Plant Health Care Annual Report 2015

FY2015 Annual Report · Plant Health Care

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Plant Health Care plc

Contents

Directors and advisers

Chairman’s letter

Strategic report

Directors

Board committees

Corporate governance

Remuneration Committee report

Report of the directors

Statement of directors’ responsibilities

Independent auditor’s report

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes forming part of the Group financial statements

Company balance sheet

Company statement of changes in equity

Notes forming part of the Company financial statements

Plant Health Care is a leading provider of proprietary agricultural biological products and
technology solutions focused on improving crop performance. The Company’s ordinary
shares have been quoted on the AIM market of the London Stock Exchange since
July 2004 (ticker symbol: PHC).

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Plant Health Care plc

Directors and advisers

Directors

Dr. Christopher G. J. Richards Executive Chairman
Paul M. Schmidt
Dr. Richard H. Webb
Michael J. Higgins
James L. Ede-Golightly
William M. Lewis

Chief executive
Executive director
Senior independent director
Non-executive director
Non-executive director

Secretary

Registered office

Andrew C. Wood FCIS

48 Chancery Lane
London WC2A 1JF

Company number

05116780

Broker and nominated adviser

Auditor

Company solicitor

Registrar

Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY

BDO LLP
55 Baker Street
London W1U 7EU

Michelmores LLP
48 Chancery Lane
London WC2A 1JF

Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands B63 3DA

In this document, references to “the Company” are to Plant Health Care plc. References to “Plant Health
Care”, “the Group”, “we” or “our” are to Plant Health Care plc and its subsidiaries and lines of business, or
any of them as the context may require. The Plant Health Care name and logo, Myconate, ProAct, and N-Hibit
and other names and marks appearing herein and on company literature are trade marks or trade names of Plant
Health Care. All other third party trade mark rights are acknowledged.

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Plant Health Care plc

Chairman’s letter

Overview
Plant Health Care is a leading provider of proprietary agricultural biological products and technology solutions
focused on improving crop performance.

This has been a year of strong commercial sales growth in a difficult market as well as accelerated progress in
the Company’s innovation. We report here separately the two areas of focus for the business: 1. New
Technology (renamed from Bio-stimulant Discovery and Development); and 2. Commercial. We are now
organised in these two lines of business and report our Commercial business in three geographic segments –
Americas, Mexico and Rest of World. We report our New Technology business in a single segment.

We have also included this year a much more detailed explanation in the Strategic report of our products, the
areas we are focusing on in New Technology and also our industry. We hope this will help our shareholders
better understand the exciting opportunities available to us.

New Technology
New Technology is focused on the discovery and early development of novel proprietary biological solutions
using the Group’s PREtec platform (PREtec signifies Plant Response Elicitor technology). Our Group continues
to invent and seek patent protection for new technologies developed using its PREtec platform; these new
technologies will mainly be developed into final products in partnership with major industry players, who will
be responsible for commercialising them, while we plan to preserve the ability to develop and commercialise
these peptides in specialty crops ourselves.

New Technology made remarkable progress during the year, under the leadership of our Chief Science Officer
(“CSO”), Dr. Zhongmin Wei. Our first family of PREtec peptides, Innatus 3G, was presented to six potential
major industry partners in the latter part of 2014. We expect that Innatus 3G will permit the development of
customisable products that will be compatible with agrochemicals and complementary to existing agricultural
practices. During 2015, we were delighted to report that four of those six companies signed agreements to
evaluate the technology. We are now intensively engaged with these partners, who are showing increasing
excitement about the potential of the Innatus 3G family.

In parallel, we are presenting our evaluation partners with further data on products derived from Innatus 3G.
We completed our third year of field trials in corn with Innatus 3G. This included one peptide variant with three
years of field trial data delivering an average yield increase of 9.6 bushels per acre when applied as a seed
treatment compared with industry standard treatments alone, with a win rate of 79%, with data from 19 of
20 sites analysed to date. This investment in our own data is helping to stimulate our partners to investigate
the potential of Innatus 3G.

Our laboratory in Seattle has also made great strides in revealing a pipeline of PREtec technology beyond
Innatus 3G. During 2016, further trial data will be generated and assessed. Assuming positive results, during
the 2017 to 2018 time period, we intend to proceed with out-licensing Innatus 3G on a crop and geographic
basis. In addition to Innatus 3G, we have identified other peptide families using PREtec with very promising
early results that we intend to continue to evaluate internally, aiming to advance additional peptide families
to the advanced development stage over the next several years.

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Chairman’s letter continued

Reflecting the speed of progress in New Technology, we have increased substantially our investment in research
and development (“R&D”). In 2015, we invested $4.1 million in R&D, an increase of 101% over 2014.
The New Technology team in Seattle now numbers 14 and we moved into larger, customised laboratory
premises during the year. We have devoted considerable resources to our intellectual property and are confident
that we are building effective protection around our technology.

Commercial
Our Commercial business sells our proprietary products worldwide through distributors and distributes
complementary third-party products in Mexico. Commercial continues to expand the registration of commercial
products and management of channels to market. Commercial is currently focused on driving sales of Harpin
and Myconate around the world, both directly and with value chain partners. We believe that our achievement
of a product registration in Brazil will result in traction for Harpin in the largest agricultural market in the world
from 2016 onwards. The Commercial team has been strengthened during 2015, to drive further growth as we
continue to expand our geographical focus in key markets by identifying capable distribution partners to extend
our reach.

Overall total sales grew by 9% (15% in constant currency) despite headwinds in the agricultural market. Sales
in the Americas were strong and grew by 24%. Mexico represented some 47% of the Group’s sales. Sales
denominated in the Mexican peso increased by 7.2 million but, due to the continued devaluation of the peso,
sales in US dollars showed a slight decrease. Our proprietary products now represent 60% of our sales, which
has helped to increase gross margin further to 62%. Careful control of costs and of working capital ensured
that we finished the year with a net loss and cash balances broadly in line with expectations.

Strong momentum is now building in the sales of Harpin-based products, which experienced a compound
annual growth rate (“CAGR”) of 35% from 2013 to 2015, excluding up-front payments, as shown in the graph
below. This steady growth is now under-pinned by a growing network of strong distribution partners,
committed to the market development efforts which are required for sustained sales growth of Harpin products.

Harpin revenue

~ 3 5 %

C A G R :

$3,165,000

$3,863,000

$4,500,000

$4,000,000

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$2,120,000

2013

2014

2015

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Chairman’s letter continued

Board changes
Given the exciting expectations for the Group, the Board requested me to take a more active role in developing
strategy and in investor relations. I, therefore, became Executive Chairman with effect from 1 April 2015.
My role is to support Paul Schmidt and the management team, who are responsible for all aspects
of implementation.

In January 2015, Dr. Richard H. Webb, formerly a non-executive director, became an Executive Director.
Dr. Webb is responsible for supporting our CSO, Dr. Zhongmin Wei, as we continue to expand our investment
in our New Technology programme.

James Ede-Golightly joined the Audit Committee on 16 January 2015 and, in conjunction with taking on the
role of Executive Director, Dr. Webb stepped down from the Audit Committee after last year’s AGM.

With effect from 1 April 2015, William (“Bill”) M. Lewis joined the Company as a non-executive director.

The relevant experience and background of each member of the Board is set out on pages 14 and 15.

Outlook
Agriculture markets in general are much less buoyant than in previous years, driven by lower commodity prices.
However, we believe that growers in key markets will continue to adopt agricultural biological products which
increase their productivity. Based on various reports, we believe the global biologicals market in 2015 was
over $2.5 billion, with an expected compound annual growth rate of approximately 10% from 2015 to 2020.
We are optimistic with respect to the growth prospects for Harpin αβ. The positive response of our evaluation
partners to early results with Innatus 3G is an enormously encouraging signal of the potential of PREtec.

Plant Health Care is now well established on the new direction which Paul Schmidt and I set out for the Group
in 2013. The progress in advancing our PREtec platform and commercialising our proprietary products during
2015 was strong, and we confidently expect further progress during 2016 as we build upon our position as a
leader in the agricultural biologicals marketplace.

In closing, I would like to thank the entire Plant Health Care team for all their hard work during the year.
Strong results come from great people, working towards shared goals. Paul Schmidt has built an impressive
team, in which I have the greatest confidence.

Dr. Christopher Richards
Executive Chairman

8 April 2016

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Strategic report

We are a leading provider of proprietary agricultural biological products and technology solutions focused on
improving crop performance by activating a growth response and bolstering plant defence mechanisms against
both abiotic stresses, such as drought and extreme temperatures, and biotic stresses, such as weed
encroachment or pest infestation. We are now organised in two lines of business: New Technology
and Commercial.

Our New Technology business focuses on the advancement of our proprietary Plant Response Elicitor
technology platform, or PREtec, to develop and provide more rapid commercialisation of small strands of
amino acids, or peptides, which we intend to out-license. We are currently focused on commercialising this
technology by partnering with leading agriculture companies to accelerate its adoption in key geographic and
crop markets. PREtec enables the custom design and creation of peptides to achieve targeted responses in
specific crops. These include improving a plant’s ability to grow efficiently, increasing its yield, bolstering its
responses to stresses such as drought and enhancing its resistance to external factors, such as diseases and
certain pests in both row and specialty crops. Currently, four of the six largest global agriculture companies
are evaluating Innatus 3G, our first peptide family developed from PREtec. We report our New Technology
business in a single segment.

Our Commercial business focuses on selling proprietary biological products that are applied to soil, seeds or
plants to improve the plant’s health and yield by enhancing its physiological processes. Our proprietary
products are primarily categorised as biofertilisers and biostimulants, which we believe are the most rapidly
growing segments in the biological industry. Our current product portfolio is mainly based on our proprietary
Harpin technology, which is proven to trigger growth and self-defence mechanisms within plants to drive
better performance. Through field trials we have commissioned or through those conducted by our distributors,
we have demonstrated results in a number of crops: our second generation Harpin αβ products have created
yield increases of approximately 3% to 5% in US corn and soybeans while improving plant growth, resistance
to abiotic stress and protection against certain pathogens. Our products are complementary to and compatible
with existing crop protection products and methods, promoting further adoption.

Our Commercial business sells our proprietary products worldwide through distributors (which accounted for
60% of our revenues in 2015) and distributes complementary third-party products (which accounted for 40%
of our revenues in 2015) in Mexico. Our proprietary products have treated millions of acres to date across
multiple significant, global agricultural markets, including the United States of America (“United States” or
“US”), Mexico and Europe. We report our Commercial business in three geographic segments – Americas
(which accounted for 35% of our revenues in 2015), Mexico (which accounted for 47% of our revenues in
2015) and Rest of World (which accounted for 18% of our revenues in 2015).

The Board believes that our innovative and value-added line of biological products helps satisfy the growing
global demand for efficient, effective and environmentally-responsible products to increase crop yields and
overall plant health. We have screened, identified and developed our novel biological products and technologies
and validated their efficacy in improving plant health leading to higher yields. Through our significant
investment in research and development, we have a scientific-based understanding of our products’ mode of
action (the functional change that occurs at the cellular level), which enables us to design and produce a
diverse range of protein-based biologicals to provide significant value for growers. The chart below illustrates
our technology progression.

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Strategic report continued

TTechnology
Technology
echnology

Generation
Generation

Harpin
Harpin
1G, 2G
1G, 2G

Products
Products

1G: Natural protein
atural protein
1G: Na

2G: Recombinant protein
combinant protein
2G: Rec

Overview
Overview

(cid:135) Large proteins
ge proteins
(cid:135)

Larg

(cid:135) Stimulate plant growth
mulate plant growth
(cid:135)

Stim
and defense
defense
and

sion
Technology progression
hnology progress
Tech

PREtec
tec
PRE

ls
3G – Biologicals
3G – Biologicals

– Genetics
4G – Genetics
4G –

hetic
Multiple families of synthetic
(cid:135) Multiple families of synthetic
(cid:135)
peptides
peptides

(cid:135) First family (Innatus 3G) - in
- in
First family (
Innatus 3G) - in
(cid:135)
phase
advanced development p
phase
advanced development p
advanced development phase

y
Further families – in early
(cid:135) Further families – in early
(cid:135)
development phase
development phase

Short synthetic peptides
(cid:135) Short synthetic peptides
(cid:135)

(cid:135) Customisable to stimulate
te
Customisable to stimulate
(cid:135)
(cid:84)(cid:81)(cid:70)(cid:68)(cid:74)(cid:109)(cid:68) (cid:83)(cid:70)(cid:84)(cid:81)(cid:80)(cid:79)(cid:84)(cid:70)(cid:84)
(cid:84)(cid:81)(cid:70)(cid:68)(cid:74)(cid:109)(cid:68) (cid:83)(cid:70)(cid:84)(cid:81)(cid:80)(cid:79)(cid:84)(cid:70)(cid:84)

(cid:135) Compatible with standard
rd
Compatible with standard
(cid:135)
agricultural inputs
agricultural inputs

- in proof of
(cid:135) Genetic traits - in proof of
(cid:135)

Genetic traits
se
concept phase
concept phase

(cid:135) Further discovery - in progress
very - in progress
(cid:135)

Further discov

(cid:135) DNA inserted into the plant’s
s’
AADN(cid:135)

d into the plant
inserted
genome to express the peptides
xpress the peptides
genome to ex

(cid:135) Modulates plant physiology
ant physiology
Modulates plant physiology
(cid:135)

Gene
Gene

Chromosome
Chromosome

1G
1G

2G (up to 10
2G (up to 10
times more active
times more active
than 1G)
than 1G)

Active
Site

ve
4 Active
Sites
Sites

Commercial
Commercial
Sales and licenses
SSales and licenses

Evaluation phase
Evaluation phase ase

Proof of concept
of concept
Proof o
Discovery
Disscovery

Our products and technologies

Harpin αβ
Our Harpin αβ products are well established in both the seed and foliar treatment markets and can be used to
treat over 40 different types of crops. We currently focus on products that treat row crops as well as high-value
specialty crops. We have three principal Harpin αβ products: N-Hibit, a seed treatment application for row
crops; ProAct, a foliar application for row crops; and Employ, a foliar application for specialty crops. Each of
these products can be applied in conjunction with conventional agrochemicals or seed treatments. During
the year ended 31 December 2015, we derived 45% of our revenues from our Harpin αβ products, for which
we have a number of current patents that expire between 2017 and 2027.

Myconate
Our Myconate product is a soil treatment that increases colonisation of roots by over 50%, aiding early-stage
plant growth and important nutrient access. This essentially provides the plant with a larger root system so
that it can grow under conditions that normally would inhibit growth, such as drought, nutrient deficiency,
chemical residues and soil salinity. Myconate is available in powder and liquid forms and can be applied
effectively as a seed coating, an in-furrow application or mixed with fertiliser. During the year ended
31 December 2015, we derived 6% of our revenues from our Myconate products, for which we have a number
of current patents that expire between 2018 and 2031.

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Strategic report continued

PREtec
Our PREtec platform identifies families of peptides that provide crop treatment options for growers that are
complementary to existing agricultural technologies and practices. Our PREtec peptides may be designed to
stimulate specific desired responses in the plant such as improved yield, vigour and resistance to biotic and
abiotic stresses. Through our PREtec platform, we have screened hundreds of peptide variants and have engaged
in greenhouse and field testing for dozens of promising novel peptides. As shown in the chart below, we
currently have three 3G peptide families in various development phases, and 4G platforms are in the early
stages of development. We presented our first family of novel peptides, Innatus 3G, to six major participants
in the agriculture industry and four of these companies are currently evaluating it internally. We expect that
our 3G peptide families will be customised and combined with standard crop protection applications through
both seed treatment and foliar applications to improve plant health. We are in the early stages of development
of our 4G peptide platforms, the first of which we anticipate enabling the incorporation of peptides into a
plant’s genome so that the plant will be able to express these peptides internally.

Phase 1

Discovery

Phase 2

Proof of concept

Phase 3
Early
development

Phase 4
Advanced
development

Phase 5

Pre-launch

Phase 6

Commercial

PREtec platform

Innatus 3G family

2nd 3G family

3rd 3G family

s
l
a
c
i
g
o
o
B

s
c
i
t
e
n
e
G

1st 4G platform

2nd 4G platform

Complete

In progress

Our growth strategy
Our future growth will be achieved by focusing on the following key areas:

(cid:1)

Increasing sales of existing commercial products. We intend to drive near-term revenue growth in our
Commercial business to more fully address our opportunities in the agricultural market. We are
increasing our focus on specialty crop markets (such as fruits and vegetables) to complement the
position we have gained in row crop markets. We plan to continue to grow our geographical expansion
in key markets by identifying capable distribution partners to extend our reach.

Expanding market for existing products through additional product registrations. We intend to continue
to build upon our strong portfolio of registered products by pursuing additional market approvals for
Harpin αβ and Myconate. Harpin αβ is approved for use in 13 countries, and Myconate is approved for
use in 11 countries. We have applied for further registrations to expand our market access to countries
such as Germany, Italy, Argentina and Canada.

Continuing to execute on out-licensing business model with Innatus 3G. Our development progress
over the past two years positions us to successfully bring Innatus 3G to market through a capital-
efficient out-licensing model. We have entered into agreements with four major players in the agriculture
industry to evaluate Innatus 3G.

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Strategic report continued

(cid:1)

Accelerating PREtec peptide technologies. Through our targeted development work, we have identified
several additional families of PREtec peptides. We are aiming to introduce up to three more families of
PREtec peptides within the next two to three years.

Pursuing strategic collaborations and acquisitions. We believe we are well positioned for strategic
collaborations or acquisitions in the agricultural biological industry as a result of our science-based
technology approach, our access to growers and distributors through our existing commercial platform
and our management team’s extensive experience.

Our industry
The global agriculture industry is facing increasing demand for products and technologies that effectively and
cost-efficiently improve crop yield and quality. This increasing demand is being primarily driven by a rising
global population and an expanding middle class in certain regions. The Food and Agriculture Organization
of the United Nations estimates that the global population will reach 7.8 billion by 2020, an increase of 5.6%
from 7.3 billion today, and arable land per capita has decreased from 0.41 hectares per person in 1962 to 0.20
hectares per person in 2012. The Organisation for Economic Co-operation and Development estimates that
the global middle class population was 1.8 billion people in 2009 and projects it will grow to 3.2 billion people
by 2020 and reach 4.9 billion people by 2030.

To meet these demands, agrochemical, agricultural biotechnology and other agriculture companies continually
seek to offer new solutions for improving the health and vitality of crops worldwide. For the past several
decades, these solutions have come primarily through advances in conventional plant breeding, screening or
genetic modification of seeds to produce crops with desired traits, fertilisers to promote plant growth and
herbicides and insecticides, nematicides and fungicides to reduce or eliminate external threats. More recently,
as agrochemical innovation and usage has started to plateau, the development of biological solutions has
started to play an increasing role in meeting growers’ needs. As the effectiveness of biological solutions has
approached and, in some cases, surpassed more conventional solutions, biologicals will play an increasingly
important role in providing a solution to crop yield and quality demands from growers.

Biological products offer multiple benefits to the agriculture industry:

(cid:1)

Protection from abiotic stress. Whereas conventional crop protection products typically focus on biotic
stresses, biological products generally improve a plant’s tolerance to both biotic and abiotic stresses.

Integrated crop management. Since biological products can be complementary to existing agrochemical
products and genetically modified seeds, they enable growers to improve the return on their investment
while pursuing an integrated approach to crop management.

Reduced time and cost to market. In general, biological products take less time to reach the market than
agrochemical products or genetically modified seeds due to reduced regulatory burdens. Furthermore,
due to complex and lengthy regulatory pathways, it is estimated that biological products cost far less
to develop than conventional chemical pesticides or genetically modified traits.

Safe and sustainable. Biological products are generally safer for workers to handle and generally pose a
reduced hazard to beneficial organisms on or near the treated plants.

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Strategic report continued

Biological products and technologies represent a highly innovative and rapidly growing sector of the agriculture
industry. Based on various reports, we believe the global biologicals market in 2015 was over $2.5 billion,
with an expected compound annual growth rate of approximately 10% from 2015 to 2020. This is a
substantially higher rate than the expected compound annual growth rate for global agrochemicals of
approximately 3 to 5% from 2015 to 2020. Adoption rates for agricultural biologicals are expected to be highest
in the United States, Europe and South America, where growers are typically further ahead of those in
developing countries with respect to agricultural innovation.

Financial summary
A summary of the financial results for the twelve months to 31 December 2015, with comparatives for the
previous financial year, is set out below:

Revenue
Gross profit
Operating loss
Finance income (net)
Net loss for the year

2015
$’000
7,508
4,683
(7,776)
93
(7,720)

2014
$’000
6,880
3,501
(6,077)
116
(6,130)

Revenues in 2015 increased by 9% to $7.5 million (2014: $6.9 million) as a result of a $1.5 million increase in
Harpin product sales to two customers, partially offset by decreased Harpin product sales of $1.0 million to a
single customer. The gross margin increased to 62% of sales in 2015, compared to 51% in 2014. The increase
is attributable to lower unit costs due to more favourable manufacturing costs of our proprietary Harpin products.

Operating expenses increased to $12.5 million from $9.6 million. Expenditure within R&D increased
$2.1 million to $4.1 million in 2015 (2014: $2.0 million). The increase was due to the hiring of additional
research and development staff, higher patent expenses and increased contract research costs. The Group
expects that our R&D costs will further increase as we continue to invest in the development of our
PREtec platform.

In addition, we have set out in Note 9 the separate category of expenditure relating to Business Development,
which increased slightly to $1.2 million in 2015 (2014: $1.0 million). This relates to expenditures for field
trials with existing and potential customers and other costs relating to customer support, market research and
the negotiation of commercial agreements.

Unallocated corporate expenses increased to $2.0 million (2014: $1.4 million).

Cash and investments at 31 December 2015 amount to $8.4 million (2014: $16.7 million).

Key performance indicators (“KPIs”)
The Group uses a range of performance measures to monitor and manage the business effectively. These are
both financial and non-financial. The most significant relate to Group financial performance and to the Group’s
progress in driving the two pillars of its strategy.

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Strategic report continued

The KPIs for financial performance of the Commercial area and for the Group as a whole include revenue,
gross profit and margin, and operating profit/loss. These KPIs indicate the volume of work the Group has
undertaken, as well as the efficiency with which this work has been delivered.

The KPIs for financial performance for the year ended 31 December 2015, with comparatives for the year ended
31 December 2014, are set out below;

Revenue ($’000)
Gross profit ($’000)
Gross profit margin (%)
Operating loss ($’000)

2015
7,508
4,683
62.4
(7,776)

2014
6,880
3,501
50.9
(6,077)

In addition, an important KPI is the increase in revenue achieved from the sale of our proprietary products.
These increases are shown below, separating out the product revenue from the receipt of license/milestone
payments and other one-off payments, which are less predictable and tend to distort the product sales growth.

Proprietary sales (excluding licensing revenue)

Americas
Mexico
Rest of World
Total

2015
$’000
2,278
643
1,364
4,285

2014
$’000
1,821
563
1,240
3,624

The KPIs for non-financial performance relate to the Group’s technologies and include the number and nature
of contracts realised with partners, and progress along the mutually agreed paths to commercial launch
of products.

The Board continues to monitor the progress of its R&D activities and expenditures. As each research project
advances, specific progress is reported to the Board and costs against budget are monitored. We anticipate
refining the KPIs for R&D as each project develops.

In addition, the Business Development activities of the Group are assessed against our success in developing
specific evaluation and commercial arrangements with third parties for the exploitation of our proprietary
products.

Principal risks and uncertainties
Our business is subject to a number of potential risks and uncertainties, including those listed below.
The occurrence of any of these risks may materially and adversely affect our business, financial condition,
results of operations and future prospects. We manage and mitigate these risks by executing on the strategy
described above.

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Strategic report continued

Financial and liquidity risk
(cid:1) We have a history of losses since inception, anticipate continuing to incur losses in the future and may

not achieve or maintain profitability.

(cid:1) We expect to require additional financing in the future and may be unable to obtain such financing on
favourable terms or at all, which could force us to delay, reduce or eliminate our research, development
or commercial activities.

Technology and commercialisation risk
(cid:1)

Our PREtec development and out-licensing strategy is in an early stage and may not be successful.

(cid:1) We are subject to risks relating to product concentration due to the fact that we derive substantially
all ofour revenues from our Harpin αβ and Myconate product lines and from the sale of third-
party products.

(cid:1) We may be unable to establish or maintain successful relationships with third-party distributors and

retailers, which could materially and adversely affect our sales.

(cid:1) We have a limited number of sales and marketing personnel and will need to expand our sales and

marketing capabilities to grow revenues from our commercial products.

(cid:1) We may be unable to obtain adequate protection for the intellectual property covering our new
technology and product candidates or develop and commercialise these product candidates without
infringing on the intellectual property rights of third parties.

Regulatory and legal risk
(cid:1)

If we are unable to obtain regulatory approvals, or to comply with ongoing and changing regulatory
requirements, it could delay or prevent sales of our commercial products or impede the development
of potential products.

(cid:1)

If we use PREtec in trait development, our technologies and product candidates will face more stringent
regulatory regimes.

If we are unable to comply with regulations applicable to our facilities and procedures and those of our
third-party manufacturers, our research and development or manufacturing activities could be delayed,
limited or prevented.

Credit risk
(cid:1)

The majority of our net sales are credit sales that are made primarily to customers whose ability to pay
is dependent, in part, upon the economic strength of the industry and geographic areas in which they
operate, and the failure to collect or timely collect monies owed from customers could materially and
adversely affect our financial condition.

Personnel
(cid:1)

Our future growth and ability to compete depend on retaining our key personnel and recruiting
additional qualified personnel.

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Plant Health Care plc

Strategic report continued

Financial instruments
The Group uses various financial instruments, including equity, cash, short-term investments of investment
grade notes and bonds, and items such as trade receivables and trade payables that arise directly from
its operations.

Information on the risks associated with the Group’s involvement in financial instruments is given in Note 19
to the financial statements.

On behalf of the Board

Paul Schmidt
Chief Executive

8 April 2016

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Plant Health Care plc

Directors

Dr. Christopher G. J. Richards

the

(Executive Chairman)
Dr. Richards joined the Company as non-executive
Chairman in August 2012. He became Executive
Chairman in April 2015 to take on a more active role
in investor relations and in developing strategy,
particularly
focus on New Technology.
Dr. Richards spent 20 years at Syngenta and
its predecessor companies in various strategic
management positions in South America, Europe and
Asia. In November 2003, he was appointed COO
of Arysta LifeScience, and he served as CEO from
2004 until 2010,
leading Arysta LifeScience’s
transformation into a global agrochemical company
with sales above $1.6 billion. He also served as a
director of Arysta LifeScience from 2003 to 2015.
He serves on the board of directors of Dechra plc, an
international specialist veterinary pharmaceuticals
business, Cibus Global Ltd., a precision gene editing
company focused on non-transgenic crop breeding,
Origin Enterprises plc, a service provider to farmers
for food production solutions, and Nanoco Group
plc, a technology company carrying out research,
development and commercialisation of products
based on heavy-metal free quantum dots.

Paul M. Schmidt

(Chief Executive Officer)
Paul Schmidt has served as Chief Executive Officer
and a member of the Board since April 2013.
Mr. Schmidt has extensive operational experience in
the agriculture industry, having served most recently
as President of Merck/EMD Crop Bioscience, a leading
developer of natural plant health products, where he
led a turnaround that
resulted in substantially
increased sales and profit. In February 2011, he
oversaw the sale of the business to Novozymes for
$275 million. Mr. Schmidt served in senior roles in
the United States, Germany and Canada during 25
years with Bayer CropScience and its predecessor
companies, most recently as Vice President and

for

developing

Global Head of New Business Ventures where he had
responsibility
new business
opportunities in the areas of nutrition, health and
biomaterials. Mr. Schmidt graduated from the
University of Saskatchewan with a BSA in Agronomy
in 1980. He is a member of the board of directors of
Alberta Innovates BioSolutions (Province of Alberta
Corporation), a research agency funded by the
Government of Alberta that works to grow prosperity
in Alberta’s agriculture, food and forestry sectors.

Michael J. Higgins

chairman of

Ebiquity plc,

(Senior independent director)
Michael Higgins joined the Company in May 2013 as
senior independent director and Chair of the Audit
Committee. He also serves as a member of the
Remuneration Committee. He currently serves as
non-executive
an
independent marketing analytics company, a non-
executive director of Arria NLG plc, a software
development business, a non-executive director of
Progility plc, a project management services group,
and chairman of the Quoted Companies Alliance, a
non-profit organisation dedicated to helping small to
mid-sized publicly traded companies grow. He is also
a member of the Panel on Takeovers and Mergers as
the appointee of the Quoted Companies Alliance.
Mr. Higgins was a partner at KPMG for 10 years and
subsequently served as a senior adviser at KPMG.
to KPMG, Mr. Higgins was a director at
Prior
Charterhouse Bank, worked at Saudi International
Bank and qualified as an accountant with Price
Waterhouse (now PricewaterhouseCoopers).

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Page 15

Plant Health Care plc

Directors continued

James L. Ede-Golightly

William M. Lewis

(Non-executive director)
William Lewis joined the Company as a non-
executive director in April 2015. Since June 2014,
Mr. Lewis has served as President and CEO of
venture
Summit Agro USA,
agrochemicals
Sumitomo
Corporation and ISK Biosciences. He previously held
senior roles within Arysta LifeScience, Syngenta Crop
Protection and Zeneca/ICI.

a
between

business

joint

LLC,

(Non-executive director)
James Ede-Golightly joined the Company as a non-
executive director in June 2013. He is Chair of the
Remuneration Committee and a member of the Audit
Committee. He currently serves as chairman of East
Balkan Properties plc, an investment company
focused on commercial property in the Balkan region,
chairman of Quoram Plc, an investment company,
chairman of Cronin Group plc, an AIM-listed
technology company, as a director of ORA Limited
(Jersey), a private equity firm, and as non-executive
director of Gulfsands Petroleum, an independent oil
and gas exploration and production company. In
2006, he co-founded ORA Capital Partners, and he
previously served as an analyst at Merrill Lynch
Investment Managers and Commerzbank. He is a
CFA Charterholder and Chartered Director.

Dr. Richard H. Webb

(Executive director)
Dr. Webb joined the Company in September 2013 as
a non-executive director. In January 2015, he was
appointed an executive director,
responsible for
supporting the Chief Science Officer, Dr. Zhongmin
Wei, as the Company continues to expand its
research and development capability. He was
previously engaged by the Company as a consultant,
contracted through StepOut Ltd., a consultancy
business he founded in 1995.
In this capacity,
between 2012 and 2014, he was instrumental in the
development of
the Company’s new business
strategy and its current New Technology programme.
He previously held various positions at Imperial
spinout Zeneca
Chemical
Agrochemicals,
for
managing laboratory discovery and field development
programmes for its public health pesticide business.
His doctorate, in pest biology, was from the London
School of Hygiene & Tropical Medicine.

responsibilities

Industries

including

and its

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Page 16

Plant Health Care plc

Board committees

The principal standing committees appointed by the
Board are as follows:

The consideration of auditor independence is a
standing agenda item at each Audit Committee
meeting.

Remuneration Committee
The members of the Remuneration Committee are
and Michael
James Ede-Golightly (Chairman)
Committee’s
Remuneration
Higgins.
responsibilities include the following:

The

(cid:1)

and

approving,

reviewing
or making
recommendations to the Board with respect
to,
the executive
the compensation of
directors and senior management;

overseeing
management; and

evaluation

senior

overseeing and administering the Company’s
employee share option scheme and equity
incentive plans in operation from time to time.

The Remuneration Committee report is set out on
pages 20 to 26.

Audit Committee
The Audit Committee is chaired by Michael Higgins.
In January 2015, James Ede-Golightly was added as a
member of the Committee. Subsequently, at the end
of the 2015 AGM, Dr. Webb, who had taken on
executive responsibilities in January 2015, stepped
down, having been a member of the Committee since
September 2013. The Audit Committee is made up
solely of independent non-executive directors.

The Committee provides a forum for reporting by the
Group’s auditor and reviews the Group’s budget and
its interim and final financial statements before their
submission to the Board. The Committee also
monitors the Group’s risk management and internal
control practices and reports to the Board on these.
The Committee
the Board on the
appointment of the external auditor and on its
remuneration, both for audit and non-audit work.
It also discusses the nature and scope of the audit
with the auditor.

advises

The Audit Committee has sole responsibility for
assessing the independence of the external auditor,
BDO LLP. Each year, the Committee seeks reassurance
that the external auditor and its staff have no family,
investment or business
financial, employment,
relationship with the Group. The Committee requires
the external auditor and its associates to confirm this
in writing, and detail the procedures which the
to make this
auditor has carried out
confirmation. The Committee also ensures that all
partners engaged in the audit process are rotated at
least every five years, and assesses the likely impact
on the auditor’s independence and objectivity before
awarding it any contract for additional services.
It is Group policy to require Audit Committee
approval for all non-audit services provided by the
independent auditor.

in order

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Page 17

Corporate governance

website

Council

Reporting

the London Stock Exchange do not

Plant Health Care plc has taken note of the UK
Corporate Governance Code (“the UK Code”)
published in September 2014. The UK Code
and associated guidance can be found on the
Financial
at
www.frc.org.uk/corporate/ukcgcode.cfm. The rules
of
require
companies that have securities traded on AIM to
formally comply with the UK Code and the Company
does not seek to formally comply nor give a
statement of compliance. However, the Board is
accountable to the Company’s shareholders for good
governance and has sought to apply those principles
of corporate governance commensurate with the
Company’s size.

The Company’s approach is set out below:

Board composition
The Board currently comprises
an executive
Chairman, two executive directors and three non-
executive directors. The Board considers all of the
in judgment
non-executives to be independent
and character.

Biographies of the Board members appear on pages
14 and 15. These indicate the high levels and range
of business experience which is essential to oversee
effectively a business of the size, complexity and
geographical spread of the Group. Concerns relating
to the executive management of the Group or the
performance of
the directors can be raised in
confidence by contacting the senior independent
director, Michael Higgins, through the Company
Secretary.

Board committees
The Board has established audit and remuneration
committees, as described on page 16. No separate
nominations committee has been established.
A Nominations Working Group comprised of non-
executive directors provides advice and guidance on

Plant Health Care plc

the selection of candidates; the full Board acts as a
nominations committee when changes to the Board
of directors are proposed.

Workings of the Board
The Board meets on a pre-scheduled basis at least six
times each year and more frequently when required.
The Board has a schedule of matters reserved to it for
decision and the requirement for Board approval on
these matters is communicated widely throughout
the senior management of the Group. The schedule
includes matters such as: approval of the Group’s
strategic plan; extension of the Group’s activities into
new business or geographic areas; any decision to
cease to operate all or any material part of the Group’s
business; changes relating to the Group’s capital
structure; contracts that are material strategically or
by reason of size;
including the
acquisition or disposal of interests in the voting
shares of any company or the making of any takeover
offer; and the prosecution, defence or settlement of
litigation material to the Group.

investments,

There is an agreed procedure for directors to take
independent professional advice, if necessary, at the
Company’s expense. This is in addition to the access
which every director has to the Company Secretary,
who is charged by the Board with ensuring that Board
procedures are followed.

The differing roles of Chairman and Chief Executive
are acknowledged. The key functions of the Chairman
are to conduct Board meetings and meetings of
shareholders and to ensure that all directors are
properly briefed in order to take a full and constructive
part in Board discussions. The Chief Executive is
required to develop and execute business strategies
and processes to enable the Group’s business to meet
the requirements of its shareholders. The senior
independent director acts as a point of contact for
shareholders and other stakeholders with concerns
which have failed to be resolved, or would not be

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Page 18

Plant Health Care plc

Corporate governance continued

appropriate to be addressed, through the normal
channels of the Chairman or Chief Executive. The
senior independent director also meets with the other
members of the Board without the Chairman present
on at least an annual basis in order to evaluate and
appraise the performance of the Chairman.

To enable the Board to function effectively and allow
directors to discharge their responsibilities, full and
timely access is given to all relevant information. In
the case of Board meetings, this consists of a
including regular
comprehensive set of papers,
business progress reports and discussion documents
regarding specific matters. All Board members engage
actively with management to provide support in their
areas of specific competence; this provides ample
opportunity for non-executive directors to understand
the business in depth.

In line with the requirements of the UK Code,
the Board normally conducts an internal Board
performance evaluation on an annual basis.

Re-election of directors
Any director appointed during the year is required
under the provisions of the Company’s articles of
association to retire and seek election by shareholders
at the next annual general meeting. The articles also
require that one-third of the directors retire by rotation
each year and seek re-election at the annual general
meeting. The directors required to retire will be those
in office longest since their previous re-election.
In any event, each director must retire at the third
annual general meeting following his appointment or
re-appointment
in a general meeting. Retiring
directors are eligible for re-election by shareholders.

Remuneration of directors
A statement of the Company’s remuneration policy
and full details of directors’ remuneration are set out
in the Remuneration Committee report on pages
20 to 26. Executive directors abstain from any
discussion or voting at full Board meetings on
Remuneration Committee recommendations where
the recommendations have a direct bearing on their
own remuneration package.

Communication
The Company places a great deal of importance on
communication with its shareholders. The Company
publishes online both an interim statement and its
full-year report and accounts. The annual report is
mailed to all shareholders and, upon request, to other
parties who have an interest
in the Group’s
performance.
communication with
shareholders also takes place via the Company’s
website: www.planthealthcare.com/for-investors.

Regular

the interim and final

There is regular dialogue with major shareholders,
as well as general presentations after the release
of
results. From time to
time,
these meetings involve the Chairman or
non-executive directors. All shareholders have the
opportunity to ask questions at the Company’s
annual general meeting.

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Page 19

Plant Health Care plc

Corporate governance continued

Risk management and internal controls
The directors recognise that the Group is ambitious
and seeking significant growth.

The Board has in place a formal process for
identifying, evaluating and managing the significant
risks faced by the Group, which complies with the
Revised Guidance for Directors on the Combined
Code published by the Financial Reporting Council.

The directors are responsible for the Group’s system
of internal control and for reviewing its effectiveness.
However, such a system can provide only reasonable,
but not absolute, assurance against material
misstatement or loss.

There is a formal process in place to regularly review
the control systems across the Group to evaluate
whether they are designed appropriately to mitigate
emerging risks and in anticipation of expected
growth. Twice a year, the Chief Financial Officer
presents to the Board, for discussion and approval, a
summary of the key internal controls in place during
the prior period and proposals for enhancements to
these controls in the forthcoming period. Based on
this process, the directors believe that the Group has
internal control systems in place appropriate to its
size and nature.

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Page 20

Plant Health Care plc

Remuneration Committee report

The Remuneration Committee is chaired by James Ede-Golightly. Michael Higgins is also a member. Both are
non-executive directors. The Committee is responsible for determining the contract terms, remuneration and
other benefits of the executive directors and of the Chairman, and for monitoring the remuneration of
first-line executive management. The Committee may call on outside compensation experts as required.

Remuneration policy
It is Group policy to set directors’ remuneration levels to attract, incentivise and retain the quality of individuals
that the Group requires to succeed in its chosen objectives. It is also Group policy to ensure that there is a
strong link between the level of executive directors’ remuneration and the performance of the Group in
achieving its goals.

Elements of remuneration – executive directors

Chief Executive Officer
The following comprised the principal elements of the Group’s Chief Executive Officer’s remuneration during
2014 and 2015:

(cid:1)

basic salary and benefits;

annual bonus (performance-related and discretionary);

long-term share-based incentives; and

pension contributions.

Other executive directors
Remuneration for the Group’s other executive directors during 2014 and 2015 was comprised of basic salary
and benefits.

Basic salary and benefits
Salaries for the Chief Executive Officer and other executive directors are reviewed annually by the Committee.
As the level of the Chief Executive Officer’s remuneration can be significantly augmented through performance-
related bonuses, only in exceptional circumstances will the Committee consider an increase in excess of the
general rate of wage inflation for the United States. Where such an increase has been awarded, the Committee
will publish the reasons behind its decision in the Remuneration Committee report.

In addition to basic salary, the Group’s Chief Executive Officer was entitled to the following main benefits:

(cid:1)

three weeks of vacation per annum;

coverage under the Company’s health insurance plans; and

coverage under the Company’s long-term and short-term disability and group term life insurance plans.

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Page 21

Plant Health Care plc

Remuneration Committee report continued

Annual bonus
An annual bonus is payable to the Chief Executive Officer based on achievement of certain corporate and
personal objectives. For 2015, the Group’s Chief Executive Officer had a bonus potential of 100% of his basic
salary and he was paid a bonus of $125,000, or 50% of his basic salary. For 2016, the potential remains 100%.
This ensures that there is a significant element of “at risk” pay, which is only available when good results
are achieved.

Long-term share-based incentives
Each of the executive directors was eligible to participate in the Company’s share option schemes and
long-term incentive stock award plans. The main features of these plans are:

(a) 2004 Unapproved share option scheme
In July 2004, the Board adopted the Plant Health Care plc Unapproved Share Option Scheme 2004. Under this
scheme, the Board could grant options at an exercise price of not less than the market value of a share on the
date of award. Options may normally be exercised between three and 10 years from grant. In most cases,
vesting is also dependent upon the option holder remaining an eligible employee. In 2014, the scheme reached
the tenth anniversary of its approval by shareholders; no further options may be granted. The Company was
authorised to award options and shares under these plans up to the greater of 3% of its issued share capital
or such number as, when aggregated with any outstanding options converted from the Plant Health Care,
Inc. option plans from 1996 and 2001, amounts to no more than 10% of the issued share capital of
the Company.

(b) Value creation plan
On 2 July 2013, the Company adopted the Plant Health Care plc 2013 Equity Incentive Plan, or the Value
Creation Plan. Participants (which include the Executive Chairman, Chief Executive Officer and key members
of the Group’s senior management team) are entitled to receive a share of the Executive Total Incentive Pool
established by the plan. The Executive Total Incentive Pool equals up to 10% of the Equity Value Created. Equity
Value Created is defined as the value generated for shareholders in excess of the initial market value of the
ordinary shares increased by an 8% annual hurdle, over a four-year Performance Period. The initial market
value was 78p (corresponding to the price of the ordinary shares issued in the April 2013 private placement).
The Performance Period extends from 16 April 2013 to the Measurement Date (the 20th market trading day
after announcement of the Group’s financial results for the year ending 31 December 2016 or such shorter
period in the event of certain changes of control). The mechanics of the plan accommodate equity issuances,
including option awards and ordinary shares issued in new placements or as consideration for acquisitions (by
adjusting the Executive Total Incentive Pool by up to 10% of any value generated from additional fundraisings
in excess of the issue price of those fundraisings increased by an annual hurdle of 8% (multiplied by the
number of shares issued in the additional fundraising) from the date of the fundraising up to the Measurement
Date) and the payment of dividends during the Performance Period. The vesting of awards under this plan is
generally subject to exercise conditions. The Company may not award options that amount to more than 10%
of the issued share capital of the Company.

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Page 22

Plant Health Care plc

Remuneration Committee report continued

(c) 2015 Employee share option plan
On 16 June 2015, the Board adopted the Plant Health Care plc 2015 Employee Share Option Plan, or the EMI
Plan, which provides for the grant of options to acquire the Company’s ordinary shares. Under the EMI Plan,
the Company may grant enterprise management incentive options, known as EMI options, to eligible bona fide
employees who qualify under applicable United Kingdom tax law, as well as options that do not qualify as EMI
options, or NQOs. Vesting of options is subject to the performance conditions set out in the applicable option
agreement and pursuant to the EMI Plan. The Board has the discretion and authority to set and measure the
satisfaction of the performance conditions, which under the EMI Plan must be linked to the achievement of
challenging financial performance over a period of at least three years, but no more than 10 years, from the
date of grant and the enhancement of shareholder value. Performance conditions may be amended, relaxed
or waived by the Board provided that any varied performance conditions would be a fairer measure of
performance than the original performance conditions and are no more or no less difficult to satisfy than prior
to the amendment. At any time, the total market value of the shares that can be acquired upon the exercise
of all EMI options under the EMI Plan may not exceed £3 million.

As part of the EMI Plan, the Board has adopted rules governing options awarded to the Company’s US
employees, or the US Sub-Plan to the EMI Plan. The US Sub-Plan to the EMI Plan provides for grants of both
incentive stock options qualifying under section 422 of the Internal Revenue Code of 1986, as amended, and
non-statutory stock options. The term of an incentive stock option may not exceed 10 years (subject to certain
limitations with respect to any employee who owns more than 10% of the voting power of all classes of the
Company’s outstanding ordinary shares). In the event the option holder ceases to be an employee before he
or she exercises the vested portion of the option for any reason other than death, disability or by the employer
for cause, the option shall expire three months after the date on which the option holder ceases to be an
employee. In the event the option holder ceases to be an employee because of death or disability, the option
holder, or his or her personal representative in the event of death, may exercise the vested portion of the
option during the 12-month period following the date the option holder ceases to be an employee. In the
event that the option holder’s employment is terminated for cause by the employer, the option will expire
immediately upon the date employment is terminated.

On 16 June 2015, the Board also adopted the Plant Health Care plc 2015 Non-Employee Share Option Plan,
or the Non-Employee Option Plan, that provides for the grant of options to acquire ordinary shares to eligible
option holders who are not employees. As part of the Non-Employee Option Plan, the Board has adopted rules
governing options awarded to individuals who are not employees, or the US Sub-Plan to the Non-Employee
Option Plan. This sub-plan provides for grants of non-statutory stock options. As of 31 December 2015, no
awards were outstanding under the Non-Employee Option Plan or the US Sub-Plan to the Non-Employee
Option Plan.

(d) Options granted outside option schemes
The Company has granted options to acquire shares pursuant to separate unapproved option agreements to
Messrs. Schmidt, Higgins and Lewis and to Dr. Webb. Generally, the options may only be exercised while the
option holder is a service provider to the Company. In the event that the option holder ceases to be a service
provider as a result of injury, ill health or disability, upon the company for which the option holder works
ceasing to be a member of the Group, or the transfer of the business that employs the option holder to a

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Plant Health Care plc

Remuneration Committee report continued

person that is not in the Group, the option may be exercised during the six-month period beginning on the
date upon which the option holder is no longer a service provider to the Company. Shares allotted under these
options rank equally with all other shares in the same class in issue at the date of allotment. If and for so long
as the allotted shares are listed or traded on any stock exchange, the Company shall apply for the shares
allotted under these options to be admitted to the relevant exchange. In the event of any capitalisation issue,
rights issue, consolidation, sub-division, reduction or other variation of the Company’s share capital, the
number and description of the shares subject to each option or the exercise price of each option shall be varied
as the Board determines, provided that it considers such adjustment to be fair and appropriate. Limitations apply
to the extent to which any such adjustment may reduce the price at which shares may be purchased pursuant
to the exercise of an option and the exercise price for a share to be newly issued on the exercise of an option
shall not be reduced below its nominal value.

Pension benefit
The Chief Executive Officer is entitled to participate in the Plant Health Care, Inc. 401(k) Plan. This is a defined
contribution plan approved by the US Internal Revenue Service. The main features of the plan are:

(cid:1)

participation is open to all US-based employees who have completed a probationary period after
initial employment;

employees may contribute a percentage of salary to the plan through a payroll withholding scheme;

In 2015, the Group made matching contributions of up to 2% of compensation to participating
employees. In 2016, the Group will continue to match contributions up to 2% of compensation to
participating employees;

Beginning in 2014, Group contributions vest immediately; and

the plan is subject to various statutory non-discrimination tests to ensure that it does not favour
highly-compensated employees.

Elements of remuneration – non-executive directors
During 2014 and 2015, the remuneration for non-executive directors consisted solely of fees for their services
in connection with the Board and Board committees. The non-executive directors receive their fees wholly in
cash. In addition, certain of the non-executive directors provide consultancy services to the Group.

Service contracts
During 2014 and 2015, the Company had service contracts with all executive and non-executive directors.
Provisions in the service contracts included:

For the Group’s Chief Executive Officer:

(cid:1)

employment continues through 2 April 2016 and is automatically extended at that time (and on
each 2 April thereafter) for successive one-year periods unless either party provides 60 days’ prior
written notice;

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Plant Health Care plc

Remuneration Committee report continued

(cid:1)

the employment agreement can be terminated by either party without cause, provided that Mr. Schmidt
is required to provide six months’ prior written notice;

the Company may also terminate Mr. Schmidt’s employment with immediate effect for cause on the part
of Mr. Schmidt;

Mr. Schmidt may terminate his employment for good reason; however, he must provide 20 days’ prior
written notice and the opportunity to correct the event giving rise to such termination;

if Mr. Schmidt’s employment is terminated by the Company for any reason other than for cause or by
Mr. Schmidt for good reason, Mr. Schmidt is eligible to receive an amount equal to 12 months of his
base pay plus a bonus; and

In the event of a sale of all of the Company’s assets and/or equity, Mr. Schmidt is entitled to be paid
(in a lump sum within 60 days of the effective date of such sale) an amount equal to (i) 0.33% of the
net proceeds (up to £1,000,000), if such sale generates at least £150,000,000 in net proceeds or (ii) an
amount equal to $1,500,000 if the effective date of such sale occurs prior to 2 April 2016 and the sale
generates less than £150,000,000 in gross proceeds.

For other executive directors (including the Executive Chairman):

(cid:1)

termination may be initiated by the Company or the director at any time with three months’ written
notice;

the Company may also terminate the agreement with immediate effect by paying a sum in lieu of notice
equal to the basic fixed salary the director would have been entitled to receive during the notice period;
and

the Company may also terminate the agreement with immediate effect at any time without notice or
payment in lieu of notice for certain circumstances including gross misconduct affecting the business.

For non-executive directors:

(cid:1)

each director’s appointment may be terminated with no less than three months’ prior written notice;
and

each director’s appointment may also be terminated with immediate effect for certain circumstances
including serious breach or repeated breach of any obligations to the Company; any act of fraud or
dishonesty; or a declaration of bankruptcy.

In addition to the above, the Company’s articles of association require that at least one-third of the directors
retire by rotation at each annual general meeting. Such retiring directors are eligible for re-election.

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Plant Health Care plc

Remuneration Committee report continued

Directors’ remuneration
For the year ended 31 December 2015, the table below sets forth the compensation paid to the directors and,
in the case of Mr. Schmidt, reflects the compensation paid for his services as Chief Executive Officer.
Mr. Schmidt did not receive any compensation other than in his capacity as an executive.

Base salary,
and fees
$’000

Performance-
related
bonus
$’000

Other
benefits
$’000

Share
option
benefit
$’000

Executive:
P. Schmidt
C. Richards *
R. Webb**

Non-executive:
M. Higgins
J. Ede-Golightly
W. Lewis (Appointed 1 April 2015)

250
137
122

68
38
29

644

125
—
—

—
—
—

125

27
—
—

—
—
—

—
341
512

—
—
49

Total
2015
$’000

402
478
634

68
38
78

Total
2014
$’000

479
87
91

74
41
—

902

1,698

772

The 2015 amount included in the table for Chris Richards represents fees for services provided as a non-executive and executive director in the
amount of $22,074 and $115,361, respectively.

The 2015 amount included in the table for Richard Webb represents fees for services provided as a non-executive and executive director in the
amount of $23,737 and $98,191, respectively.

The 2014 amount included in the table for Richard Webb represents fees for services provided as a non-executive director in the amount of
$41,000, as well as remuneration for consultancy services in the amount of $50,000.

Executive salaries
At 31 December 2015, Paul Schmidt had a base salary of $250,000 (2014: $250,000) and bonus potential
of 100%.

Other benefits
In 2015, the Company contributed to the 401(k) Plan 2% (2014: 2%) of eligible compensation. In 2015,
pension expense for the executive directors was $5,850 (2014: $5,350).

In 2015, the Company incurred nil (2014: $17,550) of other payroll expense.

In 2015, the Company incurred $21,157 (2014: $18,666) of medical, dental and life insurance expense.

The share option benefit includes the amounts for the value of options and other equity awards granted to the
Company’s directors during 2015.

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Plant Health Care plc

Remuneration Committee report continued

Directors’ share-based incentives

Movements in 2015
During 2015, the following share option awards were made to directors:

Director
C. Richards

Plan
2015 Employee
share option plan

R. Webb

2015 Employee
share option plan

Date of
award
16 June 2015

16 June 2015

W. Lewis

Stand-alone agreement

16 April 2015

Number of
options
233,644
EMI Options
481,356 NQOs
233,644
EMI options
841,356 NQOs
89,686

Exercise
price £
1.07

Expiry date
16 June 2019

1.07

16 June 2019

1.12

16 April 2019

Other information
During the year, the Company’s share price on AIM ranged between 72.0p and 127.5p. At 31 December 2015,
the share price was 83.5p. At 7 April 2016, the last working day prior to the approval of this annual report,
the share price was 52.5p.

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Plant Health Care plc

Report of the directors

The directors present their annual report together with the audited financial statements for the year ended
31 December 2015. See note 19 for discussion of financial risk management objectives and policies, exposure
to price, credit, liquidity and cash flow risk.

Results and dividends
The results of the Group for the year are set out on page 32 and show a loss for the year of $7,720,000
(2014: loss of $6,130,000).

The directors recommend that no dividend be paid at this time.

Directors
The directors of the Company during and at the end of the year and their beneficial interests in the ordinary
share capital of the Company and options to purchase ordinary shares of the Company (including through the
value creation plan) were as follows:

C. Richards
P. Schmidt
R. Webb
M. Higgins
J. Ede-Golightly
W. Lewis

At 31 December 2015
Options
1,577,000
1,909,821
1,203,205
117,647
—
89,686

Shares
76,324
82,880
10,000
—
445,111
—

Further details of the directors’ share options and awards under the VCP are shown in the Remuneration
Committee report on pages 20 to 26.

None of the directors has any holding in any subsidiary company, nor any material interest in the transactions
of the Group.

Substantial shareholders
On 7 April 2016, the directors are aware of the following persons who, directly or indirectly, are interested in
3% or more of the Company’s existing Ordinary Share capital:

Name
Henderson Global Investors Limited
Richard Griffiths**
Blake Holdings Limited**
Boulder River Capital Corporation and its affiliates
Polar Capital
Sarossa Plc
Seren Capital Management Limited**

Shares held
18,957,124
14,886,132
9,453,758
7,955,397
4,422,154
3,837,304
3,724,619

Percentage of issued
share capital*
26.38
20.72
13.16
11.08
6.15
5.34
5.18

The percentages shown are based on the most recent share register analysis or notification.

Blake Holdings Limited and Seren Capital Management Limited are controlled by Richard Griffiths, hence the interest of Blake Holdings Limited
and Seren Capital Management Limited are also included within that of Richard Griffiths.

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Plant Health Care plc

Report of the directors continued

Research and development
The Group continues to invest in R&D activities with an emphasis on the improvement of existing technologies,
the formulation of products to meet specific customer needs and the development of proprietary bio-stimulants
based on the Company’s Harpin platform technology. For further details of the Company’s R&D activities, see
the Chairman’s letter and Strategic report on pages 3 to 13.

Business review
For a discussion of the Group’s 2015 performance and future developments, see the Chairman’s letter and
Strategic report on pages 3 to 13.

Board meetings and attendance
The following table shows the attendance of directors at meetings of the Board, Audit Committee and
Remuneration Committee held during the 2015 financial year:

Number of meetings held
C. Richards
P. Schmidt
R. Webb
M. Higgins
J. Ede-Golightly
W. Lewis (Appointed 1 April 2015)

Board
9
9
9
9
9
9
5

Audit
Committee
3
—
—
1
3
3
—

Remuneration
Committee
4
2
—
—
4
4
1

Auditor
All of the directors have taken all the steps that they ought to have taken to make themselves aware of any
information needed by the Company’s auditor for the purposes of its audit and to ensure that the auditor is aware
of that information. The directors are not aware of any relevant audit information of which the auditor is unaware.

Going concern
In consideration of the Group’s current resources and review of financial forecasts and projections, the directors
have a reasonable expectation that the Group has adequate resources to continue in operational existence for
the foreseeable future. No material uncertainties that may cast significant doubt about the ability of the
Company to continue as a going concern have been identified by the directors. Accordingly, the directors
continue to adopt the going concern basis in preparing the annual report and accounts.

Annual general meeting
At the forthcoming annual general meeting of the Company, resolutions will be put forward to re-elect
Michael Higgins and Paul Schmidt as directors and to re-appoint BDO LLP as the auditor of the Company.
Shareholders will also be asked to approve the US Sub-Plan to the 2015 Employee Share Option Plan.

By Order of the Board

Andrew C. Wood FCIS
Company Secretary
8 April 2016

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Plant Health Care plc

Statement of directors’ responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law, the
directors have elected to prepare the Group financial statements in accordance with International Financial
Reporting Standards (“IFRSs”), as adopted by the European Union, and the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law, the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company
and of the profit or loss of the Group for that period. The directors are also required to prepare financial
statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

In preparing these financial statements, the directors are required to:

(cid:1)

select suitable accounting policies and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

state whether they have been prepared in accordance with IFRSs, as adopted by the European Union,
subject to any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis, unless it is inappropriate to presume that
the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy the financial position of the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act
2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.

Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available
on a website. Financial statements are published on the Company’s website in accordance with legislation in
the United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility
of the directors. The directors’ responsibility also extends to the ongoing integrity of the financial statements
contained therein.

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Plant Health Care plc

Independent auditor’s report

To the members of Plant Health Care plc

We have audited the financial statements of Plant Health Care plc for the year ended 31 December 2015 which
comprise the consolidated statement of comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the
Company statement of financial position, Company statement of changes in equity, and the related notes. The
financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The
financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.

Respective responsibilities of directors and auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC’s website at
www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements
In our opinion:

(cid:1)

the financial statements give a true and fair view of the state of the Group’s and the parent company’s
affairs as at 31 December 2015 and of the Group’s loss for the year then ended;

the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;

the parent company’s financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and

the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.

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Plant Health Care plc

Independent auditor’s report continued

Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:

(cid:1)

adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns;
or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Julian Frost
(Senior statutory auditor)

For and on behalf of BDO LLP
Statutory auditor
55 Baker Street, London
United Kingdom

8 April 2016

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

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Plant Health Care plc

Consolidated statement of comprehensive income

for the year ended 31 December 2015

Revenue
Cost of sales

Gross profit
Research and development expenses
Business development expenses
Sales and marketing expenses
Administrative expenses

Operating loss
Finance income
Finance expense

Loss before tax
Income tax expense

Loss for the year attributable to the equity holders of the

parent company

Other comprehensive income:
Items which will or may be reclassified to profit or loss:
Exchange difference on translation of foreign operations

Total comprehensive loss for the year attributable to the

equity holders of the parent company

Basic and diluted loss per share

Note
4

5
10
10

2015
$’000
7,508
(2,825)

4,683
(4,105)
(1,155)
(2,715)
(4,484)

(7,776)
95
(2)

(7,683)
(37)

2014
$’000
6,880
(3,379)

3,501
(2,044)
(1,037)
(2,731)
(3,766)

(6,077)
119
(3)

(5,961)
(169)

(7,720)

(6,130)

111

(29)

(7,609)

$(0.11)

(6,159)

$(0.09)

The notes on pages 36 to 71 form part of these consolidated financial statements.

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Page 33

Consolidated statement of financial position

at 31 December 2015

Assets
Non-current assets
Intangible assets
Property, plant and equipment
Trade and other receivables

Total non-current assets

Current assets
Inventories
Trade and other receivables
Investments
Cash and cash equivalents

Total current assets

Total assets

Liabilities
Current liabilities
Trade and other payables
Finance leases

Total current liabilities

Non-current liabilities
Finance leases

Total non-current liabilities

Total liabilities

Total net assets

Share capital
Share premium
Foreign exchange reserve
Accumulated deficit

Total equity

Note

13
14
16

15
16
19

17
18

21
22
22
22

Plant Health Care plc

2015
$’000

2,435
1,183
73

3,691

1,391
4,609
7,491
948

14,439

18,130

3,061
8

3,069

3,085

15,045

1,236
71,040
(500)
(56,731)

15,045

2014
$’000

2,707
298
41

3,046

1,084
2,710
12,775
3,898

20,467

23,513

1,832
10

1,842

1,866

21,647

1,234
70,895
(611)
(49,871)

21,647

The consolidated financial statements were approved and authorised for issue by the Board on 8 April 2016.

P. Schmidt
Director

Registered No: 05116780 (England and Wales)

The notes on pages 36 to 71 form part of these consolidated financial statements.

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Plant Health Care plc

Consolidated statement of changes in equity

for the year ended 31 December 2015

Share
capital
$’000

1,215

Share
premium
$’000

70,206

Reverse
acquisition
reserve
$’000

Share-based
payment
reserve
$’000

Foreign

exchange Accumulated
deficit
$’000

reserve
$’000

Total
$’000

10,548

2,556

(582)

(57,348)

26,595

—

— (10,548)
—
—

—
(2,556)

Balance at 1 January 2014

Loss for year
Exchange difference arising on

translation of foreign operations

Total comprehensive income/(loss)
Reverse acquisition reserve

reclassification

—
Share-based payments reclassification —
Share-based payments
Options exercised

689

Balance at 31 December 2014

1,234

70,895

Loss for year
Exchange difference arising on

translation of foreign operations

Total comprehensive income/(loss)

Shares issued
Share-based payments
Options exercised

—

—
—
2

—

42
—
103

Balance at 31 December 2015

1,236

71,040

—

—
—
—

—

—
—
—

—

(29)

—
—

—

(6,130)

—

(29)

(6,130)

(6,159)

10,548
2,556
503
—

—
—
503
708

(611)

(49,871)

21,647

—

111

—
—
—

(7,720)

—

111

(7,720)

(7,609)

—
860
—

42
860
105

(500)

(56,731)

15,045

The notes on pages 36 to 71 form part of these consolidated financial statements.

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Page 35

Consolidated statement of cash flows

for the year ended 31 December 2015

Cash flows from operating activities
Loss for the year
Adjustments for:
Depreciation
Amortisation of intangibles
Share-based payment expense
Finance income
Finance expense
Income taxes expense
(Increase)/decrease in trade and other receivables
Loss on disposal of fixed assets
(Increase)/decrease in inventories
Increase/(decrease) in trade and other payables
Income taxes paid

Net cash used in operating activities

Investing activities
Purchase of property, plant and equipment
Finance income
Purchase of investments
Sale of investments

Net cash provided by/(used in) investing activities

Financing activities
Finance expense
Issue of ordinary share capital
Exercise of options
Repayment of borrowings

Net cash provided by financing activities

Net decrease in cash and cash equivalents
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Note

14
13

10
10

14
10

Plant Health Care plc

2015
$’000

(7,720)

164
272
860
(95)
2
37
(1,931)
14
(307)
1,229
(37)

(7,512)

(1,063)
95
(8,933)
14,217

4,316

(2)
42
105
(10)

135

(3,061)
111
3,898

948

2014
$’000

(6,130)

87
297
503
(119)
3
169
735
5
1,426
(1,334)
(190)

(4,548)

(114)
119
(20,831)
19,110

(1,716)

(3)
—
708
(9)

696

(5,568)
(29)
9,495

3,898

The notes on pages 36 to 71 form part of these consolidated financial statements.

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Page 36

Plant Health Care plc

Notes forming part of the Group financial statements

for the year ended 31 December 2015

1. General information
Plant Health Care plc (the ‘‘Company’’) is a public limited company incorporated in England and Wales. The
address of its registered office is 48 Chancery Lane, London WC2A 1JF. The Company and its subsidiaries
(together, the ‘‘Group’’) is a leading provider of proprietary agricultural biological products and technology
solutions focused on improving crop performance by activating a growth response and bolstering plant defence
mechanisms against both abiotic and biotic stresses. The principal markets of the Company and its subsidiaries
are described in Note 9.

2. Accounting policies

Reporting currency
The financial statements are presented in thousands of US dollars. The directors believe that it is appropriate
to use US dollars as the presentational currency for reporting, since the majority of the Group’s transactions
are conducted in that currency. The exchange rates used to convert British pounds to US dollars at 31 December
2015 and 2014 were 1.4802 and 1.5532, respectively, and the average exchange rate for the years then ended
were 1.5284 and 1.6476, respectively.

Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards, International Accounting Standards and Interpretations (collectively “IFRSs”) issued by
the International Accounting Standards Board (“IASB”) and as adopted by the European Union and those
parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs.

Amounts are rounded to the nearest thousand, unless otherwise stated.

In 2015, the Group changed its operating and reportable segments to align with the way its business is currently
managed and to better reflect its evolving research and development activities. Therefore, the Group now
discloses New Technology as a separate operating and reportable segment. The 2014 presentation of this data
has been reclassified to conform to the 2015 presentation. Additional information about the Group’s operating
and reportable segments is included in Note 9.

Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for financial
instruments designated at fair value through the profit and loss.

The principal accounting policies are set out below. The policies have been applied consistently to all the
years presented and on a going concern basis.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

2. Accounting policies continued

Standards, amendments and interpretations to published standards effective in 2015 adopted by the Group
A number of new and amended standards have become effective since the beginning of the year. None of the
new amendments materially affect the Group.

Standards, amendments and interpretations to published standards not yet effective
There are a number of new standards and amendments to and interpretations of existing standards which have
been published and are not yet mandatory and which the Group has decided not to adopt early.

A summary of these standards is given in Note 25 to the financial statements.

Basis of consolidation
On 6 July 2004, Plant Health Care plc became the legal parent company of Plant Health Care, Inc. in a share-
for-share transaction. The former shareholders of Plant Health Care, Inc. became the majority shareholders of
Plant Health Care plc. Further, the continuing operations and executive management of Plant Health Care plc
were those of Plant Health Care, Inc.

This combination was accounted for as a reverse acquisition with Plant Health Care, Inc., the legal acquiree,
being treated as the acquirer. Under this method, the assets and results of Plant Health Care plc were combined
with the assets, liabilities and results of Plant Health Care, Inc. from the date of combination. There was no
adjustment to the carrying values of the assets and liabilities in Plant Health Care, Inc. to reflect their fair value
at the date of combination. No goodwill arose on this combination.

These consolidated financial statements incorporate the financial statements of the Group and the entities
controlled by the Group. Control exists when the Group has (i) power over the investee, (ii) exposure, or
rights, to variable returns from its involvement with the investee, and (iii) the ability to use its power over the
investee to affect the amount of the investor’s returns. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control commences until the date that control
ceases. All significant intercompany transactions, balances, revenues and expenses have been eliminated.

The consolidated financial statements incorporate the results of business combinations using the purchase
method. In the consolidated statement of financial position, the acquiree’s identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired
operations are included in the statement of comprehensive income from the date on which control is obtained.
They are deconsolidated from the date control ceases.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

2. Accounting policies continued

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, as well as from granting certain licenses for the use of its intellectual property. Revenue from the sale
of goods is recognised when all the following conditions have been satisfied:

(cid:1)

the significant risks and rewards of ownership of the goods have been transferred to the buyer;

the Group retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;

the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow to the Group; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Group typically transfers significant risks of ownership and title in the products upon shipment of goods
from one of its locations. After the Group transfers title and ships goods to the customer, it typically does not
retain significant involvement nor does it have effective control over the goods sold. Therefore, if all other
revenue recognition criteria are met, revenue is recognised upon shipment of the goods to the customer.
Payment terms range from 30 to 270 days depending on the local custom.

In the limited situation where the Group offers a product rebate to the customer, it records the fair value of
the product rebate as a reduction to product revenue. An accrued liability for these product rebates is estimated
and recorded at the time the revenues are recorded.

License/milestone payment income is recognised when the Group has no remaining obligations to perform
under a non-cancellable contract which permits the user to act freely under the terms of the agreement and
the collection of the resulting receivable is reasonably assured. To date the Group has not achieved the
performance obligations for any milestone payments.

Goodwill
Goodwill is measured as the excess of the cost of an acquisition over the net fair value of the identifiable
assets, liabilities and contingent liabilities, plus any direct costs of acquisition for acquisitions before 1 January
2010. For business combinations completed on or after 1 January 2010, direct costs of acquisition are
recognised immediately as an expense.

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to
administrative expenses in the consolidated statement of comprehensive income. The Company performs
annual impairment tests for goodwill at the financial year-end.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

2. Accounting policies continued

Other intangible assets
Externally-acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-
line basis over their useful economic lives. The amortisation expense is included within administrative expenses
in the consolidated statement of comprehensive income.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give
rise to contractual or other legal rights, and are initially recognised at their fair value.

Expenditure on internally-developed intangible assets (development costs) are capitalised if it can be
demonstrated that:

(cid:1)

it is technically feasible to develop the product for it to be sold;

adequate resources are available to complete the development;

there is an intention to complete and sell the product;

the Group is able to sell the product;

sale of the product will generate future economic benefits; and

expenditure on the project can be measured reliably.

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal
projects are recognised in profit or loss.

Capitalised development costs are amortised over the periods of the future economic benefit attributable to
the asset. The amortisation expense is included within administrative expenses in the consolidated statement
of comprehensive income. The Group has not capitalised any development costs to date.

The significant intangibles recognised by the Group and their estimated useful economic lives are as follows:

Licenses

– 12 years

Registrations

– 5-10 years

Impairment of goodwill and other intangible assets
Impairment tests on goodwill are undertaken annually at the financial year-end. Other non-financial assets are
subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount
may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (that is the
higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Impairment charges are included within administrative expenses in the consolidated statement of
comprehensive income. An impairment loss recognised for goodwill is not reversed.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

2. Accounting policies continued

Provisions
Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past
transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of
money and the risks specific to the liability.

Foreign currency
Foreign currency transactions of individual companies are translated into the individual company’s functional
currency. Any differences are recognised in profit or loss.

On consolidation, the results of operations that have a functional currency other than US dollars are translated
into US dollars at rates approximating to those ruling when the transactions took place. Statements of financial
position are translated at the rate ruling at the end of the financial period. Exchange differences arising on
translating the opening net assets at opening rate and the results of operations that have a functional currency
other than US dollars at average rate are included within “other comprehensive income” in the consolidated
statement of comprehensive income and taken to the foreign exchange reserve within capital and reserves.

Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s
chief operating decision maker (“CODM”). The CODM, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Chief Executive Officer.

Financial instruments
Trade receivables collectible within one year from the date of invoicing are recognised at invoice value less
provision for amounts the collectibility of which is uncertain. Trade receivables collectible after more than one
year from the date of invoicing are initially recognised at fair value, and subsequently carried at amortised cost
using the effective interest rate method, less provision for impairment.

Investments comprise short-term investments in notes and bonds having investment grade ratings. Investments
are designated at fair value through profit and loss upon initial recognition when they form part of a group of
financial assets which is actively managed and evaluated by key management personnel on a fair value basis
in accordance with the Company’s documented investment strategy that seeks to improve the rate of return
earned by the Company on its excess cash while providing unrestricted access to the funds. The Company’s
investments are carried at fair value as determined by quoted prices on active markets, with changes in fair
values recognised through profit or loss.

Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to insignificant risk of
changes in value.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

2. Accounting policies continued
Trade and other payables are initially recognised at fair value and subsequently carried at amortised cost using
the effective interest method.

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
The Group’s ordinary shares are classified as equity instruments.

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 profit or loss
represents the employer contributions payable to the schemes for the financial period.

The expected costs of all short-term employee benefits, including short-term compensated absences, are
recognised during the period the employee service is rendered.

Equity share-based payments
The Group operates a number of equity-settled, share-based payment plans, under which it receives services
from employees and non-employees as consideration for the Company’s equity instruments, in the form of
options or restricted stock units (‘‘awards’’). The fair value of the award is recognised as an expense, measured
as of the grant date using a binomial option pricing model. The total amount to be expensed is determined
by reference to the fair value of instruments granted, excluding the impact of any service and non-market
performance vesting conditions. Non-market vesting conditions are included in assumptions about the number
of options that are expected to vest. The total expense is recognised over the vesting period, which is typically
the period over which all of the specified vesting conditions are to be met.

Leased assets: lessee
Where assets are financed by leasing agreements that give rights approximating to ownership (finance leases),
the assets are treated as if they had been purchased outright. The amount capitalised is the lower of fair value
and present value of the minimum lease payments payable over the term of the lease. The corresponding lease
commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is recognised
in profit or loss over the shorter of useful economic life and lease term.

Lease payments are analysed between capital and interest components. The interest element of the payment
is charged to income over the period of the lease and is calculated so that it represents a constant proportion
of the balances of capital repayments outstanding. The capital element reduces the amounts payable to
the lessor.

All other leases are treated as operating leases. Their annual rentals are charged to income on a straight-line
basis over the lease term.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

2. Accounting policies continued

Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. Cost includes the purchase price and
costs directly attributable to bringing the asset into operation. Depreciation is provided to write off the cost,
less estimated residual values, of all property, plant and equipment over their expected useful lives. It is
calculated at the following rates:

Production machinery

– 10 – 20% per annum

Office equipment

– 20 – 33% per annum

Vehicles

– 20% per annum

Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost
is based upon a weighted average cost method. The Group compares the cost of inventory to its net realisable
value and writes down inventory to its net realisable value, if lower than its cost. Cost comprises all costs of
purchase and all other costs of conversion. Net realisable value is the estimated selling price in the ordinary
course of business, less applicable variable selling expenses.

Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
statement of financial position differs from its tax base, except for differences on:

(cid:1)

the initial recognition of goodwill;

the initial recognition of an asset or liability in a transaction which is not a business combination and
at the time of the transaction affects neither accounting nor taxable profit; and

investments in subsidiaries and joint arrangements where the Group is able to control the timing of the
reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will
be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively
enacted by the end of the financial period and are expected to apply when the deferred tax liabilities/(assets)
are settled/(recovered).

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax
assets and liabilities and when they relate to income taxes levied by the same tax authority and the Group
intends to settle its current tax assets and liabilities on a net basis.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

3. Critical accounting estimates and judgments
In preparing its financial statements, the Group makes certain estimates and judgments regarding the future.
Estimates and judgments 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 judgments 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.

Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions have been satisfied:

(cid:1)

the significant risks and rewards of ownership of the goods have been transferred to the buyer;

the Group retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;

the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow to the Group; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Licensing arrangements and milestone payments
In addition to the sale of goods, the Group has also granted a limited number of intellectual property licenses
to other biotechnology and agricultural companies. The terms of the Group’s licensing agreements require
delivery of an intellectual property license for use of the Group’s intellectual property in either research only,
or in research and commercial development of biological products. Payments to the Group under these
arrangements may include up-front payments and payments based on the achievement of certain milestones.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

3. Critical accounting estimates and judgments continued
Non-refundable up-front payments are generally received upon signing of a licensing agreement. All non-
refundable up-front payments received or to be received under these arrangements are recognised when IAS
18 revenue recognition criteria are met, they are receivable; they are non-refundable; and provided they are in
substance consideration for a completed separate earnings process.

Milestone payments are recognised as revenue when the performance obligations, as defined in the contracts,
are achieved. These milestone payments are generally tied to a specific performance condition and are
recognised in full when the performance obligation is met. To date, the Group has not achieved the
performance obligations for any milestone payments.

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. Additional information on carrying values is included in Note 13.

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. Additional information on
carrying values is included in Note 13.

Inventory
The Group reviews the net realisable value of, and demand for, its inventory on a periodic basis to provide
assurance that recorded inventory is stated at the lower of cost or net realisable value. Factors that could
impact estimated demand and selling prices include timing and success of future technological innovations,
competitor actions, supplier prices and economic trends. Changes in these factors that differ from
management’s estimates can result in adjustment to the carrying value and amounts charged to income in
specific periods. More details on carrying amounts and write down of inventories to net realisable value are
included in Note 15.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

3. Critical accounting estimates and judgments continued

Provisions
In accordance with IFRS, the Group recognises a provision where there is a present obligation from a past
event, a transfer of economic benefits is probable and the amount of costs of the transfer can be estimated
reliably. Application of these accounting principles to provisions estimated requires the Group’s management
to make determinations about various factual and legal matters beyond its control. The Group reviews
outstanding events, developments in legal proceedings if any, and other situations that could indicate an
obligation at each reporting date, in order to assess the need for provisions and disclosures in its financial
statements. Among the factors considered in making decisions on provisions are the nature of the event,
including, where applicable, litigation, claim or assessment, potential costs expected to be incurred related to
the event, litigation, claim or assessment, the progress of matters in the event (including the progress after the
date of the financial statements but before those statements are issued), the opinions of legal advisers or other
specialists, where applicable, experience on similar events and any decision of the Group’s management as to
how it will respond to the event, litigation, claim or assessment.

In instances where the criteria for recognising a provision are not met, a contingent liability may be disclosed
in the notes to the financial statements. Obligations arising in respect of contingent liabilities that have been
disclosed, or those which are not currently recognised or disclosed in the financial statements, could have
a material effect on the Group’s financial position. Additional information on provisions is included in
Notes 15 – 17.

4. Revenue

Revenue arises from:
Proprietary products
Third-party products

Total

2015
$’000
4,535
2,973

7,508

2014
$’000
3,774
3,106

6,880

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

5. Operating loss

2015
$’000

2014
$’000

Note

8
14
13

Operating loss is arrived at after charging/(crediting):
Share-based payment charge
Depreciation
Amortisation of intangibles
Operating lease expense
Loss on disposal of property, plant and equipment
Foreign exchange losses

Auditor’s remuneration:

Amounts for audit of parent company and consolidation
Amounts for audit of subsidiaries
Amounts for other services

Total auditor’s remuneration

860
164
272
420
14
473

116
49
427

592

Of the $427,000 of other services, $213,000 fees are within other receivables and prepayments.

Staff costs

6.
Staff costs for all employees, including executive directors, comprise:

Wages and salaries
Social security and payroll taxes
Defined contribution pension costs
Medical and other benefits

Share-based payments charge

2015
$’000
4,187
329
42
215

4,773
860

5,633

503
87
297
339
5
458

69
29
10

108

2014
$’000
3,268
280
31
157

3,736
503

4,239

The average number of employees of the Group during the year, including executive directors, was as follows:

Research
Development
Administration
Sales and marketing

Annual Report and Accounts 2015

2015
10
2
8
19

2014
7
2
11
14

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

7. Directors’ and key management personnel remuneration
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling activities of the Group, and includes only the directors of the Company. Further disclosures on the
remuneration of each individual director are included in the directors’ remuneration section of the Remuneration
Committee report on page 25.

Base salary, fees and bonuses
Other short-term employee benefits
Share-based payments
Social security and taxes
Pensions and other post-retirement benefits

2015
$’000
769
21
597
36
6

1,429

2014
$’000
668
37
322
12
5

1,044

One executive director who served during the year was eligible to participate in the Group’s 401(k) retirement
plan (2014: one).

The highest-paid director earned $375,000 consisting of an annual salary and performance-related bonus as
well as $21,000 of other benefits and $5,850 of pension.

Share-based payments

8.
The Company operates three equity-settled share-based remuneration schemes for employees: a share option
scheme, a value creation plan and an employee share option plan, as described in the “Elements of
remuneration” section for executive directors within the Remuneration Committee report on page 20.

(a) Share options
In June 2004, the Company approved the 2004 Unapproved Share Option Scheme (the ‘‘Option Plan’’). The
Option Plan provides for the issuance of options for ordinary share capital of the Group to all eligible employees.

In 2014, the scheme reached the tenth anniversary of its approval by shareholders and no further options may
be granted under the Option Plan.

In addition, in limited instances, the Company has granted options to certain management for ordinary share
capital of the Company under separate unapproved option agreements.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

Share-based payments continued

8.
Valuation of the share options granted during the years ended 31 December 2015 and 2014 was as follows:

Share options granted
Weighted average fair value

Assumptions used in measuring fair value:

Weighted average share price
Exercise price
Expected volatility
Option life (years)
Expected vesting period (years)
Expected dividend yield
Risk-free interest rate

16 April
2015
89,686
36p

112p
112p
41%
3
4.0
0.0%
0.93%

9 April
2014
200,000
19p

60p
60p
46%
4
3.0
0.0%
1.32%

For valuation of the share options granted in 2015 and 2014:

(cid:1)

The weighted average share price and the expected volatility were determined by reference to the share
price of Plant Health Care plc on AIM and the historical share price of Plant Health Care plc on AIM for
a three-year period, respectively; and

The expected vesting period reflects market-based performance conditions for these options and
share awards;

(b) Value Creation Plan
In July 2013, the Group approved the 2013 Value Creation Plan (the “VCP”). The VCP provides for the issuance
of restricted stock units and options for ordinary share capital of the Company. The Chairman, CEO and key
members of the senior executive team are able to participate. The VCP calculates value generated for
shareholders from the point of the April 2013 fundraising over a four-year period, with the plan participants
receiving in aggregate up to 10% of value generated above an annual hurdle of 8%, paid in shares valued at
that end point.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

Share-based payments continued

8.
Valuation of the share options granted under the VCP during the year ended 31 December 2015 was as follows:

Share options granted
Weighted average fair value
Market capitalisation
Valuation hurdle

Assumptions used in measuring fair value:

Weighted average share price
Exercise price
Risk-free rate
Expected vesting period
Option life (years)
Expected volatility
Expected dividend rate

For valuation of the VCP in 2015:

15 April
2015
468,975
33p
79,956,274
74,898,120

112p
80 – 111p
0.75%
2
10.0
40.6%
0.0%

(cid:1)

The expected vesting period reflects 20 trading days after the announcement of financial results for the
year ending 31 December 2016; and.

The valuation hurdle was set as 78p escalated at an 8% hurdle rate to the measurement date.

There were no VCP awards granted during the year ended 31 December 2014.

(c) 2015 Employee Share Option Plan
In June 2015, the Board approved the 2015 Employee Share Option Plan and the 2015 Non-Employee Share
Option Plan (the ‘‘Plans’’). The Plans provide for the issuance of options for ordinary share capital of the
Company to both employees and non-employees. The 2015 Employee Share Option Plan provides for the
grant of both Enterprise Management Incentive options as well as Non-qualifying Options.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

Share-based payments continued

8.
The valuation of the awards granted under the 2015 Employee Share Option Plan during the year ended
31 December 2015 were as follows (no awards or options were granted for the year ended 31 December 2014):

Share options granted
Weighted average fair value
Assumptions used in measuring fair value:

Weighted average share price
Exercise price
Risk-free rate
Expected vesting period (years)
Option life (years)
Expected volatility
Expected dividend rate

16 June
2015
1,790,000
31p

107p
107p
1.16%
1.0 – 3.0
4.0
39.0%
0.0%

15 October
2015
443,750
25p

89p
89p
0.94%
1.0 – 3.0
4.0
37.0%
0.0%

The valuation of the share options granted during the year ended 31 December 2015 was as follows:

(cid:1)

The expected vesting period reflects market-based performance conditions for these options;

Segment information

9.
The Group’s CODM views, manages and operates the Group’s business segments according to its strategic
business focuses – Commercial and New Technology. The CODM further analyses the results and operations
of the Group’s Commercial business on a geographical basis; and therefore the Group has presented separate
geographic segments within its Commercial business below: Commercial –Americas (North and South
America, other than Mexico); Commercial –Mexico; and Commercia l –Rest of World. 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 New Technology segment is focused on the research and development of
the Group’s PREtec platform.

The Group has aggregated its United Kingdom and Spain operating segments into its Commercial – Rest of
World reportable segment. These two operating segments have been aggregated into the Rest of World
reportable segment in accordance with guidance in IFRS 8 as the nature of the products sold, production
processes, type of customer, and distribution method are similar. In addition, economic characteristics,
including primarily long-term profitability and economic factors in the agricultural industry impacting the
pricing of and demand for the Group’s products, have been assessed and it has been determined that these
operating segments (United Kingdom and Spain) share similar economic characteristics.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

Segment information continued

9.
Below is information regarding the Group’s segment loss information for the year ended:

2015

Americas
$’000

Mexico
$’000

Rest of
New
World Elimination Commercial Technology
$’000
$’000

$’000

Total

Revenue*
2,528
Proprietary product sales
Third-party product sales
77
Inter-segment product sales 1,510

Total revenue

4,115

643
2,870
4

3,517

1,364
26
60

1,450

—
—
(1,574)

(1,574)

4,535
2,973
—

7,508

4,115

3,517

1,450

(1,574)

7,508

(1,963)

(1,781)

(655)

1,574

(2,825)

—
(1,155)
(1,272)
(297)

(32)
(255)
(129)

—
—
(837)
(226)

(40)
—
(4)

—
—
(606)
(811)

(5)
(17)
—

(988)

629

(644)

—
—
—
—

—
—
—

—

—
(1,155)
(2,715)
(1,334)

(77)
(272)
(133)

(3,852)
—
—
(281)

(87)
—
(526)

—
—
—

—

Total
$’000

4,535
2,973
—

7,508

(2,825)

(3,852)
(1,155)
(2,715)
(1,615)

(164)
(272)
(659)

(1,003)

(4,746)

(5,749)

(806)
(1,221)

(7,776)
95
(2)

(7,683)

Group consolidated

revenue

Cost of sales
Research and

development

Business development
Sales and marketing
Administration

Non-cash expenses:
Depreciation
Amortisation
Share-based payment

Segment operating

(loss)/profit

Corporate expenses **
Wages and

professional fees
Administration***

Operating loss
Finance income
Finance expense

Loss before tax

***

Revenue from one customer within the Americas segment totalled $1,524,000, or 20% 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 $201,000 attributed to corporate employees who are not affiliated with any of the Commercial
or New Technology segments.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

Segment information continued

Other segment information:

Segment assets
Segment liabilities
Capital expenditure

Americas
$’000
13,654
2,441
88

Mexico
$’000
1,822
183
94

Total

Rest of
New
World Elimination Commercial Technology
$’000
$’000
963
1,691
392
69
865
16

$’000
17,167
2,693
198

$’000
—
—
—

Total
$’000
18,130
3,085
1,063

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

Segment information continued

2014

Americas
$’000

Mexico
$’000

Rest of
New
World Elimination Commercial Technology
$’000
$’000

$’000

Total

Revenue*
1,971
Proprietary product sales
Third-party product sales
138
Inter-segment product sales 1,552

Total revenue

3,661

563
2,917
38

3,518

1,240
51
33

1,324

—
—
(1,623)

(1,623)

3,774
3,106
—

6,880

3,661

3,518

1,324

(1,623)

6,880

(2,459)

(1,767)

(776)

1,623

(3,379)

—
(1,037)
(1,174)
(1,222)

(52)
(253)
(169)

—
—
(903)
(303)

(30)
—
(10)

—
—
(654)
(173)

(5)
(44)
(2)

(2,705)

505

(330)

—
—
—
—

—
—
—

—

—
(1,037)
(2,731)
(1,698)

(87)
(297)
(181)

(2,044)
—
—
—

—
—
(99)

—
—
—

—

Total
$’000

3,774
3,106
—

6,880

(3,379)

(2,044)
(1,037)
(2,731)
(1,698)

(87)
(297)
(280)

(2,530)

(2,143)

(4,673)

(811)
(593)

(6,077)
119
(3)

(5,961)

Group consolidated

revenue

Cost of sales
Research and

development

Business development
Sales and marketing
Administration

Non-cash expenses:
Depreciation
Amortisation
Share-based payment

Segment operating

(loss)/profit

Corporate expenses **
Wages and

professional fees
Administration***

Operating loss
Finance income
Finance expense

Loss before tax

***

Revenue from two customers within the Americas segment totalled $1,000,000 and $717,500, or 15% and 10% of Group revenues, respectively.

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 $223,000 attributed to corporate employees who are not affiliated with any of the Commercial
or New Technology segments.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

Segment information continued

Other segment information:

Segment assets
Segment liabilities
Capital expenditure

Americas
$’000
18,372
1,066
—

Mexico
$’000
2,103
418
81

Total

Rest of
New
World Elimination Commercial Technology
$’000
$’000
150
2,888
304
78
33
—

$’000
— 23,363
1,562
—
81
—

$’000

Total
$’000
23,513
1,866
114

Segment assets include all operating assets used by a segment and consist principally of operating cash,
receivables, inventories, property, plant and equipment and intangible assets, net of allowances and provisions.
Segment liabilities include all operating liabilities and consist principally of trade payables and accrued liabilities.

All material non-current assets are located in the United States.

Geographic information
The Group operates in three principal countries – the United Kingdom (country of domicile), the United States
and Mexico.

The Group’s revenues from external customers by location of operation are detailed below:

United Kingdom
United States
Mexico
All other
Total

Year ended
31 December 2015

Year ended
31 December 2014

Amount
$’000
$ 1,191
2,605
3,513
199
$ 7,508

Percentage

16
35
47
2
100%

Amount
$’000
$ 1,135
2,109
3,480
156
$ 6,880

Percentage

16
31
51
2
100%

The Group’s non-current assets by location of assets are detailed below:

Year ended
31 December 2015

Year ended
31 December 2014

United Kingdom
United States
Mexico
All other
Total

Annual Report and Accounts 2015

Percentage

1
94
4
1
100%

Amount
$’000
$ 44
2,880
98
24
$ 3,046

Percentage

1
95
3
1
100%

Amount
$’000
$ 35
3,489
141
26
$ 3,691

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

10. Finance income and expense

Finance income
Interest on deposits and investments

Finance expense
Interest on finance leases

11. Tax expense

Current tax on profit for the year
Deferred tax – origination and reversal of timing differences

Total tax expense

2015
$’000

(2)

2015
$’000
43
(6)

2014
$’000

119

(3)

2014
$’000
167
2

169

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation
tax in the UK applied to profits for the year are as follows:

Loss before tax

Expected tax credit based on the standard rate of corporation tax

in the UK of 20.25% (2014: 21.49%)

Disallowable expenses
Share-based payment expense per accounts
Share-based payment expense per tax returns
Prior period R&D credit
Losses available for carryover
Losses utilised in the year
Amortisation of intangibles
Other temporary differences
Movement in deferred tax

Actual tax charge for the year

2015
$’000
(7,683)

2014
$’000
(5,961)

(1,555)

(1,281)

162
174
—
(160)
1,463
(530)
(84)
567
—

24
138
1
—
1,521
—
(83)
(153)
2

169

At 31 December 2015, the Group had a potential deferred tax asset of $23,590,000, which includes tax losses
available to carry forward of $21,498,000 (being actual federal, foreign and state losses of $80,617,000) arising
from historical losses incurred and other timing differences of $2,092,000.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

11. Tax expense continued
Deferred tax asset

At 1 January 2015
Charged to the profit and loss account

At 31 December 2015

Deferred taxation
$’000
21
6

The deferred tax asset comprises of sundry timing differences.

12. Loss per share
Basic loss per ordinary share has been calculated on the basis of the loss for the year of $7,720,000 (2014: loss
of $6,130,000) and the weighted average number of shares in issue during the period of 71,737,885
(2014: 71,490,056).

Equity instruments of 8,433,332 (2014: 5,938,921), which includes share options, the Value Creation Plan and
the 2015 Employee Share Option Plan, as shown within Note 21, that 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 continuing
operations for the year.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

13. Intangible assets

Cost
Balance at 1 January 2014
Additions – externally acquired

Balance at 31 December 2014

Additions – externally acquired
Balance at 31 December 2015

Accumulated amortisation
Balance at 1 January 2014
Amortisation charge for the year

Balance at 31 December 2014

Amortisation charge for the year
Balance at 31 December 2015

Net book value
At 31 December 2014

At 31 December 2015

Goodwill
$’000

Licenses and
registrations
$’000

Trade name
and customer
relationships
$’000

1,620
—

1,620

—
1,620

—
—

—

—
—

1,620

3,342
—

3,342

—
3,342

1,958
297

2,255

272
2,527

1,087

815

159
—

159

—
159

159
—

159

—
159

—

Total
$’000

5,121
—

5,121

—
5,121

2,117
297

2,414

272
2,686

2,707

2,435

The intangible asset balances have been tested for impairment using discounted budgeted cash flows. For the years
ended 31 December 2014 and 2015, cash flows are projected over a five-year period with a residual growth rate
assumed at nil%. For the years ended 31 December 2014 and 2015, a pre-tax discount factor of 16% and 15%
has been used over the forecast period for the years ended 31 December 2014 and 2015, respectively.

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 Harpin, 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.

Licenses and registrations
These amounts represent the cost of licenses 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 license or registration. Impairment is reviewed and tested according
to the method expressed above. Licenses and registrations have a weighted average remaining amortisation
period of three years.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

14. Property, plant and equipment

Production
machinery
$’000

Office
equipment
$’000

Leasehold
improvements
$’000

Vehicles
$’000

Cost
Balance at 1 January 2014
Additions
Disposals

Balance at 31 December 2014
Additions
Disposals

Balance at 31 December 2015

Accumulated depreciation
Balance at 1 January 2014
Depreciation charge for the year
Disposals

Balance at 31 December 2014
Depreciation charge for the year
Disposals

Balance at 31 December 2015

Net book value
At 31 December 2014

At 31 December 2015

13
—
—

11
2
—

13
—
—

—

610
33
—

643
345
(151)

837

428
37
—

465
75
(151)

389

178

448

—
—
—

—
570
—

570

—
—
—

—
41
—

—

529

276
81
(85)

272
148
(68)

352

184
48
(80)

152
48
(54)

146

120

206

Total
$’000

899
114
(85)

928
1,063
(219)

1,772

623
87
(80)

630
164
(205)

589

298

1,183

The net book value of property, plant and equipment includes an amount of $21,860 (2014: $32,100) in
respect of assets held under finance leases. Depreciation expense includes an amount of $7,700 (2014: $7,700)
in respect of assets held under finance leases.

15. Inventories

Raw materials
Finished goods and goods for resale

2015
$’000
31
1,360

1,391

2014
$’000
26
1,058

1,084

The inventory provision amount reversed during the year was $11,000 (2014: reversal of $156,000).

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

16. Trade and other receivables

Current:
Trade receivables
Less: provision for impairment

Trade receivables, net
Other receivables and prepayments
Tax receivable

Current trade and other receivables

Non-current:
Trade receivables
Less: provision for impairment

Non-current trade and other receivables

2015
$’000

3,581
(62)

3,519
935
155

4,609

73
—

2014
$’000

2,570
(55)

2,515
195
—

2,710

41
—

4,682

2,751

The trade receivable current balance represents trade receivables with a due date for collection within a
one-year period. The trade receivable non-current balance represents the present value of trade receivables
with a collection period that exceeds one year.

Movements on the provision for impairment of trade receivables are as follows:

Balance at the beginning of the year
Provided
Receivables written off as uncollectible
Unused amounts reversed
Foreign exchange

Balance at the end of the year

2015
$’000
55
12
(3)
—
(2)

2014
$’000
12
50
—
—
(7)

The gross value of trade receivables for which a provision for impairment has been made is $98,000
(2014: $79,000).

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables set
out above.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

16. Trade and other receivables continued
The following is an analysis of the Group’s trade and other receivables, both current and non-current,
identifying the totals of trade and other receivables which are not yet due and those which are past due but
not impaired.

Current

Past due:

Up to 30 days
31 to 60 days
61 to 90 days
Greater than 90 days

Total

2015
$’000
3,303

3
14
163
36

2014
$’000
2,333

147
11
—
24

3,519

2,515

The main factors used in assessing the impairment of trade receivables are the age of the balances and the
circumstances of the individual customer.

17. Trade and other payables

Current:
Trade payables
Accruals
Restructuring provisions
Deferred income
Taxation and social security
Income tax liability

2015
$’000

1,651
1,392
—
—
16
2

3,061

2014
$’000

619
881
309
22
—
1

1,832

The restructuring provision of $309,000 was the remaining severance payment related to the relocation of the
corporate office.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

18. Finance leases

(a) Current borrowings

Finance leases

(b) Non-current borrowings

Finance leases

2015
$’000
8

2015
$’000
16

2014
$’000
10

2014
$’000
24

Finance lease obligations are secured by retention of title to the relevant equipment and vehicles.

In less than one year
In more than one year, but less than two years

Trade and other
payables

Finance leases

2015
$’000
2,415
—

2,415

2014
$’000
998
—

998

2015
$’000
8
16

2014
$’000
10
24

19. Financial instruments

(a) Capital risk management
The Group manages its capital to ensure that all entities in the Group will be able to continue as going
concerns, while maximising shareholder value through the optimisation of its debt and equity structure. The
capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders
of the parent, comprising issued capital, reserves and accumulated deficit as disclosed in Notes 21 and 22.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

19. Financial instruments

(b) Categories of financial assets and financial liabilities

Financial assets
Trade and other receivables
Investments
Cash and cash equivalents

Financial liabilities
Trade and other payables
Borrowings due within one year
Borrowings due after one year

Fair value through profit
or loss

2015
$’000

—
7,491
—

7,491

2014
$’000

—
12,775
—

12,775

Loans and receivables
2014
2015
$’000
$’000

3,519
—
948

4,467

2,515
—
3,898

6,413

Financial liabilities
measured at
amortised cost

2015
$’000

2,415
8
16

2,439

2014
$’000

998
10
24

1,032

The amounts disclosed for all of the above financial assets and financial liabilities approximate fair value in all
material respects.

2015 – Investments

Security type
Government
Corporate*
Corporate*
Corporate*

Moody’s rating
AAA
>Aa3
A1 – A3
Baa1 – Baa2

Face
value
$’000
3,488
1,809
1,080
1,077

7,454

Coupon rate
0.3% – 5.8%
0.4% – 2.0%
0.9% – 5.7%
0.7% – 6.3%

Maturity date
15/01/16 – 01/02/21
24/06/16 – 17/08/20
16/02/16 – 14/09/18
15/03/16 – 23/11/18

2015
Value
$’000
3,510
1,804
1,091
1,086

7,491

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

19. Financial instruments continued

2014 – Investments

Security type
Government
Corporate*
Corporate*
Corporate*

Moody’s rating
AAA
>Aa3
A1 – A3
Baa1 – Baa2

Face
value
$’000
5,448
3,272
2,025
1,927

12,672

Coupon rate
0.3% – 5.7%
0.3% – 4.9%
0.3% – 5.5%
0.6% – 6.0%

Maturity date
15/01/15 – 01/06/21
01/05/15 – 15/07/20
09/01/15 – 10/05/18
01/05/15 – 18/01/18

2014
Value
$’000
5,498
3,277
2,035
1,965

12,775

Securities within this category have a coupon rate within the range shown or are variable rate securities.

The above instruments are Level 1 in the IFRS 13 fair value measurements hierarchy.

The Group limits its investments to instruments with maturities of less than five years having a rating at or
exceeding investment grade in order to limit credit and liquidity risk. These investments are managed by an
investment adviser and the portfolio’s performance is reviewed by key management personnel. The aim of the
portfolio includes both capital preservation and a rate of return that exceeds the rate available through the
purchase of money market securities.

(d) Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves and banking facilities, by reference to
continuously monitored forecast and actual cash flows. As part of its monitoring, the Group ensures that the
financial liabilities due to be paid can be met by existing cash and cash equivalents. Cash equivalents are
composed of short-term investment grade securities and are readily marketable and convertible to cash. The
Group does not currently generate sufficient cash from its operations to meet its annual funding needs.
However, the Group is well funded due to an equity placement in April 2013 and is able to meet its obligations.

Financial risk management objectives

(e)
The Group invests its surplus cash in bank deposits denominated in US dollars and British pounds, which earn
interest at money market rates, and in short-term investments comprised of notes and bonds with maturities
of less than five years and having investment grade ratings. In doing so, the Group exposes itself to fluctuations
in money market interest rates and market price fluctuations.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

19. Financial instruments continued

(f) Market risk
The Group is exposed to risk from movements in foreign currency exchange rates, interest rates and market
prices that affect its assets, liabilities and anticipated future transactions.

The Group is exposed to foreign currency risk from transactions and from translating the monetary net assets
of overseas entities denominated in currencies other than functional currency. Transaction exposure arises
because affiliated companies undertake transactions in foreign currencies. The Group does not use forward
foreign exchange rate contracts to hedge exchange rate risk.

The US dollar carrying amounts of the Group’s material foreign currency denominated monetary assets and
monetary liabilities at the reporting date are as follows:

Euro
Pound
Mexican peso

Assets

Liabilities

2015
$’000
68
1,402
1,297

2014
$’000
40
1,651
1,459

2015
$’000
24
46
183

2014
$’000
6
47
418

If the exchange rate on uncovered exposures were to move significantly there would be foreign exchange
differences on the retranslation of financial assets and liabilities and an impact on the Group’s gross profit.
However, this impact would not be material to the Group’s financial statements and, therefore, no analysis of
the sensitivities has been presented.

(g) Price risk
The Group is exposed to price risk on its investments. To manage the price risk arising from investments in
securities, the Group limits its portfolio to include only investment grade securities on active exchanges having
maturities of less than five years.

Interest rate risk

(h)
The Group is exposed to interest rate risk on its cash and investment balances. To manage the interest rate
risk, the Group limits its portfolio to cash and investment grade securities on active exchanges having maturities
of less than five years.

If interest rates were to move significantly, finance revenues could be affected. However, this impact would
not be material to the Group’s financial statements and, therefore, no analysis of the sensitivities has
been presented.

The Group is exposed to interest rate risk on its cash deposits, which earn interest at a variable rate of interest.

The Group’s borrowings comprise finance leases, which are at fixed rates.

The Group does not utilise any hedging instruments to address interest rate risk.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

19. Financial instruments continued

(i) Credit risk management
The Group’s principal credit risk relates to the recovery of trade receivables. In order to manage credit risk, the
Group sets limits for customers based on a combination of payment history and third-party credit references.
Credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history. Balances
that are beyond agreed upon terms are actively followed up to ensure collection.

The Group sells to a large number of customers across international locations within the United States, Europe
and Mexico.

Further details on trade receivables, including analysis of bad debts and ageing, are given in Note 16.

The Group manages the credit risk on its investments by limiting investments to notes and bonds with
maturities of less than five years having investment grade ratings.

The Group believes the credit risk on liquid funds, being cash and cash equivalents, is limited because the
counterparties are banks with high-credit ratings assigned by international credit-rating agencies. However, the
concentration of credit risk by counterparty does exceed 10% of the overall cash and cash equivalent balance.

The maximum exposure to credit risk on cash balances at the reporting date is the carrying value of the cash
balances. The Group ensures that its investments are maintained in high quality investment grade securities
to limit credit risk.

20. Subsidiary undertakings
The following were subsidiary undertakings of the Company at 31 December 2015:

Country of
incorporation
or registration
USA (Nevada)
United States (Nevada)
United States (Pennsylvania)

Mexico
United Kingdom
Spain
United States (Delaware)

Proportion of
voting rights
and ordinary
share capital held

Nature of
business
100% Holding company
100% Holding company
Sales
100%*

100%*
100%*
100%*
100%*

Sales
Sales
Sales
Sales

Name
Plant Health Care, Inc.
Plant Health Care, Inc.
Plant Health Care, Inc.
Plant Health Care de Mexico
S. de R.L. de C.V.
Plant Health Care (UK) Limited
Plant Health Care España
VAMTech, LLC
* Held indirectly.

For all undertakings listed above, the country of operation is the same as its country of incorporation
or registration.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

21. Share capital

(a)

Issued share capital

Allotted, called up and fully-paid share capital:

71,855,085 (2014: 71,709,705) ordinary shares at £0.01 each

(b) Movement in share capital
The movements on issued share capital are as follows:

In issue at 1 January 2014
Share options exercised

In issue at 31 December 2014
Shares issued for services rendered
Shares issued
Share options exercised

In issue at 31 December 2015

2015
$’000

1,236

2014
$’000

1,234

Ordinary shares of
Plant Health Care plc
Number
70,565,730
1,143,975

$’000
1,215
19

71,709,705
25,880
7,500
112,000

71,855,085

1,234
—
—
2

1,236

During the year ended 31 December 2014, the following fully-paid £0.01 ordinary shares in the Company
were issued:

1,143,975 shares with an aggregate value of $708,000 were issued for the exercise of share options at
an exercise price of £0.37 per share.

During the year ended 31 December 2015, the following fully-paid £0.01 ordinary shares in the Company
were issued:

ii.

iii

12,000 shares with an aggregate value of $10,000 were issued for the exercise of share options at an
exercise price of £0.53 per share.

100,000 shares with an aggregate value of $95,000 were issued for the exercise of share options at an
exercise price of £0.62 per share.

25,880 ordinary shares with an aggregate value of $42,428 were issued to one of the Group’s officers
in lieu of a cash bonus.

A former shareholder of Plant Health Care, Inc. was awarded 7,500 Plant Health Care plc shares at
nominal value.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

21. Share capital continued

(c) Other equity instruments
The Company had the following other equity instruments in issue at 31 December 2015 and 2014:

Share awards under the VCP
Share options

2015
Number
5,335,544
3,097,788

2014
Number
4,866,569
1,072,352

8,433,332

5,938,921

(d) Share options
The Company has issued share options to certain employees under the Plant Health Care plc Unapproved
Share Option Scheme 2004. In 2014, the scheme reached the tenth anniversary of its approval by shareholders;
no further options may be granted. At the time of its admission to AIM, the Company also agreed to honour
outstanding options under the Plant Health Care, Inc. 2001 Equity Incentive Plan. No further options have been
or will be issued under that Plan. In addition, in limited instances, the Company has granted options to certain
management for ordinary share capital of the Company under separate unapproved option agreements.

The movements on share options are as follows:

Outstanding at 1 January 2014
Awarded
Exercised
Forfeited

Directors
and former
directors
1,220,852
200,000
(918,975)
(56,025)

Options over ordinary shares

Other
1,087,000
—
(225,000)
(235,500)

Total
2,307,852
200,000
(1,143,975)
(291,525)

Outstanding at 31 December 2014

445,852

626,500

1,072,352

Awarded
Exercised
Forfeited

89,686
—
—

—
(112,000)
(8,500)

89,686
(112,000)
(8,500)

Outstanding at 31 December 2015

535,538

506,000

1,041,538

Weighted
average
exercise price
84p
60p
37p
71p

141p

112p
61p
62p

147p

Of the total number of options outstanding at 31 December 2015, 494,000 (2014: 599,000) had vested and
were exercisable. The weighted average exercise price was 223p (2014: 195p).

The weighted average share price at the dates of exercise for the share options exercised during 2015
was 61p (2014: 56p).

The options outstanding at 31 December 2015 have a weighted average remaining life of 3.53 years
(2014: 4.24 years) and the range of exercise prices is 53p to 325p (2014: 53p to 325p).

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

21. Share capital continued

(e) Value creation plan
The Chairman, CEO and key members of senior management participate in a value creation based long-term
incentive plan (VCP).

The movements in VCP awards are as follows:

Outstanding at 1 January 2014
Awarded

Outstanding at 31 December 2014
Awarded

Directors
2,571,821
—

2,571,821
—

Other
2,294,748
—

2,294,748
468,975

Total
4,866,569
—

4,866,569
468,975

Outstanding at 31 December 2015

2,571,821

2,763,723

5,335,544

Weighted
average
exercise price
76p
—

76p
93p

77p

Of the total number of options outstanding at 31 December 2015 and 2014, none had vested and
were exercisable.

The options outstanding at 31 December 2015 have a weighted average remaining life of 1.3 years
(2014: 2.3 years) and the range of exercise prices is 55p to 111p (2014: 55p to 80p).

(f) 2015 Employee Share Option Plan

Outstanding at 31 December 2014
Awarded
Forfeited

Outstanding as 31 December 2015

Other
—
443,750
(177,500)

Total
—
2,233,750
(177,500)

Weighted
average
exercise price
—
103p
89p

266,250

2,056,250

105p

Directors
—
1,790,000
—

1,790,000

Of the total number of options outstanding at 31 December 2015, none had vested and were exercisable.

The options outstanding at 31 December 2015 have a weighted average remaining life of 3.5 years and the range
of exercise prices is 89p to 107p.

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

22. Reserves
The following describes the nature and purpose of each reserve within owners’ equity:

Reserve

Share capital

Share premium

Reverse acquisition reserve

Share-based payment reserve

Description and purpose

Amount subscribed for share capital at nominal value.

Amount subscribed for share capital in excess of nominal value.

Reserve recognised in the share-for-share exchange transaction accounted for
as a reverse acquisition by the Group. During the year ended 31 December
2014, the Company transferred the amounts in the reverse acquisition
reserve into accumulated deficit.

Cumulative net cost of equity-settled share-based payment transactions.
During the year ended 31 December 2014, the Company transferred the
amounts in the share-based payment reserve into accumulated deficit.

Foreign exchange reserve

Gains/losses on retranslating the net assets of overseas operations.

Accumulated deficit

Cumulative net gains and losses recognised in the consolidated income
statement. During the year ended 31 December 2014, the Company
transferred the amounts in the share-based payment reserve and reverse
acquisition reserve into retained earnings.

23. Pensions
The Group does not maintain any defined benefit pension plans. The Group does maintain a retirement plan
qualified under Section 401(k) of the United States Internal Revenue Code. This plan covers all US employees.
In 2015, the Group’s pension expense under the scheme was $32,360 (2014: $21,250). Mexico has a
government-run pension plan to which our operations there must contribute. In 2015, the expense for this plan
was nil (2014: nil). Several United Kingdom employees receive contributions to their pension plans.
The expense for this was $10,028 (2014: $10,088). The total pension liability at the end of the year was
$42,400 (2014: $31,300).

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Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

24. Leases

Finance leases - as lessee
The Group leases vehicles, production equipment and office equipment on leases classified as finance leases.

Future lease payments are due as follows:

2015

Not later than one year
Later than one year and not later than five years

2014

Not later than one year
Later than one year and not later than five years

Minimum
lease payments
$’000
9
17

Minimum
lease payments
$’000
12
27

Interest
$’000
1
1

Interest
$’000
2
3

Present
value
$’000
8
16

Present
value
$’000
10
24

Operating leases
The Group leases all of its properties, as well as office equipment. The terms of property leases vary from
country to country and tend to have rent reviews at the end of the lease term for renewal purposes.

The total present values of minimum lease payments are due as follows:

Not later than one year
Later than one year and not later than five years

2015
$’000
275
957

1,232

2014
$’000
209
228

437

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Plant Health Care plc

Notes forming part of the Group financial statements continued

for the year ended 31 December 2015

25. Standards, amendments and interpretations to published standards not yet effective
The IASB and the International Financing Reporting Interpretations Committee (‘IFRIC’) have issued the
following standards and interpretations to be applied to financial statements with periods commencing on or
after the following dates:

IFRS 15 “Revenue from Contracts with Customers” (effective for periods beginning on or after 1 January 2018).
This standard is intended to clarify the principles of revenue recognition and establish a single framework for
revenue recognition. The standard has not yet been endorsed by the European Union.

On 13 January 2016, the IASB issued IFRS 16, ‘‘Leases,’’ which provides lease accounting guidance. Under the
new guidance, lessees will be required to present right-of-use assets and lease liabilities on the statement of
financial position. At the lease commencement date, a lessee is required to recognise a lease liability, which
is the lessee’s discounted obligation to make lease payments arising from a lease, as well as a right of use asset,
representing the lessee’s right to use, or control the use of, a specified asset for the lease term. IFRS 16 is
effective for annual reporting periods beginning on or after 1 January 2019. Earlier application is permitted for
entities that apply IFRS 15, ‘‘Revenue from Contracts with Customers,’’ at or before the initial application of
IFRS 16. IFRS 16 has not yet been endorsed by the European Union.

In July 2014, the IASB issued the final version of IFRS 9, “Financial Instruments”, which reflects all phases of
the financial instruments project and replaces IAS 39, “Financial Instruments: Recognition and Measurement”
and all previous versions of IFRS 9. The standard introduces new requirements for classification and
measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after
1 January 2018, with early application permitted. Retrospective application is required, but comparative
information is not compulsory. IFRS 9 has not yet been endorsed by the European Union.

Amendments to IAS 1 (effective 1 January 2016) are designed to further encourage companies to apply
professional judgment in determining what information to disclose in their financial statements. The changes
clarify that companies should use professional judgment in determining where and in what order information
is presented in the financial disclosures.

No other standards or amendments are considered likely to have an effect on the financial statements going
forward. Plant Health Care plc is still considering the impact the above changes may have.

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Plant Health Care plc

Company balance sheet

at 31 December 2015

Fixed assets
Fixed asset investments

Current assets
Debtors
Cash at bank and in hand

Total current assets

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities

Capital and reserves
Called-up share capital
Share premium
Accumulated deficit

Shareholders’ funds

Note

2015
$’000

2014
$’000

30
30
30

28,414

28,121

670
99

769

622

147

25
960

985

960

28,561

29,081

1,236
71,040
(43,715)

28,561

1,234
70,895
(43,048)

29,081

The financial statements were approved and authorised for issue by the Board on 8 April 2016.

P. Schmidt
Director

Registered No: 05116780 (England and Wales)

The notes on pages 74 to 77 form part of these financial statements.

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Plant Health Care plc

Company statement of changes in equity

Balance at 1 January 2014
Share-based payments

reclassification

Share-based payments
Reverse acquisition reserve

reclassification

Exercise of share options
Loss in the year

Balance at 31 December 2014
Shares issued
Share-based payment
Exercise of share options
Loss in the year

Share
capital
$’000
1,215

—
—

—
19
—

1,234
—
—
2
—

Balance at 31 December 2015

1,236

Share
premium
$’000
70,206

Reverse
acquisition
reserve
$’000
14,455

Share-based

payment Accumulated
deficit
$’000
(53,154)

reserve
$’000
2,256

—
—

—
689
—

70,895
42
—
103
—

71,040

—
—

(2,256)
—

2,256
503

(14,455)
—
—

—
—
—
—
—

—

—
—
—

—
—
—
—
—

—

14,455
—
(7,108)

(43,048)
—
860
—
(1,527)

Total
$’000
34,978

—
503

—
708
(7,108)

29,081
42
860
105
(1,527)

(43,715)

28,561

The notes on pages 74 to 77 form part of these financial statements.

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Plant Health Care plc

Notes forming part of the Company financial statements

for the year ended 31 December 2015

26. Accounting policies

Basis of preparation
The financial statements have been prepared under the historical cost convention and in accordance with
FRS 102 the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland.
The principal accounting policies, which have been applied consistently, are set out below. Information on
the impact of first-time adoption of FRS 102 is given in Note 38.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical
accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting
policies. See Note 27.

In preparing the separate financial statements of the parent company, advantage has been taken of the
following disclosure exemptions available in FRS 102:

(cid:1)

Only one reconciliation of the number of shares outstanding at the beginning and end of the period
has been presented as the reconciliations for the Group and the parent company would be identical;

No cash flow statement has been presented for the parent company;

Disclosures in respect of the parent company’s financial instruments have not been presented as
equivalent disclosures have been provided in respect of the Group as a whole;

Disclosures in respect of the parent company’s share-based payment arrangements have not been
presented as equivalent disclosures have been provided in respect of the Group as a whole; and

No disclosure has been given for the aggregate remuneration of the key management personnel of the
parent company as their remuneration is included in the totals for the Group as a whole.

Investments
Fixed asset investments comprise investments by the Company in the shares of subsidiary undertakings and
loans to Group undertakings. At the end of each financial period, the directors review the carrying amount of
the Company’s investments with reference to forecast discounted future cash flows and related estimates and
judgments to determine whether there is any indication that those assets have suffered an impairment loss.
They are stated at cost less any provision where, in the opinion of the directors, there has been impairment.

Share-based payments
The Company operates a number of equity-settled, share-based payment plans, under which it receives services
from employees and non-employees as consideration for the Company’s equity instruments, in the form of
options or restricted stock units (‘‘awards’’). The fair value of the awards is recognised as an expense, measured
as of the grant date using a binomial option pricing model. The total amount to be expensed is determined
by reference to the fair value of instruments granted, excluding the impact of any service and non-market
performance vesting conditions. Non-market vesting conditions are included in assumptions about the number
of options that are expected to vest. The total expense is recognised over the vesting period, which is typically
the period over which all of the specified vesting conditions are to be met.

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Plant Health Care plc

Notes forming part of the Company financial statements continued

for the year ended 31 December 2015

26. Accounting policies continued
The Company grants share options and shares under its share-based payment plans directly to employees of
its subsidiaries. In accordance with the provisions of the plan, the cost of the share-based payments will be
recorded by each subsidiary as an expense, with a corresponding increase in equity as a contribution from
the parent.

The Company, over whose shares options are issued, recognises an increase in the investment in the related
subsidiary and a credit to accumulated deficit.

Deferred taxation
Deferred tax balances are recognised in respect of timing differences that have originated but not reversed by
the balance sheet date. However, where there is uncertainty over the timing of their realisation, deferred tax
assets are not recognised.

Judgment in applying accounting policies and key sources of estimation uncertainty

27.
In preparing these financial statements, the directors have made the following judgments:

(cid:1)

At the end of the financial period, the Company reviews the carrying amounts of its fixed asset
investments to determine whether there is any indication that those assets have suffered any impairment
loss. The recoverable amount is determined based on a value-in-use calculation. 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.

28. Loss for the financial year
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006
and has not presented its own profit and loss account in these financial statements. The Group loss for the
year includes loss after tax of $1,527,000 (2014: loss of $7,108,000), which is dealt with in the financial
statements of the parent company.

29. Share-based payments
See Note 21 of the Group financial statements.

30. Reserves
See Note 22 of the Group financial statements for a description of the nature and purpose of each reserve within
owner’s equity.

31. Directors’ remuneration
The directors’ remuneration for the Company is disclosed in Note 7 of the Group financial statements.

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Plant Health Care plc

Notes forming part of the Company financial statements continued

for the year ended 31 December 2015

32. Fixed asset investments

Cost
Cost at 1 January 2014
Additions, net of repayments

Cost at 31 December 2014
Additions, net of repayments

Cost at 31 December 2015

Impairments
Impairments at 1 January 2014
Additions

Impairments at 31 December 2014
Additions

Shares in
Group
undertakings
$’000

Loans to
Group
undertakings
$’000

16,915
—

16,915

(16,915)
—

54,486
898

55,384
293

55,677

(21,464)
(5,799)

(27,263)
—

Total
$’000

71,401
898

72,299
293

72,592

(38,379)
(5,799)

(44,178)
—

Impairments at 31 December 2015

(16,915)

(27,263)

(44,178)

Net book value
At 31 December 2014

At 31 December 2015

—

28,121

28,414

28,121

28,414

The fixed asset investment balances have been tested for impairment using discounted budgeted cash flows,
a pre-tax discount rate of 15% (2014:16%), and performance projections over five years. The calculated net
present value in this review is $49,205,000 (2014: net present value $28,121,000), which caused an impairment
of nil in 2015 (2014: impairment $5,799,000).

33. Subsidiary undertakings
The subsidiary undertakings of the Company are disclosed in Note 20 of the Group financial statements.

34. Debtors

Prepayments

All amounts fall due within one year.

Annual Report and Accounts 2015

2015
$’000
670

2014
$’000
25

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Plant Health Care plc

Notes forming part of the Company financial statements continued

for the year ended 31 December 2015

35. Creditors

Trade creditors
Accruals

2015
$’000
622
—

622

36. Share capital
The share capital of the Company is disclosed in Note 21 of the Group financial statements.

37. Company reconciliation of movements in shareholders’ funds

Total recognised loss relating to the year
Shares issued
Exercise of share options
Share-based payment charge

Net decrease in shareholders’ funds
Opening shareholders’ funds

Closing shareholders’ funds

2015
$’000
(1,527)
42
105
860

(520)
29,081

28,561

2014
$’000
25
—

2014
$’000
(7,108)
—
708
503

(5,897)
34,978

29,081

38. First-time adopter of FRS 102
The policies applied under the entity’s previous accounting framework are not materially different to FRS 102
and have not impacted equity or profit or loss.

39. Related party transactions
The Company has taken advantage of the exemption allowed by Financial Reporting Standard 102, “Related
Party Transactions”, not to disclose any transactions with its wholly-owned subsidiary companies as these are
included within the consolidated financial statements of the Group.

On 16 January 2015, the Company assigned to Plant Health Care (UK) Ltd. all its rights, title, interest and
benefits in a facility agreement between the Company and Plant Health Care, Inc. in the amount of £10,000,000
to finance certain of the Group’s research and design activities.

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Plant Health Care plc

For your notes

Annual Report and Accounts 2015

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