31 May 2024
Plant Health Care plc
("Plant Health Care" or
the "Company")
Full Year Results
Plant Health Care® (AIM:
PHC.L), a leading provider of novel patent-protected biological
products to help farmers feed the world sustainably, is pleased to
announce its results for the year ended 31 December 2023
("FY23").
Financial highlights:
• Revenue in FY23 was $11.2m (2022: $11.8m)
• In
the first four months of 2024, revenue was approximately $4.3m, up
72% versus the same period in 2023 (2023: $2.5m), boosted by sales
to US distributors.
• Gross margin remained consistent with the
prior year at 60.4% (2022: 60.9%) and has
improved materially in the first four months of 2024, due to
increased sales of high margin Harpinαβ and PREtec products.
• Adjusted LBITDA* improved to $2.8m (2022 $3.7m), with further improvement expected during
2024.
• Working capital utilised in the year was $5.1m (2022:
$3.1m)
• At
31st December 2023, cash was $2.1m, increasing to $2.3m at 3rd May
2024. Cash burn for the same period in 2023 was $4.4m.
• Operating loss improved to $4.6m (2022: $9.2m)
*Adjusted LBITDA: loss before
interest, tax, depreciation, amortisation, share-based payments and
foreign exchange loss
Operational highlights:
Harpinαβ
• In
the US, distributors went through a massive destocking of all
products in 2023. On-ground sales of PHC products held up
well in 2023 and have started 2024 strongly, with sales of Employ®
(Harpinαβ) through Wilbur-Ellis currently up more than 75% against
the same period in 2023; distributor inventory now appears to be
rebalancing and to be well matched to on-ground sales.
• Sales of Harpinαβ outside the US grew by 36% led by increased
sales in Brazil and Mexico of 45% and 55%, respectively. That
trend continues in 2024.
•
Compounded Annual Growth rate
of Harpinαβ between 2020 and 2023 is 20%; that growth trend is set
to be maintained in 2024.
PREtec
• Sales of the Company's novel PREtec peptides in 2023 increased 153% to
$2.0m (2022: $0.8m), reaching 18% of sales, driven by sales to new
and existing customers following new product
registrations.
• The
Company successfully launched ObronaTM in the US for
foliar use on fruits, nuts, vegetables and row crops. With the
launch of Obrona, we sell our PREtec proprietary products on three
continents.
• In
Brazil, the peptide nematicide PHC68949 was granted registration
for commercial sale; launches under the brand name
Teikko® will take place over the coming months. Some 10
distributors have expressed interest in selling Teikko in the
upcoming growing season. Due to strong field trials results
and expected high grower ROI, multiple distributors are expressing
interest in selling Teikko.
• Signed an agreement with Agrii UK to support commercial sales
of a combination of our PREtec technology and Agrii's novel
foliar micronutrient. The combination is designed to help
growers improve crop quality and yield as part of an integrated and
environmentally responsible management program.
• The
Company's biochemical fungicide, PHC279, for the control of sugar
cane and coffee diseases received federal approval in
Brazil.
Outlook:
• New
registrations and distribution agreements in 2023 and 2024 point to
significant revenue growth in 2024, in line with market
forecasts.
• Our
business model is now more relevant than ever as the issue of food
security continues to grow, and the farming world looks for
technological solutions to achieve a sustainable future with better
crops delivering higher yields and reducing environmental effects
to help meet global sustainability targets.
- H2 2024 is expected to
see significant commercial progress across a number of fronts,
including:
• The launch of Teikko
and Moshy which are expected to deliver significant revenues in
Brazil following launch.
• Expansion of Innocul8
sales in the UK, leading to further revenue expansion in the EMEAA
region.
• The entry into India
and now China, is expected to drive substantial sales over
time.
• With
increased sales in the first four months of 2024, the Group
continues to assess potential non-dilutive short-term financing
options to ensure it can maintain sufficient working capital and
financial flexibility through its typical order cycle.
Annual Report
The Annual Report will be
available on the Company's website today (https://www.planthealthcare.com/investors/financial-
reports-and-investor-presentations)
and hard copies are expected to be posted to
Shareholders in due course.
For further information, please contact:
Plant Health Care plc
|
|
Jeffrey
Tweedy, Chief Executive Officer
|
Tel: +1
919 926 1600
|
Jeffrey
Hovey, Chief Financial Officer
|
|
Cavendish Capital Markets Ltd - Nomad &
Broker
|
Tel: +44
(0) 20 7391 8900
|
Neil
McDonald / Peter Lynch
|
|
Dr. Christopher Richards, Chairman comments:
Sustainability in a volatile market. The move
towards sustainable agriculture is unstoppable. In 2023, we fell
short of expectations, due to exceptionally volatile conditions in
the US market. We are confident of resuming growth better than the
biologicals market of 10 - 15%, over the coming years.
The move to
sustainable agriculture is unstoppable
Demand for Plant Health Care's products is driven by
the growth in sustainable agriculture. In 2023, sales outside the
USA grew by 23%, with particularly strong growth in Brazil (42%),
as the Group rides that wave.
Volatility in the
US market
The US market has been hit by volatility in the
price and availability of fertilisers and agrochemicals, which has
led to large swings in demand. Exacerbated by high interest rates,
distributors and farmers unwound inventories of all products, to
stabilise their working capital. While demand for Plant Health
Care's products remained robust, distributors delayed purchasing,
resulting in sales being down by 45%.
Harpinαβ
products
Demand for Plant Health Care's established Harpinαβ
product continues to grow; outside the US by 36% in 2023. For
example, on-ground sales of H2Copla in Brazil grew by 27%. For the
first time, larger sugar cane growers have started to use the
product. This illustrates the time it takes to drive product
adoption of these novel products.
PREtec products delivering their promise
- strong pipeline to come
The first launches of the Group's novel
PREtec peptide products
are vindicating the more than $30m invested over the last decade.
Sales of PHC279 (Saori in Brazil, Obrona in the US), reached $2m,
an increase of 153% compared to 2022. With launches in the US and
now in Europe, prospects for growth are very strong. The next
PREtec product, PHC949 is
now registered in Brazil as Teikko and will be launched into the
huge soybean market in 2024. With further registrations expected in
2024, the growth of PREtec
is only just starting.
Outstanding cost
position
The best technology will not succeed without a cost
position which allows customers and channel partners to achieve a
good return on their investment. New toll manufacturing
arrangements in the EU, which guarantee access to high quality
product at low cost, are critical for PHC as evidenced by the gross
margins we are achieving on both Harpinαβ and our PREtec products.
Sustainability in
our products
The Group's products are recognised as contributing
to the sustainability of agriculture. Not only are the products
themselves environmentally friendly, but they also help farmers to
reduce their reliance on traditional fertilisers and pesticides,
with substantial benefits to the sustainability of agriculture.
Risk
management
Covid-19, war in Ukraine, increased inflation and
supply chain challenges combine to create a much riskier world than
in recent years. Given the nature of the agriculture sector and the
Group's business, inflation and supply chain issues are those risks
on which we focus most attention. At present, we are able to
recover inflation in price. Managing volatility in our revenue will
be a focus over the coming years.
The group is committed to playing its part to
mitigate the environmental impacts of our activities and to enhance
our
resilience to the uncertainties posed by climate
change. Severe climate change could adversely affect the Group's
distribution channel. However, our proprietary products help crops
thrive under severe drought and flooding conditions, which the
Group believes will help farmers and our distribution partners
diminish the effects of climate change.
Market leading
management team
I have every confidence in the management team of
Plant Health Care, under the leadership of Jeffrey Tweedy (CEO),
ably supported by Jeff Hovey (CFO) and a strong Executive
Committee. I would like to take this opportunity to thank James
Ede-Golightly for his contribution to the Board. James stepped down
as part of our cost savings programme at the end of 2023. I am
confident that we have a balanced and experienced Board to
challenge and guide management.
Dr Christopher Richards Non-executive Chairman 31 May
2024
crichards@planthealthcare.com
Chief Executive Officer's Statement
Jeffrey Tweedy, Chief Executive Officer
Overview
Plant Health Care fell short of revenue
expectations in 2023, mainly driven by poor market conditions in
the US market. As a result, global Harpinαβ sales were down 19%
versus 2022. Revenue outside the US grew 23%, driven by strong
Harpinαβ and PREtec sales.
Sales of the Group's new PREtec technology grew 153% driven by
increased sales of Saori in Brazil and product launches in the US,
UK, and Portugal markets. PREtec now accounts for 18% of the
Group's revenue in only 2 years after first registrations and will
deliver revenue growth over the next 2 - 3 years. The Group added
three new distributors in 2023 which will provide increased market
access for growth in 2024 and in subsequent years. The Group's
focus on scaling the commercial business has helped increase
revenue by 42% in South America and 41% in the EMEAA region. Gross
margin remained steady at 60% and adjusted LBITDA improved 31% to
$2.9m reflecting the strong focus of management in controlling
operating costs in 2023.
The Group's investment in the PREtec technology is rapidly delivering
revenue and will be the key driver for continued market expansion.
We expect Saori, Moshy, Teikko, Obrona and Innocul8 to be the
drivers of future growth to help us reach our revenue
aspirations.
Cash and cash equivalents as of 31 December
2023 is $2.1m (2022: $5.7m), increasing to $2.5m as of 31 January
2024, following receipt of a delayed customer payment post period
end.
Plant Health Care has continued to expand into
new markets around the world including South America, Europe, and
India. We have grown our relationships with major distribution
partners to deliver our products into these new markets.
Products
Our proprietary products derived from natural
proteins help protect crops from diseases, nematodes and stress
leading to increased crop yield, quality and financial return for
growers globally. The rise to the top of the global agenda of
climate change, food security and sustainability is driving
increased demand for our products.
PREtec
Derived from natural proteins, PREtec is an environmentally friendly
technology which stimulates crop growth and ability to withstand a
variety of abiotic stresses as well as improve disease control,
plant health and yield. PREtec is compatible with mainstream
agricultural practices. Our aim is to launch one new
PREtec product every
year.
The Company's PREtec technology platform (Vaccines for
Plants™) continues to build on the success of the launch of our
first PREtec product,
Saori used in Brazil for the prevention and treatment of soybean
diseases. Revenues from PREtec now account for 18% of the Group's
revenue and were up 153% versus 2022.
In the US, the novel peptide fungicide PHC279 was
registered and has now been launched by Wilbur Ellis for sales as
ObronaTM.
In Brazil, registration of PHC 279, under the brand
name Moshy, was received in 2023 for sales into the coffee and
sugar cane markets. Also in Brazil, the peptide nematicide PHC949
was registered and will be launched under the brand name Teikko for
the 2024 soybean growing season.
First PREtec sales in Europe occurred in 2023
with the launch of PREzym in Portugal and the company signed an
agreement with Agrii to launch PREtec technology under the brand name
Innocul8, for launch in 2024. The Group is now selling our
PREtec products on three
continents.
Harpinαβ
The Compound Annual Growth Rate of Harpinαβ between
2020 and 2023 is 20%, which is a good indicator of the continued
growth of Harpinαβ. Harpin is a recombinant protein which acts as a
powerful biostimulant to improve the quality, nutrient use,
tolerance to abiotic stress and yield of crops. Harpinαβ sales
decreased by 19% to $6.7m (2022: $8.2m) driven by a decline in
sales in the US caused by distributor destocking. Harpinαβ sales
grew in every other region with Brazil leading the way with a 45%
increase in sales. Harpinαβ sales increased in the EMEAA and Mexico
regions by 16% and 55%, respectively.
Distribution
Partnerships
We distribute our products through partnerships with
influential distributors, which enables us to access a large number
of farmers. We work with our distribution partners to drive product
adoption and our partners also provide valued technical advice on
the best use of our products.
We now work with six of the world's largest
distributors of agricultural products which account for over 150
million acres in soybeans, corn and sugar cane. We continue to look
for new distribution partners who will help the Group continue to
scale our commercial operations.
Geographic
growth
The Group continues to invest in the commercial
business in all regions across the world, focusing on the largest
agricultural producers.
North
America
Total revenue in the US was down 45% to $2.6m (2022:
$4.8m). The decline was primarily due to impact of an exceptional
destocking by US distributors to reduce the impact of price
volatility in an uncertain market. Higher interest rates prompted
distributors and farmers to lower their inventories to manage their
working capital.
Distributor inventories are the lowest they have
been in years. Due to this, recovery of Harpinαβ revenue in the US
is expected, driven by healthy on-ground sales. 2024 will be the
first full season of sales for Obrona and we expect Obrona to
provide significant revenue over the coming years.
South
America
Total revenue in South America was up 42% to $3.2m
(2022: $2.2m) driven by the continued growth of Saori up 36% and
Harpinαβ up 45%.
Prospects for 2024 are very positive with the launch
of Teikko in H2 2024, continued growth of Saori and continued
adoption of Harpinαβ in sugar cane and soybeans.
EMEAA
Sales in EMEAA were up 41% to $1.9m in 2023 ($1.3m
in 2022). The increase in sales was driven by the growth of
Harpinαβ across all countries and the launch of PREzym in
Portugal.
Prospects for 2024 are positive with the planned
expansion of Harpinαβ in the EU with the France registration and
the expected launch of Harpinαβ in India for use on sugar cane. The
launch of Innocul8 in the UK will bring substantial revenue growth
over the coming years.
Mexico
Plant Health Care Mexico has a broad biological
product line for farmers in Mexico which includes the Groups'
proprietary and third-party products. Sales in Mexico were up
slightly to $3.5m (2022: $3.4m). The sales increase was driven by
increased sales of Harpinαβ into specialty crop acres and new
market growth coming from sales into agave and avocado.
In the next couple of years Mexico is expecting
continued growth with sales of Harpinαβ into sugar cane and
continued growth in agave and avocado. With the recent registration
approval of PHC279 for disease control and PHC949 for nematode
control we expect a significant shift in revenue to the Group's
proprietary products resulting in greater revenue and higher
margins.
Environmental
Sustainability
Food security is the top priority in 2024, and will
continue to be a growing concern, with global events driving the
world's ever-increasing need for more access to vital crops.
Sustainable agriculture lies at the heart of meeting this need, and
our biological products will play a fundamental role in providing
better-quality crops that can deliver higher yields.
Farmers face many challenges, including the impacts
of climate change, such as drought and the need to work more
sustainably. Plant Health Care products provide an environmentally
suitable solution to increase regular yields through our pipeline
of products for farmers and food/crop suppliers across various
markets.
Outlook
Looking ahead, the Group has plans to launch Teikko
and Moshy which are projected for H2 2024 and are expected to drive
significant revenue growth in 2024 in Brazil. With distributor
inventories now lower than previous years, recovery of Harpinαβ
revenue in the US is expected, driven by healthy on-ground sales.
Expansion of PREtec in the
UK will provide for significant revenue in 2024.
Our business model is now more relevant than ever as
the issue of food security continues to grow, and the farming world
looks for technological solutions to achieve a sustainable future
with better crops delivering higher yields and reducing
environmental effects to help meet global sustainability
targets.
Financial summary
Jeffrey Hovey, Chief Financial Officer
A summary of the financial results for the year
ended 31 December 2023 with comparatives for the previous financial
year is set out below:
|
2023
$'000
|
2022
$'000
|
Revenue
|
11,206
|
11,767
|
Gross
profit
|
6,765
|
7,171
|
Gross
profit margin
|
60.4%
|
60.9%
|
Operating
loss
|
(4,571)
|
(9,238)
|
Finance
income / (expense) - net
|
82
|
(84)
|
Net loss
arising from financial assets
|
-
|
(125)
|
Net loss
for the year before tax
|
(4,489)
|
(9,447)
|
Adjusted
LBITDA*
|
(2,862)
|
(3,686)
|
Cash
equivalents and investments
|
2,111
|
5,656
|
Revenues
Revenues in 2023 decreased by 5% to $11.2 million
(2022: $11.8 million). On a constant currency basis revenue
decreased 9%. Revenue excluding North America increased 23% to $8.6
million (2022: $7.0 million). North America revenue decreased 45%
to $2.6 million (2022: $4.8 million). Gross margin remained steady
declined 1% to 60% (2022: 61%) due to decreased Harpinαβ sales into
the corn market in North America offset by increased sales of Saori
in Brazil. Harpinαβ sales decreased 19% to $6.6 million (2022: $8.2
million). Third-party revenue decreased 6% to $2.7 million (2022:
$2.8 million due to weather challenges in the northwest portion of
Mexico and lower commodity prices in vegetables.
The Group has three separate reporting segments as
set out below.
In 2023, the Group's revenue, gross margin and
LBITDA was weighted evenly throughout the year with both first and
second half equalling 50%. The Group' goal is to diversify our
revenue regionally and distribute its revenue evenly throughout the
year.
Americas
This segment includes activities in both North and
South America but excludes Mexico.
North
America
North America revenue decreased 45% to $2.6 million
(2022: $4.8 million). The decline was due to delays in distributor
purchases of Harpinαβ to manage their inventory levels to reduce
the impact of price volatility in an uncertain market and the
affects of interest rate levels. Harpinαβ sales for North America
decreased 58% to $2.0 million ($4.8 million). Obrona® was launched
in June of 2023 as a foliar fungicide for fruits, nuts, vegetables,
and row crops which generated $0.6 million (2022: nil).
South
America
Revenue in South America increased 42% to $3.2
million (2022: $2.2 million). Sales of H2Copla® for use on sugar
cane increased 45% to $2.1 million (2022: $1.5 million) due to
continued adoption of H2Copla by sugar mills and processors. Sales
of Saori for use on soybeans increased 36% to $1.1 million. The
increase was due to continued adoption of Saori by soybean
farmers.
Revenue in the Americas is predominantly from
Harpinαβ and Saori sales.
EMEAA
Revenue in the Rest of World segment increased 41%
to $1.9 million (2022: $1.3 million). The increase was primarily
due to the launch of PREzym for use in fruit, vegetable and cereals
crop production in Portugal, Spain and first sales of Innocul8 into
the potato market and a wide range of crops in the United Kingdom.
PREzym and Innocul8 generated $0.1 million and $0.2 million of
sales in 2023, respectively. Sales of Harpinαβ increased 16% to
$1.5 million due to further adoption of the technology in Southern
Europe and larger consumption of inventories in the channel in
Southern Africa driven by a favourable rainy season and "boots on
the ground" support from the PHC technical team.
Revenue in the Rest of World segment is
predominantly from Harpinαβ sales.
Mexico
Revenue from the Mexico segment increased 4% to $3.5
million (2022: $3.4 million). This was primarily due to increased
sales into specialty crop market and continued expansion into the
agave and avocado markets.
Revenue in Mexico includes sales of Harpinαβ and
third-party products. The gross margin in Mexico for Harpinαβ and
third-party products are 68%+ and 39%+, respectively. Sales of
Harpinαβ increased by 55% in 2023 from 2022.
Gross
margin
Gross margin remained steady at 60% (2022: 61%). The
margins for Harpinαβ and PREtec products remained strong at 69%
and 77%, respectively. Improvement in the overall margin was held
back by a decrease of 5% to 39% in the third-party margin products
sold in Mexico.
Operating
expenses
The Group's operating expenses decreased 13% or $1.3
million to $9.6 million (2022: $10.9 million).
Beginning in 2023, the Group began to capitalize
some of its research costs which amounted to $0.4 million.
Including the amount that was capitalized, operating costs
decreased 8% or $0.9 million. The main contributors were decreased
sales and marketing spend of $4.2 million (2022: $4.6 million)
globally and decreased administration costs to $2.9 million (2022:
$3.4 million).
Non-cash unallocated corporate expenses decreased
$3.8 million to nil (2022: $3.8 million). The decrease was
attributable to the Group's decision to classify its Sterling loans
from our UK subsidiary as a hedge of net investments in a foreign
subsidiary. All gains and losses directly related to this loan
relationship is recognized in other comprehensive income.
Adjusted LBITDA, a non-GAAP measure, decreased by
$0.9 million to $2.8 million (2022: $3.7 million). Including the
effects of the capitalization of research costs, adjusted LBITDA
decreased $0.5 million. The decrease is due to decreased operating
expenses of $0.9 million offset by lower gross profit of $0.4
million.
* Adjusted LBITDA: loss before interest, tax,
depreciation, amortisation, share-based payments and losses from
foreign exchange
|
2023
$'000
|
2022
$'000
|
|
Operating
loss
|
(4,571)
|
(9,238)
|
Depreciation/amortisation
|
725
|
668
|
Share-based payment expense
|
1,009
|
1,130
|
Foreign
exchange (gains)/losses
|
(25)
|
3,754
|
Adjusted
LBITDA
|
(2,862)
|
(3,686)
|
|
|
|
|
| |
Balance Sheet
At 31 December 2023 and 2022,
investments and cash and cash equivalents were $2.1 million and
$5.7 million respectively.
Cash remains a primary focus for
the Group.
Inventory ($3.0 million)
decreased $0.4 million due to reduced Harpinαβ purchases in 2023
and the effect of a lower per unit cost of Harpin achieved through
our European supplier. Trade receivables ($3.4 million) increased
$1.9 million due to delayed collections from North American
customers. Most of the delayed collections were received in January
of 2024. Trade payables ($1.3 million) were comparable to the prior
year ($1.6 million).
Translation of the results of
foreign subsidiaries for inclusion within the consolidated Group
results resulted in an exchange gain of $0.2 million (2022: gain of
$3.7 million) recorded within other comprehensive income and
foreign exchange reserves.
Cash Flow and Liquidity
Net cash used in operations was
$5.8 million (2022: $2.7 million). The increase is due to a
decrease in working capital cash flow primarily due to increased
receivables, which resulted in reduced collections year over year
and increased payments to several suppliers offset by lower
inventory supplier payments. The lower inventory payments were a
direct result of moving our manufacturing from China to a European
supplier.
Net cash used in investing
activities was $0.6 million (2022: $8.0 million provided from
investing activities). The Group holds surplus cash in several bond
and money market funds. The movement in these funds was used to
further invest in the PREtec business
and fund the Commercial business.
Net cash provided by financing
activities was $2.9 million (2022: $0.6 million). The increase was
primarily due to the completion of the June 2023
fundraise.
Going Concern
The Company is a holding entity
and as such their going concern is dependent on the Group therefore
the going concern assessment was performed as part of the Group's
assessment.
In assessing whether the going
concern basis is an appropriate basis for preparing the 2023 Annual
Report, the Directors have used actual results for the first four
months of 2024 and its detailed forecasts which take into account
its current and expected business activities, its cash and cash
equivalents balance and investments of $2.1 million as shown in its
balance sheet at 31 December 2023, the principal risks and
uncertainties the Group faces and other factors impacting the
Group's future performance.
The Directors have prepared a base
case cash forecast that shows we will be able to operate within our
existing facilities (including the financing secured after the
year-end) for the foreseeable future of at least a year from the
date of the approval of these financial statements. The
Directors have modeled a variety of possible cash flow forecasts
for the twelve months from the date of the approval of the
financial statements.
The Group's revenue projections
are based on detailed budgets built up by customer from each of the
Group's operating segments, and specifically includes growth
assumptions in the U.S. to reverse the decline experienced in 2023.
The Group's base case shows a revenue increase of 39% in 2024 and
55% in the first half of 2025, which is an increase from the
overall decline in 2023 of 5% (which was caused by the distributors
managing their inventory levels in the U.S. market). The base case
growth rates projected for 2024 and 2025 are comparable to the 40%
and 28% overall growth rates achieved in 2022 and 2021
respectively, and the growth rates achieved in 2023 in the South
America and EMEAA regions during 2023 of 29% and 41%.
Experience has shown in the first
four months of 2024 that projected revenue has started to occur and
growth on 2023 has been achieved at a rate which has exceeded the
Directors budget, however this trend needs to continue through the
rest of 2024 and 2025, in line with the above to prevent any
liquidity issues. While the Group believes the projections are
achievable, there is inherent uncertainty in achieving budgeted
projections of growth which means the projections may not be
achieved.
In addition, the Group is
dependent on the debt due from its customers being settled in line
with forecasts. Further, the timing of cash inflows and outflows is
important and heightened in the 4th quarter of 2024 when
some large payments become due to working capital needs that could
lead to short-term liquidity issues in that period. Cost
savings are also projected in the model and may be difficult to
deliver in the current climate.
The Directors have identified
further cost savings, if necessary, to help mitigate the impact of
the above on cash outflows. Some of the costs saving measures
include further product cost reductions with its toll manufacturer,
scaling back the Group's PREtec program and reducing personnel in
all regions.
In the event of a need, the Group
may also be required to seek additional funding beyond the
facilities that are currently available to it through a placement
of shares or source other non-dilutive short-term funding, making
significant reductions in its fixed cost expenses or the potential
sale of the Group to secure the injection of funds into the
business.
In the reasonable and plausible
downturn scenario where revenue growth is 25% or below, the Group's
ability to fund its operations within current resources will be
impacted and further funding will be required which is not
guaranteed, this will have a direct impact on the Company's going
concern and as a result a material uncertainty exists, which may
cast significant doubt about the Group and Company's ability to
continue as going concern and therefore
they may be unable to realise their assets and discharge their
liabilities in the normal course of business.
However, the Directors consider
that the Group and Company will trade in a positive scenario and
therefore deem it to be appropriate to prepare the financial
statements on a going concern basis and the financial statements do
not include the adjustments that would be required if the Group and
Company were unable to continue as a going concern.
Consolidated statement of comprehensive
income
for the year ended 31 December 2023
|
Note
|
2023
$'000
|
2022
$'000
|
Revenue
|
3
|
11,206
|
11,767
|
Cost of
sales
|
|
(4,441)
|
(4,596)
|
Gross profit
|
|
6,765
|
7,171
|
Research
and development expenses
|
|
(2,853)
|
(3,564)
|
Sales and
marketing expenses
|
|
(4,260)
|
(4,557)
|
Administrative expenses
|
|
(4,223)
|
(8,288)
|
Operating loss
|
4
|
(4,571)
|
(9,238)
|
Finance
income
|
|
161
|
113
|
Finance
expense
|
|
(79)
|
(197)
|
Net loss
arising on financial assets
|
|
-
|
(125)
|
Loss before tax
|
|
(4,489)
|
(9,447)
|
Income
tax credit/(expense)
|
|
489
|
(36)
|
Loss for the year
attributable to the equity holders of the parent company
|
|
(4,000)
|
(9,483)
|
Other comprehensive
income
|
|
|
|
Items
which will or may be reclassified to profit or loss:
|
|
|
|
Exchange
gain on translation of foreign operations
|
|
215
|
3,659
|
Total comprehensive loss for
the year attributable to the equity holders of the parent
company
|
|
(3,785)
|
(5,824)
|
Basic and diluted loss per
share
|
6
|
$(0.01)
|
$(0.03)
|
The accompanying notes are an integral part of these
condensed consolidated financial statements
Consolidated statement of financial position
at 31 December 2023
Note
|
2023
$'000
|
202
$'000
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
7
|
2,331
|
1,620
|
Property,
plant and equipment
|
8
|
528
|
644
|
Right-of-use assets
|
|
661
|
586
|
Other
receivables
|
9
|
813
|
146
|
Total
non-current assets
|
|
4,333
|
2,996
|
Current assets
|
|
|
|
Inventories
|
|
2,997
|
3,371
|
Trade and
other receivables
|
9
|
4,048
|
1,801
|
Cash and
cash equivalents
|
|
2,111
|
5,656
|
Total
current assets
|
|
9,156
|
10,828
|
Total assets
|
|
13,489
|
13,824
|
Liabilities
|
|
|
|
Current liabilities
|
|
|
|
Trade and
other payables
|
|
2,106
|
3,235
|
Borrowings
|
|
269
|
55
|
Lease
liabilities
|
|
633
|
437
|
Total
current liabilities
|
|
3,008
|
3,727
|
Non-current liabilities
|
|
|
|
Borrowings
|
|
210
|
215
|
Lease
liabilities
|
|
46
|
192
|
Total
non-current liabilities
|
|
256
|
407
|
Total liabilities
|
|
3,264
|
4,134
|
Total net assets
|
|
10,225
|
9,690
|
Share
capital
|
|
4,789
|
4,352
|
Share
premium
|
|
103,734
|
100,859
|
Foreign
exchange reserve
|
|
3,070
|
2,856
|
Accumulated deficit
|
|
(101,368)
|
(98,377)
|
Total equity
|
|
10,225
|
9,690
|
|
|
|
| |
The accompanying notes are an integral part of these
condensed consolidated financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2023
|
|
Share capital
$'000
|
Share premium
$'000
|
Foreign exchange reserve
$'000
|
Accumulated
deficit
$'000
|
Total
$'000
|
Balance at 1 January
2022
|
|
4,326
|
100,859
|
(803)
|
(90,024)
|
14,358
|
Loss for
the year
|
|
-
|
-
|
-
|
(9,483)
|
(9,483)
|
Exchange
difference arising on translation of foreign operations
|
|
-
|
-
|
3,659
|
-
|
3,659
|
Total
comprehensive loss
|
|
-
|
-
|
3,659
|
(9,483)
|
(5,824)
|
Shares
issued net of issue costs
|
|
26
|
-
|
-
|
-
|
26
|
Share-based payments
|
|
-
|
-
|
-
|
1,130
|
1,130
|
Balance at 31 December
2022
|
|
4,352
|
100,859
|
2,856
|
(98,377)
|
9,690
|
Loss for
the year
|
|
-
|
-
|
-
|
(4,000)
|
(4,000)
|
Exchange
difference arising on translation of foreign operations
|
|
-
|
-
|
214
|
-
|
214
|
Total
comprehensive income/(loss)
|
|
-
|
-
|
214
|
(4,000)
|
(3,786)
|
Shares
issued net of issue costs
|
|
437
|
2,875
|
-
|
-
|
3,312
|
Share-based payments
|
|
-
|
-
|
-
|
1,009
|
1,009
|
Balance at 31 December
2023
|
|
4,789
|
103,734
|
3,070
|
(101,368)
|
10,225
|
|
|
|
|
|
|
| |
The accompanying notes are an integral part of these
condensed consolidated financial statements
Consolidated statement of cash flows
for the year ended 31 December 2023
|
Note
|
2023
$'000
|
2022
$'000
|
Cash flows from operating
activities
|
|
|
|
Loss for
the year
|
|
(4,000)
|
(9,483)
|
Adjustments for:
|
|
|
|
Depreciation
|
8
|
214
|
212
|
Depreciation of right-of-use assets
|
|
503
|
454
|
Amortisation of intangibles
|
7
|
-
|
2
|
Share-based payment expense
|
|
1,009
|
1,130
|
Finance
income
|
|
(161)
|
(113)
|
Finance
expense
|
|
79
|
197
|
Net loss
on investment
|
|
-
|
125
|
Foreign
exchange loss/(gain)
|
|
(25)
|
3,754
|
Income
taxes credit
|
|
183
|
36
|
Bad debt
expense
|
|
64
|
(32)
|
Loss of
disposal of fixed asset
|
|
1
|
-
|
(Increase)/decrease in trade and other receivables
|
|
(2,801)
|
1,602
|
Decrease/(increase) in inventories
|
|
529
|
(1,227)
|
(Decrease)/increase in trade and other payables
|
|
(1,262)
|
457
|
Income
taxes (paid)/ received
|
|
(183)
|
172
|
Net cash used in operating
activities
|
|
(5,850)
|
(2,714)
|
Investing activities
|
|
|
|
Purchase
of property, plant and equipment
|
8
|
(85)
|
(133)
|
Sale of
property, plant and equipment
|
8
|
-
|
1
|
Finance
income
|
|
161
|
113
|
Sale of
investments
|
|
-
|
8,032
|
Investments in intangible assets
|
|
(711)
|
-
|
Net cash (used in)/ provided
by investing activities
|
|
(635)
|
8,013
|
Financing activities
|
|
|
|
Finance
expense
|
|
(42)
|
(148)
|
Payment
of lease liability
|
|
(555)
|
(497)
|
Issue of
ordinary share capital
|
|
3,311
|
-
|
Exercise
of options
|
|
-
|
26
|
Borrowings
|
|
195
|
18
|
Net cash provided by/ (used
in) financing activities
|
|
2,910
|
(601)
|
Net increase in cash and
cash equivalents
|
|
(3,575)
|
4,698
|
Cash and cash equivalents at
the beginning of period
|
|
5,656
|
1,005
|
Effects of exchange rates on
cash held
|
|
30
|
(47)
|
Cash and cash equivalents at
the end of the period
|
|
2,111
|
5,656
|
The accompanying notes are an integral part of these
condensed consolidated financial statements
Notes forming part of the Group financial
statements
for the year ended 31 December 2023
1. Basis of
preparation
These consolidated financial statements have been
prepared in accordance with UK adopted international accounting
standards and the provisions of the Companies Act 2006. The
financial information has been prepared on the historical cost
basis except that financial instruments are stated at the fair
value.
Amounts are rounded to the nearest thousand, unless
otherwise stated.
A number of other new standards, amendments and
interpretations to existing standards have been adopted by the
Group, but have not been listed, since they have no material impact
on the financial statements. None of the other new standards,
amendments and interpretations in issue but not yet effective are
expected to have a material effect on the financial statements.
Reporting
currency
While the functional currency of the parent company
is Sterling, the Group's financial statements have been presented
in US Dollars. The Directors believe this better reflects the
underlying nature of the business, primarily due to the USA being
the country whose competitive forces and regulations impact this
business. The exchange rates used for translation are as reported
below:
Rates as of 31 December
|
|
GBP
|
Mexican Peso
|
Euro
|
Reals
|
2022
|
1.2090
|
0.0513
|
1.0699
|
0.1891
|
2023
|
1.2730
|
0.0589
|
1.1036
|
0.2060
|
Average exchange rates
|
|
GBP
|
Mexican Peso
|
Euro
|
Reals
|
2022
|
1.2370
|
0.0497
|
1.0538
|
0.1939
|
23
|
1.2435
|
0.0564
|
1.0814
|
0.2003
|
Going concern
The Company is a holding entity
and as such their going concern is dependent on the Group therefore
the going concern assessment was performed as part of the Group's
assessment.
In assessing whether the going
concern basis is an appropriate basis for preparing the 2023 Annual
Report, the Directors have used actual results for the first four
months of 2024 and its detailed forecasts which take into account
its current and expected business activities, its cash and cash
equivalents balance and investments of $2.1 million as shown in its
balance sheet at 31 December 2023, the principal risks and
uncertainties the Group faces and other factors impacting the
Group's future performance.
The Directors have prepared a base
case cash forecast that shows we will be able to operate within our
existing facilities (including the financing secured after the
year-end) for the foreseeable future of at least a year from the
date of the approval of these financial statements. The
Directors have modeled a variety of possible cash flow forecasts
for the twelve months from the date of the approval of the
financial statements.
The Group's revenue projections
are based on detailed budgets built up by customer from each of the
Group's operating segments, and specifically includes growth
assumptions in the U.S. to reverse the decline experienced in 2023.
The Group's base case shows a revenue increase of 39% in 2024 and
55% in the first half of 2025, which is an increase from the
overall decline in 2023 of 5% (which was caused by the distributors
managing their inventory levels in the U.S. market). The base case
growth rates projected for 2024 and 2025 are comparable to the 40%
and 28% overall growth rates achieved in 2022 and 2021
respectively, and the growth rates achieved in 2023 in the South
America and EMEAA regions during 2023 of 29% and 41%.
Experience has shown in the first
four months of 2024 that projected revenue has started to occur and
growth on 2023 has been achieved at a rate which has exceeded the
Directors budget, however this trend needs to continue through the
rest of 2024 and 2025, in line with the above to prevent any
liquidity issues. While the Group believes the projections are
achievable, there is inherent uncertainty in achieving budgeted
projections of growth which means the projections may not be
achieved.
In addition, the Group is
dependent on the debt due from its customers being settled in line
with forecasts. Further, the timing of cash inflows and outflows is
important and heightened in the 4th quarter of 2024 when
some large payments become due to working capital needs that could
lead to short-term liquidity issues in that period. Cost
savings are also projected in the model and may be difficult to
deliver in the current climate.
The Directors have identified
further cost savings, if necessary, to help mitigate the impact of
the above on cash outflows. Some of the costs saving measures
include further product cost reductions with its toll manufacturer,
scaling back the Group's PREtec program and reducing personnel in
all regions.
In the event of a need, the Group
may also be required to seek additional funding beyond the
facilities that are currently available to it through a placement
of shares or source other non-dilutive short-term funding, making
significant reductions in its fixed cost expenses or the potential
sale of the Group to secure the injection of funds into the
business.
In the reasonable and plausible
downturn scenario where revenue growth is 25% or below, the Group's
ability to fund its operations within current resources will be
impacted and further funding will be required which is not
guaranteed, this will have a direct impact on the Company's going
concern and as a result a material uncertainty exists, which may
cast significant doubt about the Group and Company's ability to
continue as going concern and therefore
they may be unable to realise their assets and discharge their
liabilities in the normal course of business.
However, the Directors consider
that the Group and Company will trade in a positive scenario and
therefore deem it to be appropriate to prepare the financial
statements on a going concern basis and the financial statements do
not include the adjustments that would be required if the Group and
Company were unable to continue as a going concern.
2. Critical accounting estimates and judgements
In preparing its financial
statements, the Group makes certain estimates and judgements
regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual
experience may differ from estimates and assumptions. The estimates
and judgements that have a risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Going
concern
The directors have adopted the
going concern basis in preparing the consolidated financial
statements, having carried out a going concern review. Given the
nature of the Group and the way in which business is managed, cash
flow forecasts have been prepared for the Group's three cash
generating segments and the PREtec research function. These forecasts
are considered by the directors to satisfy themselves that the
going concern assumptions are appropriate.
Impairment of
goodwill
The Group tests whether goodwill
has suffered any impairment on an annual basis. The recoverable
amount is determined based on value-in-use calculations. The use of
this method requires the estimation of future cash flows and the
choice of a discount rate in order to calculate the present value
of the cash flows. Actual outcomes may vary.
Impairment of intangible
assets (excluding goodwill)
At the end of the financial period,
the Group reviews the carrying amounts of its definite lived
intangible assets to determine whether there is any indication that
those assets have suffered any impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated
to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of
fair value less costs to sell and value in use. In assessing the
value in use, the estimated future cash flows are discounted to
their net present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset.
If the recoverable amount of an
asset is estimated to be less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable amount.
An impairment loss is recognised immediately within administrative
expenses in the consolidated statement of comprehensive
income.
Revenue
The Group recognises revenue at the
fair value of consideration received or receivable. Sales of goods
to external customers are at invoiced amounts less value-added tax
or local tax on sales. The Group currently generates revenue solely
within its Commercial business through the sale of its proprietary
and third-party products. When the Group makes product sales under
contracts/agreements these will frequently be inclusive of
rebate/support payments or a financing component where judgement
can be required in the assessment of the transaction
price.
Recoverability of trade
receivables
The Group applies both the
simplified and general approaches under IFRS 9 to measure expected
credit losses using a lifetime expected credit loss provision for
trade receivables. Under the simplified approach, expected credit
losses on a collective basis, trade receivables are grouped based
on credit risk and ageing. Given the Group has a low history of
default, limited judgement is required for trade receivables in
this grouping.
The Group then separately reviews
those receivables with payment terms over 180 days using the
general approach. Under this approach judgements are required in
the assessment of the risk and probability of credit losses and the
quantum of the loss in the event of a default.
The receivable balance at year-end
was higher than prior years due to amounts owed by two customers in
the Americas segment. The majority of this balance was paid by the
end of January 2024.
3. Revenue
Revenue
arises from
|
2023
$'000
|
2022
$'000
|
Proprietary products
|
8,652
|
8,927
|
Third-party products
|
2,554
|
2,840
|
Total
|
11,206
|
11,767
|
The following table gives an analysis of revenue
according to sales with payment terms of less than or more than 180
days.
Year to 31 December
2023
|
Sales contracts
with payment
terms less
than 180 days
|
Sales contracts with payment
terms greater than 180 days
|
Total
|
Segment
|
$'000
|
$'000
|
$'000
|
Mexico
|
3,494
|
-
|
3,494
|
Americas
|
5,819
|
-
|
5,819
|
Rest of
World
|
1,893
|
-
|
1,893
|
|
11,206
|
-
|
11,206
|
|
Sales contracts
with payment
terms less
than 180 days
|
Sales contracts with payment terms greater
than 180 days
|
Total
|
Timing of
transfer of goods
|
$'000
|
$'000
|
$'000
|
Point in
time (delivery to port of departure)
|
10,968
|
-
|
10,968
|
Point in
time (delivery to port of arrival)
|
238
|
-
|
238
|
|
11,206
|
-
|
11,206
|
Year to 31 December
2022
|
Sales contracts
with payment
terms less
than 180 days
|
Sales contracts with payment
terms greater than 180 days
|
Total
|
Segment
|
$'000
|
$'000
|
$'000
|
Mexico
|
3,364
|
-
|
3,364
|
Americas
|
5,988
|
1,071
|
7,059
|
Rest of
World
|
1,344
|
-
|
1,344
|
|
10,696
|
1,071
|
11,767
|
|
Sales contracts with payment
terms less
than 180 days
|
Sales contracts with payment
terms greater
than 180 days
|
Total
|
Timing of
transfer of goods
|
$'000
|
$'000
|
$'000
|
Point in
time (delivery to port of departure)
|
10,320
|
1,071
|
11,391
|
Point in
time (delivery to port of arrival)
|
376
|
-
|
376
|
|
10,696
|
1,071
|
11,767
|
4. Operating loss
|
Note
|
2023
$'000
|
2022
$'000
|
Operating
loss is arrived at after charging/(crediting):
|
|
|
|
Share-based payment charge
|
|
1,009
|
1,130
|
Depreciation
|
8
|
214
|
212
|
Depreciation of right-of-use assets
|
|
511
|
454
|
Amortisation of intangibles
|
7
|
-
|
2
|
Operating
lease expense
|
|
73
|
68
|
Loss on
disposal of property, plant and equipment
|
|
1
|
-
|
Impairment of trade receivables
|
|
24
|
(41)
|
Foreign
exchanges (gains)/ losses
|
|
(25)
|
3,754
|
Auditor's
remuneration:
|
|
|
|
Amounts
for audit of parent company and consolidation
|
|
140
|
120
|
Amounts
for audit of subsidiaries
|
|
85
|
80
|
Total
auditor's remuneration
|
|
225
|
200
|
5. Segment information
The Group's CODM views, manages and operates
the Group's business segments according to its strategic business
focuses - Commercial and PREtec. The CODM further analyses the
results and operations of the Group's Commercial business on a
geographical basis; therefore the Group has presented separate
geographic segments within its Commercial business as follows:
Commercial - Americas (North and South America, other than Mexico);
Commercial - Mexico; and Commercial - Rest of World. The Rest of
World segment includes the results of the United Kingdom and
Spanish subsidiaries, which together operate across Europe and
South Africa. The Group's Commercial segments are focused on the
sale of biological products and are the Group's only revenue
generating segments. The Group's PREtec segment is focused on the research
and development of the Group's PREtec platform.
Below is information regarding the Group's segment
loss information for the year ended:
2023
|
Americas
$'000
|
Mexico
$'000
|
Rest of World
$'000
|
Eliminations
$'000
|
Total Commercial
$'000
|
PREtec
R&D
$'000
|
Total
$'000
|
Revenue*
|
|
|
|
|
|
|
|
Proprietary product sales
|
5,809
|
964
|
1,892
|
-
|
8,665
|
-
|
8,665
|
Third-party product sales
|
10
|
2,530
|
1
|
-
|
2,541
|
-
|
2,541
|
Inter-segment product sales
|
1,776
|
-
|
265
|
(2,041)
|
-
|
-
|
-
|
Total revenue
|
7,595
|
3,494
|
2,158
|
(2,041)
|
11,206
|
-
|
11,206
|
Cost of
sales
|
(3,710)
|
(1,856)
|
(916)
|
2,041
|
(4,441)
|
-
|
(4,441)
|
Research
and development
|
-
|
-
|
--
|
-
|
-
|
(1,990)
|
(1,990)
|
Sales and
marketing
|
(2,418)
|
(969)
|
(894)
|
-
|
(4,281)
|
(110)
|
(4,391)
|
Administration
|
(1,226)
|
(380)
|
(111)
|
-
|
(1,717)
|
(183)
|
(1,900)
|
Non-cash
expenses:
|
|
|
|
|
|
|
|
Depreciation
|
(188)
|
(90)
|
(27)
|
-
|
(305)
|
(421)
|
(726)
|
Amortisation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Share-based payment
|
(152)
|
(2)
|
(48)
|
-
|
(202)
|
(466)
|
(668)
|
Segment operating
(loss)/profit
|
(99)
|
197
|
162
|
-
|
260
|
(3,170)
|
(2,910)
|
Corporate
expenses:**
|
|
|
|
|
|
|
|
Wages and
professional fees
|
|
|
|
|
|
|
(1,605)
|
Administration***
|
|
|
|
|
|
|
(56)
|
Operating
loss
|
|
|
|
|
|
|
(4,571)
|
Finance
income
|
|
|
|
|
|
|
161
|
Finance
expense
|
|
|
|
|
|
|
(79)
|
Loss before
tax
|
|
|
|
|
|
|
(4,489)
|
* Revenue from one customer within the Americas
segment totalled $1,395,000 or 12% of Group revenues.
Revenue from one customer within the Americas
segment totalled $2,075,000 or 19% of Group revenues.
Revenue from one customer within Mexico segment
totalled $1,366,000 or 12% of Group revenues.
** These amounts represent public company expenses
for which there is no reasonable basis by which to allocate the
amounts across the Group's segments.
*** Includes net share-based payment expense of
$342,000 attributed to corporate employees who are not directly
affiliated with any of the Commercial or PREtec segments.
The PREtec
segment relates to research and development activities only.
Other
segment information
|
Americas
$'000
|
Mexico
$'000
|
Rest of World
$'000
|
Eliminations
$'000
|
Total Commercial
$'000
|
PREtec
R&D
$'000
|
Total
$'000
|
Segment
assets
|
8,261
|
2,370
|
1,439
|
-
|
12,070
|
748
|
12,818
|
Segment
liabilities
|
1,820
|
324
|
566
|
-
|
2,710
|
555
|
3,265
|
Capital
expenditure
|
54
|
44
|
2
|
-
|
100
|
-
|
100
|
2022
|
Americas
$'000
|
Mexico
$'000
|
Rest of World
$'000
|
Eliminations
$'000
|
Total Commercial
$'000
|
PREtec
$'000
|
Total
$'000
|
Revenue*
|
|
|
|
|
|
|
|
Proprietary product sales
|
7,038
|
566
|
1,343
|
-
|
8,947
|
-
|
8,947
|
Third-party product sales
|
22
|
2,798
|
-
|
-
|
2,820
|
-
|
2,820
|
Inter-segment product sales
|
1,590
|
--
|
-
|
(1,590)
|
-
|
-
|
-
|
Total revenue
|
8,650
|
3,364
|
1,343
|
(1,590)
|
11,767
|
-
|
11,767
|
Cost of
sales
|
(3,989)
|
(1,760)
|
(437)
|
1,590
|
(4,596)
|
-
|
(4,596)
|
Research
and development
|
-
|
-
|
-
|
-
|
-
|
(2,481)
|
(2,481)
|
Sales and
marketing
|
(2,596)
|
(837)
|
(852)
|
-
|
(4,283)
|
(273)
|
(4,558)
|
Administration
|
(1,361)
|
(304)
|
(86)
|
-
|
(1,751)
|
(297)
|
(2,048)
|
Non-cash
expenses:
|
|
|
|
|
|
|
|
Depreciation
|
(175)
|
(80)
|
(18)
|
-
|
(273)
|
(393)
|
(666)
|
Amortisation
|
-
|
-
|
(2)
|
-
|
(2)
|
-
|
(2)
|
Share-based payment
|
(207)
|
-
|
(57)
|
-
|
(264)
|
(540)
|
(804)
|
Segment operating
(loss)/profit
|
322
|
383
|
(109)
|
-
|
596
|
(3,984)
|
(3,388)
|
Corporate
expenses:**
|
|
|
|
|
|
|
|
Wages and
professional fees
|
|
|
|
|
|
|
(2,004)
|
Administration***
|
|
|
|
|
|
|
(3,846)
|
Operating loss
|
|
|
|
|
|
|
(9,238)
|
Finance
income
|
|
|
|
|
|
|
56
|
Finance
expense
|
|
|
|
|
|
|
(265)
|
Loss before tax
|
|
|
|
|
|
|
(6,415)
|
* Revenue from one customer within
the Americas segment totalled $3,165,000, or 27% of Group
revenues.
Revenue from one customer within
the Americas segment totalled $1,420,000, or 12% of Group
revenues.
Revenue from one customer within
the Americas segment totalled $1,225,000, or 10% of Group
revenues.
** These amounts represent public
company expenses for which there is no reasonable basis by which to
allocate the amounts across the Group's segments.
*** Includes net share-based
payment expense of $327,000 attributed to corporate employees who
are not directly affiliated with any of the Commercial or
PREtec
segments.
Other
segment information
|
Americas
$'000
|
Mexico
$'000
|
Rest of World
$'000
|
Eliminations
$'000
|
Total Commercial
$'000
|
PREtec
$'000
|
Total
$'000
|
Segment
assets
|
9,936
|
2,474
|
803
|
-
|
13,213
|
614
|
13,827
|
Segment
liabilities
|
2,620
|
588
|
389
|
-
|
3,597
|
540
|
4,137
|
Capital
expenditure
|
127
|
28
|
-
|
-
|
155
|
-
|
155
|
Geographic information
The Group operates in five principal countries - the
United Kingdom (country of domicile), the USA, Mexico, Spain and
Brazil.
The Group's revenues from customers by location of
operation are detailed below:
Year ended 31
December 2023
|
Year ended 31 December 2022
|
|
|
Amount
$'000
|
%
|
Amount
$'000
|
%
|
United
Kingdom
|
534
|
5
|
269
|
2
|
United
States
|
2,634
|
24
|
4,817
|
41
|
Mexico
|
3,493
|
31
|
3,364
|
29
|
Spain
|
1,359
|
12
|
1,074
|
9
|
Brazil
|
3,186
|
28
|
2,243
|
19
|
Total
|
11,206
|
100
|
11,767
|
100
|
|
|
|
|
|
| |
The Group's non-current assets by location of assets
are detailed below:
Year ended
31 December 2023
|
Year ended
31 December 2022
|
|
|
Amount
$'000
|
%
|
Amount
$'000
|
%
|
United
Kingdom
|
-
|
-
|
1
|
-
|
|
United
States
|
3,377
|
92
|
2,653
|
89
|
|
Mexico
|
183
|
5
|
226
|
8
|
|
Spain
|
71
|
2
|
72
|
2
|
|
Brazil
|
31
|
1
|
44
|
1
|
|
Total
|
3,662
|
100
|
2,996
|
100
|
|
|
|
|
|
|
|
|
| |
6. Loss per share
Basic loss per ordinary share has
been calculated on the basis of the loss for the year of $4,000,000
(2022: loss of $9,483,000) and the weighted average number of
shares in issue during the period of 325,587,344 (2022:
305,148,646).
Equity instruments of 39,496,053
(2022: 36,006,306), which include share options, and the 2017
Employee Share Option Plan, could potentially dilute basic earnings
per share in the future have been considered but not included in
the calculation of diluted earnings per share because they are
anti-dilutive for the periods presented. This is due to the Group
incurring a loss on operations for the year.
7. Intangible
assets
|
Capitalised
Development Costs
$'000
|
Goodwill
$'000
|
Licences and registrations
$'000
|
Trade name
and customer relationships
$'000
|
Total
$'000
|
Cost
|
|
|
|
|
|
Balance at 1 January
2022
|
-
|
1,620
|
3,342
|
159
|
5,121
|
Additions
- externally acquired
|
-
|
-
|
-
|
-
|
-
|
Balance at 31 December
2022
|
-
|
1,620
|
3,342
|
159
|
5,121
|
Additions
- externally acquired
|
711
|
-
|
-
|
-
|
711
|
Balance at 31 December
2023
|
-
|
1,620
|
3,342
|
159
|
5,832
|
Accumulated amortisation
|
|
|
|
|
|
Balance at 1 January
2022
|
-
|
-
|
3,337
|
159
|
3,496
|
Amortisation charge for the year
|
-
|
-
|
3
|
-
|
3
|
Balance at 31 December
2022
|
-
|
-
|
3,340
|
159
|
3,499
|
Amortisation charge for the year
|
-
|
-
|
2
|
-
|
2
|
Balance at 31 December
2023
|
-
|
-
|
3,342
|
159
|
3,501
|
Net book value
|
-
|
|
|
|
|
At 31 December 2022
|
-
|
1,620
|
-
|
-
|
1,620
|
At 31 December 2023
|
711
|
1,620
|
-
|
-
|
2,331
|
The intangible asset balances have been tested for
impairment using discounted budgeted cash flows of the relevant
cash generating units. For the years ended 31 December 2022 and
2023, cash flows are projected over a five-year period with a
residual growth rate assumed at 0%. For the years ended 31 December
2022 and 2023, a pre-tax discount factor of 15.2% and 15.2% has
been used over the forecast period.
Capitalised Development Costs
Internally generated costs includes personnel, field
trials and study costs relating to products that have been, or are
being developed by the Group.
$711,000 (2022: nil) of development costs relate to
assets under development for which no amortisation has been charged
in 2023 or 2022.
Goodwill
Goodwill comprises of a net book value of $1,432,000
related to the 2007 acquisition of the assets of Eden Bioscience
and $188,000 related to an acquisition of VAMTech LLC in 2004. The
entire amount is allocated to Harpinαβ, a cash generating unit
within the Commercial - Americas segment. No impairment charge is
considered necessary, and no reasonable possible change in key
assumptions used would lead to an impairment in the carrying value
of goodwill.
An annual impairment review is undertaken by the
Board of Directors. The Directors have considered the progress of
the business in the current year, including a review of the
potential market for its products, the progress the Group has made
in registering its products and the key commercial factors to
assess the review.
The Directors have estimated the recoverable amount
of the CGU using a value-in-use calculation, which assumes a
turnaround in the performance of Harpinαβ in North America and
continued growth of the product in other regions.
Licences
and registrations
These amounts represent the cost of licences and
registrations acquired in order to market and sell the Group's
products internationally across a wide geography. These amounts are
amortised evenly according to the straight-line method over the
term of the licence or registration. Impairment is reviewed and
tested according to the method expressed above. Licences and
registrations have a weighted average remaining amortisation period
of nil. No impairment charge is considered necessary, and no
reasonable possible change in key assumptions used would lead to an
impairment in the carrying value of licences and registrations.
8. Property, plant and equipment
|
Office
and facility
equipment
$'000
|
Leasehold improvements
$'000
|
Vehicles
$'000
|
Total
$'000
|
Cost
|
|
|
|
|
Balance at 1 January
2022
|
1,647
|
864
|
506
|
3,017
|
Additions
|
85
|
-
|
69
|
154
|
Disposals
|
(1)
|
-
|
-
|
(1)
|
Balance at 31 December
2022
|
1,731
|
864
|
575
|
3,170
|
Additions
|
14
|
3
|
83
|
100
|
Disposals
|
(2)
|
-
|
-
|
(2)
|
Balance at 31 December
2023
|
1,743
|
867
|
658
|
3,268
|
Accumulated depreciation
|
|
|
|
|
Balance at 1 January
2022
|
1,173
|
821
|
305
|
2,299
|
Depreciation charge for the year
|
136
|
11
|
81
|
228
|
Disposals
|
(1)
|
-
|
-
|
(1)
|
Balance at 31 December
2022
|
1,308
|
832
|
386
|
2,526
|
Depreciation charge for the year
|
144
|
1
|
71
|
216
|
Disposals
|
(2)
|
-
|
-
|
(2)
|
Balance at 31 December
2023
|
1,450
|
833
|
457
|
2,740
|
Net book value
|
|
|
|
|
At 31 December 2022
|
423
|
32
|
189
|
644
|
At 31 December 2023
|
293
|
34
|
201
|
528
|
9. Trade and other receivables
|
2023
$'000
|
2022
$'000
|
Current
|
|
|
Trade
receivables
|
3,375
|
1,459
|
Less:
provision for impairment
|
(114)
|
(90)
|
Trade
receivables, net
|
3,261
|
1,369
|
Other
receivables and prepayments
|
787
|
432
|
Current
trade and other receivables
|
4,048
|
1,801
|
Non-current
|
|
|
Trade
receivables
|
-
|
-
|
Less:
provision for impairment
|
-
|
-
|
Trade
receivables, net
|
-
|
-
|
Other
receivables
|
58
|
58
|
Deferred
tax asset
|
755
|
88
|
Non-current other receivables
|
813
|
146
|
|
4,861
|
1,947
|
The trade receivable current balance represents
trade receivables with a due date for collection within a one-year
period. The other receivable non-current balance represents
lease deposits.
The Group applies the IFRS 9 simplified approach to
measuring expected credit losses for sales contracts with 180 days
or fewer payment terms. To measure expected credit losses on a
collective basis, trade receivables and contract assets are grouped
based on similar credit risk and ageing. The expected loss rates
are based on the ageing of the receivable, past experience of
credit losses with customers and forward-looking information. An
allowance for a receivable's estimated lifetime expected credit
losses is first recorded when the receivable is initially
recognised, and subsequently adjusted to reflect changes in credit
risk until the balance is collected. In the event that management
considers that a receivable cannot be collected, the balance is
written off.
Sales contract receivables provided on terms greater
than 180 days are at first discounted to recognise the financing
component of the transaction and then assessed using the "general
approach". Under this approach, the Group models and probability
weights a number of scenarios based on their assessment of the
credit risk and historical expected losses.
31 December 2023
|
Considered
under the simplified
approach
$'000
|
Considered under
the general approach
$'000
|
Trade
receivables
|
2,775
|
600
|
Expected
credit loss assessed
|
(30)
|
(83)
|
|
2,745
|
517
|
31 December 2022
|
Considered
under the simplified
approach
$'000
|
Considered under
the general approach
$'000
|
Trade
receivables
|
1,459
|
-
|
Expected
credit loss assessed
|
(90)
|
-
|
|
1,369
|
-
|
The receivables considered under the general
approach relate to one customer in the Americas segment and one
customer in the Rest of World segment. The key considerations in
the assessment of the provision were the probability of default,
expected loss in the event of default and the exposure at the point
of default.
The maximum exposure to credit risk at the reporting
date is the fair value of each class of receivables set out
above.
Movements on the provision for impairment of trade
receivables are as follows:
|
2023
$'000
|
2022
$'000
|
Balance
at the beginning of the year
|
90
|
132
|
Provided
|
114
|
-
|
Receivables written off as uncollectible
|
-
|
-
|
Unused
amounts reversed
|
(90)
|
(41)
|
Foreign
exchange
|
-
|
(1)
|
Balance
at the end of the year
|
114
|
90
|
The net value of trade receivables for which a
provision for impairment has been made is $0.6 million (2022: $0.1
million).
The following is an analysis of the Group's trade
receivables, both current and past due, identifying the totals of
trade receivables which are not yet due and those which are past
due but not impaired.
|
2023
$'000
|
2022
$'000
|
Current
|
2,624
|
1,311
|
Past
due:
|
|
|
Up to 30
days
|
159
|
17
|
31 to 60
days
|
-
|
-
|
61 to 90
days
|
58
|
-
|
Greater
than 90 days
|
420
|
41
|
Total
|
3,261
|
1,369
|
10. Cautionary statement
This document contains certain forward-looking
statements relating to Plant Health Care plc (the "Group"). The
Group considers any statements that are not historical facts as
"forward-looking statements". They relate to events and trends that
are subject to risk and uncertainty that may cause actual results
and the financial performance of the Group to differ materially
from those contained in any forward-looking statement. These
statements are made by the Directors in good faith based on
information available to them and such statements should be treated
with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such
forward-looking information.