TIDMPIM
RNS Number : 7996N
Plant Impact PLC
31 October 2016
For immediate release 31 October 2016
Plant Impact plc
('Plant Impact', 'PI' or 'the Group')
Preliminary results for 12 months ended 31 July 2016
Another year of significant progress for the Group
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
2016.
Financial highlights
-- Revenue increased significantly by 60% to GBP7.2m (2015: GBP4.5m)
-- 59% increase in gross profit to GBP5.6m (2015: GBP3.5m)
-- Cash at 31 July 2016 was GBP5.6m (31 July 2015: GBP7.6m);
reflecting continued investment in the multi-year R&D and
geographic expansion programme
Operational highlights
-- Revenue from Veritas(R) in Brazil increased more than 80% year-on-year
-- First commercial sales of Banzai(TM) for West Africa cocoa
-- Operations established in United States to target the very significant local soybean market
-- A second generation soybean product, Fortalis(R), launched in
partnership with Bayer CropScience in Argentina
-- New Scientific Advisory Network established, enabling
collaboration with ten world-leading experts on key areas of
scientific interest
-- Soybean and wheat R&D pipeline of new products on track
John Brubaker, Chief Executive Officer of Plant Impact,
commented:
"We are pleased by the progress Plant Impact has achieved over
the past year and the Directors believe that the Group is well
positioned to continue to develop successfully through the new
financial year and beyond.
"The current 2016/17 financial year is important in
consolidating our longer-term prospects in current and new markets
and establishing crop enhancement products as an important and
trusted category of agricultural chemicals. With our commercial
partners we are focused on achieving this important goal and
believe we have the products, people and programmes to
succeed."
For further information please contact:
Plant Impact plc
John Brubaker, Chief Executive Tel: +44 (0)
Officer 1582 465 540
Richard Amos, Chief Financial
Officer
Ailish Tracy, Global Communications
Manager
Peel Hunt - Nominated Adviser
and Broker
Adrian Trimmings Tel: +44 (0)
George Sellar 207 418 8900
Buchanan - Financial PR Tel: +44 (0)
Charles Ryland 207 466 5000
Sophie Cowles
Jane Glover
Plant Impact - Business Overview
Plant Impact plc leads research and development in crop
enhancement, creating products that growers can rely on to get more
yield from their crops. We use our agricultural industry expertise
to find efficient, cost effective ways to offer our solutions to
those growers, worldwide.
Research and development - in-house and in collaboration
We find that innovation is best nurtured by combining expert
scientists 'in-house' with additional specialised input from
regular collaborations with academic and research institutions such
as Lancaster University and Rothamsted Research.
In April 2016 we announced the creation of our new Scientific
Advisory Network. This network brings together world-renowned
academics and foremost authorities on soybean and wheat crop
physiology, biostimulants, agrochemicals, biochemistry and
formulation chemistry. Together they act as scientific advisers to
our R&D team as part of a collaborative network of experts with
diverse industry and specialism backgrounds and a shared goal to
help advance innovation in crop enhancement.
Our offices and people
Our head office and primary research facilities are at the
Rothamsted Centre for Research and Enterprise in Harpenden, United
Kingdom. We have additional offices in São Paulo, Brazil; in
Raleigh, North Carolina, USA; and are soon to establish an office
in Buenos Aires, Argentina.
Manufacturing - outsourced to certified experts
All of our products are outsourced for manufacture at three
leading UK contract manufacturers. We benefit from being able to
have products manufactured to order and we do not need to invest
capital in our own production facilities or carry inventory.
Distribution - industry leading partners
Key to the success of our business model is choosing to work
with partners that growers trust. We market our products via
respected global strategic partners such as Bayer CropScience and
Arysta LifeScience as well as smaller and well-connected regional
agrochemical distributors.
Regulatory compliance - staying ahead in an evolving space
This year we became members of the European Biostimulants
Industry Council, complying in full with their new code of conduct.
We also fully comply with all national product registration and
international transport shipping regulations for road, sea and
air.
PRELIMINARY RESULTS ANNOUNCEMENT FOR YEARED 31 JULY 2016
Chairman's Statement
I am pleased to report that, during the last year, Plant Impact
achieved continued growth of the business, fully in line with
market expectations. The main feature of this performance was the
consolidation of our market position with Veritas(R) in Brazilian
soybean, which owed much to the excellent working partnership of
our team with the Bayer CropScience team in Brazil. The Company
also rolled out its commercial campaign with Banzai(TM), a novel
product for West African cocoa, with our partner Arysta
LifeScience, the Agchem market leader in this geography. During the
year we also made good progress with further initiatives and key
hires were made to start our geographical expansion in soybean to
all the major markets in the Americas along with the previously
announced strengthening of our in-house research and development
(R&D) team. These investments will be reflected on both sides
of the P&L in the coming year.
I want to highlight a few points, made in full later on in this
announcement by John Brubaker, our CEO, which have strategic
implications for our approach to the business and which will be
reflected in our reporting in the future.
During 2015, Plant Impact doubled its 'on the ground' sales of
Veritas(R) creating momentum for the coming year. This was against
the background of a tough year for soybean growers and a tough year
for the Brazilian economy which resulted in sales of Agchem
products in the market generally reducing as growers trimmed their
input usage. The current year promises much improved grower
economics, however last year we had to work hard to achieve this
good result. Veritas(R) is still a new product not yet on growers'
essentials list. Our work involved intensive grower engagement
programmes aimed at ensuring the merits of the product were raised
to top of mind amongst the most progressive elements of the farming
community. Our conclusion at the close of the campaign, is that we
should expect this intensity of work will need to be an ongoing
feature of our in-market support each year. It follows that there
are trade-off decisions to be made between this level of commitment
to in-market activity to make each 'Globalise and Scale' entry
successful and the number of such initiatives we can pursue.
Breadth stretches resources on things that must be done thoroughly
and well, but breadth spreads risk across countries and crops. We
have tackled this by reducing our efforts in the 'Direct to Market'
elements of our work; principally in Europe and the Middle East in
favour of fully resourcing the larger opportunities in the Americas
with soybean and our so far single step out into cocoa. In R&D
we continue to make progress, not only with extensions of the
soybean portfolio, but also products for wheat, the world's most
important crop.
Turning to Board activities during the past year, we were
pleased to welcome Richard Amos as CFO in May. Richard has the
ability, experience and temperament for business building in small
technology companies and we are already benefiting from his energy
and counsel. The Board has reviewed its Governance processes and is
determined to comply with the highest standards set by the Quoted
Companies Alliance. Our good progress to date on this will be
described in the Annual Report.
I thank shareholders for their support through the year and
acknowledge the professional and energetic performance of our staff
in what has been a time of significant recruitment and team
expansion. I am reassured by the performance and drive of both new
staff members and our veterans of three to four years, that
everyone at Plant Impact is fully on board with what the Company is
seeking to achieve, the relevance of their specific roles to those
goals of the Group and the desired culture of performance, enquiry
and integrity we have.
Dr David Jones
Chairman
Chief Executive's Review
The Directors are pleased to report another year of good
progress against the Group's strategic, operational and financial
goals for the year ended 31 July 2016. Significant revenue growth
was achieved, primarily through a further year of commercial
progress for the flagship Veritas(R) soybean product in Brazil. The
Group also expanded its commercial presence, making the first
commercial sales of the product Banzai(TM) for cocoa in West Africa
and opening commercial operations in the United States and
Argentina. The research and field development teams also made
considerable progress in the first full year of our GBP11m,
multi-year investment programme in new products and
technologies.
Strategy
The Group continues to operate according to a 2011 strategic
plan which directs commercial and product development efforts
toward high potential opportunities. This strategic plan has the
following three pillars:
To sell "direct to market" in territories which could be served
affordably from the Group's home base in the United Kingdom. This
activity was directed at developing and marketing products which
improve the post-harvest quality of high value horticultural crops
such as field lettuce, root vegetables, soft fruit and tree fruit.
In these markets, the Group provides direct, technical "on-farm"
support to the growers who use Plant Impact products and to the
distributors who sell them. This commercial approach aims to
carefully select customers in order to develop stable relationships
and recurring revenue. The operating cash flow generated from this
element of the strategy, particularly in markets such as the United
Kingdom, France and various markets of the Middle East, has helped
to finance much of the operating cost of the Group whilst we
developed the other elements of our strategy.
To "globalise and scale" by selecting crop targets and countries
in which to enter the business of supplying technical inputs to
growers of large-scale world crops, such as soybean, rice, maize,
and wheat. The Group's strategy is to market its products for these
crops via strategic partnerships with major agrochemical suppliers.
The Group initially identified the Brazilian soybean market in
partnership with Bayer CropScience as its first "globalise and
scale" objective. Subsequently in the 2015 financial year, the
Group also identified the West African cocoa market, in partnership
with Arysta LifeScience as a meaningful additional growth
opportunity. As the Group starts to achieve the targeted growth
from its entry into these world-scale crops, the cash generated
from this element of the strategy is now providing financial and
organisational capacity to develop new products and
technologies.
To "accelerate innovation" by identifying and commercialising
new technologies and products to bring a complete crop enhancement
portfolio offering to growers of large-scale world crops. This
aspect of the strategy follows the improvement in cash flow from
sales into the first target crop: soybean. The Group has set in
motion development and marketing plans to build a complete
portfolio of new crop enhancement products for soybean and wheat
crops over the medium term.
Our progress in Brazil with Veritas(R) represents the first
commercial success of our "globalise and scale" strategy. Two
important observations from our three commercial seasons are
driving us to refine our 2011 strategic plan:
First is that - even when selling into broad-acre crops through
strategic partners - we have identified a clear requirement for
Plant Impact to provide focused technical and commercial support to
establish our products within our partners' annual commercial
programmes and their grower customers' annual crop spray regime.
This work is very similar to the approaches we developed under the
"direct to market" phase of our 2011 plan.
The second is that investing in such focused support in
broad-acre crops offers significantly greater potential returns
than we can achieve in the European fruit and vegetable markets
that we have targeted directly in the past.
As a result, we have refined the "globalise and scale" element
of our strategy. We are adapting our approach by providing more
focused commercial support to our agrochemical strategic partners
and their onward distributors. We will continue to market directly
to distributors in territories where we believe that discrete
customer populations, overall credit conditions, distributor reach,
and corporate reputational requirements do not require us to
approach the market in partnership with large agrochemical
multinationals. And we are refining the allocation of our resources
to focus on the geographies and crops where we see the greatest
potential return on investment.
Business review
Sales of Veritas(R), the Group's flagship yield improvement
product for soybean, achieved our own targets in the period and
accounted for the majority of revenue in the year. Sales of
Veritas(R) in Brazil are made through the long-term marketing
agreement that we signed in August 2014 with our partner Bayer
CropScience ("BCS"). The increase in sales was achieved despite the
2015/16 soybean growing season in Brazil being particularly
challenging for growers, as low commodity prices and a declining
Brazilian Real currency during the seasonal period of grower
purchases put margin pressure on farm outputs. These conditions
meant that growers were generally more cautious about investing in
new yield improvement technologies such as Veritas(R). Against this
backdrop, increased use of the product by growers was encouraging
and was in part driven by considerable commercial investment that
we made alongside BCS. Over the 2015/16 growing season, we expanded
our team of in-field agronomists and supported a marketing roadshow
programme that targeted 2,000 key soybean growers in 26 locations
across Brazil.
Over 5,000 Brazilian growers have now used Veritas(R) on at
least part of their crop in the three years since its commercial
launch. Hectares of soybeans treated with Veritas(R) in the last
season (an important metric in measuring our success in
commercialising the product) were more than double those of the
previous season demonstrating considerable success in sales of the
product particularly given the tough market economic backdrop.
Extending that usage further is the main opportunity that we have
in the 2016/17 growing season and our objectives for this year are
ambitious. To help achieve our objectives, we are increasing our
investment in commercial support of the Brazilian business through
a more extensive full year sales and marketing campaign aimed at
growers and distributors. In the 2016/17 growing season, we will
also extend our commercial relationship with BCS to Paraguay where
tests with Veritas(R) have demonstrated that the product delivers
similar yield improvements to those achieved in Brazil.
Whilst the opportunities that we have in soybean represent our
most immediate significant scale opportunity, part of our strategy
has been to diversify into other significant crops. With that in
mind we were pleased that the financial year also saw the first
significant revenues from Banzai(TM), a product that we launched to
cocoa growers in West Africa with our partners Arysta LifeScience
("Arysta"). Our partnership with Arysta was announced in 2015 and
gives them exclusive marketing rights to Banzai(TM) in Ivory Coast,
Cameroon, Nigeria, Ghana and Togo, countries that account for over
70% of annual world cocoa production. Trials of Banzai(TM) have
demonstrated significant yield benefits for growers and, although
the challenges of gaining adoption amongst some of the poorest
farmers in the world are not to be underestimated, the long-term
commercial opportunity remains significant.
Revenues in Europe and the Middle East were disappointing in the
year, as political issues in the Middle East and market challenges
in continental Europe and the UK led to a year-on-year reduction in
revenues from these areas, a historically important region for the
"direct to market" pillar of our strategy. Recognising this, we
have restructured this area of our business since the year end,
focusing our activity on supporting distributor-led activities,
rather than driving market adoption directly through
resource-intensive campaigns. This restructure has reduced the cost
base of this part of the business, and though we do anticipate
increased revenue in the future, our new approach will deliver more
modest growth than prior expectations.
In 2015 we announced a multi-year, GBP11m investment programme.
This is aimed at the development of new products and technologies
to improve the yield and resilience of soybean and wheat
production, as well as the geographic expansion of our commercial
footprint to important American markets for these crops, such as
the United States and Argentina. To date we have invested around
GBP4.0m of the total GBP11m planned. Our objective, on completion
of the programme, is to have developed and successfully
commercialised a portfolio of products in our target crops and
territories which generate sufficient surplus cashflow to
organically fund additional technology research. Of the GBP4.0m of
the programme spent to date, around half has been spent in
developing and commercialising existing technologies, with the
balance invested in new research.
Consistent with this programme and with our second strategic
imperative, "globalise and scale", in February, we launched
commercial operations in North America based from the Research
Triangle Park area of North Carolina, the agricultural technology
hub of that region. The Group has long-established distribution
relationships in Mexico and Canada, and this new commercial
operation is to introduce our products to the United States soybean
market, which slightly exceeds Brazil as the largest in the world.
We anticipate introducing our technologies into this market in the
2017 growing season, pending the outcome of a significant 2016
grower field trial programme on more than one hundred commercial
farms across the United States. These trials are expected to
confirm that the yield enhancements we have seen from our
technology in Brazil are repeatable in the different growing
conditions that exist for soybean growers in the United States.
In July 2016, we announced the launch with BCS of a second
generation soybean product Fortalis(R) for the Argentinian market,
which, after Brazil and the US, is the third largest of the world's
soybean growing areas. This is a further extension of our
relationship with BCS and represents an important step in
globalising the soybean crop enhancement technology that we have
been commercialising over the last three years.
Further R&D activities in line with the investment programme
have seen progress made on "F1" and "S1", our second and third
soybean crop enhancement product prototypes and "W1" our first
wheat product prototype. These products have undergone additional
formulation, glasshouse and field trials during the year which have
in each case progressed their development. The activities are on
course for commercial piloting and launches in the coming years at
which time we will announce trade names.
To progress these investments the Group has made a number of
appointments to senior management in the commercial, R&D and
back-office functions. The addition of these resources has ensured
that the Group has the resources and infrastructure needed to
effectively manage the complexity and scale of our global
expansion.
Although we re-prioritised our Group focus away from biological
pesticides some years ago, we have continued to maintain the
intellectual property associated with the Group's early development
of TGT-101. This is an effective, low residue insecticide used for
the treatment of mites, whitefly and aphids on commercially
important crops such as vegetables, almonds and apples. Although
there has been no material development expenditure incurred during
the year, there was further work on obtaining the necessary
regulatory approvals of the product to allow its commercialisation
in the United States, a potentially attractive market. Following
regulatory approval of TGT-101 by the US Environmental Protection
Agency in 2012 and further field testing in 2013, we commenced work
in 2014 to secure a product registration with the California
Department of Pesticide Regulation (DPR). Approval by the
California DPR is critical to any potential US commercial launch,
as that state contains a significant concentration of US vegetable,
almond and other tree fruit production. We are pleased to announce
that the Group received formal notification of TGT-101's
registration by the California DPR on 10 October 2016. Based on
this progress, we are actively considering our options for
realising a return on our historic investments.
Outlook
The Directors believe that the Group is well positioned to
continue to develop successfully through the new financial year and
beyond.
Sales of Veritas(R) products in Brazil are expected to continue
to make up the bulk of Group revenues over the next twelve months.
Shipments of Veritas(R) products have already been made in the
early weeks of the new financial year, and the Group expects to
receive further orders through the 2016/17 Brazilian growing season
consistent with its previous expectations of demand. As Veritas(R)
becomes more successful in Brazil, and commensurate financial
commitments for distributors become ever larger, we expect that
future orders will be much more closely timed with actual usage of
the product by growers throughout the growing season. Our early
years of commercialisation have seen channel buffer stock inventory
build to appropriate levels that are likely to be maintained rather
than increased. This will make forecasting of revenues for future
seasons harder to predict far in advance of the season. To achieve
our longer-term goals for Veritas(R), we are transitioning our
commercial focus from gaining trial use with progressive growers to
establishing the product as an essential input across the grower's
entire farm production.
Revenue from outside Brazil is also expected to grow over the
financial year. The Group has announced new product launches in
Argentina and Paraguay and anticipates first material sales in the
United States. Banzai(TM) is expected to achieve its commercial
targets, whilst revenues from products marketed to European and
Middle East customers are expected to return to modest growth
following the recent restructuring of that business.
The recent weakness in Sterling compared with the US Dollar, in
which we earn most of our revenues, should help gross margins
remain in line with those achieved in the current year, whilst as
previously guided, operating expenses will rise year-on-year,
broadly in line with revenue. This reflects the full year impact of
investments in commercial expansion and additional R&D
resources that we undertook across the last financial year.
The current financial year is an important one in consolidating
the longer-term prospects of the Group and establishing crop
enhancement products as an important and trusted category of
agricultural chemicals. With our commercial partners we are focused
on achieving this important goal and believe we have the products,
people and programmes to succeed.
Financial review
Throughout this review reference to adjusted results means the
results for continuing operations before, where applicable,
share-based payment costs.
Financial results
Year Year Year
to to to
31 July 31 July 31 July
2016 2015 2014
GBP'm GBP'm GBP'm
Revenue 7.2 4.5 2.5
Cost of sales (1.6) (1.0) (0.7)
--------- --------- ---------
Gross profit 5.6 3.5 1.8
Operating expenses (excl share-based
payment costs) (5.8) (3.7) (2.7)
--------- --------- ---------
Adjusted operating loss (0.2) (0.2) (0.9)
Net tax credit 0.5 0.4 0.2
--------- --------- ---------
Adjusted net income/(loss) 0.3 0.2 (0.7)
Share-based payment costs (1.0) (0.1) -
--------- --------- ---------
Net (loss)/income (0.7) 0.1 (0.7)
========= ========= =========
The table above shows the reconciliation of adjusted results to
statutory results. The reconciling item, share-based payment costs,
in the opinion of the Board, is primarily non-cash related and
therefore not indicative of the Group's underlying trading. In the
opinion of the Board the adjusted results give a better
representation of the underlying performance of the Group.
Revenue
Overall revenue increased 60% from GBP4,513k in the year to 31
July 2015 to GBP7,211k in the year to 31 July 2016. Increase in
sales of the Veritas(R) product to our customer in Brazil was the
main driver of the growth.
The Group's customers are agrochemical distributors and global
strategic partners who will each typically place orders for
physical volumes of the Group's products once or twice for each
agricultural selling and growing season. Revenue for product sales
is typically recognised when the product is despatched to
customers. Product is typically despatched to customers in the
northern hemisphere (United States, Europe and the Middle East)
between February and July. Product will typically be despatched to
southern hemisphere customers (eg. Brazil, reported in the Americas
geographic segment) between July and December.
Revenue relating to the initial fee received in February 2015
from Bayer CropScience is being recognised over a five year term.
GBP388k was recognised in the year (2015: GBP194k), leaving
GBP1,360k in deferred revenue. This deferred revenue will be
released to the Income Statement over the next 42 months.
Americas
Revenue in the Americas grew materially in FY16, to GBP6,494k
vs. GBP3,540k in the prior year. This was largely as a result of
the expansion of sales of Veritas(R) to Brazil which developed in
line with our business plan for the region. The revenue includes an
early order for Veritas(R) for growing season 2016/17 which was
shipped in the final weeks of the financial year. Revenue in the
Americas region also includes the initial fee income of GBP388k
(2015: GBP194k) and sales to distributors in Canada and Mexico.
Europe
Europe had a disappointing season, with a generally weak
agricultural market adversely impacting distributor demand. Revenue
in the region was GBP286k compared to GBP698k in the prior year.
Year-on-year declines in revenues were experienced in all the major
markets of the UK, Germany and Spain.
Rest of World
Revenue in the Rest of World segment increased to GBP431k from
GBP275k in the prior year. The Rest of World segment includes
revenues to West Africa for our Banzai(TM) product for cocoa as
well as sales of more traditional products into Turkey and the
Middle East. Banzai(TM) revenues were in line with expectations in
the first season of commercial sales which is encouraging for
future prospects with the product. They made up the bulk of Rest of
World revenues as sales into the Middle East were down year-on-year
due to political turmoil in the region.
Gross profit
Gross profit margins remained at 78% with a slightly adverse
overall product mix offsetting the benefit of the increase in
fee-based revenue.
Operating expenses excluding share-based payments
Excluding costs for share-based payments, underlying operating
expenses increased from GBP3,728k to GBP5,848k, reflecting the
increased headcount and on-costs associated with the strategy of
geographic expansion and increased R&D.
Sales and Marketing costs more than doubled to GBP2,914k (2015:
GBP1,365k) reflecting, in part, increased activity supporting the
Veritas(R) campaign in Brazil where we had a team of 14 permanent
and contract staff through the growing season supporting our
partner BCS and the channel distributors. Additional sales and
marketing costs have also been incurred in the year opening
commercial operations in Argentina and the United States.
In total the Group spent GBP2,923k on R&D activities (2015:
GBP1,434k). Of this, GBP1,754k (2015: GBP1,281k) was expensed
through the Income Statement. Additionally, a net GBP1,169k (2015:
GBP153k) was capitalised within intangible assets as it relates to
the development of products that are expected to be technically
feasible and commercially viable and satisfy all the conditions
prescribed by IAS 38 for recognition as an intangible asset. More
R&D projects than the prior year satisfied this condition as,
with Veritas(R) proven as a commercial product and with it the
underlying technology that supports it, confidence in the technical
and commercial feasibility of other related pipeline products has
increased.
Other administration costs increased to GBP1,180k (2015:
GBP1,082k) reflecting investment in back office functions to
support the larger and more complex business.
Share-based payments
The Income Statement charge for the cost of share-based payments
has increased significantly in the year to GBP1,009k (2015:
GBP43k). As explained in last year's Annual Report this increase
primarily reflects the first year of charge relating 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 GBP213k (2015: GBPnil)
related to employer's National Insurance costs on expected
exercises.
Income tax
The Group benefits from UK Research and Development tax credits,
in the form of a cash refund. GBP326k was claimed in the year
relating to the period to 31 July 2015, with the cash received
after the year end in early August. This was GBP38k more than had
been accrued in the accounts for that period and that, together
with the expected tax credit for the current year of GBP562k,
brings the UK R&D tax credit for the year to GBP600k. Combined
with Brazilian income tax this results in a net tax credit in the
Income Statement of GBP514k (2015: GBP368k).
The Group currently has an accumulated tax loss of GBP8,700k
(2015: GBP8,700k). The Group has not recognised the potential
deferred tax asset of GBP1,458k 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 net book value of non-current assets at 31 July 2016 has
increased to GBP3,424k (2015: GBP2,206k) reflecting the significant
increase in development activities related to projects that satisfy
the requirements of IAS 38 for recognition as intangible assets as
explained above.
Trade and other receivables
Trade and other receivables at 31 July 2016 were GBP2,313k
(2015: GBP1,301k). The balance outstanding predominantly related to
invoices for the first shipments of Veritas(R) to Brazil for the
2016/17 growing season, which were all collected by the report
date.
Trade and other payables
Trade and other payables at 31 July 2016 increased to GBP2,565k
(2015: GBP1,613k). The main increase related to accruals and other
payables which were GBP1,175k (2015: GBP432k) with the increase
primarily related to accruals for NI on share-based payment costs
and accruals for R&D trials that are being conducted in the
northern hemisphere over the year end period for which payment is
only required on completion.
Cash flow and cash
The cash balance at 31 July 2016 was GBP5,564k (2015:
GBP7,633k). The outflow of GBP2,069k mainly reflects a net cash
outflow from operating activities of GBP699k and GBP1,365k of
expenditure incurred on capitalised development expenditure and
purchasing tangible fixed assets. Within cash flow from operating
activities, movements in working capital largely offset, other than
the GBP388k related to recognition of deferred revenue where the
cash was received in February 2015 when the contract with BCS was
signed.
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. At 31 July 2016 there
was GBP50k of cash drawn down with recourse (2015: GBP57k).
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 2016
Year Year
ended ended
31 July 31 July
2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
Revenue from product sales 6,823 4,319
Fees 388 194
--------- ----------
Total revenue 3 7,211 4,513
Cost of sales (1,575) (972)
Gross profit 5,636 3,541
Sales and marketing costs (2,914) (1,365)
Research and development
costs (1,754) (1,281)
Other administrative expenses (1,180) (1,082)
--------- ----------
Operating loss before
share-based payments (212) (187)
Share-based payments (1,009) (43)
Total operating loss 3 (1,221) (230)
Finance income 13 -
Finance cost (11) (19)
--------- ----------
Net finance income / (costs) 2 (19)
Loss before tax (1,219) (249)
Income tax credit 4 514 368
(Loss) / profit for the
period attributable to
equity shareholders (705) 119
========= ==========
Exchange differences on
translating foreign operations
- may be subsequently
reclassified to profit
or loss (1) (11)
--------- ----------
Total comprehensive income (706) 108
========= ==========
(Loss) / profit per ordinary
share attributable to
equity shareholders
Total and continuing:
Basic and diluted 5 (0.9) 0.2 pence
pence
========= ========== ==========
Group Statement of Changes in Equity
For the year ended 31 July 2016
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 2014 649 14,343 404 287 (13,577) 2,106
Share issue (net) 165 6,096 - - - 6,261
Share-based payments - - 43 - - 43
Forfeited and
exercised share-based
payments - - (239) - 239 -
Transactions
with owners 165 6,096 (196) - 239 6,304
Foreign exchange
on translation - - - - (11) (11)
Profit for the
period - - - - 119 119
------------------------ --------- --------- --------- --------- --------- --------
Total comprehensive
income - - - - 108 108
------------------------ --------- --------- --------- --------- --------- --------
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-based
payments - - (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
------------------------ --------- --------- --------- --------- --------- --------
Group Statement of Financial Position
As at 31 July 2016
Note 31 July 31 July
2016 2015
GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 6 2,976 1,865
Property, plant and equipment 448 341
3,424 2,206
Current assets
Inventories 39 118
Trade and other receivables 2,313 1,301
Corporation tax receivable 888 288
Cash and cash equivalents 5,564 7,633
--------- ---------
8,804 9,340
Total assets 12,228 11,546
--------- ---------
LIABILITIES
Current liabilities
Borrowings (50) (57)
Trade and other payables 7 (2,565) (1,613)
--------- ---------
(2,615) (1,670)
Liabilities falling due
after more than one year (970) (1,358)
Total liabilities (3,585) (3,028)
--------- ---------
Net assets 8,643 8,518
========= =========
EQUITY
Equity attributable to
equity shareholders of
the Company
Share capital 816 814
Share premium 20,472 20,439
Other reserve 980 208
Merger reserve 287 287
Retained losses (13,912) (13,230)
--------- ---------
Total equity 8,643 8,518
========= =========
Group Cash Flow Statement
For the year ended 31 July 2016
Note Year Year
ended ended
31 July 31 July
2016 2015
GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (1,219) (249)
Adjusted for:
Depreciation and amortisation 146 117
Loss on disposal of fixed assets 4 -
Net foreign exchange (gain) (175) -
/ loss
Share-based payments 1,009 43
Finance income (13) -
Finance cost 11 19
Operating cash flows before
working capital changes (237) (70)
(Increase) in trade and other
receivables (1,012) (758)
Decrease / (increase) in inventories 79 (100)
Increase in trade and other
payables 7 945 201
(Decrease) / increase in deferred
income 7 (388) 1,748
Cash (absorbed) / generated
by operations (613) 1,021
Research and development tax
credit received - 241
Corporation tax paid (Brazil) 4 (86) (56)
Net cash (outflow) / inflow
from operating activities (699) 1,206
Cash flows from investing activities
Purchase of property, plant
and equipment (196) (179)
Expenditure on intangible assets 6 (1,169) (153)
Interest received 13 -
Net cash absorbed by investing
activities (1,352) (332)
Cash flows from financing activities
Proceeds from issue of share
capital (net of expenses) 35 6,262
Interest paid (11) (19)
Net cash generated by financing
activities 24 6,243
(Decrease) / increase in cash
and cash equivalents (2,027) 7,117
Effect of fluctuating exchange (42) -
rates
Cash and cash equivalents at
the beginning of the period 7,633 516
Cash and cash equivalents at
the end of the period 5,564 7,633
-------------------------------------- ----- --------- ---------
Notes to the Preliminary Results
1. Nature of operations and general information
The financial information for the years ended 31 July 2016 and
31 July 2015 included in the preliminary announcement, which was
approved by the Board on 30 October 2016, is derived from the full
Group audited statements for the year ended 31 July 2016 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 2016, 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 2016, 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
2015 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 The London Stock Exchange. 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 demonstrated its capability in securing
contractual arrangements and maintaining customer relationships
which increase the probability of improving revenues.
The Group has undertaken a review of forecasts and projections,
which have been prepared for the period to 31 January 2018. 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 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 chief operating decision maker which is defined as
the Board.
All of the results for the year ending 31 July 2016 related to
Crop Nutrients, other than GBP21k (2015: GBP16k) of costs relating
to Pest Control. All assets relate to Crop Nutrients other than net
book value of GBP817k of intangible assets which relate to Pest
Control.
The Group further monitors 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 2016,
which are as follows:
Rest
Americas Europe of World Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- ---------- ---------- ----------
Segment revenue
from external customers 6,494 286 431 7,211
----------- ---------- ---------- ----------
Operating profit 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)
-------------------------- ----------- ---------- ---------- ----------
The segment results for the year ended 31 July 2015 were as
follows:
Americas Europe Rest Total
GBP'000 GBP'000 of World GBP'000
GBP'000
Segment revenue
from external customers 3,540 698 275 4,513
----------- ---------- ----------- ----------
Operating profit 2,091 53 99 2,243
Other costs not
allocated (2,313)
Depreciation and
amortisation (117)
Share-based payments (43)
Total operating
loss (230)
-------------------------- ----------- ---------- ----------- ----------
Only one customer constituted more than 10% of the Group's
sales, with revenue of GBP6,456k (2015: GBP3,408k).
4. Income tax credit
Recognised in the Group Income Statement
Year Year
ended ended
31 July 31 July
2016 2015
GBP'000 GBP'000
Current UK tax (562) (288)
Overseas tax 86 45
Adjustments for prior years (38) (125)
-------- --------
Total tax credit in Group Income
Statement (514) (368)
--------------------------------- -------- --------
Reconciliation of effective tax rate
Year Year
ended ended
31 July 31 July
2016 2015
GBP'000 GBP'000
Loss before tax (1,219) (249)
Loss before tax multiplied by
rate of corporation tax in the
UK of 20% (2015: 20.85%) (244) (52)
Non-deductible expenses 13 5
Accelerated capital allowances (21) (29)
Enhanced R&D tax relief (630) (494)
Losses not recognised for tax
purposes 100 368
Other temporary differences 220 (86)
UK corporation tax re earlier
years (38) (125)
Overseas corporation tax 86 45
Total tax in Group Income Statement (514) (368)
------------------------------------ -------- --------
Unrelieved tax losses of GBP8.7m (2015: GBP8.7m) remain
available to offset against future taxable trading profits.
5. Loss per ordinary share
The loss per ordinary share is based on the loss after taxation
of GBP705k (2015: profit GBP119k) and 81,432,824 (2015: 71,207,446)
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
2016 2015
(Loss) /profit for the period (GBP705,000) GBP119,000
attributable to equity shareholders
Weighted average number of
ordinary shares in issue 81,432,824 71,207,446
Basic and diluted (loss) /
profit per share (0.9p) 0.2p
-------------------------------------- ------------- -----------
6. Intangible assets
Goodwill Development Total
costs
GBP'000 GBP'000 GBP'000
Cost at 1 August
2014 585 1,367 1,952
Expenditure in
the year - 153 153
--------- ------------ ---------
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
--------- ------------ ---------
Accumulated amortisation
at 1 August 2014 - 170 170
Charge in the year - 70 70
--------- ------------ ---------
Accumulated amortisation
at 1 August 2015 - 240 240
Charge in the year - 58 58
--------- ------------ ---------
Accumulated amortisation
at 31 July 2016 - 298 298
--------- ------------ ---------
Net book value
at 31 July 2016 585 2,391 2,976
--------- ------------ ---------
Net book value
at 31 July 2015 585 1,280 1,865
--------- ------------ ---------
Net book value
at 31 July 2014 585 1,197 1,782
--------- ------------ ---------
7. Trade and other payables
31 July 31 July
2016 2015
GBP'000 GBP'000
Current
Trade payables 698 608
Other taxation and social
security 302 183
Accruals and other payables 1,175 432
Deferred income 390 390
--------- ---------
2,565 1,613
----------------------------- --------- ---------
31 July 31 July
2016 2015
GBP'000 GBP'000
Falling due after more than
one year
Deferred income 970 1,358
--------- ---------
970 1,358
----------------------------- --------- ---------
The deferred revenue is in respect of the Initial Fee received
from Bayer CropScience in February 2015. This is being recognised
over a five-year period.
8. Availability of the financial statements
Copies of the full financial statements will be available from
the registered office from 9 November 2016 and will also be
available from the Group's website at www.plantimpact.com.
9. Annual General Meeting
The Annual General Meeting will be held on 9 December 2016 at
9.00am 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 QVLFLQBFZFBF
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October 31, 2016 03:00 ET (07:00 GMT)
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