©PURECIRCLE 2019
CREATING BEST-TASTING SOLUTIONS
Interim Results 2019
Presented by
Magomet Malsagov
Rakesh Sinha
12 March 2019
©PURECIRCLE 2019
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©PURECIRCLE 20193
Presented by
Magomet Malsagov, Chief Executive Officer
OVERVIEW
©PURECIRCLE 2019
CHIEF EXECUTIVE’S OVERVIEW
• Implementation of new strategy centred around best tasting products from Starleaf™ continues to gain momentum
• Scaled & Commercialised our new technology to convert RebA to RebM
• Results include sale of meaningful quantities from next generation stevia sweeteners based on Reb M both directly extracted fromleaf and via conversion of first generation stevia
• Customers are switching and reformulating to Reb M due to the superior taste profile
• Reformulations have led to some cannibalisation of base business and the results of the first six months should be seen in this context. The pipeline is healthy.
• Sufficient production capacity of Reb M to sweeten circa 1 billion cases of zero-calorie carbonated soft drinks annually
• Food and Beverage launches containing best tasting products from Starleaf™ including new channels and notable brands
• Restructuring and significant strengthening of the go-to-market organisation initiated and will be completed in H2
$50.7m
39.2%
+240bps
$2.9m
+6.9m
Interim
Revenue
Adj.EBITDA Gross Margin Underlying
Net Profit
$11.6m
+49%$8m$25m
Gross Debt
ReductionExceptional
Items
©PURECIRCLE 2019
FOOD AND BEVERAGE INDUSTRY:
In need of sweetener innovation
• Global obesity crisis
• Sugar tax (passed/proposed)
• Activist advocacy groups
• Good for me
• Good for others
• Good for the planet
proposed new label
highlighting calories and added
sugars
• Sugar
• Artificial sweeteners
RISING PUBLIC
HEALTH CONCERNSCONSUMERS REDEFINE
HEALTH & WELLBEINGSWEET
UNDER FIRE
©PURECIRCLE 20196
Evolution of Strategy
StarleafTM Stevia
©PURECIRCLE 2019
WHY REB M? From a range of options, we believe that Reb M
sweeteners combine the best of consumer needs with customer
requirements of price & capacity
7
NaturalConsumer
AcceptanceTaste Capacity
Regulatory
ApprovalPrice
Reb M (extract)
GMO Reb M
Reb A (extract)
Artificial Sweeteners
HFCS
Reb M (bioconversion)
Reb M (extract)
Reb M (GMO/fermentation)
Reb A (extract)
Monk Fruit
Artificial Sweeteners
HCFS
Sugar
©PURECIRCLE 20198
Stevia Leaf Composition Getting to the Best Stevia Sweeteners
STEVIA LEAF – THE SOURCE OF INNOVATION
Steviol Glycosides
ProteinsFibers
Antioxidants REB M, D
Other glycosides
Original Strategy (Reb A) New Strategy
REB MREB M
©PURECIRCLE 20199
WHAT CAN PURECIRCLE’S LATEST INNOVATIONS DELIVER TO
OUR CUSTOMERS
Customer + PureCircle
Cost Savings
COST & CAPACITY
Social Responsibility
FARMERS, WATER,
LAND
Growth
TASTE
Calorie Reduction
INNOVATION
©PURECIRCLE 2019
…………….………….………….………….…………….…………..…………….…………..................
FEEDBACK FROM OUR CUSTOMERS AND THEIR DEVELOPERS
IS VERY POSITIVE
10
‘Such a big difference in taste vs. using Reb A’
‘We are finally able to formulate without any
aftertaste’
‘You can really taste the difference’
©PURECIRCLE 2019
CONSUMER DEMAND DRIVES STEVIA LAUNCHES WITH
REB M EMERGING
11
Global new product launches with stevia Reb M Sweeteners are taking off in a range of categories
75% of launches
occurred in the past 5
years
280478
1,163
2,278
2,963
4,410
'09 '10 '12 '14 '16 '18
MEA +33% -7%
LTAM +40% +33%
NTAM +12% 21%
Europe +13% +26%
APAC +19% +48%
5 yr CAGR 1yr
Total +19% +33%
Years are calendar years
Project gestation period from inception to launch is shorter for RebM than RebA due to superior taste
©PURECIRCLE 201912
Calorie Reduction
INNOVATION
Cost Savings
COST & CAPACITY
Social Responsibility
FARMERS, WATER,
LAND
Growth
TASTE
Customer + PureCircle
©PURECIRCLE 2019
GROWING AROUND THE WORLD
13
North Carolina Americas Africa India China
China Africa Paraguay
Suppliers 98 30 325*
Regions 11 3 1
Varieties 3 2 1
*Small scale farmers
©PURECIRCLE 201914
VERTICAL INTEGRATION AND SUPPLY CHAIN INNOVATION
MEANS THAT WE CAN NOW SCALE UP REB M PRODUCTION
1 BillionSeedlings
Scaling Reb M
Seedlings Dry Leaf
20,000 MTDry Leaf
3,000 MTReb M
Reb M CapacitySeedling to Finished Product
$600M Investment
TODAY: 3,000 MT Reb M
2 Refineries
*Reb M refers to extract and bioconversion process
©PURECIRCLE 201915
3,000 METRIC TONS OF REB M WILL:
20+ BN
Cases
7 Trillion Calories by
replacing sugar
with stevia across
3,000 MT
2 MillionMT Of Sugar
At 15% sweetness
levels
4.5 BN
Cases
1 BN
Cases@ 30% Sugar Reduction
Reduce Sugar Across
Remove Eliminate
@ 100% Sugar Reduction @ 15% Sugar Reduction
©PURECIRCLE 2019
PURECIRCLE REB M OFFERING IS COMPETITIVE AND WILL HELP
CUSTOMERS SAVE COST GOING FORWARD
16
$75
$100
$125
$150
$175
300 MT 1000 MT 3000 MT
Reb M SweetenerPrice / Volume
Reb M Sweetener
©PURECIRCLE 2019
PURECIRCLE’S REB M CAN PROVIDE UNPARALLELED COST
SAVINGS TO OUR CUSTOMERS
17
Attract New ConsumersReformulation
$600
MillionFrom switching
from sugar to
stevia
using 3,000 MT
Save
While Investing For Growth
Innovation
©PURECIRCLE 201918
Calorie Reduction
INNOVATION
Cost Savings
COST & CAPACITY
Social Responsibility
FARMERS, WATER,
LAND
Growth
TASTE
Customer + PureCircle
©PURECIRCLE 2019
REDUCE CALORIESCARBON
FOOTPRINT
WATER
FOOTPRINT
GLOBAL
FARMERSLAND USE
Save
25,000+
hectares
annually
Support
30,000+
Farmers
annually
Remove
7 Trillioncalories as
compared to sugar
equivalence
Reduce
600,000 MTOf Green
House Gasses
Save
1 TrillionLiters of Water
PURECIRCLE CAN HELP OUR CUSTOMERS WRITE NEW
SUSTAINABILITY STORIES
Using 3,000 MT of RebM could:
©PURECIRCLE 201920
Calorie Reduction
INNOVATION
Cost Savings
COST & CAPACITY
Social Responsibility
FARMERS, WATER,
LAND
Growth
TASTE
Customer + PureCircle
©PURECIRCLE 2019
21
Portfolio of Reb M Products Beyond Sweeteners
+ Improved solubility
+ Wider range of cost options
+ New beverage applications
+ Proteins, antioxidants, & fibers
+ Nutrition and health benefits
+ Support innovation brands
WE ARE ALWAYS INNOVATING ACROSS OUR SUPPLY CHAIN
©PURECIRCLE 201922
FINANCIALREVIEW
Presented by
Rakesh Sinha, Chief Financial Officer
©PURECIRCLE 2019
Revenue
Gross Profit
Gross Margin %
US$ (millions)
Other income
SG&A
Operating Profit
Operating margin %
Other Expenses
Finance Costs
Taxation
Share of Profit/(Loss) in JV
Forex
Net (Loss)/Profit
Net Profit %
PROFIT & LOSS FY2019Margins improve with increased Breakthrough volumes
1H FY19 1H FY18
EPS – Diluted (US Cents/Share)
Adjusted EBITDA
53.5
19.7
36.8%
0.5
(17.1)
3.1
5.7%
(2.5)
(3.2)
(2.2)
(0.4)
1.2
(4.0)
-7.5%
2.3)
7.8
50.7
19.9
39.2%
6.0
(14.7)
11.2
22.1%
(30.0)
(4.7)
3.2
(0.0)
(1.8)
(22.1)
-43.6%
(12.6)
11.6
• FY19 sales decreased by $2.8m (-5.2%) to $50.7m due to sales phasing and adoption of RebMcannibalising base business
• Improved Gross Margin by 240bps driven by category mix i.e. more Breakthrough
• Higher other income due to R&D and IP related payments.
• SG&A savings from restructuring and cost savings initiatives.
• Significant inventory write down of $24.2m primarily relating to by-products generated from early generations of stevia leaf. Classified as an exceptional item.
• Higher finance costs due to higher drawdown on financing facilities.
• Deferred tax assets recognised due to recent change in Malaysian tax regulations – this will reverse by year end
• Forex loss due to weakened Malaysian Ringgit vs USD
• Adjusted EBITDA improved 48.7% to $11.6m,.
• Net Loss of $22.1m due to inventory write down. Underlying Net Profit for the period excluding exceptional items is $2.9m
©PURECIRCLE 2019
Asia, 11%
Europe, 43%
Americas, 46%
Revenue Mix by Geographic Region
Asia, 18%
Europe, 31%
Americas, 51%
Revenue Mix by Geographic Region
DIVERSIFIED REVENUE STREAMS
H1 F
Y1
8H
1 F
Y1
9
Basic Ingredients
40%
Value Added17%
Flavour32%
Breakthrough6%
Custom Blend
5%
Revenue Mix by Product Category
Basic Ingredients
43%
Value Added22%
Flavour31%Breakthrough
3%
Custom Blend1%
Revenue Mix by Product Category
• Growth from next generation,
better tasting stevia
sweeteners represented in
Breakthrough category, driving
margins
• Breakthrough grew 1.7x and
Custom Blends grew 5x
• Sales growth continues to be
achieved in North America and
Asia
• Strong growth of 14% in North
America
• Asia delivering high double
digit growth >75%
©PURECIRCLE 2019
NON – CURRENT ASSETS
- Property Plant & Equipment
- Intangible Assets
- Other non-current assets
TOTAL EQUITY
TOTAL LIABILITIES & EQUITY
BALANCE SHEET
NON - CURRENT LIABILITIES
- Long-term borrowings
- Other payables & accruals
CURRENT ASSETS
- Inventories
- Trade Receivables
- Cash and bank balances
- Other current assets
TOTAL ASSETS
CURRENT LIABILITIES
- Trade payables
- Short-term borrowings
- Other payables & accruals
TOTAL LIABILITIES
200.0
354.5
178.8
112.2
37.7
14.6
14.3
354.5
109.0
106.5
2.5
45.5
17.0
11.7
16.8
154.5
US$ (millions) FY19 FY18• PPE: Depreciation
• Intangibles: Investment in leaf
development, IP and R&D
• Other non-current assets improved
with the recognition of deferred tax
assets
• Inventories: Decrease due to net
realisable value write down of
$24.2m
• Trade receivables: continued
improvement in receivables
management.
• Trade Payables: longer credit with
suppliers
• Net debt: $103.5m
226.4
389.6
212.3
122.5
57.5
23.9
8.4
114.9
112.9
2.0
48.3
20.5
9.2
18.6
163.2
389.6
175.7
96.0
63.1
16.6
177.3
100.1
64.1
13.1
©PURECIRCLE 2019
Operating cash flow before
working capital changes
US$ (millions) 1H FY19 1H FY18
10.5
Increase in inventories
Decrease in trade and other
receivables
(Decrease)/Increase in trade
and other payables
(13.9)
17.9
(6.7)
Net cash from operations
before interest and tax 7.8
Net cash from operations after
interest and tax
Investing activities
Financing activities
3.2
(6.2)
(5.0)
Net cash flow (8.0)
Gross cash
Headroom
14.6
79.7
Operating cash flow before working capital improvement of +$2.8m
NET OPERATING CASH FLOW OF $7.8M
7.7
(22.2)
15.9
1.6
3.0
0.2
(14.2)
5.3
(8.7)
28.0
93.0
• Operating cash flow before working
capital remains positive
• Inventories increased mainly due to
leaf purchases in preparation for H2
(seasonality)
• Strong receivables management
• Investing mainly R&D projects and
capex additions
• Financing: Repayment on the
banking facilities.
©PURECIRCLE 201927
SUMMARY & OUTLOOK
Significant opportunities for growth
©PURECIRCLE 2019
SUMMARY & OUTLOOK
Our new StarleafTM strategy, which enables us to provide the best tasting solutions for our food and beverage customers looking to reduce sugar naturally is on track
Positive feedback about great taste profile of our next generation stevia Reb M sweeteners.
Pipeline of projects with new products continues to grow in both existing and new channels.
Expect margins to strengthen as both reformulations and new launches will primarily be based on high margin products.
Sales to date in H2 show an improving trend versus the prior year
Everything we do is about helping our customers achieve their goals of reducing sugar/calories/cost of ingredients without compromising taste through high purity stevia solutions
©PURECIRCLE 201929
Q&A
©PURECIRCLE 201930
Appendix
Greatest tasting stevia
©PURECIRCLE 2019
OUR GLOBAL FOOTPRINT
©PURECIRCLE 2019
HOW WE CREATE VALUE
We have successfully
commercialised a portfolio
that includes natural
sweeteners, flavours and
specialty ingredients
based on high purity
stevia.
PureCircle has deep
expertise across the value
chain, from seedling to
sweetener.
Research & Development (R&D)
Multi-disciplinary approach spanning plant breeding, agronomy, biotechnology, biochemistry,
food technology and sensory analysis
Commercialisation
• Scientific and Regulatory Affairs
• Sales & Marketing
©PURECIRCLE 2019
WE TAKE MEASURES TO PROTECT OUR IP
• 32 new patents granted in last 12 months
• 150 granted patents and c.295 pending patent applications worldwide:
–Steviol glycosides production (extraction, new sweetener technology, fermentation
etc.)
–Steviol glycosides sweetener and flavor compositions
–Steviol glycosides use and applications
–Stevia varieties
©PURECIRCLE 2019
OUR COMMITMENT TO STEVIA:
Farming communities
©PURECIRCLE 201935
STEVIA LEAF HAS MORE TO OFFER THAN REB A
• 40+ Steviol glycosides in the leaf
• Taste synergies
• Each with unique attributes
©PURECIRCLE 201936
Zero-calorie sweetness from nature…now with
a more sugar-like taste
©PURECIRCLE 2019
WE ARE SCALING UP STARLEAFTM:Traditional, non-GMO, intelligent plant breeding
Conventional
Variety
2002
StarleafTM Stevia
Variety
2017>20x most sugar-like
glycosides(Reb M, Reb D, others)
vs. conventional leaf
PureCircle Reb A
Variety
20107x Reb A vs. conventional
leaf
©PURECIRCLE 2019
New Technology
• As stevia matures from seedling to full-
grown plant, the sweet parts of the
stevia leaf (called glycosides) are
formed.
• The leaf naturally produces enzymes
which convert Reb A to Reb D and then
to Reb M.
• We start with purified stevia leaf extract
with low Reb M and, by adding
enzymes, the maturation of Reb M is
completed, just as the leaf does
naturally.
• This produces a non-GMO stevia leaf
sweetener with high sweetness quality
and no bitterness.
Approvals
• USA
• Canada
• Ecuador
• Peru
• Columbia
• Malaysia
Fema approved as a Flavor (Global)
In Progress:
• Australia (estimate 2019)
• NZ (estimate 2019)
• EU (estimate early 2020)
• JECFA (estimate end of 2020)
• China (estimate 2020)
• Brazil (estimate 2020)
NEW REB M SWEETENER TECHNOLOGY
FY2018Reb M Sweeteners
• Launched StarleafTM Reb M which
produces Reb M from other stevia
sweeteners in the plant
• Reb M is the variant of stevia sweetener
which has the most sugar-like taste.
• PureCircle has enough Reb M to
sweeten 500M cases of zero-calorie
CSDs
• Targeting to double capacity of Reb M
in 3 years
©PURECIRCLE 201939
MARKET DRIVERS
Powerful and dynamic
Presented by
Magomet Malsagov, Chief Executive Officer
©PURECIRCLE 2019
• Worldwide obesity has more than
doubled since 1980.
• In 2014, 1.9+ billion adults were
overweight. Of these 600+ million
were obese.
• Estimated that Worldwide
diabetes will impact 1 in 10 adults
by 2045 – 629 million.
• Consumers seeking natural
sustainable sources for their
sweeteners.
http://www.who.int/mediacentre/factsheets/fs311/en/
http://www.diabetesatlas.org/, 7th Ed.
CONSIDERABLE GROWTH
In the stevia market
• Stevia approved in Brazil and
India. Now 5 billion consumers
have access to stevia.
• Sugar taxes being imposed in
major markets.
• As of 2018, 80% of the countries
that passed taxes did so in the
last two years.
• F&B industry now publicly
committing to reduce added sugar
and artificial sweeteners from their
product portfolios.
• Stevia increasingly being used as
part of the solution.
• Mintel report: > 17,000 products
now launched with stevia: > 80%
within the last four fiscal years.
• All major F&B categories now
adopting across all geographic
regions.
Global obesity and
diabetes continue to
increase
Potential of stevia market materially enhanced
Growing number of products adopting stevia
Growth prospects for the market has grown considerably versus 12 months ago
©PURECIRCLE 2019
Rising Public Health Concerns On Obesity & Diabetes Are Driving Increased
Government Engagement Globally
* N.B. Unverified content – for guidance only.
Soft drink taxes in effect
Barbados
Belgium
Brunei
Cambodia
Chile
Dominica
Fiji
France
Hungary
Ireland
Laos
Mauritius
Mexico
Nauru
Norway
Peru
Philippines
US Cities• Albany
• Berkeley
• Boulder
• Oakland
• Philadelphia
• San Francisco
• Seattle
• Washington
Taxes Proposed/raised
for discussion
Australia
Canada
India
Indonesia
Malaysia
Singapore
New
Zealand
UAE
Vietnam
Russia
Saudi Arabia
• Warning Label/Nutrition Label in Effect
Algeria
Canada
Brunei
Ecuador
Egypt
Malaysia
Portugal
Samoa
St. Helena
Thailand
UK
South Africa
Spain
Sri Lanka
Turkey
Peru
Portugal
Singapore
Taiwan
UK
©PURECIRCLE 2019
– Joint (FAO & WHO) Expert Committee on Food
Additives (JECFA) approved all Steviol Glycosides
(50+) , including minor sugar-like tasting molecules
from stevia leaf and published the amended
specification (JECFA 20) in December 2017.
– Codex Alimentarius adopted the amended Steviol
Glycoside specification in July 2018, which facilitates
the approval of sugar-like tasting molecules from
stevia leaf in major Latin America, Asia and Africa
markets in near future.
– At present, all Steviol Glycosides from Stevia leaf can
be used in the food & beverage applications in the
US, Canada, Australia, New Zealand, Israel, Brazil;,
Thailand, Vietnam, Singapore, Nigeria, etc. other
authorities will follow.
– Reb M & Reb D derived from Reb A in Stevia leaf
extract is approved in the US, Canada, Mexico and a
few other countries. Other authorities and JECFA are
evaluating the products for approval.
– New flavors with Reb M, Reb E, and other glycosides
are approved by FEMA in 2017-18
REGULATORY PROGRESS
In expanding the use of stevia
©PURECIRCLE 2019
NOTES I
©PURECIRCLE 2019
NOTES II