Plant Health Care - Digital Summary Report 2019

Introduction

About us

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We offer products to improve the health, vigour and yield of major field crops such as corn, soybeans, cotton and rice, as well as speciality crops such as fruits and vegetables. We operate globally through subsidiaries, distributors and supply agreements with major industry partners.

Our innovative, patent-protected biological products help growers to protect their crops from stress and diseases, and to produce higher quality fruit and vegetables, with a favourable environmental profile.

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Farmers confront many challenges in providing food for a rapidly growing and more prosperous world. These challenges include reducing the use of potentially harmful agrochemical products. Biological products are becoming an increasingly important part of the solution because of the benefits they offer. 

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Commercial

Plant Health Care’s Commercial business is driven by sales of Harpin αß, a recombinant protein which acts as a powerful biostimulant, promoting the yield and quality of crops. The Group sells the proprietary soil treatment Myconate in selected countries. The Group sells Harpin αß and Myconate through specialist distributors around the world. In Mexico, the Group also distributes third-party biological products.

Products

HARPIN αß

MYCONATE

New technology

Plant Health Care’s New Technology is focused on PREtec – plant response elicitors. These are peptides (short chains of amino acids) which stimulate plants to increase yield and resist disease. The Group has so far launched four platforms of PREtec, which have been under evaluation by nine potential licence partners in 2018.

Technology

PREtec

INNATUS 3G

T-REX 3G

Y-MAX 3G

Global reach

Farmers confront many challenges in providing food for a rapidly growing and more prosperous world. These challenges include reducing the use of potentially harmful agrochemical products. Biological products are becoming an increasingly important part of the solution because of the benefits they offer.

  • Demonstration field trials conducted in 2016-2019 showed an average yield increase of over 21%.
  • Import licence was issued in January 2020.
  • The exclusive brand of our distributor Coplacana reaching the 8.4-million-hectare sugar cane market in Brazil continued to grow rapidly.*
  • More than 400 cane growers have made applications of the product. With these outstanding results, we anticipate strong sales growth in 2020 and beyond.

* Based on AgroNews report dated 28 August 2019.

  • 350,000 corn acres treated in 2019.
  • PHC signed new exclusive distribution agreement, with Wilbur-Ellis, for the use of Employ in speciality crops.
  • PHC received regulatory approval in California for applications of Employ on almonds, grapes and walnuts.
  • PHC now has agreements with two large distributors for Harpin aß sales in the United States.
  • 18%+ annual growth in recent years in Spain with Harpin aß use in speciality crops.
  • In the UK, Headland launched a Harpin aß based professional turf product that was used on major soccer, golf and tennis venues.
  • Sales of Proact on potatoes distributed by Agrii in the UK continue to expand rapidly.
  • We expect to expand the sales of Harpin aß on sugar cane, citrus, macadamia and cut flowers in Africa.
  • First sales of Harpin aß for applications to rice are expected in Thailand in 2020.
  • 15% Harpin growth in 2019 versus 2018.
  • Harpin aß is now well established as a biostimulant for vegetables such as tomatoes, chillies and asparagus.
  • Applications of Harpin aß in the Sinaloa/Baja California area of Mexico continue to deliver increased yield and a higher quality product.
  • PHC Mexico is a leading supplier of third-party agricultural products into the speciality crop markets of the Sinaloa/Baja area.

 

Highlights for 2019

REVENUE

($0'000)

6,436
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CASH AND INVESTMENTS

($0'000)

2,421
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ADJUSTED LBITDA

($0'000)

3,834
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  • In both the US and Brazil, Harpin aß is showing excellent customer benefits and we have large, strong and committed distribution partners.
  • The Company has made impressive progress towards the launch of the first products from the PREtec peptide platforms, targeting markets worth more than $5 billion.
  • The Group has seen robust performance in first quarter 2020 trading, with revenue 10% above 2019, buoyed by strong demand in the USA.
  • Agricultural inputs, which represent almost all sales by the Group, are considered an ‘essential industry’. Planting intentions in the US and elsewhere remain robust. However, the recent collapse in the oil price has led to a severe reduction in the price of ethanol from sugar cane in Brazil, which will lower demand for Harpin aß.
  • The Group nonetheless is positive about the prospects for revenue in 2020, compared with 2019.
  • Delayed sales in Brazil (down 64%) and exceptionally difficult market conditions in the US (down 18%) held back sales, despite robust market demand for Harpin aß.
  • Revenue was $6.4 million (2018: $8.1 million), 21% down on the prior year, 18% in constant currency*.
  • Gross margin decreased to 56% (2018: 65%). The decrease is primarily due to the increased proportion of third-party sales in Mexico and increased tariffs imposed on China by the US.
  • Adjusted LBITDA** improved to $3.8 million (2018: $5.4 million).
  • Cash and cash equivalents at 31 December 2019 were $2.4 million.
  • The Company successfully raised £2.4 million ($3.0 million) through the issuance of new ordinary shares in November 2019 and a further £3.6 million ($4.6 million) in March 2020.
  • The Group has strong cash reserves.

* Constant currency is defined in the 2019 Annual Report on page 12.

** Adjusted LBITDA: Loss before Interest, tax, depreciation, amortisation, share-based payments and intercompany foreign exchange.

Review of the year

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Plant Health Care is firmly establishing itself as a leader inbiostimulants. Our new “vaccines for plants” are now poised to drive future cash and revenue growth.

DR RICHARD WEBB

Non-Executive Chairman

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Harpin aß is now well positioned and growing sales in many crops around the world; sugar cane and corn should accelerate that growth. The first PREtec products are being prepared for launch into market opportunities worth $5 billion.

DR CHRISTOPHER G J RICHARDS

Chief Executive Officer

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Through strict control of cash operating expenses and managing our working capital, our cash burn decreased to $4.8 million for 2019.”

MR JEFFREY HOVEY

Chief Financial Officer

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