TIDMPXS
RNS Number : 0460Q
Provexis PLC
07 September 2017
7 September 2017 Provexis plc
("Provexis" or the "Company")
PRELIMINARY RESULTS for the YEAR ended 31 MARCH 2017
Provexis plc ('Provexis' or the 'Company'), the business that
develops, licenses and sells the proprietary, scientifically-proven
Fruitflow(R) heart-health functional food ingredient, announces its
audited preliminary results for the year ended 31 March 2017.
Key highlights
-- Total revenue for the year GBP228k, a 148% year on year increase (2016: GBP92k).
-- The Company and its commercial partner DSM have seen an
encouraging increase in brand awareness and customer interest in
Fruitflow(R) in recent months; the total projected annual sales
value of the prospective sales pipeline for Fruitflow now stands at
a new all-time high level.
-- Strategic collaboration agreement announced in November 2016
for Fruitflow(R) between DSM and BY-HEALTH, a GBP2bn listed Chinese
dietary supplement business.
-- MOU for a research and collaboration agreement announced in
April 2017 for Fruitflow(R) between the Company and BY-HEALTH,
focusing on BY-HEALTH's research programme into the development of
new products that contribute to cardiovascular health; BY-HEALTH
plans to launch a number of Fruitflow(R) based products in the
Chinese market, first launch envisaged in the second half of
2017.
-- Launch and encouraging initial progress of the Company's
Fruitflow(R) + Omega-3 dietary supplement product, which is
expected to provide the Company with an additional long term income
and profit stream. Listing with Amazon.co.uk secured in June 2017,
further UK sales channel opportunities are currently being
progressed to include listings with some major UK retailers;
international sales channel opportunities in North America and
elsewhere are being explored.
-- Planned formulation and launch of a Fruitflow(R) + nitrates
dietary supplement product which will be supported by the Company's
strong patent position in this area.
-- Second stage of the Company's blood pressure pilot study for
Fruitflow(R) announced, indicating that Fruitflow(R) significantly
lowered blood pressure in waking subjects; encouraging blood
pressure results will be published in a scientific study which is
expected to have a positive effect on current and future commercial
negotiations for Fruitflow(R).
-- Fruitflow(R) comparison study with aspirin published in the
European Journal of Clinical Nutrition, providing strong support
for the use of Fruitflow(R) in the primary prevention of
cardiovascular disease.
-- Further detailed scientific study for Fruitflow(R) published
in the European Journal of Nutrition, further study publications
are envisaged.
-- Company raised GBP249k through two placings in August and
September 2016, and it raised a further GBP672k through two
placings in May and August 2017.
Key financial results
-- Total revenue for the year GBP228k, a 148% increase relative
to the prior year (2016: GBP92k);
-- Underlying operating loss* reduced to GBP382k (2016:
GBP385k), a record low for the Group, reflecting increasing
revenues set against the Group's low overhead licensing business
model.
-- Statutory operating loss from operations GBP426k (2016:
GBP455k); statutory loss attributable to owners of the parent
GBP380k (2016: GBP410k). These results are after charging a GBP44k
(2016: GBP70k) non-cash share based payment charge.
-- Cash balance at 31 March 2017 GBP12k (2016: GBP190k), cash of
GBP672k raised in May and August 2017, after the year end, via a
two stage placing.
-- Basic loss per share from continuing operations 0.02p (2016: 0.03p).
*before share based payments of GBP44k (2016: GBP70k), as set
out on the face of the Consolidated Statement of Comprehensive
Income
Annual report and accounts and notice of AGM
The Company's annual report and accounts for the year ended 31
March 2017 and its AGM notice have been distributed to
shareholders.
The AGM will be held at 2:00pm on 3 October 2017 at TLT LLP, 20
Gresham Street, London EC2V 7JE.
The Company's annual report and accounts and the AGM notice are
available from the Company's website www.provexis.com and from the
address below:
The Company Secretary
Provexis plc
Prospect House
58 Queens Road
Reading
Berkshire RG1 4RP
This announcement contains inside information.
For further information please contact:
Provexis plc Tel: 07490 391888
Dawson Buck, Chairman enquiries@provexis.com
Ian Ford, Finance Director
Cenkos Securities plc Tel: 020 7397 8900
Bobbie Hilliam
Chairman's statement
The Company has had a strong year of progress, seeking to
enhance further the commercial prospects of its innovative,
patented Fruitflow(R) heart-health ingredient.
The Company's Alliance partner DSM Nutritional Products has
continued to develop the market actively for Fruitflow(R) in all
global markets. More than 50 regional consumer healthcare brands
have now been launched by direct customers of DSM, and a number of
further regional brands have been launched through DSM's
distributor channels.
The Company and DSM have seen an encouraging increase in brand
awareness and customer interest in Fruitflow(R) in recent months,
and the total projected annual sales value of the prospective sales
pipeline for Fruitflow(R) has continued to increase, now standing
at a new all-time high level.
Revenues for the year were GBP228k (2016: GBP92k), a 148%
increase relative to the prior year.
Revenues accruing to the Company for the year from its profit
sharing Alliance for Fruitflow(R) were GBP153k, a 66% year on year
increase (2016: GBP92k).
The Company launched its Fruitflow(R) + Omega-3 dietary
supplement product in late June 2016 and in its nine months on sale
the product achieved sales of GBP29k for the financial year to 31
March 2017 through the new e-commerce website
www.fruitflowplus.com.
The balance of revenue recognised in the period reflects amounts
of GBP46k (2016: GBPNil) received for marketing support; the
related marketing expenditure is included as part of administrative
costs.
The underlying operating loss for the year was reduced to
GBP382k (2016: GBP385k), a record low for the Group, reflecting
increasing revenues set against the Group's low overhead licensing
business model.
Fruitflow(R)
The increase in profit sharing Alliance revenue for Fruitflow(R)
accruing to the Company for the year reflects:
-- An increase in DSM's underlying revenues for Fruitflow(R),
which are primarily denominated in Euros. DSM's total revenues for
Fruitflow(R) for the year ended 31 March 2017 grew by 26% year on
year, reflecting strong interest in Fruitflow(R) and the success of
the powder format which is being used in an increasing number of
new product launches;
-- An improvement in underlying trading margins, supported by
continuing efforts to reduce the production costs of Fruitflow(R)
powder as manufacturing volumes increase.
Further year on year sales growth has been realised in the
quarter to June 2017.
MOU for a research and development collaboration with By-Health
Co., Ltd for Fruitflow(R)
In April 2017 the Company announced that it had entered into a
memorandum of understanding with BY-HEALTH Co., Ltd, a GBP2bn
listed Chinese dietary supplement business, which is intended to
result in a research and collaboration agreement with BY-HEALTH for
Fruitflow(R).
The Company also confirmed separately that Provexis and DSM were
working with BY-HEALTH to support the planned launch of some
Fruitflow(R) based products in the Chinese market, with the first
launch envisaged in the second half of 2017.
The proposed research and collaboration agreement between the
Company and BY-HEALTH is intended to focus on BY-HEALTH's research
programme into the development of new products that contribute to
cardiovascular health, particularly in the field of blood pressure
regulation, and it is intended to include a clinical trial which
will be conducted in China. It is envisaged that the Company,
BY-HEALTH and a third party Chinese research organisation will sign
the research and collaboration agreement later this year, with the
bulk of the research programme to be completed in 2018.
It is envisaged under the MOU that the Company and BY-HEALTH
will jointly provide primary funding for the research and
collaboration work which will include the assessment of a number of
different potential product formulations. Product formulations
which are covered under the Company's existing patents would
continue to be owned outright by the Company, and the Company would
retain proportional joint ownership of any new product formulations
developed as part of the project. It is envisaged that the Company
will provide scientific and technical support for Fruitflow(R) to
BY-HEALTH throughout the collaboration.
In November 2016 the Company announced that its Alliance partner
for Fruitflow(R), DSM, had entered into a strategic collaboration
agreement for Fruitflow(R) with BY-HEALTH focussing on the
development of new products that contribute to cardiovascular
health, to include evaluation and testing procedures to accord with
Chinese technical and regulatory standards.. The MOU announced by
the Company in April 2017 is in support of this existing
collaboration, whilst ensuring that the Company retains and
strengthens its intellectual property holdings.
There are more than 230m people in China who are currently
thought to have cardiovascular disease, and a significant increase
in cardiovascular events is expected in China over the course of
the next decade based on population aging and growth alone (source:
World Health Organisation - Cardiovascular diseases, China). China
is now the world's second-largest pharmaceuticals market, measured
by how much patients and the state spend on drugs. The Company
believes that Fruitflow(R) has the potential to play an important
role in the Chinese cardiovascular health market.
Fruitflow(R) + Omega-3 dietary supplement product
On 29 June 2016 the Company announced the launch of its new
Fruitflow(R) + Omega-3 dietary supplement product, which is
available through the Company's new e-commerce website
www.fruitflowplus.com, the product also has a Facebook page at
www.facebook.com/FruitflowPlus.
Fruitflow(R) + Omega-3 is a two-in-one supplement in an easy to
take capsule, supporting healthy blood flow and normal heart
function, and it achieved sales of GBP29k in the nine month period
from its launch to the end of the Company's financial year on 31
March 2017.
In June 2017 the Company secured a listing for the product with
Amazon.co.uk. Further UK sales channel opportunities are currently
being progressed to include listings with some major UK retailers,
and the Company is seeking to launch the product online into wider
international markets to include North America.
The rate of sales for the product has increased since the
Company's 31 March 2017 year end, aided recently by the Amazon
listing, and the Company is seeking to achieve further revenue
growth in the 2017/18 financial year, supported by some limited and
carefully targeted marketing and with continuing support from
DSM.
In May 2014 US Food and Drug Administration issued some guidance
concerning the use of low dose Aspirin, stating that after
carefully examining scientific data from major studies it has
concluded 'the data do not support the use of aspirin as a
preventive medication by people who have not had a heart attack,
stroke or cardiovascular problems, a use that is called 'primary
prevention.' In such people, the benefit has not been established
but risks - such as dangerous bleeding into the brain or stomach -
are still present.' The Company believes that this guidance remains
a particularly strong opportunity for Fruitflow(R) in North
America.
Fruitflow(R) + nitrates dietary supplement product
In December 2013 British and international patent applications
were filed for the use of Fruitflow(R) in mitigating
exercise-induced inflammation and for promoting recovery from
intense exercise, seeking to enhance further the potential of the
technology in the sports nutrition sector. The patent was granted
by the UK IPO on 3 May 2017, and patents are being sought in
Europe, the US, China and ten other territories. The patent
application has now entered the national phase, with potential
patent protection out to December 2033.
The Company is keen to progress the formulation and launch of a
Fruitflow(R) + nitrates dietary supplement product which would be
supported by the Company's strong patent position in this area. The
product would have anti-inflammatory and circulation benefits for
athletes seeking to recover after exercise, properties which would
also be potentially beneficial to a wide range of other consumers
to include people suffering from the symptoms of basic ageing.
Fruitflow(R) and Fruitflow(R) + Omega-3 marketing
initiatives
The Company and DSM are committed to a number of ongoing
scientific and marketing initiatives for Fruitflow(R) and the
Company's Fruitflow(R) + Omega-3 capsules, seeking to extend the
reach of the existing science for Fruitflow(R) and give the
products further global exposure. Scientific and marketing
initiatives include:
Scientific studies
On 23 November 2016 the Company announced the publication of an
important study for Fruitflow(R) in the European Journal of
Clinical Nutrition.
The study, titled 'A randomised controlled trial comparing a
dietary antiplatelet, the water-soluble tomato extract
Fruitflow(R), with 75mg aspirin in healthy subjects' was undertaken
by Provexis with independent statistical analysis by BIOSS, and it
compared the effects of Fruitflow(R) and 75mg aspirin. Interactions
between Fruitflow(R) and aspirin when consumed together were also
studied. A total of 47 healthy subjects completed the trial over a
7-month period.
The study, which is available to view on the Company's website
at
www.provexis.org/wp-content/uploads/2016/12/EJCN-Aspirin-Fruitflow-study-23-Nov-16.pdf
demonstrates that Fruitflow(R) showed up to 30% reduction from
baseline platelet aggregation in each of three different biological
pathways, while a single dose of aspirin caused up to 60% reduction
in a single pathway, with lesser effects on the other two. The
study showed no negative interactions between Fruitflow(R) and
aspirin when consumed together. The study findings are
statistically significant and serve to demonstrate the potential
effectiveness of Fruitflow(R) as a dietary supplement with a
significant effect on blood flow, suitable for daily use in primary
prevention of CVD, and with no adverse side effects.
The World Health Organization reports that more people die
annually from CVDs than from any other cause.
On 12 July 2016 the Company announced the publication of another
important study for Fruitflow(R) in the European Journal of
Nutrition. The study, titled 'Fruitflow(R): the first European Food
Safety Authority-approved natural cardio-protective functional
ingredient' includes a scientific summary of the entire
Fruitflow(R) project from its inception and it is expected to be a
significant opportunity to promote Fruitflow(R) further across
scientific, trade customer and consumer channels. The study is
available to view on the Company's website at
www.provexis.org/wp-content/uploads/2017/03/Fruitflow-the-first-European-Food-Safety-Authority-approved-natural-cardio-protective-functional-ingredient-07-Jul-16.pdf.
It is envisaged that further study publications for Fruitflow(R)
will be submitted to appropriate scientific journals in due course,
to include a study concerning the Company's successful pilot blood
pressure study for Fruitflow(R) which indicated that Fruitflow(R)
significantly lowered blood pressure in waking subjects.
Key Opinion Leaders' roundtable
The Company conducted a Key Opinion Leaders' roundtable event
for Fruitflow(R) in London on 29 September 2016, with considerable
support from DSM.
The roundtable was focussed on raising awareness of the
importance of blood flow in cardiovascular health, and the
effectiveness of dietary antiplatelets, and it was attended by key
scientists from Provexis and DSM, along with a number of interested
health care professionals with close links to the national media.
The event was recorded and a video for Fruitflow(R) + Omega-3
capsules targeting prospective consumers can be seen here
www.youtube.com/watch?v=P3HCSdyupEY&t=71s.
The Company and DSM are keen to secure greater medical advocacy
for Fruitflow(R) and the roundtable event forms part of this
strategy, supported by a broader consumer PR campaign.
Digital marketing strategy
A digital marketing strategy, strongly supported by DSM, has
also been implemented, seeking to drive and optimise online leads
and sales for the Company's Fruitflow(R) + Omega-3 capsules. The
capsules have been promoted across key social media and other
search platforms to include DSM's key digital communities and
channels.
World Thrombosis Day - 13 October 2017
The Company has recently partnered with World Thrombosis Day
(WTD) www.worldthrombosisday.org , a collaborative event which
takes place every year on 13 October seeking to increase global
awareness of thrombosis, including its causes, risk factors,
signs/symptoms and evidence-based prevention and treatment. WTD
strives to reduce death and disability caused by the condition, an
objective which is shared by the Company and well supported by its
Fruitflow(R) business.
Other marketing initiatives
Other marketing initiatives for Fruitflow(R) have seen the
product being promoted at several major food ingredient and dietary
supplement trade shows. The product has been featured in numerous
publications and it has been the subject of several trade seminars
and presentations, some of which are available to view in the news
section of the Company's website www.provexis.com. Some further
limited digital and other marketing investment is envisaged in the
coming months
Fruitflow(R) and Blood Pressure - Collaboration with University
of Oslo
In November 2014 the Company signed a two stage collaboration
agreement with the University of Oslo seeking to undertake further
research into the relationship between Fruitflow(R) and blood
pressure regulation. Recent work undertaken by the University has
shown that Fruitflow(R) has a potential new bioactivity, leading to
blood pressure lowering effects which would be of relevance to a
large number of consumers and patients with a wide range of
cardiovascular conditions.
The first stage of the collaboration work, completed in 2015,
was focussed on developing the science and the key results from
this stage were very encouraging, with strong evidence from the
laboratory based work that a standard 150mg dose of Fruitflow(R)
powder has the potential to give a clinically relevant reduction in
systolic blood pressure.
The Company and the University completed the second stage of the
collaboration work in December 2016, which had seen the parties
conduct a small clinical trial in Oslo by way of a proof of
principle study. The study examined the acute effects of different
amounts of Fruitflow(R) in powder format on parameters relating to
blood pressure, such as systolic and diastolic blood pressure, mean
arterial pressure, pulse pressure and heart rate. The trial
subjects, who were healthy with no underlying cardiovascular
disease or other conditions likely to affect blood pressure,
received both placebo and Fruitflow(R) supplements in a blinded
crossover design.
Results from the pilot study indicated that a 150mg dose of
Fruitflow(R) in powder format significantly lowered the average
24-hour systolic blood pressure compared to placebo. When the
monitoring time was split into waking and sleeping periods, both
systolic and diastolic blood pressure were significantly lower
after 150mg Fruitflow(R) treatment than after placebo treatment
during the waking period; systolic pressure was also significantly
lower during the sleeping period.
The encouraging results from the pilot study will be published
in a scientific paper which is expected to have a positive effect
on current and future commercial negotiations for Fruitflow(R).
Raised blood pressure is estimated to cause more than 7 million
premature deaths throughout the world each year, and 4.5% of the
disease burden. Treating raised blood pressure by way of achieving
systolic blood pressure < 140 and diastolic blood pressure <
80 has been associated with a 35-40% reduction in the risk of
stroke and at least a 16% reduction in the risk of heart attack
(WHO 2007). The pilot study results therefore show that
Fruitflow(R) may have clinically relevant effects in blood pressure
control.
The University of Oslo's research team was led by Professor Asim
Duttaroy, Group Leader of Chronic Disease at the Faculty of
Medicine, who was the original inventor of Fruitflow(R). Provexis'
work under the collaboration was led by Dr Niamh O'Kennedy, a
research chemist specialising in the field of natural products
chemistry who played a key role in the development of Fruitflow(R),
and the health claim for Fruitflow(R) which was adopted by the
European Food Safety Authority ('EFSA').
Intellectual property
The Company is responsible for filing and maintaining patents
and trade marks for Fruitflow(R) as part of the Alliance Agreement
with DSM. The Company is pursuing a strategy to strengthen the
breadth and duration of its patent coverage to maximise the
commercial returns that can be achieved from the technology. Trade
marks were originally registered in the larger global territories,
and new registrations are typically now sought in additional
territories in response to requests from current or prospective DSM
customers for Fruitflow(R).
In December 2013 British and international patent applications
were filed for the use of Fruitflow(R) in mitigating
exercise-induced inflammation and for promoting recovery from
intense exercise, and as indicated above the patent was granted by
the UK IPO on 3 May 2017. Patents are being sought in Europe, the
US, China and ten other territories, with the patent application
now having entered the national phase, with potential patent
protection out to December 2033.
The Company's patent application for Fruit Extracts, relating to
part of the production process for Fruitflow(R), was granted by the
European Patent Office on 11 January 2017, with the patent
application also now having entered the national phase across
larger global territories, with potential patent protection out to
November 2029.
Crohn's disease intellectual property
The Group continues to maintain the Crohn's disease intellectual
property registered in Provexis (IBD) Limited, a company which is
75% owned by Provexis plc and 25% owned by The University of
Liverpool. The Group continues to investigate further options for
the Crohn's disease project, seeking to maximise its value.
Capital structure and funding
The Company is seeking to maximise the commercial returns that
can be achieved from its Fruitflow(R) technology, and the Company's
cost base and its resources continue to be very tightly managed.
The Company remains keen to minimise dilution to shareholders and
it is focussed on moving into profitability as Fruitflow(R)
revenues increase, but while the Company remains in a loss making
position it will need to raise working capital on occasions.
The Company raised GBP249k through a two stage placing in August
and September 2016, and it raised a further GBP672k through a two
stage placing in May and August 2017.
The Company highly values its private investor base and it was
pleased to be able to provide private investors with an opportunity
to participate in the August 2017 placing at 0.50 pence per share
through the PrimaryBid.com platform; the placing received a strong
response from investors via the platform.
The funds raised from these placings will be used to provide the
Company with additional working capital to support its revenue
growth plans over the coming years, they have also considerably
strengthened the Group's balance sheet.
The Company intends to hold its Annual General Meeting at TLT
LLP, 20 Gresham Street, London EC2V 7JE at 2:00pm on 3 October
2017.
Outlook
We are pleased to be able to report a 148% year on year increase
in revenue for the year ended 31 March 2017, along with other
significant progress for the Company to include:
-- The encouraging increase in brand awareness and customer
interest in Fruitflow(R) which the Company and DSM have seen in
recent months, with the total projected annual sales value of the
prospective sales pipeline for Fruitflow(R) now standing at a new
all-time high level;
-- The strategic collaboration agreement for Fruitflow(R)
between DSM and Chinese listed BY-HEALTH, and the related
announcement by the Company confirming that it had entered into an
MOU with BY-HEALTH for a research and collaboration agreement for
Fruitflow(R);
-- The planned launch by BY-HEALTH of some Fruitflow(R) based
products in the Chinese market, with the first launch envisaged in
the second half of 2017;
-- The launch and encouraging initial progress of the Company's
Fruitflow(R) + Omega-3 dietary supplement product, which is
expected to provide the Company with an additional long term income
and profit stream;
-- The planned formulation and launch of a Fruitflow(R) +
nitrates dietary supplement product which will be supported by the
Company's strong patent position in this area;
-- The second stage of the Company's blood pressure pilot study
for Fruitflow(R) which indicated that Fruitflow(R) significantly
lowered blood pressure in waking subjects;
-- The Fruitflow(R) comparison study with aspirin published in
the European Journal of Clinical Nutrition, providing strong
support for the use of Fruitflow(R) in the primary prevention of
cardiovascular disease, and the detailed scientific study for
Fruitflow(R) which was published in the European Journal of
Nutrition in July 2016;
-- The strong support which the company has received from
investors in relation to subscriptions to raise further working
capital for the Company, to include a PrimaryBid.com element.
The Company expects that these strongly positive announcements
and initiatives will have a beneficial effect on the current and
future commercial prospects for Fruitflow(R). The Company is well
placed to maximise the commercial opportunities arising from these
developments for Fruitflow(R) and the Provexis business, and
remains positive about the outlook for the business for the coming
year and beyond.
Dawson Buck
Chairman
Strategic report
Group strategy
The Group strategy has historically focused on the discovery,
development and commercialisation of functional foods, medical
foods and dietary supplements, and in particular the Group's
Fruitflow(R) technology.
On 1 June 2010 the Company announced that it had entered into a
long term Alliance Agreement with DSM Nutritional Products to
commercialise Fruitflow(R), through sales as an ingredient to brand
owners in the food, beverage and dietary supplement categories.
The establishment of the Alliance Agreement was a significant
milestone in the history of the Company. The Alliance is seeing the
partners collaborate to develop Fruitflow(R) in all major global
markets, through an effective commercialisation of current formats
and pioneering new and significant applications. DSM is responsible
for manufacturing, marketing and selling via its substantial sales
force. Provexis is responsible for contributing scientific
expertise necessary for successful commercialisation, and for
maintaining and strengthening the breadth and duration of its
patent and trade mark coverage for Fruitflow(R), seeking to
maximise the commercial returns that can be achieved from the
technology. Profits from the Alliance are being shared by the
parties on an agreed basis, linked to various performance
milestones. In June 2015 the Company confirmed that it had agreed
significantly enhanced financial terms with DSM for the Company's
Alliance Agreement for Fruitflow(R).
The directors believed at the time of signing the Alliance
Agreement, and still retain the belief, that the commercialisation
of Fruitflow(R) is best undertaken in conjunction with DSM as it
enables Provexis to leverage the resources and relationships of DSM
in the major global markets.
The Group's strategic priority is to focus on developing
revenues from the Fruitflow(R) business together with the Group's
Alliance partner DSM, whilst also managing the relationship with
DSM.
The Group also seeks to ensure that it fulfils its
responsibilities under the Alliance Agreement to include protecting
the intellectual property of Fruitflow(R) and assisting DSM with
scientific work required to further commercialise the technology.
At the same time, the Board remains committed to keeping regular
and fixed costs restricted to an appropriate level, thereby
maximising the Group's profit potential and minimising cash
utilised in operations.
The Group continues to maintain the Crohn's disease intellectual
property registered in Provexis (IBD) Limited, and it continues to
investigate further options for the Crohn's disease project,
seeking to maximise its value. Options currently under review
include but are not limited to applications for external grant
funding to progress certain aspects of the project, and ongoing
discussions with prospective purchasers of the intellectual
property.
Market opportunity
Fruitflow(R) is a patented natural extract from tomatoes which
has been shown in human trials to reduce the propensity for
aberrant blood clotting, typically associated with cardiovascular
disease, which can lead to heart attack and stroke. The extract is
available in two formats, a syrup and a spray-dried powder and can
be included in a broad range of food, beverage and dietary
supplement formats.
In May 2009, the company's Fruitflow(R) technology was the first
to be substantiated by the European Food Safety Authority ('EFSA')
under the new Article 13(5) for proprietary and emerging science.
In December 2009 the European Commission authorised the health
claim 'Helps maintain normal platelet aggregation, which
contributes to healthy blood flow', which was the first wording to
be authorised under Article 13(5).
The global functional food market is estimated to be in excess
of $170 billion per year, and the global market for cardiovascular
disease, to include dietary supplements, is estimated to be in
excess of $10 billion per year. Global awareness of heart health is
increasing and a rising number of people are taking a proactive
approach to improving heart health. The directors believe that
products addressing blood flow and circulation issues continue to
represent a long-term opportunity in the expanding cardiovascular
sector.
Financial review
The financial review has been prepared on the basis of Group's
continuing operations, as further detailed in the consolidated
statement of comprehensive income.
Revenue
The Company's long-term Alliance Agreement with DSM Nutritional
Products for Fruitflow(R) includes a financial model which is based
upon the division of profits between the two partners on an agreed
basis, linked to certain revenue targets, following the deduction
of the cost of goods and a fixed level of overhead from sales. In
June 2015 the Company confirmed that revised terms for the Alliance
Agreement had been agreed with DSM, under which the fixed level of
overhead deduction from sales permanently decreased with effect
from 1 January 2015, backdated, thus increasing the profit share
payable to the Company.
On 29 June 2016 the Company announced the launch of its
Fruitflow(R) + Omega-3 dietary supplement product, which was sold
initially from a separate, dedicated website www.fruitflowplus.com
on a mail order basis. The product also has a Facebook page at
www.facebook.com/FruitflowPlus
Fruitflow(R) + Omega-3 is a two-in-one supplement in an easy to
take capsule, supporting healthy blood flow and normal heart
function, and it achieved sales of GBP29k in its initial nine month
launch period from 29 June 2016 to 31 March 2017.
The new dietary supplement product is expected to provide the
Company with an additional long term income and profit stream, and
the fruitflowplus.com website will be able to accommodate further
potential Fruitflow(R) combination product derivatives.
In July 2017 the Company announced that it had secured a listing
with Amazon.co.uk for the Company's Fruitflow(R) + Omega-3 dietary
supplement product; further sales channel opportunities for the
product are currently being explored.
The Group's total revenue for the year ended 31 March 2017 was
GBP228k, an increase of 148% relative to the prior year (2016:
GBP92k).
The increase in revenue accruing to the Company for the year
reflects:
- An increase in DSM's underlying revenues for Fruitflow(R).
DSM's total revenues for Fruitflow(R) for the year ended 31 March
2017, which are denominated in Euros, grew by 26% year on year;
- An improvement in underlying trading margins, aided by
continuing efforts to reduce the production costs of Fruitflow(R)
in liquid and powder form as manufacturing volumes increase;
- Amounts in excess of GBP45k (2016: GBPNil) received for
marketing support; the related marketing expenditure is included as
part of administrative costs, and it forms the largest element of
the increase in administrative costs for the year.
- Revenue from the Company's Fruitflow(R) + Omega-3 product,
which achieved sales of GBP29k in its initial nine month launch
period from 29 June 2016 to 31 March 2017.
Underlying operating loss
Underlying operating loss has reduced by 0.8% to GBP382k (2016:
GBP385k), reflecting continued progress with Fruitflow(R) and the
Group's ongoing low overhead strategy.
The Group has chosen to report underlying operating loss as the
directors believe that the operating loss before share based
payments provides additional useful information for shareholders on
underlying trends and performance. A reconciliation of underlying
operating loss to statutory operating loss is presented on the face
of the consolidated statement of comprehensive income. This measure
is used for internal performance analysis.
The Group's cost base and its resources have been and will
continue to be tightly managed within budgets approved and
monitored by the Board.
Research and development costs
Research and development costs have reduced by 2.6% to GBP187k
(2016: GBP192k), reflecting reduced expenditure on the Company's
two stage collaboration agreement with the University of Oslo into
the relationship between Fruitflow(R) and blood pressure
regulation.
Taxation
A current tax credit of GBP14,445 (2016: GBP11,980), primarily
in respect of research and development tax credits has been
recognised in the financial statements. The tax credit claim for
the year ended 31 March 2015 totalling GBP5,408 was paid to the
Group in April 2016, and the tax credit claim for the year ended 31
March 2016 totalling GBP13,105 was paid to the Group in April
2017.
Results and dividends
The loss attributable to equity holders of the parent for the
year ended 31 March 2017 was GBP380,087 (2016: GBP409,569) and the
basic loss per share was 0.02p (2016: 0.03p).
The directors are unable to recommend the payment of a dividend
(2016: GBPNil).
Consideration of section 656 of the Companies Act 2006
On 28 August 2014 it was noted in the Company's Notice of Annual
General Meeting that Section 656 of the Companies Act 2006
('section 656') had been brought to the attention of the Directors
as part of the 31 March 2014 year end accounts and audit. Section
656 states that where the net assets of a public company are half
or less of its called-up share capital, the directors must call a
general meeting of the company to consider whether any, and if so
what, steps should be taken to deal with the situation.
Further details of the issue were provided in the Company's AGM
notice of 28 August 2014 which is available to download from the
Company's website here
www.provexis.org/wp-content/uploads/Provexis-plc-notice-of-22-Sep-14-AGM-FINAL.pdf
A resolution was not put to the 2014 Annual General Meeting in
connection with section 656 and it was noted that the Directors'
view in August 2014 was that the most appropriate course of action
was to continue to maintain tight control over the running costs of
the Company and to wait for revenues from its core Fruitflow(R)
product to increase.
Subsequent to the Company's AGM on 22 September 2014 the net
assets of the Company and Group have remained less than half of the
Company's called-up share capital and a further general meeting of
the Company is not required under section 656.
The annual financial statements of the Company for the year
ended 31 March 2017 and the report of the Directors thereon include
a going concern statement which concludes that based on the level
of existing cash, projected income and expenditure, and excluding
the potential additional sources of funding, the directors are
satisfied that the Company and the Group have adequate resources to
continue in business for a period of more than twelve months from
the date of approval of the financial statements. If the potential
additional sources of funding are taken into account, the directors
are satisfied that the Company and the Group have adequate
resources to continue in business for the foreseeable future.
Accordingly the going concern basis has been used in preparing the
financial statements
It remains the Directors' view on 7 September 2017 that the most
appropriate course of action in respect of section 656 is to
continue to seek to maximise the commercial returns that can be
achieved from the Company's Fruitflow(R) technology, and continue
to maintain very tight control over the running costs of the
Company.
Capital structure and funding
The Company is seeking to maximise the commercial returns that
can be achieved from its Fruitflow(R) technology, and the Company's
cost base and its resources continue to be very tightly managed.
The Company remains keen to minimise dilution to shareholders and
it is focussed on moving into profitability as Fruitflow(R)
revenues increase, but while the Company remains in a loss making
position it will need to raise working capital on occasions.
In June 2015 the Company joined PrimaryBid.com
(www.primarybid.com), an online platform dedicated to equity
crowdfunding for AIM-listed companies which is further detailed in
note 16; as a result of the Company joining PrimaryBid.com the
Company's existing 10 September 2013 Equity Financing Facility with
Darwin Strategic Limited was cancelled.
Further details of the PrimaryBid.com agreement are available to
download from the announcements section of the Company's website
www.provexis.com.
On 2 August 2016 the Group announced it had raised proceeds of
GBP224,000 via the placing of 93,333,340 new ordinary shares of
0.1p each at a gross 0.24p per share with investors, with no
commissions or expenses payable. The placing shares were admitted
to AIM on 8 August 2016.
On 2 August 2016 as part of the placing announcement the Group
also announced that the Company's Chairman Dawson Buck had given a
stated intention to subscribe to 10,416,667 shares at a
subscription price of 0.24p totalling GBP25,000, with his formal
commitment to and payment for the subscription to take effect in
September 2016 immediately after publication of the Company's
annual report and accounts. On 15 September 2016, after the
publication of the Company's 2016 annual report and accounts, the
Company duly announced it had raised GBP25,000 via a placing of
10,416,667 new ordinary shares of 0.1p each at 0.24p per share with
the Company's Chairman Dawson Buck with no commissions or expenses
payable. The shares were admitted to AIM on 22 September 2016.
On 10 May 2017 the Group announced it had raised proceeds of
GBP350,000 via the placing of 70,000,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 16 May 2017.
On 31 July 2017 the Group announced it had raised proceeds of
GBP322,100 via the placing of 64,420,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 4 August 2017.
Going concern
The Group's business activities together with the factors likely
to affect its future development, and the financial position of the
Group, its cash flows and liquidity position are set out in this
strategic report. In addition note 2 to the financial statements
includes the Group's objectives, policies and processes for
managing its capital; its financial risk management objectives;
details of its financial instruments and its exposure to credit and
liquidity risk.
The Group made a loss for the year of GBP411,086 (2016:
GBP440,731) and expects to make a further loss during the year
ending 31 March 2018. The total cash outflow from continuing
operations in the year was GBP430,302 (2016: GBP366,099). At 31
March 2017 the Group had cash balances of GBP12,349 (2016:
GBP189,636).
On 4 June 2015 the Group announced it had joined PrimaryBid.com
(www.primarybid.com), an online platform dedicated to equity
crowdfunding for AIM-listed companies which is further detailed in
note 16.
On 10 May 2017 the Group announced it had raised proceeds of
GBP350,000 via the placing of 70,000,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 16 May 2017.
On 31 July 2017 the Group announced it had raised proceeds of
GBP322,100 via the placing of 64,420,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 4 August 2017.
The directors have prepared projected cash flow information for
a period of more than twelve months from the date of approval of
these financial statements and have reviewed this information as at
the date of these financial statements.
The Group has access to future equity financings, either through
the Group's existing PrimaryBid.com platform or through a separate
equity fundraising with the Company's shareholders, as potential
additional sources of funding.
Based on the level of existing cash, projected income and
expenditure, and excluding the potential additional sources of
funding, the directors are satisfied that the Company and the Group
have adequate resources to continue in business for a period of
more than twelve months from the date of approval of the financial
statements. If the potential additional sources of funding are
taken into account, the directors are satisfied that the Company
and the Group have adequate resources to continue in business for
the foreseeable future.
Accordingly the going concern basis has been used in preparing
the financial statements.
Principal risks and uncertainties
In the course of its normal business the Group is exposed to a
range of risks and uncertainties which could impact on the results
of the Group. The Board considers that risk-management is an
integral part of good business process and, on a bi-annual basis,
reviews the industry, operational and financial risks facing the
Group and considers the adequacy of the controls and mitigants to
manage the risks.
The directors have identified the following principal risks and
uncertainties that could have the most significant impact on the
Group's long-term value generation.
Funding and other risks
Provexis has experienced operating losses from continuing
operations in each year since its inception. Accordingly until
Provexis has sufficient commercial success with Fruitflow(R) to be
cash generative it will continue to rely on its existing cash
resources and further funding rounds to continue its activities.
While Provexis aims to generate licensing and sales revenues from
Fruitflow(R), there is no certainty that such revenues will be
generated. Furthermore, the amount and timing of revenues from
Fruitflow(R) is uncertain and will depend on numerous factors, most
of which are outside Provexis' control due to the terms of the
Alliance Agreement. It is therefore difficult for the directors to
predict with accuracy the timing and amount of any further capital
that may be required by the Provexis Group.
Factors that could increase Provexis' funding requirements
include, but are not limited to: higher operational costs; slower
progress than expected in DSM attracting customers to purchase
Fruitflow(R); unexpected opportunities to develop additional
products or acquire additional technologies, products or
businesses; and costs incurred in relation to the protection of
Provexis' intellectual property.
Any additional share issues may have a dilutive effect on
Provexis Shareholders. Further, there can be no guarantee or
assurance that additional equity funding will be forthcoming when
required, nor as to the terms and price on which such funds would
be available, nor that such funds, if raised, would be sufficient
to enable Provexis to meet its working capital requirements.
Early stage of operations
Whilst the Provexis Group has generated small levels of profit
share revenue from Fruitflow(R), Fruitflow(R) is still at an early
stage of its commercial development. There are a number of
operational, strategic and financial risks associated with early
stage companies and products. The Provexis Group faces risks
frequently encountered by early stage and pre-revenue companies
looking to commercialise new (food) technology. In particular, the
future growth and prospects of Provexis will be heavily dependent
on its alliance partner, DSM, in securing product sales on
appropriate terms and to attract customers who can produce products
that will maximise the revenue potential of Fruitflow(R).
Provexis is heavily dependent on DSM in marketing and selling
Fruitflow(R) to achieve market acceptance, market penetration and,
ultimately, sales of products that contain Fruitflow(R) in
sufficient commercial volumes.
The development of Provexis' revenues is difficult to predict
and there is no guarantee that Provexis will generate increasing
revenues in the foreseeable future. Further there can be no
assurance that Provexis' proposed operations will be profitable or
produce a reasonable return on investment.
Commercialisation
Due to the terms of the Alliance Agreement, Provexis is largely
dependent on DSM in respect of the development, production,
marketing and commercialisation of Fruitflow(R). Fruitflow(R) is
solely reliant on DSM under the terms of the Alliance Agreement for
its commercialisation.
Provexis' long-term success is largely dependent on the ability
of DSM to sell Fruitflow(R). Provexis' negotiating position with
DSM if they choose to vary the Alliance Agreement may be affected
by its size and limited cash resources relative to DSM who have
substantial cash resources and established levels of commercial
success. An inability to enter into any discussions with DSM on
equal terms could lead to reduced revenue from the Alliance
Agreement and this may have a significant adverse effect on
Provexis' business, financial condition and results.
The loss of, or changes affecting, Provexis' relationships with
DSM could adversely affect Provexis' results or operations as
Provexis has limited input on the sales strategies of Fruitflow(R)
adopted by DSM. Furthermore, although Provexis has sought to
include performance obligations on DSM in the Alliance Agreement,
there is a risk that DSM may reprioritise Fruitflow(R) within their
product portfolio resulting in Provexis achieving sales below that
which it expects. Any such situation may have a material and
adverse effect on Provexis' business, financial condition and
results of operations.
Profitability depends on the success and market acceptance of
Fruitflow(R)
The success of Provexis will depend on the market's acceptance
and valuing of Fruitflow(R) and there can be no guarantee that this
acceptance will be forthcoming or that Provexis' technologies will
succeed. The development of a market for Fruitflow(R) will be
affected by many factors, some of which are beyond Provexis'
control, including the emergence of newer, more successful food IP
and products and the cost of Fruitflow(R). Notwithstanding the
health claims made in respect of Fruitflow(R), there can be no
guarantee that Provexis' targeted customer base for the product
will purchase or continue to purchase the product. If a market
fails to develop or develops more slowly than anticipated, Provexis
may be unable to recover the losses it may have incurred in the
development of Fruitflow(R) and may never achieve
profitability.
Limited product offering
Provexis has only one product, Fruitflow(R), and any problems
with the commercial success of Fruitflow(R) will impact the
financial performance of Provexis.
Intellectual property protection
Provexis is heavily dependent on its intellectual property and,
in particular, its patents. No assurance can be given that any
pending patent applications or any future patent applications will
result in granted patents, that any patents will be granted on a
timely basis, that the scope of any copyright or patent protection
will exclude competitors or provide competitive advantages to
Provexis, that any of Provexis' patents will be held valid if
challenged, or that third parties will not claim rights in or
ownership of the copyright, patents and other proprietary rights
held by Provexis.
Further, there can be no assurance that others have not
developed or will not develop similar products, duplicate any of
Provexis' products or design around any patents held by Provexis.
Others may hold or receive patents which contain claims having a
scope that covers products developed by Provexis (whether or not
patents are issued to Provexis).
Provexis may rely on patents to protect its assets. These rights
act only to prevent a competitor copying and not to prevent a
competitor from independently developing products that perform the
same functions. No assurance can be given that others will not
independently develop or otherwise acquire substantially equivalent
functional food IP or otherwise gain access to Provexis' unpatented
proprietary technology or disclose such technology or that Provexis
can ultimately protect meaningful rights to such unpatented
technology.
Once granted, a patent can be challenged both in the patent
office and in the courts by third parties. Third parties can bring
material and arguments which the patent office granting the patent
may not have seen. Therefore, issued patents may be found by a
court of law or by the patent office to be invalid or unenforceable
or in need of further restriction.
A substantial cost may be incurred if Provexis is required to
assert its intellectual property rights, including any patents or
trade marks against third parties. Litigation is costly and time
consuming and there can be no assurance that Provexis will have, or
will be able to devote, sufficient resources to pursue such
litigation. Potentially unfavourable outcomes in such proceedings
could limit Provexis' intellectual property rights and activities.
There is no assurance that obligations to maintain Provexis' know
how would not be breached or otherwise become known in a manner
which provides Provexis with no recourse.
Any claims made against Provexis' intellectual property rights,
even without merit, could be time consuming and expensive to defend
and could have a materially detrimental effect on Provexis'
resources. A third party asserting infringement claims against
Provexis could require Provexis to cease the infringing activity
and/or require Provexis to enter into licensing and royalty
arrangements. The third party could also take legal action which
could be costly. In addition, Provexis may be required to develop
alternative non-infringing solutions that may require significant
time and substantial unanticipated resources. There can be no
assurance that such claims will not have a material adverse effect
on Provexis' business, financial condition or results.
Ian Ford
Secretary
Consolidated statement of comprehensive income
Year Year
ended ended
31 March 31 March
2017 2016
Notes GBP GBP
-------------------------------- ------ ---------- ----------
Revenue 1,3 227,618 91,649
Cost of goods (9,533) -
-------------------------------- ------ ---------- ----------
Gross profit 218,085 91,649
Selling and distribution costs (11,333) -
Research and development costs 4 (187,163) (192,236)
Administrative costs (446,010) (354,892)
Underlying operating loss (382,287) (385,210)
Share based payment charges 17 (44,134) (70,269)
-------------------------------- ------ ---------- ----------
Loss from operations 4 (426,421) (455,479)
Finance income 7 890 2,768
Loss before taxation (425,531) (452,711)
Taxation 8 14,445 11,980
Loss and total comprehensive
expense for the year (411,086) (440,731)
-------------------------------- ------ ---------- ----------
Attributable to:
Owners of the parent (380,087) (409,569)
Non-controlling interest (30,999) (31,162)
Loss and total comprehensive
expense for the year (411,086) (440,731)
-------------------------------- ------ ---------- ----------
Loss per share to owners of
the parent
Basic - pence 9 (0.02) (0.03)
Diluted - pence 9 (0.02) (0.03)
-------------------------------- ------ ---------- ----------
Consolidated statement of financial position
Company number 05102907 As at As at
31 March 31 March
2017 2016
Notes GBP GBP
----------------------------- ------ ------------- -------------
Assets
Current assets
Inventories 12 32,450 -
Trade and other receivables 13 86,976 49,561
Corporation tax asset 8 26,425 17,388
Cash and cash equivalents 12,349 189,636
----------------------------- ------ ------------- -------------
Total current assets 158,200 256,585
----------------------------- ------ ------------- -------------
Total assets 158,200 256,585
----------------------------- ------ ------------- -------------
Liabilities
Current liabilities
Trade and other payables 14 (133,314) (113,747)
Total current liabilities (133,314) (113,747)
----------------------------- ------ ------------- -------------
Net current assets 24,886 142,838
Total liabilities (133,314) (113,747)
----------------------------- ------ ------------- -------------
Total net assets 24,886 142,838
----------------------------- ------ ------------- -------------
Capital and reserves
attributable to
owners of the parent
company
Share capital 16 1,750,818 1,647,068
Share premium reserve 18 16,648,471 16,503,221
Warrant reserve 18 26,200 26,200
Merger reserve 18 6,599,174 6,599,174
Retained earnings 18 (24,561,989) (24,226,036)
----------------------------- ------ ------------- -------------
462,674 549,627
Non-controlling interest 18 (437,788) (406,789)
----------------------------- ------ ------------- -------------
Total equity 24,886 142,838
----------------------------- ------ ------------- -------------
Consolidated statement of cash flows
Year Year
ended ended
31 March 31 March
2017 2016
Notes
-------------------------------------- ------ ---------- ----------
GBP GBP
-------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Loss after tax (411,086) (440,731)
Adjustments for:
Profit on sale of fixed assets 4 (3,000) -
Finance income (890) (2,768)
Taxation 8 (14,445) (11,980)
Share-based payment charge 44,134 70,269
Changes in inventories (32,450) -
Changes in trade and other
receivables (37,540) 3,623
Changes in trade and other
payables 19,567 (334)
-------------------------------------- ------ ---------- ----------
Net cash flow from operations (435,710) (381,921)
-------------------------------------- ------ ---------- ----------
Tax credits received 5,408 15,822
Total cash flow from operating
activities (430,302) (366,099)
-------------------------------------- ------ ---------- ----------
Cash flow from investing activities
Proceeds from sale of fixed 3,000 -
assets
Interest received 1,015 2,932
Total cash flow from investing
activities 4,015 2,932
-------------------------------------- ------ ---------- ----------
Cash flow from financing activities
Proceeds from issue of share
capital 16 249,000 267,400
Total cash flow from financing
activities 249,000 267,400
-------------------------------------- ------ ---------- ----------
Net decrease in cash and cash
equivalents (177,287) (95,767)
-------------------------------------- ------ ---------- ----------
Opening cash and cash equivalents 189,636 285,403
-------------------------------------- ------ ---------- ----------
Closing cash and cash equivalents 12,349 189,636
-------------------------------------- ------ ---------- ----------
Consolidated statement of changes in equity
Share Share Warrant Merger Retained Total Non-controlling Total
capital premium reserve reserve earnings equity interests equity
attributable
to owners
of
the
parent
GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- ----------- -------- ---------- ------------- ------------- ---------------- ----------
At 31 March
2015 1,584,846 16,298,043 26,200 6,599,174 (23,886,736) 621,527 (375,627) 245,900
Share-based
charges - - - - 70,269 70,269 - 70,269
Issue of
shares
- PrimaryBid
placing 9
July 2015 62,222 205,178 - - - 267,400 - 267,400
Total
comprehensive
expense for
the year - - - - (409,569) (409,569) (31,162) (440,731)
At 31 March
2016 1,647,068 16,503,221 26,200 6,599,174 (24,226,036) 549,627 (406,789) 142,838
--------------- ---------- ----------- -------- ---------- ------------- ------------- ---------------- ----------
Share-based
charges - - - - 44,134 44,134 - 44,134
Issue of
shares
- placing
8 August 2016 93,333 130,667 - - - 224,000 - 224,000
Issue of
shares
- placing
22 September
2016 10,417 14,583 - - - 25,000 - 25,000
Total
comprehensive
expense for
the year - - - - (380,087) (380,087) (30,999) (411,086)
At 31 March
2017 1,750,818 16,648,471 26,200 6,599,174 (24,561,989) 462,674 (437,788) 24,886
--------------- ---------- ----------- -------- ---------- ------------- ------------- ---------------- ----------
Notes to the preliminary results for the year ended 31 March
2017
1. Accounting policies
General information
Provexis plc is a public limited company incorporated and
domiciled in the United Kingdom (registration number 05102907). The
address of the registered office is Prospect House, Queens Road,
Reading, Berkshire RG1 4RP, UK. The functional and presentational
currency is pounds sterling and the financial statements are
rounded to the nearest GBP1.
The main activities of the Group are those of developing,
licensing and selling the proprietary, scientifically-proven
Fruitflow(R) heart-health functional food ingredient for the global
functional food sector.
Basis of preparation
The financial information set out in this release does not
constitute the Company's full statutory accounts for the year ended
31 March 2017 for the purposes of section 434(3) of the Companies
Act 2006, but it is derived from those accounts that have been
audited. Statutory accounts for 2016 have been delivered to the
Registrar of Companies and those for 2017 will be delivered after
the forthcoming AGM. The auditors have reported on the accounts for
the year ended 31 March 2017; their report was unqualified, and did
not contain statements under s498(2) or (3) Companies Act 2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement principles of International Financial Reporting
Standards (IFRS) as endorsed for the use in the European Union,
this announcement does not itself contain sufficient information to
comply with IFRS. The Company expects to publish full financial
statements for the year ended 31 March 2017 that comply with IFRS
in September 2017.
The accounting policies set out below have been applied to all
periods presented in these Group financial statements and are in
accordance with IFRS, as adopted by the European Union, and
International Financial Reporting Interpretations Committee
('IFRIC') interpretations that were applicable for the year ended
31 March 2017.
These accounting policies are consistent with those applied in
the year ended 31 March 2016, as amended to reflect any new
Standards, amendments to Standards and interpretations which are
mandatory for the year ended 31 March 2017.
The Group has adopted the appropriate new interpretations and
revised Standards effective for the year ended 31 March 2017, which
have not had a material impact on the disclosures and presentation
of the financial statements.
The following Standards, interpretations and amendments have
been issued but are not yet effective and will be adopted at the
point they are effective:
-- Amendments to IAS 7, Statement of cash flows on disclosure
initiative (effective for annual periods beginning on or after 1
January 2017)
-- Amendments to IAS 12, 'Income taxes' on recognition of
deferred tax assets for unrealised losses (effective for annual
periods beginning on or after 1 January 2017)
-- Amendments to IFRS 2, 'Share based payments', on clarifying
how to account for certain types of share-based payment
transactions (effective for annual periods beginning on or after 1
January 2018)
-- IFRS 9, 'Financial Instruments' (effective for annual periods
beginning on or after 1 January 2018)
-- IFRS 15, 'Revenue from contracts with customers' (effective
for annual periods beginning on or after 1 January 2018)
-- Amendments to IFRS 15, 'Revenue from contracts with
customers' (effective for annual periods beginning on or after 1
January 2018)
-- Annual improvements 2014-2016 (effective for annual periods
beginning on or after 1 January 2018)
-- IFRIC 22, 'Foreign currency transactions and advance
consideration' (effective for annual periods beginning on or after
1 January 2018)
The Directors do not expect that the adoption of these Standards
and interpretations in future periods will have a material impact
on the consolidated financial statements of the Group. There are a
number of Standards, interpretations and amendments to published
accounts not listed above which the directors consider not to be
relevant to the Group.
Going concern
The Group's business activities together with the factors likely
to affect its future development, and the financial position of the
Group, its cash flows and liquidity position are set out in the
strategic report. In addition note 2 to the financial statements
includes the Group's objectives, policies and processes for
managing its capital; its financial risk management objectives;
details of its financial instruments and its exposure to credit and
liquidity risk.
The Group made a loss for the year of GBP411,086 (2016:
GBP440,731) and expects to make a further loss during the year
ending 31 March 2018. The total cash outflow from continuing
operations in the year was GBP430,302 (2016: GBP366,099). At 31
March 2017 the Group had cash balances of GBP12,349 (2016:
GBP189,636).
On 4 June 2015 the Group announced it had joined PrimaryBid.com
(www.primarybid.com), an online platform dedicated to equity
crowdfunding for AIM-listed companies which is further detailed in
note 16.
On 10 May 2017 the Group announced it had raised proceeds of
GBP350,000 via the placing of 70,000,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 16 May 2017.
On 31 July 2017 the Group announced it had raised proceeds of
GBP322,100 via the placing of 64,420,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 4 August 2017.
The directors have prepared projected cash flow information for
a period of more than twelve months from the date of approval of
these financial statements and have reviewed this information as at
the date of these financial statements.
The Group has access to future equity financings, either through
the Group's existing PrimaryBid.com platform or through a separate
equity fundraising with the Company's shareholders, as potential
additional sources of funding.
Based on the level of existing cash, projected income and
expenditure, and excluding the potential additional sources of
funding, the directors are satisfied that the Company and the Group
have adequate resources to continue in business for a period of
more than twelve months from the date of approval of the financial
statements. If the potential additional sources of funding are
taken into account, the directors are satisfied that the Company
and the Group have adequate resources to continue in business for
the foreseeable future.
Accordingly the going concern basis has been used in preparing
the financial statements.
Basis of consolidation
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The consolidated financial information presents the results of
the Company and its subsidiaries, Provexis Nutrition Limited,
Provexis Natural Products Limited and Provexis (IBD) Limited as if
they formed a single entity ('the Group'). All subsidiaries share
the same reporting date, 31 March, as Provexis plc. All intra group
balances are eliminated in preparing the financial statements.
Non-controlling interest
Profit or loss and each component of other comprehensive income
are attributed to the owners of the parent and to the
non-controlling interests. Total comprehensive income is attributed
to the owners of the parent and the non-controlling interests even
if this results in the non-controlling interests having a deficit
balance.
Revenue
Revenue comprises the fair value received or receivable for
exclusivity arrangements, collaboration agreements, royalties and
sales net of sales rebates and excluding VAT and trade
discounts.
The accounting policies for the principal revenue streams of the
Group are as follows:
(i) Exclusivity arrangements and collaboration agreements are
recognised as revenue in the accounting period in which the related
services, or required activities, are performed or specified
conditions are fulfilled in accordance with the terms of completion
of the specific transaction.
(ii) Royalty income relating to the sale by a licensee of
licensed product is recognised on an accruals basis in accordance
with the substance of the relevant agreement and based on the
receipt from the licensee of the relevant information to enable
calculation of the royalty due.
(iii) Revenue from sales to external customers is recognised
when the significant risks and rewards of ownership have been
transferred to the buyer in accordance with the customer terms.
This is when goods are dispatched to customers.
Segment reporting
The Group determines and presents operating segments based on
the information that internally is provided to the Chairman, who is
the Group's 'chief operating decision maker' ('CODM').
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. An operating
segment's operating results are reviewed regularly by the CODM to
make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial
information is available.
Segment results that are reported to the Group Board include
items directly attributable to a segment as well as those that can
be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during
the period to acquire property, plant and equipment, and intangible
assets.
Use of non-GAAP profit measure - underlying operating profit
The directors believe that the operating loss before share based
payments and exceptional items measure provides additional useful
information for shareholders on underlying trends and performance.
This measure is used for internal performance analysis. Underlying
operating loss is not defined by IFRS and therefore may not be
directly comparable with other companies' adjusted profit measures.
It is not intended to be a substitute for, or superior to IFRS
measurements of profit.
Exceptional items are those material items which, by virtue of
their size or incidence, are presented separately in the Statement
of Comprehensive Income to give a full understanding of the Group's
underlying financial performance. Transactions which may give rise
to exceptional items include the restructuring of business
activities and acquisitions. A reconciliation of underlying
operating profit to statutory operating profit is set out on the
face of the Statement of Comprehensive Income.
Intangible assets
Research and development
Certain Group products are in the research phase and others are
in the development phase. Expenditure incurred on the development
of internally generated products is capitalised if it can be
demonstrated that:
-- It is technically feasible to develop the product for it to be sold;
-- Adequate resources are available to complete the development;
-- There is an intention to complete and sell the product;
-- The Group is able to sell the product;
-- Sale of the product will generate future economic benefits; and
-- Expenditure on the project can be measured reliably.
The value of the capitalised development cost is assessed for
impairment annually. The value is written down immediately if
impairment has occurred. Development costs are not being amortised
as income has not yet been realised from the underlying technology.
Development expenditure, not satisfying the above criteria, and
expenditure on the research phase of internal projects is
recognised in the statement of comprehensive income as
incurred.
Patents and trade marks
The costs incurred in establishing patents and trade marks are
either expensed or capitalised in accordance with the corresponding
treatment of the development expenditure for the product to which
they relate.
Impairment of assets
Assets that have a finite useful life but that are not yet in
use and are therefore not subject to amortisation or depreciation
are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment annually and when events
or circumstances suggest that the carrying amount may not be
recoverable, an impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable
amount.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately in the statement of comprehensive income, unless the
relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss is recognised immediately in the
statement of comprehensive income, unless the relevant asset is
carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. Impairment
losses on goodwill are not reversed.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is calculated as follows:
Raw materials - cost of purchase on first in, first out
basis.
Work in progress and finished goods - cost of raw materials and
labour, together with attributable overheads based on the normal
level of activity.
Net realisable value is based on estimated selling price less
further costs to completion and disposal. A charge is made to the
income statement for slow moving inventories. The charge is
reviewed at each reporting date.
Financial instruments
Financial assets
The Group's financial assets are comprised of 'trade and other
receivables' and 'cash and cash equivalents'. They are recognised
initially at their fair value and subsequently at amortised cost.
The Group will assess at each reporting date whether there is
objective evidence that the financial asset is impaired. If an
asset is judged to be impaired the carrying amount of the asset
will be adjusted to its impaired valuation.
Financial liabilities
The Group's financial liabilities comprise 'trade and other
payables' and 'borrowings'. These are recognised initially at fair
value and subsequently at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
Government grants
Government grants are recognised when there is reasonable
assurance that the grant will be received and the Group will comply
with all attached conditions. Government grants are recognised in
the statement of comprehensive income in the same period to which
the costs that they are intended to compensate are expensed.
Taxation
Current tax is provided at amounts expected to be recovered or
to be paid using the tax rates and tax laws that have been enacted
or substantively enacted at the reporting date. When research and
development tax credits are claimed they are recognised on an
accruals basis and are included as a taxation credit.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability on the statement of
financial position differs from its tax base, except for
differences arising on:
-- The initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- Investments in subsidiaries where the Group is able to
control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profits will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered). Deferred tax balances
are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- The same taxable Group Company; or
-- Different Group entities which intend to settle current tax
assets and liabilities on a net basis, or to realise the assets and
settle the liabilities simultaneously, on each future period in
which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Foreign currency translation
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the statement of
comprehensive income.
Benefits for Directors and consultants
(i) Share-based payment transactions
The Group operates an equity-settled, share-based compensation
plan. Vesting conditions are service conditions and performance
conditions only. Where share options are awarded to employees and
others providing similar services, the fair value of the options at
the date of grant is charged to the statement of comprehensive
income over the vesting period. Non-market vesting conditions are
taken into account by adjusting the number of equity instruments
expected to vest at each reporting date so that, ultimately, the
cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options when
granted. As long as all other vesting conditions are satisfied, a
charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative charge is not adjusted for
failure to achieve a market vesting condition. If market related
terms and conditions of options are modified before they vest, the
change in the fair value of the options, measured immediately
before and after the modification, is also charged to the statement
of comprehensive income over the remaining vesting period. If
non-market related terms and conditions of options are modified
before they vest, the number of instruments expected to vest at
each reporting date, and therefore the cumulative charge, is
amended accordingly. Where equity instruments are granted to
persons other than employees and others providing similar services,
the statement of comprehensive income is charged with the fair
value of goods and services received.
The proceeds received when options are exercised, net of any
directly attributable transaction costs, are credited to share
capital (nominal value) and the remaining balance to share
premium.
National insurance on share options
All employee option holders sign statements that they will be
liable for any employers national insurance arising on the exercise
of share options.
Interest income
Interest income is recognised on a time-proportion basis using
the effective interest rate method.
Warrants
The Group has issued warrants to Darwin Strategic Limited,
initially as part of the Equity Financing Facility and with effect
from June 2015 as part of PrimaryBid.com. These warrants have been
measured at fair value at the date of grant using an appropriate
options pricing model.
The fair value of the warrants had been held on the statement of
financial position within prepayments and in the warrants reserve
within equity. The prepayment was released in full against share
premium in the year ended 31 March 2015. The warrants reserve will
be released to share premium if the warrants are exercised. If the
warrants lapse then the reserve will be transferred to retained
earnings.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.
Estimates and judgements are continually made and are based on
historic experience and other factors, including expectations of
future events that are believed to be reasonable in the
circumstances.
As the use of estimates is inherent in financial reporting,
actual results could differ from these estimates. The directors
believe the following to be the key areas of estimation and
judgement:
(i) Research and development
Under IAS 38 Intangible Assets, development expenditure which
meets the recognition criteria of the standard must be capitalised
and amortised over the useful economic lives of intangible assets
from product launch.
(ii) Share-based payments
The Group operates an equity-settled, share-based compensation
plan. The charge for share-based payments is determined based on
the fair value of awards at the date of grant partly by use of the
Black-Scholes pricing model which require judgements to be made
regarding expected volatility, dividend yield, risk free rates of
return and expected option lives. The inputs used in these pricing
models to calculate the fair values are set out in note 17. An
element of the share-based payment charge also relies on certain
assumptions over the future performance of the share price which
may not be met or may be exceeded by the time the relevant awards
vest.
2. Financial risk management
2.1 Financial risk factors
The Group's activities inevitably expose it to a variety of
financial risks: market risk (including currency risk, cash flow
interest rate risk and fair value interest rate risk), credit risk
and liquidity risk.
It is Group policy not to enter into speculative positions using
complex financial instruments. The Group's primary treasury
objective is to minimise exposure to potential capital losses
whilst at the same time securing favourable market rates of
interest on Group cash deposits using money market deposits with
banks. Cash balances used to settle the liabilities from operating
activities are also maintained in current accounts which earn
interest at variable rates.
(a) Market risk
Foreign exchange risk
The Group's largest contract, the long-term Alliance Agreement
with DSM Nutritional Products for Fruitflow(R), is primarily
denominated in Euros. The Alliance Agreement is underpinned by a
financial model which is based upon the division of profits between
the two partners on an agreed basis, linked to certain revenue
targets, following the deduction of the cost of goods and a fixed
level of overhead from sales.
DSM Nutritional Products seeks to sell Fruitflow(R) in Euros,
but its customers for Fruitflow(R) are world-wide and world-wide
exchange rate fluctuations may have an impact on the revenues
accruing to DSM, and thus the profit share accruing to the Group.
The cost of goods for Fruitflow(R) is primarily denominated in and
incurred in Euros.
Where customer or supplier transactions of more than GBP25,000
total value are to be settled in foreign currencies consideration
is given to settling the sums to be received or paid through
foreign exchange conversion at the outset of the transactions to
minimise the risk of adverse currency fluctuations.
Cash flow and fair value interest rate risk
The Group's interest rate risk arises from medium term and short
term money market deposits. Deposits which earn variable rates of
interest expose the Group to cash flow interest rate risk. Deposits
at fixed rates expose the Group to fair value interest rate
risk.
The Group analyses its interest rate exposure on a dynamic basis
throughout the year.
(b) Credit risk
Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions as well as credit exposure in
relation to outstanding receivables. Group policy is to place
deposits with institutions with investment grade A2 or better
(Moody's credit rating) and deposits are made in sterling only. The
Group does not expect any losses from non-performance by these
institutions. Management believes that the carrying value of
outstanding receivables and deposits with banks represents the
Group's maximum exposure to credit risk.
(c) Liquidity risk
Liquidity risk arises from the Group's management of working
capital, it is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. Prudent
liquidity risk management implies maintaining sufficient cash and
cash equivalents and management monitors rolling forecasts of the
Group's liquidity on the basis of expected cash flow.
The Group had trade and other payables at the statement of
financial position date of GBP133,314 (2016: GBP113,747) as
disclosed in note 14.
2.2 Capital risk management
The Group considers its capital to comprise its ordinary share
capital, share premium, warrant reserve, merger reserve and
accumulated retained earnings as disclosed in the consolidated
statement of financial position.
The Group remains funded primarily by equity capital. The
Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for equity holders of the Company and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
3. Segmental reporting
The directors have determined that only one operating segment
exists under the terms of International Financial Reporting
Standard 8 'Operating Segments', as the Group is organised and
operates as a single business unit and all activities are based in
the UK. The Group's reporting segment is determined based on the
Group's internal reporting to the Chief Operating Decision Maker
(CODM). The CODM has been determined to be the Chairman of the
Board of Directors as he is primarily responsible for the
allocation of resources to segments and the assessment of
performance of the segments.
The CODM uses underlying operating profit/(loss) as the key
measure of the segments' results as it reflects the segments'
underlying trading performance for the financial period under
evaluation.
Underlying operating profit/(loss) is a consistent measure
within the Group which measures the performance of the segment
before share based payment charges and exceptional items.
4. Loss from continuing operations
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
------------------------------------ ----------- -----------
Loss from continuing operations
is stated after charging:
Research and development costs 187,163 192,236
Foreign exchange gains 377 8,865
Profit on disposal of fixed assets 3,000 -
- plant and equipment
Equity-settled share based payment
expense 44,134 70,269
The total fees of the Group's auditor, for services provided are
analysed below:
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
--------------------------- ----------- -----------
Audit services
Parent company 10,500 10,000
Subsidiaries 8,750 8,000
Tax services - compliance
Parent company 2,000 2,000
Subsidiaries 3,000 3,000
Other services
iXBRL services 2,000 2,000
Total fees 26,250 25,000
--------------------------- ----------- -----------
5. Wages and salaries
The average monthly number of persons, including all directors,
employed or engaged under contracts for services by the Group
during the year was as follows:
Year ended Year ended
31 March 31 March
2017 2016
-------------------------------------- ----------- -----------
Research and development consultants 1 1
Directors 3 3
-------------------------------------- ----------- -----------
4 4
-------------------------------------- ----------- -----------
Their aggregate emoluments were:
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
---------------------------------- ----------- -----------
Fees 220,008 212,510
Total cash settled emoluments 220,008 212,510
Share-based payment remuneration
charge: equity settled 44,134 70,269
---------------------------------- ----------- -----------
Total emoluments 264,142 282,779
---------------------------------- ----------- -----------
6. Directors' remuneration
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
---------------------------------- ----------- -----------
Directors
Aggregate emoluments 172,008 164,010
Company pension contributions - -
---------------------------------- ----------- -----------
172,008 164,010
Share based payment remuneration
charge: equity settled - 46,524
Total Directors' emoluments 172,008 210,534
---------------------------------- ----------- -----------
Emoluments disclosed above include the following amounts in
respect of the highest paid director:
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
-------------------------------------- ----------- -----------
Aggregate emoluments 96,000 88,002
Share based payment remuneration
charge: equity settled - 23,262
-------------------------------------- ----------- -----------
Total of the highest paid director's
emoluments 96,000 111,264
-------------------------------------- ----------- -----------
During the current year and the prior year the directors did not
participate in defined contribution pension schemes, and did not
receive any benefits in kind.
7. Finance income
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
-------------------------- ----------- -----------
Finance income
Bank interest receivable 890 2,768
-------------------------- ----------- -----------
890 2,768
-------------------------- ----------- -----------
8. Taxation
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
------------------------------------- ----------- -----------
Current tax income - United Kingdom
corporation tax
Research and development credit
- current year 13,320 11,980
Research and development credit 1,125 -
- in respect of prior periods
------------------------------------- ----------- -----------
Taxation credit 14,445 11,980
------------------------------------- ----------- -----------
The tax assessed for the year is different from the standard
rate of corporation tax in the UK. The differences are explained
below:
Year ended Year ended
31 March 31 March
2017 2016
GBP GBP
------------------------------------------ ----------- -----------
Loss before tax 425,531 452,711
------------------------------------------ ----------- -----------
Loss before tax multiplied by the
standard rate of corporation tax
in the UK of 20% (2016: 20%) 85,106 90,542
Effects of:
Expenses not deductible for tax
purposes (8,827) (14,054)
Difference between depreciation
and capital allowances - 283
Unutilised tax losses and other
deductions arising in the year (68,934) (69,329)
Additional deduction for R&D expenditure 10,622 9,185
Surrender of tax losses for R&D
tax credit refund (4,647) (4,647)
Adjustments in respect of prior 1,125 -
years
Total tax credit for the year 14,445 11,980
------------------------------------------ ----------- -----------
At 31 March 2017 the Group UK tax losses to be carried forward
are estimated to be GBP18,893,000 (2016: GBP18,640,000).
Income tax asset receivable within 31 March 31 March
one year 2017 2016
GBP GBP
------------------------------------ --------- ---------
Corporation tax recoverable 26,425 17,388
26,425 17,388
------------------------------------ --------- ---------
9. Earnings per share and diluted earnings per share
Basic earnings per share amounts are calculated by dividing the
profit attributable to owners of the parent by the weighted average
number of ordinary shares in issue during the financial year.
The loss attributable to equity holders of the Company for the
purpose of calculating the fully diluted loss per share is
identical to that used for calculating the basic loss per share.
The exercise of share options, disclosed in note 17, would have the
effect of reducing the loss per share and is therefore
anti-dilutive under the terms of IAS 33 'Earnings per Share'.
Basic and diluted loss per share amounts are in respect of all
activities.
Year ended Year ended
31 March 31 March
2017 2016
Loss and total comprehensive expense
for the year attributable to owners
of the parent - GBP 380,087 409,569
Weighted average number of shares 1,712,581,870 1,630,067,560
Basic and diluted loss per share
- pence 0.02 0.03
-------------------------------------- -------------- --------------
The Group raised GBP672,100 via the placing of 134,420,000 new
shares across two placings in May and August 2017, as further
detailed in note 21. The new shares issued would change the
weighted average number of shares in issue as shown above for the
year ended 31 March 2017, but they would not significantly change
the resulting loss per share calculations.
10. Intangible assets
Goodwill Development Total
costs
GBP GBP GBP
----------------------------- ---------- ------------ ----------
Cost
At 1 April 2016 7,265,277 158,166 7,423,443
At 31 March 2017 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Amortisation and Impairment
At 1 April 2016 7,265,277 158,166 7,423,443
At 31 March 2017 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Net book value
At 31 March 2017 - - -
----------------------------- ---------- ------------ ----------
At 31 March 2016 - - -
----------------------------- ---------- ------------ ----------
Cost
At 1 April 2015 7,265,277 158,166 7,423,443
At 31 March 2016 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Amortisation and Impairment
At 1 April 2015 7,265,277 158,166 7,423,443
At 31 March 2016 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Net book value
At 31 March 2016 - - -
----------------------------- ---------- ------------ ----------
At 31 March 2015 - - -
----------------------------- ---------- ------------ ----------
Development costs represent costs incurred in registering
patents that meet the capitalisation criteria set out in IAS 38,
see also note 1.
11. Plant and equipment
Laboratory Total
equipment
GBP GBP
---------------- ----------- ---------
Cost
At 1 April
2016 68,725 68,725
Disposals (68,725) (68,725)
At 31 March - -
2017
---------------- ----------- ---------
Depreciation
At 1 April
2016 68,725 68,725
Disposals (68,725) (68,725)
At 31 March - -
2017
------------------ ----------- ---------
Net book value
At 31 March - -
2017
------------------ ----------- ---------
At 31 March - -
2016
------------------ ----------- ---------
Laboratory Total
equipment
GBP GBP
---------------- ----------- -------
Cost
At 1 April
2015 68,725 68,725
At 31 March
2016 68,725 68,725
------------------ ----------- -------
Depreciation
At 1 April
2015 68,725 68,725
At 31 March
2016 68,725 68,725
------------------ ----------- -------
Net book value
At 31 March - -
2016
------------------ ----------- -------
At 31 March - -
2015
------------------ ----------- -------
12. Inventories
31 March 31 March
2017 2016
GBP GBP
--------------- --------- ---------
Finished goods 32,450 -
32,450 -
--------------- --------- ---------
There are no provisions included within inventories in relation
to the impairment of inventories (2016: GBPNil).
During the year inventories of GBP9,533 (2016: GBPNil) were
recognised as an expense within cost of goods.
13. Trade and other receivables
31 March 31 March
2017 2016
GBP GBP
------------------------------------- --------- ---------
Amounts receivable within one year:
Trade receivables 1,251 -
Less: provision for impairment - -
of trade receivables
------------------------------------- --------- ---------
Trade receivables - net 1,251 -
Other receivables 16,287 17,423
------------------------------------- --------- ---------
Total financial assets other than
cash
and cash equivalents classified
as loans and receivables 17,538 17,423
Prepayments and accrued income 69,438 32,138
------------------------------------- --------- ---------
Total trade and other receivables 86,976 49,561
------------------------------------- --------- ---------
Trade and other receivables do not contain any impaired assets.
The Group does not hold any collateral as security and the maximum
exposure to credit risk at the reporting date is the fair value of
each class of receivable.
14. Trade and other payables
31 March 31 March
2017 2016
GBP GBP
------------------------------------- -------- --------
Trade payables 67,932 29,550
Accruals 60,157 80,326
------------------------------------- -------- --------
Total financial liabilities measured
at amortised cost 128,089 109,876
Other taxes and social security 5,225 3,871
Total trade and other payables 133,314 113,747
------------------------------------- -------- --------
The directors consider that the carrying amount of these
liabilities approximates to their fair value.
All amounts shown fall due within one year.
15. Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 17% (2016: 18%).
No amounts in respect of deferred tax were recognised in the
income statement from continuing operations or charged / credited
to equity for the current or prior year.
Deferred tax assets amounting to GBP3,211,838 (2016:
GBP3,356,723) have not been recognised on the basis that their
future economic benefit is not certain. Assuming a prevailing tax
rate of 17% (2016: 18%) when the timing differences reverse, the
unrecognised deferred tax asset comprises:
31 March 31 March
2017 2016
GBP GBP
----------------------------------- ---------- ----------
Depreciation in excess of capital
allowances 1,334 1,158
Unutilised tax losses 3,210,504 3,355,565
3,211,838 3,356,723
----------------------------------- ---------- ----------
16. Share capital
On 4 June 2015 the Company announced it had joined
PrimaryBid.com (www.primarybid.com), an online platform dedicated
to equity crowdfunding for AIM-listed companies.
PrimaryBid.com provides a new channel for the Company to raise
equity from investors, allowing investors to bid directly for new
ordinary shares of 0.1p each in the Company at prices of their
choosing, subject to certain limited restrictions.
PrimaryBid.com gives the Company ongoing access to an aggregated
book of bids submitted by prospective investors, with the Company
having full discretion as to whether or not to proceed with a share
placing to raise capital through PrimaryBid.com.
Should the Company wish to proceed with a share placing this is
done by issuing new shares, in order to satisfy any number of the
bids presented through the PrimaryBid.com platform. Shares may only
be issued to the extent that the Company has the requisite
shareholder authorities to fulfil the issuance. Full details can be
found on www.primarybid.com.
In June 2015, as a result of the Company joining PrimaryBid.com,
the Company's existing 10 September 2013 Equity Financing Facility
('EFF') with Darwin Strategic Limited was cancelled.
EFF fee and warrant reserve
In consideration of Darwin agreeing to provide the EFF in
September 2013 the Company agreed to:
(i) Pay a fee to Darwin amounting to approximately GBP35,000 by
way of an issue of 3,414,635 fully paid Ordinary Shares, at a gross
1.025p per share. The contingent fee amounting to a maximum of
GBP125,000 payable under the 7 November 2011 Equity Financing
Facility was cancelled.
(ii) Enter into a new warrant agreement dated 10 September 2013
for the grant to Darwin of warrants to subscribe for up to ten
million Ordinary Shares, such warrants to be exercisable at a price
of 4.44 pence per share and to be exercisable at any time prior to
the expiry of five years following the date of the new warrant
agreement.
The warrants were measured at fair value at the date of grant
using a Black-Scholes model, with the following assumptions:
Date Exercise Number Share Expected Risk Expected Fair
of price of warrants price volatility free life value
grant pence at grant rate years per share
date under
pence warrant
pence
---------- -------- ------------ --------- ----------- ----- -------- ----------
11-Sep-13 4.44 10,000,000 0.915 75% 0.79% 5 0.262
---------- -------- ------------ --------- ----------- ----- -------- ----------
An expected dividend yield of 0% was used in the above
valuation.
The assumption made for the expected life of the warrants is not
necessarily indicative of the exercise patterns that may occur. The
expected volatility reflects the assumption that the historical
volatility is indicative of future trends, which may not
necessarily be the actual outcome.
The existing 10 September 2013 warrant agreement with Darwin
continues to be in place under the new PrimaryBid.com
arrangements.
The total fair value of the warrants, GBP26,200, has previously
been held within prepayments and in the warrants reserve within
equity. During the year ended 31 March 2015 the prepayment was
released in full against share premium.
The warrants reserve will be released to share premium if the
warrants are exercised. If the warrants lapse then the reserve will
be transferred to retained earnings.
Allotted, called up and fully paid Ordinary Ordinary
0.1p shares 0.1p shares
GBP number
---------------------------------------- ------------- --------------
At 31 March 2016 1,647,068 1,647,068,167
Issue of shares - placing 8 August
2016 93,333 93,333,340
Issue of shares - placing 22 September
2016 10,417 10,416,667
At 31 March 2017 1,750,818 1,750,818,174
---------------------------------------- ------------- --------------
On 2 August 2016 the Group announced it had raised proceeds of
GBP224,000 via the placing of 93,333,340 new ordinary shares of
0.1p each at a gross 0.24p per share with investors, with no
commissions or expenses payable. The placing shares were admitted
to AIM on 8 August 2016.
On 2 August 2016 as part of the placing announcement the Group
also announced that the Company's Chairman Dawson Buck had given a
stated intention to subscribe to 10,416,667 shares at a
subscription price of 0.24p totalling GBP25,000, with his formal
commitment to and payment for the subscription to take effect in
September 2016 immediately after publication of the Company's
annual report and accounts. On 15 September 2016, after the
publication of the Company's 2016 annual report and accounts, the
Company duly announced it had raised GBP25,000 via a placing of
10,416,667 new ordinary shares of 0.1p each at 0.24p per share with
the Company's Chairman Dawson Buck with no commissions or expenses
payable. The shares were admitted to AIM on 22 September 2016.
Allotted, called up and fully paid Ordinary Ordinary
0.1p shares 0.1p shares
GBP number
-------------------------------------- ------------- --------------
At 31 March 2015 1,584,846 1,584,845,944
Issue of shares - PrimaryBid placing
9 July 2015 62,222 62,222,223
At 31 March 2016 1,647,068 1,647,068,167
-------------------------------------- ------------- --------------
During the year ended 31 March 2017 the Company issued ordinary
shares of 0.1p each as follows:
Date Reason for issue Shares issued
GBP Number
---------- ------------------ -------- ------------
08.08.16 Placing 93,333 93,333,340
22.09.16 Placing 10,417 10,416,667
103,750 103,750,007
----------------------------- -------- ------------
During the year ended 31 March 2016 the Company issued ordinary
shares of 0.1p each as follows:
Date Reason for issue Shares issued
GBP Number
---------- -------------------- ------- -----------
09.07.15 PrimaryBid placing 62,222 62,222,223
62,222 62,222,223
------------------------------- ------- -----------
17. Share options
In June 2005 the Company adopted a new share option scheme for
employees ('the Provexis 2005 share option scheme'). Under the
scheme, options to purchase ordinary shares are granted by the
Board of Directors, subject to the exercise price of the option
being not less than the market value at the grant date. The options
typically vest after a period of 3 years and the vesting schedule
is subject to predetermined overall company selection criteria. In
the event that the option holder's employment is terminated, the
option may not be exercised unless the Board of Directors so
permits. The options expire 10 years from the date of grant.
Following the demerger of SiS (Science in Sport) Limited in
August 2013 appropriate modifications were proposed to the exercise
price of certain outstanding EMI and unapproved share option awards
under Provexis' share option schemes. The proposed modifications
were to reflect the reduction in value of Provexis which arose from
the share re-organisation, reduction of capital and demerger of SiS
(Science in Sport) Limited, calculated on a pro rata basis
immediately after the demerger using the respective market values
of Provexis plc and Science in Sport plc, net of Science in Sport
plc's August 2013 placing ('the Demerger Modifications').
Details of the share re-organisation, reduction of capital,
demerger of SiS (Science in Sport) Limited and proposed option
Demerger Modifications were provided on 28 June 2013 in a circular
to shareholders and in an AIM admission document for Science in
Sport plc, which are available to download from the Company's
website www.provexis.com.
As envisaged in the June 2013 circular to shareholders an
advance assurance was sought from HMRC to approve the variation in
the exercise price arising out of the reduction of capital and
demerger for unexercised EMI options as at 9 August 2013, the
demerger effective date. The advance assurance was not successful,
and the Company remains in dialogue with HMRC on this issue. On 20
August 2014 it was agreed that the modifications proposed to the
exercise price of certain outstanding awards under Provexis' share
option schemes would take immediate effect.
On 31 July 2017 the Company granted a total of 13,000,000 new
share options to certain scientific, sales and marketing
consultants to the Company. The options have an exercise price of
0.52 pence, being the closing mid-market price on 28 July 2017. The
options are exercisable between 3 and 10 years from date of grant
and are subject to performance criteria, including share price
appreciation. The Company believes the grant of these new options
will closely align the interests of the scientific, sales and
marketing consultants to the Company with those of
shareholders.
Following the issue of the new Options on 31 July 2017 the total
number of Ordinary Shares under option which could be issued if all
of the performance criteria are met is 151,617,620 Ordinary
Shares.
The fair values of the options granted during the year were
estimated at the date of grant in accordance with IFRS 2, using a
Black-Scholes model. Where options have been approved but not
formally granted and optionholders have provided services in
advance of the grant of options a charge is recognised using an
estimated fair value based on the period end share price.
At 31 March 2017 the number of ordinary shares subject to
options granted over the 2005 and prior option schemes were:
EMI options
31 March 2017 31 March 2016
----------------- -------------------------------------- ---------- --------------------------
Weighted Weighted Number Weighted Weighted Number
average average average average
exercise share exercise share
price price price price
(pence) at date (pence) at date
of exercise of exercise
(pence) (pence)
----------------- ---------- ------------- ----------- ---------- ------------- -----------
Outstanding at
the beginning
of the year 0.77 - 56,078,090 0.77 - 56,078,090
Outstanding at
the end of the
year 0.77 - 56,078,090 0.77 - 56,078,090
----------------- ---------- ------------- ----------- ---------- ------------- -----------
The exercise price of EMI options outstanding at the end of the
year ranged between 0.59p and 1.85p (2016: 0.59p and 1.85p) and
their weighted average contractual life was 3.3 years (2016: 4.3
years).
Of the total number of EMI options outstanding at the end of the
year, 56,078,090 (2016: 49,078,090) had vested and were exercisable
at the end of the year. Their weighted average exercise price was
0.77 pence (2016: 0.74 pence).
Unapproved options
31 March 2017 31 March 2016
Weighted Number Weighted Number
average average
exercise exercise
price price
(pence) (pence)
------------------------------ ---------- ----------- ---------- ------------
Outstanding at the beginning
of the year 1.19 62,539,530 1.20 62,145,845
Granted during the year 0.92 20,000,000 0.49 2,500,000
Cancelled during the
year - - 0.66 (2,106,315)
Outstanding at the end
of the year 1.12 82,539,530 1.19 62,539,530
------------------------------ ---------- ----------- ---------- ------------
The exercise price of unapproved options outstanding at the end
of the year ranged between 0.49p and 1.85p (2016: 0.49p and 1.85p)
and their weighted average contractual life was 6.3 years (2016:
6.2 years).
Of the total number of unapproved options outstanding at the end
of the year, 50,039,530 (2016: 43,039,530) had vested and were
exercisable at the end of the year. Their weighted average exercise
price was 1.32 pence (2016: 1.38 pence).
Grant of options
The fair values of the options have been estimated at the date
of grant using a Black-Scholes model, using the following
assumptions:
Date Exercise Number Share Expected Risk Expected Fair
of price of options price volatility free life value
grant at grant rate per share
date under
option
pence years
pence pence
---------- -------- ----------- --------- ----------- ----- -------- ----------
03-Sep-15 0.49 2,500,000 0.49 66% 0.80% 10 0.350
30-Dec-16 0.92 20,000,000 0.92 151% 0.53% 10 0.857
The fair value of the Demerger Modifications made to the
exercise price of certain outstanding awards under Provexis' share
option schemes has been estimated in accordance with IFRS 2, using
a Black-Scholes model. The fair value of the Demerger Modifications
is charged to the statement of comprehensive income over the
vesting period as part of the share based payment charge.
An expected dividend yield of 0% has been used in all of the
above valuations.
The expected life of the options is based on historical data and
is not necessarily indicative of the exercise patterns that may
occur. The expected volatility reflects the assumption that the
historical volatility is indicative of future trends, which may not
necessarily be the actual outcome.
The total share based payment charge for the year relating to
employee share based payment plans was GBP44,134 (2016: GBP70,269)
all of which related to equity settled share-based payment
transactions.
18. Reserves
Share Warrant Merger Retained Total Non-controlling Total
premium reserve reserve earnings attributable interest reserves
reserve to equity
holders
of the
parent
GBP GBP GBP GBP GBP GBP GBP
------------- ----------- --------- ---------- ------------- -------------- ---------------- ------------
At 31 March
2017 16,648,471 26,200 6,599,174 (24,561,989) (1,288,144) (437,788) (1,725,932)
------------- ----------- --------- ---------- ------------- -------------- ---------------- ------------
At 31 March
2016 16,503,221 26,200 6,599,174 (24,226,036) (1,097,441) (406,789) (1,504,230)
------------- ----------- --------- ---------- ------------- -------------- ---------------- ------------
Details of movements in reserves are provided as part of the
consolidated statement of changes in equity.
The following describes the nature and purpose of each reserve
within total equity:
Share premium Amount subscribed for share capital
in excess of nominal value, less the
related costs of share issues.
Warrant The warrant reserve represents warrants
reserve issued as part of the Equity Financing
Facility (see note 16).
Merger reserve The merger reserve arose on the reverse
takeover in 2005 of Provexis Natural
Products Limited (formerly Provexis
Limited) by Provexis plc through a share
for share exchange and on the issue
of shares for the acquisition of SiS
(Science in Sport) Limited in 2011.
SiS (Science in Sport) Limited was demerged
from Provexis with effect from 9 August
2013 by way of a capital reduction demerger
and transferred to a newly incorporated
parent company, Science in Sport plc.
Retained Cumulative net gains and losses recognised
earnings in the consolidated statement of comprehensive
income.
19. Pension costs
The pension charge represents contributions payable by the Group
to independently administered funds which for continuing operations
during the year ended 31 March 2017 amounted to GBPNil (2016:
GBPNil). Pension contributions payable but not yet paid at 31 March
2017 totalled GBP3,871, in respect of pension contribution
entitlements where employees had not yet provided details of the
funds to which the contributions should be made (2016:
GBP3,871).
20. Related party transactions
On 1 June 2010 the Company announced a long-term Alliance
Agreement with DSM Nutritional Products, which has seen the Company
collaborate with DSM to develop Fruitflow(R) in all major global
markets. DSM has invested substantially in the manufacture,
technology development, marketing and sale of Fruitflow(R) since
the Alliance Agreement was signed. Provexis continues to contribute
scientific expertise and is collaborating in areas such as cost of
goods optimisation and regulatory matters. The financial model is
based upon the division of profits between the two partners on an
agreed basis, linked to certain revenue targets, following the
deduction of the cost of goods and a fixed level of overhead from
sales.
The Company is working closely with DSM in various areas of the
project, and in June 2015 it was announced that the Company had
agreed significantly enhanced financial terms for its long-term
Alliance Agreement with DSM, involving a reduction in the fixed
level of overhead deduction from sales which permanently decreased
with effect from 1 January 2015, backdated, thus increasing the
profit share payable to the Company. It is not possible to
determine the financial impact of the Alliance Agreement at this
time.
DSM is classified as a related party of the Group in accordance
with IAS 24 as it holds shares in the Group. Further, K Rietveld is
a director of the Company, and a senior employee of DSM.
Revenue recognised by the Group under agreements with DSM
amounted to GBP198,228 (2016: GBP90,549). At 31 March 2017 the
Group was owed GBPNil (2016: GBPNil) by DSM.
On 2 August 2016 as part of a placing announcement the Group
announced that the Company's Chairman Dawson Buck had given a
stated intention to subscribe to 10,416,667 shares at a
subscription price of 0.24p totalling GBP25,000, with his formal
commitment to and payment for the subscription to take effect in
September 2016 immediately after publication of the Company's
annual report and accounts.
On 15 September 2016, after the publication of the Company's
2016 annual report and accounts, the Company duly announced it had
raised GBP25,000 via a placing of 10,416,667 new ordinary shares of
0.1p each at 0.24p per share with the Company's Chairman Dawson
Buck. The shares were admitted to AIM on 22 September 2016.
Key management compensation
The directors represent the key management personnel. Details of
their compensation and share options are given in note 6. At 31
March 2017 the Company's Chairman Dawson Buck was owed GBP7,698,
and the Company's Finance Director Ian Ford was owed GBP8,559. The
Company settled its liabilities to Dawson Buck and Ian Ford in
April 2017.
21. Events after the reporting period
On 10 May 2017 the Group announced it had raised proceeds of
GBP350,000 via the placing of 70,000,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 16 May 2017.
On 31 July 2017 the Group announced it had raised proceeds of
GBP322,100 via the placing of 64,420,000 new ordinary shares of
0.1p each at a gross 0.50p per share with investors. The placing
shares were admitted to AIM on 4 August 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNVKRBVAKRAR
(END) Dow Jones Newswires
September 07, 2017 02:01 ET (06:01 GMT)
Provexis (LSE:PXS)
Historical Stock Chart
From Apr 2024 to May 2024
Provexis (LSE:PXS)
Historical Stock Chart
From May 2023 to May 2024