Health and Plant Protein Group Narrows Loss to $43K Amid IRS Receivable Uncertainty
Health and Plant Protein Group Limited reported a significantly reduced net loss of $43,000 for the half-year ended December 31, 2024, compared to a $748,000 loss in the prior period, despite no operational revenue following the sale of its macadamia division.
- Net loss narrowed to $43,000 from $748,000 year-on-year
- No revenue generated due to sale of macadamia division in April 2023
- Corporate overhead expenses reduced by $345,000
- Unrealised foreign exchange gain of $361,000 on IRS receivable in the USA
- US$3.9 million IRS receivable remains subject to withholding tax and reclaim costs
Half-Year Financial Overview
Health and Plant Protein Group Limited (ASX: HPP) has reported a markedly improved financial position for the half-year ended 31 December 2024, posting a net loss after tax of $43,000. This represents a substantial improvement from the $748,000 loss recorded in the same period last year. The company’s results reflect the ongoing impact of its strategic exit from the macadamia business, which was sold in April 2023.
With no operational revenue during the half-year, the Group’s financial performance was largely influenced by corporate income and overhead management. The absence of business activity following the divestment has shifted the company’s focus towards managing its remaining assets and liabilities.
Key Drivers Behind the Results
The $361,000 corporate income recorded during the period was primarily an unrealised foreign exchange gain on the Internal Revenue Service (IRS) receivable held in the United States. This receivable, amounting to US$3.9 million, remains outstanding and is subject to withholding taxes estimated at US$550,000, as well as reclaim costs of approximately US$67,000.
Corporate overhead expenses decreased by $345,000 to $429,000, reflecting tighter cost controls and the absence of one-off expenses that weighed on the prior period. The previous half included significant non-recurring costs such as $178,000 for director options, $82,000 in legal and professional fees related to the macadamia sale, and a foreign exchange loss of $122,000 on the IRS receivable.
Balance Sheet and Cash Flow Position
The Group’s net tangible asset backing remained stable at 5.4 cents per share, with total equity of $6.1 million as at 31 December 2024. The company holds no interest-bearing liabilities and ended the period with $904,000 in cash and cash equivalents.
Cash flow from operating activities showed a net outflow of $409,000, consistent with the lack of trading revenue. Investing activities reflected a small net inflow of $24,000, primarily from interest income, while no financing activities occurred during the period.
Going Concern and Future Outlook
The directors have prepared the financial statements on a going concern basis, supported by cash flow forecasts extending to March 2026. However, the Group’s ability to sustain operations beyond this horizon hinges on the successful recovery of the IRS receivable. Should these funds not be realised, the company may need to seek alternative capital sources to maintain its financial position.
Meanwhile, the Board continues to work with external advisors to expedite the clearance process with the US IRS. The resolution of this matter remains a critical factor for the Group’s strategic options and investor confidence.
Shareholder Returns and Capital Structure
No dividends were declared or paid during the half-year, consistent with the company’s focus on preserving capital amid its transitional phase. The company’s share capital remains unchanged at approximately 113.5 million shares, with 25 million share options granted to directors in December 2023, exercisable at 6 cents each and expiring in December 2027.
These options, accounted for as equity-settled share-based payments, reflect management’s alignment with shareholder interests as the company navigates its post-divestment phase.
Bottom Line?
Health and Plant Protein Group’s near-term stability depends on the IRS receivable clearance, setting the stage for its next strategic moves.
Questions in the middle?
- When will the US IRS release the withheld funds, and what are the risks of further delays?
- What strategic directions will the company pursue now that its macadamia division has been sold?
- Could the company require additional capital if the IRS receivable is not recovered promptly?