(PIM) Plant Impact

Plant Impact plc ("Plant Impact" or the "Company" and together with its subsidiaries, the "Group")

Unaudited Consolidated Half Year Results for the six months ended 30 September 2011

Plant Impact plc (AIM: PIM), which develops and markets crop yield enhancing products, today announces its unaudited consolidated half year results for the six months ended 30 September 2011.

Highlights

·     Total turnover £610,042 (30 September 2010: £638,409)

·     Gross profit £436,339 (30 September 2010: £417,809)

·     Gross margin 71.5% (30 September 2010: 65.4%)

·     Operating loss £1,492,022 ( 30 September 2010: £1,158,852);

·     Cash balance £1,661,495 ( 30 September 2010: £1,713,025)

David Jones, Chairman of Plant Impact, commented:

"Our recent financial period has been one of significant activity and change  for the Company.  In June of this year we were pleased to secure a strategic investment from the international AgChem major Arysta LifeScience.  Arysta purchased 9.1% of the Company's ordinary share capital through a new issue of shares at a significant premium to the then market price.  We have since built a constructive dialogue with them about driving sales of Plant Impact products in the selected markets where they have strength and complementary products.

The Board also took the difficult decision to change the executive leadership of the Company. This was a necessary step in order to secure the requisite skills to guide it in its next phase of growth.  The Board were delighted to attract the interest and then commitment of John Brubaker to take up the post of Executive Director and CEO.  John has an impressive record of leadership in the agricultural industry and also in small start-ups in the technology sector.  He has made a vigorous start examining and then acting across all aspects of the business.  My colleagues and I are convinced that under John's energetic and incisive leadership, Plant Impact will grow in stature and performance.  John describes many of the changes made in the last few months in his CEO report today.

Finally, I should like to thank our shareholders, many who have supported Plant Impact from inception, for their continued faith and interest in the Company.  I have every confidence that under current management your Company will perform and begin to deliver its promise."

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Chief Executive Officer's Statement

Plant Impact aims to be a global agricultural leader through the invention and deployment of crop enhancement and specialty nutrition technologies.  This ambition is the foundation of the Company and is now driving recent and ongoing management and market focus changes in the Company.

Since joining Plant Impact (Pi) in September 2011, I have been impressed by the quality and enthusiasm of our distribution partners, the commitment of our staff, and the strategic opportunity for our business.  The world's most technically advanced growers of horticultural and broad acre crops constantly seek new ways to improve the quality and yield of their production. At Plant Impact, we believe we can be part of the answer to meeting this challenge.

The Company plans to grow through three phases of activity.  These will commence and develop sequentially as increasing resources and capability permit.  In the short term, the Company is focusing its product development and sales toward high-value crops and market segments such as potatoes, lettuce, top fruit, soft fruit and legumes, sectors where our products' performance is particularly impactful and where growers can be accessed by smaller technology companies such as Pi.  Later, we plan to expand into broad acre crops such as soy, wheat, oilseed rape and maize.  Given the significant acreage and logistical challenges of serving these markets, we aim to sell our products to these growers through strategic partnerships with industry leaders.  This requires careful and realistically paced collaboration with large industry partners who take a rigorously scientific approach to new products.  We believe this approach aligns with Pi's performance-driven product development criteria.  With increasing availability of internally generated cash, we will invest further in R&D to formulate products based on our unique Alethea technology.  This platform offers considerable promise for a portfolio of products that address a range of negative factors growers face in the field, such as excessive salinity, mild drought, excess UV light, and volatile temperatures.  The Board believes that this methodical and sequential delivery of growth through three phases of scale-up and growing technical strength offers the best prospect of long-term success for the Company.

To align the Company to this plan, we have taken a number of important decisions over the past four months to secure cost control and market focus.  Firstly, markets:  our resources will be directed to those where we have already achieved commercial traction.  Our aim is to improve our service to these customers at the expense of a global roll-out into longer term markets for Pi, ones where, at this time, the Company has insufficient resources and no local presence.  We are confident that this is the surest route to cash flow sustainability and profitability and the capability to take on new and more challenging markets around the world.

Business Update

In specific terms, our focusing of Company activities has resulted in a prioritisation of sales effort in support of our lead products; InCa and PiNT.  We will be focusing in Northern Europe (the Netherlands, United Kingdom, France and Germany), and limited selected targets in the Americas (US Golf, Brazil, Mexico), and several countries covered by our primary Middle Eastern customer, Agrimatco.  Plant Impact will continue to sell to other smaller markets and customers when opportunities arise that offer attractive margins and negligible credit risk.  This consolidation of effort implies fewer sales in some territories such as Africa and Asia and importantly, it has resulted in the Board's decision to delay our previously announced plan to launch a local subsidiary in the United States, choosing not to relocate key UK-based sales and marketing staff into that market in 2012. This strategic decision  reduces our revenue expectations for the current year as described below.

Since early September, the Board have examined the operating expense base carefully.  Whilst our objective is to grow the Company quickly, a prudent level of operational risk and sensible attention to efficiency is desirable.  We have identified many activities in the Company that were consuming cash but not serving to accelerate our new measured-growth strategy.  These activities and associated costs have been eliminated and include public relations expenses, travel expenses (reduced significantly due to our focus on "near" markets), certain R&D costs (with the exception of the remaining regulatory activity around BugOil), general office expenses and various legal and professional costs.

Furthermore, the Company has eliminated some staffing costs through combining several positions and roles, at the same time identifying the need to strengthen certain areas.  As a result, we are now actively recruiting for new staff in marketing, supply chain, and finance.  The Company has improved its internal processes to generate and manage cash.  In particular, we have implemented processes to control spending, reduce inventory, and improve our cash collection cycle to conserve resources and ensure their efficient re-allocation where necessary.

Finally, we are improving our collaboration with and management of our outsourced contract manufacturer.  This should allow us to better refine our product formulations, improve our quality control process, and introduce new, improved packaging and labeling.

We expect the financial, operational and strategic benefits from the actions described above to arise in 2012 and beyond, following the incurrence of the one-off costs associated with them.

Financial Performance

Turnover for the first six months of the year was £610,042.  This represented a small decline over the similar period in the previous year (2010: £638,409), primarily due to the seasonality and timing of purchases from the Company's customers in the Netherlands.  In the similar period in the previous financial year, the Company shipped its full seasonal volumes to the Netherlands during the period from April to June 2010.  For the 2011 growing season, however, Plant Impact shipped Netherlands volumes in February and March.  The consequence was that Pi shipped and invoiced two growing seasons of product to the Netherlands during the 2011 financial year.  The Company therefore booked no revenue from shipments to the Netherlands in the first six months of this financial year due entirely to the timing of these orders.

In the first six months of the current financial year, all other regions of Plant Impact's business showed consistent or improved sales compared to the same period in the previous financial year.

Gross profit of £436,339 represented an improvement over the same period last year (2010: £417,809).  This was due to the greater mix of shipments of higher value products such as InCa to Northern European markets compared to sales in the prior period of lower-value products in more price competitive markets such as Spain, Kenya and Turkey.  Total operating expenses increased to £1,928,361 in the first half of the year (2010: £1,576,661).  This increase was driven by a significant external R&D expense related to joint development programs with Arysta LifeScience in the United States Turf and Ornamental market and the Brazilian horticulture markets.  External spending related to these programs was £340,000 in the first half of the year (2010: nil)  In addition, the Company incurred non-recurring redundancy and recruitment expenses of £206,000 in the first half of the year (2010: £20,000).

Cash outflow from operating activities in the first half of the year was £1,376,038 (2010: £1,048,413).  This was primarily due to reduced cash flow from operations as a result of increased operating expenses, specifically R&D programs and redundancy and recruitment payments.

In May 2011, the Company received net proceeds of £1,967,524 as a result of a placing of new shares in the Company with Arysta LifeScience, a Tokyo-based agrochemical multinational.  Net cash on hand at the end of the first half of the year was £1,661,495 as compared to. £1,172,763 as at 31 March 2011.

Current Outlook

The Company will continue to focus upon growth in key crop sectors in the "near" markets of the UK, Netherlands, France and Germany.  These Northern Hemisphere markets have a peak usage season during spring and summer.  Accordingly, the Company is currently in the middle of discussions with these customers on shipment volumes and schedules for the coming six months.  With the Plant Impact financial year-end falling at the end of March, there may be important timing issues affecting the year-end result, which we are not able to give a secure indication of at this time.  However, the Company is firmly focused on actual product use in-season and also timely delivery to minimize the working capital requirement associated with our products from production to consumption in the total value chain.  Looking through these considerations, the Company expects increased 2012 purchases and on-the-ground consumption by growers in Northern Europe, the United Kingdom, and the Middle East  over and above their consumption levels in the 2011 period.

Plant Impact also expects to grow its business in the 2012 calendar year into the U.S. Turf (golf course) market via its partnership with Arysta LifeScience.  The volumes expected from this collaboration are launch-year volumes and, again, revenues may not be achieved prior to the financial year ending in March 2012.

Previous forward expectations for the 2012 financial year were based on a roll-out in the United States and other specialty markets (such as US Turf).  This rollout led to sales estimates for the 2011/2012 financial year of £2.8 million.  As explained above, management has decided to delay entry into the USA until resources permit and launches can be planned in detail to ensure a good likelihood of success,  Accordingly, the Directors now anticipate that sales and operating results for the current financial year ending 31 March 2012 will be materially below previous management expectations and market forecasts.  The Company estimates that its refocus on sales into "near" markets will result in current year sales of between £1.8 million and £2.2 million.

Our actions to improve the Company's expense position have re-aligned the Company's operating structure to a more realistic and sustainable level.  The Company began its financial year with an annual operating expense base of approximately £3,240,000.  Following recently implemented changes, the Company is now operating at a recurring annual expense level of approximately £2,500,000, a significant reduction.

Finally, and crucially, the Company is applying focus and rigour to its product development and research activities for the 2012 calendar year.  Complete alignment between technical prospects and commercial opportunity is our goal.  For 2012, we expect to conduct additional critical research and field trials to underpin the market claims and performance of InCa and PiNT.  We believe that compiling a dossier of compelling performance data represents an accumulating asset that will underpin our proposition to growers and expand our capability to grow sales and margins.  Key areas of crop focus for additional InCa research in 2012 include potatoes, peas & beans, tomatoes, root vegetables, soft fruit, lettuce, cucurbits and brassica.  In addition, the Company expects to continue work on the performance and applicability of InCa, PiNT and other technologies in key, strategic row crops such as soy, oilseed rape, and wheat.

The above outlook confirms the Board and management team's commitment to growth through a more focused, higher performance and lower risk approach.  We see significant potential for the business in key current markets, and we are confident that these can provide a secure foundation for the Company's plans to roll-out its products in global markets given sufficient internally generated resources.  I am enthusiastic about the possibilities for our business over the next 12 months, and I am grateful for the support of our shareholders, customers and staff during a period of significant change.

John Brubaker
Chief Executive Officer
15 December 2011