repayment of existing loans as they fall due and support expected sales growth.

CARRYINGAMOUNTUSD’000

TOTALCONTRACTUAL

UNDISCOUNTEDCASH FLOW

USD’000

WITHIN1 YEAR OR

ON DEMANDUSD’000

MORETHAN 1

YEAR BUTLESS THAN

2 YEARSUSD’000

MORETHAN 2

YEARS BUTLESS THAN

5 YEARSUSD’000

THE COMPANY

2016

At 30 June 2016

Other payables and accruals 6,833 6,833 6,833 - -

2015

At 30 June 2015

Other payables and accruals 3,142 3,142 3,142 - -




(b) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debts, which include the borrowings disclosed in Note 24, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, share premium, reserves and retained earnings.

The Group’s policy is to maintain a strong capital base by having low to moderate gearing. The Group monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total equity.

The gearing ratio at the financial year end was as follows:

THE GROUP

2016USD’000

2015USD’000

Debts (i) 113,929 109,646

Less: Gross cash (ii) (61,002) (64,276)

Net debt (iii) 52,927 45,370

Equity (iv) 203,790 190,492

Net debt to equity ratio 26% 24%

(i) Debts relate to borrowings disclosed in Note 24 to the financial statements.

(ii) Gross cash includes restricted cash and cash and cash equivalents disclosed in Note 19 to the financial statements.

(iii) Net debt is calculated as total borrowings (including “current and non-current borrowings”) as shown in the consolidated statement of financial position less gross cash.

(iv) Equity includes all capital and reserves of the Group attributable to the equity holders of the Company.

(c) Fair value estimation

Fair value is defined as the amount at which the assets/liabilities could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.

The fair value measurement hierarchy for assets/liabilities stated in the balance sheet is as follows:

• Level 1: Quoted price (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset and liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

There are no significant fair value estimates at level 2 or 3 made for the financial instruments measured at fair value for the Group as at the reporting date.

5 Summary Of Significant Accounting Policies The principal accounting policies applied in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Financial assets – loan and receivable

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. An allowance for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

(b) Financial liabilities

(i) Payables

Liabilities for trade and other payables and accruals, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(ii) Interest-bearingloansandborrowings

All loans and borrowings are recognised initially at fair value of the consideration received, net of directly attributable transaction cost incurred, and are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction cost) and the redemption value is recognised in the profit or loss over the period of the loans and borrowings using the effective interest method.

(c) Foreign currency translation

(i) Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which the entities operates.

The functional and presentation currency of the Company is United States Dollar (“USD”). The consolidated financial statements are presented in United States Dollar (“USD”) which is the Company’s presentation currency.



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5 Summary of Significant Accounting Policies (continued)

(c) Foreign currency translation (continued)

(ii) Transactions and balances

Transactions of the Group’s entities in foreign currency are converted into USD at the approximate rates of exchange ruling at the transaction dates.

Transactions in foreign currency are measured in the respective functional currencies of the Group’s entities and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates.

Monetary assets and liabilities at the reporting date are translated at the rates ruling as of that date. Exchange differences arising from the translation of monetary assets and liabilities are recognised in the profit or loss.

Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined.

(iii) Foreign operations

The results and financial position of the subsidiaries are translated into the presentation currency as follows:-

(a) assets and liabilities, including goodwill and fair value adjustments arising on the acquisition of foreign operations, for each statement of financial position presented are translated at the closing rate at the reporting date; and

(b) income and expenses for each profit or loss are translated at the average exchange rates for the year; and

(c) all resulting exchange differences are recognised as a separate component of equity; and

(d) on disposal, accumulated translation differences are recognised in the profit or loss as part of the gain or loss on sale of the foreign operation.

(d) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries.

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If, after reassessment, the Group’s interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the profit or loss.

Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(ii) Transactionswithnon-controllinginterests

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.




(d) Basis of consolidation (continued)

(iii) Disposal of subsidiaries

When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(iv) Joint ventures

The Group’s interest in a joint venture is accounted for in the financial statements using the equity method of accounting. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group recognise the further losses to the extent of its incurred obligations.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

(e) Goodwill on consolidation

Goodwill that arises upon acquisition of subsidiaries is included in intangible assets. The carrying value of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate a potential impairment. Impairment losses on goodwill are recognised immediately in the profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent year. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to

those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.

Acquisition of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transaction.

(f) Investments in subsidiaries and joint ventures

Investments in subsidiaries and joint ventures are stated at cost in the statement of financial position of the Company, and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable.

On the disposal of the investments in subsidiaries and joint ventures, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the profit or loss.

(g) Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets with finite useful lives are carried at cost less any accumulated amortisation and any accumulated impairment losses.

(i) Intellectual property

The intellectual property consists of the internal investment and external acquisition costs of the patents, trademarks, technological processes and all intellectual and industrial property rights (“intellectual property rights”) in connection therewith on the production of natural sweeteners, pharmaceutical products and chemical derivatives of bio-organic and physiologically active compounds. The acquisition cost is capitalised as an intangible asset as it is able to generate future economic benefits to the Group.



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(g) Intangible assets (other than goodwill) (continued)

(i) Intellectual property (continued)

The useful life of these intellectual property rights, other than patented development costs is considered to be indefinite based on the Directors’ annual reassessment of the useful life; there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group. Intellectual property rights are stated at cost less impairment losses. They are not amortised but tested for impairment annually or more frequently when indicators of impairment are identified. The intellectual property rights are assessed to have an indefinite useful life because the Group’s natural sweeteners and flavours are expected to become mass volume ingredients in all foods and beverage categories. Similar to the sugar market, there is no expected end to the useful life of the natural sweeteners and flavours such as stevia. Accordingly, the Directors believe the useful life for intellectual property rights is indefinite. The Directors will continue to reassess the basis of that useful life of the intellectual property rights on an annual basis.

Patented development costs are subject to estimated useful life of no more than 20 years and amortised starting from the financial year when the product is first viable for commercial use.

(ii) Development costs

All research costs are recognised in the profit or loss as incurred.

Development costs consist of expenditure incurred on product development and leaf development projects.

Expenditure incurred on these projects are capitalised as intangible assets only when the Group can demonstrate the technical feasibility of completing the intangible assets so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resource to complete the project and the ability to measure reliably the expenditure during the developments. Expenditures which do not meet these criteria are recognised in the profit or loss when incurred.

Product development costs are amortised on a straight line basis over their estimated useful life of no more than 20 years starting from the financial year when the product are first viable for commercial use.

Leaf development costs are only amortised when

Stevia plant demonstrates capability of producing high yielding strains of Stevia leaf at reasonable consistency on a volume production basis. As at 30 June 2016, these development projects remain on-going as the development targets have not been fully met and no amortisation has been charged.

(h) Property, plant and equipment

Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation and impairment losses, if any. Freehold land is stated at cost less impairment losses, if any, and is not depreciated. Cost includes expenditure that is directly attributable to the acquisition of the items. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.

Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

Buildings 2% - 5%

Extraction and refinery plant 2% - 20%

Office equipment, furniture and fittings and motor vehicles 20%

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each reporting date.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

Capital work-in-progress represents assets under construction, and which are not ready for commercial use at the reporting date. Capital work-in-progress is stated at cost, and will be transferred to the relevant category of long-term assets and depreciated accordingly when the assets are completed and ready for commercial use.




(i) Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation but are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

(j) Biological assets

Biological assets comprise stevia plants in the Group’s controlled nurseries (nursery plants) that are used to mass produce seedlings for third party farmers.

Seedlings produced from the nursery plants are deducted from the biological asset at fair value less cost to sell. Seedlings harvested from nursery plants are carried at their deemed cost under IAS 2 as inventories, which are then stated at lower of this deemed cost and net realisable value subject to any impairment loss.

During the year, biological assets have been transferred to product development within intangible assets reflecting the changed nature of the Group’s nursery operations. The Group’s leaf nurseries are now focused on improving leaf strains and similar leaf development intellectual property activity as opposed to their historic role in the production and supply of seedlings.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost incurred in bringing the inventories to their present location and condition are accounted for as follows:

Raw materials comprise of auxiliary materials: purchase cost on weighted average basis.

Finished goods and work-in-progress: cost of materials, labour and production overheads.

Net realisable value represents the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale.

Where necessary, due allowance is made for all damaged, obsolete and slow-moving items.

(l) Income taxes

Income taxes for the year comprise current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the applicable tax rates that have been enacted or substantively enacted at the reporting date in each of the jurisdictions in which the Group operates.

Deferred tax is provided in full, using the liability method, on the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to be applicable in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the reporting date.

Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs. The carrying amounts of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

(m) Equity instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.



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(m) Equity instruments (continued)

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(n) Restricted cash

Restricted cash comprise cash balances held in an account solely for the purpose of utilising trade finance facility and credit card facility provided by a licensed financial institution.

(o) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, deposits held at call with banks, short-term deposits with licensed banks with maturities of three month or less, and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents exclude restricted cash.

(p) Employee benefits

(i) Short-termbenefits

Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group.

(ii) Definedcontributionplans

The Group’s contributions to defined contribution plans are charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans. The Group has no defined benefit plan.

(q) Share-based payment

The Group operates a long term incentive programme which is an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (share awards) of the Company. The fair value of the employee services received in exchange for the grant of the share awards is recognised as an expense over the vesting period. The total amount to be expensed is determined by reference to the fair value of the shares granted excluding the impact of any non-market vesting conditions and the number of shares expected to vest. Non-market vesting conditions are included in assumptions about the number of share awards that are expected to become exercisable.

When the share awards are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the share awards are exercised.

The grant by the Company of share awards over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution in the subsidiary. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

(r) Provisions

A provision is recognised if, as a result of past event, the Group has a present legal and constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost.

(s) Leases

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which the termination takes place.

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownerships are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges.

The corresponding rental obligations, net of finance charges, are included as borrowings. The interest element of the finance charge is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Plant and equipment acquired under a finance lease is depreciated over the shorter of the estimated useful life of the asset and the lease term.

The prepaid land lease payments represent the Group’s right to use the land for 20 years. Accordingly, the amortisation of the prepaid land lease payments is on a straight line basis over 20 years.




(t) Segmental information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (i.e. the Chief Executive Officer (“CEO”)). The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

(u) Revenue recognition

(i) Sale of goods

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of sales taxes, returns and trade discounts. The Group recognises revenue when the amount of revenue can be reliably measured and when it is probable that future economic benefits will flow to the entity.

In practice, this means that sales of stevia products are recognised once the contractual terms, typically Free On Board or Ex-Works, have been met and the stevia product has been delivered to a specified location (usually the carrier of the port of departure) or leaves the refinery.

(ii) Interest income

Interest income is recognised on an accrual basis, based on the effective yield on the investment.

(v) Government grants

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Grants that compensate the Group for the cost of an asset are recognised in profit or loss on a systematic basis over the useful life of the asset.

6 Critical Accounting Estimates and JudgementsEstimates and judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below.

(i) Goodwill and other assets carrying values

(a) Key assumptions for value-in-use calculations

The recoverable amount of a cash generating unit (“CGU”) is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a 5-year period including a terminal value as required by IAS 36 ‘Impairment of Assets’. The key assumptions used in the CGU’s value-in-use computation are:

(i) Growthrate

The average sales growth rate used is based on planned capacity and forecasted demands. The short to medium term growth rates used are not more than 25% per annum (2015: 25% to 30%). The long term growth rate used is 2% (2015: 2.0%) per annum, based on sweetener industry’s long term growth rate ranging from 2% to 4% (2015: 2% to 4%) per annum.

(ii) Gross margin

Changes in selling price and direct costs are based on past results and expectations of future changes in the market.

(iii) Discount rate

The discount rate used is 10% per annum.

(b) Sensitivity to changes in assumptions

The Directors believes that a reasonable change in any of the above key assumptions would not cause the carrying value of the intangible assets to be impaired.

(ii) Indefinite useful life of intellectual property rights

The intellectual property rights are assessed to have indefinite useful lives because over the long term, the Group’s natural sweeteners and flavours are expected to become mass volume ingredients in all foods and beverage categories. Similar to the sugar market, there is no expected end to the useful life of the natural sweeteners and flavours such as stevia. Accordingly, the Directors believe the useful life for intellectual property rights is indefinite. The Directors will continue to reassess the basis of that useful life of the intellectual property rights on an annual basis.

(iii) Useful life of product development costs

The product development cost is amortised on a straight line basis over their estimated useful life of no more than 20 years which consistent with useful life of intellectual property.



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7 Investment in Subsidiaries

THE COMPANY

2016USD’000

2015USD’000

Investment in subsidiaries 77,328 76,622

Amount due from subsidiaries 64,678 63,961

AT 30 JUNE 142,006 140,583

The advances to subsidiaries are treated as an extension of its investments in subsidiaries.

Details of the subsidiaries are as follows:-

NAME OF COMPANY COUNTRY OFINCORPORATION

EFFECTIVE EQUITYINTEREST

PRINCIPAL ACTIVITIES

2016 2015

HELD DIRECTLY BY PURECIRCLE LIMITED “PCL”

PureCircle Sdn. Bhd. (“PCSB”) Malaysia 100% 100% Production and distribution of natural sweeteners and flavours.

PureCircle Mexico Inc. (“PCMEX”)* Mexico 100% 100% Sales and marketing of natural sweeteners and flavours.

PureCircle S.A. Switzerland 100% 100% Investment holding and sales and marketing of natural sweeteners and flavours.

PureCircle Australia Pty. Ltd. Australia 100% 100% Sales and marketing of natural sweeteners and flavours.

PureCircle USA Holdings Inc. (“PCUSAH) United States of America (“USA”)

100% 100% Investment holding

PureCircle (UK) Limited (“PCUK”) England and Wales 100% 100% Sales and marketing of natural sweeteners and flavours.

PureCircle Kenya Limited (“PCK”) Kenya 100% 100% Supply and development of stevia agronomy.

PureCircle South America Sociedad Anonima (“PCSAM”)

Paraguay 100% 100% Supply and development of stevia agronomy.

PureCircle (China) Limited (“PCC”) Hong Kong 100% 100% Investment holding

PureCircle USA Inc. (“PCUSA”) United States of America (“USA”)

100% 100% Sales and marketing of natural sweeteners and flavours.

PureCircle (S.E.A) Sdn. Bhd. (formerly known as PureCircle Stevia Sdn. Bhd.)

Malaysia 100% 100% Sales and marketing of natural sweeteners and flavours.

PureCircle Trading Sdn. Bhd. Malaysia 100% 100% Sales, marketing and distribution of natural sweeteners and flavours.

HELD BY PCMEX PCM PureCircle De Mexico S.A. de C.V. ** Mexico 100% 100%

Receivable financing for its immediate holding company



7 Investment in Subsidiaries (continued)Details of the subsidiaries are as follows:-

NAME OF COMPANYCOUNTRY OFINCORPORATION

EFFECTIVE EQUITYINTEREST PRINCIPAL ACTIVITIES

2016 2015

HELD BY PCUSA

PureCircle Company LLC United States of America (“USA”)

100% 100% Receivable financing for its immediate holding company

HELD BY PCUK

PureCircle Company UK Ltd England and Wales 100% 100% Receivable financing for its immediate holding company

HELD BY PCSB

PureCircle (Jiangxi) Co. Ltd. (“PCJX”) The People’s Republic of China (“The PRC”)

100% 100% Supply chain, production and distribution of natural sweeteners and flavours.

PureCircle (Shanghai) Co. Ltd. The People’s Republic of China (“The PRC”)

100% 100% Sales and marketing of natural sweeteners and flavours.

PureCircle Servicios Inc. Mexico 100% 100% Dormant

PureCircle Brazil*** Brazil 100% 100% Sales and marketing of natural sweeteners and flavours.

HELD BY PCC

PureCircle China AgricultureDevelopment Co. Ltd

The People’s Republic of China (“The PRC”)

100% 100% Supply and development of stevia agronomy.

During the financial year, PCT issued 2,999,998 ordinary shares at RM1.00 each and be allotted to PCL.

* 99% held directly by the Company and 1% held through PCUSAH

** 1% held directly by the Company and 99% held through PCMEX

*** 1% held directly by the Company and 99% held through PCSB



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8 Investment in Joint VenturesDetails of joint ventures are as follows:-

NAME OF COMPANYCOUNTRY OF INCORPORATION

EFFECTIVE EQUITY INTEREST

PRINCIPAL ACTIVITIES

2016 2015

NP Sweet AS (“NPS”) Denmark 50% 50% Production, marketing and distribution of natural sweeteners.

Tereos PureCircle Solutions (“TPCS”) France - - Production, marketing and distribution of natural sweeteners.

As part of the restructuring of its Joint Ventures, Tereos purchased the Company’s shares in TPCS in 2015 and continues to service the Group’s Regional Key Accounts in the TPCS region.

THE GROUP

2016USD’000

2015USD’000

At 1 July (200) (1,463)

Share of loss (332) (818)

Unrealised profit (837) (54)

Disposal - 1,894

Additional investment 274 342

Exchange differences (1) (101)

AT 30 JUNE (1,096) (200)

Analysed as follows:

Other payables (non-current) (1,096) (200)

AT 30 JUNE (1,096) (200)

The Group’s share of the results of the joint ventures, none of which is individually material to the Group, are shown in aggregate as follows:

2016USD’000

2015USD’000

Share of loss in joint ventures (before elimination of unrealised profit) (332) (818)

Shares of other comprehensive income of joint ventures (1) (101)

SHARE OF TOTAL COMPREHENSIVE LOSS (333) (919)



8 Investment in Joint Ventures (continued)Set out below are the summarised financial information for Joint Ventures which are accounted for using the equity method:

SUMMARISED STATEMENTS OF FINANCIAL POSITION

2016USD’000

2015USD’000

CURRENT

Cash and cash equivalents 34 128

Other current assets (excluding cash) 5,911 3,440

TOTAL CURRENT ASSETS 5,945 3,568

Financial liabilities (excluding trade payables) (404) (292)

Other current liabilities (including trade payables) (6,020) (3,670)

TOTAL CURRENT LIABILITIES (6,424) (3,962)

NON-CURRENT

Assets 555 588

Financial Liabilities - -

NET ASSETS 76 194

SUMMARISED STATEMENTS OF COMPREHENSIVE INCOME

2016USD’000

2015USD’000

Revenue 3,562 6,922

Depreciation and amortisation - (78)

Interest (expense)/ income (7) 562

Loss before taxation (664) (1,540)

Income tax - (96)

Loss after taxation (664) (1,636)

Other comprehensive income (2) (202)

TOTAL COMPREHENSIVE LOSS (666) (1,838)



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8 Investment in Joint Ventures (continued)

RECONCILIATION OF SUMMARISED FINANCIAL INFORMATION

2016USD’000

2015USD’000

Opening net liabilities – 1 July 194 (2,440)

Loss for the year (664) (1,636)

Other comprehensive income (2) (202)

Disposal - 3,788

Additional investment 548 684

Closing net assets– 30 June 76 194

Interest in joint venture 50% 50%

Share of net assets 38 97

Goodwill - -

Cumulative unrealised profit (1,134) (297)

CARRYING VALUE (1,096) (200)

9 Intangible Assets

INTELLECTUALPROPERTY

RIGHTSUSD’000

DEVELOPMENTCOSTS

USD’000GOODWILL

USD’000TOTAL

USD’000

THE GROUP

COST

At 1 July 2015 13,963 22,836 1,806 38,605

Additions 422 8,443 - 8,865

Transfer - 4,055 - 4,055

Foreign exchange translation difference (812) (1,322) - (2,134)

AT 30 JUNE 2016 13,573 34,012 1,806 49,391

ACCUMULATED AMORTISATION

At 1 July 2015 418 397 - 815

Charge for the financial year 6 71 - 77

Foreign exchange translation difference (26) (22) - (48)

AT 30 JUNE 2016 398 446 - 844

NET CARRYING AMOUNT

AT 30 JUNE 2016 13,175 33,566 1,806 48,547



9 Intangible Assets (continued)


RIGHTSUSD’000

DEVELOPMENTCOSTS

USD’000GOODWILL

USD’000TOTAL

USD’000

THE GROUP

COST

At 1 July 2014 14,355 22,618 1,806 38,779

Additions 359 3,506 - 3,865

Written off during the financial year - (45) - (45)

Foreign exchange translation difference (751) (3,243) - (3,994)

AT 30 JUNE 2015 13,963 22,836 1,806 38,605

ACCUMULATED AMORTISATION

At 1 July 2014 483 273 - 756

Charge for the financial year 8 172 - 180

Foreign exchange translation difference (73) (48) - (121)

AT 30 JUNE 2015 418 397 - 815

NET CARRYING AMOUNT

AT 30 JUNE 2015 13,545 22,439 1,806 37,790


RIGHTSUSD’000

DEVELOPMENTCOSTS

USD’000TOTAL

USD’000

THE COMPANY

COST

At 1 July 2015 473 - 473

Additions during the financial year - 1,250 1,250

AT 30 JUNE 2016 473 1,250 1,723

At 1 July 2014 472 - 472

Additions during the financial year 1 - 1

AT 30 JUNE 2015 473 - 473

Intellectual property rights comprise the patents, trade mark technology process and all intellectual and industrial property rights in connection therewith on the production of natural sweetener, pharmaceutical products and derivatives of bio-organic and physiologically active compounds.

As at 30 June 2016, the carrying value of indefinite life intangible assets is USD10,613,032 (2015: USD11,312,000). The change in value was due to foreign currency translation differences.

Goodwill is allocated to the Group’s single CGU identified according to its only operating segment. See Note 6(i) for key assumptions used in the value-in-use calculations.



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10 Property, Plant and Equipment

FREEHOLD LAND

USD’000BUILDINGS

USD’000

EXTRACTIONAND

REFINERY PLANTS

USD’000

OFFICEEQUIPMENT,FURNITURE

AND FITTINGSAND MOTOR

VEHICLESUSD’000

CAPITALWORK-IN

PROGRESSUSD’000

TOTALUSD’000

THE GROUP

COST

At 1 July 2015 1,615 20,608 60,303 7,186 4,976 94,688

Additions - 61 1,213 1,096 13,034 15,404

Disposals/write-offs - - (1,783) (476) - (2,259)

Transfer - (24) 2,605 863 (3,444) -

Foreign exchange translation reserve (80) (1,265) (3,889) (452) (356) (6,042)

AT 30 JUNE 2016 1,535 19,380 58,449 8,217 14,210 101,791

ACCUMULATED DEPRECIATION

At 1 July 2015 - 4,417 26,868 3,679 - 34,964

Charge for the financial year - 1,034 3,461 1,062 - 5,557

Disposals/write-offs - - (1,666) (405) - (2,071)

Foreign exchange translation reserve - (369) (1,748) (204) - (2,321)

AT 30 JUNE 2016 - 5,082 26,915 4,132 - 36,129

NET CARRYING AMOUNT

AT 30 JUNE 2016 1,535 14,298 31,534 4,085 14,210 65,662

FREEHOLD LAND

USD’000BUILDINGS

USD’000

EXTRACTIONAND

REFINERY PLANTS

USD’000



VEHICLESUSD’000

CAPITALWORK-IN

PROGRESSUSD’000

TOTALUSD’000

THE GROUP

COST

At 1 July 2014 1,820 20,592 65,514 5,321 2,062 95,309

Additions - 38 560 2,429 3,624 6,651

Disposals/write-offs - - - (76) - (76)

Transfer - 46 44 108 (198) -

Foreign exchange translation reserve (205) (68) (5,815) (596) (512) (7,196)

AT 30 JUNE 2015 1,615 20,608 60,303 7,186 4,976 94,688


At 1 July 2014 - 3,413 25,070 3,111 - 31,594

Charge for the financial year - 1,131 3,689 918 - 5,738

Disposals/write-offs - - - (73) - (73)

Foreign exchange translation reserve - (127) (1,891) (277) - (2,295)

AT 30 JUNE 2015 - 4,417 26,868 3,679 - 34,964

NET CARRYING AMOUNT

AT 30 JUNE 2015 1,615 16,191 33,435 3,507 4,976 59,724



10 Property, Plant and Equipment (continued)



VEHICLESUSD’000

CAPITALWORK-IN

PROGRESSUSD’000

TOTALUSD’000

THE COMPANY

COST

At 1 July 2015 411 433 844

Additions 81 - 81

Disposal (179) - (179)

Transfer 433 (433) -

AT 30 JUNE 2016 746 - 746


At 1 July 2015 185 - 185

Charge for the financial year 154 - 154

Disposal (115) - (115)

AT 30 JUNE 2016 224 - 224

NET CARRYING AMOUNT

AT 30 JUNE 2016 522 - 522



VEHICLESUSD’000

CAPITALWORK-IN

PROGRESSUSD’000

TOTALUSD’000

THE COMPANY

COST

At 1 July 2014 382 - 382

Additions 29 433 462

AT 30 JUNE 2015 411 433 844


At 1 July 2014 104 - 104

Charge for the financial year 81 - 81

AT 30 JUNE 2015 185 - 185

NET CARRYING AMOUNT

AT 30 JUNE 2015 226 433 659



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10 Property, Plant and Equipment (continued)The carrying values of property, plant and equipment charged to financial institutions to secure banking facilities granted to the Group are as follows:

THE GROUP

2016USD’000

2015USD’000

Freehold land 1,000 1,256

Building 11,599 13,929

Extraction and refinery plants 31,413 40,269

Office equipment, furniture and fittings 2,106 913

Capital work in-progress 13,944 1,960

60,062 58,327

The carrying values of plant and equipment acquired under hire purchase terms are as follows:

THE GROUP

2016USD’000

2015USD’000

Motor vehicles - 6

11 Biological AssetsNursery plants with a book value of USD3,377,000 (2015: USD3,570,000) previously reported as biological assets have been transferred to product development within intangible assets reflecting the changed nature of the Group’s nursery operations. The Group’s leaf nurseries are now focused on improving leaf strains and similar leaf development intellectual property activity as opposed to their historic role in the production and supply of seedlings.

12 Prepaid Land Lease Payments

THE GROUP

2016USD’000

2015USD’000

At 1 July 2,914 2,999

Additions - 50

Amortisation for the financial year (135) (143)

Foreign exchange translation reserve (242) 8

AT 30 JUNE 2,537 2,914

Cost 3,526 3,526

Accumulated amortisation (929) (794)

Foreign exchange translation reserve (60) 182

AT 30 JUNE 2,537 2,914

The prepaid land lease payments have been pledged as security for banking facilities granted to the Group.



13 Deferred Tax

THE GROUP

2016USD’000

2015USD’000

DEFERRED TAX ASSETS

At 1 July 9,429 5,876

(Charge)/Credit to profit or loss (Note 27) (125) 3,960

Foreign exchange translation reserve (314) (407)

AT 30 JUNE 8,990 9,429

DEFERRED TAX LIABILITIES

At 1 July 529 -

Charge to profit or loss (Note 27) 1073 529

Foreign exchange translation reserve - -

AT 30 JUNE 1,602 529

REPRESENTED BY:

DEFERRED TAX ASSETS

Tax losses 8,850 9,337

Others 140 92

8,990 9,429

Offsetting (1,602) (529)

7,388 8,900


Property, plant and equipment 1,602 529

Offsetting (1,602) (529)

- -

Deferred tax assets are recognised for tax losses carry-forward to the extent that the realisation of the related tax benefit through future tax profit is probable based on projections and forecasts prepared by management and taking into consideration the expiry dates of carry forward losses. The Group did not recognise deferred tax assets of USD74,000 (2015: USD385,000) in respect of losses amounting to USD 598,000(2015: USD1,940,000) that can be carried forward against future taxable income.



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13 Deferred Tax (continued)

THE GROUP

2016USD’000

2015USD’000

DEFERRED TAX ASSETS

Deferred tax assets to be recovered within 12 months 140 1,002

Deferred tax assets to be recovered after more than 12 months 8,850 8,427

8,990 9,429


Deferred tax liabilities to be recovered within 12 months - -

Deferred tax liabilities to be recovered after more than 12 months (1,602) (529)

(1,602) (529)

An analysis of tax losses with expiry dates for which deferred tax assets have been recognised is as follows:THE GROUP

2016USD’000

2015USD’000

FY2017 - 115

FY2018 70 192

FY2019 - 763

FY2021 208 -

FY2023 - 1,677

FY2029 to FY2036 4,834 2,994

Indefinite 3,738 3,596

TOTAL 8,850 9,337

14 Inventories

THE GROUP

2016USD’000

2015USD’000

Raw materials 11,422 5,523

Work-in-progress 41,785 11,716

Finished goods 31,397 45,551

84,604 62,790

There is no provision of obsolete inventories recognised during the year (2015: Nil).



15 Trade Receivables

THE GROUP

2016USD’000

2015USD’000

NON-CURRENT

Third party trade receivables 523 1,856

CURRENT

Third party trade receivables 57,627 59,149

Joint ventures 5,116 3,381

62,743 62,530

The Group’s normal trade credit terms range from 30 to 60 days (2015: 30 to 60 days). Terms for joint ventures are 30 days after consumption or onward sales of products. Other credit terms are assessed on a case-by-case basis.

In line with all businesses, management reviews the credit terms and collectability of all balances on an on-going basis and exercises judgement in assessing the recoverability of amounts due.

As of 30 June 2016, trade receivables amounting to USD5,645,000 (2015: USD6,622,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing of the trade receivables that are past due but not impaired is as follows:

THE GROUP

2016USD’000

2015USD’000

Past due but not impaired:

Up to 3 months 3,828 5,948

3 to 6 months 553 412

6 months and above 1,395 262

5,776 6,622

16 Other Receivables, Deposits and Prepayments

GROUP COMPANY

2016USD’000

2015USD’000

2016USD’000

2015USD’000

NON-CURRENT

Other receivables 885 2,121 - -

CURRENT

Other receivables 5,592 3,038 1,063 886

Prepayments 5,448 3,967 311 428

Deposits 614 485 109 109

AS AT 30 JUNE 11,654 7,490 1,483 1,423

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. These amounts are not past due.

17 Amount Owing by SubsidiariesThe amounts owing by subsidiaries are unsecured, repayable on demand and are denominated in United States Dollar.



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18 Financial Instruments by Category

GROUP COMPANY

NOTE 2016USD’000

2015USD’000

2016USD’000

2015USD’000

RECEIVABLES

Trade receivables 15 63,266 64,386 - -

Other receivables and deposits (excluding prepayments) 16 7,091 5,644 1,172 995

Amount owing by subsidiaries 17 - - 24,036 19,349

Cash and bank balances 19 61,002 64,276 30,885 39,889

131,359 134,306 56,093 60,233

OTHER FINANCIAL LIABILITIES

Borrowings 24 113,929 109,646 - -

Trade payables 25 5,543 3,134 - -

Other payables and accruals (excluding deferred income) 26 20,999 10,717 6,833 3,142

140,471 123,497 6,833 3,142

19 Cash And Cash Equivalents

GROUP COMPANY

2016USD’000

2015USD’000

2016USD’000

2015USD’000

Short term deposits with licensed banks 32,047 32,280 28,309 32,017

Cash at bank and on hand 28,955 31,996 2,576 7,872

Deposits, cash and bank balances 61,002 64,276 30,885 39,889

Restricted cash (255) (5,095) - (4,831)

CASH AND CASH EQUIVALENTS 60,747 59,181 30,885 35,058

Cash deposits of USD255,000 (2015: USD5,095,000) are pledged as security for banking facilities.

The weighted average interest rates of the short-term deposits at the reporting date was 0.38% (2015: 0.40%) per annum. The short-term deposits have weighted maturity period of 40 days (2015: 104 days).



20 Share CapitalThe movements in the authorised and paid-up share capital are as follows:

THE GROUP/COMPANY2016

THE GROUP/COMPANY2015

PARVALUE

USD

NUMBEROF SHARES

(’000)USD

(’000)

NUMBEROF SHARES

(’000)USD

(’000)

AUTHORISED

At 1 July/30 June 0.10 250,000 25,000 250,000 25,000

ISSUED AND FULLY PAID-UP

At 1 July 0.10 170,062 17,006 164,722 16,472

Exercise of share awards 0.10 2,050 205 100 10

Placement of shares 0.10 - - 5,000 500

Issuance of shares 0.10 - - 240 24

AT 30 JUNE 0.10 172,112 17,211 170,062 17,006

21 Share PremiumTHE GROUP/COMPANY

2016USD’000

2015USD’000

At 1 July 208,310 163,240

Exercise of share awards 6,413 410

Placement of shares - 42,963

Issuance of shares - 1,697

AT 30 JUNE 214,723 208,310

22 Foreign Exchange Translation ReserveThe foreign exchange translation reserve arose from the translation of the financial statements of the foreign operations into the Group’s presentation currency of USD.

During financial year end 2016, the fluctuations are due to MYR and RMB weakening against USD.



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23 Share-Based Payment ReserveThe expense arising from equity-settled share-based payment transaction recognised for employee services received during the year is as shown below:

GROUP COMPANY

2016USD’000

2015USD’000

2016USD’000

2015USD’000

Expense arising from equity-settled share-based payment transactions

5,209 6,412 5,209 6,412

THE GROUP/COMPANY

2016USD’000

2015USD’000

At 1 July 11,185 5,076

Share awards scheme compensation expense 5,209 6,412

16,394 11,488

Transfer to share capital and share premium upon exercise of share awards (6,618) (303)

AT 30 JUNE 9,776 11,185

The Company maintains a Long-Term Incentive Plan (“LTIP”), the principal terms include a restriction on the Company issuing (or granting rights to issue) no more than 10 per cent of its issued ordinary share capital under the LTIP (and any other employee share plan) in any ten calendar year period. It is currently intended that, other than in exceptional circumstances, such as senior executive recruitment, all awards will be subject to performance conditions and that, the performance conditions will be linked principally to the Group’s sales growth. The awards are conditional on employment service requirements.

The LTIP recognises the fast growth and changing nature of the Company and the need to recruit and retain executives in different employment markets around the world. Accordingly, the LTIP allows for the Remuneration Committee to exercise significant discretion in exceptional cases where the Committee considers executives will bring particular value to shareholders.

The fair value of share awards granted is estimated at the date of the grant, taking into account the terms and conditions upon which the LTIPs were granted.

30.6.2016 30.6.2015

WEIGHTEDAVERAGEEXERCISE

PRICE PERSHARE

NUMBEROF

LTIPS(’000)

WEIGHTEDAVERAGEEXERCISE

PRICE PERSHARE

NUMBEROF

LTIPS(’000)

At 1 July - 3,912 - 7,523

Granted - 1,881 - 344

Exercised - (2,050) - (153)

Lapsed - (1,433) - (3,802)

AT 30 JUNE - 2,310 - 3,912



23 Share-Based Payment Reserve (continued)Details of share awards granted that are outstanding as at 30 June 2016 are as follows:

NUMBER OFLTIPS

OUTSTANDING’000

WEIGHTED AVERAGE

FAIR VALUE AT GRANT

DATE(STERLING

POUND)

EXERCISEPRICE PER

SHAREVESTING

REQUIREMENTS

GRANT-VEST

AWARD 18 October 2013 - 12 July 2016

1,394 3.54 NilSales target and

three years’ service

AWARD 214 March 2013 - 13 April 2017

116 2.53 - 6.13 Nil Three years’ service

AWARD 34 July 2014 - 27 July 2017

118 4.94 - 6.08 Nil Three years’ service

AWARD 47 July 2015 - 1 July 2017

577 3.95 NilSales target and

three years’ service

AWARD 522 September 2015 - 22 September 2018

57 4.05 Nil Three years’ service

AWARD 64 March 2016 - 30 August 2018


AWARD 723 May 2016 - 25 April 2019


TOTAL 2,310

The number of exercisable share awards as at the reporting date was Nil (2015: Nil).

The related weighted average share price at the time of exercise was Nil (2015: GBP4.90) per share.

24 BorrowingsTHE GROUP

2016USD’000

2015USD’000

CURRENT PORTION:

- Term loans (a) 29,044 25,668

- Hire purchase (b) - 13

29,044 25,681

NON-CURRENT PORTION:

- Term loans (a) 84,885 83,948

- Hire purchase (b) - 17

TOTAL NON-CURRENT PORTION 84,885 83,965

113,929 109,646



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24 Borrowings (continued)

(a) Term Loans

The term loans bore a weighted average effective interest rate of 4.30% (2015: 4.60%) per annum at the reporting date. These term loans bear floating rates (base rate plus a margin as imposed by respective lenders) that fluctuate because of changes in market interest rates.

THE GROUP

2016USD’000

2015USD’000

CURRENT PORTION:

Unsecured:

- Term loan 1 - 205

Secured:

- Term loan 2 306 1,546

- Term loan 3 542 -

- Term loan 4 4,460 -

- Term loan 5 23,736 23,917

TOTAL CURRENT PORTION 29,044 25,668

NON-CURRENT PORTION:

Secured:

- Term loan 2 - 275

- Term loan 3 2,092 -

- Term loan 4 53,766 62,223

- Term loan 6 29,027 21,450

TOTAL NON-CURRENT PORTION 84,885 83,948

113,929 109,616

Term loan 1 is unsecured.

Term loans 2 to 4 are secured by way of:-(i) a fixed and floating charge over present and future assets and the freehold property of a subsidiary; and(ii) corporate guarantee by the Company; and(iii) legal charge over landed property of a subsidiary.

Term loan 5 is secured as follows:-(i) a legal charge over certain assets of a subsidiary; and(ii) a legal charge over the prepaid land lease payments of a subsidiary.

Term loans 6 are trade receivables financing secured via receivable balances.



24 Borrowings (continued)

(b) Hire purchase

The Group leases motor vehicles under finance leases with lease terms of 5 to 9 years (2015: 5 to 9 years). At the end of the lease term, title to the assets will be transferred to the Group upon full payment being made. In 2016, the Group has settled all its obligations under finance lease.

THE GROUP

2016USD’000

2015USD’000

ANALYSIS OF HIRE PURCHASE:

- No later than one year - 17

- Later than 1 year and no later than 5 years - 21

- 38

Less: Future finance charges - (8)

PRESENT VALUE - 30

THE PRESENT VALUE OF HIRE PURCHASE IS AS FOLLOWS:

- No later than one year - 13

- Later than 1 year and no later than 5 years - 17

- 30

The hire purchases were secured by the rights to the leased motor vehicles which revert to the lessor in the event of defaults. The hire purchase bore a weighted average effective interest rate of 0% (2015: 3.65%) per annum at the reporting date.

25 Trade PayablesThe normal trade credit terms granted to the Group range from 0 to 90 days (2015: 0 to 90 days)

26 Other Payables and Accruals

GROUP COMPANY

2016USD’000

2015USD’000

2016USD’000

2015USD’000

NON-CURRENT

Other payables 1,096 200 - -

Deferred income 149 290 - -

1,245 490 - -

CURRENT

Other payables 11,962 7,265 6,202 2,563

Deferred income 74 29 - -

Accruals 7,941 3,252 631 579

19,977 10,546 6,833 3,142

Deferred income as at the reporting date represents a form of regional government financial assistance for the purchase of high technology plant equipment. The deferred income will be amortised over the useful life of 20 years.



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27 Taxation

THE GROUP

2016USD’000

2015USD’000

CURRENT TAX:

Current tax on profits for the year (2,124) (408)

Over accruals in respect of prior years 27 20

(2,097) (388)

DEFERRED TAX:

Origination and reversal of temporary differences (1,198) 3,431

(3,295) 3,043

The Company was granted a tax assurance certificate dated 1 February 2012 under the Exempted Undertakings Tax Protection Act, 1966 pursuant to which it is exempted from any Bermuda taxes (other than local property taxes) until 31 March 2035.

The subsidiary, PCSB, has been granted the Bio-Nexus Status by the Malaysian Biotechnology Corporation Sdn Bhd in which PCSB is entitled to a 100% income tax exemption for a period of 10 years on its first statutory income commencing in year of assessment (YA) 2008. Upon the expiry of the 10-year incentive period, PCSB will be entitled to a concessionary tax rate of 20% on income derived from qualifying activities for a further period of 10 years.

The subsidiary, PCT has been granted the Principal Hub Status by the Malaysian Investment Development Authority in which PCT is entitled to a 100% income tax exemption for a period of 10 years on its statutory income commencing from YA 2017.

A reconciliation of income tax expense applicable to the profit before taxation at the applicable tax rate to income tax expense at the effective tax rate of the Group is as follows:-

THE GROUP

2016USD’000

2015USD’000

PROFIT BEFORE TAXATION 17,895 1,048

TAX AT THE APPLICABLE TAX RATES IN THE RESPECTIVE COUNTRIES 6,542 289

TAX EFFECTS OF:

Non-deductible expenses 251 204

Non-taxable income (4,039) (2,309)

Under/(over) provision of taxation 756 (20)

Previously unrecognised tax losses (215) (1,207)

INCOME TAX EXPENSE/(CREDIT) 3,295 (3,043)



28 Profit from Ordinary Activities Before TaxationIncluded in the profit from ordinary activities before taxation are the following charges and credits:

THE GROUP THE COMPANY

2016USD’000

2015USD’000

2016USD’000

2015USD’000

CHARGES:

Depreciation and amortisation 5,769 6,061 154 81

Directors’ remuneration 1,578 1,432 417 220

Share-based payment expense 5,209 6,412 5,209 6,412

Interest expenses 5,315 7,275 315 488

Cost of inventories expensed 49,440 61,203 - -

Wages and salaries 14,881 15,461 879 2,462

Defined contribution retirement plan 1,841 1,322 352 187

Operating lease 625 507 39 94

CREDITS:

Amortisation of deferred income 96 76 - -

Interest income 92 57 39 30

29 Earnings Per ShareThe basic earnings per share is calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue:

THE GROUP

2016 2015

Earnings attributable to equity holders of the Company (USD’000) 14,600 4,158

Weighted average number of ordinary shares in issue (thousands) 172,035 167,906

Impact of share awards outstanding (thousands) 2,310 3,965

Diluted weighted average number of ordinary shares (thousands) 174,345 171,871

Basic profit per share (US Cents) 8.49 2.48

Diluted profit per share (US Cents) 8.37 2.42



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30 Significant Related Party Transactions

(a) Identities of related parties

The Group and/the Company have related party relationships with:-(i) its subsidiaries and joint ventures; and (ii) the Directors who are the key management personnel

(b) In addition to the information detailed elsewhere in the financial statements, details of the Group’s transactions and balances with related parties during the financial year are set out below:

(i) Related parties

THE GROUP

2016USD’000

2015USD’000

Gross sales of goods to joint ventures 5,304 6,954

(ii) Key management personnel compensationKey management personnel are executive directors of the Company. The compensation paid or payable to key management for employee services is shown as below:

THE GROUP

2016USD’000

2015USD’000

Remuneration 998 1,025

Share-based payment expense 177 785

1,175 1,810



31 Segmental ReportingManagement determines the Group’s operating segments based on the criteria used by the Chief Executive Officer (CEO) for making strategic decisions. Management considers the Group to be a single operating segment whose activities are the production, marketing and distribution of natural sweeteners and flavours.

From a geographical perspective, the Group is a multinational with operations located on all continents, but managed as one unified global organisation. The Group’s markets and its supply chain are based in the Americas, EMEA (Europe, Middle East and Africa) and Asia Pacific.

2016USD’000

2015USD’000

TRADING

Revenue 138,641 127,349

Cost of sales (81,634) (87,070)

GROSS MARGIN 57,007 40,279

Gross margin % 41% 32%

Other income 328 760

Administrative expenses (24,947) (24,024)

OPERATING PROFIT 32,388 17,015

Main Market Listing costs (1,808) -

Other expenses (8,396) (7,117)

Foreign exchange gain/(loss) 1,358 (757)

Finance costs (5,315) (7,275)

Share of loss in joint ventures* (332) (818)

Taxation (3,295) 3,043

EARNINGS FOR THE FINANCIAL YEAR 14,600 4,091

Adjusted EBITDA 37,729 22,182

Reconciliation of Adjusted EBITDA to operating profit:

Adjusted EBITDA 37,729 22,182

Depreciation and amortisation (5,673) (5,985)

Share of loss in joint venture 332 818

OPERATING PROFIT 32,388 17,015



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31 Segmental Reporting (continued)

2016USD’000

2015USD’000

Gross cash 61,002 64,276

Gross debt 113,929 109,646

Net debt 52,927 45,370

Gross cash 61,002 64,276

Unutilised facilities 15,269 23,661

Headroom 76,271 87,937

Earnings per share (US cents)

- Basic 8.49 2.48

- Diluted 8.37 2.42

* Under segmental reporting, revenues of approximately USD70 million (2015: USD65 million) are derived from 5 external customers.

These revenues are attributable to the Americas customers.

Geographical Information

ASIAUSD’000

EUROPE*USD’000

AMERICASUSD’000

GOODWILLUSD’000

TOTALUSD’000

30 JUNE 2016

External revenue 18,105 32,207 88,329 - 138,641

Non-current assets 112,452 1,454 9,830 1,806 125,542

30 JUNE 2015

External revenue 23,588 15,484 88,277 - 127,349

Non-current assets 100,720 1,352 12,997 1,806 116,875

Basis of attributing sales by geographical region is based on location of sales.

The primary performance indicators used by the Group are revenues, gross margin %, adjusted EBITDA, net cash from operations, gross cash and borrowings.

Adjusted EBITDA is defined as EBITDA with other expenses (principally the charge of the Group’s LTIP scheme, short-term incentive scheme, foreign exchange and share of gain/(loss) in joint venture) added back.

The net assets per share is calculated based on the net assets book value at the reporting date of USD203,700,000 (2015: USD190,492,000) divided by the number of ordinary shares in issue at the reporting date of 172,112,000 (2015: 170,062,000).

The entity is domiciled in Bermuda. The entity’s non-current assets are located in countries other than Bermuda. There is no revenue from Bermuda.

* The Europe segment includes results and sales to the Group’s European joint venture.



32 Commitments

(a) Capital commitments

Capital expenditure at the reporting date is as follows:

THE GROUP

2016USD’000

2015USD’000

Authorised capital expenditure contracted for -Property, plant and equipment

24,109 1,138

Authorised capital expenditure not contracted for 12,232 20,500

(b) Operating lease commitments

The Group also leases corporate office under non-cancellable operating lease agreements. The lease expenditure charged to the profit or loss during the year is disclosed in Note 28.

The future aggregate minimum lease payments under non-cancellable operating lease are as follows:

THE GROUP

2016USD’000

2015USD’000

The present value of operating lease is as follows:

- No later than one year 570 535

- Later than 1 year and no later than 5 years 1,257 1,412

- More than 5 years 982 1,293

2,809 3,240

33 Events After the Reporting PeriodEvents after the period end comprise:

(a) Banking Facility

On 2 August 2016, the company has entered into an Amendment Agreement relating to Term Loan 6 to increase the drawdown limit from USD 38 million to USD 50 million.

(b) Incorporation of subsidiary after the financial year

On 26 August 2016, a wholly owned subsidiary, PureCircle Natural Ingredient India Private Limited was incorporated and its principle activities are supply and development of stevia agronomy sales and production, distribution and sales of natural sweeteners and flavours.



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SHAREHOLDER’SINFORMATION

Internet

PureCircle Group operates these websites which are updated regularly to cater for different information needs:

Investors and corporate stakeholderswww.purecircle.com

Health professionals, customers, policy makers, consumerswww.globalsteviainstitute.com

Investor RelationsRequest for further copies of the annual report or other investor relations matters should be addressed to PureCircle’s office.

Annual General MeetingThe Annual General Meeting (AGM) will be held on 1 December 2016, a formal notice of AGM will be sent to shareholders together with the annual report for financial year 2016.

2017 Financial and Corporate CalendarHalf year end 31 December 2016Half year results March 2017 Financial year end 30 June 2016Full year results September 2017

PureCircle Offices

Registered Office Clarendon House 2 Church Street Hamilton HM 11 Bermuda.

Corporate Headquarters

Malaysia12th Floor, West WingRohas PureCircle No. 9 Jalan P. Ramlee 50250 Kuala Lumpur, Malaysia.T +603 2166 2206F +603 2166 2207

Sales & Marketing Head Office

USA915 Harger Road, Suite 250Oak Brook, IL 60523, USA.T +630 361 0374F +630 361 0384

Regional Sales

Contact details:

US or Canada : [email protected]

Latin America : [email protected]

Europe, Middle East or Africa : [email protected]

Asia Pacific : [email protected]

Auditors

PricewaterhouseCoopers LLP1 Embankment PlaceLondonWC2N 6RH

Sponsor

Liberum Capital Limited Ropemaker Place Level 1225 Ropemaker Street London EC2R 9LY

Brokers

Liberum Capital Limited Ropemaker Place, Level 1225 Ropemaker Street London EC2Y 9LY

Macquarie Capital (Europe) LimitedRopemaker Place28 Ropemaker StreetLondon EC2Y 9HD

Share Registrar

In Jersey (Shares)Computershare Investor Services (Channel Islands) LimitedPO Box 83, Ordnance House31 Pier Road, St HelierJersey JE4 8PWChannel Islands

In the UK (Depositary Interests)Computershare Investor Services plcThe PavilionsBridgwater RoadBristol BS13 8AE

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Annual Report 2016

Annual Report 2016

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