Plant Health Care - Results for the year ended 31 December 2022
02/05/2023 07:10
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RNS Number : 9812X Plant Health Care PLC 02 May 2023
2 May 2023
PLANT HEALTH CARE plc
("Plant Health Care" or the "Company")
Full Year Results and Announcement of Consultation
Company is on track to deliver long-term targeted revenue, cash breakeven and
profitability
Plant Health Care(®) (AIM: PHC.L), a leading provider of novel
patent-protected biological products to help farmers feed the world
sustainably, is pleased to announce its results for the year ended 31 December
2022.
Financial highlights:
· Revenue up 40% to $11.8m (2021: $8.4m)
· Gross margin improved 200 basis points to 61% (2021: 59%)
· Adjusted LBITDA* improved 20% to $3.7m (2021 $4.6m)
· Substantial improvement in working capital which decreased 20% to
$3.1m (2021: $3.9m)
· Company is on track to deliver long-term targeted revenue, cash
breakeven and profitability.
*Adjusted LBITDA: loss before interest, tax, depreciation, amortisation,
share-based payments and foreign exchange loss
Operational highlights:
Harpinαβ
· The Company has recorded strong commercial sales growth of
Harpinαβ (36%) - the recombinant protein which acts as a powerful
bio-stimulant to improve the quality, nutrient use, tolerance to abiotic
stress and yield of crops.
· Appointed Ager Agro SAS as a distributor of Harpinαβ product,
ProAct®, in Argentina and Uruguay with the first sales in Argentina in Q4
2022.
· Developed partnerships in new regions, as Harpinαβ was
successfully registered for use as a fertilizer with bio-stimulant properties
in France, the largest agricultural producer in the European Union. The
structure of the EU mutual recognition process will also ensure the expansion
of the use of Harpinαβ to other European markets.
PREtec
· The Company's PREtec technology platform (Vaccines for
Plants™) continues to build on the success of the launch of our first PREtec
product, Saori, which is used in Brazil for the prevention and treatment of
soybean diseases.
· Submitted applications to the relevant regulatory agencies in
Brazil for approval to commercialise our new PREtec products, PHC279 and
PHC949, for use on major crops. Brazil is the world's largest producer of
sugar cane and coffee with 8.3 million hectares of sugar cane under
cultivation.
· Second new product from Plant Health Care's PREtec was launched
in the US. The Company's target is to launch at least one PREtec product in a
major market every year and, following regulatory approval of PHC279 by the US
Environmental Protection Agency (EPA) in early 2023, we expect to commercially
launch PHC279 in the US in the second half of 2023.
· Signed a trial agreement with agronomy services and technology
provider, Agrii UK, to evaluate PREtec technology for use in the UK.
· Signed an agreement for EDAF Unipessoal LDA to become the
exclusive distributor in Portugal for a proprietary PREtec-containing
fertilizer, PREzym™, for use in fruit, vegetables and cereals crop
production across the European market.
Outlook:
· Plant Health Care remains firmly on track to achieve annual
revenue of $30 million by 2025 through the launch of new peptides and growth
through current and future distributor relationships and delivering cash
breakeven within our existing cash reserves.
· The planned growth is well underpinned by increasing market share
in existing markets, plus the impact of new distribution agreements for
Harpinαβ and launches of PHC279 and, later, PHC949 in several markets.
· Prospects for 2023 are positive, in spite of a slow start to the
US farming season; other areas of the business have had a good start to the
year. With the usual warning that weather events can affect sales, trading
is currently in line with market expectations for the full year.
· The PHC business model is now more relevant than ever as the
issue of food security continues to grow, and the farming world looks for
technological solutions to achieve a sustainable future with better crops
delivering higher yields and reducing environmental effects to help meet
global sustainability targets.
· The Board has decided to evaluate a range of financing and
strategic options for the Company, including how Plant Health Care might
access non-dilutive capital to support its growth ambitions, and, as part of
this process, to consult with key shareholders as to whether AIM remains the
right environment for Plant Health Care to achieve its ambitions. Further
details of the proposed consultation are below.
Annual Report
The Annual Report will be available on the Company's website today
(https://www.planthealthcare.com/investors/financial-reports-and-investor-presentations
(https://www.planthealthcare.com/investors/financial-reports-and-investor-presentations)
) and hard copies are expected to be posted to Shareholders in due course.
For further information, please contact:
Plant Health Care plc
Jeffrey Tweedy, Chief Executive Officer Tel: +1 919 926 1600
Jeffrey Hovey, Chief Financial Officer
Cenkos Securities plc - Nomad & Broker Tel: +44 (0) 20 7391 8900
Neil McDonald / Peter Lynch
SEC Newgate (Financial Communications) Tel: +44 (0) 7540 106366
Robin Tozer / Harry Handyside / George Esmond Email: phc@secnewgate.co.uk
Dr. Christopher Richards, Chairman comments:
In 2022, we once again beat annual market growth of 12 - 16%, as the wave of
sustainability sweeps across farming. Another firm step towards our goal of
$30m annual revenue in 2025.
Sustainable growth
Plant Health Care is all about sustainability while delivering against market
expectations in all respects. The Company is on track to deliver long-term
targeted revenue, cash breakeven and profitability.
Delivering Performance
Plant Health Care's financial performance accelerated in 2022. Our core
Harpinαβ grew by 36%; more than double the 12 - 16% growth for the market in
sustainable biological products for agriculture. For the second year,
financial performance was ahead of market expectations; we intend to continue
with this out-performance.
Robust Financial Position
As revenue grows, we leverage our cost base to move progressively to cash
positive. At the same time, we are making measured increases in investment
in sales and marketing, where we are confident of strong returns. Our
Commercial business is now strongly profitable and cash generative, financing
an increasing part of the costs of bringing our exciting new PREtec products
to market. We are confident of becoming profitable and cash generative as a
company within our existing cash reserves, while continuing to fund priority
growth projects.
Accelerating Growth
Strong revenue growth in Harpinαβ is a testament to the broadening scale of
adoption of this remarkable product. We have the enormously exciting PREtec
platform, from which we intend to launch at least one major product every
year, in a major market through a large distributor. The large-scale launch
of Saori(®) in Brazil in 2022 is but the first of a series of launches
planned for the coming years.
Cost Position
The best technology will not succeed without a cost position which allows
customers and channel partners to achieve a good return on their investment.
During 2022, we established new toll manufacturing arrangements in the EU,
which guarantee access to high-quality products at a low cost, as evidenced by
the gross margins we are achieving on both Harpinαβ and Saori.
ESG Focus
During 2022, we have broadened our focus from sustainability to ESG as a
whole. We are increasing our focus on delivering for all stakeholders. We
have taken the first steps to improve the diversity of the Board and senior
teams are working to embed ESG across the Company.
Risk Management
Covid-19, the war in Ukraine, increased inflation and supply chain challenges
combine to create a much riskier world than in recent years. Plant Health
Care is alert to the risks and has increased attention to their management.
Given the nature of the agriculture sector and the Company's business,
inflation and supply chain issues are those on which we focus most
attention. At present, we are able to recover inflation in price. We are
addressing supply chain issues by seeking to diversify the sources of our
principal products.
World Beating Management Team
In July, I handed over the Chief Executive Officer role to Jeffrey Tweedy, who
had been acting as COO for the previous 12 months. I was pleased to accept
the Board's request to take on the role of Non-Executive Chairman. Jeff was
well prepared for his new role and is performing at a very high level. He is
ably supported by Jeff Hovey (CFO) and a strong Executive Committee, which is
driving the performance we cover in this report. We were pleased to welcome
Kate Coppinger and James Ede-Golightly to the Board in early 2023; with their
appointment, we now have a Board with strong competencies in all areas.
Announcement of Consultation
The Board is pleased to report that Plant Health Care is on track to deliver
long-term targeted revenue, cash breakeven and profitability, in line with
its strategy. However, like many other small UK-quoted companies, the Board
is frustrated that the Company's share price performance does not reflect the
positive progress in the delivery of its strategy.
The Board is committed to accelerating the Company's organic growth and, where
possible, making value-accretive acquisitions to scale up Plant Health Care's
operations. This will require capital investment; however, the Board is
mindful of the impact on existing shareholders of any potential future equity
raise at current share price levels.
Therefore, the Board has decided to evaluate over the coming weeks a range of
financing options for the Company, including how Plant Health Care might
access non-dilutive and strategic capital to support its growth ambitions. As
part of this process, the Board intends to consult with shareholders as to
whether AIM remains the right capital market for Plant Health Care to achieve
its ambitions. Shareholders are invited to submit their views on this issue
to the Chairman by email.
Dr Christopher Richards
Non-executive Chairman
1 May 2023
crichards@planthealthcare.com
Chief Executive Officer's Statement
Jeffrey Tweedy, Chief Executive Officer
Overview
We are pleased to record an excellent financial year and are on track to
achieve revenue of $30 million by 2025. The Company's focus on developing new
distribution partnerships and building on its existing ones for its growing
portfolio of products has helped increase revenue by 40% to $11.8m (2021:
$8.4m). Sales in both North and South America were strongly up, 74% and 104%
respectively.
Our success has been driven by the growing demand for Harpinαβ in North and
South America and the successful commercialisation of Saori in Brazil
following its launch in 2021. We expect Saori to be a significant driver of
growth, and our new long-term commercial agreement with Nutrien to distribute
the product in Brazil will help achieve this mission.
Cash and cash equivalents as of 31 December 2022 were $5.7m. There has been a
substantial improvement in working capital which decreased by 20% to $3.1m
(2021: $3.9m), and cash used in operations decreased by 16% to $2.7m (2021:
$3.2m).
Plant Health Care has continued to expand into new markets around the world
including South America, Europe and India. We have grown our relationships
with major distribution partners to deliver our products into these new
markets.
It is a testament to the hard work of the Plant Health Care team that we have
delivered on our key objectives for the financial year and are firmly on track
to reach our long-term financial objectives by 2025.
Products
Our proprietary products derived from natural proteins help protect crops from
diseases and stress leading to increased crop yield, quality and financial
return for growers globally. The rise to the top of the global agenda of
climate change, food security and sustainability is driving increased demand
for our products.
Harpinαβ
The Company has recorded strong commercial sales growth of Harpinαβ - the
recombinant protein which acts as a powerful biostimulant to improve the
quality, nutrient use, tolerance to abiotic stress and yield of crops.
Harpinαβ sales increased by 36% to $8.2m (2021: $6.0m). Furthermore, the
Group signed a production agreement with a leading Europe-based
biomanufacturing company to ensure production capacity and to accommodate the
expected long-term growth in demand for the product. The agreement will also
improve our gross margin.
In the last 12 months, we have seen Harpinαβ and associated products expand
its reach. In April 2022, we appointed Ager Agro SAS as a distributor of
Harpinαβ product, ProAct(®), in Argentina and Uruguay with the first sales
in Argentina in Q4 2022. We have also developed partnerships in new regions.
Harpinαβ was successfully registered for use as a fertilizer with
biostimulant properties in France, the largest agricultural producer in the
European Union. The structure of the EU mutual recognition process will also
ensure the expansion of the use of Harpinαβ to other European markets.
In January 2023, we signed an exclusive agreement with Novozymes South Asia
Pvt to enable the distribution of Harpinαβ across India. The first
commercial sales are expected to commence in the second half of 2023,
following regulatory approval. This is a significant milestone for Plant
Health Care and offers considerable growth potential. India is the world's
second largest producer of sugar cane, with five million hectares currently
under cultivation in the country.
PREtec
The Company's PREtec technology platform (Vaccines for Plants™) continues
to build on the success of the launch of our first PREtec product, Saori used
in Brazil for the prevention and treatment of soybean diseases. Saori was
fully launched in Brazil in the second quarter of 2022 generating revenue of
$0.8 million.
Derived from natural proteins, PREtec is an environmentally friendly
technology which stimulates crop growth and ability to withstand a variety of
abiotic stresses as well as to improve disease control, plant health and
yield. PREtec is compatible with mainstream agricultural practices. Our aim
is to launch one new PREtec product every year.
Following regulatory approval of PHC279 by the US Environmental Protection
Agency (EPA) in early 2023, we expect to commercially launch PHC279 in the US
in the second half of 2023.
In December 2022, we submitted applications to the relevant regulatory
agencies in Brazil for approval to commercialise our new PREtec products,
PHC279 and PHC949, for use on major crops. Brazil is the world's largest
producer of sugar cane and coffee. In the latest season, Brazil had 8.3
million hectares of sugar cane under cultivation and more than 2.2 million
hectares of coffee. PHC279 was submitted for the control of sugar cane
orange rust (Puccinia kuehnii) and coffee leaf rust (Hemileia vastatrix).
PHC279 is the active ingredient in Saori, which is already used in Brazil for
the prevention and treatment of soybean diseases.
PHC949 was submitted as a seed treatment for the control of root-lesion
nematode (Pratylenchus brachyurus) in soybean. It is a novel product that
amplifies a plant's natural defense against damaging nematodes (a
"bionematicide"), increasing plant health and yield in a variety of crops. For
2022/23, the soybean harvested area in Brazil is forecast to be 42.9 million
hectares. Results from field studies show PHC949 may provide control of
harmful nematodes comparable to the traditional chemical nematicides and
superior to current biological products. The Brazilian authorities do not
commit to a specific timeline for granting regulatory licenses. However, the
Company anticipates regulatory licenses will be granted in 1-2 years.
Furthermore, our entrance into the nematicides sector offers significant
growth potential as we look to consolidate our presence in a market predicted
to reach $1.79bn by 2027.
In August 2022, we announced a trial agreement with agronomy services and
technology provider, Agrii UK., to evaluate PREtec technology for use in the
UK. We also signed an agreement for EDAF Unipessoal LDA to become the
exclusive distributor in Portugal for a proprietary PREtec-containing
fertilizer, PREzym™, for use in fruit, vegetables and cereals crop
production.
Distribution Partnerships
We distribute our products through partnerships with influential distributors,
which enables us to access large numbers of farmers. Our distribution partners
provide valued technical advice on the best use of our products.
We work together to drive product adoption, to mutual benefit.
We now work with six of the world's largest distributors of agricultural
products, which account for over 150 million acres in soybeans, corn and sugar
cane.
Geographic growth
The Company continues to expand and deepen its footprint in regions across the
world, focusing on the largest agricultural producers.
North America
Total revenue in the US has grown to $4.8m (2021: $2.8m) driven by strong
Harpinαβ demand for Employ in specialty crops, corn, soybeans and citrus.
Looking ahead, we see more growth opportunities working with Wilbur-Ellis on
cotton, soybeans, citrus, sugar cane and California specialty crops, and the
planned launches of our PREtec products PHC279, and in the future, PHC949. The
US has huge potential, with West Coast farmers spending $10 billion every year
on disease control alone.
South America
We are now present in Brazil, Argentina (with our first sales in Q4 2022) and
Chile with plans to launch in Uruguay. Total revenue is $2.0m (2021: $1.1m)
driven by Saori use in soybeans and Harpinαβ sales in sugar cane.
In the next couple of years, we anticipate significant growth of Saori in
soybeans and Harpinαβ growth in sugar cane, soybeans and cotton.
EMEAA
Sales in EMEAA were $1.3 m in 2022 versus $1.6m in 2021. Lower revenue was
caused by loss of sales in Spain and Portugal due to drought impacting crops
and negative effects of currency.
Prospects for 2023 are positive with the planned expansion of Harpinαβ in
the EU with the France registration and the launch of PREzym in Portugal.
Mexico
Plant Health Care Mexico has a broad biological product line for farmers in
Mexico including third-party products. Sales in Mexico were $3.4m (2021:
$3.0m). The sales increase was driven by increased specialty crop acres and
new market growth coming from sales into agave and avocado.
In the next couple of years Mexico is expecting continued growth with sales of
Harpinαβ into sugar cane and continued growth in agave and avocado.
Environmental Sustainability
Food security is the top priority in 2023, and will only continue to become a
growing concern, with global events driving the world's ever-increasing need
for more access to vital crops. Sustainable agriculture lies at the heart of
meeting this need, and our biological products will play a fundamental role in
providing better-quality crops that can deliver higher yields.
Farmers face many challenges, including the impacts of climate change, such as
drought and the need to work more sustainably. Plant Health Care products
provide an environmentally suitable solution to increase regular yields
through our pipeline of products for farmers and food/crop suppliers across
various markets.
Financial summary
Jeffrey Hovey, Chief Financial Officer
A summary of the financial results for the year ended 31 December 2022 with
comparatives for the previous financial year is set out below:
2022 2021
$'000 $'000
Revenue 11,767 8,432
Gross profit 7,171 5,003
Gross profit margin 61% 59%
Operating loss (9,238) (6,381)
Finance expense - net (84) (34)
Net loss arising from financial assets (125) -
Net loss for the year before tax (9,447) (6,415)
Adjusted LBITDA* (3,686) (4,618)
Cash equivalents and investments 5,656 9,162
Revenues
Revenues in 2022 increased by 40% to $11.8 million (2021: $8.4 million). On a
constant currency basis revenue increased 41% driven by strong growth in the
specialty crops and corn market in the USA, sugar cane market with sugar cane
out growers Brazil. The gross margin increased to 61% (2021: 59%) due to
increased Harpinαβ sales into the Americas and the full-scale launch of
Saori in Brazil. Harpinαβ sales increased 36% to $8.2 million (2021: $6.0
million). Third-party revenue increased 17% to $2.8 million (2021: $2.4
million) due to the rebound in the specialty crop market following the effects
of the Covid pandemic.
The Group has three separate reporting segments as set out below.
In 2022, the Group's revenue, gross margin and LBITDA were weighted more
evenly throughout the year with 47% in the first half and 53% in the second
half of the financial year. This was an important objective for the Group as
this helped with cash flow fluctuations during the year.
Americas
This segment includes activities in both North and South America but excludes
Mexico. Revenue in the Americas segment increased 82% (80% in constant
currency) to $7.1 million (2021: $3.9 million). The increase in revenue was
due to further expansion into the specialty crop and corn markets through our
partner Wilbur-Ellis and another large USA distributor. Revenue in the
Americas is predominantly from Harpinαβ and Saori sales.
EMEAA
Revenue in the Rest of World segment decreased 16% (5% in constant currency)
to $1.3 million (2021: $1.6 million). The decrease was primarily due to
drought conditions experienced in Spain in the first half of 2022 and currency
fluctuations of the Euro versus the Dollar. Sales into the greenhouse market
saw an increase of 72%, driven by multiple factors including; demand
generation through technical assistance/showcasing in the field, local trial
investments and integrated marketing. Revenue in the Rest of World segment is
predominantly from Harpinαβ sales.
Mexico
Revenue from the Mexico segment increased 13% (12% in constant currency) to
$3.4 million (2021: $3.0 million). This was primarily due to the rebound in
the specialty crop market following the effects of the Covid pandemic.
Revenue in Mexico includes sales of Harpinαβ and third-party products. The
gross margin in Mexico for Harpinαβ and third-party products are 69%+ and
43%+, respectively.
Gross Margin
Gross margin increased to 61% (2021: 59%). The increase was primarily due to
increased sales of Harpinαβ in North America and Saori in Brazil.
Operating Expenses
The Group's operating expenses increased 13% or $1.3 million to $10.9 million
(2021: $9.6 million). The main contributors were increased sales and marketing
spend to $4.6 million (2021: $3.7 million) to drive additional commercial
sales primarily in the Americas and increased administration costs to $3.4
million (2021: $3.0 million). 2022 cash operating expenses were held at the
same amount as H2 2021 on a pro-rata basis, which reflected increased spend
following the March 2021 fundraise.
Non-cash unallocated corporate expenses increased $2.0 million to $3.8 million
(2021: $1.8 million). The increase was attributable to the forex loss in the
value of Sterling loans from our UK subsidiary due to the appreciation of the
Pound (2021: forex loss).
Adjusted LBITDA, a non-GAAP measure, decreased by $0.9 million to $3.7 million
(2021: $4.6 million) primarily due to improved gross profit of $2.2 million
offset by increased spend in sales and marketing of $0.9 million and
administration of $0.4 million.
* Adjusted LBITDA: loss before interest, tax, depreciation, amortisation,
share-based payments and losses from foreign exchange
2022 2021
$'000 $'000
Operating loss (9,238) (6,381)
Depreciation/amortisation 668 567
Share-based payment expense 1,130 572
Foreign exchange 3,754 624
losses
Adjusted LBITDA (3,686) (4,618)
Balance Sheet
At 31 December 2022 and 2021, investments and cash and cash equivalents were
$5.7 million and $9.2 million respectively.
Cash remains a primary focus for the Group.
Inventory ($3.4 million) increased $1.2 million due to Harpinαβ purchases in
the second half of 2022 to ensure adequate supply to meet the projected strong
demand in the first half of 2023. Trade receivables ($1.4 million) decreased
$1.6 million due to higher-than-expected collections in the fourth quarter in
the Americas versus the prior year. Trade payables ($1.6 million) were
comparable to the prior year ($1.2 million).
Translation of the results of foreign subsidiaries for inclusion within the
consolidated Group results resulted in an exchange gain of $3.7 million (2021:
$0.5 million) recorded within other comprehensive income and foreign exchange
reserves.
Cash Flow and Liquidity
The Company successfully raised £6.6 million ($9.1 million) through the
issuance of new ordinary shares in March 2021.
Net cash used in operations was $2.7 million (2021: $3.2 million).
The decrease is due to reduced losses offset by an increase in working capital
cash flow primarily by reduced receivables through increased collections
offset by increased inventory outflows to supply first half revenue growth
projections.
Net cash provided by investing activities was $8.0 million (2021: $5.4 million
net cash used). The Group held in 2021 surplus cash in several bond and money
market funds. The movement in these funds was used to further invest in the
PREtec business and fund the Commercial business.
Net cash used in financing activities was $0.6 million (2021: $8.6 million net
cash provided from financing). This is primarily from the issuance of new
ordinary shares in March 2021.
Going Concern
In assessing whether the going concern basis is appropriate for preparing the
2022 annual report, the Directors have utilised the Group's detailed
forecasts, which take into account its current and expected business
activities, its cash and cash equivalents and its investments balance of $5.7
million. The principal risks and uncertainties the Group faces and other
factors impacting the Group's future performance were considered. The
Directors confirm that they have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for the next 12
months from approval of these financial statements and accordingly these
financial statements are prepared on a going concern basis, with no material
uncertainty over going concern.
Consolidated statement of comprehensive income
for the year ended 31 December 2022
Note 2022 2021
$'000 $'000
Revenue 3 11,767 8,432
Cost of sales (4,596) (3,429)
Gross profit 7,171 5,003
Research and development expenses (3,564) (3,383)
Sales and marketing expenses (4,557) (3,677)
Administrative expenses (8,288) (4,324)
Operating loss 4 (9,238) (6,381)
Finance income 113 27
Finance expense (197) (61)
Net loss arising on financial assets (125) -
Loss before tax (9,447) (6,415)
Income tax (expense)/credit (36) 111
Loss for the year attributable to the equity holders of the parent company (9,483) (6,304)
Other comprehensive income
Items which will or may be reclassified to profit or loss:
Exchange gain on translation of foreign operations 3,659 468
Total comprehensive loss for the year attributable to the equity holders of (5,824) (5,836)
the parent company
Basic and diluted loss per share 6 $(0.03) $(0.02)
The accompanying notes are an integral part of these condensed consolidated
financial statements
Consolidated statement of financial position
at 31 December 2022
Note 2022 2021
$'000 $'000
Assets
Non-current assets
Intangible assets 7 1,620 1,622
Property, plant and equipment 8 644 718
Right-of-use assets 586 843
Other receivables 9 146 135
Total non-current assets 2,996 3,318
Current assets
Inventories 3,371 2,137
Trade and other receivables 9 1,801 3,364
Tax receivable - 229
Investments - 8,157
Cash and cash equivalents 5,656 1,005
Total current assets 10,828 14,892
Total assets 13,824 18,210
Liabilities
Current liabilities
Trade and other payables 3,235 2,711
Borrowings 55 37
Lease liabilities 437 400
Total current liabilities 3,727 3,148
Non-current liabilities
Borrowings 215 224
Lease liabilities 192 480
Total non-current liabilities 407 704
Total liabilities 4,134 3,852
Total net assets 9,690 14,358
Share capital 4,352 4,326
Share premium 100,859 100,859
Foreign exchange reserve 2,856 (803)
Accumulated deficit (98,377) (90,024)
Total equity 9,690 14,358
The accompanying notes are an integral part of these condensed consolidated
financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2022
Share Share Foreign Accumulated Total
capital premium exchange deficit $'000
$'000 $'000 reserve $'000
$'000
Balance at 1 January 2021 3,605 92,520 (1,271) (84,292) 10,562
Loss for the year - - - (6,304) (6,304)
Exchange difference arising on translation of foreign operations - - 468 - 468
Total comprehensive loss - - 468 (6,304) (5,836)
Shares issued net of issue costs 721 8,339 - - 9,060
Share-based payments - - - 572 572
Balance at 31 December 2021 4,326 100,859 (803) (90,024) 14,358
Loss for the year - - - (9,483) (9,483)
Exchange difference arising on translation of foreign operations - - 3,659 - 3,659
Total comprehensive income/(loss) - - 3,659 (9,483) (5,824)
Shares issued net of issue costs 26 - - - 26
Share-based payments - - - 1,130 1,130
Balance at 31 December 2022 4,352 100,859 2,856 (98,377) 9,690
The accompanying notes are an integral part of these condensed consolidated
financial statements
Consolidated statement of cash flows
for the year ended 31 December 2022
Note 2022 2021
$'000 $'000
Cash flows from operating activities
Loss for the year (9,483) (6,304)
Adjustments for:
Depreciation 8 212 132
Depreciation of right-of-use assets 454 432
Amortisation of intangibles 7 2 3
Share-based payment expense 1,130 572
Finance income (113) (27)
Finance expense 197 61
Net loss on investment 125 -
Foreign exchange loss 3,754 624
Income taxes expense/(credit) 36 (111)
Bad debt (reversal)/expense (32) 33
Decrease/(increase) in trade and other receivables 1,602 (499)
Gain on disposal of fixed asset - (20)
(Increase)/decrease in inventories (1,227) 1,349
Increase in trade and other payables 457 406
Income taxes received 172 134
Net cash used in operating activities (2,714) (3,215)
Investing activities
Purchase of property, plant and equipment 8 (133) (382)
Sale of property, plant and equipment 8 1 20
Finance income 113 2
Purchase of investments - (8,048)
Sale of investments 8,032 3,056
Net cash from/ (used in) investing activities 8,013 (5,352)
Financing activities
Finance expense (148) (9)
Payment of lease liability (497) (465)
Issue of ordinary share capital - 9,029
Exercise of options 26 31
Borrowings 18 36
Net cash (used in)/ provided by financing activities (601) 8,622
Net increase in cash and cash equivalents 4,698 55
Cash and cash equivalents at the beginning of period 1,005 982
Effects of exchange rates on cash held (47) (32)
Cash and cash equivalents at the end of the period 5,656 1,005
The accompanying notes are an integral part of these condensed consolidated
financial statements
Notes forming part of the Group financial statements
for the year ended 31 December 2022
1. Basis of preparation
The financial information set out in this document does not constitute the
Group's statutory accounts for the years ended 31 December 2021 or 2022.
Statutory accounts for the year ended 31 December 2022, which were approved by
the directors on 1 May 2023, have been reported on by the Independent
Auditor. The Independent Auditor's Reports on the Annual Report and
Financial Statements for each of 2021 and 2022 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 2021 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2022 will be delivered to the Registrar of Companies in due course
and will be posted to shareholders shortly, and thereafter will be available
from the Group's registered office at c/o DWF LLP, 1 Scott Place, 2 Hardman
Street, Manchester, England, M3 3AA and from the Group's website:
https://www.planthealthcare.com/investors
The financial information set out in these results has been prepared using the
recognition and measurement principles of International Accounting Standards,
International Financial Reporting Standards and Interpretations in conformity
with UK adopted international accounting standards. The accounting policies
adopted in these results have been consistently applied to all the years
presented and are consistent with the policies used in the preparation of the
financial statements for the year ended 31 December 2022, except for those
that relate to new standards and interpretations effective for the first time
for periods beginning on (or after) 1 January 2022. There are deemed to be no
new standards, amendments and interpretations to existing standards, which
have been adopted by the Group, that have had a material impact on the
financial statements.
Reporting currency
While the functional currency of the parent company is Sterling, the Group's
financial statements have been presented in US Dollars. The Directors believe
this better reflects the underlying nature of the business, primarily due to
the USA being the country whose competitive forces and regulations impact this
business. The exchange rates used for translation are as reported below:
Rates as of 31 December
GBP Mexican Peso Euro Reals
2021 1.3510 0.0489 1.1342 0.1794
2022 1.2090 0.0513 1.0699 0.1891
Average exchange rates
GBP Mexican Peso Euro Reals
2021 1.3754 0.0493 1.1830 0.1855
2022 1.2370 0.0497 1.0538 0.1939
Going concern
In assessing whether the going concern basis is an appropriate basis for
preparing the 2022 annual report, the Directors have utilised detailed
forecasts which take into account the Group's current and expected business
activities, its cash and cash equivalents balance and investments of $5.7
million as shown in its balance sheet at 31 December 2022, the principal risks
and uncertainties the Group faces and other factors impacting the Group's
future performance. Some of the assumptions used in the detailed forecasts
were reduced product costs through new toller manufacturer relationships,
increased revenue of Harpin αβ and PREtec products in all regions through
organic and new distribution growth and modest increase in operating expenses.
The consolidated financial statements have been prepared on a going concern
basis. The Directors have, at the time of approving the financial statements,
a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Covid-19 pandemic has so
far had limited impact on our business and the Board believes that the
business is able to navigate through the continued impact of the Covid-19
pandemic and any macroeconomic impact of the ongoing situation in Ukraine,
global impact of high inflation and rising energy costs due to the strength of
its customer proposition and statement of financial position and the net cash
position of the Group. The current economic conditions continue to create
uncertainty, particularly over: (a) the level of customers and potential
customer engagement; and (b) the level of new sales to new customers. The
pandemic and situation in Ukraine have continued to have impacts economically,
with potential for causing delays in contract negotiations and/or cancelling
of anticipated sales and an uncertainty over cash collection from certain
customers.
As a consequence, various sensitivity analyses have been performed to reflect
a variety of possible cash flow scenarios and also to consider the likelihood
of this scenario occurring. Overall, these cash flow forecasts, which cover a
period of at least 12 months from the date of approval of the financial
statements, foresee that the Group will be able to operate within its existing
facilities. Nevertheless, there is a risk that the Group will be impacted more
than expected by reductions in customer confidence. If sales and settlement of
existing debts are not in line with cash flow forecasts, the Directors have
the ability to identify cost savings if necessary, to help mitigate the impact
on cash outflows. Having assessed the principal risks and the other matters
discussed in connection with the going concern statement, the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For these reasons, they
continue to adopt the going concern basis of accounting in preparing the
financial information.
2. Critical accounting estimates and judgements
In preparing its financial statements, the Group makes certain estimates and
judgements regarding the future. Estimates and judgements 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 judgements 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.
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.
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.
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. When the Group makes product sales under
contracts/agreements these will frequently be inclusive of rebate/support
payments or a financing component where judgement can be required in the
assessment of the transaction price.
Recoverability of trade receivables
The Group applies both the simplified and general approaches under IFRS 9 to
measure expected credit losses using a lifetime expected credit loss provision
for trade receivables. Under the simplified approach, expected credit losses
on a collective basis, trade receivables are grouped based on credit risk and
ageing. Given the Group has a low history of default, limited judgement is
required for trade receivables in this grouping.
The Group then separately reviews those receivables with payment terms over
180 days using the general approach. Under this approach judgements are
required in the assessment of the risk and probability of credit losses and
the quantum of the loss in the event of a default.
3. Revenue
Revenue arises from 2022 2021
$'000 $'000
Proprietary products 8,927 6,096
Third-party products 2,840 2,336
Total 11,767 8,432
The following table gives an analysis of revenue according to sales with
payment terms of less than or more than 180 days.
Year to 31 December 2022
Sales contracts Sales contracts Total
with payment with payment
terms less terms greater
than 180 days than 180 days
Segment $'000 $'000 $'000
Mexico 3,364 - 3,364
Americas 5,988 1,071 7,059
Rest of World 1,344 - 1,344
10,696 1,071 11,767
Sales contracts Sales contracts Total
with payment with payment
terms less terms greater
than 180 days than 180 days
Timing of transfer of goods $'000 $'000 $'000
Point in time (delivery to port of departure) 10,320 1,071 11,391
Point in time (delivery to port of arrival) 376 - 376
10,696 1,071 11,767
Year to 31 December 2021
Sales contracts Sales contracts Total
with payment with payment
terms less terms greater
than 180 days than 180 days
Segment $'000 $'000 $'000
Mexico 2,969 - 2,969
Americas 3,510 362 3,872
Rest of World 1,591 - 1,591
8,070 362 8,432
Sales contracts Sales contracts Total
with payment with payment
terms less terms greater
than 180 days than 180 days
Timing of transfer of goods $'000 $'000 $'000
Point in time (delivery to port of departure) 7,862 362 8,224
Point in time (delivery to port of arrival) 208 - 208
8,070 362 8,432
Financing component of sales contracts $'000
At 1 January 2021 9
Financing components recognised -
Financing components unwound to the income statement (9)
At 31 December 2021 -
Financing components recognised -
Financing components unwound to the income statement -
At 31 December 2022 -
4. Operating loss
2022 2021
Note $'000 $'000
Operating loss is arrived at after charging/(crediting):
Share-based payment charge 1,130 572
Depreciation 8 212 132
Depreciation of right-of-use assets 454 432
Amortisation of intangibles 7 2 3
Operating lease expense 68 36
Gain on disposal of property, plant and equipment - (20)
Impairment (reversal)/ provision on trade receivables (41) 33
Foreign exchange losses 3,754 624
Auditor's remuneration:
Amounts for audit of parent company and consolidation 120 115
Amounts for audit of subsidiaries 80 60
Total auditor's remuneration 200 175
5. Segment information
The Group's CODM views, manages and operates the Group's business segments
according to its strategic business focuses - Commercial and PREtec. The CODM
further analyses the results and operations of the Group's Commercial business
on a geographical basis; therefore the Group has presented separate geographic
segments within its Commercial business as follows: 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 PREtec 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:
2022 Americas Mexico Rest of Eliminations Total PREtec Total
$'000 $'000 World $'000 Commercial $'000 $'000
$'000 $'000
Revenue*
Proprietary product sales 7,038 566 1,343 - 8,947 - 8,947
Third-party product sales 22 2,798 - - 2,820 2,820
Inter-segment product sales 1,590 - - (1,590) - - -
Total revenue 8,650 3,364 1,343 (1,590) 11,767 11,767
Cost of sales (3,989) (1,760) (437) 1,590 (4,596) (4,596)
Research and development - - - - - (2,481) (2,481)
Sales and marketing (2,596) (837) (852) - (4,285) (273) (4,558)
Administration (1,361) (304) (86) - (1,751) (297) (2,048)
Non-cash expenses:
Depreciation (175) (80) (18) - (273) (393) (666)
Amortisation - - (2) - (2) - (2)
Share-based payment (207) - (57) - (264) (540) (804)
Segment operating (loss)/profit 322 383 (109) - 596 (3,984) (3,388)
Corporate expenses:**
Wages and professional fees (2,004)
Administration*** (3,846)
Operating loss (9,238)
Finance income 113
Finance expense (197)
Net loss investment (125)
Loss before tax (9,447)
* Revenue from one customer within the Americas segment totalled
$3,165,000, or 27% of Group revenues.
Revenue from one customer within the Americas segment totalled
$1,420,000, or 12% of Group revenues.
Revenue from one customer within the Americas segment totalled
$1,225,000, or 10% 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 $326,000 attributed to
corporate employees who are not directly affiliated with any of the Commercial
or PREtec segments.
Other segment information Americas Mexico Rest of Eliminations Total PREtec Total
$'000 $'000 World $'000 Commercial $'000 $'000
$'000 $'000
Segment assets 9,933 2,474 803 - 13,210 614 13,824
Segment liabilities 2,617 588 389 - 3,594 540 4,134
Capital expenditure 126 28 - - 154 - 154
2021 Americas Mexico Rest of Eliminations Total PREtec Total
$'000 $'000 World $'000 Commercial $'000 $'000
$'000 $'000
Revenue*
Proprietary product sales 3,836 695 1,565 - 6,096 - 6,096
Third-party product sales 36 2,274 26 - 2,336 - 2,336
Inter-segment product sales 853 - 45 (898) - - -
Total revenue 4,725 2,969 1,636 (898) 8,432 - 8,432
Cost of sales (2,232) (1,560) (535) 898 (3,429) - (3,429)
Research and development - - - - - (2,645) (2,645)
Sales and marketing (1,878) (760) (772) - (3,410) (242) (3,652)
Administration (900) (213) (94) - (1,207) (198) (1,405)
Non-cash expenses:
Depreciation (128) (87) (21) - (236) (335) (571)
Amortisation - - (3) - (3) - (3)
Share-based payment (64) - (22) - (86) (246) (332)
Segment operating (loss)/profit (477) 349 189 - 61 (3,666) (3,605)
Corporate expenses:**
Wages and professional fees (2,046)
Administration*** (730)
Operating loss (6,381)
Finance income 27
Finance expense (61)
Loss before tax (6,415)
* Revenue from one customer within the Americas segment totalled
$1,350,000, or 16% of Group revenues.
Revenue from one customer within the Mexico segment totalled
$1,204,000, or 14% of Group revenues.
Revenue from one customer within the Americas segment totalled
$1,066,000, or 13% of Group revenues.
Revenue from one customer within the Americas segment totalled
$994,000, or 12% 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 $240,000 attributed to
corporate employees who are not directly affiliated with any of the Commercial
or PREtec segments.
Other segment information Americas Mexico Rest of Eliminations Total PREtec Total
$'000 $'000 World $'000 Commercial $'000 $'000
$'000 $'000
Segment assets 13,571 2,221 1,465 - 17,257 953 18,210
Segment liabilities 1,976 328 346 - 2,650 1,202 3,852
Capital expenditure 124 106 - - 230 374 604
Geographic information
The Group operates in five principal countries - the United Kingdom (country
of domicile), the USA, Mexico, Spain and Brazil.
The Group's revenues from customers by location of operation are detailed
below:
Year ended Year ended
31 December 2022 31 December 2021
Amount % Amount %
$'000 $'000
United Kingdom 269 2 349 4
United States 4,817 41 2,774 33
Mexico 3,364 29 2,969 35
Spain 1,074 9 1,242 15
Brazil 2,243 19 1,098 13
Total 11,767 100 8,432 100
The Group's non-current assets by location of assets are detailed below:
Year ended Year ended
31 December 2022 31 December 2021
Amount % Amount %
$'000 $'000
United Kingdom 1 - 3 -
United States 2,653 89 3,074 93
Mexico 226 8 213 6
Spain 72 2 17 1
Brazil 44 1 11 -
Total 2,996 100 3,318 100
6. Loss per share
Basic loss per ordinary share has been calculated on the basis of the loss for
the year of $9,483,000 (2021: loss of $6,304,000) and the weighted average
number of shares in issue during the period of 305,148,646 (2021:
292,204,361).
Equity instruments of 36,006,306 (2021: 26,770,302), which include share
options, and the 2017 Employee Share Option Plan 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.
7. Intangible assets
Licences and Trade name Total
Goodwill registrations and customer $'000
$'000 $'000 relationships
$'000
Cost
Balance at 1 January 2021 1,620 3,342 159 5,121
Additions - externally acquired - - - -
Balance at 31 December 2021 1,620 3,342 159 5,121
Additions - externally acquired - - - -
Balance at 31 December 2022 1,620 3,342 159 5,121
Accumulated amortisation
Balance at 1 January 2021 - 3,337 159 3,496
Amortisation charge for the year - 3 - 3
Balance at 31 December 2021 - 3,340 159 3,499
Amortisation charge for the year - 2 - 2
Balance at 31 December 2022 - 3,342 159 3,501
Net book value
At 31 December 2021 1,620 2 - 1,622
At 31 December 2022 1,620 - - 1,620
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 2021 and 2022, cash flows are projected over a five-year period
with a residual growth rate assumed at 0%. For the years ended 31 December
2021 and 2022, a pre-tax discount factor of 15.2% and 15.2% has been used over
the forecast period.
Goodwill
Goodwill comprises of 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
Harpinαβ, a cash generating unit within the Commercial - 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 nil. 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.
8. Property, plant and equipment
Office Leasehold Total
and facility improvements Vehicles $'000
equipment $'000 $'000
$'000
Cost
Balance at 1 January 2021 1,263 819 395 2,477
Additions 384 45 175 604
Disposals - - (64) (64)
Balance at 31 December 2021 1,647 864 506 3,017
Additions 85 - 69 154
Disposals (1) - - (1)
Balance at 31 December 2022 1,731 864 575 3,170
Accumulated depreciation
Balance at 1 January 2021 1,110 819 302 2,231
Depreciation charge for the year 63 2 67 132
Disposals - - (64) (64)
Balance at 31 December 2021 1,173 821 305 2,299
Depreciation charge for the year 136 11 81 228
Disposals (1) - - (1)
Balance at 31 December 2022 1,308 832 386 2,526
Net book value
At 31 December 2021 474 43 201 718
At 31 December 2022 423 32 189 644
9. Trade and other receivables
2022 2021
$'000 $'000
Current
Trade receivables 1,459 3,114
Less: provision for impairment (90) (132)
Trade receivables, net 1,369 2,982
Other receivables and prepayments 432 382
Current trade and other receivables 1,801 3,364
Non-current
Other receivables 58 59
Deferred tax asset 88 76
Non-current other receivables 146 135
1,947 3,499
The trade receivable current balance represents trade receivables with a due
date for collection within a one-year period.
The other receivable non-current balance represents lease deposits.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses for sales contracts with 180 days or fewer payment terms. To measure
expected credit losses on a collective basis, trade receivables and contract
assets are grouped based on similar credit risk and ageing. The expected loss
rates are based on the ageing of the receivable, past experience of credit
losses with customers and forward-looking information. An allowance for a
receivable's estimated lifetime expected credit losses is first recorded when
the receivable is initially recognised, and subsequently adjusted to reflect
changes in credit risk until the balance is collected. In the event that
management considers that a receivable cannot be collected, the balance is
written off.
Sales contract receivables provided on terms greater than 180 days are at
first discounted to recognise the financing component of the transaction and
then assessed using the "general approach". Under this approach, the Group
models and probability weights a number of scenarios based on their assessment
of the credit risk and historical expected losses.
2022 Considered under Considered under
the simplified the general
approach approach
$'000 $'000
Trade receivables 1,459 -
Expected credit loss assessed (90) -
1,369 -
2021 Considered under Considered under
the simplified the general
approach approach
$'000 $'000
Trade receivables 2,385 729
Expected credit loss assessed - (132)
2,385 597
The receivables considered under the general approach relate to one customer
in the Americas segment and one customer in the Rest of World segment. The key
considerations in the assessment of the provision were the probability of
default, expected loss in the event of default and the exposure at the point
of default.
The maximum exposure to credit risk at the reporting date is the fair value of
each class of receivables set out above.
Movements on the provision for impairment of trade receivables are as follows:
2022 2021
$'000 $'000
Balance at the beginning of the year 132 99
Provided - 50
Unused amounts reversed (41) (15)
Foreign exchange (1) (2)
Balance at the end of the year 90 132
The net value of trade receivables for which a provision for impairment has
been made is $0.1 million (2021: $0.7 million).
The following is an analysis of the Group's trade receivables, both current
and past due, identifying the totals of trade receivables which are not yet
due and those which are past due but not impaired.
2022 2021
$'000 $'000
Current 1,311 2,611
Past due:
Up to 30 days 17 34
31 to 60 days - 2
61 to 90 days - 78
Greater than 90 days 41 257
Total 1,369 2,982
10. Cautionary statement
This document contains certain forward-looking statements relating to Plant
Health Care plc (the "Group"). The Group considers any statements that are not
historical facts as "forward-looking statements". They relate to events and
trends that are subject to risk and uncertainty that may cause actual results
and the financial performance of the Group to differ materially from those
contained in any forward-looking statement. These statements are made by the
Directors in good faith based on information available to them and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
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