Source - RNS
RNS Number : 3433K
Plant Health Care PLC
10 April 2018
 

 

 

RNS

10 April 2018

 

PRELIMINARY RESULTS 2017

Plant Health Care® (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 (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 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 αβ products increased by 42% (44% in constant currency*), driven by broadly based growth in many countries. Harpin αβ and Myconate® products represented 69% of sales in 2017 (2016: 59%).

•     Harpin αβ 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 αβ, since 2013. Harpin αβ 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 αβ 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 αβ; sales of Harpin αβ 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 αβ products increased by 42% (44% in constant currency*), driven by broadly based growth in many countries. Harpin αβ and Myconate products represented 69% of sales in 2017 (59% in 2016). Gross margin was steady at 62%. Sales of Harpin αβ 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 αβ is growing well in Italy, following the launch onto table grapes in 2016, through our partner Sipcam. Harpin αβ 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 αβ 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 αβ 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 αβ

Sales of Harpin αβ 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 αβ 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 αβ improves the vigour and condition of the grass. Extensive trials over the last three years have shown significant benefits of Harpin αβ 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 αβ 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 αβ) 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 αβ 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 αβ 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 αβ, 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 αβ 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

 

 

Note

2017

$'000

2016

$'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

 

 

Note

2017

$'000

2016

$'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

 

 

Share capital

$'000

 

Share premium

$'000

Foreign exchange reserve

$'000

 

Accumulated

deficit

$'000

 

 

Total

$'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

 

 

Note

2017

$'000

2016

$'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

 

Revenue arises from:

2017

$'000

2016

$'000

Proprietary products

5,344

3,761

Third-party products

2,341

2,568

Total

7,685

6,329

 

5.  Operating loss

 

 

Note

2017

$'000

2016

$'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:

 

 

 

2017

 

Americas

$'000

 

Mexico

$'000

 

Rest of World

$'000

 

Elimination

$'000

Total

Commercial

   $'000

New

Technology

$'000

 

Total

$'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

 

 

The Americas

$'000

 

Mexico

$'000

 

Rest of World

$'000

 

Elimination

$'000

Total Commercial

$'000

New Technology

$'000

 

Total

$'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

 

 

 

 

 

 

2016

 

The Americas

$'000

 

Mexico

$'000

 

Rest of World

$'000

 

Elimination

$'000

Total Commercial

$'000

New Technology

$'000

 

Total

$'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:

 

 

The Americas

$'000

 

Mexico

$'000

Rest of World

$'000

 

Eliminations

$'000

Total Commercial

$'000

New Technology

$'000

 

Total

$'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

31 December 2017

Year ended

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

31 December 2017

Year ended

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

$'000

2016

$'000

Finance income

 

 

Interest on deposits and investments

87

52

Finance expense

 

 

Interest on finance leases

(2)

(2)

 

8.  Tax credit

 

2017

$'000

2016

$'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

$'000

2016

$'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

(83)

 

 

 

Deferred tax asset

Deferred taxation

$'000

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

 

 

 

Goodwill

$'000

 

Licences and registrations

$'000

Trade name and customer relationships

$'000

 

 

Total

$'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

$'000

2016

$'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

$'000

2016

$'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

$'000

2016

$'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

$'000

2016

$'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

$'000

2016

$'000

Finance leases

8

8

(b)  Non- current borrowings

 

2017

$'000

2016

$'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

$'000

2016

$'000

 

2017

$'000

2016

$'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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