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Annual report 2008

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Contents

04-11

1. Overview

1.1 Vision and strategy

1.2 Our product and market

1.3 Highlights for the period

12-31

2. Business review

2.1 Chairman’s statement

2.2 Chief Executive’s review

2.3 Corporate responsibility

2.4 Group financial review

32-45

3. Governance

3.1 Corporate governance report

3.2 Report of the Remuneration Committee

3.3 Directors’ report

3.4 Board of directors

464. Independent auditors’ report

48-795. Accounts and notes

806. Shareholder information

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Nature’s gift


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1.Overview

PureCircle is the world’s leading developer and producer of Reb-A, the world’s fi rst all-natural zero calorie sweetener regarded as a viable complement to sugar in mainstream food and beverage production.

Through our innovative technologies and processes we are able to extract the highest purity natural sweeteners from plants, enabling our customers to develop new products and consumers to choose healthier diets.

As leaders in this field, we will strive to continue developing this rapidly growing global market in partnership with our blue chip customers and business partners in a transparent and responsible manner.


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Imagine natural healthy time with them


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1.1 Vision and strategy

Our vision is to provide consumers around the world with a portfolio of natural and healthy mainstream food and beverage ingredients that meet fully their needs for great tasting and lower calorie products aligned to their 21st century lifestyles.

PureCircle is the world’s leading producer and distributor of Reb-A, the world’s first all-natural zero calorie sweetener regarded as a viable complement to sugar in mainstream food and beverage products. We are a business to business company that builds strong and deep relationships with our customers, who are the leading food and beverage companies.

Our strategy is to provide the world’s leading consumer marketing companies with an excellent portfolio of natural and healthy ingredients that enables them to offer food and beverage formulations that more than meet their consumer needs. We recognize that their ingredients have to be delivered at high quality, in high quantity, with high reliability and be supported with high ongoing innovation. We will expand our business in parallel with the growing level of demand for Reb-A. Through our marketing of the PureVia™ brand we will further support consumers’ demand for healthy and natural mainstream food and beverage ingredients.


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1.2 Our product and marketPureCircle is the world’s leading producer and distributor of high purity Reb-A, the world’s fi rst all-natural zero calorie sweetener regarded as a viable complement to sugar in mainstream food and beverage products.

Reb-A possesses the following unique combination of characteristics:

• It is 100% natural

• It has zero calories, zero carbohydrates and has a low glycemic index

• It is 200 to 400 times sweeter than sugar on a kilo for kilo basis

• It is pleasant tasting, providing the consumer with a similar taste to sugar

• It has a high level of stability at extreme temperatures, making it suitable for cooking, baking and freezing

Consumers are seeking an ingredient that provides great tasting sweetness but which also supports the natural and healthy lifestyle characteristics being demanded of 21st century food and beverage products. High purity Reb-A is well positioned to meet the mainstream consumer requirements for a complementary ingredient to sugar.

As well as looking to address the growing health concerns of consumers, food and beverage producers are urgently reviewing their product formulations in light of the sharp increases in commodity prices over the last two years.

Reb-A is refi ned from the Stevia rebaudiana plant (Stevia), which is native to certain regions of South America, where it is known locally as the “honey leaf”. During growth sweet glycosides naturally produced by the plant accumulate in the leaf. The most commercially important of these glycosides is Rebaudioside-A (Reb-A).

Extracts from Stevia have been used as forms of sweetener around the world for many centuries, without ever becoming mainstream. Historically, because the extract contains a mixture of different molecules that vary depending upon climate and growing conditions, it was impossible to come up with the clear and consistent specifi cations of the product needed to make it a reliable ingredient.

PureCircle has addressed this issue and has overcome the hurdles associated with developing a major new ingredient market. Firstly by identifying the molecule with the best taste profile, Reb-A; and secondly by developing innovative and unique process technologies to separate and purify Reb-A to 97% purity on a reliable and consistent basis: and, importantly, to do so in commercially viable volumes.

Reb-A therefore enables our customers to develop new formulation platforms to meet consumer demands for healthy products.

High purity Reb-A is at present the only viable natural alternative to sugar currently in commercial development and PureCircle believes it is unique in its ability to produce Reb-A to this purity on a commercial scale.


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1.3 Highlights for the periodPureCircle (www.purecircle.com), announced its results for financial year ended 30 June 2008(“FY 2008”) and comparatives for the year ended 30 June 2007 (“FY 2007”) to reflect the change in year end announced in August 2008*.

Summary of financials

The audited results for the six months ended 30 June 2008 are set out in the Group Financial Review on page 26. Summary of fi nancials for FY 2008 with comparatives for FY 2007 follow below:

Financial highlights

• Sales more than trebled due to a major increase in demand • Results also benefited from increase in production throughput • Strong positive operating margins achieved on just 11% refi ning capacity utilization • Robust balance sheet with net assets of USD82 million (2007: USD15 million) • Strong gross cash position of USD44 million (2007: USD0.5 million) leaves the Group well placed to invest in further growth

Pro-forma 12 months ended 30 June (USDm) for illustrative purposes FY 2008 FY 2007

Revenue 33.4 11.0

Operating profit 5.2 1.4

Net profit after minority 2.1 0.3

Adjusted net profit** 3.8 0.3

EPS (cents) 1.6 0.2

Adjusted EPS (cents)** 2.9 0.2


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* The Company’s new fi nancial year runs from 1 July to 30 June. FY 2008 represents the results for the 12 months from 1 July 2007 to 30 June 2008 and is on a pro-forma basis for illustrative purposes only. The audited results for the six months ended 30 June 2008 are set out in the Group Financial Review on page 26** Adjusted net profi t is calculated by adding back a USD1.2 million foreign exchange loss on the proceeds of the IPO and USD0.48 million in relation to Long-Term Incentive Plan awards in FY 2008*** PureVia™ is a registered trademark of PepsiCo Inc and Whole Earth Sweetener Company**** Whole Earth Sweetener Company is a wholly owned subsidiary of Merisant Company, the maker of Equal ® and Canderel ® and a global leader in the manufacture, marketing and distribution of tabletop sweeteners with sales in over 90 countries

Paul Selway-Swift, Chairman of PureCircle, commented:

“There have been a number of signifi cant developments since the IPO which, collectively, signal a much bigger future for PureCircle than envisaged in December 2007.

We believe that through the combination of our first mover advantage, established supply chain, leading technology, strong market position, strategic partnerships and robust balance sheet, we have the right platform in place from which to take the business to the next stage of its development.

We are excited about the Group’s prospects and I look forward to reporting on further progress.”

Business developments

• Launch of PureVia™*** Reb-A consumer brand by PepsiCo and Whole Earth**** generating consumer recognition of

high purity Reb-A as a mainstream F&B ingredient

• PureCircle awarded exclusive rights to market PureVia™ Reb-A brand across other F&B segments

• PureVia™ Reb-A confirmed as a viable complement to sugar enabling usage in mainstream F&B markets

• Potential market for high purity Reb-A now estimated at signifi cantly more than the USD1.3 billion market assessment

at the time of IPO

• Major new contracts won with some of world’s leading F&B brand names including PepsiCo and Whole Earth

• Sales pipeline for FY 2009 more than doubled from same time last year

• Signifi cant progress on regulatory approval processes:

- Joint FAO / WHO Expert Committee on Food Additives (“JECFA”) approved Reb-A in June 2008

- Approvals subsequently granted in Switzerland, Australia and New Zealand

- Approvals expected following September 2007 submission to The European Food Safety Authority (“EFSA”)

and May 2008 strong Generally Recognised As Safe (“GRAS”) submissions to US Food & Drug Administration

• Initial customer product launches announced

• Expansion of current extraction facility in China underway: on completion will be world’s largest capacity crude Stevia

extraction complex with capability to process over 30,000 MT pa of dry leaf

• Investments approved and plantation projects underway in Kenya, Paraguay, Thailand and Laos

• Strategic partnerships in place with leading agribusinesses to accelerate development of supply chain


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Bringing you nature’s best


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Natural ingredient


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2. Business review2.1 Chairman’s statement

There have been a number of major developments which collectively could result in a much bigger market opportunity for PureCircle than was forecast at the time of the IPO in December 2007:

• The global F&B market increasingly shares our view that the future for PureVia™ Reb-A is more as a complementary product to sugar as well as a substitute for synthetic High Intensity Sweeteners (“HISs”);

• There has been good progress on achieving regulatory approvals, particularly in the key US and EU markets;

• Stevia is increasingly seen as a major cash crop and strategic commodity. Supply of raw leaf is therefore expected to increase dramatically over the next two to three years as larger plantations seek to benefit commercially from growing Stevia;

• We have tied up agreements with some of the world’s largest agribusinesses to accelerate and secure our supply of quality Stevia leaf; and

• We are reviewing the optimal long-term extraction and refining capacities for the Group in light of the bigger market opportunity.

Each of these developments is reviewed below and in greater detail in the Chief Executive’s review.


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Sales contracts

The Group’s long-term sales strategy is to operate on a non-exclusive basis and to that end our last exclusive contract expired on 30 June 2008.

I am pleased to report that since 1 July 2008, the Group has started trading a number of multi-year non-exclusive contracts with major F&B companies including PepsiCo, Whole Earth and Cargill.

In addition, PepsiCo and Whole Earth have launched the PureVia™ Reb-A brand to generate and support consumer recognition of high purity Reb-A as a mainstream F&B ingredient. It was therefore a significant development in July 2008 for PureCircle to be granted an exclusive licence to market high purity Reb-A under the PureVia™ brand.

Following these contract wins, our pipeline of committed volumes for FY 2009 is double that of the commitments we had in place for FY 2008.

Operating margins were 16% but, at just 11% refi nery utilization, have the potential to improve as refi ning throughput increases and the Group reaps the benefi ts of economies of scale.

The Group has a robust balance sheet with net assets of USD82 million (2007: USD15 million) and a strong gross cash position of USD44 million (2007: USD0.5 million).

While the Company is growing its business, the Board deems working capital to be a priority. The Board will therefore not be recommending payment of a dividend. This policy will be reviewed in the future in light of the Group’s progress and funding requirements.

Results

In August 2008, the Group announced that it was changing its year-end from 31 December to 30 June in order to bring its financial reporting cycle into line with its principal operating activities, particularly its major sales contracts and the buying season for Stevia leaf, its primary raw material. As previously announced, the Group has been successful in securing signifi cant new multi-year sales contracts and these, along with our other major sales contracts, now all run on a 1 July to 30 June year.

Revenues for FY 2008 were up by 204% to USD33.4 million reflecting increasing demand for and production of our portfolio of natural sweeteners. Sales of high purity Reb-A contributed 65% of total revenues.


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Market development

At the time of the Group’s IPO in December 2007, we believed that the potential target market for high purity Reb-A was primarily the existing High Intensity Sweetener (“HIS”) market which is estimated to be worth some USD1.3 billion globally.

It has now become apparent from our existing customers, and through the prospective interest of other multi-national F&B companies, that PureVia™ Reb-A is seen more as a potentially complementary product to sugar as well as a substitute for synthetic HIS products. The signifi cance of this development is that it opens the way for PureVia™ Reb-A to be used across mainstream F&B products and not just in the niche HIS market.

The principal driver for the expansion of the potential market for PureVia™ Reb-A is growing consumer demand for a natural and healthy solution to the global obesity epidemic and other health issues arising from high sugar usage - resulting in high calorifi c counts - in F&B products. As an all-natural and calorie-free product, PureVia™ Reb-A is seen as providing the solution.

The expansion of the potential market necessitates a review of our operational strategy and future development plans including supply of Stevia leaf and extraction and refi ning capacity.

For FY 2009, PureCircle has successfully secured its own Stevia leaf supply through its strong network of farmers in China. Looking forward, we are taking a proactive role in ratcheting up production and supply through the development of plantations in Africa and elsewhere.

Longer-term, Stevia is already being recognised globally as an important strategic commodity and we expect that Stevia production will be undertaken on an industrial scale by the world’s leading agribusinesses. This will secure volume supply and also will lessen the dependence on any one country.

Securing our own Stevia leaf supply was also a prerequisite for setting high industry standards in what was, and remains, a pioneering industry. Further work remains in improving the quality of our leaf in order to secure a higher ratio of high purity Reb-A extract and the development of new plantations will be key in this regard.

The Group announced a strategic partnership with OWIH, a joint venture between Wilmar International and Olam International, two leading agribusiness groups, both listed on the Singapore Stock Exchange. The partnership will accelerate the development of world Stevia leaf production. As part of the agreement, OWIH became a signifi cant shareholder in the Group.

The review will also consider the optimal extraction and refi ning capabilities required over and above those announced at the time of the IPO.

We will give further updates on this area as and when appropriate decisions have been made.

Regulatory environment

Following submissions made earlier this year by various F&B product manufacturers to the US Food & Drug Administration (“FDA”), we believe that the FDA clearance on high purity Reb-A is imminent which will confirm its suitability to be used as an ingredient in mainstream F&B products in the US.

Reb-A achieving Generally Recognised As Safe (“GRAS”) status would substantially alter the landscape for our PureVia™ Reb-A brand in particular and for PureCircle in particular. There would be significantly increased interest and demand for PureVia™ Reb-A from F&B producers in the US and it would, we believe, also expedite regulatory approval in Europe where a separate submission has been made.

Separately, I am pleased to report that regulatory approval was received in Switzerland - the fi rst European country to do so - and Russia. Clearance has been given in Australia and New Zealand.


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Board & Management

The Board’s strength in depth was augmented during the period with the appointments of William Mitchell as CFO and Peter Lai, as a non-executive Director and Chairman of the Audit Committee. William brings with him valuable financial expertise in the F&B industry whilst Peter has over twenty years in international fi nancial services.

Following the announcement of the strategic partnership with OWIH, we have subsequently announced the appointment of Sunny Verghese, Group Managing Director and Chief Executive Offi cer of Olam International as a non-executive Director.

The Group is fortunate to be led by CEO Magomet Malsagov whose Chief Executive’s review looks in detail at the developments during the period.

People

I would like to thank all the Group’s employees for their hard work and dedication during the year.

Outlook

There have been a number of signifi cant developments since the IPO which, collectively, signal a much bigger future for PureCircle than envisaged in December 2007.

We believe that through the combination of our first mover advantage, established supply chain, leading technology, strong market position, strategic partnerships and robust balance sheet, we have the right platform in place from which to take the business to the next stage of its development.

We are excited about the Group’s prospects and I look forward to reporting on further progress.

Paul Selway-SwiftChairman


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Imagine natural healthy moments with your friends


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The last twelve months has been an exciting period for PureCircle. Following the Group’s successful debut on the London Stock Exchange by way of admission to AIM in December 2007, we have seen industry interest in and demand for PureVia™ Reb-A increase substantially following the realisation that its potential lies more in its suitability as a complementary product to sugar.

This development is hugely exciting for PureCircle. It places PureVia™ Reb-A in the mainstream of F&B production which, in turn, puts the Group in the middle of a significantly larger marketplace than the original USD1.3 billion market identifi ed at the time of our IPO.

This also has signifi cant ramifi cations for the Group, not least the need for us to scale up to meet the additional demand that we now expect from a diverse range of multi-national F&B producers.

Therefore, we are reviewing the Group’s strategy to ensure that the Group’s supply chain is scaled-up sufficiently to allow PureCircle to secure and keep market leading long-term contracts with blue-chip F&B customers.

2.2 Chief Executive’s review

PureVia™ Reb-A is a natural and healthy ingredient and is well positioned to meet the mainstream consumer requirements for a complementary ingredient to sugar. This is not just the view of PureCircle, but is what we are being told by our existing customers and by the growing list of major F&B companies with which we are in discussions.

As well as looking to address the growing health concerns of consumers, F&B producers globally are urgently reviewing their product formulations in light of the sharp increase in commodity prices over the last two years. The rise in sugar prices is a considerable and growing cost concern for food companies around the world.

Market review

i. Clear market need for PureVia™ Reb-A

The global need to combat obesity and related issues such as diabetes is well documented. World Health Organisation and other research is clear that consumers need, and are actively seeking, to reduce the calorific content of their mainstream food and beverages. Despite this sugar remains the second largest food ingredient worldwide, after water, with global consumption of over 160 million MT, representing a market of over USD50 billion.

The challenge for F&B companies has been to source an ingredient that has the same taste profile as sugar with the natural and healthy lifestyle characteristics that the market demands. Synthetic or chemical high intensity sweeteners fail the natural and healthy requirement, which is why they will remain a niche market.


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ii. Clear milestones that show growing and accelerating market momentum

We see the market for PureVia™ Reb-A developing rapidly into a major global mainstream food ingredient industry. The principal milestones for this development are:

• Regulatory approval in the major markets for the use of high purity Reb-A as an ingredient;• Product launches by the major F&B companies with PureVia™ Reb-A in their formulation; and• Consumer acceptance and then pull through demand for formulations with PureVia™ Reb-A as an ingredient.

There has been signifi cant progress towards each of these milestones since our IPO in December 2007. On the question of regulatory clearances:

• Joint FAO / WHO Expert Committee on Food Additives (“JECFA”) concluded that Reb-A is safe and allocated permanent Acceptable Daily Intake (“ADI”) of 0-4 mg / kg body weight in June 2008;• Approvals were subsequently granted in Switzerland, Australia and New Zealand;• Approvals expected following September 2007 submission to The European Food Safety Authority (“EFSA”) and May 2008 strong Generally Recognised As Safe (“GRAS”) submissions to US Food & Drug Administration; and• Clearance in the US is expected imminently and in the EU soon after.

Announcements of product launches have been made by a number of major F&B businesses, including PepsiCo Inc, Whole Earth and Cargill. Increased launch activity is expected over the next three to six months.

Inevitably consumer acceptance and pull through demand for high purity Reb-A has to lag product trials and launches. However the establishment by Pepsi and Whole Earth of the PureVia™ Reb-A brand is a clear sign of growing and accelerating momentum.

iii. Emerging competition further validates the market

Another sign of the growing market is the clearer emergence of competitors. PureCircle welcomes competition as it provides further validation of the scale of the opportunity and provides additional investment resources to accelerate overall market growth.

Whilst we welcome competition, we remain determined to stay well ahead of it. Our recent contract award successes suggest we are going in the right direction.

Contract awards

After two years of selling high purity Reb-A under an exclusive contract to Cargill, since 1 July 2008 PureCircle has been free to supply and distribute product on a non-exclusive basis.

Since then we have started trading under a number of material contracts on a multi-year or “evergreen” basis. These include prestigious consumer brand companies such as PepsiCo Inc and Whole Earth. We have also agreed a contract extension with Cargill for two years through to 30 June 2010. Taken together the new contracts mean that our committed volumes for FY 2009 are already double the fi gure at the beginning of FY 2008.

We are in discussions with an increasing number of international F&B companies and expect to be able to announce signifi cant new contract wins in the coming months.


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Review of operations

PureCircle is a business-to-business company centred

on the delivery of the highest quality high purity Reb-A under the

PureVia™ brand to the world’s leading F&B producers. This

strategy in turn is underpinned by: the sourcing of raw Stevia

leaf; the extraction of crude Stevia; the refining of high-purity

Reb-A; and, a highly innovative, R&D-based formulation

support service.

The Group currently sources its Stevia leaf from China, which

accounts for over 80% of global leaf supply and is the location

of our 1,000 MT extraction plant. The crude extract is then

shipped to Malaysia - where the Group’s state-of-the-art refi ning

plant and innovative R&D capabilities are located - for processing

into high-purity Reb-A for shipping under the PureVia™ brand

to customers around the world.

During the period, we made signifi cant progress on developing

our production capabilities and global supply chain.

i. Leaf Sourcing & Supply

The establishment of a secure and reliable supply of Stevia leaf

is a major priority for the Group. With the majority of the world’s

Stevia leaf harvest currently dependant upon small-scale farmers

in China, Stevia leaf supply and prices can be volatile and the

quality can vary signifi cantly.

In China, farmers typically farm an area equivalent to 1/15 of a

hectare and produce between 200 – 300 kilos of dry Stevia leaf

per year. We are currently sourcing leaf from over 50,000 farmers.

Sourcing enough leaf to feed our 1,000 MT, being expanded to

4,000 MT, Stevia extraction plant is a major logistical exercise.

We achieve this by having in place the industry’s leading network

of agents and by working closely with communities to promote

Stevia as an important cash crop.

Nevertheless the current supply model exposes the Group to

some risks and is not sustainable in the long-term given the

projected market growth. The industry needs to move Stevia

supply to a more industrial scale model and we are helping to

lead that transition.

Encouragingly, Stevia is increasingly being recognised as an

important commodity crop and is attracting research and

investment from many of the world’s largest agribusinesses. It

is clear that commercial scale plantations will be developed in

many countries that provide the basic essential of reliable daily

sunshine. Discussions with plantation partners suggest global

Stevia leaf supply will expand rapidly and may exceed two million

MT within 4-5 years: this represents an increase of at least fi fty

times the FY 2008 industry harvest.

Whilst we are progressing plans for plantation development in

other countries, our immediate focus must be on improving the

reliability of leaf supply from China which, accounting today for

over 80% of world Stevia production, will remain an important

supplier of raw leaf for at least the next three to fi ve years.

In China, we are advancing plans to establish scaleable

production which will enable better resource management,

investment in R&D and fewer points of collection. PureCircle is

developing high quality seedling cultures for farmers to plant

and supplying fertilisers and technical advice.

We expect total China leaf supply to be 45,000 MT for the

FY 2009 harvest, cropped in late calendar 2008. This compares

to an estimated 15,000 MT for the FY 2008 China harvest,

cropped in late calendar 2007. We have already secured about

40% of the FY 2009 total market supply, which is substantially

sufficient for our FY 2009 supply needs. We expect total China

leaf supply to treble again by the time of the FY 2010 harvest,

cropped in late calendar 2009, again sufficient for our

projected needs.


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ii. Extraction

Following the acquisition of a further 40% in May 2007, the Group now owns 95% of Ganzhou Julong High-Tech Food Industry Co., Ltd (“GJH”), our 1,000 MT extraction plant in Ganzhou in south-eastern China.

Full control of GJH has enabled us to fully integrate the extraction plant and its management into the PureCircle group. The plant is currently running at a rate of over 750 MT per annum and a range of improved processes post acquisition are already yielding benefits.

GJH is already the largest such extraction plant in the world and we are currently undertaking a major expansion plan which will take capacity up to 4,000 MT per annum. The expansion is well underway and fully on target for completion by the first quarter of 2009.

As part of our strategic partnership with Swire, we have earmarked USD15 million for the construction of a 3,000 MT extraction plant in Kenya. Feasibility studies and project planning for this plant are underway. These existing extraction plans will provide capacity of 7,000 MT per annum and arefully catered for in our cash fl ow planning.

With raw leaf accounting for some 70% of our production cost base, we are also taking action to improve significantly the quality of the leaf supply. With our existing technologies, higher-quality leaf will enable us to almost double the amount of high purity Reb-A refined from each tonne of raw leaf. This will be a major long-term opportunity for PureCircle.

Outside China, we are both investigating and, progressing opportunities with our joint venture partners for the development of large-scale plantations initially in Kenya, and a number of other countries including Thailand, Laos and Paraguay. Early indications are that it will be possible to produce three or four crops per annum in some of these countries whereas, in China, being further north of the tropics, output is limited to either one and two harvests per year.

Following these actions and the quality standards we are putting in place, we believe that by FY 2012, PureCircle will have substantially de-risked its Stevia leaf supply. The Group will then be able to rely on the most consistent and highest quality leaf on a year-round basis. Until then, we are confi dent that we have secured supply to meet our requirements, but that quality and pricing will retain some of the volatility one expects of an emerging market.

iii. Refining

The Group’s refi nery, located just outside Kuala Lumpur, Malaysia has a capacity of 1,000 MT of end product high purity Reb-A, the largest such facility in the world. Work is starting on expanding the refi nery’s capacity to 2,000 MT.

The refining process is highly complex and provides a major barrier to entry. That PureCircle’s refinery is the only one in the world capable of consistently producing the highest quality high purity Reb-A, in commercially viable volumes, is a result of over thirty years of R&D and resulting proprietary IP. Furthermore, the Group has registered a range of production patents reinforcing its refi ning leadership position.

Dr. Abelyan has been instrumental in designing the technologies used to scale the production of high purity Reb-A commercially. He is head of our industry leading R&D team and is responsible for determining the optimum production process strategies to support our growth.

Dr. Varuzhan AbelyanCorporate VP, Process Innovation & R&D


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Sales & Marketing

With the signifi cant increase in the size of the Group’s addressable market, we have reviewed our sales and marketing strategy.

Led by Sales & Marketing Director, Peter Milsted, our strategic priority is to secure contracts with the leading F&B producers in the United States and Europe which are urgently looking for a solution to the health concerns arising from sugar and chemical sweetener usage in mainstream F&B production. These companies are increasingly aware that PureVia™ Reb-A could provide the solution to falling sales on the back of growing health issues.

As part of that strategy, we are therefore promoting PureVia™ Reb-A as possessing a signifi cant number of qualities that position it as an ideal mainstream food ingredient:

• 100% natural with a high intensity sweetness of about 200 times that of sugar• Wholly compatible with sugar on a taste profi le basis• A healthy alternative to sugar and artifi cial sweeteners• Calorie-free• Tooth friendly• Suitable for consumption by diabetics with its low glycemic index• Highly stable at extreme temperatures making it suitable for cooking, baking and freezing• pH stable giving long shelf-life and Carbonated Soft Drinks (“CSD”) application

In developing our pipeline, we are focused on securing non-exclusive contracts with as broad a range of global F&B companies as possible in order to allow for maximum operational fl exibility.

We have made excellent progress in establishing close relationships with potential customers and believe that we will be in a position over the coming months to announce a range of new contracts.

Expansion plans

The expansion plans referred to above were already being implemented before the larger market opportunity became apparent. We are now reviewing whether our production capacity needs to be expanded further and, if so, over what timeframe.

Importantly, with Stevia now recognised as a strategic global commodity crop, major agribusinesses are looking to invest in Stevia plantations. Further, PureCircle already has strategic partners in place with global sourcing networks and extract capabilities. Consequently, in the event that we decide to increase our supply chain capacity, this will not have to be funded wholly from our own resources.


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People & Organisation

During FY 2008, we have grown from a company of just 70 people based in one country to almost 500 today located in seven countries across four continents.

That we have achieved a trebling in turnover and a strong increase in profit during this period of major change is testimony to the quality of the management team.

As we grow further, this level and pace of change will continue to be the norm. Recruiting and retaining top management, and implementing robust systems, will remain a priority.

Prospects

The past twelve months have been a transformational period for PureCircle. The Group is fi rmly established as the global leader in a fast-growing market with signifi cant barriers to entry. We have major fi rst-mover advantages. Initially these were in supply chain and technology. Increasingly they are and will be in customer relationships and share of market.

With the major contracts in place, our committed sales orders for FY 2009 are already 100% higher than committed volumes for FY 2008. Sales for the fi rst three months of the current year are in line with plan.

With a fast growing market, an already well-advanced integrated supply chain and the strategic partners in place to take the Group to the next level of development, PureCircle is well positioned for rapid growth.

Magomet MalsagovChief Executive Officer


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2.3 Corporate responsibilityPureCircle Limited endeavours to minimize the impact and to maximise the social, economic and environmental benefits of its operations beyond compliance with minimum legal requirements. To that end, we have a five star strategy in place, aimed at:

• Encouraging natural and healthy consumption• Injecting more money into rural farming communities• Treating the environment with respect• Continually looking to get the best out of nature• Ensuring commercial viability and sustainability

Encouraging natural and healthy consumption

A fundamental part of our mission is to encourage healthier diets around the world through the supply of natural food and ingredients to the global food and beverage industry.

PureCircle is the world’s leading producer and distributor of Reb-A, the world’s first all-natural zero calorie sweetener regarded as a viable complement to sugar in mainstream food and beverage products. Reb-A provides consumers with various healthy benefi ts including having no caloric content and a low glycemic index, making it suitable for consumption by anyone seeking to reduce their sugar intake and also by diabetics.

High-purity Reb-A is an entirely natural product with a similar taste profile to sugar, yet it is between 200-400 times sweeter than sugar on a kilo for kilo basis and has zero calories.

Furthermore, it is both heat and pH stable which makes it suitable for a wide variety of applications as a sugar complement. It therefore provides global food and beverage companies with an ideal platform for the development of new products aimed at health conscious consumers, which represent a rapidly growing segment of the market.

High-purity Reb-A can be used as a viable natural alternative to sugar, high fructose corn syrup and artificial high intensity sweeteners (such as aspartame and sucralose) which are widely used in food and beverages today.

Products launched by our customers that are sweetened with PureVia™ Reb-A will therefore not only help diabetics but also people who wish to reduce their calorific intake. As a natural alternative to sugar, it is also kind to teeth and will also help to prevent tooth decay.

Injecting more money into rural farming communities

Stevia is an attractive crop for rural farming communities being both easy to grow and able to offer an attractive economic return. Stevia plants grow in any warm climate where there are large temperature variations throughout the day. It is a hardy crop, requiring little water and has few natural pests.

There are more than 100 types of Stevia, all of which produce glycosides of different concentration. Successful commercialisation requires development of plantations with high yield varieties, those with a leaf glycoside content of 10-12%.

Stevia plants offer rapid turnaround in terms of harvest. Stevia does produce seeds, but only a small percentage of them germinate. Planting Stevia seedlings produced through selection techniques is a more effective method of cultivation. Cuttings can be planted and harvested within three-six months providing potential for more than two harvests per annum. Provided you have access to cuttings and land in which to plant them, Stevia farming can be up and running in six months.

The plant’s growth cycle varies, but in China where over 80% ofthe world’s Stevia production is sourced, it is planted in March with its first harvest in July and a second in September. Leaves must be harvested before the plant fl owers. After harvesting the plants’ roots are taken up and stored for the next season.

On average, one hectare of land given to Stevia produces 3 – 4 MT of dried Stevia leaf, and 10 – 14 MT of leaf are required to produce 1 MT of raw Stevia extract. At current market rates, farmers receive much higher revenue than for other cash crops.

Furthermore, outside of the Stevia growing season, the land can be returned to growing staple crops such as rice, providing farmers with an additional source of food and income.

Cultivating Stevia can therefore provide a real economic boost to rural farming communities.


24

Treating the environment with respect

PureCircle’s products are based only on natural ingredients and are strictly controlled in terms of ownership of the supply chain from cultivation through to distribution. No genetically modified plants are used in the production of PureCircle’s range of sweeteners.

Stevia is a renewable crop with minimal environmental impact. We insist that farmers do not use pesticides in the cultivation and care of the Stevia plants. The extraction of high purity Reb-A from Stevia leaf is an entirely natural process and does not in any way alter the product that nature has provided in the leaf of the plant. Once the extraction process is complete, the remaining biomass (leaf mulch) can be used as natural fertilizer.

Because refined Reb-A is more than 200 times sweeter than sugar, planting Stevia also requires less to provide the same sweetness when compared to other crops (sugar cane, sugar beet and corn) which in turn means a signifi cantly reduced impact on the environment.

Purification of Reb-A from raw Stevia extract is done in PureCircle’s state-of-the-art refi ning plant in Malaysia. Proprietary NATURAL crystallisation and separation technology is used to separate the constituent glycoside molecules present in the crude extract and isolate pure Reb-A in high purity. High purity Reb-A comprises about 50% of crude extract. The balance is ‘co-product’ which is treated with proprietary technology and turned into SWETA and other glycosides. The entire process is therefore very low in waste. The ability to derive commercial value from the entirety of the crude Stevia extract is important to production economics and provides the Group with a robust business model.

We are committed to the highest standards in manufactureand our Malaysia refinery is compliant with relevant major international standards including ISO 22000:2005 (food safety management system); ISO9001:2000 (quality management system); CGMP (Current Good Manufacturing Practices – to certify compliance with the Australian Code of Good Manufacturing Practice for Medical Products) and HACCP (Hazards Analysis Critical Control Point system for safe production of food products).

Continually looking to get the best out of nature

PureCircle is pioneering the extraction of natural goodness from plants and has invested in innovative technology, plantations and a fully integrated vertical supply chain to bring its first products, zero calorie natural sweeteners based on highly purifi ed extracts of Stevia, to market.

For many years, food and beverage manufacturers have been researching alternatives to sugar, both in response to consumer demand for low calorie products and as a direct replacement for an increasingly expensive commodity. Until the launch of PureVia™ Reb-A, the only commercially available high intensity sweeteners were artificial sweeteners such as aspartame, saccharin and sucralose which, although widely used, no longer gel with consumers seeking natural food and beverages.

High purity Reb-A has been called the ‘Holy Grail of sweeteners’ because it is the only commercially viable, natural complement to sugar sweetener.

Ensuring commercial viability and sustainability

Through its subsidiary, Ganzhou Julong High-Tech Food Industry Co. Ltd., the Group encourages Stevia cultivation across three Chinese provinces: namely Jiangxi, Anhui and Jiangsu provinces. This spread of provinces is deliberate and mitigates the risk of localised natural disasters such as flooding or crop failure in a single area. In total, the Group receives the output from around 60,000 farmers and 15,000 hectares of Stevia farming. Both numbers will increase signifi cantly in FY 2009.

The Group is currently investigating new locations in other parts of the world to expand its operations in anticipation of increasing demand for high purity Reb-A. This includes diversification into new areas within China, the recent joint venture with Finlays in Kenya and plantings in Thailand, Laos and Paraguay geographically spreads risk. Research initiatives are also underway into increasing the plant yield of Reb-A through selective breeding of high yield varieties, plant propagation techniques and improved plantation practices.


25

Imagine a natural healthy lifestyle together


26

2.4 Group financial review

The Group earlier this year changed its year-end from 31 December to 30 June in order to bring its financial

reporting cycle into line with its principal operating activities, particularly its major sales contracts which all run on

a 1 July to 30 June basis, and the buying season for Stevia leaf, its primary raw material, which starts in July and

has lowest inventories at end June.

To assist understanding of the Group’s performance, for illustrative purposes only, we are providing Pro-Forma

consolidated income statements for the twelve months to 30 June 2008 (“FY 2008”) and Pro-Forma consolidated

income statement comparatives for the twelve months to 30 June 2007 (“FY 2007”).

PureCircle Limited was only incorporated on 23 July 2007 and acquired the PureCircle

Sdn Bhd (“PCSB”) Group on 27 September 2007. Accordingly the Pro-Forma FY 2008

consolidated income statements cover the results for the PureCircle Limited Group

from 1 October 2007 to 30 June 2008 aggregated with the results for the PCSB Group

from 1 July 2007 to 30 September 2007. The Pro-Forma FY 2007 consolidated income

statements cover the results for the PCSB Group from 1 July 2006 to 30 June 2007.

Base data for the FY 2008 and FY 2007 Pro-Forma consolidated income statements

described above has been extracted from the audited accounts of:

• PureCircle Limited Group from 1 January to 30 June 2008;

• PureCircle Limited Group from 23 July to 31 December 2007;

• PCSB Group from 1 January to 31 December 2007; and the

• PCSB Group from 1 January to 31 December 2006.

In addition to the Pro-Forma consolidated income statements for FY 2008 and FY 2007, the Group is presenting the audited consolidated results for the six month period 1 January 2008 to 30 June 2008, together with audited comparatives for the period 23 July 2007 to 31 December 2007.

In a series of transactions since December 2006, the Group has taken control of its Stevia extract production subsidiary Ganzhou Julong High-Tech Food Industry Co., Ltd (“GJH”). The Group acquired an initial 25% of the shares in GJH in October 2006, a further 30% in July 2007 and a further 40% in May 2008. As at 30 June 2008 the Group owns 95% of GJH, the maximum permitted under relevant China legislation.

This means that at 1 July 2006 GJH was not part of the Group, from October 2006 to June 2007 GJH was an associated company and from July 2007 a subsidiary.


27

Consolidated Income Statements

Notes:The adjusted net profit is after adding back the foreign exchange loss on issuance of shares and the FY 2008 USD480,000 charge for a Long Term Incentive Plan (“LTIP”)

The pro-forma earnings per share is calculated assuming 129.8 million shares were in issue throughout FY 2008 and FY 2007

Pro-formaPCL Group

FY 2008USD’000

Pro-formaPCSB Group

FY 2007USD’000

AuditedPCL Group6 Months -30.06.2008

USD’000

AuditedPCL Group23.07.2007

(Date of Incorporation) -

31.12.2007USD’000

Revenue 33,379 10,967 19,290 8,898

Cost of sales (25,005) (8,858) (15,282) (6,249)

Gross profi t 8,374 2,109 4,008 2,649

Other income 3,551 1,493 2,937 364

Share of (loss) / profi t in associated company (19) 464 - -

Management and administration expenses (6,670) (2,632) (4,710) (882)

Operating profi t before fi nance expenses 5,236 1,433 2,235 2,131

Finance expenses (1,860) (890) (996) (471)

Profi t from operations 3,376 543 1,239 1,660

Foreign exchange loss on issuance of shares (1,216) - - (1,216)

Profi t before taxation 2,160 543 1,239 444

Taxation 789 (293) - 569

Net profi t after taxation 2,949 250 1,239 1,013

Profi t attributable:

to minority interests 873 - 171 591

to equity holders of the Company 2,076 250 1,068 422

Adjusted net profi t attributable:to equity holders of the Company 3,772 250 1,548 1,638

Earnings per share (cents) 1.6 0.2 0.82 0.61

Adjusted earnings per share (cents) 2.9 0.2 1.19 2.4


28

Consolidated Balance Sheetsat 30 June 2008

30.06.2008 USD’000

31.12.2007 USD’000

Assets

Non-Current Assets

Investment in an associate 141 157

Intangible assets 8,200 7,789

Property, plant and equipment 32,947 26,725

Prepaid land lease payments 2,285 1,457

43,573 36,128

Current Assets

Inventories 9,583 12,509

Trade receivables 7,430 3,410

Other receivables, deposits and prepayments 7,658 8,275

Amount owing by related parties 1,433 2,137

Short-term deposits with licensed banks 13,563 31,543

Cash and bank balances 30,891 12,722

70,558 70,596

Total Assets 114,131 106,724

Equity And Liabilities

Equity

Share capital 13,272 13,029

Share premium 64,104 55,697

Treasury shares * *

Foreign exchange translation reserve 2,251 909

Share option reserve 480 -

Retained profi t 1,490 422

Shareholders’ Equity 81,597 70,057

Minority Interests 1,383 11,613

Total Equity 82,980 81,670

Note:* - Represents less than USD1.00


29

Consolidated Balance Sheetsat 30 June 2008

30.06.2008 USD’000

31.12.2007 USD’000

Liabilities

Non-Current Liability

Long-term borrowings 11,890 10,625

11,890 10,625

Current Liabilities

Trade payables 1,186 778

Other payables and accruals 2,079 1,501

Short-term borrowings 15,608 11,630

Bank overdraft 388 520

19,261 14,429

Total Liabilities 31,151 25,054

Total Equity And Liabilities 114,131 106,724

Net Assets Per Share (USD) 0.62 0.54


30

Consolidated Cash Flow Statementfor the six months to 30 June 2008

The Group

From 01.01.2008 -30.06.2008

USD’000

From 23.07.2007(Date of incorporation) -

31.12.2007USD’000

Cash fl ows for operating activities

Profi t for the fi nancial period 1,239 444

Adjustments for:-

Amortisation of intellectual property rights - 18

Amortisation of prepaid land lease payments - 18

Depreciation of property, plant and equipment 1,064 391

Equipment written off - 40

Interest expense 1,039 381

Interest income (600) (127)

Excess of Group’s interest in the net fair value of acquiree’s identifi able assets, liabilities and contingent liabilities over cost of acquisition (2,390) (51)

Unrealised loss on foreign exchange (266) 981

Share loss of an associate 19 -


Operating cashfl ow before working capital changes 585 2,095

Decrease/(Increase) in inventories 2,926 (1,580)

Increase in trade and other receivables (3,137) (6,511)

Increase/(Decrease) trade and other payables 1,690 (2,154)

Net cash from operations 2,064 (8,150)

Interest received 600 127

Interest paid (1,039) (381)

Net cash from operating activities 1,625 (8,404)

Cash fl ows from investing activities

Acquisition of net assets in a subsidiary, net of cash acquired - (6,708)

Purchase of intangible assets (114) (3,237)

Purchase of leasehold land (716) (851)

Purchase of property, plant and equipment (5,027) (2,658)

Acquisition of an associate - (157)

Net cash for investing activities (5,857) (13,611)


31

The Group

From 01.01.2008 - 30.06.2008

USD’000


31.12.2007USD’000

Cash fl ows from fi nancing activities

Proceeds from issuance of shares - 60,920

Admission to AIM market expenses - (3,318)

Proceeds from disposal of treasury shares 120 84

Net drawdown of term loans 3,685 3,215

Net movement of hire purchase 36 (54)

Proceeds from issue of shares to minority shareholders - 5,900

Net cash from fi nancing activities 3,841 66,747

Effects of foreign exchange rate changes on cash and cash equivalents 712 (987)

Cash and cash equivalents at beginning of the fi nancial period 43,745 -

Cash and cash equivalents at end of the fi nancial period 44,066 43,745

Consolidated cash fl ow statement continuefor the six months to 30 June 2008

Operating profit before finance expensesThe strong growth in sales, coupled with stronger margins and the strengthened GJH relationship have all contributed to a signifi cant increase in operating profi t. The FY 2008 operating profit before finance expenses increased by over 265% from USD1.4 million in FY 2007 to USD5.2 million in FY 2008.

Strong balance sheet and net cashAt 30 June 2008 the Group has gross assets of USD114 million (31 December 2007 USD107 million). Gross cash and deposits balances totaled USD44m (31 December 2007 USD44m).

RevenueRevenue for FY 2008 were up by 204% to USD33.4 million reflecting increased production and sales of our portfolio of natural sweeteners. Sales of high purity Reb-A, under an exclusive sales contract, contributed 65% of total revenue.

Other operating incomeIn FY 2008 the Group earned other operating income of USD3.5 million relating to GJH. Initially the income represented royalty income for Intellectual Property used by GJH. Latterly the income represents negative goodwill on acquisition of shares in GJH. Going forward the Group will not earn “other operating income” from GJH, but instead will enjoy the significant operational benefits of having a consolidated supply chain. I am glad to report that benefi ts from the increased control are already in line with our expectations.

Management and administration expensesManagement and administration expenses in FY 2008 increased by USD4 million compared to FY 2007. The increase included over USD3 million investment for growth and USD0.6 million a year of ongoing costs associated with our AIM listing.

MarginsGross margins at 25% were improved reflecting the improved utilisation of available production capacity. However, at just 11% utilisation we have signifi cant further capacity in place to meet our projected growth.

William MitchellChief Financial Officer


32

Naturally healthy food & beverages


33

3. Governance3.1 Corporate governance report

The Directors of PureCircle regard corporate governance as vitally important to the success of the Company’s business and are unreservedly committed to applying the principles necessary to ensure that good governance is practised in all of its business dealings in respect of all its stakeholders.

The Board is committed to the principles of good corporate governance set out in the Combined Code on Corporate Governance adopted by the Financial Reporting Council in June 2008 (the Code). This report sets out the Company’s compliance with the Code.

Statement of compliance with the Combined Code

During the period under review, the Company has complied with the provisions set out in section 1 of the Combined Code.

Sunny Verghese is the Group Managing Director and Chief Executive Officer of Olam International Limited (“Olam”). Olam through its 50% owned investment vehicle Olam Wilmar Investment Holdings, holds 20% of equity interest in the Company.

John Slosar is the Chief Operating Officer of Cathay Pacific Ltd which is partly owned by the Swire Group. The Swire Group directly and indirectly holds a total of 8.8% equity interest in the Company.

The roles of the Chairman and CEO are separate and clearly defi ned.

The Board

The Board comprises the Non-Executive Chairman, three Executive Directors and four other Non-Executive Directors.

The Non-Executive Directors have a diverse range of knowledge and commercial experience and serve the function of bringing objective judgement on the development, performance and risk management of the Group through their contributions in board meetings. With the exception of Sunny Verghese and John Slosar, the Board considers all the Non-Executive Directors to be independent.


34

Chief Executive Officer

The CEO, Magomet Malsagov, is responsible for the Executive management of the Group. He has responsibility to recommend and to implement the Group’s strategic objectives.

The role of the Board

The Board’s principal responsibility is to deliver shareholder value and provide an overall vision and leadership for the Group. It also has an oversight role, monitoring operational plans and ensuring internal controls and risk management are effective. There is a formal schedule of matters reserved for the Board, which provides a framework for it to oversee the control of the Group’s direction and affairs.

The schedule of matters reserved include the approval of the financial statements and dividends, strategy, acquisitions and disposals, major projects, contracts, delegated authorities, major capital expenditure, risk management strategies, health and safety and succession planning. Whilst the CEO and Executive Directors are responsible for the overall strategy of the Group, the Board meets at least once a year to review strategy and the future of the business. Implementation of the strategy is delegated by the CEO and Executive Directors to the Executive management team.

The Directors are satisfied that the Board continues to deliver a strategic vision and effective leadership for the Group.

Meeting attendance

Directors’ attendance at Board meetings during the period under review is shown in the following table:

The Board has met on one further occasion between 30 June 2008 and the date of the signing of these accounts.The meeting was attended by all Directors.

In addition Aslan Tomov was a Director and he attended all meetings up to the date of his resignation on 1 July 2008.

Board

Number of meetings (1 January to 30 June 2008) Potential Actual

Paul Selway-Swift 2 2

Magomet Malsagov 2 2

Peter Milsted 2 2

William Mitchell (appointed on 2 June 2008) 1 1

Olivier Maes 2 2

John Slosar 2 2

Peter Lai Hock Meng (appointed on 2 June 2008) 1 1

Sunny Verghese (appointed on 13 October 2008) n/a n/a

Chairman

Paul Selway-Swift who is the Chairman of PureCircle Limited also chairs the Nomination Committee.

The Chairman carries responsibility for ensuring the effi cient operation of the Board and its Committees, for ensuring that corporate governance matters are addressed, and for representing the Group externally and communicating with shareholders when required.


35

Board performance and evaluation

The Board is committed to evaluating its own performance. This is an ongoing process led by the Chairman and the Independent Directors.

Directors’ induction and training

In order to address the Board’s continuing professional development, the Board is required to meet with key senior managers regularly in order to gain a better understanding of the businesses. A formal schedule of annual updates on legislative and regulatory changes with respect to Directors’ duties, listing rules, health and safety and corporate governance is built into the Board agenda when required.

Board members are able to attend external courses where they feel that these will keep them updated or will improve their effectiveness as a Director.

Independent directors

The Independent Directors are Paul Selway-Swift, Olivier Maes and Peter Lai Hock Meng. Their responsibilities include being available to liaise with shareholders should this be necessary.

Board processes

The Board is scheduled to meet on a quarterly basis, and in any event no less than four times a year. The Board will meet at least once a year to review the strategic direction of the Group. In addition to normal scheduled meetings, the Board will convene as required.

All Directors have access to the advice and services of the Company Secretary and Directors may, in furtherance of their duties, seek independent professional advice at the Company’s expense. The Company Secretary is responsible for ensuring that Board procedures and applicable rules and regulations are followed. The Company Secretary, in consultation with the Chairman, ensures that the information presented to the Board is not only timely but of suffi cient quality to enable members to make an informed decision.

The Chairman and Non-Executive Directors will meet annually without the Executive Directors present. In accordance with the Company’s Bye-Law, one-third of the Board is required to retire by rotation each year, but if any Director has, at the start of the AGM, been in offi ce for three years or more since his last appointment or re-appointment, he shall retire at the AGM. In addition, any Director appointed during the year is subject to election at the AGM after their appointment. The Non-Executive Directors are appointed for an initial three-year term after which they are subject to annual re-appointment.

Board Committees

The Board is assisted in discharging its responsibilities through the Audit Committee, Remuneration Committee and Nomination Committee. The Board Committees were formally established during the Board meeting in March 2008.

Membership of the Audit and Remuneration Committees consists wholly of Non-Executive Directors. Each Committee has clearly defi ned terms of reference which are reviewed annually. The Board is kept fully informed of the decisions of its Committees and the minutes are circulated with the Board papers. A summary of the Committees of the Board and their membership is provided below.


36

Nomination Committee

The Nomination Committee is chaired by Paul Selway-Swift and its members are the CEO and Olivier Maes. The Committee is responsible for reviewing the structure, size, composition and skills of the Board, presenting suitable candidates to fill Board vacancies, reviewing succession planning for the Board and senior managers, evaluating the time commitment of the Chairman and Non-Executive Directors, undertaking the performance evaluation of the Board and reviewing the re-appointment of Non-Executive Directors. The Committee is responsible for assessing the composition, diversity and skill set of the Board and is aware that as the Company grows there may be a future need to expand the size of the Board. The Committee will regularly review this need. There is a robust procedure for selecting candidates for vacancies. The Committee’s performance is evaluated as part of the overall Board evaluation exercise.

One Nomination Committee meeting was held during the period under review.

Audit Committee

The Audit Committee is responsible for making recommendations to the Board on the appointment and terms of reference of the auditors and to receive and review reports from management and the Company’s auditors on the fi nancial accounts and internal control systems used throughout the Company. Peter Lai Hock Meng as chairman, John Slosar and Olivier Maes are members of the Committee. The Board believes that members of the Committee have recent and relevant fi nancial experience.

The external Auditors, the CEO and the CFO will regularly attend meetings at the invitation of the Committee. The Audit Committee is scheduled to meet no less than three times in a calendar year. During the period under review, one Committee meeting was held, with two subsequent meetings up to date of signing of these accounts.

• the review of the financial results in advance of their consideration by the Board, paying particular attention to signifi cant fi nancial reporting judgements, any changes in accounting policies and practices and any fi ndings post audit;

• the review of the nature and scope of the external audit and the findings of the Auditors in respect of Annual and Interim Reports;

• the review of the Auditors’ independence and the policy on the provision of non-audit services;

• monitoring the Group’s fi nancial and non-fi nancial risk and internal controls;

• the review of the effectiveness of the internal systems with respect to fi nancial control and Group risk;

• a review of the necessity for an internal audit function; and

• a review of the means by which employees may raise concerns regarding the systems of internal fi nancial control.

Group financial statements

The Audit Committee is responsible for the integrity of the fi nancial statements and the Group’s internal controls and risk management structure. The Committee’s deliberations will include the following matters:-


37

Remuneration Committee

The role of the Remuneration Committee is to review the performance of the Executive Directors and other senior executives and to set the scale and structure of their remuneration, including bonus arrangements, with due regard to the interest of shareholders. The Remuneration Committee administers and establishes performance targets for share incentive schemes and determine the allocation of share incentives to employees. The Remuneration Committee is chaired by Olivier Maes. Its other members are Paul Selway-Swift and John Slosar. The CEO, CFO and Company Secretary attend meetings by invitation.

There was one Remuneration Committee meeting held during the period under review and one subsequent prior to the date of signing of these accounts.

Details of the remuneration of each Director are set out in the Remuneration report.

Internal control and risk management

The Board is responsible for establishing, reviewing and maintaining the Group’s systems of internal control and risk management and ensuring that these systems are effective for managing the business risk within the Group.

The Group will annually review the effectiveness of the risk management system and its internal controls to safeguard shareholders’ investments and the Group’s assets whilst ensuring that proper accounting records are maintained.

Relations with shareholders

The Board is committed to a continuing dialogue with its shareholders. Following the announcement and presentation of the year-end results, there are a series of formal meetings with shareholders. These meetings are a two-way dialogue whereby the Executive Directors can apprise the investors of the Group’s business and future plans and the shareholders can communicate any concerns they may have. The Non-Executive Directors and Chairman are available to attend these meetings if requested. The Company’s brokers and fi nancial PR advisers provide feedback from the shareholder and analyst meetings and present the results to the Board.

The Group’s investor relations section on its website contains information on the Group’s financial results, its corporate policies, its stock exchange announcements, analysts’ presentations and the terms of reference for each of the Board Committees. Additionally, the AGM provides a useful interface with shareholders. All shareholders are invited to attend the AGM and all members of the Board will be available at the meeting to answer questions.


Imagine natural healthy treats anytime you like


39

3.2 Report of the Remuneration Committee

The Company has established a Remuneration Committee consisting of the Chairman and the Non-Executive Directors. The aggregate amount of emoluments received and receivable by Directors of the Group and of the Company during the period under review are as follows:-

Details of emoluments for the Directors of the Group and of the Company received/receivable for the fi nancial period in bands of USD40,000 are as follows:-

The Group30.06.2008

USD’000

The Company30.06.2008

USD’000

Executive Directors:

- basic salary 183 57

Non-Executive Directors:

- fee 105 105

The Group / The Company30.06.2008

Executive Directors Non-Executive Directors

Below USD40,000 - 3

USD40,001 – USD80,000 4 1


40

3.3 Directors’ reportThe directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial period from 1 January 2008 to 30 June 2008.

Principal activities

The Company is principally engaged in the business of investment holding whilst the principal activities of the rest of the Group are the production and distribution of natural healthy food and beverages ingredients. There have been no signifi cant changes in the nature of these activities during the fi nancial period.

Results and dividends

During the period under review, PureCircle Group’s turnover was USD19 million. The PureCircle Group’s profi t for the period after taxation and minority interest was USD1 million. This gives earnings per share of US cents 0.82.

The Group ended the period with net assets of USD82 million and gross cash and deposits balances of USD44 million.

The Directors do not recommend payment of a dividend.

Business review and future developments

These are covered in detail within the Chairman’s Statement and Chief Executive’s review.

The Chairman’s Statement on pages 12 to 15, the Chief Executive’s review on pages 17 to 22 and the Group Financial Review on pages 26 to 31, report on the activities during the period under review. The information in these reports, which are required to fulfi ll the requirements of the business review, is incorporated in this Directors’ Report by reference.

Fixed assets

Details of changes in fi xed assets are given in Note 9 to the fi nancial statements.

Annual general meeting

The Company held its AGM on 2 June 2008. The next AGM will be announced following publication of the Group’s results for fi nancial year 2009 in September.

1 Family interest held indirectly by Paul Selway-Swift and his wife 2 Held directly 3 Family interest held indirectly by Olivier Maes and his wife4 Family interest held directly by his wife

Director Number of SharesPaul Selway-Swift1 128,571Magomet Malsagov2 14,813,176Peter Robert Milsted2 1,160,000William Mitchell2 120,000Aslan Tomov2 4,401,096Olivier Phillipe Marie Maes3 580,000John Robert Slosar4 1,418,702

Directors and their interests

The current members of the Board, together with biographical details of each Director, are set out on pages 44 and 45.

The interest (all of which are benefi cial interests save as otherwise stated) of the Director and of persons connected with them as at 30 June 2008 are as follows:


41

Changes to directors’ and substantial shareholders’ interests after 30 June 2008

On 1 July 2008, PureCircle entered into strategic partnerships with Olam Wilmar Investment Holdings (“OWIH”), an investment vehicle owned by Wilmar International Limited (“Wilmar”) and Olam International Limited. OWIH purchased 26,544,609 shares (20% of the issued capital) in PureCircle. 23,728,155 were purchased from Asian Investment Partners Limited and Artur and Aslan Tomov and 2,818,454 from PrimePartners Asia Merchant Capital Holdings Limited.

In view of the nature of the transaction, the lock-in arrangement relating to Aslan Tomov’s shareholdings was waived by PureCircle’s broker. Through the transaction, Asian Investment Partners Limited and Artur and Aslan Tomov have disposed off substantially all their shareholdings in PureCircle and their combined holding is now below 1% of PureCircle’s issued capital. PrimePartners Asia Merchant Capital Holdings Limited has also ceased to be a substantial shareholder in PureCircle.

Substantial interests

At 30 June 2008, the Company had been notifi ed of the following interests of 3% or more in its ordinary shares.

(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 fi nancial statements; and

(d) prepare the fi nancial statements on the going concern basis unless it is inappropriate to

assume that the Group will continue in business.

Statement of directors’ responsibilities The directors are responsible for the preparation of the financial statements for each financial period which give a true and fair view of the state of affairs of the Company and of the Group at the end of the period and of the results of the Group and of the Company for the period in preparing those fi nancial statements, the directors are required to: -

Benefi cial Shareholder Interest in Issued Shares Interest

Magomet Malsagov 14,813,176 11.2%

Half Moon Bay Enterprises Ltd 13,355,692 10.1%

Asian Investment Management Services Ltd 10,500,000 7.9%

Artur Tomov 10,314,033 7.8%

PrimePartners Asia Merchant Capital Holdings Ltd 5,800,141 4.4%

Swire Beverages Holdings Ltd 5,800,000 4.4%

James Finlay International Holding Ltd 5,800,000 4.4%

Varuzhan Abelyan 5,567,982 4.2%

Asian Investment Partners Ltd 4,805,652 3.6%

Aslan Tomov 4,401,096 3.3%


42

Payment of creditors

It is the policy of the Group in respect of all its creditors, where it is reasonably practicable, to settle the payment with those creditors according to the terms formally agreed with them.

The creditors’ payment periods for the Group throughout the fi nancial year under review range from 0 to 60 days.

Employee involvement

The average number of employees in the Group during the six months period to 30 June 2008.

The Group operates within a framework of human resource policies, practices and regulations appropriate to their own market sector and country of operation. Policies and procedures for recruitment, training and career development promote equality of opportunities.

The Group aims to improve the performance of the organization through the development of its employees. Their involvement is encouraged by means of team working. The Group is committed to effective communication with employees, including information on its performance and business environment.

Auditors

Horwath (Malaysia) have expressed their willingness to continue in offi ce as auditors and a resolution proposing their reappointment will be submitted to shareholders at the forthcoming Annual General Meeting.

This report was approved by the Board on 14 October 2008 and is signed on its behalf by:

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

So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are unaware and we have taken all the steps that we ought to have taken as directors in to make ourselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

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




43

Imagine a natural healthy lifetime together


44

3.4 Board of directors

Paul worked with the HSBC Group for 30 years, where he was an Executive Director of HSBC Hong Kong until 1996 and Deputy Chairman of HSBC Investment Bank in London until 1998. He is currently the Chairman and a Director of Atlantis Investment Management (Ireland) Ltd and Non-Executive Director of Temenos Group AG. Additionally, he is a Non-Executive Director of Alba plc, China Export Finance Ltd and Li & Fung Ltd.

He was appointed Chairman of the Company on December 2007 and also chairs the Nomination Committee.

Paul Selway-SwiftNon-Executive Chairman


Magomet is a Russian national who hasheld the position of CEO since co-founding the business in 2002. He has a Business Administration degree from Washington International University.

He is primarily responsible for leading the successful establishment of the Group’s entire supply chain from the plantations and extractionfacilities to the multi-functional plants around the world. As CEO, he further establishes the Group’s business direction and strategies along with his management team and is responsible for managing the growth and development of the Group’s business.


William was appointed to the PCL Board as CFO on 2 June 2008. He brings with him a wealth of relevant experience to the PureCircle team having worked extensively in the global capital markets, food and beverage and technology industries.

William is a FCA who trained with Price Waterhouse London. At PW, he advised major international food and beverage consumer package goods businesses and private equity firms on mergers and acquisitions and post acquisition integrations.

He was part of the management buyin-buyout team that acquired Tetley Tea, the number 2 global tea brand, from Allied Domecq in a GBP190 million leverage buyout.

Most recently William was Finance Director of EnQii Holdings PLC, a global market leader in the fast growing digital media industry.

Peter Milsted Sales & Marketing Director

Peter joined the Group in December 2006 and was appointed to the PCL Board on 11 December 2007.

Peter is responsible for providing leadership to the global sales and marketing functions of the Group. He also develops product strategies benchmarking and competitor analysis to better position the Group’s products in the marketplace and to develop the Group’s distribution channels.

Previously, at ICI, he was a member of the Executive Management team for Uniqema, where he held the position of Vice President Asia. Prior to joining ICI he was a divisional director of Unichema, the Unilever oleochemicals company.

From 1992 to 1995 he was Managing Director Unichema Australia and from 1988 to 1992 he was the Head of Fragrance Division for Quest Brazil.


45

Olivier MaesNon-Executive Director

Olivier joined the Group as a Director of PCSB in November 2006 and was appointed to the PCL Board on 11 December 2007. He is presently the CEO and Managing Director of General Biscuits Benelux, a biscuits and cereals based product leader in Belgium and Netherlands.

He has more than 20 yearsof experience in the dairy, beverages and biscuits sectors in Western Europe and Asia where his responsibilities included sales and marketing, mergers and acquisitions, industrial and supply chain development, as well as the expansion of production operations.

Olivier chairs the Remuneration Committee.

John SlosarNon-Executive Director

John joined the Group as a Director of PCSB in November 2006 and was appointed to the PCL Board on 11 December 2007. He joined the Swire Group in 1980 and worked with the Group’s Aviation Division in Hong Kong, the United States and Thailand.

He was appointed Managing Director of Hong Kong Aircraft Engineering Co Ltd in 1996. In July 1998, he was appointed Managing Director of Swire Pacifi c’s Beverages Division. He was appointed Chief Operating Officer of Cathay Pacific on 1st July 2007.

He is currently on the Boards of Cathay Pacifi c Airways Ltd, John Swire & Sons (H.K.) Ltd and Swire Pacifi c Ltd.

John was a graduate of both Columbia University and Cambridge University.

Peter Lai Hock MengNon-Executive Director

Peter Lai was appointed to the PCL Board on 2 June 2008. He has more than 20 years experience in financial services industry including central banking, investment banking, private banking, stockbroking and venture capital.

Presently, Peter holds the position of Managing Director, Tembusu Partners Pte Ltd, a private equity investment fi rm in Singapore.

Peter graduated with a BA in economics from the University of Cambridge, England. He is also a CFA charter holder from the CFA Institute, USA.

Peter chairs the Audit Committee.

Sunny VergheseNon-Executive Director

Sunny is the Group Managing Director and Chief Executive Officer of Olam, a major Asia based internationalagribusiness listed on the Singapore Stock Exchange (“SGX”). He is responsible for the strategic planning, business development and overall management for the Olam group of companies worldwide. He is also the Chairman of International Enterprise Singapore, a statutory board under the Ministry of Trade and Industry, as well as Chairman of the SGX listed infrastructure trust, CitySpring Infrastructure Management Pte Ltd.

Sunny was appointed to the PCL Board on 19 August 2008 as an alternate director and subsequently appointed as a Non-Executive Director of the Company on 13 October 2008.


46

4. Independent auditors’ reportWe have audited the fi nancial statements of PureCircle Limited, which comprise the Balance Sheets as at 30 June 2008 of the Group and of the Company, and the Income Statement, Statement Of Changes In Equity and Cash Flow Statement of the Group for the period then ended, and a summary of signifi cant accounting policies and other explanatory notes, as set out on pages 48 to 79.

Director’s responsibility for the financial statements

The directors of the Group are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit and to report our opinion to you, as a body, and for no other purpose. We do not assume responsibility towards any other person for the contents of this report.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Group’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors and managers, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with International Financial Reporting Standards so as to give a true and fair view of the financial position of the Group as of 30 June 2008 and of its financial performance and cash flows for the financial period then ended.

HorwathFirm No: AF 1018Chartered AccountantsKuala Lumpur14 October 2008


47

Financia l statements


48

5. Accounts and notesBalance sheetsat 30 June 2008

The Group The Company

Note30.06.2008

USD’00031.12.2007

USD’00030.06.2008

USD’00031.12.2007

USD’000

Assets

Non-Current Assets

Investment in subsidiaries 6 - - 18,080 17,985

Investment in an associate 7 141 157 - -

Intangible assets 8 8,200 7,789 - -

Property, plant and equipment 9 32,947 26,725 - -

Prepaid land lease payments 10 2,285 1,457 - -

43,573 36,128 18,080 17,985

Current Assets

Inventories 11 9,583 12,509 - -

Trade receivables 12 7,430 3,410 - -

Other receivables, deposits and prepayments 13 7,658 8,275 1,250 4,951

Amount owing by a subsidiary 14 - - 28,869 10,312

Amount owing by related parties 15 1,433 2,137 - -

Short-term deposits with licensed banks 17 13,563 31,543 8,502 31,543

Cash and bank balances 18 30,891 12,722 19,003 3,221

70,558 70,596 57,624 50,027

Total Assets 114,131 106,724 75,704 68,012

Equity And Liabilities

Equity

Share capital 19 13,272 13,029 13,272 13,029

Share premium 20 64,104 55,697 64,104 55,697

Treasury shares 21 * * * *

Foreign exchange translation reserve 22 2,251 909 - -

Share option reserve 23 480 - 480 -

Retained profi t/(Accumulated loss) 1,490 422 (2,215) (1,143)

Shareholders’ Equity 81,597 70,057 75,641 67,583

Minority Interests 1,383 11,613 - -

Total Equity 82,980 81,670 75,641 67,583

Note:* - Represents less than USD1.00

The annexed notes form an integral part of these fi nancial statements.


49



Note30.06.2008

USD’00031.12.2007

USD’00030.06.2008

USD’00031.12.2007

USD’000

Non-Current Liability

Long-term borrowings 25 11,890 10,625 - -

11,890 10,625 - -

Current Liabilities

Trade payables 27 1,186 778 - -

Other payables and accruals 28 2,079 1,501 63 429

Short-term borrowings 29 15,608 11,630 - -

Bank overdraft 30 388 520 - -

19,261 14,429 63 429

Total Liabilities 31,151 25,054 63 429

Total Equity And Liabilities 114,131 106,724 75,704 68,012

Net Assets Per Share (USD) 31 0.62 0.54

Approved and authorised for issue by the board of directors on 14 October 2008.




50

Consolidated income statementsfor the financial period from 1 January 2008 to 30 June 2008

The Group

Note

From 01.01.2008 -30.06.2008

USD’000


31.12.2007USD’000

Revenue 32 19,290 8,898

Cost of sales (15,282) (6,249)

Gross profi t 4,008 2,649

Other income 2,937 364

6,945 3,013

Administrative expenses (4,710) (882)

Finance costs (996) (471)

Profi t from operations 1,239 1,660

Foreign exchange loss on issuance of shares - (1,216)

Profi t before taxation 1,239 444

Income tax expense 33 - 569

Profi t after taxation 1,239 1,013

Attributable to:-

Equity holders of the company 1,068 422

Minority interests 171 591

1,239 1,013

Earnings per share (US Cents)

- Basic 34 0.82 0.61

- Diluted 34 0.82 -



51

Consolidated statements of changes in equityfor the financial period from 1 January 2008 to 30 June 2008

ShareCapital

USD’000

SharePremiumUSD’000

Treasury Shares

USD’000

ShareOption

ReserveUSD’000

Foreign Currency

Translation ReserveUSD’000

Retained Profi t

USD’000

Minority InterestsUSD’000

TotalUSD’000

The Group

Balance at 01.01.2008 13,029 55,697 * - 909 422 11,613 81,670

New allotment for additional shareholding in subsidiary during the fi nancial period 243 8,287 - - - - (8,530) -

Gain from sale of treasury shares ^ - 120 * - - - - 120

Valuation on share option scheme granted during the period - - - 480 - - - 480

Profi t for the fi nancial period - - - - - 1,068 171 1,239

Exchange difference ^ - - - - 1,342 - (1,871) (529)

Balance at 30.06.2008 13,272 64,104 * 480 2,251 1,490 1,383 82,980

ShareCapital

USD’000

SharePremiumUSD’000

Treasury Shares

USD’000

ShareOption

ReserveUSD’000

AccumulatedLoss

USD’000Total

USD’000

The Company

Balance at 01.01.2008 13,029 55,697 * - (1,143) 67,583

New allotment during the fi nancial period 243 8,287 - - - 8,530

Valuation on share option scheme granted during the period - - - 480 - 480

Gain from sale of treasury shares ^ - 120 * - - 120

Loss for the fi nancial period - - - - (1,072) (1,072)

Balance at 30.06.2008 13,272 64,104 * 480 (2,215) 75,641

Notes:* - Represents less than USD1.00^ - Gain/(Loss) not recognised in Income Statement



52

Consolidated cash fl ow statementsfor the financial period from 1 January 2008 to 30 June 2008

The Group

Note

From 01.01.2008 -30.06.2008

USD’000


31.12.2007USD’000

Cash fl ows for operating activities

Profi t for the fi nancial period 1,239 444

Adjustments for:-

Amortisation of intellectual property rights - 18

Amortisation of prepaid land lease payments - 18

Depreciation of property, plant and equipment 1,064 391

Equipment written off - 40

Interest expense 1,039 381

Interest income (600) (127)

Excess of Group’s interest in the net fair value of acquiree’s identifi able assets, liabilities and contingent liabilities over cost of acquisition (2,390) (51)

Unrealised loss on foreign exchange (266) 981

Share loss of an associate 19 -


Operating cashfl ow before working capital changes 585 2,095

Decrease/(Increase) in inventories 2,926 (1,580)

Increase in trade and other receivables (3,137) (6,511)

Increase/(Decrease) in trade and other payables 1,690 (2,154)

Net cash from operations 2,064 (8,150)

Interest received 600 127

Interest paid (1,039) (381)

Net cash from operating activities 1,625 (8,404)

Cash fl ows from investing activities

Acquisition of net assets in a subsidiary, net of cash acquired 35 - (6,708)

Purchase of intangible assets (114) (3,237)

Purchase of leasehold land (716) (851)

Purchase of property, plant and equipment (5,027) (2,658)

Acquisition of an associate - (157)

Net cash for investing activities (5,857) (13,611)

Balance carried forward (4,232) (22,015)



53

The Group

Note

From 01.01.2008 - 30.06.2008

USD’000


31.12.2007USD’000

Balance brought forward (4,232) (22,015)

Cash fl ows from fi nancing activities

Proceeds from issuance of shares - 60,920


Proceeds from disposal of treasury shares 120 84

Net drawdown of term loans 3,685 3,215

Net movement of hire purchase 36 (54)

Proceeds from issue of shares to minority shareholders - 5,900

Net cash from fi nancing activities 3,841 66,747

Effects of foreign exchange rate changes on cash and cash equivalents 712 (987)

Cash and cash equivalents at beginning of the fi nancial period 43,745 -

Cash and cash equivalents at end of the fi nancial period 36 44,066 43,745



54

Notes to the financial statementsfor the financial period from 1 January 2008 to 30 June 2008

Increase / decrease in

Exchange rate

Effect on profi t after taxation

USD ‘000

Effecton equityUSD ‘000

Ringgit Malaysia + 5% 53 894- 5% (53) (894)

Chinese Renminbi + 5% 6 1,379- 5% (6) (1,379)

The Group

30.06.2008 31.12.2007 30.06.2008USD ‘000

31.12.2007USD ‘000

Effective InterestRate %

Current account 0.98 1.71 30,192 12,151Fixed deposits 2.17 4.80 13,563 31,543Bank overdraft 6.75 6.75 388 520

1. General information

The Company was incorporated and registered as a private limited company in Bermuda, under the Companies (Bermuda) Law 1991 (as amended). The registered offi ce and principal place of business are as follows:-

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

Principal place of business :Unit 19-03-02, 3rd Floor, PNB Damansara,Lorong Dungun, Damansara Heights,50490 Kuala Lumpur Malaysia.

The Company changed its financial reporting year end from 31 December to 30 June in order to bring its fi nancial reporting cycle into line with its principal operating activities, particularly its major sales contracts and the buying season for stevia leaf.

The fi nancial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 14 October 2008.

2. Principal activities

The Company is principally engaged in the business of investment holding whilst the principal activities of the rest of the Group are the production and distribution of natural healthy food and beverages ingredients. There have been no significant changes in the nature of these activities during the fi nancial period.

3. Financial instruments

The Group’s activities expose it to a variety of fi nancial risks (including foreign currency risk, interest rate risk and price 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 arising from various currency exposures, primarily with respect to the Ringgit Malaysia and Chinese Renminbi. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

It manages its foreign exchange exposure by a policy of matching as far as possible receipts and payments in each individual currency.

The following table demonstrates the sensitivity to a reasonably possible change in the Ringgit Malaysia and

Chinese Renminbi exchange rate, with all other variables held constant of the Group’s profit and the Group’s equity:-

(ii) Interest Rate Risk The Group’s exposure to interest rate risk arises mainly

from interest-bearing deposits, loans and borrowings. The Group’s interest rate profile as monitored by management is set out below:-

Of the current account of USD30,192,000 as at 30 June 2008, USD18,586,000 was in transit between fixed deposit account.

Interest rate sensitivity analysis

At 30 June 2008, it is estimated that a general increase or decrease of 100 basis points in interest rates, with all

other variable held constant, would increase or decrease the Group’s profit for the period by approximately USD11,000.

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that date. The 100 basis point increase or decrease represents management’s assessment of a reasonably possible change in interest rates over the period until the next fi scal year end balance sheet date.

(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 verifi cation procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debt is not signifi cant. The maximum exposure is the carrying amount as disclosed in Note 12 to the fi nancial statements.

The Group’s concentration of credit risk relates to debts owing by a major customer which constituted approximately 21% of its outstanding receivables at the balance sheet date.


55

(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 25, 29 and 30, cash and bank balances 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 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 fi nancial year end was as follows:

(c) Fair Value Estimation

All fi nancial instruments are carried at amounts not materially different from their fair values as at 30 June 2008.

Fair value estimates are made at a specific point in time and based on relevant market information and information about the financial instruments. These estimates are subjective in nature, involve uncertainties and matters of signifi cant judgement and therefore cannot be determined with precision. Changes in assumptions could signifi cantly affect the estimates.

The Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

(iv) Liquidity and Cash Flow Risks Liquidity and cash flow risks arise mainly from general

funding and business activities. The Group practises prudent risk management by maintaining suffi cient cash and the availability of funding through certain committed credit facilities.

The following tables detail the remaining contractual maturities at the balance sheet date of the Group’s and

the Company’s non-derivative financial liabilities, which are based on contractual undiscounted cash flows

(including interest payments computed using contractual rates or, if fl oating, based on rates current at the balance sheet date) and the earliest date the Group and the

Company can be required to pay:

CarryingAmount

USD’000

TotalContractual

UndiscountedCash Flow

USD’000

Within1 Year or

on Demand*USD’000

More than1 Year butLess than

5 YearsUSD’000

More than5 Years

USD’000

The Group At 30 June 2008

Trade and other payables 3,265 3,265 3,265 - -

Borrowings 27,498 27,498 15,608 11,336 554

Bank overdraft 388 388 388 - -*Borrowings within 1 year or on demand are drawn down under a revolving facility.

CarryingAmount

USD’000

TotalContractual

UndiscountedCash Flow

USD’000

Within1 Year or

on Demand*USD’000

More than1 Year butLess than

2 YearsUSD’000

More than2 Years but

Less than5 Years

USD’000

The Company At 30 June 2008

Other payables and accruals 63 63 63 - -

Notes1. Debts relate to borrowings disclosed in Note 25, 29 and 30 to the financial statements.2. Equity includes all capital and reserves of the Group.

30.06.2008USD’000

31.12.2007USD’000

Debts1 (27,886) (22,775)

Cash and cash equivalents 44,454 44,265

Net debt Not applicable Not applicable

Equity2 81,581 70,057

Net debt to equity ratio Not applicable Not applicable


56

4. Basis of preparation

The fi nancial statements of the Group and of the Company are prepared under the historical cost convention and modifi ed to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with International Financial Reporting Standards (“IFRS”).

The following IFRSs and IASs have been issued and are effective for fi nancial periods beginning on or after 1 January 2009 and will be effective for the Group’s fi nancial statements for the fi nancial year ending 30 June 2010:-

IFRS 1 First time adoption of IFRS (Amendment)IFRS 2 Share-based Payment (Amendment)IFRS 8 Operating SegmentsIAS 1 Presentation of Financial Statements (Amendment)IAS 16 Property, Plant and Equipment (Amendment)IAS 19 Employee Benefi ts (Amendment)IAS 20 Government Grants and Disclosure of Government Assistance (Amendment)IAS 23 Borrowing Costs (Amendment)IAS 27 Consolidated and Separate Financial Statements (Amendment)IAS 28 Investments in Associates (Amendment)IAS 29 Financial Reporting in Hyperinfl ationary Economies (Amendment)IAS 31 Interest in Joint Ventures (Amendment)IAS 32 Financial Instruments: Presentation (Amendment)IAS 36 Impairment of Assets (Amendment)IAS 38 Intangible Assets (Amendment)IAS 39 Financial Instruments: Recognition and Measurement (Amendment)IAS 40 Investment Property (Amendment)IAS 41 Agriculture (Amendment)

IFRS 1, IAS 20, IAS 29, IAS 40 and IAS 41 are not relevant to the Group’s operations.

The amendments made to IAS 19, IAS 31, IAS 32, IAS 36, IAS 38 and IAS 39 will not have any material fi nancial effect to the fi nancial statements of the Group when adopted.

IFRS 2 - Share-based Payment (Amendment) clarifi es that only service conditions and performance conditions are vesting conditions, and other features of a share-based payment are not vesting conditions. In addition, it specifi es that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment.The Group will apply this amendment from the financial year ending 30 June 2010 onwards.

IFRS 8 - Operating Segments is effective from 1 January 2009. IFRS 8 replaces IAS 14 and aligns segment reporting with the requirements of the US standard SFAS 131 Disclosures about Segments of an Enterprise and Related Information. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting

purposes. The Group will apply IFRS 8 from the financial year ending 30 June 2010 onwards.

IAS 1 - Presentation of Financial Statements (Amendment) requires separate presentation of owner and non-owner changes in equity by introducing the statement of comprehensive income. The statement of recognised income and expense will no longer be presented. Whenever there is a restatement or reclassification, an additional balance sheet, as at the beginning of the earliest period presented, will be required to be published. This amendment has removed the inconsistency of current/non-current classification of derivatives. The Group will apply this amendment from the fi nancial year ending 30 June 2010 onwards.

IAS 16 - Property, Plant and Equipment (Amendment) has amended the definition of “recoverable amount” to “the higher of an asset’s fair value less costs to sell and its value in use” for consistency with the wordings used in IFRS 5. The Group will apply this amendment from the financial year ending 30 June 2010 onwards.

IAS 23 - Borrowing Cost (Amendment) requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. Borrowing costs may include interest expense calculated using the effective interest rate method as described in IAS 39. The Group will apply this amendment from the fi nancial year ending 30 June 2010 onwards.

IAS 27 - Consolidated and Separate Financial Statements (Amendment) clarifies that investments accounted for at cost shall be accounted for in accordance with IFRS 5 when they are classifi ed as held for sale. Whereas, the measurement of those investments that are accounted for in accordance with IAS 39 is not changed when they meet held for sale criteria in IFRS 5. The Group will apply this amendment from the fi nancial year ending 30 June 2010 onwards.

IAS 28 - Investments in Associates (Amendment) reaffi rms that investor should not allocate impairment loss to any asset that forms part of the carrying amount of the investment in the associate because the investment is the only asset that the investor controls and recognises. Reversal of impairment loss on the investment shall be recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment increases subsequently. The Group will apply this amendment from the fi nancial year ending 30 June 2010 onwards.

In addition to the above, the following IFRSs and IASs have been issued and are effective for fi nancial periods beginning on or after 1 July 2009 and will be effective for the Group’s fi nancial statements for the fi nancial year ending 30 June 2010:-


57

IFRS 3 Business Combination (Revised)IFRS 5 Non-current Assets held for Sale and Discontinued Operations (Amendment)IAS 27 Consolidated and Separate Financial Statements (Amendment)IAS 28 Investments in Associates (Amendment)IAS 31 Interest in Joint Ventures (Amendment)IAS 39 Financial Instruments: Recognition and Measurement (Amendment)

The amendments made to IFRS 5 and IAS 39 are not relevant to the Group’s operations.

IFRS 3 - Business Combination (Revised) requires the purchase method of accounting to be applied to business combinations but will introduce some changes to existing accounting treatment. The Group will apply this amendment from the fi nancial year ending 30 June 2010 onwards.

IAS 27 - Consolidated and Separate Financial Statements (Amendment) / IAS 28 Investments in Associates (Amendment) / IAS 31 Interest in Joint Ventures (Amendment) requires the effects of all transactions with

non-controlling interests to be recorded in equity if there is no change in control. Such transactions will no longer result in goodwill or gains or losses. Where control is lost, any remaining interest in the entity is re-measured to fair value and a gain or loss recognised in the income statement. The Group will apply this amendment from the financial year ending 30 June 2010 onwards.

The following IC Interpretations have been issued and are effective for the current fi nancial period on or after 1 January 2008 but are not relevant to the Group’s operations:-

IFRIC 12 Service Concession ArrangementsIFRIC 14 IAS 19 - The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction

The following IC Interpretations have been issued and are effective for financial periods beginning on or after the effective date but are not relevant to the Group’s operations:-

Effective date

IFRIC 13 Customer Loyalty Programmes 1 July 2008

IFRIC 15 Agreements for the Construction of Real Estate 1 January 2009

IFRIC 16 Hedges of Net Investment in a Foreign Operation 1 October 2008


58

5. Significant accounting policies

(a) Critical Accounting Estimates And Judgements

Estimates 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 signifi cant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below.

(i) Depreciation of Property, Plant and Equipment The estimates for the residual values, useful lives and

related depreciation charges for the property, plant and equipment are based on commercial and production factors which could change signifi cantly as a result of

technical innovations and competitors’ actions in response to the market conditions.

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(ii) Impairment of Assets When the recoverable amount of an asset is determined

based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

(iii) Intellectual Property Rights and Product Development The useful lives of the intellectual property rights and

product development of PureCircle Sdn. Bhd. (“PCSB”) are estimated to be indefi nite because based on the

analysis of all of the relevant factors; there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for PCSB. In addition, the estimation of the useful lives is based on the internal technical evaluation. The estimated useful lives are reviewed periodically and are updated if expectations differ from previous estimates due to obsolescences, economic, technical and legal or other limits on the use of the intangible assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above.

The useful lives of the intellectual property rights of Ganzhou Julong High-Tech Food Industry Co., Ltd (“GJH”) is amortised over a period of 20 years.

(iv) Income Taxes There are certain transactions and computations for

which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises tax liabilities based on estimates of whether additional taxes will be due. Where the final outcome of these

matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

(v) Allowance for Doubtful Debts of Receivables The Group makes allowance for doubtful debts based

on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables.

(vi) Fair value estimates for certain fi nancial assets and liabilities The Group carries certain fi nancial assets and liabilities

at fair value, which requires extensive use of accounting estimates and judgement. While signifi cant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profi t and equity.

(vii) Share-based payments The Group measures the cost of equity-settled

transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility and dividend yield and making assumptions about them. The assumptions and models used are disclosed in Note 23.

(b) Financial assets

(i) Receivables 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 establish when there is objective evidence that the

Group will not be able to collect all amount due according to the original terms of the receivables.

(ii) Treasury shares Own equity instruments which are reacquired (treasury

shares) are deducted from equity. No gain or loss is recognised in profi t or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.


59

(c) Financial liabilities

(i) Payables Liabilities for trade and other payables, including amounts

owing to associates and related parties, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(ii) Interest-bearing loans and borrowings 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 income statement over the period of the loans and borrowings using the effective interest method.

(d) Functional and Foreign Currency

(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 entity operates.

The functional and presentation currency of the Company is United States Dollar (“USD”). The consolidated fi nancial statements are presented in United States Dollar (“USD”) which is the parent’s presentation currency.

(ii) Transactions and Balances Transactions of the Company 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 balance sheet date are translated at the rates ruling as of that date.

Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are taken to the income statement.

(iii) Foreign Operations The results and financial position of the subsidiaries

engaged in foreign operations 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 balance sheet presented are

translated at the closing rate at the date of the balance sheet;

(b) income statement of foreign operations, including revenue and expenses, are translated at the average exchange rates for the year;

(c) all resulting exchange differences are recognised as a separate component of equity, as a foreign currency translation reserve; and

(d) on disposal, accumulated translation differences are recognised in the consolidated income statements as part of the gain or loss on sale of the foreign operation.

(e) Basis of Consolidation

The consolidated fi nancial statements include the fi nancial statements of the Company and its subsidiaries made up from 1 January 2008 to 30 June 2008.

A subsidiary is defi ned as a company in which the Group has the power, directly or indirectly, to exercise control over the fi nancial and operating policies so as to obtain benefi ts from its activities.

All subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiary’s net assets are determined and these values are refl ected in the consolidated fi nancial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of the subsidiary to ensure consistency of accounting policies with those of the Group.

Minority interests in the consolidated balance sheets consist of the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree as at the date of acquisition and the minorities’ share of movements in the acquiree’s equity.

Minority interests are presented in the consolidated balance sheet of the Group within equity, separately from the Company’s equity holders, and are separately disclosed in the consolidated income statement of the Group.

(f) Goodwill on Consolidation

Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifi able net assets of the subsidiaries at the date of acquisition.

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in a subsequent period.

If, after reassessment, the Group’s interest in the fair values of the identifi able net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the consolidated income statement.


60

(g) Investments in Subsidiaries

Investments in subsidiaries are stated at cost in the balance sheet 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, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statement.

(h) Intangible Assets

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 are carried at cost less any accumulated amortisation and any accumulated impairment losses.

The useful lives of intangible assets are either finite or indefinite.

Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful life. The amortisation period and the amortisation method for an intangible asset with a fi nite useful life are reviewed at every balance sheet date. Intangible assets with indefi nite useful lives are not amortised.

All intangible assets are tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.

(i) Intellectual Property Rights Intellectual property rights of PureCircle Sdn. Bhd.

(“PCSB”) comprise the patents, technological process, micro-organisms and all intellectual and industrial property rights in connection therewith on the production of natural enzymatically enhanced sweetener, pharmaceutical products and chemical derivatives of

bio-organic and physiologically active compounds.

The useful life of the intellectual property rights of PCSB is considered to be indefi nite because based on the analysis of all of the relevant factors; 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 identifi ed.

The intellectual property of Ganzhou Julong High-Tech Food Industry Co., Ltd (“GJH”) consists of the acquisition costs of the patents, technological process, micro- organisms and all intellectual and industrial property rights in connection therewith on the production of natural enzymatically enhanced sweetener, 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 benefi ts to GJH.

Prior to 1 January 2008, the intellectual property of GJH is amortised on a straight-line basis over the period of

20 years during which its economic benefi ts are expected to be consumed. Following the acquisition of GJH, the intellectual property is now applied across the whole Group. In consequence, the effective useful life of the

intellectual property rights will become indefinite. Accordingly, the accounting policy has been changed.

The change in the useful life assessment from finite to indefinite is made on a prospective basis. The net

carrying amount as at 1 January 2008 of USD3,234,000 ceased to amortise. Because the revised accounting policy has been applied prospectively, the change has had no impact on amounts reported for period ended 31 December 2007. The change has no impact on the Company’s fi nancial statements.

(ii) Product Development All research costs are recognised in the income

statement as incurred.

Expenditure incurred on projects to develop new products is capitalized as intangible asset and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset 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 development. Product development expenditures which do not meet these criteria are expensed when incurred.

i) Property, Plant and Equipment

Property, plant and equipment, other than freehold land, are stated at cost less accumulated depreciation or amortisation and impairment losses, if any. Freehold land is stated at cost less impairment losses, if any, and is not depreciated.

Depreciation or amortisation 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 5%

Extraction and refi nery plants 2% - 20%

Offi ce equipment, furniture and fi ttings and motor vehicles

20%

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance


61

sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items of the property, plant and equipment.

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 income statement 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 balance sheet 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.

Cost of capital work-in-progress includes direct cost, related expenditure and interest cost on borrowings taken specifi cally to fi nance the purchase of the assets, net of interest income on the temporary investment of those borrowings.

(j) Impairment of Assets

The carrying values of assets, other than those to which IAS 36 - Impairment of Assets does not apply, are reviewed at each balance sheet date for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ net selling price and their value-in-use, which is measured by reference to discounted future cash fl ow.

An impairment loss is charged to the income statement immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset.

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis,and comprises the purchase price and incidentals incurred

in bringing the inventories to their present location and condition. Cost of finished goods and work-in-progress includes the cost of materials, labour and an appropriate proportion of 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 profi t for the year and is measured using the tax rates that have been enacted or substantially enacted at the balance sheet date.

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 fi nancial 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 profi t nor taxable profi t.

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 apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised in the income statement, 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 balance sheet date and reduced to the extent that it is no longer probable that suffi cient future taxable profi ts will be available to allow all or part of the deferred tax assets to be utilised.


62

(n) 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.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

Where the Company purchases any of its own equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is shown as a deduction from equity attributable to shareholders of the Company until the shares are cancelled or reissued. Gain or loss from cancellation or subsequent reissue is taken as a movement in equity.

(o) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(p) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, deposits held at call with banks, bank overdraft and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(q) Employee Benefits

(i) Short-term Benefi ts Wages, salaries, paid annual leave, bonuses and non-

monetary benefi ts are accrued in the period in which the associated services are rendered by employees of the Group.

(ii) Defi ned Contribution Plans The Group’s contributions to defi ned contribution plans

are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defi ned contribution plans.

(r) Related Parties

For the purpose of these fi nancial statements, a related party is considered to be related if:-

(a) directly, or indirectly through one or more intermediaries, the party:- (i) controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);

(ii) has an interest in the entity that gives it signifi cant infl uence over the entity; or (iii) has joint control over the entity;(b) the party is an associate of the entity;(c) the party is a joint venture in which the entity is a venturer;(d) the party is a member of the key management personnel of the entity or its parent;(e) the party is a close member of the family of any individual referred to in (a) or (d);(f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or(g) the party is a post-employment benefit plan for the benefi t of employees of the entity, or of any entity that is a related party of the entity.

Close members of the family of an individual are those family members who may be expected to infl uence, or be infl uenced by, that individual in their dealings with the entity.

(s) Segmental Information

Segment revenue and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of property, plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables and cash and bank balances.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets do not include income tax assets, whilst segment liabilities do not include income tax liabilities and borrowings from fi nancial institutions. Segment revenue, expenses and results include transfers between segments. The prices charged on inter-segment transactions are based on normal commercial terms. These transfers are eliminated on consolidation.

(t) Revenue Recognition

(i) Sale of Goods Revenue from the sale of goods is recognised when the

signifi cant risks and rewards of ownership of the goods have passed to the buyer, usually upon delivery of goods to the port of loading and customers’ acceptance and where applicable, net of sales tax, returns and trade discounts.

(ii) Interest Income Interest income is recognised on an accrual basis,

based on the effective yield on the investment.


63

6. Investment in subsidiaries The Company

30.06.2008USD’000

31.12.2007USD’000

At 1 January 17,985 -

Acquisition during the fi nancial period 95 17,985

At 30 June/31 December 18,080 17,985

Details of the subsidiaries are as follows:-

* - Held through PureCircle Sdn. Bhd. During the financial period, the Group acquired additional 40% equity interest in Ganzhou Julong High-Tech Food Industry Co. Ltd. for a total consideration of USD8,530,655. The consideration was satisfied by way of the Company’s issuance of 2,437,330 new ordinary shares of USD0.10 each at an issue price of USD3.50 per ordinary share.

During the financial period, the Group acquired 100% equity interest in PureCircle SA for a total consideration of USD95,402.

Name of Company Country of Incorporation Effective Equity Interest Principal Activities

2008 2007

PureCircle Sdn. Bhd. Malaysia 100% 100%Production and distribution of natural healthy food and beverages ingredients.

Ganzhou Julong High-Tech Food Industry Co. Ltd.*

The People’s Republic of China (“The PRC”)

95% 55%Manufacturing, marketing and sale of Stevioside and Stevia products.

PureCircle S.A. Switzerland 100% -Sales and marketing of food and beverages ingredients.

AssetUSD’000

LiabilitiesUSD’000

RevenueUSD’000

LossUSD’000

SDF Limited 140 150 - 19

Details of the associate are as follows:-

The group’s share of the results of its principal associates, all which are unlisted, and its aggregated assets and liabilities, are as follow:

The Group

30.06.2008USD’000

31.12.2007USD’000

At 1 January 157 -

Acquisition during the fi nancial period - 157

Share of post-acquisition reserves (19) -

Exchange differences 3 -

141 157

7. Investment in an associate

Name of Company Country of Incorporation Effective Equity Interest Principal Activities

2008 2007

SDF Limited Hong Kong 30% 30% Investment holding

SDF (China) LimitedThe People’s Republic of China (“The PRC”)

30% - Plantation of Stevia leaves


64

8. Intangible assets

Intellectual property rights comprise the patents, technology process, micro-organisms and all intellectual and industrial property rights in connection therewith on the production of natural enzymatically enhanced sweetener, pharmaceutical products and chemical derivatives of bio-organic and physiologically active compounds.

(a) Key assumptions for value-in-use calculationsThe 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 five-year period. The key assumptions used for each of the CGU’s value-in-use calculations are:

(i) Growth rate The average growth rate used is based on the planned

capacity and forecasted demands.

(ii) Gross margin The budgeted gross margin used is based on the

average selling prices and the fixed and variable costs achieved in the year immediately before the budgeted year, adjusted for market conditions and economic conditions and internal resource efficiency.

(iii) Discount rate The discount rates used ranged between 10% and 25% which approximate the CGUs’ average cost of funds

and risk factor.

(b) Sensitivity to changes in assumptionsThe management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the intangible assets to be materially higher than its recoverable amount.

Intellectual PropertyRights

USD’000Product Development

USD’000Total

USD’000

The Group

Cost:

Balance at beginning of period 7,417 918 8,335

Additions during the fi nancial period 92 22 114

Foreign exchange translation difference 289 21 310

At 30.06.2008 7,798 961 8,759

Accumulated amortization:

Balance at beginning of period (546) - (546)

Foreign exchange translation difference (13) - (13)

At 30.06.2008 (559) - (559)

Net carrying amount

At 30.06.2008 7,239 961 8,200

At 31.12.2007 6,871 918 7,789


65

9. Property, plant and equipment

At 01.01.2008

USD’000AdditionsUSD’000

TransferUSD’000

Written OffUSD’000

DepreciationCharge

USD’000

ExchangeFluctuationDifference

USD’000

At 30.06.2008

USD’000

The Group

Net Book Value

Freehold land 524 - - - - 6 530

Buildings 91 - - - (21) 6 76

Extraction and refi nery plants 24,336 1,895 232 - (895) 596 26,164

Offi ce equipment, furniture and fi ttings and motor vehicles 983 272 - - (148) 36 1,143

Capital work-in-progress 791 4,382 (232) - - 93 5,034

26,725 6,549 - - (1,064) 737 32,947

Acquisition of Subsidiaries

USD’000AdditionsUSD’000

TransferUSD’000

Written OffUSD’000

DepreciationCharge

USD’000

ExchangeFluctuationDifference

USD’000

At 31.12.2007

USD’000

The Group

Net Book Value

Freehold land 507 - - - - 17 524

Buildings 92 - - - (2) 1 91

Extraction and refi nery plants 22,036 2,012 5 (40) (327) 650 24,336

Offi ce equipment, furniture and fi ttings and motor vehicles 1,008 11 - - (62) 26 983

Capital work-in-progress 98 635 (5) - - 63 791

23,741 2,658 - (40) (391) 757 26,725

At Cost

USD’000

AccumulatedDepreciation

USD’000

Net BookValue

USD’000

At 30.06.2008

Freehold land 530 - 530

Buildings 109 (33) 76

Extraction and refi nery plants 30,320 (4,156) 26,164

Offi ce equipment, furniture and fi ttings and motor vehicles 1,762 (619) 1,143

Capital work-in-progress 5,034 - 5,034

37,755 (4,808) 32,947

At Cost

USD’000

AccumulatedDepreciation

USD’000

Net BookValue

USD’000

At 31.12.2007

Freehold land 524 - 524

Buildings 103 (12) 91

Extraction and refi nery plants 27,501 (3,165) 24,336

Offi ce equipment, furniture and fi ttings and motor vehicles 1,442 (459) 983

Capital work-in-progress 791 - 791

30,361 (3,636) 26,725


66

9. Property, plant and equipment continue

The carrying values of plant and equipment charged to fi nancial institutions to secure banking facilities granted to the Group are as follows:-

The Group

30.06.2008USD’000

31.12.2007USD’000

Extraction and refi nery plants 60 76

Motor vehicles 327 265

The carrying values of plant and equipment acquired under hire purchase terms are as follows:-

The Group

30.06.2008USD’000

31.12.2007USD’000

Freehold land 530 523

Extraction and refi nery plants 20,544 19,138

21,074 19,661

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. The prepaid land lease payments have been pledged as security for banking facilities granted to the Group.

10. Prepaid land lease payments The Group

30.06.2008USD’000

31.12.2007USD’000

At beginning of fi nancial period 1,457 -

Arising from acquisition of a subsidiary - 603

Additions for the fi nancial period 716 851

Amortisation for the fi nancial period - (18)

Effect of foreign exchange translation 112 21

At end of fi nancial period 2,285 1,457

11. Inventories The Group

30.06.2008USD’000

31.12.2007USD’000

At Cost:-

Raw materials 3,191 8,716

Work-in-progress 4,790 2,381

Finished goods 1,602 1,412

9,583 12,509


67

The Group

30.06.2008USD’000

31.12.2007USD’000

Chinese Renminbi 567 773

Ringgit Malaysia 36 286

The foreign currency exposure profile of the trade receivables at the balance sheet date was as follows:-

The Group

30.06.2008USD’000

31.12.2007USD’000

Up to 3 months 35 29

3 to 6 months 33 29

68 58

The Group’s normal trade credit terms range from 15 to 45 days. Other credit terms are assessed and approved on case-by-case basis.

The trade receivables that are less than three months past due are not considered impaired. As of 30 June 2008,

trade receivables of USD68,000 (2007: USD 58,000) were past due not impaired. These related to a number of independent customers for whom there is no recent history of default. The ageing of these trade receivables is as follows:-

12. Trade receivables

Included in other receivables are the following major balances:-

(a) USD3.2 million advances to suppliers/agents for the purchase of stevia leaves; and

(b) USD0.97 million which represents the deferred amount payable by a director in respect of shares sold to him.

The Group

30.06.2008USD’000

31.12.2007USD’000

Chinese Renminbi 4,691 2,639

Ringgit Malaysia 1,697 3,234

Sterling Pound 121 551

The foreign currency exposure profile of the other receivables, deposits and prepayments at the balance sheet date was as follows:-

The Group

30.06.2008USD’000

31.12.2007USD’000

Other receivables, deposits and prepayments 7,682 8,299

Allowance for doubtful debts (24) (24)

7,658 8,275

13. Other receivables, deposits and prepayments


68

14. Amount owing by a subsidiaryThe amount owing is unsecured, interest-free and is repayable on demand. The amount owing is to be settled in cash.

15. Amount owing by related parties The amount owing is unsecured, interest-free and is repayable on demand. The amount owing is to be settled in cash.

16. Loans and receivables The Group The Company

30.06.2008USD’000

31.12.2007USD’000

30.06.2008USD’000

31.12.2007USD’000

Trade receivables 7,430 3,410 - -

Other receivables, deposits and prepayments 7,658 8,275 - 4,951

Less: Prepayments - (372) - -

Trade and other receivables 15,088 11,313 - 4,951

Amount owing by a subsidiary - - 1,250 10,312

Amount owing by related parties 1,433 2,137 28,869 -

Short-term deposits with licensed banks 13,563 31,543 8,502 31,543

Cash and bank balances 30,891 12,722 19,003 3,221

60,975 57,715 57,624 50,027

The weighted average interest of the short-term deposits at the balance sheet date was 2.17% per annum. The short-term deposits have weighted maturity period of 13 days.

The foreign currency exposure profi le of short-term deposits with licensed banks at balance sheet date was as follows:-

17. Short-term deposits with licensed banks

The Group / The Company

30.06.2008USD’000

31.12.2007USD’000

Sterling Pound - 29,037


30.06.2008USD’000

31.12.2007USD’000

30.06.2008USD’000

31.12.2007USD’000

Chinese Renminbi 10,315 7,788 - -

Ringgit Malaysia 53 80 3 -

Sterling Pound 301 2,380 301 1,892

Swiss Franc 168 - - -

The foreign currency exposure profi le of the cash and bank balances at the balance sheet date was as follows:-

18. Cash and bank balances


69

19. Share capitalThe movements in the authorised and paid-up share capital are as follows:-

The Company 30.06.2008

Par ValueUSD

Number of Shares‘000 USD’000

Authorised

At 1 January 2008 0.10 250,000 25,000

Movement during the fi nancial period 0.10 - -

At 30 June 2008 250,000 25,000

The Company 31.12.2007

Par ValueUSD

Number of Shares‘000 USD’000

Authorised

At 23 July 2007 (date of incorporation) 1.00 10 10

Increase during the fi nancial period 1.00 24,990 24,990

At 31 December 2007 25,000 25,000

Sub-division of the par value of ordinary

shares of USD1.00 to USD0.10 each 0.10 250,000 25,000

Issued and fully paid-up

At 1 January 2008 0.10 130,285,714 13,028,571

Issuance of shares for additional shareholding in a subsidiary 0.10 2,437,330 243,733

At 30 June 2008 0.10 132,723,044 13,272,304

Issued and fully paid-up

At 23 July 2007 (date of incorporation) 1.00 10,000 10,000

Sub-division of par value from USD1.00 to USD0.10 per share - 90,000 -

0.10 100,000 10,000

Issuance of shares pursuant to the:

- issue during the fi nancial period 0.10 15,303,030 1,530,303

- acquisition of a subsidiary 0.10 100,696,970 10,069,697

Cancellation on purchasing of own shares 0.10 (100,000) (10,000)

116,000,000 11,600,000

Public issue 0.10 14,285,714 1,428,571

At 31 December 2007 0.10 130,285,714 13,028,571

During the fi nancial period, the Company increased its issued and paid-up ordinary share capital from USD13,028,571 to USD13,272,304 by way of the issuance of 2,437,330 ordinary shares of USD0.10 each at an issue price of USD3.50 per ordinary share being consideration paid in exchange of additional 40% shareholding in Ganzhou Julong High-Tech Food Industry Co. Ltd.

All new shares issued during the financial period rank pari passu in all respects with the existing shares of the Company.


70

20. Share premium The Group / The Company

30.06.2008USD’000

31.12.2007USD’000

At beginning of fi nancial period 55,697 -

Premium arising from:

- issue of shares to fund the acquisition of subsidiary and working capital purposes 8,287 9,390

- issue of shares pursuant to admission to AIM market - 48,571

Gain from sale of treasury shares 120 1,054


At end of fi nancial period 64,104 55,697

21. Treasury shares 22. Foreign exchange translation reserveDuring the fi nancial period, the Company sold 120,000 treasury shares to a director of the Company for a total cash consideration of USD120,000.

At 30 June 2008, the Company held a total of 940,000 treasury shares.

The foreign exchange translation reserve arose from the translation of the financial statements of the foreign subsidiaries.

23. Share-based payments plans The Group / The Company

30.06.2008USD’000

31.12.2007USD’000

Expense arising from equity-settled share-based payment transactions 480 -

During the fi nancial period, the Company implemented the Long-Term Incentive Plan (“LTIP”), the principal terms 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 Plan (and any other employee share plan) in any ten calendar year period. Awards may be linked to performance conditions. It is currently intended that, other than in exceptional circumstances, such as senior recruitment, all awards will be subject to performance conditions and that, initially, the performance conditions will be linked principally to the Company’s share price. However, in the future the Plan also allows for internal target measures to be used where

such measures are themselves drivers of shareholder value.LTIP recognises the fast growth and changing nature of the Company and the need to recruit and retain executives in very different employment markets around the world. Accordingly, LTIP allows for the Remuneration Committee to exercise signifi cant discretion in exceptional cases where the Committee considers executives will bring particular value to shareholders. The fair value of share options granted is estimated at the date of the grant using a Black-Scholes simulation model, taking into account the terms and conditions upon which the options were granted.

30.06.2008 31.12.2007

Weighted average price per share

Options‘000

Weighted average price per share

Options‘000

At beginning of period - - - -

Granted 3.56 978 - -

Exercised 3.51 (120) - -

At end of period 3.57 858 - -


71

26. Deferred tax liabilities The Group

30.06.2008USD’000

31.12.2007USD’000

At beginning of fi nancial period - -

Arising from the acquisition of subsidiary - 561

Recognised in the income statement (Note 33) - (561)

At end of fi nancial period - -

27. Trade payables

The Group

30.06.2008USD’000

31.12.2007USD’000

Chinese Renminbi 1,044 212


The normal trade credit terms granted to the Group range from 0 to 60 days.

The foreign currency exposure profi le of the trade payables at the balance sheet date was as follows:-


30.06.2008USD’000

31.12.2007USD’000

30.06.2008USD’000

31.12.2007USD’000

Trade payables 1,186 778 - -

Other payables and accruals 2,079 1,501 63 429

Total borrowings 27,886 22,775 - -

31,151 25,054 63 429

24. Financial liabilities measured at amortised cost

25. Long-term borrowings The Group

30.06.2008USD’000

31.12.2007USD’000

Lease and hire purchase payables 247 216

Term loans (Note 37) 11,643 10,409

11,890 10,625

The Group

30.06.2008USD’000

31.12.2007USD’000



The foreign currency exposure profi le of the short-term borrowings at the balance sheet date was as follows:-


72

The bank overdraft bore an effective interest rate of 6.75% (2007: 6.75%) per annum at the balance sheet date and is secured by way of:-

(i) a fi xed and fl oating charge over present and future assets and the freehold property of a subsidiary; and

(ii) the joint and several guarantee of certain directors.


30. Bank overdraft

The Group

30.06.2008USD’000

31.12.2007USD’000


31. Net assets per shareThe net assets per share is calculated based on the net assets value at the balance sheet date of USD81,597,000 (2007: USD70,057,000) divided by the number of ordinary shares in issue (excluding the treasury shares held by the Company) at the balance sheet date of 131,783,044 (2007: 129,225,714).

32. RevenueRevenue represents the invoiced value of services rendered less returns and trade discounts.

The foreign currency exposure profi le of the other payables and accruals at the balance sheet date was as follows:-

28. Other payables and accruals

The Group

30.06.2008USD’000

31.12.2007USD’000

Chinese Renminbi 1,322 718

Pound Sterling 53 186


29. Short-term borrowings The Group

30.06.2008USD’000

31.12.2007USD’000

Bills payable 11,808 7,496

Lease and hire purchase payables 65 61

Term loans (Note 37) 3,735 4,073

15,608 11,630


The Group

30.06.2008USD’000

31.12.2007USD’000




73

The Company was granted a tax assurance certifi cate dated 18 August 2007 under the Exempted Undertakings Tax Protection Act 1966 pursuant to which it is exempted from any Bermuda taxes (other than local property taxes) until 28 March 2016. 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 income commencing from the date of commercial operation. 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 other subsidiary, GJH, has also been granted a 100% exemption on corporate tax from 1 January to 31December 2008 and 50% exemption on corporate tax from 1 January 2009 to 31 December 2011.

A reconciliation of income tax expense applicable to the profi t before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group is as follows:-

33. Income tax expense The Group

01.01.2008-30.06.2008USD’000

23.07.2007-31.12.2007USD’000

Current tax

- foreign tax - 8

Deferred tax (Note 26): - 561

- 569

The Group

01.01.2008 -30.06.2008

USD’000

23.07.2007(Date of incorporation) -

31.12.2007USD’000

Profi t before taxation 1,239 444

Tax at the statutory tax rates in the respective countries (277) (676)

Tax effects of:-

Non-deductible expenses 283 (2,436)

Non-taxable income 83 2,912

Deferred tax assets not recognised during the fi nancial period (89) -

Utilisation of deferred tax assets - 208

Overprovision of deferred tax - 561

Income tax expense - 569

The basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue

(excluding the treasury shares) during the year as disclosed in Note 21 to the fi nancial statements:-

34. Earnings per share

The Group30.06.2008

The Group31.12.2007

Profi t attributable to equity holders of the Company (USD’000) 1,068 422

Weighted average number of ordinary shares in issue (thousands) 129,915 69,663

Basic earnings per share (US Cents) 0.82 0.61


74

35. Acquisition of a subsidiary, net of cash acquired (a) During the fi nancial period, the Group acquired additional 40% equity interest in Ganzhou Julong High-Tech Food Industry Co. Ltd. for a total consideration of USD8,530,655. The consideration was satisfi ed by way of the Company’s issuance of 2,437,330 new ordinary shares of USD0.10 each at an issue price of USD3.50 per ordinary share. The additional acquisition brings a total of 95% equity interest in the subsidiary.

(b) During the fi nancial period, the Group acquired 100% equity interest in PureCircle SA for a total consideration of USD95,402 for cash.

During the previous financial year, the Company acquired 100% equity interest in PureCircle Sdn. Bhd for a total consideration of USD17,985,000. The purchase consideration was satisfi ed by way of the following:-

(i) cash consideration of USD7.915 million for the acquisition of 7,651,515 ordinary shares of RM1.00 each representing 13.19% equity interest in PCSB, and

(ii) the remaining 86.81% equity interest in PCSB for a consideration of USD10,069,697 settled via share swap arrangement, whereby 50,348,485 ordinary shares of RM1.00 each in PCSB were swapped for 100,696,970 ordinary shares of USD0.10 each in the Company at par on the basis of 2 new ordinary shares in the Company for every 1 ordinary share held in PCSB.

The details of net assets acquired and cash flow arising from the acquisition of a subsidiary are as follows:-

The Group

31.12.2007USD’000

Fair Value

31.12.2007USD’000

Carrying Amount

Non-current assets 28,746 28,746Current assets 19,537 19,537Current liabilities (24,564) (24,564)Non-current liability (561) (561)Minority interests (5,122) (5,122)Fair value of net assets acquired 18,036 18,036Excess of Group’s interest in the net fair value of acquiree’s identifi able assets, liabilities and contingent liabilities over cost of acquisition (51)Total cost of acquisition 17,985*Satisfi ed by the issuance of ordinary shares (10,070)Satisfi ed in cash 7,915Less: Cash and cash equivalents of subsidiary acquired (1,207)Net cash outfl ow from acquisition of subsidiary 6,708

Note:-* Includes related costs of USD135,000.

The effects of the acquisition of the subsidiary on the fi nancial results of the Group at the end of the fi nancial year are as follows:-

The Group31.12.2007

USD’000

Revenue 8,898

Profi t for the fi nancial period 2,156

The fully diluted earnings per share is calculated by dividing the profi t attributable to equity holders of the Company by

the weighted average number of ordinary shares that would have been in issued had all the options been exercised:-

34. Earnings per share continue

The Group30.06.2008

The Group31.12.2007

Profi t attributable to equity holders of the Company (USD’000) 1,068 -

Weighted average number of ordinary shares in issue (thousands) 130,320 -

Fully diluted earnings per share (US Cents) 0.82 -


75

Of the current account of USD30,192,000 as at 30 June 2008, USD18,586,000 was in transit between short-term deposit account.

36. Cash and cash equivalentsFor the purpose of the cash fl ow statements, cash and cash equivalents comprise the following:-

The Group

30.06.2008USD’000

31.12.2007USD’000

Fixed deposits 13,563 31,543

Cash and bank balances 30,891 12,722

Bank overdraft (388) (520)

44,066 43,745

37. Term loans

The term loans bore a weighted average effective interest rate of 7.78% (2007: 7.78%) per annum at the balance sheet date.

The Group

30.06.2008USD’000

31.12.2007USD’000

Current portion (Note 29):

- repayable within one year 3,735 4,073

Non-current portion (Note 25):

- repayable between one and two years 11,146 5,845

- repayable between two and fi ve years 497 4,564

Total non-current portion 11,643 10,409

15,378 14,482

Details of the repayment terms of the term loans are as follows:-

Term Loans Number of Monthly Instalments Monthly Instalments AmountCommencement Date of

Repayment Amount Outstanding

USD’000

The Group 30.06.2008

USD’000

1 84 175 Apr 05 6,078

2 48 70 Jul 08 2,882

3 1 438 Jan 09 438

4 1 292 Mar 09 292

5 1 438 Mar 09 438

6 1 875 Aug 08 875

7 1 4,375 Jul 09 4,375

15,378


76

The fair values of the term loans approximated their carrying amounts.

Term loan 1 and 2 are secured by way of:- (i) a fi xed and fl oating charge over present and future

assets and the freehold property of a subsidiary; and

(ii) the joint and several guarantee of certain directors of the subsidiary.

Term loan 3 is secured by pledges of raw materials inventory of a subsidiary.

Term loan 4 is unsecured while term loan 5 is secured by a legal charge over certain assets of the subsidiary.

Term loan 6 is secured as follows:- (i) a legal charge over certain assets of the subsidiary; and

(ii) pledges of raw material inventory of the subsidiary.

Term loan 7 is secured as follows:- (i) a legal charge over certain assets of the subsidiary;

(ii) a legal charge over the prepaid land lease payments of the subsidiary; and

(iii) pledges of raw materials inventory of the subsidiary.

(i) Related Parties

The Group

30.06.2008USD’000

31.12.2007USD’000

Purchase of stevia extraction business from certain directors of GJH - 1,487

Purchase of intellectual property rights from the directors of GJH - 3,114

Sale of treasury shares to a directors of the Company 120 1,054

Amount owing by a director in respect of shares sold to him 970 970

(ii) Key Management Personnel

The Group

30.06.2008USD’000

31.12.2007USD’000

Short-term employee benefi ts 346 103

Share-based payments 480 -

37. Term loans continue

(a) Identities of related partiesThe Group and/or the Company have related party relationships with:-

(i) its subsidiaries as disclosed in Note 6 to the fi nancial statements;

(ii) the directors who are the key management personnel; and

(iii) companies in which certain directors are common directors and/or substantial shareholders;

(b) In addition to the information detailed elsewhere in the fi nancial statements, the Group carried out the following transactions with related parties during the fi nancial year:-

38. Signifi cant related party transactions

The Group

30.06.2008USD’000

31.12.2007USD’000

Amount owing by management of GJHTerms as disclosed in Note 15 to the fi nancial statements 1,433 2,137

39. Signifi cant related party balances


77

The applicable closing foreign exchange rates used (expressed on the basis of one unit of foreign currency to United States Dollar equivalent) for the translation of

foreign currency balances at the balance sheet date are as follows:-

The Group

30.06.2008 31.12.2007

Chinese Renminbi 0.1459 0.1369

Ringgit Malaysia 0.3062 0.2998

40. Foreign exchange rates

On 3 April 2008, the Company entered into a Share Swap Agreement with the other shareholders of Ganzhou Julong High-Tech Food Industry Co. Ltd. to acquire an additional

40% shareholding in this subsidiary by issuing a total of 2,437,330 new ordinary shares of USD0.10 each value at USD3.50 each.

41. Signifi cant events during the fi nancial period

(i) On 1 July 2008, Wilmar International Limited (“Wilmar”) and Olam International Limited (“Olam”), through a 50:50 owned investment vehicle Olam Wilmar Investments Holdings Limited (“OWIH”), purchased 26,544,609 shares (20% of the issued capital) in the Company. Of which, 23,728,155 shares were purchased from Asian Investment Partners Limited and Artur and Aslan Tomov and 2,816,454 shares from PrimePartners Asia Merchant Capital Holdings Limited at a price of £2.01 per share.

(ii) On completion of the above transaction, Mr. Kuok Khoon Hong, the Chairman and Chief Executive Offi cer of Wilmar International Ltd, was appointed to the Board as a Non-Executive Director on 19 August 2008 and Mr. Aslan Tomov resigned as an Executive Director of the Company with effective from 7 July 2008.

(iii) On 13 October 2008, Mr. Sunny Verghese, was appointed as Non-Executive Director of the Company replacing Mr. Kuok Khoon Hong whom has resigned on the same day.

42. Events after balance sheet date

43. Segmental reporting

30.06.2008Investment Holdings

USD’000Natural Sweetener

USD’000Eliminations

USD’000Total

USD’000

Revenue - 26,578 (7,288) 19,290

Result

Segment profi t 2,235

Finance costs (996)

Profi t before taxation 1,239

Income tax expense -

Profi t after taxation 1,239

Other information

Segment assets # 75,872 85,167 (46,908) 114,131

Segment liabilities * 133 59,846 (28,828) 31,151

Capital expenditure - 7,286 - 7,286

Depreciation and amortisation - 1,064 - 1,064

(i) Primary reporting format - business segments

Notes# - Segment assets comprise total current and non-current assets.* - Segment liabilities comprise total current and long-term liabilities.


78

43. Segmental reporting continue

31.12.2007Investment Holdings

USD’000Natural Sweetener

USD’000Eliminations

USD’000Total

USD’000

Revenue - 14,604 (5,706) 8,898

Result

Segment profi t 915

Finance costs (471)

Profi t before taxation 444

Income tax expense 569


Other information

Segment assets # 68,012 67,532 (28,820) 106,724

Segment liabilities * 430 34,933 (10,309) 25,054

Capital expenditure - 3,509 - 3,509

Depreciation and amortisation - 427 - 427

(i) Primary reporting format - business segments (continue)


30.06.2008BermudaUSD’000

MalaysiaUSD’000

The PRCUSD’000

EliminationsUSD’000

TotalUSD’000

Revenue - 14,749 11,829 (7,288) 19,290

Result

Segment profi t 2,235

Finance costs (996)

Profi t before taxation 1,239

Income tax expense -


Other information

Segment assets # 75,872 69,781 38,070 (65,591) 114,131

Segment liabilities * 133 51,892 10,409 (31,286) 31,151

Capital expenditure - 1,984 5,302 - 7,286

Depreciation and amortisation - 506 558 - 1,064

(ii) Secondary reporting format - geographical segments



79

43. Segmental reporting continue

31.12.2007MalaysiaUSD’000

The PRCUSD’000

EliminationsUSD’000

TotalUSD’000

Revenue 5,780 8,824 (5,706) 8,898

Result

Segment profi t 915

Finance costs (471)

Profi t before taxation 444

Income tax expense 569


Other information

Segment assets # 102,433 33,111 (28,820) 106,724

Segment liabilities * 27,861 7,502 (10,309) 25,054

Capital expenditure 251 3,258 - 3,509

Depreciation and amortisation 222 205 - 427

(ii) Secondary reporting format - geographical segments (continue)


Fair value is defined as the amount at which the financial instrument 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 following methods and assumptions are used to estimate the fair value of each class of fi nancial instruments:-

(a) Cash And Cash Equivalents And Other Short-Term Receivables/Payables

The carrying amounts approximated their fair values due to the relatively short-term maturity of these investments.

(b) Long-Term Borrowings The carrying amounts approximated the fair values of these instruments. The fair values of the long-term borrowings are determined by discounting the relevant cash flows using current interest rates for similar types of instruments at the balance sheet date.

45. Fair values of fi nancial assets and liabilities

The comparative fi gures are in respect of fi nancial period from 23 July 2007 (date of incorporation) to 31 December 2007.

46. Comparative fi gures

Capital expenditure at the balance sheet date is as follows:-

44. Capital commitment

The Group

30.06.2008USD’000

31.12.2007USD’000

Approved and contracted for Property, plant and equipment 2,499 2,497

Approved but not contracted for Property, plant and equipment 12,717 -


80

6. Shareholder information

The Annual General Meeting (AGM) will be announced following publication of the Group’s results for fi nancialyear 2009.

2009 fi nancial year and corporate calendarHalf year end 31 December 2008Interim results 4 March 2009Year end 30 June 2009Final results announcement 23 September 2009

Annual general meeting

Registered offi ce in BermudaClarendon House2 Church StreetHamilton HM 11Bermuda

www.purecircle.com

Management offi ce in Malaysiac/- PureCircle Sdn BhdUnit 19-03-02 (3rd Floor)PNB DamansaraNo. 19 Lorong DungunDamansara Heights50490 Kuala LumpurMalaysiaT +603 2093 9333

PureCircle

Horwath (Kuala Lumpur)Level 16, Tower CMegan Avenue II12 Jalan Yap Kwan Seng50450 Kuala Lumpur, Malaysia

Auditors

RFC Corporate Finance LimitedLevel 14, 19-31 Pitt StreetSydney NSW 2000, Australia

Level 15, QV1 Building250 St George’s TerracePerth WA 6000, Australia

Nominated adviser

Hanson Westhouse Limited12th Floor, 1 Angel CourtLondon EC2R 7HJ, United Kingdom

Mirabaud Securities Limited21 St James’s SquareLondon SW1Y 4JP, United Kingdom

Brokers

College Hill Associates LimitedThe Registry, Royal Mint CourtLondon EC3N 4QN, United Kingdom

Public relations

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, United Kingdom

Share registrar

This report has been printed in Singapore, our printer is Environmental Management System ISO14001:2004 accredited and Forest Stewardship Council (FSC) chain of custody certified. All inks used are vegetable based. This paper is FSC certified, environmentally-friendly ECF (elemental chlorine free) and recyclable.


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