SORBIC INTERNATIONAL PLC 
By ("Sorbic" or the "Group" or the "Company")
Interim ResultsSorbic International plc, (AIM:SORB), the third largest sorbates producer in China, today announces its unaudited Interim Results for the six months period ended 31 March 2013.
Summary
• EBITDA for the period more than doubled to £0.79 million (H1 2012: £0.33 million) after foreign exchange gains of £0.3million (H1 2012: loss £0.1 million)
• Gross profit margin for the period of 10.7% (H1 2012: 9.0%)
• Revenue for the period was £7.0 million (H1 2012: £8.3 million)
• Net profit after tax of £0.36 million (H1 2012: loss of £0.14 million)
• Net cash balance at the end of the period of £5.341 million (H1 2012: £4.039 million)
• Net assets of £17.35 million as at 31 March 2013 (H1 2012: £16.22 million)
• The Board continues to consider proposals regarding the building of a new factory in
Linyi, to be funded by the Linyi authorities
John McLean, Non-Executive Chairman of Sorbic, commented: "The Board is pleased to report that demand for the Group's products continues to grow, driven by the widely reported increase in consumption in China and the increasing focus on food safety. Demand for sorbates continues to outweigh supply and we are working to finalise proposals that will enable the Group to increase its production capability to meet more of these high levels of demand.
"The Board is currently exploring the opportunity for Sorbic in relation to a new potential production facility in Linyi, which has been proposed by the Linyi authorities, and will update shareholders once further progress is made on these negotiations."
John McLean, Non-Executive Chairman Tel: +44 (0) 7768 031 454
www.sorbicinternational.com
Geoff Nash / Ben Thompson (Corporate
Finance)
Simon Starr (Broking)
Tel: +44 (0) 20 7600 1658
Henry Harrison-Topham / Joanne Shears Tel: +44 (0) 20 7398 7709 joanne.shears@abchurch-group.com www.abchurch-group.com
Notes to Editors:
Sorbic International's principal activity is the production and sale of the food preservatives Sorbic Acid and Potassium Sorbate from its base in Linyi City, Shandong Province, Peoples Republic of China. Approximately half of Sorbic International's production is sold to overseas markets, across 46 countries and half into the Chinese domestic market.
Sorbic Acid is a naturally occurring organic compound that is used in all kinds of foods for its anti-decomposition and anti-fungus function and also in grains, medicines, cosmetics, toothpaste, tobacco, animal feed, latex, paper-manufacturing and pesticides. Potassium Sorbate is used to inhibit moulds and yeasts in many foods, such as cheese, wine, yogurt, dried meat, baked goods, cosmetics and pharmaceuticals.
Sorbic International operates through its wholly owned subsidiary Linyi Van Science and
Technique Co., Ltd ("LVST").
During the first half of the year, production at the Liny plant resulted in a total output of 2,933 tonnes (H1 2012: 3,514 tonnes) of sorbates. Although there has been a dip in product sold, due primarily to a longer shut down than was planned for plant maintenance at Chinese New Year in February, there has been an increase of 1.7% in overall margin to 10.7% which has increased the gross profit from £744,000 in 2012 to £754,000 for 2013. In addition, the Company has continued to manage its expenses, which have seen an overall reduction of approximately £70,000; the Board is pleased to report that this has resulted in an improved operating profit of £102,604 compared to £23,497 for 2012.
The margin improvements have been largely driven by a decrease in the unit cost of sales due to lower input costs for both products, together with a small increase in selling price for Potassium Sorbate and a minimal improvement in the acid selling price. The Company is pleased that the trend for the cost of sales reduction has been positively consistent over the period.
The trading relationship with the Group's American distributor, APAC, continues to prosper and the outlook for further demand is positive, once the Company has additional production capacity available.
Sorbic's consolidated balance sheet remains strong with over £6.5 million of cash balances at
31 March 2013 to support the existing operations, which on a net cash basis has shown an improvement over 2012 from £4.039 million to £5.341 million for 2013.
During the period, the RMB has continued to strengthen against the £ and US$, which has resulted in a currency gain of £328,314 (2012: (67,678)) which has been shown in the P&L account as an unrealised gain. Since the period end, the RMB has continued to strengthen and the Board expects further currency gains in the second half.
On 25 March 2013, the Company announced that it had raised £0.7 million (before expenses)
through the issue of £125,000 of convertible loan notes (the "New A Loan Notes") and
8,331,429 new ordinary shares of 6 pence each to be issued at 7 pence each ("New Ordinary
Shares").
The proceeds of the fundraising will be used to meet the ongoing costs of Sorbic International plc whilst it continues to work towards repatriating funds from the PRC to the UK.
The required majority of holders of A and B loan notes have agreed to amend the terms of the loan note instruments such that the redemption date is now 31 August 2014. The New A Loan Notes have been issued subject to the terms of the A loan note instrument and will have the same terms as the A and B loan notes currently in issue.
Key terms of New A Loan Notes (and the revised A and B loan notes) are:
