Plant Impact Share Discussion Threads

[cerrito] 01/8/2017 10:46

Wan
Thanks for that
I admit I am being lazy but do I gather from your comments that Bayer had a problem with inventory across all their product lines-at last in Brazil?

[wan] 01/8/2017 09:22

I note we now have a new (presumably 12 month) broker price target of 47p, which is interesting given the comments above regarding the Value Creation Plan (VCP) and the relevant share price hurdles etc. In my view, with the 50p share price hurdle and gross profit target having already been met, clearly the next target is maintaining a share price above 50p in order that it can be exercised, with 70p being the next target......let's hope that one is achievable and, at the very least, holds. It should certainly serve to focus minds!

Geographic expansion obviously came a bit late to help matters, but I sense growth guidance overall is now more conservative compared to previous guidance. Nonetheless, geographic expansion is happening and hopefully this will be felt more than the current (conservative?) guidance going forwards.

Brazil will remain a large and important market though, but nonetheless, the percentage share of revenues from Veritas in Brazil should reduce going forwards as sales expansion elsewhere gains momentum and(hopefully)other products make their way through to commercialisation proper.

I have now had time to catch up with Bayer's Results commentary in detail, and in my view, for the best indication and insights as to what happened on the ground in Brazil, comes via the Conference Call, namely the Q & A section (pages 6 - 23 of the transcript below), where some interesting questions were raised and effectively answered. In short, Bayer do appear to have locked the situation down and further rolled out their sophisticated inventory management system (to the extent that it should prevent a similar situation going forwards). Importantly, current demand is described and forecast as being "robust".

Transcript of Bayer's Conference Call -
hxxp://www.investor.bayer.de/securedl/15519

[wan] 28/7/2017 08:52

Visionon...The earliest vesting date is 20th November, but the performance criteria will ultimately dictate at what date vesting can be achieved, however, the VCP option is not capable of exercise for another two years after the vesting date, and it is the exercise date to which the restriction you refer to applies -

"Once (and to the extent) vested, a VCP-Option will generally not be capable of exercise for a further two years after the vesting date (except in the event of certain corporate events or in the case of certain leavers as described below).
However, if by the permitted exercise date of a VCP-Option (or part of it), the Share Price is more than 30% below the Share Price Hurdle which triggered vesting of that VCP-Option (or that part of it), exercise of that VCP-Option (or part)
is not permitted until the Share Price again achieves that Share Price Hurdle on average for at least 20 consecutive dealing days."

hxxp://www.plantimpact.com/~/media/Files/P/Plant-Impact/reports-and-presentations/2014/20172-plantimpact-nom-141027.pdf

[visionon] 27/7/2017 08:09

wet towel over head time...

gives us something to do whilst waiting for sales to recover and new products.

[bigglesbingham] 26/7/2017 22:56

The wording is vague. It says "by" vesting I think it means "at" vesting date. If it was "by" vetting date it implies if share price went below 35p at any time then it could be delayed. If it means "at" vesting date if the price recovers to above 35 p but below 50p at vesting date then he cannot vest. The price did go below 35p after Nov 2014 (I think)so if that's the case the issuance price is irrelevant. Or have I misread it??

[cerrito] 26/7/2017 10:37

I too noted lack of support from directors before reminding myself that Brubaker/Amos have a very generous share scheme; also apart from Jones only one NED
I note they are increasing shares issued by 15%+ within the 25% limit for disapplication of pre-emption rights and thus no need for an EGM. This 25% limit seems rather high to me but I do not track this as closely as I should at AGM’s.

One of those rare cases with a new funding where everyone happy- smaller investors have been able to buy under the issue price and the instis have been able to get bulk without moving the price up.
Incidentally I wonder if this fall in the share price will mean a reduction this year in the expense line of share based payments…not entirely clear to me from the last AR and as it is non cash apart from the NIC’s a bit academic; also went to last Year’s AR to see if Brubacker in danger of loosing his VCP options with the share price fall but you need to go to the original 2014 AGM resolution I guess and do not have time for that this morning, and I assume there is quite a long time horizon

[visionon] 26/7/2017 08:09

Given £13m fwd revenue guidance I think 31p is a decent base for investors. Around 2x Fwd R net of new cash. My one doubt is what growth rate to assume going fwd. we had a run of 60% but if the new norm post hiccup is more like 40% then share price growth will adjust accordingly YOY. Hopefully these new products will offer the prospects of a return to the former.

[wan] 26/7/2017 07:55

Level 2 already suggests that there was no luck involved!

[here and there] 26/7/2017 07:35

Looks like they will get this away pretty easily. Very small participation by directors…just £8k from the Chairman…̷0;.not impressed , should put more skin in the game, particularly after a hiccup and with new products due to come to market

[pugugly] 26/7/2017 07:20

Placing at 31p -


(imo) Lucky to get it away at a premium - Now to see what happens in Brazil - Not jumping back in for the moment.

[here and there] 25/7/2017 20:15

It really is v simple, the business model was very vulnerable, totally dependent on one product, one partner and one country. They got away with it for a couple of years.

This year, a year too early, as they have only just diversified, there has been a hiccup. The market has punished them, they are raising the 'covering money', i.e.the money they need to see them through the r&d , new theatres of revenue, the launch of new products. Interestingly, their twitter feed is v busy PRing everything and anything.

The key element is new product/s. Are they efficacious? Do farmers want them? Do Bayer rate them? They are part of their deal....so, they better be good or Bayer will play hard ball with this haggle over over stocking and fresh orders.

The key here is what deal PIM can haggle with Bayer. It will define the next few years for PIM. If Bayer like the runway of new products they will be reasonable on fresh terms. If they are not that impressed in what is due to come on to the market, they will play hard ball. Watch and wait for me

[wan] 25/7/2017 08:35

The following Report provides insights that PI investors should be very interested in.

The Report highlights the current challenging conditions as well as opportunities and concludes that farmers’ economics should at the center of decision making for companies to succeed. They also forecast a M & A boom, with many companies appearing to be taking a wait-and-see attitude pending the approval of four megadeals -

"The question is which companies will weather the near-term challenges, navigate through a crowded field of yield-enhancing technologies, and emerge as the strongest competitors. We believe it will be those that place farmers’ economics at the center of decision making. By sowing the seeds of recovery, these agribusiness companies will position themselves to reap a bountiful harvest for their shareholders."

Sowing the Seeds of Recovery
Focus | July 24, 2017
Full Report - hxxps://www.bcg.com/publications/2017/agribusiness-sowing-seeds-recovery-2017-agribusiness-value-creators-report.aspx

Plant Impacts recently introduced Pi Quality Standard, which guarantees ground-breaking levels of effectiveness, innovation, safety and compliance, is insightfully aligned with the thrust and the conclusion of the BCG Report.

The fall in the share price will not help matters, in terms of analysing the investment proposition, as some investors have clearly and understandably been affected by events/announcements thus far.

I am not going to get drawn into calling the bottom, but the Report above and the big players believe we are somewhere in the trough in terms of the low point in the agriculture cycle. What muddies the water somewhat in my view, is what part Agthech will play, which has received huge investment, and will it be the deployment of such advances that will turn the cycle, or will it be improved crop prices (cyclical)?

The big question of course is, what part will Plant Impact and their products play in an agriculture industry that is on the threshold of a new agricultural revolution?

In short, and as the BCG Report concludes, the population of the world is growing and we need sustainable food, but farmers must be able to make a profit in order to supply it!

[bigglesbingham] 24/7/2017 12:46

Wonder if the £2m committed or indicated at 31p will be honoured? Don't think there will be much interest from private investors at this price . Any ideas where this will leave the company ??

[buywell3] 20/7/2017 10:22

Wonder if the 31p will hold re fund raise if this falls further ?

That sell off prior to the announcement has hurt the share price and probably the 31p

IMO they will have to knock off another 5p to get it away

[wan] 20/7/2017 08:50

To add some weight to my previous comments regarding soybean sales momentum and what Bayer appear to be anticipating, and also to add a more complete quote to the FT report -

From Bunge's press release -

Bunge Details $250 Million Competitiveness Program and Provides Update on Second Quarter Performance
Released : 07/19/17

"Market conditions during the second quarter were challenging, driven by unprecedented farmer retention in South America, which pressured margins throughout the chain," added Schroder. "Increased farmer pricing early in July, as well as more dynamic markets and continued strong demand, lead us to expect much improved Agribusiness conditions in the second half of the year."

[wan] 20/7/2017 08:23

If anyone else needs confirmation that Brazil's farmers are a significant factor behind the current challenging industry-wide trading conditions, then Bunge has just supplied it and also issued a profits warning citing farmer soybean retention -

20th July 2017
Bunge issues surprise Q2 profit warning

Bunge is a dominant buyer of soyabeans and corn from Brazil, where farmers have hoarded crops in hopes of receiving higher prices. The company cited “unprecedented farmer retention in South America” as one reason for lower profits.
Full story FT.Com -


This level of farmer retention is an interesting development, and I expect companies supplying dry storage buildings are seeing good demand!

As mentioned, there are some recent signs that Brazil soybean sales has gained momentum, and it will thus be interesting to see if input purchases respond accordingly.

The latest PI Trading Statement appears to imply that Bayer are expecting input purchases to respond (from one aspect or another).

[wan] 17/7/2017 15:48

Cerrito...Just a small correction if I may regarding the 2015 PI/Bayer announcement, note the word potentially -
"The agreement encompasses a multi-year partnership for Plant Impact to develop, and Bayer CropScience to potentially commercialise, new products in the soy markets of the Americas, including Brazil, the United States and Argentina."

The current US marketing arrangements means that Fortalis can be sold alongside a range of fungicides and not just Bayer's, the outcome of which will be interesting to analyse, given that Fortalis also improves the performance of fungicides, which is something that is perhaps overlooked and it may yet prove to be a 'significant' attribute.

The Bayer milestone payments may yet materialise of course, perhaps hence the Board has determined that it is in the best interest of shareholders to sustain the momentum of the R&D supporting the significant number of product development projects that are in the final stages of pre-commercial testing.

[cerrito] 17/7/2017 12:57

I agree with you very dodgy trading on Friday and I hope-probably in vain-that FSA are on top of it; though Wan probably right that did not influence the price of the placing.
AGM will be interesting:; Wan probably right to take an optimistic view of the Bayer relationship- and to be honest I have never understood why sales are made so much in advance of the Brazilian planting period. That said do not understood why final discussions need to take so long and of course-as per my 1090- we have the case of the Bayer milestones not being met and would have been good to have more clarity on this.
When I read the comments about continued R&D spend I was reminded of the following in the February 2015 Placing announcement
Quote
To continue to deliver on its core strategy, Plant Impact expects to invest, over the forthcoming three years, approximately £11.0 million in the development of new products and technologies to improve the yield and resilience of soy and wheat production.
Unquote
And thus in some ways this placing par for the course given that he Bayer milestone monies have not materialized.

Also note that the Feb 16 2015 RNS on the agreement that PIM struck with Bayer ref the milestones referred to Bayer doing the selling in the US which as per Feb 22 2017 RNS will be done via three US partners-though I am reluctant to read too much into this especially as it was trailed in last Summer’s Investor Presentation.
Given the delay in sales to Brazil will be interesting to see if there will be Finished Goods Inventory in the July 31 Statements…this may well inconvenience the Contract Manufacturer. I cannot remember if Veritas shipped by air or sea and the exact order/manufacturing cycle- this came up in an Investor Day some years back but cannot find my notes.

Reassuring that they are talking about FY18 ales almost double those of FY16-even with positive FX movements and the fact that given the business any estimate for next year’s sales speculative

[wan] 17/7/2017 11:19

Horace...I am assuming in my above comments, that contract discussions will also include the following from the previous announcement "the soybean development portfolio has benefited from another season's work in Brazil with one new product having reached the end of its development stage. This provides the potential for first sales in the next crop cycle in Brazil." But let's not count our chickens before they have hatched!

The other interesting point is that institutions are usually offered a reasonable discount on the prevailing price, which appears to be the case based on say Thursdays pricing. So, I still think that Fridays price action appears to be from a possible speculative short position, if so, do they close now, or given today's announcement, await further news?

[horace_h] 17/7/2017 10:43

I'd pretty much entirely agree with that Wan, especially the commitment of the existing institutional investor.

There's also the sentence:

"The Company now has a significant number of product development projects in the final stages of pre-commercial testing, and the Board has determined that it is in the best interest of shareholders to sustain the momentum of the R&D supporting these projects."

In one sense, that subjective non-specific comment can be viewed as "predictable sugar coating" but, if "final stages" means "success sooner rather than later" all thoughts of prime dependence on one product will go away.

I held when the share price topped 60p in the hope that the release of the Wheat Suite of products would propel the share price closer to the option exercise territory that PIM Board members financial reward kicked in and all shareholders enjoy gravy with their green vegetables. I've lost a lot of profit for now but the low level of selling, as pointed out by Cerrito, keeps me on an even keel.

I've little doubt that "ShortWell" will disagree - for whatever motivation - that's the market.

[wan] 17/7/2017 09:37

We now have a line drawn under the previous market announcement, which arguably lacked any detail necessary to make any type of informed judgement!

Today's announcement goes some way to correct that, however, for most of us there is still no clarity on how the guidance has actually changed, which for small investors is, as is nearly always the case, very frustrating. That said, we now have numbers by which to gauge the outcome, so to a degree the playing field has leveled somewhat.....long may that continue!

Clearly some things have been agreed with Bayer (Bayer had clearly arrived at what was necessary and the "order of magnitude") and other items still remain to be negotiated and agreed, which brings me on to the next point;

One could argue what's the point of minimum purchase agreements if early shipments can be cancelled. However, the fact that it looks like Bayer has established and quantified what needed to be done, plus "The contract discussions continue to progress positively but are expected to take some time to conclude." Along with the fact that an existing shareholder is already prepared to invest the full amount, implies to me that a positive outcome awaits those further negotiations and indeed growth expectations (arguably institutional investors would need to be offered a decent investment prospect that also more than compensates for dilution).

In my view, the other very important fact is Bayer's obvious commitment, which I think sends a strong signal about the crop enhancement category, PI's approach to establishing this category and one assumes therefore Bayer's interest in PI's pipeline of new products.

To summarise, we now have at least some clarity and indeed there is still the prospect of a very bright future. Despite the current negativity and the shortcomings of the previous announcement, I believe we have an excellent management team in place at PI, albeit maybe this situation goes to remind us that things don't always go exactly to plan!

[bigglesbingham] 17/7/2017 07:40

Absolutely disgusting the blatant sell on news which wasn't in public domain!! The FCA need to take action . Will be easy to find seller

[buywell3] 17/7/2017 07:24

Hence the fall on friday


Hoping to get £4M at 31p

[here and there] 17/7/2017 07:21

OK. I expected this fund raising had to happen. Even without this bump in the road with bayer in Brazil I thought they would need to top up the coffers at some stage. I'm glad they have got on with it quickly rather than drag out this process for another 6 months (the share price would have been way lower)

One very big problem. The price action on Friday, somebody was clearly in the know and dumped that stock. This is clearly a major breach in regulations, very disappointing. I'm tempted to report this to the FSA…accept they probably would do nothing as they are so under resourced