Half Year Results

Plant Health Care PLC 24 September 2007 Embargoed until 7.01 24 September 2007 PLANT HEALTH CARE PLC ('Plant Health Care' or 'the Company') Interim results for the six months ended 30 June 2007 Plant Health Care, (AIM: PHC.L), a leading provider of natural products for plants and soil, announces interim results for the six months ended 30 June 2007. Highlights * Revenue up 68% to $8.4 million (2006: $5.0 million) * Gross margin remains in line at 46% (2006:46.6%) * In January 2007 Plant Health Care entered into an agreement with Bayer CropScience for the development of Myconate with upfront and milestone payments * The Company is now in discussions with four of the world's largest crop science companies re: further supply agreements for both Myconate and Harpin * The Board is confident of making further significant progress in 2007 and of securing further upfront and milestone payments in connection with Myconate and Harpin supply agreements within the next six months * In February 2007, the Company acquired the business assets of Eden Bioscience Corporation and with it the rights to the Harpin technology * Very encouraging Myconate test results in Mexico on a variety of crops demonstrating yield improvements ranging from 16% to 23% Commenting on the results, Chief Executive John Brady said: 'We believe that we are exceptionally well positioned today to take advantage of the continuing worldwide demands for both improved agricultural efficiency and greater environmental care. The inevitable global demand for 'energy crops' will further underpin the Company's commercial position and further drive demand for natural, yield enhancing products. The drivers of our business are stronger than ever and the future for Plant Health Care remains very exciting. We look forward to the future with confidence.' Plant Heath Care plc John Brady, Chief Executive 26-28 September Tel: 020 7920 3150 Therafter: 001 603 525 3702 Evolution Securities Limited Tim Worlledge/ Tim Redfern Tel: 020 7071 4300 Tavistock Communications Jeremy Carey/Matt Ridsdale Tel: 020 7920 3150 Notes to editors Plant Heath Care was established in 1995 in Pittsburgh (Pennsylvania) in the United States. Its products are aimed at the agriculture, commercial landscaping and land reclamation industries, through both direct sales and supply and distribution agreements with major agrichemical industry partners. Plant Health Care's products create both environmental and economic benefits for our customers and capitalise upon long-term trends towards natural systems and biological products to provide plant health and growth. Interim results for the six months ended 30 June 2007 Chairman and Chief Executive's Statement Introduction The first half of 2007 saw growing demand for our natural products with, in particular, strong sales in our newly formed US agriculture business. This resulted in a 68% increase in revenue compared with the first half of 2006. We have also invested heavily in the development and marketing of Myconate and Harpin, as we seek to achieve market momentum for these products. In January 2007, we signed our first major development and commercialisation agreement for Myconate with Bayer CropScience AG, one of the world's leading innovative crop science companies. This validates the Board's belief in Myconate's potential and represents a key milestone in the development of Plant Health Care. The agreement, for the use of Myconate for application as a seed treatment on corn, soybean, cotton and sunflower, will extend for up to ten years. The acquisition of the business assets of Eden Bioscience Corporation ('Eden') was completed on 26 February 2007, following the approval of the sale by Eden's shareholders. This acquisition brought with it, products to aid the development of our newly formed US Agriculture division and the exclusive rights to Harpin, a patented natural technology that presents an exciting commercial opportunity both on a standalone basis and for supply in conjunction with Myconate. The addition of the Harpin line of products including N-Hibit and ProAct, is expected to contribute approximately $2.4 million of product sales during 2007. For both Myconate and Harpin, Plant Health Care is now in discussions regarding further supply agreements with four of the world's largest crop science companies, so as to respond to their demand for sustainable solutions to crop yield enhancement. Summary of Financial Results Revenue for the six months ended 30 June 2007 was $8.4 million (2006: $5.0 million), producing a gross profit of $3.8 million (2006: $2.3 million) and a loss before tax of $2.9 million (2006: loss of $2.3 million). The 68% increase in revenue includes a modest amount of fees from partnership agreements but the growth in sales was primarily due to the newly formed US Agriculture division. There was also strong growth in our Mexican (+48%) and European (+27%) businesses. Gross margins for the period were flat at 46% (2006: 46.6%). In the US Agriculture division, the new N-Hibit product acquired from Eden generated healthy margins of more than 60% but logistical teething problems on initial shipments of Organic Plant Food ('OPF') from Europe resulted in a significant reduction in margins. The administrative expenses of $6.7 million (2006: $4.5 million) included $1.6 million spent on the development, sales and marketing of Myconate and Harpin, $0.2 million on severance payments and $0.2 million on providing in full against the Company's rental exposure on its former manufacturing facility near Pittsburgh. This resulted in a net operating loss of $2.8 million (2006: $2.1 million). The net cash position (cash and short term investments less borrowings on our working capital credit facility) at the end of June 2007 was $1.2 million, with trade receivables standing at $7.6 million. Since the period end, the cash balance has increased to $2.0 million and trade receivables have reduced to $5.2 million. The early order programmes undertaken at the end of 2006 and early in 2007 were extremely successful in generating sales but did create high levels of receivables for the first half of the year. The Board believes that this programme played a significant part in getting the Company's products into the market. The Company intends to repeat the programme this year and already has in place credit facilities to fund the programme. Operational Review Agriculture Division Sales in our newly formed US Agriculture division were $2.4 million (2006: nil), driven by our new sales team, a number of whom came across from Eden Bioscience. The extreme drought conditions in part of the southeast prevented us reaching our target sales for the period, but nevertheless we were pleased with our first Spring season in the market. The sales team provides us with an important foothold in the US agriculture market and we expect the acquisition of Eden to deliver value in 2008 and in the future not only through Harpin but also increasing sales in the US agriculture market. Sales in Europe were up by 27% to $0.9 million (2006: $0.7 million), with Holland performing particularly strongly. Our Mexican operation continued to develop, with sales up 48% on the back of extending our distributor network in previously under-exploited areas of the country. Landscaping and Turf Division In our preliminary results statement for 2006, we anticipated that our Landscaping and Turf division would move from reporting losses to delivering a small earnings contribution in 2007. We are pleased to say that, as a result of stringent cost control, the division remains on course to achieve this for the full year. In view of the maturity of this market and trading conditions currently being experienced, we continue to believe that the Landscaping and Turf business will grow at a slower rate than other areas of our business. Technology Partnerships Securing our first contract for the commercialisation of Myconate has been a key objective of Plant Health Care and in January an agreement was signed with Bayer CropScience for the development of Myconate as a new seed treatment solution for application worldwide on corn, soybean, cotton and sunflower crops. This agreement provides Bayer CropScience with exclusive rights, for a ten-year period, to combine Myconate with its market leading products on the aforementioned crops only. The Board expects these products to be launched late in 2009, to be applied in time for the 2010 US crop season. As previously announced, further tests have been carried out by the Company, our partners and potential partners on Myconate during this year. We have now received, and reported separately on, the results of tests carried out in Mexico earlier this year. On a variety of crops there were very encouraging results, demonstrating yield improvements ranging from 16% to 21% in Baja and 23% in Sonora. As announced today, Myconate trials in the US demonstrated strong results. Two trials on carrots, undertaken by a major Wisconsin vegetable grower, were successful in producing a resultant yield improvement in excess of 30% in both trials. In addition, celery and onion trials in Wisconsin demonstrated a 14% and 13% harvestable yield increase respectively when Myconate was applied as a pre-plant, transplant spray. The results of trials on grain and straw production in winter wheat, tested using a variety of applications produced particularly pleasing yield improvements. When applied as a seed treatment yield increased as much as 5.4% and when applied as a ground spray the improvement was up to 7.4%. Additionally, Myconate's application as both a seed treatment and a ground spray delivered yield increases of up to 9.4%. Two successful trials of Harpin-based N-Hibit on soybeans were undertaken by Southern Illinois University and the American Soybean Association ('ASA'). Both trial results demonstrated successful suppression of cyst nematodes and a resultant improvement in soybean yield, a crop which is planted on approximately 150 million acres each year in the US and Brazil alone. The test results from the ASA, which has in excess of 20,000 members, have exceeded our expectations with a broad range of samples demonstrating significant biomass increases and root elongation over the control. The Company will continue to invest in developing and marketing Myconate and Harpin at similar levels to the first half. Following an evaluation of Harpin's performance in its most recent tests, its suitability for application in conjunction with Myconate and the lack of suitable alternatives on the market, we now believe that its commercial potential is substantially greater than previously thought. Given the quest for environmentally sustainable and economically beneficial products, interest from major potential partners is considerable and we are now in negotiations with a four of the world's largest crop science companies for further supply and partnership agreements for both Myconate and Harpin. We remain confident of securing further upfront and milestone payments in relation to other partner deals in the coming months. Outlook The prospects for Plant Health Care are very exciting. Signing our first manufacture and supply agreement for Myconate with Bayer CropScience is a significant milestone in the development of Plant Health Care. Awareness, interest and demand for our natural products continues to grow and, in particular, Myconate and Harpin present very exciting opportunities in the near future. We are in varying stages of negotiations with some of the world's largest crop science companies regarding potential supply and/or partnership agreements for Myconate and Harpin. We are confident of making further significant progress in 2007 and finalising one or more of these agreements within the next six months. Our sales continue to grow strongly and, but for the adverse weather conditions, would have been greater in the first half. This shortfall in sales and continuing significant investment in our new technologies is likely to mean that the sought after break-even is not now likely for at least 12 months, albeit that we expect all our trading activities (excluding investment in Myconate and Harpin) to be profitable at the operating level sooner. However, if negotiations for Harpin and/or Myconate supply agreements are concluded before the year-end then up-front payment could enhance performance for the year. We believe that we are exceptionally well positioned today to take advantage of the continuing worldwide demands for both improved agricultural efficiency and greater environmental care. The inevitable global demand for 'energy crops' will further underpin the Company's commercial position and further drive demand for natural, yield enhancing products. The drivers of our business are stronger than ever and the future for Plant Health Care remains very exciting. We look forward to the future with confidence. I would like to thank the Plant Health Care staff for their effort and commitment to our Company and our shareholders for their continuing support. DR ALBERT FISCHER CHAIRMAN 24 September 2007 Plant Health Care plc Unaudited Consolidated Income Statement For the Six Months Ended 30 June 2007 Note Six months Six months Year to 30 June to 30 June ended 2007 2006 31 December 2006 as restated as restated $,000 $,000 $,000 Revenue 8,374 4,975 13,679 Cost of sales (4,526) (2,656) (7,565) ---------------------------------- Gross profit 3,848 2,319 6,114 Administrative expenses (6,664) (4,462) (8,980) ---------------------------------- Operating loss 6 (2,816) (2,143) (2,866) Finance revenue 53 78 275 Finance costs (136) (254) (335) ---------------------------------- Loss before taxation (2,899) (2,319) (2,926) Taxation - - (72) ---------------------------------- Loss for the period (2,899) (2,319) (2,998) ================================== Attributable to: Equity holders of the parent (2,896) (2,323) (3,028) Minority interest (3) 4 30 ---------------------------------- (2,899) (2,319) (2,998) ================================== Basic and diluted loss per 4 (7.0)c (7.0)c (8.2)c share ================================== All amounts relate to continuing activities. Plant Health Care plc Unaudited Consolidated Statement of Recognised Income and Expense For the Six Months Ended 30 June 2007 Six months Six months Year to 30 June to 30 June ended 2007 2006 31 December 2006 as restated as restated $,000 $,000 $,000 Loss for the period (2,899) (2,319) (2,998) Exchange differences on translation of foreign operations 42 85 219 ------------------------------------ Total recognised income and expense for the period (2,857) (2,234) (2,779) ==================================== Attributable to: Equity holders of the parent (2,854) (2,238) (2,809) Minority interest (3) 4 30 ------------------------------------ (2,857) (2,234) (2,779) ==================================== Plant Health Care plc Unaudited Consolidated Balance Sheet At 30 June 2007 Note 30 June 30 June 31 December 2007 2006 2006 $,000 $,000 $,000 as restated as restated Assets Non-current assets Intangible assets 4,324 2,759 2,737 Property, plant and equipment 973 812 1,008 ------------------------------------ Total non-current assets 5,297 3,571 3,745 ------------------------------------ Current assets Inventories 3,623 2,476 2,468 Trade and other receivables 8,208 2,613 6,942 Short term investments 721 258 436 Cash and cash equivalents 585 10,563 4,446 ------------------------------------ Total current assets 13,137 15,910 14,292 ------------------------------------ Total assets 18,434 19,481 18,037 ------------------------------------ Liabilities Current liabilities Trade and other payables 3,875 2,922 3,222 Short term borrowings 659 1,576 314 Provisions 419 227 282 ------------------------------------ Total current liabilities 4,953 4,725 3,818 ------------------------------------ Non-current liabilities Long-term borrowings 453 506 414 Provisions 578 - - ------------------------------------ Total non-current liabilities 1,031 506 414 ------------------------------------ Total liabilities 5,984 5,231 4,232 ------------------------------------ Total net assets 12,450 14,250 13,805 ==================================== Capital and reserves attributable to equity holders of the company Share capital 763 730 731 Share premium 23,455 21,761 21,826 Merger reserve 10,994 11,181 11,174 Share option reserve 139 76 118 Retained earnings (23,118) (19,692) (20,264) ------------------------------------ 8 12,233 14,056 13,585 Minority interest 217 194 220 ------------------------------------ Total equity 12,450 14,250 13,805 ==================================== Plant Health Care plc Unaudited Consolidated Cash Flow Statement For the Six Months Ended 30 June 2007 Note Six months Six months Year ended to 30 June to 30 June 31 December 2007 2006 2006 $,000 $,000 $,000 Cash flows from operating activities Loss before taxation (2,899) (2,319) (2,926) Adjustments for: Depreciation 145 123 248 Amortisation of intangibles 108 32 2 Share based payment expense 20 25 68 Gain/(loss) on sale of fixed assets - (2) 10 Impairment charge - - 30 Minority interest (3) 4 30 (Increase) in inventories (252) (894) (887) (Increase)/decrease in trade and (1,251) 394 (3,952) other receivables Increase in trade and other payables 849 408 813 ------------------------------------ Cash outflow from operations (3,283) (2,229) (6,564) Interest paid (145) (252) (338) Interest received 53 78 275 Income taxes paid (46) (84) (79) ------------------------------------ Net cash outflow from operating activities (3,421) (2,487) (6,706) Investing Activities Purchase of business net assets 7 (2,251) - - Purchase of tangible fixed assets (99) (149) (497) Proceeds on sale of assets held for sale 675 - - Proceeds on sale of fixed assets - 6 20 Purchase of short term investments (284) (6) (184) ------------------------------------ Net cash used in investing (1,959) (149) (661) activities ------------------------------------ Financing activities Issuing of ordinary share capital 353 11,049 11,053 Exercise of options and warrants 1,200 1 64 Issue of new borrowings 181 1,301 101 Repayment of borrowings (82) (26) (180) Repurchase of minority interest's shares by subsidiary (133) (20) (119) ------------------------------------ Net cash used in financing 1,519 12,305 10,919 activities ------------------------------------ Net (decrease)/increase in cash (3,861) 9,669 3,552 ==================================== Plant Health Care Notes to Unaudited Financial Information 30 June 2007 1 Accounting policies Basis of preparation The financial information set out in this report does not constitute full accounts for the purposes of Section 240 of the Companies Act 1985. The interim accounts for the six months ended 30 June 2007 and 30 June 2006 are unaudited. The comparative figures for the financial year ended 31 December 2006 are not the Company's statutory accounts for the financial year but are abridged from those accounts which have been reported on by the Company's auditors, whose report was unqualified. The interim accounts were approved by the Directors on 24 September 2007. The group is required to report its consolidated financial statements under International Financial Reporting Standards ('IFRS'), as adopted by the European Union, for all accounting periods beginning on or after 1 January 2007. Comparative information for 2006, previously reported under UK GAAP, has been restated under IFRS. The financial effects of the transition from reporting under UK GAAP to IFRS are shown in Note 3. The presentation of the Group's financial statements has also changed, in accordance with IAS 1 'Presentation of Financial Statements' and IAS 7 'Cash Flow Statements'. There is a possibility that the directors may determine that some changes to those policies are required when preparing the full annual financial statements, since the IFRS interpretations that will be applicable and adopted for use in the European Union at 31 December 2007 are not known with certainty at the time of preparing this interim financial information. The policies have been applied consistently to all the periods presented, and on the going concern basis. The preparation of the condensed consolidated financial information in accordance with IFRS has resulted in changes to the accounting policies as compared with the most recent annual financial statements prepared under UK GAAP. The accounting policies set out below have been applied consistently to all periods presented in these consolidated interim financial statements and have been applied in preparing an opening IFRS balance sheet at 1 January 2006 for the purposes of transition to IFRS, as required by IFRS 1. Transition to International Financial Reporting Standards IFRS 1 'First-time adoption of International Financial Reporting Standards' sets out the rules for first time adoption of IFRS and the optional exemptions which may be used in applying the standards retrospectively to comparative periods. The Group has used the following exemption in adopting IFRS. IFRS 3 'Business Combinations' has only been applied to acquisitions completed after the date of transition, 1 January 2006. As a result, the carrying value of goodwill in the UK GAAP balance sheet at 31 December 2005 is brought forward to the IFRS opening balance sheet without adjustment. Revenue Revenue represents sales to external customers and fee income. Sales to external customers are at invoiced amount less value added tax or local taxes on sales and are recognized at the point that the customer takes legal title to the goods sold. Fee income is recognized when the company has no remaining obligations to perform under a non-cancellable contract which permits the user to act freely under the terms of the agreement. Goodwill Goodwill is measured as the excess of the cost of the acquisition over the net fair value of the identifiable assets, liabilities and contingent liabilities, plus any direct costs of acquisition. Goodwill is capitalised as an intangible asset. Other intangible assets Intangible assets are stated at cost less accumulated amortisation and consist of licenses and developed technology, customer lists and trade names. The cost of the intangible assets, which were acquired through business combinations, was measured at the fair value allocated in the acquisition accounting. The intangible assets are amortised over their estimated useful lives of twelve to fifteen years. Impairment of Goodwill and other intangible assets Impairment tests on the carrying value of goodwill and other intangible assets are undertaken at each annual reporting date and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable. Employee benefits The Group maintains a number of defined contribution pension schemes for certain of its employees; the Group does not contribute to any defined benefit pension schemes. The amount charged to the income statement represents the employer contributions payable to the schemes for the financial period. The expected cost of all short term employee benefits, including short-term compensated absences, are recognised during the period the employee service is rendered. 2 Segmental Analysis Six Six Year months months ended to 30 to 30 31 Dec June June 2006 2007 2006 as as restated restated $'000s $'000s $'000s Revenue External sales USA 6,076 3,318 8,791 Mexico 1,379 933 2,536 Europe 919 724 2,352 Inter-segment sales USA 274 295 717 Mexico - - - Europe 444 42 742 Elimination (718) (337) (1,459) Total revenue USA 6,350 3,613 9,508 Mexico 1,379 933 2,536 Europe 1,363 766 3,094 Elimination (718) (337) (1,459) --------------------------- Consolidation 8,374 4,975 13,679 Segment operating (loss) profit USA (1,184) (1,203) (1,462) Mexico 102 29 256 Europe (81) (95) (12) --------------------------- (1,163) (1,269) (1,218) Unallocated corporate expenses (1,653) (874) (1,648) --------------------------- Consolidated operating loss (2,816) (2,143) (2,866) =========================== 3 First-time Adoption of International Financial Reporting Standards (IFRS) Reconciliations and explanatory notes on how the transition to IFRS has affected profit and net assets previously reported under UK Generally Accepted Accounting Principles (UK GAAP) are given below: Income statement reconciliation for the six months ended 30 June 2006 Note UK GAAP Adjustments IFRS $,000 $,000 $,000 Revenue 4,975 4,975 Cost of sales (2,656) (2,656) ----------------------------------- Gross profit 2,319 - 2,319 Goodwill amortisation (i) (18) 18 - Other administrative expenses (ii) (4,450) (12) (4,462) ----------------------------------- Operating loss (2,149) 6 (2,143) Finance revenue and similar income 78 78 Finance costs and similar charges (254) (254) ----------------------------------- Loss before taxation (2,325) 6 (2,319) Taxation - - - ----------------------------------- Loss for the period (2,325) 6 (2,319) =================================== Attributable to: Equity holders of the parent (2,329) 6 (2,323) Minority interest 4 4 ----------------------------------- (2,325) 6 (2,319) =================================== All amounts relate to continuing activities. Income statement reconciliation for the year ended 31 December 2006 Note UK GAAP Adjustments IFRS $,000 $,000 $,000 Revenue 13,679 13,679 Cost of sales (7,565) (7,565) ----------------------------------- Gross profit 6,114 - 6,114 Goodwill amortisation (i) (36) 36 - Administrative expenses (ii) (8,976) (4) (8,980) ----------------------------------- Operating loss (2,898) 32 (2,866) Finance revenue and similar income 275 275 Finance costs and similar costs (335) (335) ----------------------------------- Loss before taxation (2,958) 32 (2,926) (Taxation (72) (72) ----------------------------------- Loss for the period (3,030) 32 (2,998) =================================== Attributable to: Equity holders of the parent (3,060) 32 (3,028) Minority interest 30 30 ----------------------------------- (3,030) 32 (2,998) =================================== All amounts relate to continuing activities. Balance sheet reconciliation at 1 January 2006 Note UK GAAP Adjustments IFRS $,000 $,000 $,000 Assets Non-current assets Intangible assets 2,769 2,769 Tangible assets 790 790 ----------------------------------- Total non-current assets 3,559 - 3,559 ----------------------------------- Current assets Inventories 1,582 1,582 Trade and other receivables 2,989 2,989 Short term investments 252 252 Cash and cash equivalents 894 894 ----------------------------------- Total current assets 5,717 - 5,717 ----------------------------------- Total assets 9,276 - 9,276 ----------------------------------- Liabilities Current liabilities Trade and other payables (ii) 2,813 51 2,864 Short term borrowings 285 285 Provisions 234 234 ----------------------------------- Total current liabilities 3,332 51 3,383 ----------------------------------- Non-current liabilities Long-term borrowings 523 523 Provisions - ----------------------------------- Total non-current liabilities 523 523 ----------------------------------- Total liabilities 3,855 51 3,906 ----------------------------------- Total net assets 5,421 (51) 5,370 =================================== Capital and reserves attributable to equity holders of the company Share capital 542 542 Share premium 10,847 10,847 Merger reserve 11,195 11,195 Share option reserve 51 51 Retained earnings (17,404) (51) (17,455) ----------------------------------- 5,231 (51) 5,180 Minority interest 190 190 ----------------------------------- Total equity 5,421 (51) 5,370 =================================== Balance sheet reconciliation at 30 June 2006 Note UK GAAP Adjustments IFRS $,000 $,000 $,000 Assets Non-current assets Intangible assets (i) 2,741 18 2,759 Tangible assets 812 812 ----------------------------------- Total non-current assets 3,553 18 3,571 ----------------------------------- Current assets Inventories 2,476 2,476 Trade and other receivables 2,613 2,613 Short term investments 258 258 Cash and cash equivalents 10,563 10,563 ----------------------------------- Total current assets 15,910 - 15,910 ----------------------------------- Total assets 19,463 18 19,481 ----------------------------------- Liabilities Current liabilities Trade and other payables (ii) 2,859 63 2,922 Short term borrowings 1,576 1,576 Provisions 227 227 ----------------------------------- Total current liabilities 4,662 63 4,725 ----------------------------------- Non-current liabilities Long-term borrowings 506 506 Provisions - - ----------------------------------- Total non-current liabilities 506 506 ----------------------------------- Total liabilities 5,168 63 5,231 ----------------------------------- Total net assets 14,295 (45) 14,250 =================================== Capital and reserves attributable to equity holders of the company Share capital 730 730 Share premium 21,761 21,761 Merger reserve 11,181 11,181 Share option reserve 76 76 Retained earnings (19,647) (45) (19,692) ----------------------------------- 14,101 (45) 14,056 Minority interest 194 194 ----------------------------------- Total equity 14,295 (45) 14,250 =================================== Balance sheet reconciliation at 31 December 2006 Note UK GAAP Adjustments IFRS $,000 $,000 $,000 Assets Non-current assets Intangible assets (i) 2,701 36 2,737 Tangible assets 1,008 1,008 ----------------------------------- Total non-current assets 3,709 36 3,745 ----------------------------------- Current assets Inventories 2,468 2,468 Trade and other receivables 6,942 6,942 Short term investments 436 436 Cash and cash equivalents 4,446 4,446 ----------------------------------- Total current assets 14,292 - 14,292 ----------------------------------- Total assets 18,001 36 18,037 ----------------------------------- Liabilities Current liabilities Trade and other payables (ii) 3,166 56 3,222 Short term borrowings 314 314 Provisions 282 282 ----------------------------------- Total current liabilities 3,762 56 3,818 ----------------------------------- Non-current liabilities Long-term borrowings 414 414 Provisions - - ----------------------------------- Total non-current liabilities 414 414 ----------------------------------- Total liabilities 4,176 56 4,232 ----------------------------------- Total net assets 13,825 (20) 13,805 =================================== Capital and reserves attributable to equity holders of the company Share capital 731 731 Share premium 21,826 21,826 Merger reserve 11,174 11,174 Share option reserve 118 118 Retained earnings (20,244) (20) (20,264) ----------------------------------- 13,605 (20) 13,585 Minority interest 220 220 ----------------------------------- Total equity 13,825 (20) 13,805 =================================== Adjustments Explanations of the adjustments made to the UK GAAP income statement and balance sheets are as follows: Note (i) IFRS 3 'Business Combinations' has been applied to acquisitions completed after the date of transition, 1 January 2006. As a result, the carrying value of goodwill in the UK GAAP balance sheet at 31 December 2005 is brought forward to the IFRS opening balance sheet. The effect of IFRS has been to reverse the goodwill amortisation charge for the June 2006 and December 2006 reporting periods. (ii) In accordance with IAS 19 administrative expenses have been adjusted to reflect accrued entitlement to short-term compensated absences. 4 Basic and Diluted Loss per Share Basic loss per ordinary share has been calculated on the basis of the loss attributable to equity holders of the parent of $2,896,000 (loss for the six months ended 30 June 2006 - $2,323,000 and loss for the year ended 31 December 2006 - $3,028,000) and the weighted average number of shares in issue during the period of 41,394,679 (six months ended 30 June 2006 - 33,327,537 and year ended 31 December 2006 - 36,838,918). Instruments that could potentially dilute basic earnings per share in the future have been considered, but were not included in the calculation of diluted earnings per share because they are anti-dilutive for the periods presented. 5 Financial Instruments On 12 April 2007, the Company entered into a revolving credit agreement that provides for up to $2,000,000 in borrowings. The agreement matures one year from the date it was entered into. Interest is at prime plus 8 percent. A facility fee of 4% was payable upon closing. As of 30 June 2007 $139,000 in borrowings was outstanding under the agreement. As of the date of this report, there were no borrowings outstanding under the agreement. Borrowings under the agreement are based on the eligible accounts receivable and inventory of certain of the Group's US subsidiaries. They are secured by substantially all of the assets of those subsidiaries and are guaranteed by Plant Health Care, Inc. 6 Operating Loss Six months to Six months to Year ended 30 June 30 June 31 December 2007 2006 2006 as restated as restated $,000 $,000 $,000 Operating loss is arrived at after charging: Depreciation 145 123 248 Amortisation 108 32 2 ==================================== Exceptional costs - Share based payment expense 20 25 68 - Employee termination costs 171 - - - Placement costs - 63 63 - Provision for plant relocation 175 100 250 ------------------------------------ 366 188 381 ==================================== 7 Asset Purchase Agreement On 28 February 2007, the Company acquired certain of the assets of Eden Bioscience Corporation for a total consideration of $2,200,000 plus the assumption of certain liabilities associated with these assets. $1,500,000 was paid at closing and $700,000 was due under a secured promissory note bearing interest at a rate of 5 percent per annum. $506,000 was paid on the note during the period. The balance outstanding at 30 June 2007 was $194,000 and is due on 31 December 2007. Costs attributable to the purchase were $245,000. Details of the fair value of the assets acquired and liabilities assumed were as follows: Provisional fair value of assets acquired $,000 Inventories 902 Tangible assets 686 Intangible assets 448 Accrued expenses (102) Onerous lease provision (736) ------ 1,198 Goodwill 1,247 ------ Cost of acquisition 2,445 ====== The Company assumed the obligations under an Exclusive License Agreement relating to the licensing of technology from Cornell University. Payments due under the agreement with Cornell are the greater of 2% of sales or $200,000 per annum. 8 Changes in shareholders' equity Six months to Six months to Year ended 30 June 30 June 31 December 2007 2006 2006 as restated as restated $,000 $,000 $,000 Total recognised income and expense (2,854) (2,238) (2,809) Exercise of options and warrants 1,200 1 64 Repurchase of minority interest's (180) - (8) shares by subsidiary Share based payments 20 25 67 Share issues for services 109 38 38 Share placement - 12,066 12,066 Placement costs - (1,016) (1,013) Sale of shares 353 - - - Provision for plant relocation 175 100 250 -------------------------------------- (1,352) 8,876 8,405 Capital and reserves attributable to equity holders of the parent at the beginning of the period 13,585 5,180 5,180 -------------------------------------- Capital and reserves attributable to equity holders of the parent at the end of the period 12,233 14,056 13,585 ====================================== -ends- This information is provided by RNS The company news service from the London Stock Exchange

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