TIDMPHC
RNS Number : 3730W
Plant Health Care PLC
23 April 2021
Plant Health Care plc
Results for the year ended 31 December 2020
Plant Health Care(R) (AIM: PHC), a leading provider of novel
patent-protected biological products to the global agriculture
markets, is pleased to announce its preliminary results for the
full year ended 31 December 2020, together with an update on the
impact of Covid-19 on the business.
2020 highlights
Commercial
-- Revenue was $6.6 million (2019: $6.4 million), 3% increase on
the prior year, 10% in constant currency*.
-- The Commercial Business was EBITDA and cash positive for the first time.
-- In-market sales in the US and Brazil doubled in 2020; product
adoption points to strong revenue growth ex PHC.
-- In-market distributor inventory reduced by more than $1 million.
-- Market access: 30 million hectares.
-- Harpin <ALPHA><BETA> in-market sales doubled in core markets.
PREtec products
-- Saori(TM) (PHC279), the first product from the PREtec
platform, was registered as a seed treatment for soybeans in
Brazil.
-- PHC279 was submitted for registration in the USA.
-- $20 million invested in PREtec platform since 2012.
-- A Joint Development Agreement was signed with Wilbur-Ellis
for the development of four PREtec products in specialty crops in
the USA.
-- Low-cost manufacture of PREtec peptides was demonstrated at the pilot scale.
-- The first patents on PREtec were granted by the US Patent Office.
-- The Group has a rich pipeline from the PREtec platform.
Group
-- Cash used in operations reduced to $2.5 million (2019: $4.4 million).
-- Adjusted LBITDA ** improved to $3.3 million (2019: $3.8 million).
-- Cash and cash equivalents including investments at 31
December 2020 were $4.1 million (2019: $2.4 million).
-- The Company successfully raised GBP3.6 million ($4.4 million)
through the issuance of new ordinary shares in March 2020 and a
further GBP6.6 million ($9.1 million) in March 2021.
* Constant currency is defined below.
** Adjusted LBITDA: Loss before Interest, tax, depreciation,
amortisation, share-based payments and intercompany foreign
exchange.
Richard Webb, Chairman comments:
I am proud to report that Plant Health Care rose to the
challenge in this most challenging of years. Our staff adapted
swiftly and creatively to find effective ways to work around the
global restrictions caused by Covid-19. Despite all the disruption,
we delivered year on year revenue growth in 2020. Operating cost
savings were also delivered, and a further improvement in working
capital over 2020.
The outcome was that our commercial operations were EBITDA and
cash positive for the first time. In a year when revenues grew and
our development programme accelerated, PHC still reduced cash burn
by more than expected. We ended the year with over $4 million of
cash equivalents and investments in hand. This is a great credit
not only to the Executive leadership, but also to our loyal and
hard-working staff in five countries.
Covid-19 brought about many work and personal life challenges.
We took early and decisive management action during the onset of
Covid-19. The Group decided early on to look after its employees
and customers to minimize disruption to the business and ensure
that the long-term goals of the Group are unaffected. As part of
several governmental assistance programs, the Group received $0.3
million from the Paycheck Protection Program in the USA and $0.1
million in Spain. The Group experienced minimal disruption from
Covid-19 globally, where domestic demand for fruits and vegetables
and the Peso devaluation held back sales growth.
Agricultural input companies faced mixed fortunes in 2020, but
world opinion is swinging strongly in support of novel and
sustainable solutions to helping farmers to preserve their soils,
increase crop yields and quality, and reduce carbon and residue
footprints. PHC is a pioneer in this sector, and after investing
$20 million in new technology over the past eight years, we now
have a broad portfolio of benign biologicals close to launch.
In agriculture, long dominated by harsh chemical fertilisers and
pesticides, our patented PREtec is a disruptive technology. It
acts, not directly on pests, diseases or soils, but on the plants
themselves, to boost their defences and improve yield, vigour and
harvest quality. We call our products "vaccines for plants". Tiny
protein fragments mimic natural signals in the environment, and
stimulate the plants to defend themselves, to build stronger, and
to lay down more seeds and biomass. PREtec rapidly biodegrades, but
its beneficial effects persist. The resulting deeper roots
sequester more carbon to the soil, the higher yields require no
additional fertiliser, and in sugar cane the surge converts to over
20% more biofuel produced per hectare.
Our success in getting registrations in Brazil ahead of
expectation shows that international regulatory authorities
recognise the benefits and benign profile of our new products.
PREtec registrations are advancing in Brazil and North America - it
is our ambition to address Europe next, as the largest biologicals
market in the world.
In March 2020 we completed a $4.4 million fundraise at 8p per
share in the teeth of an emerging international crisis and stock
market downturn. Post year end, in March 2021 we completed a $9.1
million (net of costs) fundraise at 14p per share, to finance
accelerated PREtec product launches and address opportunities in
Europe.
During 2020, Board meetings and the AGM moved to a remote
format, which is not ideal but works well. AMBA Secretaries Limited
took over the role of PHC Company Secretary in July 2020, and the
Board is benefiting from her deep experience.
For further information, please contact:
Plant Health Care plc
Richard Webb, Non-executive Chairman Tel: +1 919 926 1600
Arden Partners plc (Nomad and Broker) Tel: +44 (0) 20 7614 5900
John Llewellyn-Lloyd / Benjamin Cryer / Nick Wright (Corporate
Finance)
James Reed-Daunter (Equity sales)
Cenkos Securities plc - Joint Broker Tel: +44 (0) 20 7391 8900
Neil McDonald / Peter Lynch
Company website: www.planthealthcare.com
Chief Executive Officer's statement
Plant Health Care had a year of substantial progress, in both
the Commercial Business and in the development of the very exciting
PREtec New Technology. Global agriculture needs sustainable
products more than ever; Plant Health Care intends to contribute to
this effort with outstandingly cost-effective products. This
progress builds on the clear strategic direction established in
recent years, with momentum maintained in spite of the disruption
of Covid-19 to so many aspects of life.
Fundraise
We were delighted in March 2021 to receive the support of
shareholders for a fundraise. We raised $9.1 million (net of costs)
to finance accelerated PREtec product launches and address growth
opportunities in Europe.
Commercial Business - in-market sales accelerating
In the Commercial Business, in-market sales of Harpin
<ALPHA><BETA> in our three core growth markets in the
USA and Brazil doubled. We now have close relationships with the
major distributors who are our partners in these markets and work
with them to drive customer adoption of the product. Improved
visibility of in-market sales led us to reduce in-market inventory
of Harpin <ALPHA><BETA> by more than $1 million. As a
result, reported sales of Harpin <ALPHA><BETA> ($3.9
million) substantially under-state progress in developing grower
demand for this outstanding product. Revenue growth of 10% in
constant currency (3% in US$) to $6.6 million would have been
significantly higher.
Harpin <ALPHA><BETA> sales in the Brazilian sugar
cane market in 2020 was three times that of 2019, driven by
consistent yield increases well in excess of 20% and a Return on
Investment (ROI) for growers of more than 14x. As we track monthly
sales, we have seen product adoption accelerate. We increased our
investment in field promotion in sugar cane in the second half of
2020, which should help to bring the benefits of Harpin
<ALPHA><BETA> to new users over the coming years.
In the USA, Harpin <ALPHA><BETA> performed very well
as a seed treatment in corn in 2020, consistently delivering
stronger early plant growth. With in-market sales 1.8 times those
in 2019, we are confident of continued growth in the coming
years.
Also in the USA, we are delighted by the progress with our new
partner Wilbur-Ellis in specialty crops. Wilbur-Ellis is not only a
very large distributor with nationwide reach; they are also focused
on bringing the benefits of biological products to growers, through
their highly skilled agronomists in the field. This capability is
delivering increased sales in crops where Harpin
<ALPHA><BETA> was already established. With the launch
of Harpin <ALPHA><BETA> into almonds and grapes in
California, we anticipate further growth to come.
In Europe, sales to new markets compensated for the impact of
Covid-19; sales increased by 24% (22% in constant currency).
However, reduced demand for domestic fruits and vegetables in the
pandemic adversely affected sales in Mexico; in particular, we were
unable to raise prices to compensate for the devaluation of the
Mexican peso. Sales in Mexico nonetheless came close to target in
local currency.
PREtec New Technology - progress towards first product
launches
After eight years and an investment in excess of $20 million, we
are enormously excited by the prospect of the first product launch
from the PREtec platform. Saori(TM), the new name for PHC279 in
Brazil, will be introduced to Brazilian soybean growers in the
second half of 2021. The current pipeline of PREtec products is
targeting markets with a current value of more than $5 billion; we
are set on a highly ambitious plan. With outstanding grower
benefits and an excellent sustainability profile, we are confident
of a bright future for PREtec products.
The Brazilian authorities registered Saori in an astonishingly
short 13 months from the date of our submission. As we report
later, the 'early read' from this season's trials with Saori
demonstrate again the substantial benefits of the product for
growers. Our focus in 2021 will be on getting Saori trialed by as
many 'early adopters' as possible, with the limited product volumes
available this year; this will provide a good base for accelerated
product adoption in 2022 and beyond.
In the USA, we were delighted to conclude a Joint Development
Agreement with Wilbur-Ellis for the development and
commercialisation of four PREtec peptides in specialty crops. The
regulatory submission of PHC279 was made to the Environmental
Protection Agency (EPA) of the USA in late 2020; we expect
registration to be granted in the second half of 2022, with a
succession of product launches following.
The PREtec product pipeline is building well, with substantial
progress in bringing forward the next products. PHC949 is showing
exceptional promise for control of nematodes; we expect to make a
submission for this product to the EPA during 2021, with first
sales in 2023. Hard on its heels comes PHC404, a powerful
biostimulant,and other products will follow.
Substantial progress has been made towards establishing low-cost
manufacture of PREtec peptides at a commercial scale. While the
launch of Saori is being met from pilot scale manufacture, we
anticipate concluding long term toll manufacturing arrangements
during the course of 2021.
Impact of Covid-19
Covid-19 impacted growers of fruits and vegetables globally, as
supply chains rushed to adapt to the closing of food service
industries such as restaurants and canteens. In the first months of
the pandemic, this caused significant disruption to companies
supplying inputs for these crops, including Plant Health Care.
However, with the exception of Mexico, growth in demand for Harpin
<ALPHA><BETA> was such that the impact on the Company's
revenue was limited. The Company's ability to promote the use of
our products through field days, technical visits and promotional
events was significantly constrained; while remote contacts were
used extensively, we cannot rule out some impact on future
growth.
The ravages of Covid-19 did not leave Plant Health Care's team
untouched. Like everyone else around the world, PHC employees faced
substantial additional challenges, alongside ensuring the safety of
family, customers and colleagues. This required substantial change
to work patterns, especially making it hard for our field promotion
teams to engage with customers. While I am pleased to report that
the handful of PHC employees who contracted Covid-19 have all made
a full recovery, we continue to monitor the development of the
virus closely; new variants and variable lockdown regimes will
present challenges throughout 2021 and, most likely, beyond.
*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.
Summary and outlook
Plant Health Care is well positioned for growth in 2021. In our
core markets, Harpin <ALPHA><BETA> is gaining traction
together with very strong distributor partners. The prices of
agricultural commodities have bounced back to the highest level for
many years; growers will be investing more in their crops and may
be willing to try new, yield-enhancing products.
The PREtec product pipeline looks stronger every time we look at
it. Our first product launch, Saori(TM) in Brazil, is a pivotal
moment for the Group. With regulatory submissions in the USA and in
South America, the schedule of product launches is taking shape,
with profitable sales building from there. The recent fund-raise
will allow us to invest, to accelerate this growth, not only in the
Americas but also to enter Europe, the largest market in the world
for sustainable agriculture.
Supporting this growth is an exciting challenge for the Plant
Health Care team. As we grow, the team is increasing in size, but
we remain a small team of high-performing professionals, around the
world. The global team is increasingly sharing ideas for product
development and growth, learning from each other. What works for
citrus and fruit in Spain, often works also in the USA; exceptional
results on golf courses in the UK offers learnings for the much
larger market in the USA; seed treatment in Brazil and the USA can
teach much to Europe. I am highly privileged to lead this
outstanding team.
I would like to thank the entire Plant Health Care team for all
their hard work during the year. As CEO, I am proud of the Group's
impressive team of highly motivated professionals, in whom I have
the greatest confidence.
Commercial Business
Overall sales in 2020 were $6.6 million, an increase of 3% (10%
in constant currency *) compared with 2019 ($6.4 million). Sales by
region are listed in the table below:
2020 2019 Growth CC Growth
$'000 $'000 Percentage Percentage
-------------- ----- ----- ---------- ----------
North America 1,657 1,715 -3% -3%
South America 527 416 27% 64%
EMEAA 1,213 975 24% 22%
Mexico 3,214 3,330 -3% 7%
-------------- ----- ----- ---------- ----------
Sales of core Harpin <ALPHA><BETA> products
increased by 7% (13% in constant currency). Harpin
<ALPHA><BETA> represented 56% of sales in 2020 (2019:
59%).
Although Sales in North America were flat year-over-year because
of a one-time sale in 2019, in-market sales of our two distributors
in corn and specialty crops grew substantially. In corn, in-market
sales of Harpin <ALPHA><BETA> reached 650,000 acres,
some 1.8 times those in 2019; this resulted in substantial
reduction in the inventory held by our distributor. Moreover, the
product is delivering impressive results; data from independent
Seedsman Association (IPSA), an independent agency, showed yield
increases of up to 5%. This creates a strong base for future sales
growth. In specialty crops (fruits and vegetables), sales to
Wilbur-Ellis doubled. We also achieved a registration for Harpin
<ALPHA><BETA> in California, for use on the important
almond and citrus crops; Wilbur-Ellis will launch Employ into those
crops in 2021. Sales ex Plant Health Care in 2020 were $1.7 million
(2019: $1.7 million); we estimate that distributor inventory in
North America decreased by approximately $400k.
In-market sales to sugar cane in Brazil grew 3 times in 2020
versus 2019 levels due to continued adoption of our proprietary
product H2Copla in the sugar cane market. The H2Copla product is
gaining traction rapidly, due to consistent yield increases of more
than 23%. During 2020, we reviewed with our partner, Coplacana, the
plans for promoting H2Copla in the field, following the first 18
months of sales since launch in 2018. We have agreed increased
resources dedicated to the product, which should drive further
sales increases in the future. Sales ex-PHC in Brazil increased 27%
in 2020 (64% in constant currency) to $0.5 million (2019: $0.4
million).
Sales in EMEAA increased to $1.2 million due to further growth
into the citrus market and expansion into the Chile market. Sales
in Spain increased by 33% to $0.9 million (2019: $0.7 million). In
South Africa, sales continued to be hit by drought and the Group
decided not to make any sales in order to further reduce in-market
inventory.
Sales in Mexico decreased 3% to $3.2 million (increased 7% in
constant currency). Sales of Harpin <ALPHA><BETA>
decreased by 9% (increased by 1% constant currency). The decrease
in sales can be attributed to the devaluation of the Peso and
decreased domestic demand of fruits and vegetables.
New Technology
PREtec - New Technology
After an investment of more than $20 million since 2012, Plant
Health Care's PREtec (Plant Response Elicitor Technology) platform
has now generated a strong pipeline of blockbuster products; the
first product from this pipeline, Saori, was registered in Brazil
in January 2021. The Group is currently focusing on three products
targeting very large market opportunities with a value of more than
$5 billion. Further products are under evaluation.
What is PREtec?
PREtec is a novel, environmentally friendly approach to growing
crops more sustainably. PREtec peptides can be thought of as
'vaccines for plants' - they stimulate plants' natural defence
systems and result in improved crop yield and quality. Derived from
naturally occurring proteins, PREtec peptides present a broad
opportunity to develop novel crop protection and yield-enhancing
products. Plant Health Care has filed more than 40 patents on
PREtec, the first three of which have now been granted by the US
Patent Office.
Growth opportunities
In November, the Company announced a Joint Development Agreement
with Wilbur-Ellis for the commercialization of four PREtec products
in US specialty crops (fruits and vegetables). This collaboration
brings together the development and marketing strengths, as well as
decades of agriculture knowledge of Wilbur-Ellis, especially in
biological products, with Plant Health Care's industry-leading
expertise on PREtec peptides. As one of the largest US distributors
of crop protection products and with its focus on innovative
products for specialty crops markets, Wilbur-Ellis is an ideal
partner to launch PREtec into the US specialty crops market.
Multiple PREtec products are being evaluated, initially focusing on
improving disease and nematode control, and plant stress tolerance.
The parties are committed to rapidly moving new products through
the development process in order to make this novel technology
available to growers as soon as possible.
In Brazil, regulatory authorities approved PHC279 (subsequently
branded Saori(TM)) for sale in soybeans. Saori will be used as a
seed treatment; trials over the last three years have shown
excellent early vigour and disease control, resulting in
significantly increased crop yield. There is an extensive
field-testing program underway in the 2020/21 season, which has
confirmed these outstanding grower benefits. Plant Health care is
in discussion with several leading crop protection companies
regarding the distribution of Saori. Many of these companies have
planted their own soybean trials to independently confirm the
performance of Saori.
The Group is planning the commercial launch of Saori during the
second half of 2021. Initial sales will specifically focus on early
adopters of novel technologies within the sustainable agricultural
markets. There are 38 million Hectares of soy planted in Brazil, on
which growers spend some $2.5 billion on controlling disease.
Significant penetration of this market is expected over the coming
years.
Europe represents an excellent market opportunity for PREtec.
Increasingly stringent environmental and safety regulations across
the EU have resulted in many heavily used products having their
registrations cancelled, often leaving growers without viable
solutions to manage their crops. Moreover, the EU has set out
targets to further reduce agrochemical usage, through the 'Farm to
Fork' framework, which aims to promote the adoption of sustainable
agriculture. As a result, Europe is expected to see rapid growth in
the market for biostimulants and biocontrols over the next decade
and is already recognized as the largest global market for plant
biostimulants and one of the largest markets for biocontrol
solutions. Plant Health Care has started to conduct trials in the
EU and the UK, as a first step to entering this very large
market.
Target markets
PREtec peptides are targeting markets with global agchem sales
of more than $5 billion. These markets are split by crops (Corn,
Soy, etc.), geographies (US, Brazil, Europe) and mode of
application (seed treatment or foliar spray) providing a number of
specific opportunities. The average yield increases (5%+) achieved
with PREtec in large acreage row crops is one easily identifiable
point of potential value of PREtec to the industry and highlights
how valuable even a small market share could be.
The opportunity for Saori in Brazil (and LATAM more generally)
to prevent and treat disease (especially Asian Soybean Rust or
(ASR) is very large. ASR, caused by the fungus Phakopsora
pachyrhizi, is a devastating disease which can lead to crop yield
loss of up to 90%. Brazilian soybean farmers spent US$2.85 billion
on disease control in the 2019/20 season, approximately 90% of
which was for ASR control. The Group has also observed
significantly improved early plant growth and enhanced early season
disease control in Saori testing, suggesting that Saori may add
value beyond the ASR control opportunity. Being adopted for use on
even a single-digit percentage of the available soybean hectares in
Brazil would generate millions of dollars in annual Saori
sales.
In addition to the opportunities discussed elsewhere for PREtec
in specialty crops in the US via its collaboration with
Wilbur-Ellis, the Company is pursuing development in the US of
PHC279 as a: (1) a fungicide booster in which the peptide is added
to existing chemical fungicides to improve the spectrum of disease
control in potatoes and other row crops, (2) a foliar
micronutrient, in which PHC279 improves nutrient uptake by corn and
soy plants to improve yield, and (3) as a seed treatment to fight
soil-borne disease and increase yields in soybeans. In Brazil, PHC
is also exploring the opportunity for PHC279 as a foliar product to
enhance disease control and yield in sugarcane.
PHC414 is a biostimulant that has demonstrated reliable
performance in a variety of crops. As such, the Group anticipates
that the product will be regulated as a fertilizer in some
countries and is being targeted at the quality and yield
characteristics of the global fruit and vegetable market.
PHC949 is being developed for the control of nematodes in row
crops and specialty crops in the US and LATAM. Recent field studies
indicate that PHC949 offers improved nematode control
characteristics relative to current leading chemical products
whether it is applied via foliar application or as a seed
treatment.
The global nematicides market size was estimated to be valued at
USD 1.3 Billion in 2019 and is projected to reach USD 1.6 Billion
by 2025. Vegetables accounted for the largest share of the
nematicides market globally in 2018 and North America was the
largest market, driven by use on soybean, corn, and cotton crops.
PHC949 is expected to find applications in US and Brazilian soy
crops as well as US, Brazilian and European vegetable crops.
Registrations
Saori(TM) was approved for commercial use as a seed treatment
for the prevention and control of ASR. The approval process was
completed by the three responsible Brazilian regulatory agencies in
just over one year. This rapid approval is a testimony to the
safety profile of Saori and the urgency the Brazilian government
attaches to making new sustainable solutions available for soybean
growers in order to reduce reliance on traditional, less safe,
chemical fungicides. The company is currently planning to pursue
regulatory approval for Saori in the other important South American
soybean growing markets, including Argentina and Paraguay.
In the US, PHC279 was submitted for approval to the EPA as a
biopesticide in February 2021. This submission starts the clock on
an eighteen-month review process that is expected to permit PHC279
to be used for the prevention and treatment of a variety of
agronomically important diseases in a wide range of row crops and
specialty crops. Given PHC's prior success achieving registration
for the similar product, PHC398, approved earlier in the year by
the EPA, the Group anticipates by the EPA in the second half of
2022.
Also in the US, PHC404 was registered in 2020 under the brand
ZARAgrow(TM) for use as a fertilizer in California.
In 2021 the Group plans to submit an application to the EPA for
approval of PREtec peptide PHC949 for use in row crops and
specialty crops for the control of soil nematodes. Assuming the
review process proceeds as expected, the US launch of PHC949 could
occur in early 2023.
In Europe, a variety of PREtec products are being evaluated,
both as plant protectants for enhanced disease control and as
biostimulants in row crops and specialty crops. In 2021, the Group
intends to ramp up the PREtec development program
substantially.
Intellectual Property Protection of PREtec:
Innovation is at the heart of what Plant Health Care does every
day and having a strong position protecting its intellectual
property is critical to its success. Plant Health Care has filed
more than 50 patent applications worldwide for its PREtec peptide
technology since 2012. In 2020, the Group announced that its first
seven US PREtec patents were granted by the US Patent and Trademark
Office (USPTO). These patents provide protection for a wide range
of PREtec peptides and their use in agricultural production.
Additional patents are expected to be granted in 2021, including
the first foreign patents corresponding to the US patents. These
patents provide robust barriers to potential competitors and will
enable the Company to pursue strategic and opportunistic
out-licensing opportunities.
Financial summary
Jeffrey Hovey, Chief Financial Officer
A summary of the financial results for the year ended 31
December 2020 with comparatives for the previous financial year is
set out below:
2020 2019
$'000 $'000
------------------------------- ------- -------
Revenue 6,611 6,436
Gross profit 3,683 3,602
56% 56%
Operating loss (3,568) (4,127)
Finance income (net) 264 285
Net loss for the year
before tax (3,304) (3,842)
Adjusted LBITDA (3,304) (3,814)
Cash equivalents & investments 4,149 2,421
------------------------------- ------- -------
Revenues
Revenues in 2020 increased by 3% to $6.6 million (2019: $6.4
million). On a constant currency basis revenue increased 10% or
$0.6 million driven by strong growth in the sugar cane and citrus
markets in Brazil and Spain, respectively. The gross margin was
steady at 56% (2019: 56%) despite a cost increase in Harpin due to
the US tariffs with China. The Group was able to maintain our
margin versus 2019 levels due to increased Harpin sales in several
regions.
The Group has three separate reporting segments as set out
below.
Americas
This segment includes activities in both North and South America
but is exclusive of Mexico.
External revenue in the Americas segment increased 2% to $2.2
million (2019: $2.1 million). The increase in revenue was primarily
due to further expansion into the specialty crop market through our
partner Wilbur-Ellis. Revenue in the Americas is predominantly from
Harpin <ALPHA><BETA> sales.
Mexico
A significant portion of the Group's revenue comes from Mexico.
Revenue from the Mexican segment decreased 3% (increase of 7% in
constant currency) to $3.2 million (2019: $3.3 million). This was
due to reduced domestic demand for fruits and vegetables and the
devaluation of the Peso as a result of the Covid-19 pandemic.
Revenue in Mexico includes sales of Harpin
<ALPHA><BETA>, Myconate and third-party products.
Rest of World
External revenue in the Rest of World segment increased 24% (22%
in constant currency) to $1.2 million (2019: $1.0 million). The
increase was primarily due to a sales increase of 33% (30% in
constant currency) in Spain due to further growth into the citrus
market and expansion into Chile. Revenue in the Rest of World
segment is predominantly from Harpin <ALPHA><BETA> and
nominal Myconate sales.
The Group's revenue, gross margin and LBITDA is weighted towards
the second half of the financial year.
Gross margin
Gross margin remained steady at 56% (2019: 56%). The Group
experienced a cost increase in Harpin due to the US tariffs with
China but was able to maintain margin versus 2019 levels due to
increased Harpin sales in several regions.
Operating expenses
The Group has maintained strict control of cash operating
expenses, which decreased to $7.3 million (2019: $7.4 million). The
main contributors were reduced Sales and Marketing spend at $2.9
million (2019: $3.2 million) offset by increased spend in New
Technology of $2.3 (2019: $2.1 million).
Unallocated corporate expenses decreased $0.1 million to $0.2
million (2019: $0.3 million). The decrease was attributable to the
increase in the value of Sterling loans from our UK subsidiary due
to the appreciation of the Pound.
Adjusted LBITDA*, a non-GAAP measure, decreased by $0.5 million
to $3.3 million primarily due to improved gross profit of $0.1
million and reduced spend in Sales and Marketing $0.3 million
offset by increased spend in New Technology $0.2 million. The
LBITDA in 2020 also improved due to the receipt of $0.3 million
from the Paycheck Protection Program in the USA and a Covid loan of
$0.1 million from the Spanish government.
2020 2019
$'000 $'000
------------------------------ ------- -------
Operating loss (3,568) (4,127)
Depreciation/amortisation 639 778
Share-based payment expense 596 318
Intercompany foreign exchange
gains (971) (783)
Adjusted LBITDA (3,304) (3,814)
------------------------------ ------- -------
* Adjusted LBITDA: loss before interest, tax, depreciation,
amortization, share based payments and intercompany foreign
exchange.
Balance sheet
At 31 December 2020 and 2019, investments, cash and cash
equivalents were $4.1 million and $2.4 million respectively. Cash
remains a primary focus for the Group. Cash used in operations
decreased to $2.5 million (2019: $4.4 million) primarily due to
improved working capital through increased collections, increased
accounts payable and proceeds of $0.3 million from the Paycheck
Protection Program in the United States and a Covid loan of $0.1
million from the Spanish government.
Inventory ($3.6 million), accounts receivable ($3.1 million),
and payables ($1.3 million) were comparable to the prior year ($3.0
million, $3.6 million and $0.8 million, respectively) with the
exception of large trade payable balance with our manufacturer of
Harpin <ALPHA><BETA> (2020: $0.5 million; 2019:
nil).
Translation of the results of foreign subsidiaries for inclusion
within the consolidated Group results resulted in an exchange loss
of $1.2 million recorded within Other Comprehensive Income and
Foreign Exchange Reserves (2019: loss of $0.8 million).
Cash flow and liquidity
Net cash used in operations was $2.5 million (2019: $4.4
million). The decrease is due to reduced losses and improvement in
working capital through increased collections and payables
management.
Net cash used by investing was $1.2 million in 2020 (2019: $0.1
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 $4.2 million
(2019: $2.6 million). The increase was primarily due to the March
2020 equity raise of $4.4 million.
Going concern
In assessing whether the going concern basis is appropriate for
preparing the 2020 Annual Report, the Directors have utilised its
detailed forecasts, which take into account its current and
expected business activities, its cash and cash equivalents balance
and investments of $4.1 million. The principal risks and
uncertainties the Group faces and other factors impacting the
Group's future performance were considered. Analysis of the going
concern position is detailed in the Directors' Report in the Annual
Report and Note 2 to this announcement.
Consolidated statement of comprehensive income
for the year ended 31 December 2020
2020 2019
Note $'000 $'000
---------------------------------------------------------- ---- ------- -------
Revenue 4 6,611 6,436
Cost of sales (2,928) (2,834)
---------------------------------------------------------- ---- ------- -------
Gross profit 3,683 3,602
Other income 289 -
Research and development expenses (2,963) (2,775)
Sales and marketing expenses (2,876) (3,144)
Administrative expenses (1,701) (1,810)
---------------------------------------------------------- ---- ------- -------
Operating loss 5 (3,568) (4,127)
Finance income 295 323
Finance expense (31) (38)
---------------------------------------------------------- ---- ------- -------
Loss before tax (3,304) (3,842)
Income tax credit 80 158
---------------------------------------------------------- ---- ------- -------
Loss for the year attributable to the equity holders
of the parent company (3,224) (3,684)
Other comprehensive income
Items which will or may be reclassified to profit
or loss:
Exchange (loss)/gain on translation of foreign operations (1,211) (792)
---------------------------------------------------------- ---- ------- -------
Total comprehensive loss for the year attributable
to the equity holders of the parent company (4,435) (4,476)
---------------------------------------------------------- ---- ------- -------
Basic and diluted loss per share 7 $(0.01) $(0.02)
---------------------------------------------------------- ---- ------- -------
Consolidated statement of financial position
at 31 December 2020
2020 2019
Note $'000 $'000
------------------------------ ---- -------- --------
Assets
Non-current assets
Intangible assets 8 1,625 1,649
Property, plant and equipment 246 475
Right-of-use assets 970 416
Trade and other receivables 9 303 150
------------------------------ ---- -------- --------
Total non-current assets 3,144 2,690
------------------------------ ---- -------- --------
Current assets
Inventories 3,567 2,960
Trade and other receivables 9 2,778 3,412
Tax receivable 251 335
Investments 3,167 1,964
Cash and cash equivalents 982 457
------------------------------ ---- -------- --------
Total current assets 10,745 9,128
------------------------------ ---- -------- --------
Total assets 13,889 11,818
------------------------------ ---- -------- --------
Liabilities
Current liabilities
Trade and other payables 2,118 1,406
Borrowings 33 -
Lease liabilities 400 353
------------------------------ ---- -------- --------
Total current liabilities 2,551 1,759
------------------------------ ---- -------- --------
Non-current liabilities
Borrowings 193 -
Lease liabilities 583 107
------------------------------ ---- -------- --------
Total non-current liabilities 776 107
------------------------------ ---- -------- --------
Total liabilities 3,327 1,866
------------------------------ ---- -------- --------
Total net assets 10,562 9,952
------------------------------ ---- -------- --------
Share capital 3,605 3,030
Share premium 92,520 88,647
Foreign exchange reserve (1,271) (61)
Accumulated deficit (84,292) (81,664)
------------------------------ ---- -------- --------
Total equity 10,562 9,952
------------------------------ ---- -------- --------
Consolidated statement of changes in equity
for the year ended 31 December 2020
Foreign
Share Share exchange Accumulated
capital premium reserve deficit Total
$'000 $'000 $'000 $'000 $'000
------------------------------------------- -------- -------- --------- ----------- -------
Balance at 1 January 2019 2,586 86,126 731 (78,298) 11,145
------------------------------------------- -------- -------- --------- ----------- -------
Loss for the year - - - (3,684) (3,684)
Exchange difference arising on translation
of foreign operations - - (792) - (792)
------------------------------------------- -------- -------- --------- ----------- -------
Total comprehensive income/(loss) - - (792) (3,684) (4,476)
Shares issued net of issue costs 444 2,521 - - 2,965
Share-based payments - - - 318 318
------------------------------------------- -------- -------- --------- ----------- -------
Balance at 31 December 2019 3,030 88,647 (61) (81,664) 9,952
------------------------------------------- -------- -------- --------- ----------- -------
Loss for the year - - - (3,224) (3,224)
Exchange difference arising on translation
of foreign operations - - (1,210) - (1,210)
------------------------------------------- -------- -------- --------- ----------- -------
Total comprehensive income/(loss) - - (1,210) (3,224) (4,434)
Shares issued net of issue costs 575 3,873 - - 4,448
Share-based payments - - - 596 596
------------------------------------------- -------- -------- --------- ----------- -------
Balance at 31 December 2020 3,605 92,520 (1,271) (84,292) 10,562
------------------------------------------- -------- -------- --------- ----------- -------
Consolidated statement of cash flows
for the year ended 31 December 2020
2020 2019
Note $'000 $'000
------------------------------------------------------- ---- ------- -------
Cash flows from operating activities
Loss for the year (3,224) (3,684)
Adjustments for:
Depreciation 277 358
Depreciation of right-of-use assets 338 373
Amortisation of intangibles 8 24 43
Share-based payment expense 596 318
Finance income (295) (323)
Finance expense 31 38
Foreign exchange (loss)/gain (1,015) (824)
Income taxes credit (80) (158)
Decrease in trade and other receivables 598 155
Gain on disposal of fixed asset (11) -
(Increase)/Decrease in inventories (607) 15
Increase/(Decrease) in trade and other payables 711 (941)
Income taxes received 165 223
------------------------------------------------------- ---- ------- -------
Net cash used in operating activities (2,492) (4,407)
------------------------------------------------------- ---- ------- -------
Investing activities
Purchase of property, plant and equipment (15) (132)
Sale of property, plant and equipment 11 20
Finance income 159 56
Purchase of investments (2,756) (1,940)
Sale of investments 1,404 1,859
------------------------------------------------------- ---- ------- -------
Net cash provided by investing activities (1,197) (137)
------------------------------------------------------- ---- ------- -------
Financing activities
Finance expense (4) (3)
Payment of lease liability (389) (420)
Issue of ordinary share capital 4,449 2,695
Borrowings 174 -
------------------------------------------------------- ---- ------- -------
Net cash provided by financing activities 4,230 2,542
------------------------------------------------------- ---- ------- -------
Net increase / (decrease) in cash and cash equivalents 541 (2,002)
Cash and cash equivalents at the beginning of period 457 2,459
Effects of exchange rates on cash held (16) -
------------------------------------------------------- ---- ------- -------
Cash and cash equivalents at the end of the period 982 457
------------------------------------------------------- ---- ------- -------
Notes forming part of the Group financial statements
for the year ended 31 December 2020
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 2019 or 2020. Statutory accounts for the years ended 31
December 2019 and 31 December 2020, which were approved by the
directors on 22 April 2021, have been reported on by the
Independent Auditors. The Independent Auditor's Reports on the
Annual Report and Financial Statements for each of 2019 and 2020
were unqualified, did not draw attention to a matter by way of
emphasis in the year ended 31 December 2020 but did draw attention
to a matter by way of emphasis for the year ended 31 December 2019,
being going concern 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 2019 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2020 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 the
requirements of the Companies Act 2006. 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 2019, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2019. 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.
2. Accounting policies
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, and primarily due to the US 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 Peso Euro Reals
----- ------------ ------ ------ ------
2019 1.3185 0.0529 1.1215 0.2485
2020 1.3649 0.0503 1.2264 0.1924
----- ------------ ------ ------ ------
Average
exchange
rates
--------- ------ ------ ------
GBP Peso Euro Reals
----- --------- ------ ------ ------
2019 1.2767 0.0519 1.1194 0.2537
2020 1.2834 0.0468 1.1414 0.1958
----- --------- ------ ------ ------
Going concern
In assessing whether the going concern basis is an appropriate
basis for preparing the 2020 Annual Report, the Directors have
utilised its detailed forecasts which take into account its current
and expected business activities, its cash and cash equivalents
balance and investments of $4.1 million as shown in its balance
sheet at 31 December 2020, the principal risks and uncertainties
the Group faces and other factors impacting the Group's future
performance.
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 company
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 pandemic due
to the strength of its customer proposition, 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 customer and potential customer engagement;
and (b) the level of new sales to new customers. The pandemic has
had a widespread impact 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. This
assessment has also included the group's actual cash holdings as of
the date of the approval of these financial statements, which
include funds received through an equity raise in March 2021 of
$9.1 million (net of costs). 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.
3. 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.
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 aging. 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. The Group has debtors with a gross value
(before provisioning but after the assessment of financing
components) of $0.6 million within this grouping.
4. Revenue
2020 2019
Revenue arises from: $'000 $'000
--------------------- ------ ------
Proprietary products 3,984 3,770
Third-party products 2,627 2,666
--------------------- ------ ------
Total 6,611 6,436
--------------------- ------ ------
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 2020
Sales contracts Sales contracts
with payment with payment
terms less terms greater
than 180 than 180
days days Total
Segment $'000 $'000 $'000
-------------- --------------- --------------- -----
Mexico 3,214 - 3,214
Americas 2,017 167 2,184
Rest of World 1,213 - 1,213
-------------- --------------- --------------- -----
6,444 167 6,611
-------------- --------------- --------------- -----
Sales contracts Sales contracts
with payment with payment
terms less terms greater
than 180 than 180
days days Total
Timing of transfer of goods $'000 $'000 $'000
---------------------------------------------- --------------- --------------- -----
Point in time (delivery to port of departure) 6,166 167 6,333
Point in time (delivery to port of arrival) 278 - 278
---------------------------------------------- --------------- --------------- -----
6,444 - 6,611
---------------------------------------------- --------------- --------------- -----
Year to 31 December 2019
Sales contracts Sales contracts
with payment with payment
terms less terms greater
than 180 than 180
days days Total
Segment $'000 $'000 $'000
-------------- --------------- --------------- -----
Mexico 3,330 - 3,330
Americas 1,394 737 2,131
Rest of World 848 127 975
-------------- --------------- --------------- -----
5,572 864 6,436
-------------- --------------- --------------- -----
Sales contracts Sales contracts
with payment with payment
terms less terms greater
than 180 than 180
days days Total
Timing of transfer of goods $'000 $'000 $'000
---------------------------------------------- --------------- --------------- -----
Point in time (delivery to port of departure) 5,536 737 6,273
Point in time (delivery to port of arrival) 36 127 163
---------------------------------------------- --------------- --------------- -----
5,572 864 6,436
---------------------------------------------- --------------- --------------- -----
Financing component of sales contracts $'000
----------------------------------------------------- -----
At 1 January 2020 144
Financing components recognised 9
Financing components unwound to the income statement (144)
----------------------------------------------------- -----
At 31 December 2020 9
----------------------------------------------------- -----
5. Operating loss
2020 2019
$'000 $'000
--------------------------------------------------------- --- ------ ------
Operating loss is arrived at after charging/(crediting):
Share-based payment charge 596 318
Depreciation 277 358
Depreciation of right-of-use assets 338 373
Amortisation of intangibles 24 43
Operating lease expense 26 41
Gain on disposal of property, plant and equipment (11) (20)
Impairment of trade receivables (123) 85
Employee termination costs - 63
Foreign exchange gains (971) (784)
Other income* (289) -
-------------------------------------------------------------- ------ ------
Auditor's remuneration:
Amounts for audit of parent company and consolidation 100 101
Amounts for audit of subsidiaries 45 44
-------------------------------------------------------------- ------ ------
Total auditor's remuneration 145 145
-------------------------------------------------------------- ------ ------
* Under the U.S. Department of Treasury CARES Act, the company
was eligible for the Paycheck Protection Program (PPP) loan. All
provisions of the loan were satisfied as laid out in the CARES Act,
making the company eligible for a 100% forgiveness of the $289,000
loan received.
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:
Rest
of Total New
Americas Mexico World Elimination Commercial Technology Total
2020 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------------------------- -------- ------- ------- ----------- ----------- ----------- --------
Revenue*
Proprietary product sales 2,165 613 1,206 - 3,984 - 3,984
Third-party product sales 19 2,601 7 - 2,627 - 2,627
Inter-segment product sales 1,383 - 634 (2,017) - - -
-------------------------------- -------- ------- ------- ----------- ----------- ----------- --------
Total revenue 3,567 3,214 1,847 (2,017) 6,611 - 6,611
-------------------------------- -------- ------- ------- ----------- ----------- ----------- --------
Cost of sales (2,109) (1,746) (1,090) 2,017 (2,928) - (2,928)
Other income** 289 - - - 289 - 289
Research and development - - - - - (2,135) (2,135)
Sales and marketing (1,318) (664) (735) - (2,717) (257) (2,974)
Administration (722) (224) (8) - (954) (144) (1,098)
Non-cash expenses:
Depreciation (98) (68) (16) - (182) (443) (625)
Amortisation (18) - (5) - (23) - (23)
Share-based payment (49) - (36) - (85) (381) (466)
-------------------------------- -------- ------- ------- ----------- ----------- ----------- --------
Segment operating (loss)/profit (458) 512 (43) - 11 (3,360) (3,349)
Corporate expenses:***
Wages and professional fees (1,146)
Administration**** 927
-------------------------------- -------- ------- ------- ----------- ----------- ----------- --------
Operating loss (3,568)
Finance income 295
Finance expense (31)
-------------------------------- -------- ------- ------- ----------- ----------- ----------- --------
Loss before tax (3,304)
-------------------------------- -------- ------- ------- ----------- ----------- ----------- --------
* Revenue from one customer within the Americas segment totalled
$950,000, or 14% of Group revenues. Revenue from one customer
within the Mexico segment totalled $1,293,000 or 20% of Group
revenues.
** Under the U.S. Department of Treasury CARES Act, the company
was eligible for the Paycheck Protection Program (PPP) loan. All
provisions of the loan were satisfied as laid out in the CARES Act,
making the company eligible for a 100% forgiveness of the $289,000
loan received.
*** 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 $130,000
attributed to corporate employees who are not directly affiliated
with any of the Commercial or New Technology segments.
Other segment Information
Rest
of Total New
Americas Mexico World Eliminations Commercial Technology Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------------- -------- ------- ------ ------------ ----------- ----------- ------
Segment assets 8,574 2,269 2,135 - 12,978 911 13,889
Segment liabilities 1,447 597 307 - 2,351 976 3,327
Capital expenditure 42 1 1 - 44 4 48
-------------------- -------- ------- ------ ------------ ----------- ----------- ------
Rest
of Total New
Americas Mexico World Elimination Commercial Technology Total
2019 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------------------------- -------- ------- ------ ----------- ----------- ----------- --------
Revenue*
Proprietary product sales 2,109 689 972 - 3,770 - 3,770
Third-party product sales 22 2,641 3 - 2,666 - 2,666
Inter-segment product sales 844 - 368 (1,212) - - -
-------------------------------- -------- ------- ------ ----------- ----------- ----------- --------
Total revenue 2,975 3,330 1,343 (1,212) 6,436 - 6,436
-------------------------------- -------- ------- ------ ----------- ----------- ----------- --------
Cost of sales (1,583) (1,704) (759) 1,212 (2,834) - (2,834)
Research and development - - - - - (2,031) (2,031)
Business development - - - - - - -
Sales and marketing (1,530) (883) (731) - (3,144) - (3,144)
Administration (651) (233) (153) - (1,037) (193) (1,230)
Non-cash expenses:
Depreciation (97) (87) (11) - (195) (540) (735)
Amortisation (38) - (5) - (43) - (43)
Share-based payment (62) - (32) - (94) (188) (282)
-------------------------------- -------- ------- ------ ----------- ----------- ----------- --------
Segment operating (loss)/profit (986) 423 (348) - (911) (2,952) (3,863)
Corporate expenses:**
Wages and professional fees (1,026)
Administration**** 762
-------------------------------- -------- ------- ------ ----------- ----------- ----------- --------
Operating loss (4,127)
Finance income 323
Finance expense (38)
-------------------------------- -------- ------- ------ ----------- ----------- ----------- --------
Loss before tax (3,842)
-------------------------------- -------- ------- ------ ----------- ----------- ----------- --------
* Revenue from one customer within the Americas segment totalled
$675,000, or 10% of Group revenues.
Revenue from one customer within the Mexico segment totalled
$1,243,000 or 19% 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 $36,000
attributed to corporate employees who are not directly affiliated
with any of the Commercial or New Technology segments.
Rest
of Total New
Americas Mexico World Eliminations Commercial Technology Total
Other segment information $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------------------- -------- ------- ------ ------------ ----------- ----------- ------
Segment assets 7,367 1,915 1,972 - 11,254 564 11,818
Segment liabilities 967 434 137 - 1,538 328 1,866
Capital expenditure 78 38 - - 116 16 132
--------------------------- -------- ------- ------ ------------ ----------- ----------- ------
Segment assets include all operating assets used by a segment
and consist principally of operating cash, receivables,
inventories, property, plant and equipment and intangible assets,
net of allowances and provisions. Segment liabilities include all
operating liabilities and consist principally of trade payables and
accrued liabilities.
Geographic information
The Group operates in three principal countries - the United
Kingdom (country of domicile), the US and Mexico.
The Group's revenues from external customers by location of
operation are detailed below:
Year ended Year ended
31 December 31 December
2020 2019
-------------- --------------
Amount Amount
$'000 % $'000 %
--------------- -------- ---- -------- ----
United Kingdom 285 4 271 4
United States 1,657 25 1,715 27
Mexico 3,214 49 3,330 52
All other 1,455 22 1,120 17
--------------- -------- ---- -------- ----
Total 6,611 100 6,436 100
--------------- -------- ---- -------- ----
The Group's non-current assets by location of assets are
detailed below:
Year ended Year ended
31 December 31 December
2020 2019
-------------- --------------
Amount Amount
$'000 % $'000 %
--------------- -------- ---- -------- ----
United Kingdom 7 - 11 -
United States 2,734 91 2,430 90
Mexico 208 7 209 8
All other 195 2 40 2
--------------- -------- ---- -------- ----
Total 3,114 100 2,690 100
--------------- -------- ---- -------- ----
7. Loss per share
Basic loss per ordinary share has been calculated on the basis
of the loss for the year of $3,224,000 (2019: loss of $3,684,000)
and the weighted average number of shares in issue during the
period of 245,268,691 (2019: 178,031,230).
Equity instruments of 22,953,802 (2019: 18,098,134), which
includes share options, the 2015 Employee Share Option Plan and 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.
8. Intangible assets
Trade
Licences name
and and customer
Goodwill registrations relationships Total
$'000 $'000 $'000 $'000
--------------------------------- --------- -------------- -------------- ------
Cost
Balance at 1 January 2019 1,620 3,342 159 5,121
Additions - externally acquired - - - -
--------------------------------- --------- -------------- -------------- ------
Balance at 31 December 2019 1,620 3,342 159 5,121
Additions - externally acquired - - - -
--------------------------------- --------- -------------- -------------- ------
Balance at 31 December 2020 1,620 3,342 159 5,121
--------------------------------- --------- -------------- -------------- ------
Accumulated amortisation
Balance at 1 January 2019 - 3,270 159 3,429
Amortisation charge for the year - 43 - 43
--------------------------------- --------- -------------- -------------- ------
Balance at 31 December 2019 - 3,313 159 3,472
Amortisation charge for the year - 24 - 24
--------------------------------- --------- -------------- -------------- ------
Balance at 31 December 2020 - 3,337 159 3,496
--------------------------------- --------- -------------- -------------- ------
Net book value
At 1 January 2019 1,620 72 - 1,692
--------------------------------- --------- -------------- -------------- ------
At 31 December 2019 1,620 29 - 1,649
--------------------------------- --------- -------------- -------------- ------
At 31 December 2020 1,620 5 - 1,625
--------------------------------- --------- -------------- -------------- ------
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 2019 and 2020,
cash flows are projected over a five-year period with a residual
growth rate assumed at 0%. For the years ended 31 December 2019 and
2020, a pre-tax discount factor of 14.9% and 14.5% 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 Harpin, 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 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.
9. Trade and other receivables
2020 2019
$'000 $'000
---------------------------------------- ------ ------
Current
Trade receivables 2,494 3,497
Less: provision for impairment (84) (264)
---------------------------------------- ------ ------
Trade receivables, net 2,410 3,233
Other receivables and prepayments 368 179
---------------------------------------- ------ ------
Current trade and other receivables 2,778 3,412
---------------------------------------- ------ ------
Non-current
Trade receivables 164 -
Less: provision for impairment (15) -
---------------------------------------- ------ ------
Trade receivables, net 149 -
Other receivables 69 62
Deferred tax asset 85 88
---------------------------------------- ------ ------
Non-current trade and other receivables 303 150
---------------------------------------- ------ ------
3,081 3,562
---------------------------------------- ------ ------
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 aging. The expected loss rates are based on
the aging 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.
Considered Considered
under under
the simplified the general
approach approach
$'000 $'000
------------------------------ --------------- ------------
Trade receivables 2,036 622
Expected credit loss assessed (2) (97)
------------------------------ --------------- ------------
2,034 525
------------------------------ --------------- ------------
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:
2020 2019
$'000 $'000
----------------------------------------- ------ ------
Balance at the beginning of the year 264 186
Provided - 161
Receivables written off as uncollectible (42) (85)
Unused amounts reversed (123) -
Foreign exchange - 2
----------------------------------------- ------ ------
Balance at the end of the year 99 264
----------------------------------------- ------ ------
The net value of trade receivables for which a provision for
impairment has been made is $0.6 million (2019: $1.6 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.
2020 2019
$'000 $'000
--------------------- ------ ------
Current 2,199 2,401
Past due:
Up to 30 days 8 -
31 to 60 days - 9
61 to 90 days - 11
Greater than 90 days 352 812
--------------------- ------ ------
Total 2,559 3,233
--------------------- ------ ------
10. Subsequent events
In March of 2021, the Company successfully completed an equity
raise which generated $9.1 million (net of costs) from new and
existing investors. The Company issued 50,397,913 ordinary shares
at 14p per share.
11. 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 Company 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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END
FR UURWRASUSUAR
(END) Dow Jones Newswires
April 23, 2021 02:00 ET (06:00 GMT)
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