TIDMPHC
RNS Number : 3433K
Plant Health Care PLC
10 April 2018
RNS
10 April 2018
PRELIMINARY RESULTS 2017
Plant Health Care(R) (AIM: PHC), a leading provider of novel
patent-protected biological products to the global agriculture
markets, announces its preliminary results for the full year ended
31 December 2017.
Highlights
Operational
-- Significant progress in moving the PREtec(TM) (Plant Response
Elicitor) technology towards the Company's first Technology
Licence.
-- All five of the top global agricultural/seed companies and a
number of other companies are testing lead peptides from our PREtec
platforms Innatus(TM) 3G, T-Rex 3G and Y-Max 3G.
-- Four global agricultural/seed majors are running field trials
in Brazil of Innatus 3G added to chemical sprays for the control of
Asian Soybean Rust (ASR), a devastating fungal disease of soybeans.
Farmers spent US$1.7 billion on soybean fungicides in 2016 in
Brazil; there are increasing concerns about disease resistance and
the resulting impact on yield.
-- In the Company's trials, our lead peptides have shown promise
for the control of ASR, especially for the control of resistant
disease when used in mixture with conventional agrochemicals. Data
from these ASR trials are due in Q2 2018.
-- Exclusive rights to Innatus 3G for use in South American
soybeans are expected to be licenced through a competitive
licencing process in the second half of 2018.
-- PHC expanded its programme of trials in other crops. Results
continued to show good performance for Innatus 3G under disease and
drought stress, and for T-Rex 3G against nematodes. Y-Max 3G
peptides increased yields even under optimal growing
conditions.
-- Discussions continue with partners about future licencing of
Innatus 3G in other crops and regions and of both T-Rex 3G and
Y-Max 3G.
Financial
-- On 27 February 2018, the Group successfully raised $6.7
million (net of costs) which was well supported by existing
shareholders and brought in a number of new institutional
investors.
-- Revenue from commercial products in 2017 increased by 21% to
$7.7 million (2016: $6.3 million); in constant currency*, sales
increased by 23%. Strong external sales growth in Rest of World (up
100%; 107% in constant currency*) was offset by weaker sales in
Mexico due to low produce prices in the first half of the year;
external sales in the Americas grew 8%.
-- Sales of core Harpin <ALPHA><BETA> products
increased by 42% (44% in constant currency*), driven by broadly
based growth in many countries. Harpin <ALPHA><BETA>
and Myconate(R) products represented 69% of sales in 2017 (2016:
59%).
-- Harpin <ALPHA><BETA> was launched into sugarcane
in Brazil in early 2018. Initial response has been very encouraging
in this large market.
-- Gross Margin was steady at 62%.
-- Cash, cash equivalents and investments at 31 December 2017 were $3.9 million.
Chris Richards, Executive Chairman & Interim CEO,
commented:
"2017 was a year of exciting progress at Plant Health Care. Our
New Technology, which is focused on the discovery and early
development of novel proprietary biological solutions using the
Group's PREtec technology, made enormous progress. Each of our
three existing platforms has moved to evaluating lead peptides,
which have the potential to become products. These are not only
showing promising efficacy; we have now advanced the first of them
to pilot scale production. It is testament to the promise of our
technology that all five of the largest global agricultural/seed
companies are now testing peptides from PREtec.
During the year, we decided to focus our resources on the
evaluation of PHC279 and others from the Innatus 3G platform, for
the control of Asian Soybean Rust (ASR) and yield enhancement in
Brazil. We are actively preparing for the competitive licence
process for soybeans in South America, in the second half of
2018.
Given the interest of our partners in evaluating Innatus 3G for
soybeans in Brazil, we decided to de-prioritise seeking a licensing
event during 2017, in order to focus our efforts. However, we
continue to work with our partners, who are evaluating PREtec
peptides in a wide range of crops and regions of the world. A
number of our value propositions are being explored, with promising
results. We are confident that a series of technology licences will
result, over the coming two years.
Our Commercial segment had a solid year, with a return to strong
sales growth. We have now shown 23% CAGR revenue growth in our core
product, Harpin <ALPHA><BETA>, since 2013. Harpin
<ALPHA><BETA> is becoming increasingly used in crops
such as citrus, potatoes and grapes, as well as apples and high
value vegetables such as peppers. Growers are finding that the
correct use of Harpin <ALPHA><BETA> leads to healthier
plants and higher quality crops.
We are excited about the prospects for the coming year, which
will be one of decisive progress for our Company. Following the
fund-raise in early 2018, the Company is well funded beyond our
first revenue-generating technology licences."
Inside information
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation. For further
information, please contact:
Plant Health Care plc
Christopher Richards, Executive Chairman & Interim Chief
Executive Officer Tel: +1 919 926 1600
Liberum Capital Limited (Nomad & Joint Broker)
Clayton Bush/Chris Clarke Tel: +44 (0) 20 3100 2000
Arden Partners plc (Joint Broker)
John Llewellyn-Lloyd / Dan Gee-Summons Tel: +44 (0) 20 7614
5900
About Plant Health Care plc: Plant Health Care plc ("Plant
Health Care") is a leading provider of patent-protected biological
products aimed at the agriculture industry that are environmentally
beneficial. Through the commercialisation of these products, Plant
Health Care is capitalising on current long-term trends towards
natural systems and biological products for plant care and soil and
water management.
Chairman's letter
Overview
Plant Health Care is a leading provider of proprietary
agricultural biological products and technology solutions focused
on improving crop performance.
2017 was a year of strong progress for the Group. Revenue and
gross profit rose strongly in the Commercial business; we now have
a well-diversified business. At the same time, great strides have
been made in New Technology and we are well placed to deliver our
first substantial technology licence during 2018.
Commercially, sales growth of 21% was driven by increased sales
of our core product, Harpin <ALPHA><BETA>; sales of
Harpin <ALPHA><BETA> have now grown at 23% Compound
Annual Growth Rate (CAGR) since we relaunched the business in 2013.
The Commercial business is well placed to fulfil its mission of
generating profit and cash to finance the business by 2021.
In New Technology, nine partners have been evaluating our PREtec
platforms of biorational peptides, including all five of the top
global agricultural/seed companies. We are particularly excited
about the potential for the first competitive licencing of Innatus
3G, which we now plan will be for rights for use on South American
soybeans; we expect that competitive licencing will be completed by
the end of H2 2018, ahead of the planting of the next soybean
crop.
We report here separately on the two areas of focus for the
business: New Technology and Commercial. We are organised in these
two lines of business and report our Commercial business in three
geographic segments -Americas, Mexico and Rest of World.
We report our New Technology business in a single segment.
New Technology
New Technology is focused on the discovery and early development
of novel proprietary biological solutions using the Group's PREtec
science and technology capabilities (PREtec signifies plant
response elicitor technology). These new technologies will mainly
be developed into final products in partnership with agricultural
industry companies active downstream, who will take them to market;
the Group would then receive licence payments on these sales. We
expect to partner with major agrochemical companies for the larger
arable crops such as corn and soybean; for specialty crops, such as
regional crops and fruits and vegetables, we will work with a wider
range of partners.
Our laboratory, glasshouse and field trials, and a number of
other trials run for us by university groups and other specialists,
confirm that peptides from Innatus 3G, T-Rex 3G and Y-Max 3G can be
customised to deliver targeted agronomic benefits, such as stronger
root growth, resistance to attack by fungi and soil pests, and
improved recovery from the effects of drought. All of these
benefits increase crop yield.
Our peptides have been shown to be compatible with standard
agricultural applications, such as seed treatment and foliar
sprays, and to work with different genetic strains of crops. They
can enhance the performance of established chemical and biological
products, and resistant crop varieties. In some instances peptides
on their own perform as effectively as significant commercial
products currently on the market. However, we generally expect our
peptides to be used in combination with conventional agricultural
products, to extend their performance and to reduce their
environmental impact.
This promise is encouraging an increasing number of potential
licencees to evaluate PREtec peptides. This now includes all five
of the largest global agriculturalal/seed companies. In total, nine
potential partners ran field trials during 2017, under the terms of
formal evaluation agreements with the Company.
During 2017, we also made significant progress in characterising
the lead peptides from each of Innatus 3G, T-Rex 3G and Y-Max 3G.
From the total of eight lead peptides we worked on in 2017, PHC279
is currently the focus for work in three main areas - demonstrating
effectiveness; establishing the route towards regulatory licences
to sell; and developing a cost-effective production process. While
we are also working on a wide range of opportunities across the
three platforms, I will focus here on PHC279, for purposes of
illustration.
PHC279 is showing notable promise for use in the control of
Asian Soybean Rust ("ASR") in Brazil. ASR is a devastating disease
of soybeans; Brazilian farmers spend some US$1.7 billion (according
to the 2015 AgrAspire database) each year on its control. However,
ASR is developing resistance even to the most advanced chemical
fungicides in the market, leading to poorer control and the need
for ever larger and more frequent applications. Our own trials,
including repeated greenhouse tests and field trials in two
countries, indicate that PHC279, when mixed with the market-leading
fungicides, improves control of resistant ASR even on
disease-tolerant soybean varieties. We also expect that PHC279
applications will boost soybean yield, by enhancing crop
health.
The four market leaders in the fungicide market in Brazil are
now running their own field trials with PHC279, as well as other
peptides from the Innatus 3G platform. Trials started in late 2017
and results are anticipated late in Q2 2018. Embrapa, the highly
regarded Brazilian government agency, is also evaluating Innatus 3G
peptides in the field, in parallel with our own field trials.
In parallel with these field trials, we are evaluating the track
to regulatory licences needed to sell Innatus 3G peptides in
Brazil, as well as in other countries. We are encouraged that
regulatory authorities have indicated that they are likely to treat
PREtec peptides as biologicals, which have a substantially faster
route to market than conventional agrochemicals.
The most cost-effective means of production for the Company's
peptides is likely to be by industrial fermentation. We have now
developed a high-yield fermentation process for PHC279, and taken
it up to pilot scale. Material produced in this way has been shown
to be fully effective in field and greenhouse trials and physically
stable, including in mixtures with agricultural chemicals.
Importantly, the costs of production have now achieved our targets
to ensure cost-efficiency in the field. We are working towards a
competitive licencing round in the second half of 2018 for rights
to use Innatus 3G in South American soybean markets. Whoever wins
that licence will be seeking to use Innatus 3G as an ingredient or
component of their own product ranges. If our peptides can show
benefits such as performance improvement, resistance management and
environmental and regulatory advantages this will be of significant
commercial value.
We anticipate that a series of competitive licencing events in
other crops, geographical regions and other value propositions will
follow over the coming years.
Commercial
Our Commercial business sells our proprietary products worldwide
through distributors and also distributes complementary third-party
products in Mexico.
Overall sales in 2017 were $7.7 million, an increase of 21% over
2016 ($6.3 million); in constant currency*, the increase was 23%.
Strong external sales growth in Rest of World (up 100%; 107% in
constant currency*) was offset by weaker sales in Mexico due to low
produce prices in the first half of the year. External sales in the
Americas grew 8%, following moves in 2016 to reduce distributor
inventories.
Sales of the core Harpin <ALPHA><BETA> products
increased by 42% (44% in constant currency*), driven by broadly
based growth in many countries. Harpin <ALPHA><BETA>
and Myconate products represented 69% of sales in 2017 (59% in
2016). Gross margin was steady at 62%. Sales of Harpin
<ALPHA><BETA> are now established on a strong growth
track; CAGR from 2013-2017 was 23%.
In Rest of World, sales increased strongly in Spain and South
Africa. Harpin <ALPHA><BETA> is growing well in Italy,
following the launch onto table grapes in 2016, through our partner
Sipcam. Harpin <ALPHA><BETA> was also successfully
launched on potatoes in the UK. During the year, registration and
first sales were achieved in Morocco. We anticipate further
registrations and product launches in 2018.
In the Americas, sales by our largest distributor in the Pacific
Northwest were held back by adverse weather. However, new outlets
in Florida and a fluency agent in corn (maize) helped to support
modest sales growth.
Mexico had a challenging year, particularly due to very low
prices of peppers, tomatoes and other produce exported to the USA
in the first half of the year. Sales were more positive in the
second half of the year but ended up 11% lower (in local currency)
than
in 2016.
In Brazil, Harpin <ALPHA><BETA> was launched into
sugarcane at the turn of the year. Results from demonstration
trials have shown significant increases in yield, which is a
promising indicator for the launch. First sales by the Company were
expected at the end of 2017; due to delays in importation, these
sales slipped into early 2018 but first in-country sales were not
affected.
Financial and corporate
Operating expenses in 2017 were $10.5 million, compared with
$15.2 million in 2016. Excluding the exceptional costs incurred in
2016 evaluating a potential US listing ($1.2 million) and a
non-cash decrease in the value of loans from our UK subsidiary (a
gain of $1.3 million in 2017, compared with a loss of $1.5 million
in 2016), cash operating expenses reduced by $0.6 million to $11.9
million (2016: $12.5 million). R&D costs increased by $0.6
million to $5.1 million, while other costs excluding the
exceptional costs detailed above decreased by $1.2 million.
As we report in US Dollars, the increase in Sterling value has
resulted in a foreign currency gain of $1.3 million arising in
respect of the Sterling loan between the holding company and the UK
trading company. The net increase in the consolidated statement of
comprehensive income in respect of the revaluation of these loans
is $1.3 million.
*Constant currency
We evaluate our results of operations on both an as reported and
a constant currency basis. The constant currency presentation,
which is a non-IFRS measure, excludes the impact of fluctuations in
foreign currency exchange rates. We believe providing constant
currency information provides valuable supplemental information
regarding our results of operations, consistent with how we
evaluate our performance. We calculate constant currency
percentages by converting our prior-period local currency financial
results using the current period exchange rates and comparing these
adjusted amounts to our current period reported results.
Board changes
I have had the honour to act as Interim CEO, as well as
Executive Chairman, since November 2016. The Board reviewed these
arrangements in early 2018 and has requested that I continue as
Interim CEO for the time being. The Board will review the situation
periodically and may initiate a search for a new CEO in due
course.
Outlook
After depressed years in 2015-2016, agriculture markets appear
to have stabilised at a new, lower level; commodity prices are
unlikely to recover while grain stocks remain at relatively high
levels. The global agrochemical market is estimated to have been
flat in 2017. Even in depressed agrochemical markets; however, we
believe that growers in key markets will continue to adopt
agricultural biological products which increase their productivity.
Based on various reports, we expect growth in the demand for
biological products to increase at approximately 10% per annum from
2017 to 2020. We are confident that Harpin
<ALPHA><BETA> sales will continue to grow significantly
faster than the market for biological products as a whole over the
medium term. However, sales in any one period will be subject to
seasonal factors such as weather, timing of registrations and
third-party relations. As a result, Group sales may not follow a
strictly linear trend.
We are currently focused on ensuring successful field trials of
PHC279 and other Innatus 3G peptides for the control of ASR and
yield enhancement in soybeans. We are confident that our partners
will replicate our own positive results, which will lead to a
successful competitive licencing of rights to the platform for
South American soybeans during H2 2018. In addition, we are working
on a number of other value propositions for our PREtec peptides, in
co-operation with our partners; we expect these to lead to a series
of technology licencing agreements over the coming years.
Plant Health Care has a clearly defined strategy, which we are
implementing effectively. 2018 will be a decisive year for the
Company, which we enter with confidence.
In closing, I would like to thank the entire Plant Health Care
team for all its hard work during the year. Strong results come
from great people, working towards shared goals. As Interim CEO, I
am proud of the Group's impressive team of highly motivated
professionals, in whom I have the greatest confidence.
On 27 February 2018, the Group successfully completed an equity
raise which generated $6.7 million (net of costs) from new and
existing investors. The signal of our investor's confidence in the
Group is highly noteworthy.
Dr Christopher Richards
Executive Chairman and Interim Chief Executive Officer
9 April 2018
Our products and technologies
Our innovative line of patent-protected products provides both
economic and environmental benefits for our customers and
capitalises upon long-term trends towards natural systems and
biological solutions to promote plant health and growth.
Harpin <ALPHA><BETA>
Sales of Harpin <ALPHA><BETA> have grown at 23% CAGR
over the five years to 2017, since we adopted a strategy of
expanding registrations and developing distribution through new
partners. We are now able to sell Harpin <ALPHA><BETA>
in more than 14 countries. In the USA, we sell into corn as a
component of seed treatment and, since 2016, as a component of
fluency agents used in seed planters. These treatments all improve
crop yield.
We also sell into fruit in the Pacific Northwest and into soft
fruit and citrus in Florida. In Europe, we started sales into table
grapes in Italy in 2016, leading to improved fruit quality; there
are plans to expand to other countries. In Spain, sales are growing
rapidly in citrus and have also started in rice. In the UK,
activity included the launch into potatoes in 2017 and sales also
started in turf, where Harpin <ALPHA><BETA> improves
the vigour and condition of the grass. Extensive trials over the
last three years have shown significant benefits of Harpin
<ALPHA><BETA> in sugarcane in Brazil, where the benefit
is increased yield; the product was launched in Brazil in early
2018. In South Africa, sales have been developed into fruit, corn
and sugar cane.
Benefits of Harpin <ALPHA><BETA> in Brazil
-- There are 10 million has of sugarcane in Brazil.*
-- There are 5 million has of sugarcane in Sao Paulo state.
-- Coplacana, our distributor, is the largest supplier of inputs
for sugarcane in Sao Paulo state.
-- Applications of H2Copla (Harpin <ALPHA><BETA>)
have been shown to potentially increase sugarcane yield by as much
as 12%, resulting in a possible 4x return for the grower.**
-- Coplacana launched the H2Copla brand in February 2018.
* Based on 2016 sugarcane harvested data and 2017/2018 projected
data from USDA Foreign Agricultural Service's GAIN report dated
April 19, 2017.
** Yield increase based on Plant Health Care field trials
conducted on sugarcane in Brazil in 2017; Value and ROI based on
cost data from Agrianual 2016 FNP - Informa report.
PREtec
PREtec (plant response elicitor technology) is our core new
technology, inspired by natural proteins found in plants and plant
pathogens. We are able to identify families of peptides (chains of
amino acids) that can provide various agronomic benefits for
farmers. We have so far characterised four 3G peptide platforms
from our research, three of which we have launched with partners.
By platform, we mean a family of related peptide designs, all
covered by extensive patent filings. 3G signifies third generation
and indicates that these are small peptides. In addition, we have
fourth generation or 4G platforms, which are applications of DNA or
RNA forms of PREtec for various genetic uses in agriculture and
plant breeding.
Within each 3G platform, we are able to modify the peptide
sequence in order to customise the performance of peptides in
various ways. For example, to make them better at inducing
resistance to pests and diseases in plants, to improve the
tolerance of plants to drought or to accelerate root growth.
Furthermore, we can optimise the physical and chemical stability of
peptides, so that they are stable in mixtures with
agrochemicals.
Technology
Innatus 3G was our first platform. It delivers a range of
disease and yield benefits to growers. It has been under evaluation
with four of the top global agricultural/seed companies. Their
field testing and other technical evaluation is well advanced. Our
3G peptides are designed to be combined with standard crop
protection applications through both seed treatment and foliar
applications to improve plant health.
T-Rex 3G is a platform developed to protect crop plants against
pest nematodes. It also shows good effects in limiting the loss of
yield caused by drought stress. Y-Max 3G behaves more like a
biostimulant, promoting vigour and yield by regulating growth genes
in the plant. T-Rex 3G and Y-Max 3G were introduced to selected
partners in the latter part of 2016. During 2017, eight industry
partners conducted evaluation trials on one or both of these
platforms.
We are in the early stages of development of our 4G peptide
platforms. The first platform entails the incorporation of genetic
sequences in the plant that allow the plant to express peptides
internally.
Financial review
A summary of the financial results for the year ended 31
December 2017 with comparatives for the previous financial year is
set out below:
2017 2016
$'000 $'000
====================== ======= ========
Revenue 7,685 6,329
Gross profit 4,732 3,893
Operating loss (5,801) (11,350)
Finance income (net) 85 50
Net loss for the year (5,716) (11,300)
====================== ======= ========
Revenues
Revenues in 2017 increased by 21% to $7.7 million (2016: $6.3
million) as a result of strong growth in our Rest of World segment,
in particular Spain and South Africa. The gross margin remained
steady at 62% of sales in 2017.
The Americas
External revenue in the Americas segment increased 8% to $1.6
million (2016: $1.5 million). The increase in revenue was primarily
due to increased sales of Harpin <ALPHA><BETA> in
potatoes in the Upper Midwest and strawberries in Florida. Americas
includes revenues from the sales to North and South America.
Initial sales to Brazil were delayed due to importation issues;
these sales occurred in early 2018, with the launch into sugarcane.
Revenue in the Americas is predominantly from Harpin
<ALPHA><BETA> sales.
Mexico
A significant portion of the Group's revenue continues to come
from Mexico. Revenue from the Mexican segment decreased 11% (10% in
local currency) to $2.9 million (2016: $3.2 million). This was due
to lower than expected produce prices in the north-west portion of
Mexico. Revenue in Mexico includes sales of Harpin
<ALPHA><BETA>, Myconate and third-party products.
Rest of World
In 2017, the Group's largest revenues were derived from the Rest
of World segment. External revenue increased 100% to $3.2 million
(2016:$1.6 million). The increase was primarily due to increased
sales in the South African and Spanish regions. Sales increased
104% and 60% for South Africa and Spain, respectively. Revenue in
the Rest of World segment is predominantly from Harpin
<ALPHA><BETA> sales.
Operating expenses
Operating expenses decreased to $10.5 million from $15.2
million. The factors that contributed to the decrease were
continued investment in Research and Development up 11% to $5.1
million, non-cash expenses associated with the increase in the
value of loans from our UK subsidiary of a foreign currency gain of
$1.3 million (2016: foreign currency loss of $1.5 million) and
costs of approximately $1.2 million were incurred in 2016 in
association with evaluating a potential USA listing. There were no
USA listing costs in 2017. The 2016 costs associated with a
potential USA listing were charged to administration.
Administration expenses also included $1.3 million (2016: foreign
currency loss of $1.5 million) a non-cash foreign currency gain
associated with the increase in the value of the loans from our UK
subsidiary.
Expenditure within the New Technology segment increased $0.5
million to $5.5 million in 2017 (2016: $5.0 million). The increase
was due to the hiring of additional R&D staff, increased
contract research and intellectual property costs.
In addition, we have set out in Note 6 the separate category of
expenditure relating to Business Development, which decreased to
$0.6 million in 2017 (2016: $1.0 million). This relates to reduced
personnel costs and other costs relating to customer support and
market research.
Unallocated corporate expenses decreased $4.7 million to a gain
of $0.3 million (2016: $4.4 million loss). The increase was
attributable to costs in 2016 associated with a USA listing and the
increase in the value of Sterling loans from our UK subsidiary due
to the appreciation of the Pound.
Balance sheet
At 31 December 2017 and 2016, investments, cash and cash
equivalents were $3.9 million and $10.1 million respectively.
Working capital was $7.2 million at 31 December 2017 (31
December 2016: $12.6 million). The $5.4 million reduction is
primarily due to an increase in accounts receivable, accounts
payable and further spend in research and development
activities.
Translation of the results of foreign subsidiaries for inclusion
within the consolidated Group results resulted in an exchange loss
of $1.3 million recorded within Other Comprehensive Income and
Foreign Exchange Reserves (2016: gain of $1.3 million).
Cash flow and liquidity
Net cash used in operations was $4.9 million in 2017 (2016: $9.2
million), a decrease of $4.3 million. This decrease was primarily
the result of a decrease in the Group's net loss offset by an
increased working capital position.
Net cash provided by investing was $2.6 million in 2017 (2016:
$1.8 million). The Group holds surplus cash in several bond and
money market funds. The movement in these funds was used to further
invest in the New Technology business and fund the Commercial
business.
Net cash provided by financing activities was $nil for 2017
(2016: $9.7 million). The decrease is due to a $9.7 million
fundraise concluded in 2016.
On 27 February 2018, the Group successfully completed an equity
raise which generated $6.7 million (net of costs) from new and
existing investors.
Based upon the Group's current cash and cash equivalent
position, projected revenue from product sales, anticipated
operating costs and the additional funding received post year end,
the Group is confident that it will have sufficient cash to meet
its working capital needs through the next 12 months.
Consolidated statement of comprehensive income
for the year ended 31 December 2017
2017 2016
Note $'000 $'000
======================================== ===== ============ ============
Revenue 4 7,685 6,329
Cost of sales (2,953) (2,436)
======================================== ===== ============ ============
Gross profit 4,732 3,893
Research and development expenses (5,127) (4,485)
Business development expenses (623) (954)
Sales and marketing expenses (2,995) (2,518)
Administrative expenses (1,788) (7,286)
======================================== ===== ============ ============
Operating loss 5 (5,801) (11,350)
Finance income 7 87 52
Finance expense 7 (2) (2)
======================================== ===== ============ ============
Loss before tax (5,716) (11,300)
Income tax credit 8 262 83
======================================== ===== ============ ============
Loss for the year attributable to the
equity holders of the parent company (5,454) (11,217)
Other comprehensive income:
Items which will or may be reclassified
to profit or loss:
Exchange difference on translation of
foreign operations (1,282) 1,393
======================================== ===== ============ ============
Total comprehensive loss for the year
attributable to the equity holders of
the parent company (6,736) (9,824)
======================================== ===== ============ ============
Basic and diluted loss per share 9 $(0.04) $(0.11)
======================================== ===== ============ ============
Consolidated statement of financial position
at 31 December 2017
2017 2016
Note $'000 $'000
============================== ===== ============ =============
Assets
Non-current assets
Intangible assets 10 1,898 2,162
Property, plant and equipment 968 1,236
Trade and other receivables 11 134 131
============================== ===== ============ =============
Total non-current assets 3,000 3,529
============================== ===== ============ =============
Current assets
Inventories 1,536 1,245
Trade and other receivables 11 4,668 3,284
Investments 2,719 5,349
Cash and cash equivalents 1,175 4,727
============================== ===== ============ =============
Total current assets 10,118 14,605
============================== ===== ============ =============
Total assets 13,118 18,134
============================== ===== ============ =============
Liabilities
Current liabilities
Trade and other payables 12 2,879 2,088
Finance leases 13 8 8
============================== ===== ============ =============
Total current liabilities 2,887 2,096
============================== ===== ============ =============
Non-current liabilities
Finance leases 13 - 7
============================== ===== ============ =============
Total non-current liabilities - 7
============================== ===== ============ =============
Total liabilities 2,887 2,103
============================== ===== ============ =============
Total net assets 10,231 16,031
============================== ===== ============ =============
Share capital 2,237 2,237
Share premium 79,786 79,786
Foreign exchange reserve (389) 893
Accumulated deficit (71,403) (66,885)
============================== ===== ============ =============
Total equity 10,231 16,031
============================== ===== ============ =============
Consolidated statement of changes in equity
for the year ended 31 December 2017
Foreign
Share Share exchange Accumulated
capital premium reserve deficit Total
$'000 $'000 $'000 $'000 $'000
=========================== ==================== =============== ============= ==================== =============
Balance at 1 January 2016 1,236 71,040 (500) (56,731) 15,045
=========================== ==================== =============== ============= ==================== =============
Loss for the year - - - (11,217) (11,217)
Exchange difference arising
on translation of foreign
operations - - 1,393 - 1,393
=========================== ==================== =============== ============= ==================== =============
Total comprehensive
income/(loss) - - 1,393 (11,217) (9,824)
Shares issued 1,001 8,746 - - 9,747
Share-based payments - - - 1,063 1,063
Options exercised - - - - -
=========================== ==================== =============== ============= ==================== =============
Balance at 31 December 2016 2,237 79,786 893 (66,885) 16,031
=========================== ==================== =============== ============= ==================== =============
Loss for the year - - - (5,454) (5,454)
Exchange difference arising
on translation of foreign
operations - - (1,282) - (1,282)
=========================== ==================== =============== ============= ==================== =============
Total comprehensive
income/(loss) - - (1,282) (5,454) (6,736)
Shares issued - - - - -
Share-based payments - - - 936 936
Options exercised - - - - -
=========================== ==================== =============== ============= ==================== =============
Balance at 31 December 2017 2,237 79,786 (389) (71,403) 10,231
=========================== ==================== =============== ============= ==================== =============
Consolidated statement of cash flows
for the year ended 31 December 2017
2017 2016
Note $'000 $'000
========================================== ===== ========== ===========
Cash flows from operating activities
Loss for the year (5,454) (11,217)
Adjustments for:
Depreciation 393 359
Amortisation of intangibles 10 264 273
Share-based payment expense 936 1,063
Finance income 7 (87) (52)
Finance expense 7 2 2
Income taxes credit (262) (83)
(Increase)/decrease in trade and
other receivables (1,024) 1,145
Gain on disposal of fixed assets (4) (14)
(Increase)/decrease in inventories (291) 146
Increase/(decrease) in trade and
other payables 771 (973)
Income taxes paid (121) 205
========================================== ===== ========== ===========
Net cash used in operating activities (4,877) (9,146)
========================================== ===== ========== ===========
Investing activities
Purchase of property, plant and equipment (125) (469)
Sale of property, plant and equipment 4 71
Finance income 7 87 52
Purchase of investments (2,258) (7,918)
Sale of investments 4,888 10,060
========================================== ===== ========== ===========
Net cash provided by investing activities 2,596 1,796
========================================== ===== ========== ===========
Financing activities
Finance expense 7 (2) (2)
Issue of ordinary share capital - 9,747
Repayment of finance lease principal (8) (9)
========================================== ===== ========== ===========
Net cash (used)/provided by financing
activities (10) 9,736
========================================== ===== ========== ===========
Net (decrease)/increase in cash and
cash equivalents (2,291) 2,386
Effects of exchange rate changes
on cash and cash equivalents (1,261) 1,393
Cash and cash equivalents at the
beginning of period 4,727 948
========================================== ===== ========== ===========
Cash and cash equivalents at the
end of period 1,175 4,727
========================================== ===== ========== ===========
1. Annual Report
The financial information set out in this document does not
constitute the Company's statutory accounts for the years ended 31
December 2016 or 31 December 2017. Statutory accounts for the years
ended 31 December 2016 and 31 December 2017 which were approved by
the Directors on 9 April 2018, have been reported on by the
Independent Auditor. The Independent Auditor's Reports on the
Annual Report and Financial Statements for each of 2016 and 2017
were unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
Statutory accounts for the year ended 31 December 2016 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2017 will be delivered to the Registrar
in due course and will be posted to shareholders shortly, and
thereafter will be available from the Company's registered office
at 1 Scott Place, 2 Hardman Street, Manchester M3 3AA and from the
Company's website www.planthealthcare.com.
The financial information set out in these preliminary results
has been prepared using the recognition and measurement principles
of International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The accounting
policies adopted in these preliminary results have been
consistently applied to all the years presented and are consistent
with the policies used in the preparation of the statutory accounts
for the period ended 31 December 2017. The principal accounting
policies adopted are unchanged from those used in the preparation
of the statutory accounts for the period ended 31 December 2016.
New standards, amendments and interpretations to existing
standards, which have been adopted by the Group have not been
listed, since they have no material impact on the financial
information.
2. Accounting policies
Reporting currency
The financial information is presented in thousands of US
Dollars. The Directors believe that it is appropriate to use US
Dollars as the presentational currency for reporting since the
majority of the Group's transactions are conducted in that
currency. The exchange rates used to convert British Pounds to US
Dollars at 31 December 2017 and 2016 were 1.3491 and 1.2336,
respectively, and the average exchange rate for the years then
ended were 1.2885 and 1.3548, respectively.
The functional currency of the parent company is US Dollars.
Basis of preparation
The financial information has been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and interpretations (collectively "IFRSs")
issued by the International Accounting Standards Board ("IASB") and
as adopted by the European Union and those parts of the Companies
Act 2006 which apply to companies preparing their financial
statements under IFRSs.
Amounts are rounded to the nearest thousand, unless otherwise
stated.
Basis of measurement
The financial information has been prepared on a historical cost
basis, except for financial instruments designated at fair value
through the profit and loss.
The principal accounting policies are set out below. The
policies have been applied consistently to all the years presented
and on a going concern basis.
Basis of consolidation
This financial information incorporates the financial
information of the Group and the entities controlled by the Group.
Control exists when the Group has (i) power over the investee, (ii)
exposure, or rights, to variable returns from its involvement with
the investee, and (iii) the ability to use its power over the
investee to affect the amount of the investor's returns.
Revenue
The Group recognises revenue at the fair value of consideration
received or receivable. Sales of goods to external customers are at
invoiced amounts less value-added tax or local tax on sales. The
Group currently generates revenue solely within its Commercial
business through the sale of its proprietary and third-party
products, as well as from granting certain licences for the use of
its intellectual property. Revenue from the sale of goods is
recognised when all the following conditions have been
satisfied:
-- the significant risks and rewards of ownership of the goods
have been transferred to the buyer;
-- the Group retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective
control over the goods sold;
-- the amount of revenue can be measured reliably;
-- it is probable that the economic benefits associated with the
transaction will flow to the Group; and
-- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Group typically transfers significant risks of ownership and
title in the products upon shipment of goods from one of its
locations. After the Group transfers title and ships goods to the
customer, it typically does not retain significant involvement nor
does it have effective control over the goods sold. Therefore, if
all other revenue recognition criteria are met, revenue is
recognised upon shipment of the goods to the customer. Payment
terms range from 30 to 270 days depending on the local custom. This
applies to both proprietary and third-party products.
In the limited situation where the Group offers a product rebate
to the customer, it records the fair value of the product rebate as
a reduction to product revenue. An accrued liability for these
product rebates is estimated and recorded at the time the revenues
are recorded.
Licence/milestone payment income is recognised when the Group
has no remaining obligations to perform under a non-cancellable
contract which permits the user to act freely under the terms of
the agreement and the collection of the resulting receivable
is reasonably assured. To date the Group has not achieved the
performance obligations for any milestone payments.
Goodwill
Goodwill is measured as the excess of the cost of an acquisition
over the net fair value of the identifiable assets, liabilities and
contingent liabilities, plus any direct costs of acquisition for
acquisitions before 1 January 2010. For business combinations
completed on or after 1 January 2010, direct costs of acquisition
are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to administrative
expenses in the consolidated statement of comprehensive income. The
Company performs annual impairment tests for goodwill at the
financial year end.
Other intangible assets
Externally acquired intangible assets are initially recognised
at cost and subsequently amortised on a straight-line basis over
their useful economic lives. The amortisation expense is included
within administrative expenses in the consolidated statement of
comprehensive income.
Intangible assets are recognised on business combinations if
they are separable from the acquired entity or give rise to
contractual or other legal rights, and are initially recognised at
their fair value.
Expenditure on internally-developed intangible assets
(development costs) are capitalised if it can be demonstrated
that:
-- it is technically feasible to develop the product for it to be sold;
-- adequate resources are available to complete the development;
-- there is an intention to complete and sell the product;
-- the Group is able to sell the product;
-- sale of the product will generate future economic benefits; and
-- expenditure on the project can be measured reliably.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are
recognised in profit or loss.
Capitalised development costs are amortised over the periods of
the future economic benefit attributable to the asset. The
amortisation expense is included within administrative expenses in
the consolidated statement of comprehensive income. The Group has
not capitalised any development costs to date.
The significant intangibles recognised by the Group and their
estimated useful economic lives are as follows:
Licences - 12 years
Registrations - 5-10 years
Impairment of goodwill and other intangible assets
Impairment tests on goodwill are undertaken annually at the
financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where
the carrying value of an asset exceeds its recoverable amount (that
is the higher of value in use and fair value less costs to sell),
the asset is written down accordingly.
Impairment charges are included within administrative expenses
in the consolidated statement of comprehensive income. An
impairment loss recognised for goodwill is not reversed.
Foreign currency
Foreign currency transactions of individual companies are
translated into the individual company's functional currency at the
date of transaction.
At the year end, non-functional currency monetary assets and
liabilities are translated at the year-end rate with the
differences being recognised in the profit or loss.
On consolidation, the results of operations that have a
functional currency other than US Dollars are translated into US
Dollars at rates approximating to those ruling when the
transactions took place. Statements of financial position are
translated at the rate ruling at the end of the financial period.
Exchange differences arising on translating the opening net assets
at opening rate and the results of operations that have a
functional currency other than US Dollars at average rate are
included within "other comprehensive income" in the consolidated
statement of comprehensive income and taken to the foreign exchange
reserve within capital and reserves.
Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the Group's chief operating decision
maker ("CODM"). The CODM, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Chief Executive Officer.
Financial instruments
Trade receivables collectible within one year from the date of
invoicing are recognised at invoice value less provision for
amounts the collectability of which is uncertain. Trade receivables
collectible after more than one year from the date of invoicing are
initially recognised at fair value, and subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment.
Investments comprise short-term investments in notes and bonds
having investment grade ratings. Investments are designated as at
fair value through profit and loss upon initial recognition when
they form part of a group of financial assets which is actively
managed and evaluated by key management personnel on a fair value
basis in accordance with the Company's documented investment
strategy that seeks to improve the rate of return earned by the
Company on its excess cash while providing unrestricted access to
the funds. The Company's investments are carried at fair value as
determined by quoted prices on active markets, with changes in fair
values recognised through profit or loss.
Cash and cash equivalents comprise cash on hand, demand deposits
and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to
insignificant risk of changes in value.
Trade and other payables are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest method.
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs. The Group's ordinary
shares are classified as equity instruments.
Employee benefits
The Group maintains a number of defined contribution pension
schemes for certain of its employees; the Group does not contribute
to any defined benefit pension schemes. The amount charged to
profit or loss represents the employer contributions payable to the
schemes for the financial period.
The expected costs of all short-term employee benefits,
including short-term compensated absences, are recognised during
the period the employee service is rendered.
Equity share-based payments
The Group operates a number of equity-settled, share-based
payment plans, under which it receives services from employees and
non-employees as consideration for the Company's equity
instruments, in the form of options or restricted stock units
("awards"). The fair value of the award is recognised as an
expense, measured as of the grant date using a binomial option
pricing model. The total amount to be expensed is determined by
reference to the fair value of instruments granted, excluding the
impact of any service and non-market performance vesting
conditions. Non-market vesting conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
typically the period over which all of the specified vesting
conditions are to be met.
Leased assets: lessee
Where assets are financed by leasing agreements that give rights
approximating to ownership ("finance leases"), the assets are
treated as if they had been purchased outright. The amount
capitalised is the lower of fair value and present value of the
minimum lease payments payable over the term of the lease. The
corresponding lease commitments are shown as amounts
payable to the lessor. Depreciation on the relevant assets is
recognised in profit or loss over the shorter of useful economic
life and lease term.
Lease payments are analysed between capital and interest
components. The interest element of the payment is charged to
income over the period of the lease and is calculated so that it
represents a constant proportion of the balances of capital
repayments outstanding. The capital element reduces the amounts
payable to the lessor.
All other leases are treated as operating leases. Their annual
rentals are charged to income on a straight-line basis over the
lease term.
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. Cost includes the purchase price and costs directly
attributable to bringing the asset into operation. Depreciation is
provided to write off the cost, less estimated residual values, of
all property, plant and equipment over their expected useful
lives.
It is calculated at the following rates:
Production machinery - 10-20% per annum
Office equipment - 20-33% per annum
Vehicles - 20% per annum
Leasehold improvements - 25% per annum
Inventories
Inventories are initially recognised at cost, and subsequently
at the lower of cost and net realisable value. Cost is based upon a
weighted average cost method. The Group compares the cost of
inventory to its net realisable value and writes down inventory to
its net realisable value, if lower than its cost. Cost comprises
all costs of purchase and all other costs of conversion. Net
realisable value is the estimated selling price in the ordinary
course of business, less applicable variable selling expenses. The
inventory provision is based on which products have been determined
to be obsolete.
Taxation
Companies within the group may be entitled to claim special tax
allowances in relation to qualifying research and development
expenditure (e.g. R&D tax credits). The Group accounts for such
allowances as tax credits which means they are recognised when it
is probable that the benefit will flow to the group and that the
benefit can be reliably measured. R&D tax credits reduce
current tax expense and to the extent the amounts are due in
respect of them and not settled by the balance sheet date, reduce
current tax payable.
Deferred tax
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the statement of
financial position differs from its tax base, except for
differences on:
-- the initial recognition of goodwill;
-- 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 nor taxable profit;
and
-- investments in subsidiaries and joint arrangements where the
Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse
in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the end of
the financial period and are expected to apply when the deferred
tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and when they relate to income taxes levied by the same
tax authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
3. Critical accounting estimates and judgments
In preparing the financial information, the Group makes certain
estimates and judgments regarding the future. Estimates and
judgments are continually evaluated based on historical experience
and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future,
actual experience may differ from estimates and assumptions. The
estimates and judgments that have a risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Revenue
The Group recognises revenue at the fair value of consideration
received or receivable. Sales of goods to external customers are at
invoiced amounts less value-added tax or local tax on sales. The
Group currently generates revenue solely within its Commercial
business through the sale of its proprietary and third-party
products, as well as from granting certain licences for use of its
intellectual property. When the Group makes product sales under
contracts / agreements which may be inclusive of additional
performance conditions, different payment terms and associated
rebate or support payments, judgement can be required in the
assessment of the fair value of consideration.
Licensing arrangements and milestone payments
The Group granted a limited number of intellectual property
licences to other biotechnology and agricultural companies. The
terms of the Group's licensing agreements require delivery of an
intellectual property licence for use of the Group's intellectual
property
in either research only, or in research and commercial
development of biological products. Payments to the Group under
these arrangements may include upfront payments and payments based
on the achievement of certain milestones.
If the licence for the Group's intellectual property is
determined to be distinct from the other performance obligations
identified in the arrangement, the Group recognizes revenues from
non-refundable, up-front fees allocated to the licence when the
licence is transferred to the customer and the customer is able to
use and benefit from the licence.
Non-refundable upfront payments are generally received upon
signing of a licensing agreement. All non-refundable upfront
payments received or to be received under these arrangements are
recognised when IAS 18 revenue recognition criteria are met, they
are receivable, they are non-refundable, and provided they are in
substance consideration for a completed separate earnings
process.
Milestone payments are recognised as revenue when the
performance obligations, as defined in the contracts, are achieved.
These milestone payments are generally tied to a specific
performance condition and are recognised in full when the
performance obligation is met. To date, the Group has not achieved
the performance obligations for any milestone payments.
At the inception of each agreement that includes milestone
payments, the Group evaluates whether each milestone is substantive
on the basis of the contingent nature of the milestone. We
recognize revenues related to substantive milestones in full in the
period in which the substantive milestone is achieved. If a
milestone payment is not considered substantive, we recognize the
applicable milestone over the remaining period of performance.
Judgement can be required in assessing whether milestones have
been achieved.
Impairment of goodwill
The Group tests whether goodwill has suffered any impairment on
an annual basis. The recoverable amount is determined based on
value-in-use calculations. The use of this method requires the
estimation of future cash flows and the choice of a discount rate
in order to calculate the present value of the cash flows. Actual
outcomes may vary. Additional information on carrying values is
included in Note 10.
Impairment of intangible assets (excluding goodwill)
At the end of the financial period, the Group reviews the
carrying amounts of its definite lived intangible assets to
determine whether there is any indication that those assets have
suffered any impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the
extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing the value in use, the estimated
future cash flows are discounted to their net present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately within administrative expenses in the consolidated
statement of comprehensive income. Additional information on
carrying values is included in Note 10.
4. Revenue
2017 2016
Revenue arises from: $'000 $'000
====================== ====== ===========
Proprietary products 5,344 3,761
Third-party products 2,341 2,568
====================== ====== ===========
Total 7,685 6,329
====================== ====== ===========
5. Operating loss
2017 2016
Note $'000 $'000
====================================== ===== ========== ===========
Operating loss is arrived at after
charging/(crediting):
Share-based payment charge 936 1,063
Depreciation 393 359
Amortisation of intangibles 10 264 273
Operating lease expense 446 446
Gain on disposal of property,
plant and equipment (4) (14)
Costs associated with abandoned
USA listing - 1,247
Employee termination costs 228 267
Foreign exchange losses (1,432) 1,927
====================================== ===== ========== ===========
Auditor's remuneration:
Amounts for audit of parent company
and consolidation 79 68
Amounts for audit of subsidiaries 34 29
====================================== ===== ========== ===========
Total auditor's remuneration 113 97
====================================== ===== ========== ===========
6. Segment information
The Group's CODM views, manages and operates the Group's
business segments according to its strategic business focuses -
Commercial and New Technology. The CODM further analyses the
results and operations of the Group's Commercial business on a
geographical basis and therefore the Group has presented separate
geographic segments within its Commercial business below:
Commercial - Americas (North and South America, other than Mexico);
Commercial - Mexico; and Commercial - Rest of World. The Rest of
World segment includes the results of the United Kingdom and
Spanish subsidiaries, which together operate across Europe and
South Africa. The Group's Commercial segments are focused on the
sale of biological products and are the Group's only revenue
generating segments. The Group's New Technology segment is focused
on the research and development of the Group's PREtec platform.
Below is information regarding the Group's segment loss
information for the year ended:
Total New
Americas Mexico Rest Elimination Commercial Technology Total
2017 $'000 $'000 of $'000 $'000 $'000 $'000
World
$'000
================== ========================= ============ ============= =================== ================= ================= ===========
Revenue*
Proprietary
product
sales 1,574 570 3,200 - 5,344 - 5,344
Third-party
product
sales 25 2,310 6 - 2,341 - 2,341
Intersegment
product
sales 1,608 - 85 (1,693) - - -
================== ========================= ============ ============= =================== ================= ================= ===========
Total revenue 3,207 2,880 3,291 (1,693) 7,685 - 7,685
================== ========================= ============ ============= =================== ================= ================= ===========
Group consolidated
revenue 3,207 2,880 3,291 (1,693) 7,685 - 7,685
================== ========================= ============ ============= =================== ================= ================= ===========
Cost of sales (1,978) (1,440) (1,228) 1,693 (2,953) - (2,953)
Research and
development - - - - - (4,350) (4,350)
Business
development (561) - - - (561) (62) (623)
Sales and
marketing (1,277) (688) (1,030) - (2,995) - (2,995)
Administration (860) (318) (58) - (1,236) (188) (1,424)
Non-cash expenses:
Depreciation (30) (55) (7) - (92) (301) (393)
Amortisation (255) - (9) - (264) - (264)
Share-based
payment (83) (3) (70) - (156) (632) (788)
================== ========================= ============ ============= =================== ================= ================= ===========
Segment operating
(loss)/profit (1,837) 376 (889) - (572) (5,533) (6,105)
Corporate
expenses**
Wages and
professional
fees (1,048)
Administration*** 1,352
================== ========================= ============ ============= =================== ================= ================= ===========
Operating loss (5,801)
Finance income 87
Finance expense (2)
================== ========================= ============ ============= =================== ================= ================= ===========
Loss before tax (5,716)
================== ========================= ============ ============= =================== ================= ================= ===========
* Revenue from one customer within the Americas segment totalled
$1,001,000, or 13% of Group revenues.
Revenue from one customer within the RoW segment totalled
$1,958,000, or 25% of Group revenues. Revenue from one customer
within the Mexico segment totalled $989,000 or 13% of Group
revenues.
** These amounts represent public company expenses for which
there is no reasonable basis by which to allocate the amounts
across the Group's segments.
*** Includes net share-based payment expense of $148,000
attributed to corporate employees who are not affiliated with any
of the Commercial or New Technology segments.
Other segment Information
Total New
The Mexico Rest Elimination Commercial Technology Total
Americas $'000 of $'000 $'000 $'000 $'000
$'000 World
$'000
============ ========= ============ ============== =================== ================== ================= ===========
Segment
assets 7,014 1,997 3,198 - 12,209 909 13,118
Segment
liabilities 1,630 251 420 - 2,301 586 2,887
Capital
expenditure - 34 4 - 38 87 125
============ ========= ============ ============== =================== ================== ================= ===========
Total New
The Mexico Rest Elimination Commercial Technology Total
2016 Americas $'000 of $'000 $'000 $'000 $'000
$'000 World
$'000
================== ================= ============= ============== =================== ================= ================= ============
Revenue*
Proprietary
product
sales 1,424 734 1,603 - 3,761 - 3,761
Third-party
product
sales 53 2,513 2 - 2,568 - 2,568
Intersegment
product
sales 1,252 - - (1,252) - - -
================== ================= ============= ============== =================== ================= ================= ============
Total revenue 2,729 3,247 1,605 (1,252) 6,329 - 6,329
================== ================= ============= ============== =================== ================= ================= ============
Group consolidated
revenue 2,729 3,247 1,605 (1,252) 6,329 - 6,329
================== ================= ============= ============== =================== ================= ================= ============
Cost of sales (1,556) (1,620) (512) 1,252 (2,436) - (2,436)
Research and
development - - - - - (3,868) (3,868)
Business
development (954) - - - (954) - (954)
Sales and
marketing (916) (733) (869) - (2,518) - (2,518)
Administration (293) (206) (1,233) - (1,732) (220) (1,952)
Non-cash expenses:
Depreciation (33) (53) (7) - (93) (266) (359)
Amortisation (255) - (18) - (273) - (273)
Share-based
payment (295) (5) - - (300) (631) (931)
================== ================= ============= ============== =================== ================= ================= ============
Segment operating
(loss)/profit (1,573) 630 (1,034) - (1,977) (4,985) (6,962)
Corporate
expenses**
Wages and
professional
fees (2,494)
Administration*** (1,894)
================== ================= ============= ============== =================== ================= ================= ============
Operating loss (11,350)
Finance income 52
Finance expense (2)
================== ================= ============= ============== =================== ================= ================= ============
Loss before tax (11,300)
================== ================= ============= ============== =================== ================= ================= ============
* Revenue from one customer within the Americas segment totalled
$1,024,000, or 16% of Group revenues.
Revenue from one customer within the RoW segment totalled
$835,000, or 13% of Group revenues.
** These amounts represent public company expenses for which
there is no reasonable basis by which to allocate the amounts
across the Group's segments.
*** Includes net share-based payment expense of $132,000
attributed to corporate employees who are not affiliated with any
of the Commercial or New Technology segments.
Other segment information:
Rest Total New
The Mexico of Eliminations Commercial Technology Total
Americas $'000 World $'000 $'000 $'000 $'000
$'000 $'000
============ ========= ============ ========== ==================== ================= ================= ===========
Segment
assets 12,963 1,966 2,115 - 17,044 1,090 18,134
Segment
liabilities 1,527 164 92 - 1,783 320 2,103
Capital
expenditure 1 79 2 - 82 387 469
============ ========= ============ ========== ==================== ================= ================= ===========
Segment assets include all operating assets used by a segment
and consist principally of operating cash, receivables,
inventories, property, plant and equipment and intangible assets,
net of allowances and provisions. Segment liabilities include all
operating liabilities and consist principally of trade payables and
accrued liabilities.
Geographic information
The Group operates in three principal countries - the United
Kingdom (country of domicile), the US and Mexico. The Group's
revenues from external customers by location of operation are
detailed below:
Year ended Year ended
31 December 2017 31 December
2016
Amount Percent Amount Percent
$'000 $'000
=============== ====== ======= ========== ===========
United Kingdom 2,687 35 1,280 20
United States 1,598 21 1,477 23
Mexico 2,880 37 3,247 51
All other 520 7 325 6
=============== ====== ======= ========== ===========
Total 7,685 100 6,329 100
=============== ====== ======= ========== ===========
The Group's non-current assets by location of assets are
detailed below:
Year ended Year ended
31 December 2017 31 December
2016
Amount Percent Amount Percent
$'000 $'000
=============== ====== ======= ========== ===========
United Kingdom 31 1 26 1
United States 2,782 93 3,297 94
Mexico 180 6 193 4
All other 7 - 13 1
=============== ====== ======= ========== ===========
Total 3,000 100 3,529 100
=============== ====== ======= ========== ===========
7. Finance income and expense
2017 2016
$'000 $'000
===================================== ====== ==========
Finance income
Interest on deposits and investments 87 52
===================================== ====== ==========
Finance expense
Interest on finance leases (2) (2)
===================================== ====== ==========
8. Tax credit
2017 2016
$'000 $'000
======================================== ====== ==========
Current tax on profit for the year (256) (50)
Deferred tax - origination and reversal
of timing differences (6) (33)
======================================== ====== ==========
Total tax credit (262) (83)
======================================== ====== ==========
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the UK applied
to profits for the year are as follows:
2017 2016
$'000 $'000
============================================= ================ ===========
Loss before tax (5,716) (11,300)
============================================= ================ ===========
Expected tax credit based on the standard
rate of corporation tax in the UK of 19.3%
(2016: 20.0%) (1,100) (2,260)
Disallowable expenses 31 57
Share-based payment expense per accounts 180 213
Prior period R&D credit (360) (242)
Losses available for carryover 1,225 2,268
Losses utilised in the year (398) -
Capital allowances in excess of amortisation (80) (83)
Other temporary differences 240 (36)
============================================= ================ ===========
Actual tax credit (262) (83)
============================================= ================ ===========
Deferred taxation
$'000
Deferred tax asset
=============================== ========================================================================
At 1 January 2016 60
Charged to the profit and loss
account 6
=============================== ========================================================================
At 31 December 2016 66
=============================== ========================================================================
The deferred tax asset comprises sundry timing differences.
At 31 December 2017, the Group had a potential deferred tax
asset of $17,557,554 which includes tax losses available to carry
forward of $16,226,770 (being actual federal, foreign and state
losses of $89,835,719) arising from historical losses incurred and
other timing differences of $1,330,574. Due to US tax reform the
potential U.S. deferred tax asset as of 31 December 2017 was
reduced by $7,715,912 (due to the reduction in US tax rate from 35%
to 21% beginning 1 January 2018) to the final amount of $17.6m as
shown above.
9. Loss per share
Basic loss per ordinary share has been calculated on the basis
of the loss for the year of $5,454,000 (2016: loss of $11,217,000)
and the weighted average number of shares in issue during the
period of 147,822,881 (2016: 100,369,025).
Equity instruments of 9,709,418 (2016: 8,383,332), which
includes share options, the Value Creation Plan, the 2015 Employee
Share Option Plan, the 2017 Employee Share Option Plan, that could
potentially dilute basic earnings per share in the future have been
considered but not included in the calculation of diluted earnings
per share because they are anti-dilutive for the periods presented.
This is due to the Group incurring a loss on operations for the
year.
10. Intangible assets
Trade
Licences name
Goodwill and and customer Total
$'000 registrations relationships $'000
$'000 $'000
=========================== ========== ======================= =============== ============
Cost
Balance at 1 January 2016 1,620 3,342 159 5,121
Additions - externally - - - -
acquired
=========================== ========== ======================= =============== ============
Balance at 31 December
2016 1,620 3,342 159 5,121
=========================== ========== ======================= =============== ============
Additions - externally - - - -
acquired
Balance at 31 December
2017 1,620 3,342 159 5,121
=========================== ========== ======================= =============== ============
Accumulated amortisation
Balance at 1 January 2016 - 2,527 159 2,686
Amortisation charge for
the year - 273 - 273
=========================== ========== ======================= =============== ============
Balance at 31 December
2016 - 2,800 159 2,959
=========================== ========== ======================= =============== ============
Amortisation charge for
the year - 264 - 264
Balance at 31 December
2017 - 3,064 159 3,223
=========================== ========== ======================= =============== ============
Net book value
At 1 January 2016 1,620 815 - 2,435
=========================== ========== ======================= =============== ============
At 31 December 2016 1,620 542 - 2,162
=========================== ========== ======================= =============== ============
At 31 December 2017 1,620 278 - 1,898
=========================== ========== ======================= =============== ============
The intangible asset balances have been tested for impairment
using discounted budgeted cash flows of the relevant cash
generating units. For the years ended 31 December 2016 and 2017,
cash flows are projected over a five-year period with a residual
growth rate assumed at 0%. For the years ended 31 December 2016 and
2017, a pre-tax discount factor of 16.4% and 15.6% has been used
over the forecast period.
Goodwill
Goodwill comprises a net book value of $1,432,000 related to the
2007 acquisition of the assets of Eden Bioscience and $188,000
related to an acquisition of VAMTech LLC in 2004. The entire amount
is allocated to Harpin, a cash generating unit within the
Commercial - The Americas segment. No impairment charge is
considered necessary, and no reasonable possible change in key
assumptions used would lead to an impairment in the carrying value
of goodwill.
Licences and registrations
These amounts represent the cost of licences and registrations
acquired in order to market and sell the Group's products
internationally across a wide geography. These amounts are
amortised evenly according to the straight-line method over the
term of the licence or registration. Impairment is reviewed and
tested according to the method expressed above. Licences and
registrations have a weighted average remaining amortisation period
of three years. No impairment charge is considered necessary, and
no reasonable possible change in key assumptions used would lead to
an impairment in the carrying value of licences and
registrations.
11. Trade and other receivables
2017 2016
$'000 $'000
======================================== ====== ===========
Current:
Trade receivables 4,131 3,124
Less: provision for impairment (52) (51)
======================================== ====== ===========
Trade receivables, net 4,079 3,073
Other receivables and prepayments 232 211
Tax receivable 377 -
======================================== ====== ===========
Current trade and other receivables 4,688 3,284
======================================== ====== ===========
Non-current:
Trade receivables 68 71
Less: provision for impairment - -
Deferred tax asset 66 60
======================================== ====== ===========
Non-current trade and other receivables 134 131
======================================== ====== ===========
4,822 3,415
======================================== ====== ===========
The trade receivable current balance represents trade
receivables with a due date for collection within a one-year
period. The trade receivable non-current balance represents the
present value of trade receivables with a collection period that
exceeds one year.
Movements on the provision for impairment of trade receivables
are as follows:
2017 2016
$'000 $'000
========================================= ====== ==========
Balance at the beginning of the
year 51 62
Provided (2) 10
Receivables written off as uncollectible (1) (11)
Foreign exchange 4 (10)
========================================= ====== ==========
Balance at the end of the year 52 51
========================================= ====== ==========
The gross value of trade receivables for which a provision for
impairment has been made is $80,000 (2016: $52,000). The maximum
exposure to credit risk at the reporting date is the fair value of
each class of receivables set out above.
The following is an analysis of the Group's trade and other
receivables, both current and non-current, identifying the totals
of trade and other receivables which are not yet due and those
which are past due but not impaired.
2017 2016
$'000 $'000
======================= ====== ===========
Current 3,927 2,617
Past due:
Up to 30 days 7 13
31 to 60 days 17 84
61 to 90 days 39 259
Greater than 90 days 157 100
======================= ====== ===========
Total 4,147 3,073
======================= ====== ===========
The main factors used in assessing the impairment of trade
receivables are the age of the balances and the circumstances of
the individual customer.
12. Trade and other payables
2017 2016
$'000 $'000
============================= ====== ===========
Current:
Trade payables 1,523 491
Accruals 1,292 1,542
Taxation and social security 62 53
Income tax liability 2 2
============================= ====== ===========
2,879 2,088
============================= ====== ===========
13. Finance leases
(a) Current borrowings
2017 2016
$'000 $'000
=============== ====== ==========
Finance leases 8 8
=============== ====== ==========
(b) Non- current borrowings
2017 2016
$'000 $'000
=============== ====== ==========
Finance leases - 7
=============== ====== ==========
Finance lease obligations are secured by retention of title to
the relevant equipment and vehicles.
(c) Due date for payment:
The contractual maturity of the Group's financial liabilities on
a gross basis is as follows:
Trade and other payables Finance
leases
===========================
2017 2016 2017 2016
$'000 $'000 $'000 $'000
================================ =============== =========== =============== ==========
In less than one year 1,863 1,261 8 8
In more than one year, but less
than two years - - - 7
================================ =============== =========== =============== ==========
1,863 1,261 8 15
================================ =============== =========== =============== ==========
14. Cautionary statement
Plant Health Care has made forward-looking statements in this
press release, including: statements about the market for and
benefits of its products and services; financial results; product
development plans; the potential benefits of business relationships
with third parties; and business strategies. These statements about
future events are subject to risks and uncertainties that could
cause Plant Health Care's actual results to differ materially from
those that might be inferred from the forward-looking statements.
Plant Health Care can give no assurance that any forward-looking
statements will prove correct.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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April 10, 2018 02:00 ET (06:00 GMT)
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