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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Plant Impact | LSE:PIM | London | Ordinary Share | GB00B1F4K366 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 10.45 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPIM
RNS Number : 9991S
Plant Impact PLC
09 October 2017
For immediate release 9 October 2017
Plant Impact plc
('Plant Impact', 'PI' or 'the Group')
Preliminary results for 12 months ended 31 July 2017
Geographic sales expanded - R&D investment delivering progress
Plant Impact plc (AIM: PIM), a leader in research and development in crop enhancement products that growers can rely on to improve the yield and quality of their crops, today announces its audited preliminary results for the year ended 31 July 2017.
Highlights
-- Revenue increased 17% to GBP8.5m (2016: GBP7.2m), primarily reflecting Veritas(R) sales in Brazil
- Reported revenue growth reflects the strength of the US Dollar - constant currency revenue growth was 2%
- First sales of Veritas(R)/Fortalis(R) in the USA, Argentina, Paraguay and Bolivia
- Veritas(R) purchase plan agreed for 2017/18 Brazil growing season based on our commercial partner's end-user sales targets
- Increased sales of Banzai(TM) cocoa product -- Gross profit increased 19% to GBP6.7m (2016: GBP5.6m)
-- Total R&D investment increased 43% to GBP4.2m (2016: GBP2.9m), including GBP1.6m of capitalised costs (2016: GBP1.2m) with novel new compounds identified and pipeline progress achieved
-- R&D pipeline summary issued in August 2017 to give greater visibility to investors and industry partners of our progress in R&D
- Complete season-long portfolio of soybean products being tested over 2017/18 Brazil growing season
- Discovery phase activities increased with expanded molecule discovery capability yielding new compounds
- new academic partnerships announced
- Early indications of product extension potential beyond current target crops
-- Sales and marketing costs increased to GBP5.3m (2016: GBP2.9m) with expansion of commercial activities in the USA and Argentina and additional marketing investment in Brazil and West Africa.
-- Cash at 31 July 2017 of GBP7.2m (31 July 2016: GBP5.6m), reflecting a successful placing announced on 26 July 2017 to raise GBP4.0m before expenses
John Brubaker, Chief Executive Officer of Plant Impact, commented:
"The Group has an exciting set of commercial and R&D prospects ahead of it and an ambitious and talented team with the drive to succeed. We enter the new financial year focused on our goal of establishing Plant Impact as the leader in this important new category of agricultural inputs."
Analyst meeting
A meeting for analysts will be held at 10.00 a.m. today, 9 October 2017, at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. For further details, contact Buchanan on 020 7466 5000.
For further information please contact:
Hot Features
Premium
Plant Impact plc Tel: +44 (0)
1582 465 540
John Brubaker, Chief Executive
Officer
Richard Amos, Chief Financial
Officer
Ailish Tracy, Global Communications
Manager
Peel Hunt - Nominated Adviser Tel: +44 (0)
and Broker 207 418 8900
Adrian Trimmings Tel: +44 (0)
George Sellar 207 466 5000
Buchanan - Financial PR
Mark Court
Sophie Cowles
Jamie Hooper
The Company considers that this announcement contains inside information for the purposes of the Market Abuse Regulation.
PRELIMINARY RESULTS ANNOUNCEMENT FOR YEARED 31 JULY 2017
Chairman's Statement
The last 12 months have been eventful ones for our industry and for our business. We have seen a remarkable uptick in the pace of technical innovation from smaller companies, as well as from industry multinationals. There have been numerous scientific and technical developments in the areas of biostimulants, AgData, plant genetics and advanced sensing and diagnostic tools. The future of technology on the world's farms and in its food supply chain looks very bright over the next 5-10 years: growers will have better inputs, better information about how to use them, and newer, more efficient ways of doing business.
The short-term commercial environment in agriculture looks very different, however. An unusual succession of strong harvests over the past five years (prompted by both good weather and grower adoption of new, high-tech inputs) has depressed commodity prices in the world's big crops: corn, soybeans, wheat and rice. This has created significant pressure on growers' profitability and the financial performance of the distributors and input manufacturers who supply them. Cost-cutting behaviour by farmers has reduced input consumption, creating significant channel inventory in many markets, notably Brazil and the United States. The industry is adjusting to these new conditions in a number of ways, most conspicuously by consolidation.
Plant Impact's business progress in the last financial year reflects these broader sectoral trends. We have invested more in R&D and have been rewarded with a step advance in our pipeline of products. In the next two years, we expect to launch new crop enhancement products for both soybean and our second target crop, wheat. Following investments and partnerships for early stage discovery of new yield-enhancing small molecules suitable for soybean, wheat and other major dicot and monocot crops, we have made many promising discoveries. We expect these to generate significant new revenue in the medium term.
Commercially, the Group's Brazil Veritas(R) business - still the majority of its sales - experienced a shortfall in grower consumption relative to campaign targets, impacting our sales for the 2016/17 financial year and the outlook for the 2017/18 year. In spite of this, we made the important step of establishing commercial positions in the United States and Argentina, which - along with Brazil - make up more than 90% of the world's soybean production.
The Group's Board and management have evolved the strategy of the Company to reflect the richer flow of development products we are now seeing. We are moving from a sole focus on the exploitation of products in hand, to orientating ourselves to a future where our R&D platform will significantly broaden our offer (and with it, of course our development challenge). Detail on this is explained more fully in the Chief Executive's Review. Having worked successfully with the previous strategic plan from 2011 to 2016 of globalising and placing our products into important sectors of world agriculture, this evolution of our strategy will emphasise and build upon our productive R&D discovery capability. We believe that a wealth of novelty in discovery coupled with proven development and commercial placement capability is the best choice we can make. Our aim remains to become the industry leader in the discovery and development of small molecule chemistry for crop yield enhancement, establishing this emerging category of agricultural inputs as one that growers can trust and will adopt.
The Brazil purchasing outlook for the coming 2017/18 season translated into a lower level of internally-generated cash to fund R&D over the next 12 months. Given the progress we had made over the last two years and the desire to avoid losing R&D momentum, we approached shareholders for additional funding to maintain our investment in the future. We were pleased by the support we received which resulted in a fund-raising of GBP4m. We will invest this in R&D activities, primarily in bringing to market the products that are closest to launch.
People
Richard Amos, our CFO since May 2016, has informed the Board that, for personal reasons, he has decided not to seek re-election to the Board at the forthcoming AGM in December 2017. He will leave the Group in the early part of next year having transitioned responsibilities to a new CFO. I would like to thank Richard for his outstanding contribution to the Group; he has introduced a high level of professionalism to our financial management and governance, which has taken the Group through its recent international expansion. The Board will commence the search imminently for a new CFO and a further announcement will be made in due course. We wish Richard well in his future endeavours and, in the meantime, we look forward to working with him during the transition period.
I would like to thank all of our employees for the commitment and support that they have shown over the last year. It is their drive, enthusiasm and skill that produces the progress we seek and their efforts in this regard have been exemplary.
Dr David Jones
Chairman
Chief Executive's Review
In the 2016/17 financial year we made good progress in developing Plant Impact's commercial and technical platforms to exploit the significant opportunity in crop enhancement.
Considerable progress has been made in the 2016/17 financial year in research and product development (R&D). For the first time, our R&D progress is enabling us to trial an integrated, full-season portfolio of four individually developed yield products and prototypes for soybeans. Ultimately, and in combination, we are developing them to deliver a consistent double-digit yield improvement for growers; this is without precedent in this category. In addition, we are gathering test data signalling that our technologies in soybeans and wheat could be extended to other major world crops like cotton, canola, corn and rice. Most exciting, our chemical discovery process has been developed to be highly productive in generating novel compound leads, which are showing promising performance in early laboratory assays. Reflecting this and the importance that we place on R&D, we have recently published a pipeline review that gives investors and industry partners improved visibility of where we are working and the progress we are making.
Successes this year have included the launch of Fortalis(R) in North America and Veritas(R)/Fortalis(R) in the Southern Cone of Latin America. Additionally we have seen growth of Banzai(TM), our product for cocoa in West Africa and made progress in developing additional partnerships to expand that opportunity in future years. We made commercial progress in Brazil, expanding our flagship product Veritas(R) to consolidate a leading market position in soybean crop enhancement. However, we did not achieve the campaign plan that both we and Bayer CropScience (BCS), our partner in the country, had set for the season. This resulted in a build up in channel inventory levels which adversely impacted BCS's planned purchase volumes for the forthcoming 2017/18 growing season. We regard this as a temporary setback, brought about by poor market conditions last season. Factors included poor crop prices, restricted availability of farm credit and overall poor economic sentiment in Brazil.
Strategy
The Group has operated since 2011 under a strategic plan which directed commercial and product development efforts towards building three pillars: sell direct to market, globalise and scale, and accelerate innovation. Over the last 12 months, we have evolved this strategy for the next stage of our development. Our update recognises that R&D activities are at the core of what we are seeking to achieve and that these provide the main engine for an appreciation in long-term shareholder value. This 2017 strategic plan (i) organises our R&D efforts to address specific plant physiological responses and resource prioritisation that limit crop yields, (ii) focuses these research efforts on soybeans and wheat, as initial models for dicot and monocot plant classes, (iii) aims to create a replicable R&D platform approach to the discovery of new small molecules, (iv) concentrates product development on novel synthetic and defined chemistries, and (v) builds partnerships with companies that growers trust in order to commercialise products and fund further R&D.
The refined strategy forms the basis of a five-year business and R&D plan that the Group will continue to progress as the business develops.
Operating review
Research and Development
Research and Development (R&D) is at the core of Plant Impact's business, with more than 25% of our staff dedicated full time to R&D work and almost everyone in the Group engaged in some form of R&D activity. Product development in crop enhancement is a multi-year activity, albeit a significantly more rapid process than comparable development cycles for traditional agrochemicals or new seed genetics. Considerable work has been conducted this year in streamlining our R&D process to ensure a better flow of opportunities from concept to product development. A detailed update on progress on R&D activities was published in August 2017 on our website.
Our R&D process, like that of most other Life Sciences businesses, consists of discrete stages: Discovery, Early stage development and Late stage development. Projects that advance to the late stage of development are expected to achieve first product sales in one to three years. Projects currently in this phase, include those that aid the in-ground germination and establishment of both wheat (W1) and soybeans (S0) as well as an important project to support the photosynthetic process of soybeans in the vegetative growth stage (F1, now branded Tempus(R)). Trials within these projects have been conducted in both North and South America over the course of the last year.
In the case of both S0 and Tempus(R) soybean development projects we also made formulation upgrades that are in advanced trials. Over the past year, we have identified partners who are eager to launch these early-stage formulations under their own labels. These commercial opportunities are being actively considered as interim solutions which can generate supplemental corporate funding for additional R&D in our core discovery and product development activities.
We have a number of projects that have progressed from Discovery into a more advanced Early development stage where we have identified candidate active molecules that appear to offer the yield potential we seek and are testing these in the field in small plot and larger scale trials. Included in this area is work we are progressing at the reproductive stage of the soybean growing cycle that is complementary with our existing Veritas(R) and Fortalis(R) products (V4 project).
However, the most exciting development has been in the Discovery phase of our activities. We have significantly increased the flow of potential new molecules into our screening process. This has been as a consequence of improvements in our processes, as well as new capabilities and the recruitment of scientists who have bought techniques that allow us to model chemical/plant interactions, further accelerating lead generation. In parallel, we have established a number of potential new academic partnerships, and we were delighted in May 2017 to sign a collaboration agreement with Ghent University that gives us exclusive access to novel phosphonamide pyrabactin analogue molecules that improve drought tolerance in wheat (project code-name Y1). Our aim is to develop academic partnerships for each of our R&D focus areas. In this regard we were also pleased to announce a collaboration with Rothamsted Research and Lancaster and Nottingham Universities to investigate the physiological impacts of heat stress in wheat (H1 project).
As announced at the time of the interim results in March, the Group is currently investigating options to dispose of the intellectual property assets related to its biological insecticide TGT-101. The process is ongoing and further announcements will be made as appropriate.
Commercial activity
Veritas(R)
As announced in this review last year, for the 2016/17 Brazilian soybean growing season we increased investment in commercial support in Brazil for Veritas(R), our flagship soybean product, sold through our partner in the region, Bayer CropScience (BCS). This investment included additional temporary field agent resources to run demonstration programmes for dealers and growers and investment in a digital marketing campaign targeted specifically at growers. These investments did not achieve the results we had hoped for and growth in grower use of the product fell well short of the plans that we had agreed with BCS. Purchases by growers were affected by the challenging backdrop of Brazilian agricultural market conditions that adversely affected overall industry purchases of chemical inputs. Weak crop prices and a lack of available credit following a poor season in 2015/16 meant that the 2016/17 season was a difficult one for chemical suppliers.
These underlying market conditions did not impact our sales of Veritas(R) to BCS at the beginning of the 2016/17 growing season. BCS purchased from us the quantities that we had agreed with them ahead of the start of that season and that were in line with the minimum quantities that they needed to purchase to maintain their exclusive rights to market the product in Brazil. In addition, they purchased volumes for Paraguay and Bolivia, for which this was the first season of Veritas(R) sales. Product performance results from the field in all three countries were encouraging, with yield uplifts in grower tests in the 5% range. This was achieved in a season that itself saw very high underlying yields, confirming our data from research tests that show Veritas(R) providing soybean yield improvement regardless of the level of underlying yields.
Lower grower usage in season 2016/17 meant higher than expected channel stocks in Brazil at the start of the 2017/18 growing season. This has impacted planned purchases for this season, including sales that we had anticipated making prior to the recent financial year end, as we have done in each of the last three financial years. As announced in July 2017, we have agreed a purchasing plan with BCS for 2017/18 which is lower than previously assumed. Campaign plans have been agreed, and we will again be supporting them in the field. By incorporating the learning of the last campaigns, our support will be more effectively structured to drive grower adoption this season.
Looking forward, both the Group and BCS aim to move to higher volume strategies and recognise that the current commercial arrangements may need to be flexed to achieve that objective.
Fortalis(R)
The last year saw the launch of the follow-on product to Veritas(R), Fortalis(R), which uses the same yield-enhancing molecule and is targeted at the same biological stress condition of soybean development. Fortalis(R), however, has a wider application window allowing use in regions where the spray of compatible fungicide takes place later in the plant's reproductive cycle. In the year, we launched this product in Argentina and the United States.
The launch of Fortalis(R) in North America has been more significant. Following the results of trials conducted over the 2016 growing season in the US we decided to launch the product in 2017, arranging distribution deals with five of the biggest distributors in the North American market. Commercially, we have positioned Fortalis(R) in combination with a range of premium soybean fungicides. Currently, only 20% of soybean growers in the US use fungicide due to a perception of relatively low disease pressure. However for those growers, applying a fungicide with Fortalis(R) offers, on average, a 10% yield uplift even on non-fungicide treated areas. This is a very compelling prospect. By working directly with the most important distributors in the market, we are able to remain independent of any particular fungicide manufacturer which significantly increases our options and potential market. For instance, it also enables us to offer commercial incentives direct to growers and to capture their yield improvement data thus allowing us to drive more focused customer relationship campaigns to increase on
the ground useage. Harvest data and customer feedback will come in during the final months of the current calendar year, and we will use this information to define marketing plans for the 2018 US season.
In Argentina we launched Fortalis(R) through a test-marketing scheme with BCS Argentina. Feedback from growers using and testing the product has been very good, and the yield improvements were consistent with our targets in the 4-5% range. Following this programme, we have designed a promotional campaign which has some elements of our channel strategy in both Brazil and United States. In Argentina, we plan to work directly with regional distributors, but maintain some collaboration with BCS (and other leading fungicide manufacturers) to design commercial co-promotions with Fortalis(R). Given the tight economic conditions for growers in Argentina, pressured in particular by a soybean production tax, we are planning a very cautious expansion in this important market. In 2017/18, we will focus first on establishing a customer relationship management system and selling a modest volume in the market to prove our commercial system. Recognising this slower approach, we have reduced some commercial costs in Argentina, with a plan to increase commercial resource as we prove a customer adoption and retention model.
Banzai(TM)
The last financial year was the second active commercial season for Banzai(TM), which is our yield enhancement product for cocoa sold into West Africa by our partner Arysta LifeScience. Our sales to Arysta met the commercial plans that we had with them and grower use of the product was also in line with the targets in the business plan. Within this, sales into Cameroon were in line with expectations as we saw the first results of the strategy we are adopting in that area of working with the cocoa processors to support their sustainability programmes. Sales into Ivory Coast where Arysta is adopting a more traditional dealer-led sales model underperformed, but the shortfall here was offset in Ghana where the product has been adopted by COCOBOD, the government-organised supply organisation in that country.
Going forward, we intend to continue to pursue the cocoa processor model which we think could lead to significant growth opportunity for the product. We are developing that model with Arysta in Cameroon and now in the Ivory Coast, and we have contracted with local technical resources to help support the necessary demonstration trials.
Other products
At the start of the year, we restructured our business servicing customers in Europe, Middle East and Africa to reflect the lower growth rates we felt were achievable in this region. Our focus in this area has been on supporting distributor-led business plans, rather than trying to proactively drive grower demand. This has led to modest growth in the period but we feel that it has resulted in a more sustainable base from which to develop. Importantly, as a result of this lower cost commercial model, this part of the business was a net generator of cash over the last 12 months.
Outlook
Sales of Veritas(R) product into Brazil will continue to make the bulk of the revenue that the Group expects for the new financial year. These expectations are based on the purchase plan that has been agreed with BCS, which in turn is based on their target for grower use of the product over the next 12 months. In addition to this, the Group expects further growth in sales of Veritas(R)/Fortalis(R) in regions outside of Brazil, increased sales of the Banzai(TM) cocoa product into West Africa and material revenues from the launch of new products that are currently approaching the end of the development cycle. In total, the Directors believe, at this early stage, that revenue for FY18 will be around GBP13m with gross margins somewhat lower than those achieved in the last financial year due to the impact of product mix, but operating expenses also reduced.
The Group has an exciting set of commercial and R&D prospects ahead of it and an ambitious and talented team with the drive to succeed. We enter the new financial year focused on our goal of establishing Plant Impact as the leader in this important new category of agricultural inputs.
Financial review
Throughout this review reference to adjusted results means the results for continuing operations before, where applicable, share-based payments and restructuring costs.
Financial results
Year Year Year
to to to
31 July 31 July 31 July
2017 2016 2015
GBP'm GBP'm GBP'm
Revenue 8.5 7.2 4.5
Cost of sales (1.7) (1.6) (1.0)
--------- --------- ---------
Gross profit 6.7 5.6 3.5
Operating expenses (excl. share-based
payments and restructuring
costs) (9.7) (5.8) (3.7)
--------- --------- ---------
Adjusted operating loss (3.0) (0.2) (0.2)
Net tax credit 0.9 0.5 0.4
--------- --------- ---------
Adjusted net (loss)/income (2.1) 0.3 0.2
Share-based payments and restructuring
costs (1.0) (1.0) (0.1)
--------- --------- ---------
Net (loss)/income (3.1) (0.7) 0.1
========= ========= =========
The table above shows the reconciliation of adjusted results to statutory results. The reconciling items are, share-based payments costs which are primarily non-cash related and restructuring costs which are by their nature one-off. In the opinion of the Board therefore these costs are not indicative of the Group's underlying trading which is better represented by the adjusted results.
Revenue
Overall revenue increased 17% to GBP8,450k in the year to 31 July 2017 (2016: GBP7,211k). Much of the increase came from the relative increase in the strength of the US Dollar compared to Sterling year on year, as most of the Group's revenue is invoiced in Dollars. Adjusting for this, the underlying increase in revenue on a constant currency basis was 2%.
Americas
The majority of the Group's revenue continues to come from the Americas where it was GBP7,209k compared to GBP6,494k in the prior year. Revenue in the Americas includes sales of the Company's flagship Veritas(R) product into Brazil. In FY17 the Group, through our partner Bayer CropScience, started making sales of Veritas(R) to Paraguay and Bolivia. Americas revenue in FY17 also included the initial sales of the second generation Fortalis(R) soybean product that was launched in the year in Argentina and the United States. The revenue achieved from these new regions helped offset a reduction in revenue for Brazil, as sales of Veritas(R) into that region were down year on year as previously explained.
Revenue in the Americas also includes revenue relating to the initial fee received in February 2015 from BCS which is being recognised over a five year term. GBP389k was recognised in the year (2016: GBP388k), leaving GBP972k in deferred revenue. This deferred revenue will be released to the income statement over the next 30 months.
Europe
Revenue in this region was GBP453k compared with GBP286k in the prior year. In particular there was growth seen in France, Turkey and Eastern Europe.
Rest of World
Revenue in the Rest of World increased to GBP788k from GBP431k in the prior year. Rest of World includes revenues from sales to West Africa for our Banzai(TM) product for cocoa as well as sales of more traditional products into the Middle East. In FY17 Banzai(TM) revenues accounted for all Rest of World revenues as there were no sales to Middle Eastern customers due to the political and economic conditions in the region. Banzai(TM) sales were in line with expectations in the second season of commercial sales, with higher than expected shipments for Ghana offsetting some weakness in Ivory Coast.
Gross profit
Gross profit margins increased slightly to 80% (2016: 78%). The increase primarily reflected the benefit the stronger Dollar had on revenues compared with the predominantly Sterling-based cost of sales, although this was partially offset by a slightly weaker product mix.
Operating expenses excluding share-based payments and restructuring costs
Excluding share-based payments and restructuring costs, underlying operating expenses increased from GBP5,848k to GBP9,720k, reflecting the increased headcount and on-costs associated with the strategy of geographic expansion and increased R&D.
Sales and marketing costs increased to GBP5,298k (2016: GBP2,914k) due mainly to the expansion of commercial activities into the United States and Argentina where local offices were established and commercial personnel recruited to provide initial support for the product launches. In the United States, additional temporary contract resources were also hired to reflect the direct-to-market commercial strategy that we are pursuing in that country. Additional marketing expenditure was also incurred in West Africa to support Banzai(TM) and in Brazil where we invested approximately GBP0.5m more than the previous year in additional temporary field staff and sales and marketing costs.
In total the Group spent GBP4,188k on R&D activities (2016: GBP2,923k). Of this, GBP2,636k (2016: GBP1,754k) was expensed through the income statement. Additionally, GBP1,552k (2016: GBP1,169k) was capitalised within intangible assets as it relates to products that are in the Late development stage where they are expected to be technically feasible and commercially viable and satisfy all the conditions prescribed by IAS 38 for recognition as an intangible asset.
Other administration costs increased to GBP1,786k (2016: GBP1,180k). Of the increase of GBP606k, GBP291k related to foreign exchange gains/losses which were a loss of GBP116k compared with a gain of GBP175k in the prior year. The majority of the rest of the increase reflected higher professional fees.
Share-based payments and restructuring costs
The income statement charge for the cost of share-based payments was GBP893k compared with GBP1,009k last year. As explained in last year's Annual Report the share-based payment charge primarily relates to options granted under the Value Creation Plan (VCP) that was adopted by shareholders at the Annual General Meeting in November 2014 and for which the first options were granted on 31 July 2015. The charge is predominantly a non-cash expense other than provision for employer's National Insurance costs on expected exercises where the lower share price this year resulted in a credit of GBP65k for the year compared with a charge of GBP213k in the prior year.
Restructuring costs in the period were GBP177k (2016: GBPnil). These reflected the costs of restructuring the European business which took place in the first quarter of the year.
Income tax
The Group benefits from UK R&D tax credits, in the form of a cash refund. GBP694k was claimed in the year relating to the period to 31 July 2016, with the cash received in January 2017. The amount received was GBP132k more than had been accrued in the accounts for the prior period and adjusting for that, together with the expected tax credit for the current year of GBP850k, brings the UK R&D tax credit for the year to GBP982k. This, combined with GBP54k of income tax incurred by overseas subsidiaries, results in a net tax credit in the income statement of GBP928k (2016: GBP514k).
The Group currently has an accumulated tax loss of GBP10,100k (2016: GBP8,700k). The Group has not recognised the potential net deferred tax asset of GBP1,293k related to these accumulated losses and other timing differences in the current year. The asset should only be recognised if it is probable that there will be sufficient taxable profits against which the loss can be utilised. The Group is currently in an operating loss position, and the Directors do not consider there is sufficient certainty over the timing of future taxable profits to crystallise the deferred tax asset.
Balance sheet
Non-current assets
The increase in net book value of non-current assets at 31 July 2017 to GBP4,847k (2016: GBP3,424k) reflects the capitalisation of development activities related to projects that satisfy the requirements of IAS 38 for recognition as intangible assets. Previously capitalised costs are being amortised from first commercial sale over periods of from 5 to 20 years depending on the expected longevity of the related technology or product.
Trade and other receivables
Trade and other receivables at 31 July 2017 were GBP829k (2016: GBP2,313k). The reduced balance reflects the absence this year of early season sales of Veritas(R) to Brazil, compared to prior years. The outstanding balance primarily relates to sales of Veritas(R) and Fortalis(R) products to Paraguay and the United States, as well as Banzai(TM) product being sold to Ghana.
Trade and other payables
Trade and other payables at 31 July 2017 due for payment within 12 months increased by GBP396k to GBP2,961k (2016: GBP2,565k). The main change related to deferred income which increased due to provisions for rebate programmes that support the United States Fortalis(R) commercial programme.
Cash flow and cash
The cash balance at 31 July 2017 was GBP7,204k (2016: GBP5,564k). The net inflow of GBP1,640k, reflects the impact of the fund raising that took place on 28 July 2017 raising GBP3,773k net of issue expenses. The inflow from this more than offset a cash outflow from operations of GBP317k and an outflow from investing activities of GBP1,685k.
Within cash flow from operations, the loss for the year was offset by the collection of the large trade debtor balance that existed at the start of the year. Cash flow from operations also benefited from the collection of two years' R&D tax credits following a delay in receipt of the prior year's claim for the period to 31 July 2015.
Cash spent in investment activities was primarily the GBP1,552k of capitalised R&D which is more fully described in the analysis of operating expenses.
The Group has a GBP1.0m invoice financing facility with HSBC Bank plc under which it can draw down up to 80% of all outstanding invoices, subject to a concentration limit. As at 31 July 2017 there were no drawings (31 July 2016: GBP50k of cash drawn down with recourse).
The Group has sufficient funds to support its near- and mid-term operating requirements and has the operational flexibility to reduce or increase expenditure to respond to challenges or opportunities.
John Brubaker
Chief Executive Officer
Group Statement of Comprehensive Income
For the year ended 31 July 2017
Year Year
ended ended
31 July 31 July
2017 2016
Note GBP'000 GBP'000 GBP'000 GBP'000
Revenue from product sales 8,061 6,823
Fees 389 388
---------- ---------
Total revenue 3 8,450 7,211
Cost of sales (1,720) (1,575)
Gross profit 6,730 5,636
Sales and marketing costs (5,298) (2,914)
Research and development
costs (2,636) (1,754)
Other administrative expenses (1,786) (1,180)
--------- ----------
Operating loss before
share-based payments and
restructuring costs (2,990) (212)
Share-based payments (893) (1,009)
Restructuring costs (177) -
Total operating loss 3 (4,060) (1,221)
Finance income 3 13
Finance cost (1) (11)
---------- ---------
Net finance income 2 2
Loss before tax (4,058) (1,219)
Income tax credit 4 928 514
Loss for the period attributable
to equity shareholders (3,130) (705)
========== =========
Exchange differences on
translating foreign operations
- may be subsequently
reclassified to profit
or loss (1) (1)
---------- ---------
Total comprehensive income
attributable to equity
shareholders (3,131) (706)
========== =========
Loss per ordinary share
attributable to equity
shareholders
Total and continuing:
Basic and diluted 5 (3.8) (0.9)
pence pence
========== ========== =========
Group Statement of Changes in Equity
For the year ended 31 July 2017
Share Share Other Merger Retained Total
capital premium reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31
July 2015 814 20,439 208 287 (13,230) 8,518
Share issue (net) 2 33 - - - 35
Share-based payments - - 796 - - 796
Forfeited and
exercised share
options - - (24) - 24 -
Transactions
with owners 2 33 772 - 24 831
Foreign exchange
on translation - - - - (1) (1)
Loss for the
period - - - - (705) (705)
---------------------- --------- --------- --------- --------- --------- --------
Total comprehensive
income - - - - (706) (706) ---------------------- --------- --------- --------- --------- --------- -------- Balance at 31 July 2016 816 20,472 980 287 (13,912) 8,643 ---------------------- --------- --------- --------- --------- --------- -------- Share issue 130 3,883 - - - 4,013 Costs of share issue - (240) - - - (240) Share-based payments - - 958 - - 958 Forfeited and exercised share options - - (6) - 6 - Transactions with owners 130 3,643 952 - 6 4,731 Foreign exchange on translation - - - - (1) (1) Loss for the period - - - - (3,130) (3,130) ---------------------- --------- --------- --------- --------- --------- -------- Total comprehensive income - - - - (3,131) (3,131) ---------------------- --------- --------- --------- --------- --------- -------- Balance at 31 July 2017 946 24,115 1,932 287 (17,037) 10,243 ---------------------- --------- --------- --------- --------- --------- --------
Group Statement of Financial Position
As at 31 July 2017
Note 31 July 31 July
2017 2016
GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 6 4,381 2,976
Property, plant and equipment 466 448
4,847 3,424
Current assets
Inventories 74 39
Trade and other receivables 7 829 2,313
Corporation tax receivable 833 888
Cash and cash equivalents 7,204 5,564
--------- ---------
8,940 8,804
Total assets 13,787 12,228
--------- ---------
LIABILITIES
Current liabilities
Borrowings - (50)
Trade and other payables 8 (2,961) (2,565)
--------- ---------
(2,961) (2,615)
Liabilities falling due
after more than one year 8 (583) (970)
Total liabilities (3,544) (3,585)
--------- ---------
Net assets 10,243 8,643
========= =========
EQUITY
Equity attributable to
equity shareholders of
the Company
Share capital 946 816
Share premium 24,115 20,472
Other reserve 1,932 980
Merger reserve 287 287
Retained losses (17,037) (13,912)
--------- ---------
Total equity 10,243 8,643
========= =========
Group Cash Flow Statement
For the year ended 31 July 2017
Note Year Year
ended ended
31 July 31 July
2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (4,058) (1,219)
Adjusted for:
Depreciation and amortisation 270 146
Loss on disposal of fixed assets - 4
Net foreign exchange loss/ (gain) 116 (175)
Share-based payments 893 1,009
Finance income (3) (13)
Finance cost 1 11
Operating cash flows before
working capital changes (2,781) (237)
Decrease/ (increase) in trade
and other receivables 7 1,416 (1,012)
(Increase)/ decrease in inventories (35) 79
Increase in trade and other
payables 8 151 945
Decrease in deferred income 8 (67) (388)
Cash absorbed by operations (1,316) (613)
Research and development tax 1,020 -
credit received
Overseas corporation tax paid 4 (21) (86)
Net cash outflow from operating
activities (317) (699)
Cash flows from investing activities
Purchase of property, plant
and equipment (136) (196)
Expenditure on intangible assets 6 (1,552) (1,169)
Interest received 3 13
Net cash absorbed by investing
activities (1,685) (1,352)
Cash flows from financing activities
Proceeds from issue of share
capital (net of expenses) 3,773 35
Interest paid (1) (11)
Net cash generated by financing
activities 3,772 24
Increase/ (decrease) in cash
and cash equivalents 1,770 (2,027)
Exchange losses on cash and
cash equivalents (130) (42)
Cash and cash equivalents at
the beginning of the period 5,564 7,633
Cash and cash equivalents at
the end of the period 7,204 5,564
-------------------------------------- ----- --------- ---------
Notes to the Preliminary Results
1. Nature of operations and general information
The financial information for the years ended 31 July 2017 and 31 July 2016 included in the preliminary announcement, which was approved by the Board on 6 October 2017, is derived from the full Group audited statements for the year ended 31 July 2017 and does not constitute the statutory financial statements within the meaning of section 434 of the Companies Act 2006. The Group financial statements for the year ended 31 July 2017, on which the auditor has given an unqualified report which does not include a reference to any matter to which the auditor drew attention by way of emphasis of matter and does not contain a statement under section 498(2) or (3) of the Companies Act 2006 in respect of the financial statements for 2017, will be delivered to the Registrar of Companies in due course.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards, as adopted by the European Union (EU) (IFRS), this announcement does not in itself contain sufficient information to comply with IFRS.
The statutory financial statements for the year ended 31 July 2016 have been delivered to the Registrar of Companies.
The Company is a limited liability company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by London Stock Exchange plc. The consolidated financial information of Plant Impact plc is presented in round thousands Sterling (GBP), which is also the functional currency of the Group.
2. Going concern
The Group has undertaken a review of forecasts and projections, which have been prepared for the period to 31 January 2019. These indicate anticipated growth in product revenues and cash flows. The projections take into account the new business opportunities highlighted in the commentary above, the timing and quantum of which will affect the Group's cash requirements, which are continually monitored by the Board. The sensitivity analysis undertaken included a number of scenarios surrounding uncertainties of achieving forecast product revenues and a review of the ability of the Group to manage its cost base to meet working capital and funding requirements in the event that forecast revenues and cash flows are not achieved. This review supports the Directors' conclusion that the Group should be able to operate within the level of its current cash resources and on this basis the Directors believe that the Group is well placed to manage its business risks successfully.
In arriving at this judgement the Directors took into account a number of key factors affecting future cash flows including recognising the reliance on cash flows from the contract that the Group has with its major customer, which are anticipated to continue in line with the recently agreed purchasing plan. The Directors also noted that the Group has demonstrated its capability in securing contractual arrangements and maintaining customer relationships which increase the probability of improving revenues and that it has recently raised additional funds through the placing of new shares prior to the year end.
In summary, the Group's financial resource reporting is managed in a way that identifies potential risks, is forward looking and provides sufficient time to respond to these risks while maintaining a going concern status. The Group's financial resource management includes regular reporting to the Board. This reporting includes up-to-date cash resource visibility and forward looking projections of the Group's financial position.
The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Group financial statements.
3. Segment information
The Group's operating segments have been identified based on internal management reporting information that is regularly reviewed by the Board as Chief Operating Decision Maker.
All of the results for the year ended 31 July 2017 related to Crop Nutrients, other than GBP54k (2016: GBP21k) of costs relating to Pest Control. All assets relate to Crop Nutrients other than net book value of GBP943k (2016: GBP943k - restated following a review of the allocation of capitalised costs by product) of intangible assets which relate to Pest Control.
The Group further monitors elements of its business based on geography. These segments are monitored and strategic decisions are made on the basis of the segment results for the year ended 31 July 2017, which are as follows:
Rest
Americas Europe of World Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- ---------- ---------- ----------
Segment revenue
from external customers 7,209 453 788 8,450
----------- ---------- ---------- ----------
Segment operating
profit 1,186 155 113 1,454
Other costs not
allocated (4,174)
Depreciation and
amortisation (270)
Share-based payments (893)
Restructuring costs
(relating to Europe) (177)
----------
Total operating
loss (4,060)
-------------------------- ----------- ---------- ---------- ----------
The segment results for the year ended 31 July 2016 were as follows:
Rest of
Americas Europe World Total
GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue
from external customers 6,494 286 431 7,211
----------- ---------- --------- ----------
Segment operating
profit/ (loss) 3,489 (362) 106 3,233
Other costs not
allocated (3,299)
Depreciation and
amortisation (146)
Share-based payments (1,009)
----------
Total operating
loss (1,221)
-------------------------- ----------- ---------- --------- ----------
4. Income tax credit
Recognised in the Group income statement
Year Year
ended ended
31 July 31 July
2017 2016
GBP'000 GBP'000
Current UK tax (850) (562)
Overseas tax 54 86
Adjustments for prior years (132) (38)
-------- --------
Total tax credit in Group income
statement (928) (514)
--------------------------------- -------- --------
The UK tax credit of GBP850k (2016: GBP562k) relates to development expenditure and furthermore a repayable tax credit receivable from the UK government.
Reconciliation of effective tax rate
Year Year
ended ended
31 July 31 July
2017 2016
GBP'000 GBP'000
Loss before tax (4,058) (1,219)
Loss before tax multiplied by
rate of corporation tax in the
UK of 19.67% (2016: 20%) (798) (244)
Non-deductible expenses 208 13
Fixed asset differences 1 (21)
Enhanced R&D tax relief (388) (630)
Losses not recognised for tax
purposes (4) 100
Other temporary differences 95 220
UK corporation tax re earlier
years (132) (38)
Change in tax rates 70 -
Effect of overseas tax rates 20 86
Total tax credit in Group income
statement (928) (514)
--------------------------------- -------- --------
5. Loss per ordinary share
The loss per ordinary share is based on the loss after taxation of GBP3,130k (2016: GBP705k) and 81,774,331 (2016: 81,432,824) ordinary shares of 1 pence each, being the weighted average number of shares in issue during the period.
Year Year
ended ended
31 July 31 July
2017 2016
Loss for the period attributable (GBP3,130,000) (GBP705,000)
to equity shareholders
Weighted average number of
ordinary shares in issue 81,774,331 81,432,824
Basic and diluted loss per
share (3.8p) (0.9p)
---------------------------------- --------------- -------------
Share options could dilute earnings per share in the future but these have not been included in the above calculations as they are anti-dilutive this year and last year.
6. Intangible assets
Goodwill Development Total
costs
GBP'000 GBP'000 GBP'000
Cost at 1 August
2015 585 1,520 2,105
Expenditure in the
year - 1,169 1,169
--------- ------------ ---------
Cost at 31 July
2016 585 2,689 3,274
Expenditure in the
year - 1,552 1,552
Cost at 31 July
2017 585 4,241 4,826
--------- ------------ ---------
Accumulated amortisation
at 1 August 2015 - 240 240
Charge in the year - 58 58
--------- ------------ ---------
Accumulated amortisation
at 31 July 2016 - 298 298
Charge in the year - 147 147
--------- ------------ ---------
Accumulated amortisation
at 31
July 2017 - 445 445
--------- ------------ ---------
Net book value at
31 July 2017 585 3,796 4,381
--------- ------------ ---------
Net book value at
31 July 2016 585 2,391 2,976
--------- ------------ ---------
Net book value at
31 July 2015 585 1,280 1,865
--------- ------------ ---------
7. Trade and other receivables
31 July 31 July
2017 2016
GBP'000 GBP'000
Trade receivables 700 2,062
Other receivables 44 181
Prepayments and accrued income 85 70
--------- ---------
829 2,313
-------------------------------- --------- ---------
All trade and other receivables fall due within one year.
8. Trade and other payables
31 July 31 July
2017 2016
GBP'000 GBP'000
Current
Trade payables 735 698
Other taxation and social
security 240 302
Accruals and other payables 1,276 1,175
Deferred income 710 390
--------- ---------
2,961 2,565
----------------------------- --------- ---------
31 July 31 July
2017 2016
GBP'000 GBP'000
Falling due after more than
one year
Deferred income 583 970
--------- ---------
583 970
----------------------------- --------- ---------
9. Availability of the financial statements
Copies of the full financial statements will be available from the registered office from 24 October 2017 and will also be available from the Group's website at www.plantimpact.com.
10. Annual General Meeting
The Annual General Meeting will be held on 15 December 2017 at 12.00 noon at Rothamsted Conference Centre, Rothamsted, West Common, Harpenden, Herts, AL5 2JQ. Investors who plan to attend are requested, if possible, to register their attendance by email to investorrelations@plantimpact.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BVLFBDBFFFBL
(END) Dow Jones Newswires
October 09, 2017 02:00 ET (06:00 GMT)
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