Shares in Plant Impact (AIM: PIM) came in demand this morning after the developer of technologies that improve crop productivity released its interim results, reporting a nearly fourfold increase in revenues while losses narrowed.
Revenues for the six months to 30 September amounted to £969,554 compared to £225,287 for the equivalent period of the previous year, while losses narrowed to £879,381 from £1.3 million a year ago. The increase in revenues was largely due to the sales of nutrient products in the USA and milestone payments for pesticide product BugOil after the company entered into a licensing agreement with Arysta LifeScience Corp (ALS).
The first regulatory milestone was achieved in September with the submission of the BugOil dossier to the Environmental Protection Agency in the USA, the next milestone is anticipated in the first half of 2010 when BugOil is expected to secure UK approval.
Plant Impact has also signed an extramural agreement with the United States Department of Agriculture (USDA) for extensive trials on its nitrogen delivery technology PiNT.
“The Company has achieved significant progress in terms of commercializing our key technologies over the past six months. The license agreement with Arysta demonstrates our ability to secure significant distribution opportunities. Our ongoing and successful field trials for our products help to validate the performance of our technologies and support both our direct sales and our ability to secure further licensing agreements,” said Chairman of Plant Impact Martin Robinson.
The group’s cash balance stood at £1.58 million, up from £1.43 million at 30 November following net placing proceeds of £1.3 million and a final £0.5 million drawdown of the ALS loan agreement.
The interim report offered an upbeat outlook, referring to the group’s recent appointment as a member of the parliamentary science committee to the House of Commons and its work with the USDA, which it said was key to the widespread commercialisation of its products.
“The fact that a young company like Plant Impact can engage at this level gives the Directors confidence that the Group can play a significant role in sustainable agriculture,” Plant Impact said in its statement.
Shares in Plant Impact rose 5% on the news this morning.
Equity Development was encouraged by the report, saying the results underscored the company’s transition into a business with a scalable model based upon a combination of both licensing revenue and direct sales as this time they included the first licensing revenues from ALS, while up until now Plant Impact’s revenues were solely derived from direct sales of its plant nutrition products.
The forecasts were slightly trimmed in view of the anticipated negative impact of the ongoing financial crisis on the plant nutrition business, however, the medium term price target was maintained at 60 pence as the “long term story” remained intact.
The broker forecasted full year revenues of £2.23 million for the company, which would represent growth of 169%, assuming a proportionally similar revenue split to that of the previous year and no further milestone payment on the BugOil deal during the second half of the year. Full year gross profits were forecasted to soar 267% to £1.23 million with an overall gross margin of 65%, enhanced by the inclusion of the licensing milestone payment in these results.