Israeli farmers are boosting the share price of Roots Sustainable Agricultural Technologies (ASX: ROO). The share price surged 11.8% today (after having risen as much as 17% before falling back), following a report that the Israel Ministry of Agriculture and Rural Development will provide a subsidy to farmers using a system developed by Roots. The system makes it possible to heat and cool crop roots using little energy.
The report said that the Ministry of Agriculture and Rural Development would subsidize 30% of the cost of the system for farmers growing basil as part of a broader program by the ministry and the Ministry of Finance to invest NIS 45 million in innovative mechanized agriculture by the end of 2019.
The subsidy was approved following a pilot of Roots' system in which the system warmed roots of basil, a summer crop, by 5 degrees during the winter, resulting in the plants growing twice as fast and 35-65% larger plants.
"Government confirmation of the system's effectiveness"
"This is a significant achievement for Roots, because it provides confirmation from independent government experts of the great benefit and economic value of using our system," said Roots CEO Sharon Devir. He added that the company was now considering other government programs that provide subsidies or financing for farmers.
Devir and his partner, company director and former Ale Yarok party leader Boaz Wachtel, founded Roots in 2012. The company went public following its IPO on the Australian Securities Exchange late last year, in which it raised A$5 million at A$0.20 per share. Following today's surge in the share price, the share closed at A$0.285, giving an A$18 million market cap. At its peak a few weeks after the company's IPO, Roots' share price reached A$0.60, giving a market cap of almost NIS 100 million.
Roots posted $200,000 in revenue in the first half of 2018, compared with zero in the first half of 2017. The company's net loss during this period was $1.4 million, and it had a negative $1.6 million cash flow from current activity. Roots had $1.8 million in cash as of the end of the first half of 2018.
Published by Globes [online], Israel business news - www.globes-online.com - on September 17, 2018
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