REG - Plant Health Care - Full Year Results
31/05/2024 17:15
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RNS Number : 7249Q Plant Health Care PLC 31 May 2024
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 Obrona(TM) 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-
(https://www.planthealthcare.com/investors/financial-reports-and-investor-presentations)
reports-and-investor-presentations
(https://www.planthealthcare.com/investors/financial-reports-and-investor-presentations)
)
(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 (mailto: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 Obrona(TM).
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 2022
$'000 $'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 2022
$'000 $'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 4(th) 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 2022
$'000 $'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 (3,785)
the parent company
(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 202
$'000 $'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 Share premium Foreign exchange reserve Accumulated
$'000 $'000 $'000 deficit Total
$'000 $'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 2022
$'000 $'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 - 1
8
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 4(th) 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 2022
$'000 $'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 Sales contracts with payment
with payment
terms greater than 180 days
terms less
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 Sales contracts with payment terms greater
with payment
terms less than 180 days
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 Sales contracts with payment
with payment
terms greater than 180 days
terms less
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 Sales contracts
with payment with payment terms greater
terms less
than 180 days
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 2022
$'000 $'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:
Americas Mexico Rest of World Eliminations Total Commercial PREtec Total
2023 $'000 $'000 $'000 $'000 $'000 R&D $'000
$'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.
Americas Mexico Rest of World Eliminations Total Commercial PREtec Total
Other segment information $'000 $'000 $'000 $'000 $'000 R&D $'000
$'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
Americas Mexico Rest of World Eliminations Total Commercial PREtec Total
2022 $'000 $'000 $'000 $'000 $'000 $'000 $'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.
Americas Mexico Rest of World Eliminations Total Commercial PREtec Total
Other segment information $'000 $'000 $'000 $'000 $'000 $'000 $'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 Year ended
31 December 2023 31 December 2022
Amount % Amount %
$'000 $'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 Year ended
31 December 2023 31 December 2022
Amount % Amount %
$'000 $'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 Goodwill Licences and registrations Trade name
Development Costs $'000 $'000 and customer relationships Total
$'000 $'000 $'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 Leasehold improvements
and facility $'000 Vehicles Total
equipment
$'000 $'000
$'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 2022
$'000 $'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.
Considered Considered under
under the simplified the general approach
31 December 2023 approach $'000
$'000
Trade receivables 2,775 600
Expected credit loss assessed (30) (83)
2,745 517
Considered Considered under
under the simplified the general approach
31 December 2022 approach $'000
$'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 2022
$'000 $'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 2022
$'000 $'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.
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. END FR FLFIRELILVISRecent news on Plant Health Care
See all newsREG - Cavendish Securities Plant Health Care - Form 8.5 (EPT/NON-RI)
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AnnouncementREG - Cavendish Securities Plant Health Care - Form 8.5 (EPT/NON-RI)
AnnouncementREG - Cavendish Securities Plant Health Care - Form 8.5 (EPT/NON-RI) - Plant Health Care PLC
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