HPP’s Cash Reserves Dip to $0.90M as Operating Outflows Continue in Q2 FY25

Quarterly Financial Overview

Health and Plant Protein Group Limited (ASX: HPP) has released its quarterly activities report and Appendix 4C cash flow statement for the period ending 31 December 2024. The company closed the quarter with cash and cash equivalents of $0.90 million, down from $1.06 million at the end of the previous quarter. This decline reflects ongoing operational expenditures and the absence of new capital injections.

Operating activities during the quarter resulted in a net cash outflow of $157,000, driven primarily by staff costs, administration, and corporate expenses. The company reported no receipts from customers or government grants, highlighting a continued focus on managing existing resources amid limited revenue inflows.

IRS Withholding Tax and Sale Proceeds

A significant aspect of HPP’s current financial position relates to the unresolved repayment of sale proceeds held by the US Internal Revenue Service (IRS). These funds stem from the April 2023 divestment of the company’s macadamia division. The company is actively working towards finalising the US withholding tax payable on this transaction, which continues to delay the release of these proceeds back into HPP’s cash reserves.

This ongoing tax matter introduces a layer of uncertainty regarding the timing and amount of funds that will ultimately become available to the company, potentially impacting liquidity and operational flexibility in the near term.

Capital and Financing Position

During the quarter, HPP did not raise additional equity or debt financing, nor did it engage in any share buy-backs or dividend payments. The company’s financing facilities remain unused, indicating no immediate reliance on external credit lines. With no new capital inflows, the company’s cash runway is estimated at approximately 5.8 quarters based on current operating cash outflows.

Payments to related parties, specifically $12,000 in non-executive director remuneration, were disclosed, reflecting standard governance costs without material impact on overall cash flow.

Outlook and Strategic Considerations

While HPP maintains a modest cash buffer, the absence of revenue receipts and the unresolved IRS withholding tax issue suggest a cautious outlook. The company’s ability to sustain operations without further capital raises will depend on managing expenditures and successfully resolving the tax matter to unlock withheld funds.

Investors will be watching closely for updates on the IRS repayment timeline and any strategic moves by HPP to bolster liquidity or accelerate revenue generation. The current financial snapshot underscores the challenges faced by companies navigating complex cross-border tax issues while managing tight cash flows.