Plant Health Regulatory News (PHC)

26 March 2013

PLANT HEALTH CARE PLC

("Plant Health Care" or the "Company")

Placing and Subscription, and Notice of General Meeting

Plant Health Care plc (AIM/CISX: PHC.L), a leading provider of novel patent protected biological products to the global agriculture markets, announces that it is proposing to raise £13.4m ($20.3m) before expenses by means of a Placing of 14,164,047 Placing Shares with certain new and existing institutional investors and a Subscription for 2,955,397 Subscription Shares from existing and new investors, in each case at an Issue Price of 78p per New Ordinary Share.

The Placing, which is conditional upon inter alia, the Subscription, has been fully underwritten by Nomura Code. The Placing and the Subscription are, inter alia, subject to the approval of Shareholders at a General Meeting that will be held on 15 April 2013 at the offices of Reed Smith LLP, The Broadgate Tower, 20 Primrose Street, London EC2A 2RS. Admission of the Placing Shares and the Subscription Shares to AIM and the CISX is expected to take place on 16 April 2013.

Highlights

Years of hard work by Plant Health Care's management and personnel have developed a company which enjoys significant product intellectual property ("IP") (mainly the Harpin alpha beta and Myconate products) and which has established sound footholds in its initial markets. The Board has stepped back and thought deeply about the strengths of the Company, and the additional work and investment required which, in its view, can enable Plant Health Care to fulfil its potential. Consequently, the Company is proposing to raise money to fund the expansion of the R&D programme for the Harpin product platform and commercialisation of existing products. While this strategy is an evolution rather than a revolution of the previous strategy, its implementation in a focused, effective manner will require change and it will require investment.

The Directors propose to use the net proceeds of the Placing and Subscription, being approximately $19.7m (£13.0m), as follows:

·; Invest in research and development to evaluate the third generation Harpins, to enable the Company to bring to market a new generation of better characterised and more targeted Harpin products to meet the demands of today's agriculture market;

·; Invest in the generation and further protection of IP;

·; Expand the Company's R&D centre in Seattle, employ new scientists and technicians, enlarge the glasshouses and take on new key staff; and

·; Continue to invest in the momentum created behind the Company's existing Harpin alpha beta and Myconate products, to drive short-term revenues.

A Circular convening the General Meeting (the "Circular") is being posted to Shareholders and is reproduced below. Words defined in the Circular shall have the same meaning in this announcement. A copy of the Circular will be available on the Company's website later today at www.planthealthcare.com

Dr Christopher Richards, Chairman, commented: "The fundraising that we are announcing today will allow Plant Health Care to make the focused investment that is required to realise the potential of the Harpin platform and to ramp up sales of existing products. This is the start of an exciting new chapter of the development of Plant Health Care. Our long-term vision is to establish Plant Health Care as a highly profitable technology licensing business, embedded in the global agrochemical industry, earning most of its income as royalties and licensing fees."

For further information, please contact:

About Plant Health Care plc:Plant Health Care plc ("Plant Health Care") is a leading provider of patent protected biological products aimed at the agriculture industry that are environmentally beneficial. Through the commercialisation of these products, Plant Health Care is capitalising on current long-term trends toward natural systems and biological products for plant care and soil and water management.

Nomura Code Securities Limited, which is regulated by the Financial Services Authority, is acting as nominated adviser and broker to the Company in connection with the matters described in this announcement. Persons receiving this announcement should note that Nomura Code Securities Limited will not be responsible to anyone other than the Company for providing the protections afforded to clients of Nomura Code Securities Limited or for advising any other person on the arrangements described in this announcement. Nomura Code Securities Limited has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by Nomura Code Securities Limited for the accuracy of any information or opinions contained in this announcement or for the omission of any information.

The New Ordinary Shares will not be registered under the United States Securities Act of 1933 (as amended) or under the securities laws of any state of the United States or qualify for distribution under any of the relevant securities laws of Canada, Australia or Japan, nor has any prospectus in relation to the New Ordinary Shares been lodged with or registered by the Australian Securities and Investments Commission. Accordingly, subject to certain exceptions, the New Ordinary Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into the United States, Canada, Australia or Japan. This announcement is directed and issued only to the shareholders of Plant Health Care plc and their representatives and shall not be distributed to or used by any other person.

The New Ordinary Shares will not be publicly offered or distributed in Switzerland. The New Ordinary Shares shall be offered in Switzerland privately only to a limited number of selected institutional investors without the use of any public means of information or advertisement. Each copy of this announcement is addressed to a specifically named recipient and may not be passed on to third parties. Neither this announcement nor any other offering or marketing material relating to the New Ordinary Shares constitute a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations. This announcement has not been filed with or approved by any Swiss regulatory authority or stock exchange. The New Ordinary Shares will not be registered in Switzerland or listed at any Swiss stock exchange. This announcement may not be distributed or used in Switzerland without our prior written approval.

Overseas shareholders and any person (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward this announcement to a jurisdiction outside the United Kingdom should seek appropriate advice before taking any action.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

PLACING AND SUBSCRIPTION STATISTICS

Proposed Placing and Subscription of New Ordinary Shares

and Notice of General Meeting

1. Introduction

Your Board announced today that the Company is proposing to raise £13.4 million ($20.3 million) before expenses by means of a Placing and a Subscription of New Ordinary Shares. The Placing and Subscription (the "Fundraising") are subject, inter alia, to the approval of Shareholders at the General Meeting. The main purpose of this document is to explain the reasons for, and details of, the Fundraising and to explain why the Board considers that they are in the best interests of the Company and its Shareholders as a whole and to recommend that you vote in favour of the Resolutions.

Background to the Fundraising

Plant Health Care is a leading provider of novel patent protected biological products to the global agriculture markets. Years of hard work by Plant Health Care management and personnel have developed a company which enjoys significant product intellectual property ("IP") (mainly the Harpin alpha beta and Myconate products) and which has established sound footholds in its initial markets. The Board has stepped back and thought deeply about the strengths of the Company, and the additional work and investment required, which, in its view, can enable Plant Health Care to fulfil its potential.

The Company is proposing to raise money to fund expansion of the research and development ("R&D") programme for the Harpin product platform and commercialisation of existing products. While this strategy is an evolution rather than a revolution of the previous strategy, its implementation in a focused, effective manner will require change and it will require investment.

Today's agriculture market

In response to growing global demand for food, driven by population growth and growing demand for protein, the agriculture industry is searching for new ways of increasing yield sustainably. With limited land and water availability and more erratic climate, the world needs sustainable intensification of agriculture. In addition, increasing agricultural commodity prices encourage farmers to increase inputs in the search of higher crop yields. One consequence is heightened interest in biological products, such as those being developed by Plant Health Care, where products have been demonstrated to increase yields through, for example, improved drought tolerance or improved pest control. By embracing sophisticated approaches to understanding plant physiology, biological products seek to improve yield by enhancing the plant's capacity to produce usable food. In addition, biological products have the ability to improve efficacy and extend patent life of agrochemical products. The Board sees this as a new trend which has the potential to favour Plant Health Care.

The Directors also believe that, historically, many biological products have been of variable efficacy; while we have proven the efficacy of the Company's products, the sector as a whole has been tarnished with this reputation and biological products have lacked sustained investment as a result. However, major players, particularly those with leading biotech programmes, are now rapidly recognising that biologicals can be materially enhanced by the application of sophisticated molecular biology and biochemistry. This, combined with the ability of these molecules to extend patent life of valuable chemical actives, to assist with pest resistance management, to provide complementary activity, and to leverage powerful crop protection distribution channels, has led to a wave of interest and activity not seen since the surge of investment in seeds companies by the majors in the mid- nineties. Over the last year, major agrochemical companies have made very substantial investments in the biological sector, to acquire science platforms, IP, and products. For example, Syngenta acquired Devgen NV in September 2012 for €403 million, BASF acquired Becker Underwood in September 2012 for c.$1 billion and Bayer Crop Science acquired Agraquest Inc. in August 2012 for an up front payment of $425 million.

The Directors also believe that mid-sized players are keen to explore the use of biologicals and other agents to differentiate their post-patent product lines, and specialist biological companies are eager to build scale. In recent years, the prices of most agricultural commodities have increased.

2. Information on Plant Health Care

Plant Health Care's approach has involved the development and field testing of a range of products based upon both current and future development of its core proprietary and IP-protected technologies, which are then exploited commercially through major partnering and licensing arrangements with leading global and regional players with established presence in, and marketing effort and sales channels into, the wide range of target crops and applications where its products deliver sustainable economical benefit.

The Company's key products are based on its proprietary Harpin technology, which has demonstrated commercial success around the world and has been applied to over 10 million acres (approximately 4 million hectares) of crops. The Company's other products include Myconate, a biological plant growth stimulant, and a range of fertiliser and plant nutrient products.

Harpin

Harpins are natural proteins found in all plant pathogenic bacteria and work in an analogous way to the immune response to disease pathogens in humans. Harpin proteins are large, complex molecules containing active sites in the folds of their structures; they lock on to specific receptors in the plant that alert it to the presence of disease pathogens. Activation of these receptors stimulates the plant's defence and growth mechanisms and makes it better able to resist future attacks and grow. Crops treated with Harpins have been shown to germinate sooner, build stronger roots, heal faster, fight off pests and put more vigour into fruits and seeds. For the farmer, that can mean higher yields, resistance to drought, less damage from pests and a higher quality product.

The Company's Chief Science Officer, Dr Zhongmin Wei, is an internationally-recognised expert on Harpins and the creator of the Company's Harpin-based products. The first generation of Harpins was sold under the Messenger brand name and contains an active ingredient which is a combination of naturally-occurring proteins. Messenger was launched in 2000 and has been shown to work in a wide range of crops, but the complex nature of the product and limited number of active sites in the naturally-occurring proteins meant that its efficacy was variable and its penetration of the market was limited. However, the IP and the knowledge and confidential information ("know-how") generated from Messenger was invaluable in evolving the technology and creating new products.

The second and current generation of Harpin, Harpin alpha beta, is a recombinant protein engineered by the Company and contains many more active sites than the first generation product and as a result is more reliable. Harpin alpha beta is more potent and can be manufactured at low cost. Harpin alpha beta is sold under the N-Hibit and ProAct brand names; N-Hibit is a dry powder formulation for use as a seed treatment agent, while ProAct is a dry powder for foliar spraying. ProAct and N-Hibit have shown excellent results across several crops in the USA and elsewhere.

Field trials have regularly shown the benefit of N-Hibit (the seed treatment brand of Harpin alpha beta), since its launch in the USA in 2005. These trials have clearly demonstrated positive results for water stress conditions (e.g. general drought, lack of moisture in cotton crops or excessive heat during corn pollination) and pest control (e.g. nematode worms, which are particularly damaging in soybean crops), resulting in increased yields. N-Hibit's yield-enhancing success was particularly marked during the widespread drought conditions in the main corn and bean growing areas of the US during 2012. In trials carried out by the Company's partner, Direct Enterprises, Inc., and evaluated by an independent contract researcher, yield increases in soybean, corn and wheat crops of 4.2 per cent., 8.3 per cent. and 3.2 per cent. were demonstrated, representing a return on investment to farmers of between 20 and 230 fold. Reflecting these continuing strong field results, the number of acres seed- treated with N-Hibit in the USA has increased from 1.1 million acres in 2011 to 3.5 million acres in 2012, representing 4 per cent. of the soya crop. In addition to these results in the USA, N-Hibit has established significant sales in South Africa as a seed treatment for corn (maize); in the first commercial year of sales, 4.5 per cent. of the corn crop was treated.

ProAct (the foliar brand of Harpin alpha beta) was launched in 2005. The benefits of spraying ProAct onto row, vegetable and fruit crops have been demonstrated in field trails and commercial use in the USA, UK and elsewhere. Numerous uses of ProAct have been demonstrated, including shelf life extension, increasing fruit sugar and significant reduction in fruit splitting. For example, direct sales in the UK have demonstrated value in cherry crops. Sales of ProAct have been modest, due to the limited sales resources of the Company. However, trials over the last two years have demonstrated remarkable results when ProAct has been combined with agrochemical products. In particular, when combined with the propiconazole, the Company has seen similar and superior pest control effects to BASF's market-leading proprietary fungicide which is a strobilurin-based product. In 2012, field trials by the Iowa Soybean Association confirmed these results. ProAct combined with propiconazole was sprayed on 200,000 acres in 2012. The synergistic disease control effect seen in the Harpin alpha beta and generic fungicide combination is likely to become a useful tool in managing resistance to strobilurin fungicides, which are the most widely used products in the US.

Further details of the Company's continued research and development into the Harpin platform may be found in paragraph 3.

Harpin licenses and partnerships

Results such as those described above have demonstrated the value of products generated by the Harpin platform. The Company's strategy has been to enter into licensing agreements with major agricultural input supply companies to commercialise Harpin alpha beta. The Company has developed several important relationships in recent years and these are forecast to lead to significant sales growth of Harpin products in the USA and around the world over the coming years.

The Company had a mixed early experience with licensing agreements. In December 2008, the Company entered into an exclusive agreement with Monsanto to combine Harpin alpha beta with Monsanto's own standard seed treatment package for use in their Round-Up Ready 2. This agreement covered corn, soya, cotton and canola on a global basis. However, the launch was not as successful as anticipated and Monsanto was left with a large inventory of Harpin. A third party, Direct Enterprises, Inc., has been steadily depleting this inventory since acting as a sub-distributor for Monsanto since 2010, and has created demand in soya and other crops. The Company currently forecasts that this inventory will be largely exhausted during 2013 and it will see new sales at the end of 2013 for use in the 2014 season.

In 2010, a global exclusive agreement for sugar beet was announced with Germains Seed Technology, a member of the Associated British Foods and British Sugar group of companies. Following three years of successful laboratory and small-scale field testing, Germains is now moving forward into much larger scale testing in the US where the product is already registered for commercialisation, and a milestone payment is being made to Plant Health Care.

In 2012, a licensing agreement for ProAct, focused on the mixture with generic fungicides in the USA, was signed with Makhteshim Agan, to carry out field trials and test marketing. Also in 2012, a development agreement for similar uses was signed with Arysta LifeScience in 2012.

Myconate

Myconate was launched in 2008 and is at an earlier stage of commercialisation than Harpin alpha beta, with approximately 200,000 treated acres of crops.

Myconate is a seed treatment and stimulates the growth and colonisation of plant roots by VAM fungi. VAM fungi act in symbiosis with the plant and extend the effective surface area of plant roots, affording increased scope and ability for nutrient uptake (especially phosphorus) in soil moisture. Crops treated with Myconate have been shown to develop visibly enhanced root systems, which improve their ability to absorb water and to grow even in dry conditions. Myconate is a formulation of the isoflavinoid, formenonetin, and the Group owns a significant amount of IP in this area.

The Company had a successful season of trials in 2012, and as a result will begin to ship commercial quantities of Myconate into the cereal, potato and vegetable industry in 2013.

Myconate Partnerships

In 2013, the Company announced an agreement with Dalgety Agra Polska to sell Myconate for seed treatment and foliar application in Poland.

In July 2011 the Company signed a non-exclusive agreement with Incotec to develop Myconate in conjunction with existing seed treatments. Incotec is the world's largest seed treatment company for vegetables, ornamentals and certain field crops. This agreement is now in its second year and testing continues in several countries around the world, involving many crop targets.

The Company has completed successful Myconate trials in Brazil. Based on these results the Company has entered into a trial program with a leading fertiliser company and, if successful, the Company expect a launch of a combined fertiliser/Myconate product by 2016. The Company's strategy for Myconate is to continue to roll out the product commercially but it does not intend to invest in further research for this product.

Other products

Plant Health Care also sells a range of fertiliser and other crop treatment products mainly to vegetable and fruit farmers through its operations in Mexico and some EU markets. These businesses have established valuable market positions and generate cash for Plant Health Care. The Directors believe the growth potential of these products is limited and they represent only local contributions to driving the global partnership sales of the Company's priority technologies. The Directors therefore see these businesses as non-core and, consistent with the Company's disposal of its US landscape and retail business in January 2011, the Board has decided to divest such operations as and when the opportunity arises to do so on attractive terms. Any future divestment projects will ensure that Plant Health Care retains all rights to Harpin and Myconate.

Plant Health Care's strategy

The Company has developed significant product IP (mainly around the Harpin and Myconate products) and these products have established sound footholds in their initial markets. The Board has stepped back and thought deeply about the strengths of the Company, and the additional work and investment required, to in its view, enable it to fulfil its potential.

The Company is proposing to raise money to fund expansion of the Company's R&D programme and accelerated commercialisation of existing products. While this strategy is an evolution rather than a revolution of the previous strategy, its implementation in a focused, effective manner will require change and it will require investment.

Invest in momentum - Harpin alpha beta products

The Company intends to invest in exploiting the current product portfolio, both to generate revenue and to further establish Harpin as a technology with wide applicability. Plant Health Care intends to build on the momentum of sales growth of Harpin alpha beta products, in particular focusing on N-Hibit and ProAct in the US and South America.

Current Harpin products are formulated as a relatively low strength dry powder. This can be a disadvantage in certain of the uses of this product (for example, when used as a seed treatment), as powder formulations that require thorough and sometimes separate mixing can lead to reduced seed processing speeds. The Directors believe that being able to formulate as a liquid would mitigate this mixing time issue, and widen the appeal of Harpin alpha beta and therefore the Company intends to develop both higher-strength and liquid formulations (see paragraph 3, "Research and Development"). We intend to increase investment in liquid Harpin alpha beta formulation development, to accelerate this process.

As a result of formulating the liquid Harpin, the Company will create more product development opportunities, both with standalone Harpin and in combination with existing third party products. The Directors believe that the opportunity to enhance and extend the IP life of existing products in this way will be attractive to potential partners.

Develop the Harpin platform

In 2011 Dr. Zhongmin Wei synthesised 28 candidate third generation Harpin products. In green- house tests, these showed significant promise. From these, six were taken into small scale field trials in 2012. These trials confirmed the greenhouse results.

The Directors believe that Harpin is a valuable asset and plan to invest further to develop the platform into a pipeline of third generation and future products. The Company will use advanced analytical and biochemistry techniques to analyse the Harpin proteins to identify the source of their valuable biological activity. With this understanding comes the potential to create a significant number of novel, differentiated products.

The aim of this work is to develop the next generations of Harpins into a suite of products with superior performance for specific crops and agronomic applications. Further information on the Research and Development programme can be found in paragraph 3 below.

Build our licensing capability for the next generation Harpins

The Directors believe that historically many biological products have been of variable efficacy; while we believe we have proven the efficacy of the Company's products, the sector as a whole has been tarnished with this reputation, and biological products have lacked sustained investment as a result. However, major players, particularly those with leading biotech programs, are now rapidly recognising the merits of biological products, both for short term sales and for longer term development.

Although Plant Health Care management has done a remarkable job in developing early sales of its products, the Company recognises that development and eventual commercialisation of these products is beyond the resources of a small company like Plant Health Care, and as such intends to develop its capabilities to license out its products to larger companies in the sector. Once proof of concept for the third generation platform is achieved, the Company intends to enter into exclusive joint development or licensing agreements with industry majors who have the development and marketing capabilities to maximise the potential of this portfolio.

At the research level, there is increasing recognition that biological products can be materially enhanced by the application of sophisticated molecular biology and biochemistry. This, combined with the ability of these molecules to extend patent life of valuable chemical actives, to assist with pest resistance management, to provide complementary activity, and to leverage powerful crop protection distribution channels has led to a wave of interest and activity not seen since the surge of investment in seeds companies by the majors in the mid-nineties.

As part of these licensing agreements, major companies will share the costs, risks and the rewards of commercialisation. Plant Health Care intends to offer a differentiated portfolio of development peptides, which can allow Plant Health Care to assign meaningful exclusivity to a number of competing industry majors. To achieve this and manage the relationships effectively the Company needs to raise its out-licensing and key partnering capabilities. This effort will be synergistic with the push to develop further the short term licensing and partnering with existing Plant Health Care products.

Our long term vision for Plant Health Care is of a highly profitable technology licensing business, embedded in the global agrochemical industry, earning most of its income as royalties and licensing fees. It will aggressively extend and defend its science, its IP and its know-how in peptide production.

As part of the implementation of this strategy, the Company will create a central office for Plant Health Care, where key operational staff will work. All R&D activities will continue to be managed and implemented from the Company's existing site in Seattle. The core team at Plant Health Care is a small group of dedicated professionals, who believe passionately in the company's products. We intend to augment that group during 2013 with the appropriate skills to implement the new strategy effectively. To enable us to motivate and retain key management and staff we have set out a new approach to ensuring that the interests of management and Shareholders are fully aligned on the delivery of Shareholder value (for further details please see the "Value creation-based incentive plan" section setout in the Circular).

3. Research and development programme

As mentioned above, research over recent years indicates that there is the potential to create a third and potentially later generations of Harpins. The aim of the research going forward is to develop the Harpins into a suite of products with superior performance for specific crops and agronomic applications.

To date, research into the Harpin platform has been carried out with a modest budget. With the promising results achieved over the past two years, the Board believes that a substantial increase in research spend is now justified and necessary, to take the platform to the next stage.

Evaluation of third generation Harpins

The third generation of product candidates to be derived from the Harpin platform are smaller polypeptides that resemble the amino acid sequence of the active sites in the second generation Harpin proteins. Target profiles have been designed for potential third generation Harpin products, which would be more specific and/or more active than Harpin alpha beta. The targets include nematode control, disease control, drought resistance and the potential to enhance the efficacy of agrochemical products. In 2011, the Company synthesised 28 third generation Harpins which, based on earlier data, were expected to match these targets. Of the 28 products that were tested in the laboratory, 6 were selected for further testing. These further tests indicated that the approach is valid and the Company now has candidate products for different crops with better performance than Harpin alpha beta. The next stage will be to carry out detailed evaluation of these candidates against the target profiles. An important aspect of the third generation products is their molecular size; they are only 1/20th the size of the first and second generation products and are polypeptides. The Directors expect them to penetrate more readily into plant cells and therefore be more effective in initiating the plant response, leading to more consistent performance. Furthermore, these smaller products will be easier to formulate and to mix with agrochemical products, which is an important target.

Expansion of the Company's research capability

In order to accelerate the evaluation of third generation Harpin candidates, the Company intends to expand its R&D centre in Seattle, employ new scientists and technicians, enlarge the glasshouses and take on new key staff. The Company will use contract service laboratories to synthesise the proteins. The Company will use a combination of contract research organisations ("CROs") and in-house resources to conduct the performance evaluation work. Protocols will be established with the help of the CROs to assay various agronomic effects including drought protection, defence against nematodes and resistance to herbicides. The emphasis will be on quickly generating clear and simple indications of differentiated activity and estimating rates and once a picture has emerged of each product's profile, various mixtures will be screened, including combinations with the pesticides of potential partners. The bulk of the assay work will be conducted in 2013, with the objective of bringing the first third generation Harpin products to the point at which development decisions can be made with a partner who will fund full development.

As further research is conducted into gaining a thorough understanding of the mode of action and plant pathways affected by the Harpins, the Directors believe future generations to come from the Harpin platform will be small synthetic molecules or traits with very high specificity and potency.

Process development

The Company has synthesised the third generation product candidates in experimental quantities. However, a cost effective manufacturing method of the new small polypeptides will need to be found. The cost of synthesis depends on the length of the peptides. In order to be cost effective in large scale production, significant work is needed to manufacture the peptides on an industrial scale in fermenters. Developing this know-how will secure control over future supply chains. As they are so much smaller than the Harpin alpha beta protein, the new peptides may be amenable to chemical synthesis, which should lead to lower costs, opening up new markets.

Formulation capabilities

The Company intends to invest in the development of a high strength liquid Harpin alpha beta formulation, which would open up new markets for this existing product. The know-how and IP generated by this activity will also allow the Company to test the potential for third generation Harpins in mixtures with established formulations.

Scientific research

The Company intends to invest in sustained scientific research to find and optimise future generations of Harpin products. The longer term goal is customised manipulation of plant health by means of designer peptides and traits. Harpins bind to receptors in the plant and thereby elicit responses. Identifying and characterising these receptors will allow the Company to design new peptides that can act as highly specific switches to manage a crop's defences or stimulate growth.

Key Harpin R&D activities, outputs and timelines

In regards to the third generation Harpins, the Company intends to screen candidates from 2013 and progress to full evaluation of candidates in 2014. The Company anticipates being able to sign a licensing agreement (which may include milestone payments) in late 2014. First sales (royalty income) are projected in 2017.

With regard to liquid Harpin alpha-beta, the Company intends to accelerate product development in 2013, with a view to having new formulations in field trials within 12 months. The Company's aim is to record first sales through partnership agreements from as early as the last quarter of 2014.

4. Intellectual Property

The Company owns intellectual property encompassing patents, trademarks and trade secrets related to its technologies and products. The Company has 120 granted patents in 30 countries with expiry dates ranging from 2015 to 2030 and another 75 patent applications that are currently pending in various jurisdictions. The Company also has 65 registered trademarks and 5 pending trademark applications. In addition to registered IP, the Company also relies upon trade secrets, know-how and continuing technological innovations to develop and maintain its competitive position. Plant Health Care's aim is to aggressively invest in generating and protecting new IP. Part 1 of this document sets out key risk factors, including those relating to the Company's intellectual property and its ability to protect its patents.

Patents

The Directors are aware of the importance of protecting the Company's inventions. The Company pursues a policy of seeking to obtain patent protection for its inventions in all major agricultural regions, including the USA, Europe, South America and in other selected countries, and it defends its patents forcefully. The Company's 120 granted patents have been issued in 30 countries. The patents and filings cover the whole class of Harpin genes and proteins (known and unknown members), for all methods of application (foliar, seed treatment and transgenic) and with any other class of agricultural chemical (herbicides, fungicides, insecticides, plant growth regulators and fertilisers) in any of multiple powder or liquid formulations. Also covered are the use of Harpin genes and proteins for many purposes, such as growth and yield improvement, and pest and disease suppression, plus the improvement of post-harvest quality and storage. The Directors believe these patents and applications provide broad and robust protection of the Company's core Harpin technologies. Myconate is similarly protected.

Trademarks

The Company protects its most significant trademarks and currently holds, in addition to its common law (non-registered) rights, various registrations and pending applications in the European Union (covering 27 countries), the United Kingdom and the United States. The registrations and applications encompass the following five marks: Harp-N-Tek, N-Hibit, ProAct, Employ, Myconate.

Trade secrets

The Company is careful to take reasonable measures to protect the know-how that it has created while conducting extensive research and development relating to the Company's technology while expanding its business. Such trade secret information concerns both technological (e.g., production details, expression systems, control systems, chemistries, product combinations, and methods and processes) and operational aspects of the business. In addition to the Company's published intellectual property, the Directors believe that this trade secret information gives the Company a significant advantage over competitors who would similarly need to invest heavily in research and development in order to generate the information encompassed within the Company's protected trade secrets.

5. Reasons for the Placing and Subscription and use of proceeds

The Company is proposing to raise £13.0 million ($19.7 million), net of expenses for the purposes of increasing investment in the Harpin R&D programme and commercialisation of existing products:

• R&D: $16.2 million

• Evaluation of third generation Harpin

• Process development

• Formulation

• Future generation research

• IP protection: $1.5 million

• Sales and marketing: $2.0 million

• Estimate of expenses: $0.6 million

Total: $20.3 million

6 The proposed Placing and Subscription

The Company proposes to raise approximately £13.0 million (net of expenses) through the issue of the Placing Shares and the Subscription Shares at the Issue Price. The Issue Price represents a discount of 4.29 per cent. to the closing middle market price of 81.5 pence per Ordinary Share on 25 March 2013, being the last practicable date prior to the publication of this document. The Placing Shares and the Subscription Shares will represent approximately 24.28 per cent. of the Company's issued ordinary share capital immediately following Admission.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Nomura Code has conditionally agreed to use its reasonable endeavours, as agent for the Company, to place the Placing Shares at the Issue Price with certain institutional and other investors. The Placing has been fully underwritten by Nomura Code. The Placing Agreement is conditional upon, inter alia, the Resolutions being duly passed at the GM and Admission becoming effective on or before 16 April 2013 (or such later time and/or date as the Company and Nomura Code may agree, but in any event by no later than 26 April 2013).

The Placing Agreement contains warranties from the Company in favour of Nomura Code in relation to, inter alia, the accuracy of the information contained in this document and certain other matters relating to the Group and its business. In addition, the Company has agreed to indemnify Nomura Code in relation to certain liabilities it may incur in respect of the Placing. Nomura Code has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, for force majeure or in the event of a material breach of the warranties set out in the Placing Agreement.

Under the Placing Agreement and subject to it becoming unconditional in all respects and not being terminated in accordance with its terms, the Company has agreed to pay Nomura Code a commission of 4 per cent. on the value at the Issue Price of the Placing Shares (except in the case of certain investors), together with all reasonable expenses and any applicable value added tax.

The Subscription Agreements

The Subscribers entered into Subscription Agreements pursuant to which they have conditionally agreed to subscribe for the Subscription Shares at the Issue Price per Subscription Share. The Subscription Agreements are conditional on (i) Shareholders of the Company passing the Resolutions at the General Meeting; (ii) on the Placing becoming unconditional (save only as to any condition relating to the Subscription becoming unconditional and the Subscription Shares being admitted to AIM and the CISX); and (iii) Admission occurring on or before 16 April 2013. The Subscription monies shall be paid by the Subscribers to Reed Smith LLP, who will hold the money as escrow agents until the Subscription Agreements have become unconditional in all respects, whereupon it will be transferred to the Company.

Settlement and dealings

Application will be made to the London Stock Exchange and the CISX for the Placing Shares and the Subscription Shares to be admitted to trading on AIM and the CISX. It is expected that such Admission will become effective and that dealings will commence on 16 April 2013.

The Placing Shares and the Subscription Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares, including the right to receive dividends and other distributions declared following Admission. It is expected that CREST accounts will be credited on the day of Admission and that share certificates (where applicable) will be dispatched by first class post by 30 April 2013.

No temporary documents of title will be issued. Pending the dispatch of definitive share certificates, instruments of transfer will be certified against the register of members of the Company.

7 Current trading and prospects

On 26 March 2013, the Company announced its results for the year ending 31 December 2012. A summary of the results is set out below.

Revenue

• revenue was $7.8 million, essentially unchanged from the prior year

• sales of Harpin and Myconate have increased as a percentage of total sales to 34 per cent. from 30 per cent. in 2011, a continuing upward trend expected to continue in 2013

• Gross margin

• the gross margin increased to 55 per cent. of sales in 2012 an improvement from 52 per cent. in 2011, as a result of an increased contribution from Harpin and Myconate in the sales mix

• Operating cost

• operating expenses were reduced by 3 per cent., the 5th consecutive year of operating cost decreases, to $10.8 million in 2012

• R&D expenses for the year were $2.1 million

• Cash and short-term investments at 31 December 2012 were $7.7 million

• A partnership agreement for foliar Harpin which was expected to be completed by the end of

2012 and which would have added significantly to the revenues for the year was delayed. This agreement is now expected to be completed shortly.

The Directors view the financial and trading prospects for the Group, in particular as supplemented by the net proceeds for the Placing, for the current financial year and the foreseeable future with confidence. Further details of the Company's R&D strategy are set out in paragraph 3.

On 10 January 2013, the Company provided a post year-end update ahead of the announcement of its audited full year results for the year ended 31 December 2012 in March 2013. The Company reported that a partnership agreement for foliar Harpin which was expected to be completed by the end of the year would have added significantly to the revenues for 2012, however, it expected to complete this agreement in the first quarter of 2013 and noted that the precise timing of additional partnership agreements remained unpredictable.

On 11 March 2013, the Company announced that it remained confident that it can deliver substantial value to Shareholders through the successful implementation of its partnership agreements but the precise timing of agreements and revenues can be subject to a number of uncertainties because of factors such as the outcome of field trials and the progress of registration processes for new products.

The Board announced that it had resolved to adopt a more cautious approach to budgeting for future revenues from its partnership discussions which should give investors a better understanding of the Company's prospects in the short and medium terms. In addition:

• The Company entered into a multi-year distribution agreement with Dalgety Agra Polska to market Myconate for both seed treatment and foliar application in Poland. This agreement follows several years of successful trials in Poland, which is an important producer of corn, potato and wheat. The agreement will generate revenues in the current financial year.

• The partnership agreement for foliar harpin, referenced in the January 2013 trading update, is expected to be completed shortly.

• The Board anticipates good growth in partnership revenues in the current year and in 2014, but at lower levels than currently indicated by market forecasts.

The Company anticipates providing an update to the market on the following news over the course of the next two years:

2013:

• Partnership agreement for foliar Harpin alpha-beta to be completed shortly

• anticipate milestone payments in 2013 and revenue late 2013

• Announcement of new corporate headquarters location and personnel plan 3Q 2013

• Up-date on southern hemisphere sales of Harpin alpha-beta 3Q 2013

• Up-date on DEI sales of Harpin alpha-beta for seed treatment in US 3Q 2013

• Disposal of a non-core operating subsidiary by end of 2013

2014:

• At least one further partnership agreement with Harpin alpha-beta and/or Myconate

• At least one evaluation agreement for a third generation Harpin product

• Disposal of a further non-core operating subsidiary by end of 2014

8. Working capital

In the opinion of the Directors and assuming completion of the Placing and Subscription, the working capital available to the Group is sufficient for the Group's present requirements, that is for at least 12 months following Admission.

9. Board changes

Mr. Paul Schmidt, Nominated Chief Executive Officer

The Company is pleased to welcome Mr Schmidt as Chief Executive, and an Executive Director effective 2 April 2013. Mr. Schmidt has a distinguished career and extensive operational experience in the agriculture industry, having served in senior roles in the USA, Germany and Canada. As President of Merck/EMD Crop Bioscience, a biologicals product company, he led a dramatic increase in sales and profit and oversaw the sale of the business in February, 2011 to Novozymes for $275 million. Since May 2012, he has served as a Managing Director at Kirchner Private Capital Group in its Agriculture and Food Integrated Focus Area. His past experience includes President of Merck/EMD Crop BioScience: (2007-2011), Vice President, Global Head of New Business Ventures, Bayer CropScience (2002-2007), Director of Strategy & New Business Development, Aventis CropScience, (2000-2002) as well as various roles in Hoechst Schering AgrEvo and Hoechst Canada (1983 to 2000). Mr. Schmidt has worked in the agriculture industry since graduating from the University of Saskatchewan with a BSA in Agronomy in 1980.

Mr. John Brady, Chief Executive Officer

Mr. Brady will be stepping down as Chief Executive Officer of the Company on or around 2 April 2013, having held this position since 2001. The Board is pleased that Mr. Brady will continue to be a Director, taking up a position as a Non-Executive Director on the Board on or around 2 April 2013. I would like to recognise the enormous contribution which John Brady has made in his leadership of the Company over the last decade.

The Company also intends on entering into an agreement with Mr. Brady whereby he agrees to be bound to exercise his options within a particular period.

Mr. Sam Wauchope, Senior Independent Non-Executive

Mr. Wauchope, having served as a non-executive director for nine years, will step down from the Board on 2 April 2013. I would like to pay tribute to Sam Wauchope and the valuable contribution he has made to the company over his time on the Board, including a stint as Interim Chairman in 2012.

Mr. Michael Higgins, Proposed Non-Executive Director

Mr Higgins will be appointed as in independent non-executive director following the Company's annual general meeting. He is currently non-executive Chairman of AIM quoted Ebiquity Plc and a Deputy Chairman of the Quoted Companies Alliance. Michael also works with, and invests in a number of early stage businesses. Michael was a Senior Adviser at KPMG following ten years as a Partner. Prior to KPMG he was a Director at Charterhouse Bank, worked at Saudi International Bank and qualified as an accountant with Price Waterhouse (now PricewaterhouseCoopers).

10. General Meeting

Set out at the end of this document is a notice convening the GM to be held on 15 April 2013 at the offices of Reed Smith LLP, The Broadgate Tower, 20 Primrose Street, London EC2A 2RS, at 11.00 a.m., at which the Resolutions will be proposed for the purposes of implementing the Proposed Placing and the Subscription.

Resolution 1, which will be proposed as an ordinary resolution and which is subject to the passing of Resolution 2 and the Placing Agreement becoming unconditional and not being terminated in accordance with its terms, authorises the Directors to allot the New Ordinary Shares in connection with the Placing and the Subscription, provided that such authority shall expire on the earlier of the conclusion of the next annual general meeting of the Company or the expiry of 15 months from the passing of this Resolution.

Resolution 2, which will be proposed as a special resolution and which is subject to the passing of Resolution 1 and the Placing Agreement becoming unconditional and not being terminated in accordance with its terms, disapplies Shareholders' statutory pre-emption rights in relation to the issue of the Placing Shares and the Subscription Shares, provided that such authority shall expire on the earlier of the conclusion of the next annual general meeting of the Company or the expiry of 15 months from the passing of this Resolution.

11. Related Party Transaction

Under the Placing, ORA (Guernsey) Limited and Henderson Global Investors Limited have agreed to subscribe for 4,221,996 and 4,250,000 Placing Shares, respectively, at the Issue Price. These subscriptions constitute related party transactions under the AIM Rules. ORA (Guernsey) Limited and Henderson Global Investors Limited are both related parties by virtue of their shareholdings in the Company. The Directors consider, having consulted with the Company's nominated adviser, Nomura Code, that the terms of the participation in the Placing by ORA (Guernsey) Limited and Henderson Global Investors Limited are fair and reasonable insofar as Shareholders are concerned.

12. Action to be taken

A Form of Proxy for use at the GM accompanies this document. The Form of Proxy should be completed in accordance with the instructions thereon and returned to the Company's registrar, Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible, but in any event so as to be received by 11.00 a.m. on 13 April 2013. The completion and return of a Form of Proxy will not preclude Shareholders from attending the GM and voting in person should they so wish.

13. Recommendation

The Directors consider the Proposed Placing and the Subscription to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their beneficial holdings of Ordinary Shares amounting, in aggregate, to 378,779 Ordinary Shares, representing approximately 0.71 per cent. of the existing issued ordinary share capital of the Company.