PureCircle Limited : FY14–Audited Full Year Results · 10/09/2014 · - FY14 was an important...
Transcript of PureCircle Limited : FY14–Audited Full Year Results · 10/09/2014 · - FY14 was an important...
PureCircle Limited : FY14– Audited Full Year ResultsAnalyst Call - 10 September 2014
PureCircle - Investor Slides - All rights reserved September 20141
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PureCircle - Investor Slides - All rights reserved September 20142
Content1. CEO Overview Magomet Malsagov, CEO
2. Financial Review William Mitchell, CFO
3. Operational Review Jordi Ferre, COO
4. Outlook Magomet Malsagov, CEO
5. Questions
PureCircle - Investor Slides - All rights reserved September 20143
4
1. CEO Overview
PureCircle - Investor Slides - All rights reserved September 2014
by Magomet Malsagov, CEO
4
CEO Overview (1)Business Model - FY14 confirmed the operational gearing of our business model
- Our $31m sales growth led to $14m EBITDA and $12m net profit improvement- Across the combined period FY13 & FY14, we have grown sales $56m a year andimproved net profit $25m a year
Sales - Our sales increased $31m to $101m: (44% growth)- Volume gains were led by Stevia 3.0TM portfolio: we now have 12 products in market- The whole portfolio showed growth notably new innovations- All sales regions grew compared to FY13- Growing use of proprietary blends of our products by customers was a feature of FY14
Margins - FY14 gross margin was $37m, an increase of $18m (106%)- Gross margin % was up 11 points to 36%, we would expect further increases on higher sales
Inventories - FY14 inventories of $86m were flat against FY13- Includes finished goods production of new innovations ahead of expected sales growth
Debt & funding - FY14 net debt was $80m (FY13: $75m)- We have renewed and extended for 5 years our core $71m bank facility
Headroom - Our funding headroom is $60m and is sufficient for our current expansion plans
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CEO Overview (2)
Market - Market adoption has accelerated across all Food and Beveragecategories- The scale and breadth of adoption is strong evidence of Stevia becominga mainstream ingredient- Adoption is being enabled by our Stevia 3.0TM portfolio
Carbonated Soft Drinks - FY14 was an important year for development of stevia in the key CSDcategory- Coca Cola Life, Pepsi Next, Sprite and other important global brandsannounced expanded roll-outs into larger markets
Regulatory - Currently over 4 billion consumers have access to stevia- Stevia clearances in India is imminent and will add an additional 1 billionconsumers- FDA GRAS approval for Reb M, a new zero-calorie sweetener jointlydeveloped with The Coca-Cola Company is an important milestone for us
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CEO Overview (3)PureCircle Innovation - We launched 6 new products to market in FY14.
- Each innovation helps F&B brands find the right customized solution for their formulation.
Formulation & - We opened additional formulation & application laboratories in Technical support Mexico and Malaysia to support LATAM and SE Asia markets.
Stevia advocacy - The Global Stevia Institute (www.globalsteviainstitute.com) enhanced stakeholder engagement partnering with key customers to tailor advocacy for product launches. - The GSI reaches over 6,000 health professionals regularly.
Supply Chain - We delivered increased sales volumes across wider product portfolio to a wider range of delivery points than before. - At same time we scaled up production of new innovations and reduced unit costs of production.
Management - The Group further strengthened its senior management team with appointments of COO and other key new hires in Leaf Supply, Quality Control, Operational Finance and Human Resources.
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2. Financial Review
by William Mitchell, CFO
USD’ m (FY13 restated) FY14 FY13 ChangeSales 101.0 70.2 +44%Gross margin 36.6 17.8 +106%
Operating profit 17.2 1.0 +16.2mEBITDA 22.9 9.1 +13.8mNet profit/(loss) after tax 2.3 (9.4) +11.7m
Operating cashflow before financing 15.5 (9.6) +25.1m
Net debt (79.9) (75.2) (4.7m)Net assets 147.5 141.8 +5.7mNet assets per share (U$ cents) 0.90 0.86 +0.04
Summary Financials
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• FY14 confirmed the operational gearing of our business model - $31m sales growth led to $13m (152%) increase in EBITDA.
• $25m improvement in operating cashflow before financing• Principal bank facility renewed and extended for 5 years
Profit and Loss Account
PureCircle - Investor Slides - All rights reserved September 201410
USD’ m (FY13 restated) FY14 FY13 ChangeRevenue 101.0 70.2 +44%Cost of sales (64.4) (52.4) +106%
Gross margin 36.6 17.8 +18.8mGross margin % 36% 25% +11 points
Other income 0.4 0.4 -
Administrative expenses (19.8) (17.3) (2.5m)
Operating profit 17.2 1.0 +16.2m
Other expenses (6.1) (3.9) (2.2m)
Foreign exchange gain 1.3 2.4 (1.1m)
Finance costs (9.3) (8.4) (0.9m)
Share of loss in joint ventures (0.5) (0.3) (0.2m)
Taxation (0.3) (0.1) (0.2m)
Profit/(Loss) for the financial year 2.3 (9.4) +11.7m
EBITDA 22.9 9.1 +13.8m
Sales: - $31m (44%) increase. 37% volume and 5% pricing- Volumes: wider adoption, new innovations. - Pricing: sales mix more Stevia 3.0TM portfolio less co-products
Gross margin: - $36.6m, $18m increase (106%): - Improved sales volumes, sales mix and lower unit costs. - At 36% FY14 gross margin up 11% points vs FY13 25%. - Further improvement in gross margin expected as sales increase
Operating profit - $17m and $23m respectivelyand EBITDA: - Highly geared operational business model
- Sales increases lead to higher profitability - Sales up $31m, operating profit up $16m, EBITDA up $14m (152%) at $23m.
Share of loss of - New IFRS: JVs now equity accounted for (not proportional consolidation) Joint Ventures: - Loss up $0.2m reflecting increased investment in application support.
Finance costs: - Up $1m to $9m- Higher average FY14 net debt balance reflecting the FY13 decision to build inventories of Stevia 3.0TM products ahead of anticipated sales growth in FY14 and FY15.
Net profit after tax: - $2m net profit. $12m improvement.- Reflects EBITDA up $14m, $1m higher interest and $1m lower forex gain.
Profit and Loss Account
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Operating cashflow: - $25m improvement : Stronger EBITDA and flat inventory- Further improvements expected as sales increase.- Payables down $3m –reflects flat inventories
Financing Activities: - FY13 includes $31m equity placing and $23m bank drawdowns for production
- FY14 reflecting flatter working capital- Post June 14: - $34m gross debt repayments
- $71m principal bank facility renewed and extended for 5 years
Cashflow
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USD’ m (FY13 restated) FY14 FY13 ChangeOperating cashflow before working capital changes 22.7 6.8 +15.9m
- Inventories 0.1 (20.6) +20.7m- Receivables (4.4) (6.9) +2.5m- Payables (2.9) 9.7 (12.6m)
Operating cashflow 15.5 (9.6) +25.1m- Interest / tax (10.2) (8.2) (2.0m)- Capex / investments (11.4) (10.6) (0.8m)
Net cash from Financing (2.3) 52.4 (54.7m)Net movement in cash (8.4) 24.0 (32.4m)
• Production capacity fully invested that can support $250-300m+ of sales• Innovation investment accelerating: driving adoption of stevia and PCL market share• Inventory volumes have been sustained in anticipation of higher future sales growth
Balance Sheet
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USD’ m (FY13 restated) FY14 FY13Intangible Assets 38.0 32.3
Working capital items:
- Inventory 86.5 86.5
- Receivables - excluding Joint Ventures 34.6 29.8
- Payables 18.7 20.8
Gross assets 292.8 287.6
Net debt (80.0) (75.2)
Net assets 147.5 141.8
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3. Operational Review
by Jordi Ferre, COO
• Sales Performance:– FY14 sales increased $31m (44%) to $101m.– Volumes increased 37% led new value added ingredients from our Stevia 3.0 TM portfolio.– Continued reduction in lower value co-product sales in line with focusing on our Stevia 3.0 TM portfolio.
• Development of stevia as a mainstream ingredient in the Carbonated Soft Drink category:– The Coca Cola Company announced roll out of Coca-Cola Life into the USA, Mexico, UK, Sweden while PepsiCo extended Pepsi
Next into Canada, Finland and Netherlands.– Innovation in non-cola CSDs: Dr Pepper has launched a range of products with stevia in the USA.– Reformulation of Global Brands such as Sprite and Fanta continues in markets in Europe, Latin America and Asia.– Numerous other Carbonated Soft Drink are ready in development pipelines for launch.
• Favorable Market & Regulatory Dynamics:– Health and regulatory pressures to moderate calorific intakes continue to increase with a series of government initiatives such
as the sugar tax in Mexico or the “Traffic Light” labelling in the UK.– Mintel data shows adoption by numbers of product continuing to grow at more than 50% a year.
• Consolidation of PureCircle Innovation Strategy:– Reb M and new flavors approved by US regulatory bodies– The Group now has 12 products in market under our proprietary Stevia 3.0 TM portfolio.– Growing use of our proprietary Stevia 3.0 TM blends to formulate great tasting consumer products.
• Organization and Supply Chain Investments– During FY14 in-market application laboratories were opened in Mexico and Malaysia to support LATAM and SEA Markets.– Increased investment in diversified leaf supply at our Kenya and Paraguay operations in anticipation of growth in market
demand.– Supply chain delivered record volumes across a wider product portfolio to a wider range of delivery locations, confirming the
scalable nature of PureCircle business model.– Implementation of a global integrated Enterprise Wide Operational System- JD Edwards– A new Operating Committee reporting to the CEO has been implemented including new senior hires in key areas of Leaf
Development and Supply, Quality Control, Operational Finance and Human Resources.
FY14 Operational Overview: Step Change
PureCircle - Investor Slides - All rights reserved September 2014
15
+58%
70,200
2012
101,045
2014
44,475
2013
+44%
FY14 Topline Sales Analysis
• FY14 sales increased $31m (44%) to $101m. • Average pricing increased 5% in FY14. • Sales to Global Key Accounts grew faster than sales to regional Accounts
PureCircle Volume By Quarter
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Stevia 3.0TM Portfolio: Continuous Evolution in FY14
GlycosideBlends
Reb APremium
Blends Reb M*
SG95SG95-20SG95-30
Reb A 97Reb A 99
AlphaAlpha 2DeltaBeta
PureCircle Targeted Solutions = Formulators’ Tool Box
Natural Flavors
NSF-01NSF-02NSF-03NSF-04
Introduced in FY14
* Developed with TCCC
• In FY14 volumes increased 37% led by sales of new ingredients from our Stevia 3.0 TM portfolio. • The Group now has 12 products in market under our proprietary Stevia 3.0 TM portfolio. • Growing use of blends of our proprietary Stevia 3.0 TM portfolio to formulate great tasting consumer products. • December 2013 GRAS approval for Reb M and approval in March 2014 for an increased range of natural flavours.• Further potential in our innovation pipeline in the pipeline for FY15 and subsequent years.
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NETHERLANDS
ITALY
ITALY.
CHILE
CANADA CHINA
UK/US
FRANCE
GREECE/CYPRUS ISRAEL
MALAYSIA
COLOMBIAPARAGUAY
USA
CHINA
CHINA
Q2 2014 New Product Launches: Global and Diversified
ROMANIA.
MEXICO
AUSTRALIAINDONESIA
MEXICO
UKPHILIPPINES
ARGENTINA
CARB
ON
ATED
SO
FT D
RIN
KS
JUIC
E BE
VRAG
ES
SYRU
PSDA
IRY
SOY
SAU
CERT
D T
EA
TABL
E TO
P
CERE
AL
WAT
ER
USA
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FY14 Step Change: Market Adoption of Stevia by the leading CSD brands in a variety of strategic approaches to market
Reformulation New Launch<3
0% R
educ
tion
30%
-50%
Red
uctio
n>5
0% R
educ
tion
Sugar Moderation for Kids
Replace Artificial SweetenersRedefine Regular Cost SavingsNew Innovation
100%
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Typical Values 100ml (3.5floz) provide
A 200ml (7floz) serving provides
Energy 210kJ (49kcal) 420kJ (100kcal)
Protein trace trace
Carbohydrate 12.3g 24.6g
Sugars 12.3g 24.6g
Fat trace trace
Saturates 0g 0g
Fibre trace trace
Sodium* 0g 0g
A 50% sugar reduction using stevia will yield:Typical values per 100ml per 200ml
serving
Sugars 6.1 g 12.3 g
Moving Customer Cranberry Juice Drink from red to amber
Options “Reduced sugar”“50% less sugar““Stevia leaf extract”
Cost saving 2p / Ltr vs. sugar that’s £20k / Million Litres
UK traffic light case study: Cranberry Juice Drink 1Litre
Health and regulatory pressures to moderate calorific intakes
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Growth in new product launches with stevia is accelerating globally across categories beyond beverages
Years are PureCircle FiscalSource: Mintel, 2014
Category #FY14 5 Yr CAGRRTDs 133 101.5%Sugar & Gum Confectionery 111 94.4%Sweet Spreads 53 92.6%Water 97 89.2%Dairy 168 83.8%Bakery 130 79.4%Juice Drinks 208 76.9%Meals & Meal Centers 36 64.4%Carbonated Soft Drinks 132 61.5%Other Beverages 167 59.9%Hot Beverages 103 59.4%Sports & Energy Drinks 60 58.5%Breakfast Cereals 17 53.4%Sauces & Seasonings 63 51.1%Desserts & Ice Cream 61 46.6%Sweeteners & Sugar 161 46.3%Processed Fish, Meat & Egg Products 27 40.1%Fruit & Vegetables 5 38.0%Snacks 396 28.3%Chocolate Confectionery 78 --Baby Food 9 --Alcoholic Beverages 7 --Soup 4 --Savoury Spreads 3 --Side Dishes 2 --Total Launches 2231 54.8%
Categories Ranked by Launch Growth FY09-FY14
251368
493
987
1314
2231
0
500
1000
1500
2000
2500
FY09 FY10 FY11 FY12 FY13 FY14
# la
unch
es
Global Food & Beverage Product Launches With Stevia
5 Year CAGR: +55%
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Expansion of Application formulation and technical support
US Lab Expansion: 9/2013China Lab Upgrade: 11/2013
Mexico New Lab: 1/2014
EU Lab Expansion: 1/2014
Malaysia New Lab: 3/2014• Expanded sensory, CSD
capabilities.• Added technologist and senior
scientist
• Expanded processing capabilities.
• Expanded dairy capabilities.• Added two scientists
• Applications manager added
• Application Scientist added
• During FY14 application laboratories were opened in Mexico and Malaysia to support growth in Latin America and South East Asia Markets.
• PureCircle expanded its PureCircle University program, hosting more than 100 PureCircle University programs around the globe for our Key Customers resulting in the accelerated use by customers of proprietary PureCircle Stevia 3.0 TM products and blends.
PureCircle - Investor Slides - All rights reserved September 201422
is working in collaboration with key customers, to tailor advocacy support for significant product launches and reformulations.
www.globalsteviainstitute.com
Through advisory board member led activity, the GSI was able to reach more than 6,000 health
professionals and influencers in FY14
PureCircle - Investor Slides - All rights reserved September 201423
Diversification and Scaling Up of Leaf Supply
• Leaf Diversification is key for scaling leaf volume, improve leaf quality, security of supply and avoid leaf cost fluctuations
• We have increased investment across our leaf operations in Africa and South America and in FY15 we expect these regions to significantly contribute on our overall supply
We have a diverse and consistent leaf source across 25,000 individual farmers
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New PureCircle Operational Management
A new Operating Committee reporting to the COO has been implemented including new senior hires in key areas of Leaf Development and Supply, Quality Control, Operational Finance and Human Resources.
PureCircle - Investor Slides - All rights reserved September 201425
The Key to PureCircle and Stevia Continuous Success
• Continue supporting our Key Customers in the areas of Ingredient Reputation Management, Application & Regulatory guidance as well as Consumer Insights & trends
• Consolidate Global Diversified Leaf Sourcing with the goal to deliver 50% of requirements from Africa and Latin America in the next 12 months
• Maximize current capacity in order to deliver lower manufacturing costs and improved gross margins
• Expand innovation strategy focusing to deliver good tasting 0 calorie CSDs including propagation of leaf varieties which will increase yields to deliver better tasting Stevia Molecules on a large scale
PureCircle - Investor Slides - All rights reserved September 201426
PureCircle - Investor Slides - All rights reserved September 201427
4. Outlook
by Magomet Malsagov, CEO
Outlook (1)
• Our FY14 results provide strong evidence of the scalability of our business model with highersales volumes leading to strong improvements in gross margin, operating profit and EBITDA.
• Further improvements in profitability should arise as volumes increase.
• Market adoption of PureCircle Stevia is accelerating, particularly in the important CarbonatedSoft Drink category.
• The scale and breadth of market adoption across more categories and more countries isstrong evidence of stevia becoming a mass volume mainstream ingredient.
• Blends of our proprietary products are accelerating.
• Coupled with our strong innovation pipeline, this provides us with further confidence in thefuture of our business.
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Outlook (2)
• As highlighted in this presentation, the Company is in growth phase with continuedinvestment in market development, product innovation, supply chain and organization. Weexpect this to continue in FY15.
• We have renewed and extended for 5 years our principal debt facilities and are sufficientlyfunded for our current growth plans.
• Recent CSD launches in major markets are significant and are expected to have growingimpact from CY 2015.
• The seasonality seen in our business in prior years is expected to continue with sales beingH2 weighted.
• Our guidance for H1 FY15 is for sales to be in the range $40 to $45m.
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PureCircle - Investor Slides - All rights reserved September 201430
5. Questions
PureCircle Limited : FY14– Audited Full Year ResultsAnalyst Call - 10 September 2014
PureCircle - Investor Slides - All rights reserved September 201431