Plant Impact Share Discussion Threads

[glenglen] 14/12/2017 14:38

Thanks to both Wan and Mthead - answers a lot.
The fact remains however that not enough sales which mean at the end of the day CASH is not coming in. This is putting financial constraints on PI as Wan said earlier. As with any business CASH is KING - sales = cash and sales to the farmers are not materialising.........

[wan] 14/12/2017 14:01

Glen...Selling via a large distributor with significant distribution channels/capabilities is an accepted route to market, especially for the smaller player, where you are effectively and potentially combining your technology with inputs the grower is already buying e.g. a Bayer fungicide. It’s a tried and tested chemical marketing strategy in agricultural, so that should effectively answer your question "why would PI need Bayer in the first place".

[mthead1968] 14/12/2017 13:52

Not strictly true, Glen.
My understanding is that Bayer have agreed to purchase what is being warehoused. So we have that as sales booked on our accounts (legitimately). What we don't know is how much Bayer have shifted. IMV that's probably not a fat lot. So we are now not able to make any more sales until that becomes clear and they have cleared the overstock. It's why our reported turnover has about halved from £13m to £6m. (as most of our turnover is in Brazil)

[glenglen] 14/12/2017 13:37

The tennis between Wan and Mthead has brought up the simple reason why we are at this point. As Mthead has said not enough Veritas or whatever has been sold and yes, we do not know (or does someone know?)how many end users i.e. farmers have received it, used it and sang its praises (or not as the case might be) and then paid for it. It does not matter a jot if Bayer sell it or PI or the man on the moon sells it - the basic fact is if the product was all bells and whistles (as we were told it was)the farmers would have bought it. If it was the best product and sold for its value why would PI have needed Bayer in the first place?
The product sitting in warehouses means one thing and that is it has not been sold by PI or Bayer - it does not matter who has responsibility - IT HAS NOT BEEN SOLD AND THEREFORE CASH HAS NOT BEEN RECEIVED.
So the question we should be asking is: why would someone buy PI if its flagship product cannot be sold for whatever the reason?

[wan] 14/12/2017 12:26

Actually I am open minded and quite capable of proportioning blame where it needs to go. You are right though that Bayer has (or had) too much influence over PI's success. We are now in play with a wider audience though and PI could well slip out of Bayer's reach.

[mthead1968] 14/12/2017 12:06

I'll stick with my interpretation, thank you.
I think you just can't bring yourself to lay any blame on our inept BoD.
When this deal was first being implemented, I took a look on LinkedIn and (to my astonishment) I found 20 people in Brazil, all employed by Plant Impact with titles of agronomist (or similar). I wondered at that time just how much cash we were throwing at this venture, but (wrongly) assumed that it would prove to be cost effective. The experiment (which is what I now believe this will turn out to be) has failed. And its architects have trashed the value of the company.

[wan] 14/12/2017 11:40

Mthead, you are still incorrect, we do not sell Veritas in Brazil. To quote PI they work in a “two-step̶1; distribution model; Bayer markets Veritas® exclusively to its distribution network and PI have a team of field technicians and advisors in Brazil growing regions, supporting distributors and growers.

On the face of it and in my opinion only, Bayer appear to have gone back on what was agreed and indeed what enabled exclusivity for Veritas to remain in place, so given the financial constraints that that puts PI under, what options were left other than for PI to inform the market and explore the alternatives (which includes a revised mutually agreeable contractual arrangement with Bayer).

You don't like it, I don't like, but we are singing from different hymn sheets/interpretations!

[mthead1968] 14/12/2017 11:08

Wan. I am fully aware of how we sell Veritas in Brazil. And it's through a joint marketing initiative, which we run and pay for. Fact is we have failed to sell anywhere near enough of the product. We are not told how much has actually reached the farms. Only that Bayer are massively overstocked. I believe this is in part caused by our efforts to inflate turnover figures. And this in order to raise more cash on the basis that working capital was required to keep us afloat until (actual) sales reached a point to move us into profit. We never reached that point, and are now paying the price. Furthermore, I am convinced that falling out with Bayer by accusing them of reneging on a deal will not help our cause one jot.

[wan] 14/12/2017 10:55

Mthead...You seem to be unaware that in Brazil, we sell Veritas through Bayer and it was Bayer that set end-user sales targets and thus revised the new purchase plan, and subsequently PI agreed to cancel early season shipments previously anticipated for July 2017. So I am not sure how you arrive at your interpretation of events, but I could argue that PI were wrongly informed (enticed?) into cancelling the early shipments, which would also imply that indeed Bayer did not want to loose the exclusivity for Veritas (not to mention Bayer plan to launch Veritas in Cotton) -

Excerpt from the Plant Impact PLC Full Year Trading Update & Potential Capital Raise
17/07/2017

On 19 June 2017, the Company announced that it was in contract discussions with Bayer CropScience Brazil ("Bayer"), the Company's partner in Brazil and the exclusive marketer of the Company's flagship soybean product, Veritas(R). These discussions aim to revise the structure of the Company's contract with Bayer to provide greater inventory purchase flexibility for Bayer and more predictable income and earnings visibility for the Company. The contract discussions continue to progress positively but are expected to take some time to conclude. Bayer remains fully committed to the commercial development of Veritas(R), which during its first four years of sales has grown to be the leading biostimulant in the Brazilian soybean market.

Bayer has set end-user sales targets for the 2017/18 growing season, which anticipate strong growth in grower usage of Veritas(R) building on Bayer's achievements of the past two growing seasons. This has driven an agreed plan for new purchases of Veritas(R) commencing in the first half of the Company's financial year ending 31 July 2018 ("FY18"). However, to reduce current stock levels in the market, the Company has agreed to cancel early season shipments previously anticipated for July 2017.

[mthead1968] 14/12/2017 10:06

Wan, quite recently you were keen to tell us how very closely aligned Bayer were with us (you cut and pasted something along those lines only last week). Doesn't seem like they will be very interested right now. I imagine the headlines they are receiving will not be going down very well with them. Look at it from their aspect. They have an agreement with us whereby we are responsible for marketing Veritas. And we employ over 20 agronomists to travel all over Brazil telling farmers what a brilliant product we have (as long as it's used with Bayers fungicide that is). We tell them that we'll be shifting it by the lorryload, so best order tons of the stuff. And what has actually transpired? Sales are so low that they don't appear to be in a position to shift the product at anywhere near the rate they were told they would. Our marketing plan failed and they quite rightly wanted to re-negotiate the deal. And part of that deal clearly included an option to relinquish sole rights to sell it in Brazil. Commercially it could be in their interests to do just that. But it looks like we are begging them to reconsider, so desperate and short of options are we. Then we announce to the world that it's all their fault !!
Genius. The BoD are muppets.

[pugugly] 14/12/2017 10:03

glengen - Very good point - I suspect all depends on the strength of the patents held and the ease of reverse engineering to work round them - plus as as been said many times before CASH BURN is a major problem -

[wan] 14/12/2017 09:19

I have been monitoring biostimulant interest and activity, and a market price that implies PI is worth only £5m-6m seems ridiculous, when 10 of millions (sometimes 100's of millions) of dollars are being thrown at start-ups!

Mthead...Bayer might want the Veritas franchise, but in any regard PI has an established commercial footprint, real products and real sales, so parts of, or the whole business, is obviously going to be of some interest, as opposed to your suggestion of none!

A new partner is also a distinct possibility and something I have been considering for quite some time. Take Arysta for example, who are already a PI shareholder and partner and who also have a commercial foot print where PI does. Their new integrated solutions to meet the needs of today's growers seems more aligned with PI than that of Bayer's interest and activities (my interpretation).-

ProNutiva® is an exclusive program that integrates biosolutions with conventional active ingredients to deliver crop solutions that meet the real-world needs of growers.

A ProNutiva program may cover plant needs either throughout the season or at a specific development stage of the crop, and application could be via seed treatment, in-furrow, fertigation or foliar spray and includes separate or combined applications of Arysta LifeScience biosolutions and/or crop protection products.

ProNutiva is much more than combining products. Interactions between biosolutions and conventional crop protection products are real and go beyond current benefits expected by most growers.

ProNutiva opens a new dimension to crop production with innovative solutions to:

manage resistance and residues
enhance overall crop protection
target higher yields and better quality, resulting in enhanced farm economics

[cjac39] 14/12/2017 08:17

its poor news badly delivered but :

- bayer charged PI a lot of money for distributing
- PI know who all end buyers are
- the shareholder base is not dominated by any single investor who will torch smaller
- the shareholders are rich enough to carry PI through negative burn into cashflow breakeven
- in small stocks, time and again, its not mr market but mr market makers who pull the share price down pushing out retail investors who panic sell until some marginal buyers appear
- most marginal buyers will wait until it settles before buying reinforcing above

BUT

- playing this out in public is a poor strategy
- cash burn needs arresting with plan for cash neutral to remove blow up risk
- previously interested prospective buyers will look at mkt cap as ref price
- without comp tension the offered price will be low

its up to resolve of existing sh to back company and hold out for fair value

upside is therefore gone but its prob worth 10-15p and todays price looks decent risk reward

[wan] 14/12/2017 07:42

It's also quite intriguing to learn that companies were already showing an interest when the share price was a lot higher.

[wan] 14/12/2017 07:37

As I stated yesterday, Bayer not meeting their obligations doesn't make for good reading, and not just from our perspective!

Plant Impact puts itself up for sale, after Bayer breaks pledge on product purchases
News
13 Dec 2017
by Mike Verdin

[cerrito] 13/12/2017 22:57

I will not be going to the AGM.
One reason is that the value of my stake is now so low not worth the effort.
The other is that I imagine the Board will be more preoccupied in dealing with suppliers and especially their staff than small shareholders; if I thought I would have learnt from my mistake I would have gone.
The key thing for the Board is to try and whip up a real auction atmosphere along with Peel Hunt so something like the value of the company can be realized.

[mthead1968] 13/12/2017 15:37

Correct Glen, we have one customer and one market. Leastways as far as significant turnover is concerned. Add to that the fact that our only new products anywhere near coming to market are based on the same crop! And they only seem to work well enough to be considered an option if they are applied alongside other manufacturers fungicides. No wonder we are in this situation.

[glenglen] 13/12/2017 15:28

Mthead

Perhaps it should have read:

PI has put itself up for sale after one of its major customers in Brazil pulled the plug.

One of its major customers!!! who are the other major customers out of interest?

[mthead1968] 13/12/2017 15:07

From proactive investors:
(who have somehow managed to miscalculate the market cap).

Plant Impact up for sale after Brazilian blow

Plant Impact PLC (LON:PIM) has put itself up for sale after one of its major customers in Brazil signalled plans to de-stock.

The crop productivity specialist said that Bayer CropScience (BCS), which has the exclusive rights to market the UK company’s flagship soya bean product, Veritas, would not be able to conclude a new contractual arrangement until the first quarter of next year at the earliest.

Worse still, BCS said it would not be able to meet its commitments within the existing purchasing plan, as it needs to accelerate destocking activities.

Should BCS not meet its minimum purchase volume commitments by the end of March next year Plant Impact could terminate its agreement with BCS and find an alternative distribution partner.

The shares lost three-quarters of their value in double-quick time this morning as the company announced it is pursuing all strategic options, including a sale of the company.

With a market capitalisation of £2.54mln, the company could be bought with pocket change by most chemicals companies.

With the company indicating it would require further funding of around £7mln before April of next year, the acquisition cost moves closer to £10mln.

[wan] 13/12/2017 14:52

mthead...Arguably from an investment perspective you have proved more correct than I, but unless you cannot read and you consider £6m insignificant, you surely don't need a response from me!

Obviously for most, including me, this is, as of to date, a painful experience seeing not just hard earned gains, but seeing, on the face of it at least, hard earned money evaporate.

Bayer not meeting their obligations doesn't make for good reading, and not just from our perspective! As far as the market is aware, Bayer has made 'more than' sufficient provisions in Brazil. In fact, back in October they were able to reduce the provisions previously made for product returns in Brazil. Which sits awkwardly with their confirmation that, "given its well-publicised challenges within the Brazilian market, it will not be able to meet its commitments within the purchase Plan". Perhaps Bayer are set to warn again then?

Bayer are also planning to launch Veritas for application in cotton, which would arguably shift inventory (assuming it's the same formulation) and certainly provide for further growth and the higher volume strategy both were seeking. The main point here is that Bayer obviously want Veritas, but clearly Bayer's actions and terms are not aligned to PI's expectations, hence it is now potentially being offered to others.

Very recent commentary from Bayer's Global Segment Manager for Crop Efficiency, Anne Suty Heinze, also confirmed that they are committed to this sector and she also highlighted their partnership with Plant Impact -

"At Bayer, we are looking at Biostimulants as one additional way to help farmers increase the productivity of their crops and marketable quality in a sustainable manner. Besides our own Research activities, we are partnering with Biostimulants companies like SICIT 2000 S.p.A. or Plant Impact Plc to complement our crop protection range with high qualitative science-based Biostimulants that meet high safety and efficacy standards. If you plan to attend, I recommend that you listen to the presentation from Steven Adams from Plant Impact Plc on Thursday, November 30th. He will show how a soybean crop enhancer containing an advanced Calcium technology was developed using high agronomic standards. This product helps the soybean plant’s ability to fixate flowers and pods, thus contributing to filling grains. The benefit: better yield and enhanced profitability for the growers."

The World Congress on the Use of Biostimulants in Agriculture will be attended by more than 600 companies and numerous researchers which demonstrates the growing interest for this category of agricultural products. With the increasing investments in research around Biostimulants, we can anticipate that this area is going to play a significant role for increasing food supply in a sustainable way in the future.


Maybe Bayer has already morphed into a Monsanto type company and PI needed act accordingly?

[glenglen] 13/12/2017 14:46

mthead and bigglesbingham - glad to see we are all on the same hymn sheet here. Yes where are future revenues coming from and yes we now know why CFO left.
As to revenues being based on proven products yeah right. It was asked a while ago why are Bayer and PI taking so long - could it be that Bayer told them then and we have been strung along a little.
I am not in UK so not going to AGM - let's hope someone asks the board what has actually gone on with this company and importantly who have they been talking to during the Bayer negotiations (assuming they were negotiations). If Bayer don't want the products who will - it's a fundamental question

[mthead1968] 13/12/2017 14:44

At what price though?
That's what worries me.
Current mcap less than £6m