Plant Health Care (LON:PHC), a leading provider of novel patent-protected biological products to global agriculture markets, today announced its unaudited interim results for the six months ended 30 June 2019.
Financial Highlights
– Revenue for the six months ended 30 June 2019 was $2.7 million (2018: $3.0 million); a first-half order of $0.5 million for Brazil fell into July due to import licence delays.
– Cash outflows decreased 35% to $2.9 million (2018: $4.4 million).
– Adjusted LBITDA* improved to $4.2 million (2018: $5.6 million).
– The Company had cash reserves of $1.4 million as at 30 June 2019.
Operational Highlights
– Sales orders were up 10% at $3.3 million (2018: $3.0 million), despite challenging market conditions.
– Excluding Brazil, sales were up 4% at $2.7 million (2018: $2.6 million).
– Harpin 𝜶β is delivering exceptional results in both Brazil sugar cane and US corn despite the difficult market environment.
– Trials with the Group’s PREtec peptides continue to show strong results, in Brazil soybeans and in a range of crops in the US and EU.
– The Group has made good progress towards preparing for direct sales of PREtec peptides, targeting markets worth more than $5 billion. Registration is progressing and production of PREtec peptides is now scaling up from laboratory to pilot scale.
Commercial Business
The success of Harpin 𝜶β has encouraged the Company to rebalance its resources to focus on accelerating the rate of profitable organic growth in the commercial business.
The Commercial business is forecast to be profitable and cash generative in 2019, with profitable growth continuing in future years. The Board is committed to achieving cash breakeven within existing resources and will take the necessary steps to achieve it.
PREtec
Trials with the Group’s first PREtec peptide (PHC279) as a seed treatment in Brazil soybeans, showed up to 45% improved control of Asian Soybean Rust (ASR) and up to 16% yield increase. These compelling results have attracted material interest from growers and distributors.
Projected production costs of PREtec peptides are lower than previously anticipated, and we have robust commercial formulations. The Company is now progressing through a well-established process to register and sell directly into major markets where the total value of opportunity is c$5 billion.
Following a review by the Board, the Company will rebalance its resources to prioritise profitable growth from the Commercial business. As a consequence, the resources applied to R&D, registration and launch of new products will be reset to achieve their goals within our financial means. The Company will continue to explore opportunities to fund the development of the PREtec peptides.
Board changes
As part of this review the Company is strengthening the Board with changes aimed at improving execution of the strategy; Richard Webb will become Non-Executive Chairman, while Chris Richards will become CEO to focus on operational delivery, with effect from October 1st, 2019.
In parallel, Michael Higgins, Audit Committee Chair and Senior Independent Director, will stand down from the Board on September 30th. We are at an advanced stage of appointing a successor to Michael, with details to be announced in due course. Until then, interim arrangements include the appointment of Bill Lewis to serve as Interim Audit Committee Chair.
Dr Christopher Richards, Executive Chairman and Interim CEO, commented:
“I am delighted with the progress Plant Health Care has made during the first half of 2019. The Group’s Commercial business is forecast to generate a material EBITDA in 2019, for the first time. The substantial benefits of Harpin 𝜶β to growers are now abundantly clear.
We are confident of achieving material revenue growth in 2019 despite macro-level market-driven challenges, although revenue will be slightly lower than previous expectations.
Finally, I would like to express my thanks to Michael Higgins for his outstanding work on the Plant Health Care Board over the past six years.”
*LBITDA: loss before interest, tax, depreciation, amortisation, shared-based payments and intercompany currency adjustments.
