TIDMPXS
RNS Number : 0907C
Provexis PLC
27 September 2018
27 September 2018 Provexis plc
("Provexis" or the "Company")
PRELIMINARY RESULTS for the YEAR ended 31 MARCH 2018
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 2018.
Key highlights
-- Total revenue for the year GBP236k (2017: GBP228k). Strong
start to the 2018/19 financial year, with first quarter revenues
ahead of first half revenues in 2017/18.
-- Planned launch by BY-HEALTH of a number of Fruitflow(R) based
products in the Chinese market progressing well, with two studies
successfully completed, one study currently ongoing at a clinical
site and three further planned human studies confirmed by
BY-HEALTH. The two completed studies (a human study and an animal
study) showed excellent results in use for Fruitflow(R).
The six studies outlined are being conducted at BY-HEALTH's sole
expense, a substantial investment in the Fruitflow(R) based
products which BY-HEALTH plans to launch in China. Studies
conducted in China are needed to obtain 'blue cap' health claim
status for dietary supplements, as required by the China Food and
Drug Administration (CFDA), with BY-HEALTH intending to make the
relevant submission to the CFDA by the end of 2018.
-- The MOU for a research and collaboration agreement for
Fruitflow(R) between the Company and BY-HEALTH, a GBP3bn listed
Chinese dietary supplement business, remains on track with the
research project now scheduled to take place in the first half of
2019, effectively being a seventh BY-HEALTH study.
-- The Company and its commercial partner DSM have seen an
encouraging increase in brand awareness and customer interest in
Fruitflow(R) over the last two years, with the total projected
annual sales value of the prospective sales pipeline for Fruitflow
now standing at a substantial multiple of existing annual
sales.
-- Fruitflow(R)+ Omega-3 launched in Holland & Barrett in
August 2018, with a listing in more than 660 Holland & Barrett
stores across the UK and Ireland giving Fruitflow(R)+ Omega-3
widespread consumer exposure. Holland & Barrett's loyalty
programme, Rewards for Life, has over 10 million members in the UK
and it is intended that Fruitflow(R)+ Omega-3 will be promoted by
email to Holland & Barrett's online customers.
-- Further encouraging progress from the Company's Fruitflow(R)
+ Omega-3 dietary supplement product which was launched in 2016,
with a listing with Amazon secured in June 2017. Total revenues for
Fruitflow(R) + Omega-3 grew by 149% year on year to GBP73k,
compared to GBP29k in its initial nine month launch period from
June 2016 to 31 March 2017. Further UK and international sales
channel opportunities are currently being progressed.
-- The filing of a patent application, announced in December
2017, relating to the use of Fruitflow(R) in protecting against the
adverse effects of air pollution on the body's cardiovascular
system, with laboratory work showing that Fruitflow(R) can reduce
the platelet activation caused by airborne particulate matter by
approximately one third. In 2016, 91% of the world's population
lived in places where air quality levels exceed WHO limits.
-- Planned formulation and launch of a Fruitflow(R) + nitrates
dietary supplement product is progressing well, with the
involvement of third party manufacturers, and interest from brand
owners. Strong patent position for this formulation, with further
interest in the role of Fruitflow(R) in exercise generated by Team
Sunweb Pro Cycling's use of Fruitflow(R) in the 2018 Tour de
France.
-- Fruitflow(R) blood pressure study published in the
International Journal of Food Sciences and Nutrition, indicating
that Fruitflow(R) significantly lowered blood pressure in the study
subjects.
-- The Company raised a gross GBP672k through a two stage
placing of new ordinary shares at 0.50p per share in May and August
2017, and it has raised a further GBP395k from a placing announced
today with new and existing investors at 0.40p per new ordinary
share.
-- Underlying operating loss* GBP362k (2017: GBP368k), a record low for the Group.
-- Cash GBP315k at 31 March 2018 (2017: GBP12k) with cash of
GBP395k raised from the placing announced today.
-- Change of registered office with immediate effect to 2 Blagrave Street, Reading RG1 1AZ.
*before share based payments of GBP106k (2017: GBP44k), 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 2018 and its AGM notice will be distributed by post to
shareholders on Friday 28 September 2018.
The Company's annual report and accounts and the AGM notice are
available from the Company's website www.provexis.com now, and from
the address below:
The Company Secretary
Provexis plc
2 Blagrave Street
Reading
RG1 1AZ
The AGM will be held at 10:30am on 25 October 2018 at the
offices of Allenby Capital Limited, 5th Floor, 5 St Helen's Place,
London EC3A 6AB.
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
Mark Connelly
Stephen Keys
Chairman's statement
The Company has had a very active year, seeking to enhance
further the commercial prospects of its innovative, patented
Fruitflow(R) heart-health ingredient.
The Company's Alliance partner DSM Nutritional Products ('DSM')
has continued to develop the market actively for Fruitflow(R) in
all global markets. More than 90 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) over the last two
years, with an increasing number of further commercial projects
being initiated with prospective customers, including some
prospective customers which are part of global businesses.
The total projected annual sales value of the prospective sales
pipeline for Fruitflow now stands at a substantial multiple of
existing annual sales.
Revenues for the year were GBP236k (2017: GBP228k), an increase
of 4% relative to the prior year.
The increase in revenue accruing to the Company for the year
reflects:
-- An increase in the net income received from the Company's
Alliance Agreement with DSM, which grew by 6% year on year to
GBP163k; this increase was aided by an improvement in underlying
trading margins, reflecting continuing efforts to reduce the
production costs of Fruitflow(R) in liquid and powder form as
volumes and production efficiencies increase;
-- An increase in revenue from the Company's Fruitflow(R) +
Omega-3 product, which grew by 149% year on year to GBP73k in the
year to 31 March 2018, compared to GBP29k in its initial nine month
launch period from 29 June 2016 to 31 March 2017.
-- Amounts in excess of GBP45k which were received in the year
to 31 March 2017 for marketing support, compared to amounts of
GBPNil which were received in the year to 31 March 2018.
Underlying operating loss has reduced by 1.7% to GBP362k (2017:
GBP368k), a record low for the Group, reflecting continued progress
with Fruitflow(R) and the Group's ongoing low overhead
strategy.
The Group has seen a strong start to the 2018/19 financial year,
with first quarter revenues, including further marketing support
received, ahead of first half revenues in 2017/18.
BY-HEALTH Co., Ltd
The Company has previously announced that it was working with
DSM and BY-HEALTH Co., Ltd, a GBP3bn listed Chinese dietary
supplement business, to support the planned launch of some
Fruitflow(R) based products in the Chinese market.
The planned launch of a number of Fruitflow(R) based products in
the Chinese market, with potentially substantial volumes, is
progressing well, with activities driven at present by the need to
obtain 'blue cap' health claim status for Fruitflow(R) as a dietary
supplement with the China Food and Drug Administration (CFDA).
Clinical studies conducted in China are typically required to
obtain blue cap health claim status, and a significant investment
in six separate studies, in support of the Fruitflow(R) based
products which BY-HEALTH plans to launch in China, is being
undertaken at BY-HEALTH's expense.
Two studies have been successfully completed in China, one study
is currently ongoing at a Chinese clinical site and three further
planned human studies have been confirmed by BY-HEALTH.
The two completed studies (a human study and an animal study)
showed excellent results in use for Fruitflow(R), and BY-HEALTH
intends to make the relevant blue cap submission to the CFDA by the
end of 2018, to include reference to the Company's existing
European Food Safety Authority ('EFSA') health claim for
Fruitflow.
It was originally envisaged that a first consumer product would
be launched by BY-HEALTH in the second half of 2017, but in part
due to the limitations of non blue cap status it was decided to
focus instead on obtaining a blue cap health claim for
Fruitflow(R), hence the substantial investment in the studies
outlined above.
BY-HEALTH has launched a Fruitflow(R) sports nutrition product
in China under its GymMax brand, for the exclusive use of Chinese
national athletes.
In April 2017 the Company announced it had entered into a
memorandum of understanding with BY-HEALTH, intended to result in a
research and collaboration agreement with BY-HEALTH for
Fruitflow(R), focussing 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.
The proposed research and collaboration agreement is intended to
include a clinical trial which will be conducted in China, and it
was originally envisaged that the Company, BY-HEALTH and a third
party Chinese research organisation would sign the agreement in the
first quarter of 2018, with the bulk of the research programme to
be completed in 2018.
BY-HEALTH has been fully committed to the conduct of its
existing Fruitflow(R) studies in China, and it is now intended that
the Company, BY-HEALTH and a third party Chinese research
organisation will sign the research and collaboration agreement in
the first half of 2019, with the bulk of the research programme to
be completed in 2019. This will effectively be BY-HEALTH's seventh
clinical study for Fruitflow(R).
It is envisaged 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, with further potential research projects for
Fruitflow(R) between the Company and BY-HEALTH now under
discussion.
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 (source:
health-care information company IQVIA). The Company believes that
Fruitflow(R) has the potential to play an important role in the
Chinese cardiovascular health market.
Patent application - Fruitflow(R) protects against adverse
effects of air pollution
In December 2017 the Company announced the filing of a patent
application relating to the use of Fruitflow(R) in protecting
against the adverse effects of air pollution on the body's
cardiovascular system.
Recent laboratory work has shown that Fruitflow(R) can reduce
the platelet activation caused by airborne particulate matter, such
as that from diesel emissions, by approximately one third. The
beneficial effects of this reduction can be observed in laboratory
models representing healthy subjects as well as in models
representing subjects with an underlying cardiovascular
problem.
The patent application describes 'a composition comprising a
water soluble tomato extract (Fruitflow(R)) for use in maintaining
cardiovascular health, lessening the risk of developing a
cardiovascular health problem, or reducing the likelihood of
worsening an existing cardiovascular health problem in a subject
who is exposed, or is at risk of exposure, to particulate air
pollution', and uses of Fruitflow(R) described in the patent
application include:
-- maintaining healthy platelet function in the presence of air pollution;
-- maintaining a healthy blood circulation and blood flow in the presence of air pollution;
-- reducing the risk of an adverse cardiovascular condition,
such as atherosclerosis or thrombosis, in the presence of
particulate matter air pollution;
-- reducing the severity of cardiovascular diseases when exposed to particulate matter; and
-- reducing the risk of cardiovascular and respiratory illness in an air polluted environment.
The World Health Organization ('WHO') estimates that in 2012
around 1 in 9 deaths were attributed to exposure to air pollution,
making it the largest environmental risk factor for ill health, and
with 72% of outdoor air pollution-related premature deaths being
due to ischaemic heart disease and strokes.
In 2016, 91% of the world's population lived in places where air
quality levels exceed WHO limits (source: World Health
Organization, Ambient (outdoor) air quality and health).
The patent filing means that DSM and the Company can use this
research to assist with discussions with current and potential
customers. The Company expects that this patent application will
have a significantly beneficial effect on the current and future
commercial prospects for Fruitflow worldwide.
Fruitflow(R) + Omega-3 dietary supplement product - direct
sales
In June 2016 the Company launched its Fruitflow(R) + Omega-3
dietary supplement product, which is available through the
Company's e-commerce website www.fruitflowplus.com, and from June
2017 it became available through Amazon.co.uk. The product also has
a Facebook page at www.facebook.com/FruitflowPlus.
Total revenues for Fruitflow(R) + Omega-3 grew by 149% year on
year to GBP73k, compared to GBP29k in its initial nine month launch
period from June 2016 to 31 March 2017 with further sales growth
seen since the year end.
Further UK and international sales channel opportunities for
Fruitflow(R) + Omega-3 are currently being progressed, and the
Company is actively seeking to launch the product online into wider
international markets to include North America.
Fruitflow(R) + Omega-3 dietary supplement product - launch in
Holland & Barrett
In June 2018 the Company confirmed that it had secured a retail
listing with Holland & Barrett for the Company's Fruitflow(R)+
Omega-3 dietary supplement product.
Holland & Barrett is Europe's largest health and wellbeing
retailer (source: www.hollandandbarrett.com/info/who-we-are ),
supplying its customers with a wide range of vitamins, minerals,
health supplements, specialist foods and natural beauty
products.
The product was launched in Holland & Barrett in August
2018, with a listing in more than 660 Holland & Barrett stores
across the UK and Ireland giving Fruitflow(R)+ Omega-3 widespread
consumer exposure.
Holland & Barrett's loyalty programme, Rewards for Life, has
over 10 million members in the UK and is free for customers to
join. Holland & Barrett has also recently introduced a
personalised Healthbox service, providing nutritionist recommended
vitamins and supplements to their customers along with health tips.
Holland & Barrett's Rewards for Life programme and their new
Healthbox service will facilitate more direct communications with
their customers, and both are expected to provide opportunities to
highlight the unique benefits of Fruitflow(R)+ Omega-3.
The product listing is being supported by a number of ongoing
staff training, consumer marketing and promotional initiatives, to
include Holland & Barrett's in house Healthy magazine and their
website www.hollandandbarrett.com.
The Company's Fruitflow(R)+ Omega-3 dietary supplement business
is complementary to its long-term Alliance Agreement with DSM and
it is supported by DSM, reflecting the continued strength of the
relationship between Provexis and DSM and the shared interest of
both companies in seeking to maximise the commercial returns that
can be achieved from Fruitflow(R). The Company's Fruitflow(R)+
Omega-3 dietary supplement business is expected to provide the
Company with an additional long term income and profit stream, and
all of the revenue and costs attributable to the listing with
Holland & Barrett will accrue to Provexis.
The Company had a substantial batch of Fruitflow(R)+ Omega-3
capsules manufactured in July 2018, and it developed some enhanced
product packaging which is better suited to a retail
environment.
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 in May 2017, and patents are being sought in Europe,
the US, China and ten other territories, with potential patent
protection out to December 2033.
The Company is progressing the 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,
with the involvement now of third party manufacturers and with some
interest already generated from brand owners. The product will 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 who
are less active and people who suffering from the symptoms of basic
ageing.
Further interest in the role of Fruitflow(R) in exercise was
generated by Team Sunweb Pro Cycling's use of Fruitflow(R) in the
2018 Tour de France, with further details available on the
Company's fruitflowplus.com website at
www.fruitflowplus.com/sportrecovery and
www.fruitflowplus.com/wp-content/uploads/2018/07/FF-athletes_summary-of-background-science-for-webpage_v2.pdf
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.
Results from the pilot study, conducted under the collaboration
in 2016, 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.
In September 2017 the encouraging results from the blood
pressure collaboration were published in the International Journal
of Food Sciences and Nutrition and the study is available to view
on the Company's website at:
www.provexis.org/wp-content/uploads/2017/09/IJFSN-Fruitflow-blood-pressure-study-Sep-17.pdf
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).
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 in 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.
The Company's British and international patent applications for
the use of Fruitflow(R) in mitigating exercise-induced
inflammation, and for promoting recovery from intense exercise,
were filed in December 2013. The patent was granted by the UK IPO
in May 2017 as indicated above. 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 patent applications for Fruitflow(R) as an antihypertensive
(blood pressure lowering) agent are progressing well, with a patent
granted by the European Patent Office in July 2018. The Company has
provided primary funding for the necessary patent filings on a
tightly managed budget, with the results from the blood pressure
collaboration with Oslo University and the related patents being
jointly owned by the Company and the University.
The Company's patent application which was announced in December
2017, relating to the use of Fruitflow(R) in protecting against the
adverse effects of air pollution on the body's cardiovascular
system, extends potential patent protection for Fruitflow(R) out to
2036.
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.
People
In January 2018 the Company announced with great sadness that
its then Non-executive Director Krijn Rietveld had died suddenly.
Krijn was a highly valued member of the Provexis Board and we are
immensely grateful for his many contributions to the business.
Krijn was a member of the Company's Audit Committee and a senior
employee of the Company's Alliance Partner for Fruitflow(R), DSM.
Krijn was appointed to the Board in September 2008 following DSM
Venturing BV's initial investment in the Company.
In July 2018 Frédéric Boned, who was then EMEA Vice President of
DSM's Human Nutrition & Health business, a part of DSM
Nutritional Products, was appointed as a Non-executive
Director.
Frédéric brings a wealth of sales and marketing knowledge and
expertise to the Company from a diverse working background.
Frédéric has held a variety of senior roles in DSM's Personal Care
& Aroma Ingredients business, prior to which he worked in sales
and marketing positions for over ten years at Givaudan.
The Company is delighted to welcome Frédéric to the Board, and
expects his proven sales and marketing knowledge and expertise to
help drive Provexis and its core Fruitflow(R) product forward.
Frédéric has recently been appointed North American Vice
President of DSM's Human Nutrition & Health business, a welcome
development for Provexis in this important market for
Fruitflow(R).
The Board would like to thank the Company's small team of sales,
marketing, e-commerce, PR and scientific consultants for their
professionalism, enthusiasm and dedication in driving the business
forward over the last year. The Company would also like to thank
its key professional advisers for their valuable help and
support.
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 a further GBP672k through a two stage placing
in May and August 2017, and on 27 September 2018 it announced it
had raised a further GBP395k from a placing of new ordinary shares
with new and existing investors at 0.40 pence per share.
The Company intends to hold its Annual General Meeting at the
offices of Allenby Capital Limited, 5th Floor, 5 St Helen's Place,
London EC3A 6AB at 10:30am on 25 October 2018.
Outlook
The Group has seen a strong start to the 2018/19 financial year,
with first quarter revenues, including further marketing support
received, ahead of first half revenues in 2017/18.
The Company is well placed to maximise the numerous commercial
opportunities which the Company has been pursuing for Fruitflow(R),
to include its collaboration with BY-HEALTH in the vast Chinese
market.
The Company would like to thank its investors for their
continued support, and it remains positive about the outlook for
Fruitflow(R) and the Provexis 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.
In June 2016 Provexis launched a high quality dietary supplement
product containing Fruitflow(R) and Omega-3 which is being sold
from a separate, dedicated website www.fruitflowplus.com on a mail
order basis, the product is also available to purchase from
Amazon.co.uk.
The Company's Fruitflow(R)+ Omega-3 dietary supplement business,
which is expected to provide the Company with an additional long
term income and profit stream, is complementary to its Alliance
Agreement with DSM and it is supported by DSM, reflecting the
continued strength of the long term relationship between Provexis
and DSM and the shared interest of both companies in seeking to
maximise the commercial returns that can be achieved from
Fruitflow(R).
The Company announced in June 2018 that it had secured a retail
listing with Holland & Barrett for Fruitflow(R)+ Omega-3, with
all of the revenue and costs attributable to this listing to accrue
to the Company. The Company is seeking to expand further its
commercial activities with Fruitflow(R)+ Omega-3, and it is seeking
to develop and sell further Fruitflow(R)+ combination products, to
include a Fruitflow(R) + nitrates product which would be supported
by the Company's strong patent position in this area.
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 GBP73k in the year to 31 March
2018, compared to 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, and in June 2018 it was announced that the
Company had secured a retail listing with Holland & Barrett for
Fruitflow(R)+ Omega-3, with all of the revenue and costs
attributable to this listing to accrue to the Company; further
sales channel opportunities for the product are currently being
explored.
The Group's total revenue for the year ended 31 March 2018 was
GBP236k, an increase of 4% relative to the prior year (2017:
GBP228k).
The increase in revenue accruing to the Company for the year
reflects:
- An increase in the net income received from the Company's
Alliance Agreement with DSM, which grew by 6% year on year to
GBP163k; this increase was aided by an improvement in underlying
trading margins, reflecting continuing efforts to reduce the
production costs of Fruitflow(R) in liquid and powder form as
production efficiencies increase;
- An increase in revenue from the Company's Fruitflow(R) +
Omega-3 product, which grew by 149% year on year to GBP73k in the
year to 31 March 2018, compared to GBP29k in its initial nine month
launch period from 29 June 2016 to 31 March 2017.
- Amounts in excess of GBP45k which were received in the year to
31 March 2017 for marketing support, compared to amounts of GBPNil
which were received in the year to 31 March 2018.
Underlying operating loss
Underlying operating loss has reduced by 1.7% to GBP362k (2017:
GBP368k), 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 are primarily composed of patent,
trade mark and other research agreement costs, with the Group
seeking to maintain and strengthen the breadth and duration of its
patent and trade mark coverage for Fruitflow(R). Research and
development costs have reduced by 2.8% to GBP182k (2017: GBP187k),
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.
R&D tax relief: payable tax credit
A current tax credit of GBP15k (2017: GBP14k), in respect of
research and development tax relief has been recognised in the
financial statements. The tax credit claim for the year ended 31
March 2016 totalling GBP13k was paid to the Group in April 2017,
and the tax credit claim for the year ended 31 March 2017 totalling
GBP14k was paid to the Group in April 2018.
Taxation
The current tax charge is GBPNil (2017: GBPNil) due to the loss
made in the year. No amounts in respect of deferred tax were
recognised in profit and loss from continuing operations or charged
/ credited to equity for the current or prior year.
Results and dividends
The loss attributable to equity holders of the parent for the
year ended 31 March 2018 was GBP448k (2017: GBP380k) and the basic
loss per share was 0.02p (2017: 0.02p). The directors are unable to
recommend the payment of a dividend (2017: 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 2018 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. Accordingly the
going concern basis has been used in preparing the financial
statements.
It remains the Directors' view on 27 September 2018 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 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.
On 27 September 2018 the Group announced it had raised proceeds
of GBP395,000 via the placing of 98,750,000 new ordinary shares of
0.1p each at a gross 0.40p per share with investors, with no
commissions payable. It is envisaged that the placing shares will
be admitted to AIM on 5 October 2018.
Key performance indicators
The principal financial KPIs monitored by the Board relate to
underlying operating loss and cash and cash equivalents.
The table below shows the Group's underlying operating loss,
calculated as operating profit before share based payment expense,
from continuing operations for the two years ended 31 March
2018:
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
Underlying operating loss 361,618 367,842
--------------------------- ----------- -----------
The trading results are further detailed in this strategic
report.
The table below shows the Group's cash position at 31 March 2018
and 31 March 2017:
31 March 31 March
2018 2017
GBP GBP
Cash and cash equivalents 315,166 12,349
--------------------------- --------- ---------
The monitoring of cash gives due consideration to anticipated
future spend required to prioritise development opportunities and
to plan the resources required to achieve the goals of the
business. The GBP302,817 increase in cash and cash equivalents
during the financial year is primarily the result of the cash
inflows arising during the year from financing activities, as
further detailed in the consolidated statement of cash flows.
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
2018 2017
Notes GBP GBP
---------------------------------------- ------ ---------- ----------
Revenue 1,3 235,804 227,618
Cost of goods (23,167) (9,533)
---------------------------------------- ------ ---------- ----------
Gross profit 212,637 218,085
Selling and distribution costs (23,878) (11,333)
Research and development costs 4 (181,922) (187,163)
Administrative costs (including share
based payment charges) (489,777) (446,010)
R&D tax relief: payable tax credit 8 15,015 14,445
Underlying operating loss (361,618) (367,842)
Share based payment charges 17 (106,307) (44,134)
---------------------------------------- ------ ---------- ----------
Loss from operations 4 (467,925) (411,976)
Finance income 7 497 890
Loss before taxation (467,428) (411,086)
Taxation 8 - -
Loss and total comprehensive expense
for the year (467,428) (411,086)
---------------------------------------- ------ ---------- ----------
Attributable to:
Owners of the parent (448,108) (380,087)
Non-controlling interest (19,320) (30,999)
Loss and total comprehensive expense
for the year (467,428) (411,086)
---------------------------------------- ------ ---------- ----------
Loss per share to owners of the parent
Basic - pence 9 (0.02) (0.02)
Diluted - pence 9 (0.02) (0.02)
---------------------------------------- ------ ---------- ----------
Consolidated statement of financial position
Company number 05102907 As at As at
31 March 31 March
2018 2017
Notes GBP GBP
----------------------------------- ------ ------------- -------------
Assets
Current assets
Inventories 12 10,521 32,450
Trade and other receivables 13 64,621 86,976
Corporation tax asset 8 28,335 26,425
Cash and cash equivalents 315,166 12,349
----------------------------------- ------ ------------- -------------
Total current assets 418,643 158,200
----------------------------------- ------ ------------- -------------
Total assets 418,643 158,200
----------------------------------- ------ ------------- -------------
Liabilities
Current liabilities
Trade and other payables 14 (89,383) (133,314)
Total current liabilities (89,383) (133,314)
----------------------------------- ------ ------------- -------------
Net current assets 329,260 24,886
Total liabilities (89,383) (133,314)
----------------------------------- ------ ------------- -------------
Total net assets 329,260 24,886
----------------------------------- ------ ------------- -------------
Capital and reserves attributable
to
owners of the parent company
Share capital 16 1,885,238 1,750,818
Share premium reserve 18 17,179,546 16,648,471
Warrant reserve 18 26,200 26,200
Merger reserve 18 6,599,174 6,599,174
Retained earnings 18 (24,903,790) (24,561,989)
----------------------------------- ------ ------------- -------------
786,368 462,674
Non-controlling interest 18 (457,108) (437,788)
----------------------------------- ------ ------------- -------------
Total equity 329,260 24,886
----------------------------------- ------ ------------- -------------
Consolidated statement of cash flows
Year Year
ended ended
31 March 31 March
2018 2017
Notes
------------------------------------------- ------ ---------- ----------
GBP GBP
------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Loss after tax (467,428) (411,086)
Adjustments for:
Profit on sale of fixed assets 4 - (3,000)
Finance income (497) (890)
Tax credit receivable 8 (15,015) (14,445)
Share-based payment charge 106,307 44,134
Changes in inventories 21,929 (32,450)
Changes in trade and other receivables 22,478 (37,540)
Changes in trade and other payables (43,931) 19,567
------------------------------------------- ------ ---------- ----------
Net cash flow from operations (376,157) (435,710)
------------------------------------------- ------ ---------- ----------
Tax credits received 13,105 5,408
Total cash flow from operating activities (363,052) (430,302)
------------------------------------------- ------ ---------- ----------
Cash flow from investing activities
Proceeds from sale of fixed assets - 3,000
Interest received 374 1,015
Total cash flow from investing activities 374 4,015
------------------------------------------- ------ ---------- ----------
Cash flow from financing activities
Proceeds from issue of share capital 16 665,495 249,000
Total cash flow from financing activities 665,495 249,000
------------------------------------------- ------ ---------- ----------
Net change in cash and cash equivalents 302,817 (177,287)
------------------------------------------- ------ ---------- ----------
Opening cash and cash equivalents 12,349 189,636
------------------------------------------- ------ ---------- ----------
Closing cash and cash equivalents 315,166 12,349
------------------------------------------- ------ ---------- ----------
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
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
--------------- ---------- ----------- -------- ---------- ------------- ------------- ---------------- ----------
Share-based
charges - - - - 106,307 106,307 - 106,307
Issue of
shares
- placing
16 May 2017 70,000 280,000 - - - 350,000 - 350,000
Issue of
shares
- placing
4 August 2017 64,420 251,075 - - - 315,495 - 315,495
Total
comprehensive
expense for
the
year - - - - (448,108) (448,108) (19,320) (467,428)
At 31 March
2018 1,885,238 17,179,546 26,200 6,599,174 (24,903,790) 786,368 (457,108) 329,260
--------------- ---------- ----------- -------- ---------- ------------- ------------- ---------------- ----------
Notes to the preliminary results for the year ended 31 March
2018
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 2 Blagrave Street, Reading,
Berkshire RG1 1AZ, 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 2018 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 2017 have been delivered to the
Registrar of Companies and those for 2018 will be delivered after
the forthcoming AGM. The auditors have reported on the accounts for
the year ended 31 March 2018; 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 2018 that comply with IFRS
in September 2018.
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 2018.
These accounting policies are consistent with those applied in
the year ended 31 March 2017, as amended to reflect any new
Standards, amendments to Standards and interpretations which are
mandatory for the year ended 31 March 2018.
The Group has adopted the appropriate new interpretations and
revised Standards effective for the year ended 31 March 2018, 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:
IFRS 15 'Revenue from Contracts with Customers' (effective 1
January 2018)
IFRS 9 'Financial Instruments' (effective 1 January 2018)
IFRIC Interpretation 22 'Foreign Currency Transactions and
Advance Consideration'
IFRS 16 'Leases' (effective 1 January 2019)
The Directors do not anticipate that the adoption of IFRS 9
'Financial Instruments', IFRS 15 'Revenue from Contracts with
Customers' and IFRIC Interpretation 22 'Foreign Currency and
Advance Consideration' will have a material impact on the Group's
financial statements, however further disclosure around the
potential impact of IFRS 15 has been provided.
IFRS 15 'Revenue from Contracts with Customers' will replace IAS
18 'Revenue' with effect from the accounting period beginning 1
April 2018 and Management has reviewed the impact of this standard
on the Group's financial statements.
Under IFRS 15, revenue will be recognised based on a five step
model which requires, for each contract with a customer, the
transaction price to be matched against the performance obligation
arising under the contract or in the case of more than one
performance obligation, apportioned over those obligations. The
transaction price will be the amount of consideration the Group
expects to be entitled to in exchange for transferring the
goods or service to the customer. Depending on the particular
contractual arrangements in place, application of the new standard
and consideration of the judgment around variable consideration
could change the amount of revenue recognised on a contract and/or
its timing.
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 GBP467,428 (2017:
GBP411,086) and expects to make a further loss during the year
ending 31 March 2019. The total cash outflow from continuing
operations in the year was GBP363,052 (2017: GBP430,302). At 31
March 2018 the Group had cash balances of GBP315,166 (2017:
GBP12,349).
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.
On 27 September 2018 the Group announced it had raised proceeds
of GBP395,000 via the placing of 98,750,000 new ordinary shares of
0.1p each at a gross 0.40p per share with investors, with no
commissions payable. It is envisaged that the placing shares will
be admitted to AIM on 5 October 2018.
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.
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 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.
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 profit and loss 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 profit and loss, 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, representing finished goods, are stated at the
lower of cost and net realisable value.
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.
When research and development tax credits are claimed they are
recognised on an accruals basis and are included as other
income.
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.
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 profit and loss.
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 profit and loss 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.
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,
profit and loss 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 a
Binomial / Black-Scholes convergence 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.
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 GBP89,383 (2017: GBP133,314) 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 exclusively 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 Group's operating segments are 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 performance of operating segments
is assessed on operating profit before share based payment expenses
('underlying operating loss').
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.
Revenue is reported separately to the CODM and all other reports
are prepared as a single business unit.
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
------------------------ ----------- -----------
DSM Alliance Agreement 162,486 152,957
Fruitflow + Omega 3 73,318 29,391
Other income - 45,270
235,804 227,618
------------------------ ----------- -----------
4. Loss from continuing operations
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
-------------------------------------------- ----------- -----------
Loss from continuing operations is stated
after charging:
Research and development costs 181,922 187,163
Foreign exchange gains 1,460 377
Profit on disposal of fixed assets - plant
and equipment - 3,000
Equity-settled share based payment expense 106,307 44,134
The total fees of the Group's auditor, for services provided are
analysed below:
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
--------------------------- ----------- -----------
Audit services
Parent company 10,500 10,500
Subsidiaries 8,750 8,750
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 26,250
--------------------------- ----------- -----------
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
2018 2017
-------------------------------------- ----------- -----------
Research and development consultants 1 1
Directors 3 3
-------------------------------------- ----------- -----------
4 4
-------------------------------------- ----------- -----------
Their aggregate emoluments were:
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
------------------------------------------ ----------- -----------
Fees 241,014 220,008
Share-based payment remuneration charge:
equity settled 106,307 44,134
------------------------------------------ ----------- -----------
Total emoluments 347,321 264,142
------------------------------------------ ----------- -----------
6. Directors' remuneration
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
------------------------------------------ ----------- -----------
Directors
Aggregate emoluments 182,010 172,008
Company pension contributions - -
------------------------------------------ ----------- -----------
182,010 172,008
Share based payment remuneration charge: 9,646 -
equity settled
Total Directors' emoluments 191,656 172,008
------------------------------------------ ----------- -----------
Emoluments disclosed above include the following amounts in
respect of the highest paid director:
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
------------------------------------------------- ----------- -----------
Aggregate emoluments 106,002 96,000
Share based payment remuneration charge: 4,823 -
equity settled
------------------------------------------------- ----------- -----------
Total of the highest paid director's emoluments 110,825 96,000
------------------------------------------------- ----------- -----------
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
2018 2017
GBP GBP
-------------------------- ----------- -----------
Finance income
Bank interest receivable 497 890
-------------------------- ----------- -----------
497 890
-------------------------- ----------- -----------
8. R&D tax relief: payable tax credit and taxation
Year ended Year ended
31 March 31 March
2018 2017
GBP GBP
---------------------------------------------- ----------- -----------
R&D tax relief: payable tax credit
Research and development credit - current
year 14,710 13,320
Research and development credit - in respect
of prior periods 305 1,125
---------------------------------------------- ----------- -----------
Taxation credit 15,015 14,445
---------------------------------------------- ----------- -----------
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
2018 2017
GBP GBP
--------------------------------------------- ----------- -----------
Loss before tax (467,428) (411,086)
--------------------------------------------- ----------- -----------
Loss before tax multiplied by the
standard rate of corporation tax in the UK
of 19% (2017: 20%) 88,811 82,217
Effects of:
Expenses not deductible for tax purposes (20,198) (8,827)
Unutilised tax losses and other deductions
arising in the year (71,129) (79,365)
Adjustment for R&D tax relief 2,516 5,975
Total taxation charge for the year - -
--------------------------------------------- ----------- -----------
At 31 March 2018 the Group UK tax losses to be carried forward
are estimated to be GBP19,245,000 (2017: GBP18,893,000).
R&D tax relief: payable tax credit receivable 31 March 31 March
within one year 2018 2017
GBP GBP
------------------------------------------------ --------- ---------
R&D tax relief: payable tax credit recoverable 28,335 26,425
28,335 26,425
------------------------------------------------ --------- ---------
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
2018 2017
Loss and total comprehensive expense
for the year attributable to owners of the
parent - GBP 448,108 380,087
Weighted average number of shares 1,854,178,119 1,712,581,870
Basic and diluted loss per share - pence 0.02 0.02
--------------------------------------------- -------------- --------------
On 27 September 2018 the Group announced it had raised proceeds
of GBP395,000 via the placing of 98,750,000 new ordinary shares of
0.1p each at a gross 0.40p per share with investors, with no
commissions payable. It is envisaged that the placing shares will
be admitted to AIM on 5 October 2018. The new shares issued would
change the weighted average number of shares in issue as shown
above for the year ended 31 March 2018, 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 2017 7,265,277 158,166 7,423,443
At 31 March 2018 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Amortisation and Impairment
At 1 April 2017 7,265,277 158,166 7,423,443
At 31 March 2018 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Net book value
At 31 March 2018 - - -
----------------------------- ---------- ------------ ----------
At 31 March 2017 - - -
----------------------------- ---------- ------------ ----------
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 - - -
----------------------------- ---------- ------------ ----------
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 2017 - -
At 31 March 2018 - -
----------------- ----------- ------
Depreciation
At 1 April 2017 - -
At 31 March 2018 - -
----------------- ----------- ------
Net book value
At 31 March 2018 - -
----------------- ----------- ------
At 31 March 2017 - -
----------------- ----------- ------
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 - -
-------------------- ----------- ---------
12. Inventories
31 March 31 March
2018 2017
GBP GBP
---------------- --------- ---------
Finished goods 10,521 32,450
10,521 32,450
---------------- --------- ---------
There are no provisions included within inventories in relation
to the impairment of inventories (2017: GBPNil).
During the year inventories of GBP23,166 (2017: GBP9,533) were
recognised as an expense within cost of goods.
13. Trade and other receivables
31 March 31 March
2018 2017
GBP GBP
----------------------------------------------- --------- ---------
Amounts receivable within one year:
Trade receivables 1,314 1,251
Other receivables 11,700 16,287
----------------------------------------------- --------- ---------
Total financial assets other than cash
and cash equivalents classified as loans and
receivables 13,014 17,538
Prepayments and accrued income 51,607 69,438
----------------------------------------------- --------- ---------
Total trade and other receivables 64,621 86,976
----------------------------------------------- --------- ---------
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
2018 2017
GBP GBP
-------------------------------------------------- -------- --------
Trade payables 29,329 67,932
Accruals 54,829 60,157
-------------------------------------------------- -------- --------
Total financial liabilities measured at amortised
cost 84,158 128,089
Other taxes and social security 5,225 5,225
Total trade and other payables 89,383 133,314
-------------------------------------------------- -------- --------
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% (2017: 17%).
No amounts in respect of deferred tax were recognised in profit
and loss from continuing operations or charged / credited to equity
for the current or prior year.
Deferred tax assets amounting to GBP3,271,678 (2017:
GBP3,211,838) have not been recognised on the basis that their
future economic benefit is not certain. Assuming a prevailing tax
rate of 17% (2017: 17%) when the timing differences reverse, the
unrecognised deferred tax asset comprises:
31 March 31 March
2018 2017
GBP GBP
---------------------------------------------- ---------- ----------
Depreciation in excess of capital allowances 1,334 1,334
Unutilised tax losses 3,270,344 3,210,504
3,271,678 3,211,838
---------------------------------------------- ---------- ----------
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 of Exercise Number Share price Expected Risk free Expected Fair value
grant price of warrants at grant volatility rate life per share
pence date years under warrant
pence 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 2017 1,750,818 1,750,818,174
Issue of shares - placing 16 May 2017 70,000 70,000,000
Issue of shares - placing 4 August 2017 64,420 64,420,000
At 31 March 2018 1,885,238 1,885,238,174
----------------------------------------- ------------- --------------
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.
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
--------------------------------------------- ------------- --------------
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.
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.
On 29 December 2017 the Company granted a total of 27,500,000
new share options to certain directors and scientific, sales and
marketing consultants to the Company. The options have an exercise
price of 0.55 pence, being the closing mid-market price on 28
December 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 option holders with
those of shareholders.
On 26 August 2018 41,117,620 options which had been issued in
August 2008 lapsed.
Following the issue of the new options in July and December
2017, and the lapse of the options which expired in August 2018,
the total number of Ordinary Shares under option which could be
issued if all of the performance criteria are met is 138,000,000
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
Binomial / Black-Scholes convergence model. Where options have been
approved but not formally granted and option holders 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 2018 the number of ordinary shares subject to
options granted over the 2005 and prior option schemes were:
EMI options
31 March 2018 31 March 2017
------------------------ -------------------------------------- ---------- --------------------------
Weighted Weighted Number Weighted Weighted Number
average average average average
exercise share price exercise share
price at date price price
(pence) of exercise (pence) at date
(pence) of exercise
(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 (2017: 0.59p and 1.85p) and
their weighted average contractual life was 2.3 years (2017: 3.3
years).
Of the total number of EMI options outstanding at the end of the
year, 56,078,090 (2017: 56,078,090) had vested and were exercisable
at the end of the year. Their weighted average exercise price was
0.77 pence (2017: 0.77 pence).
Unapproved options
31 March 2018 31 March 2017
Weighted Number Weighted Number
average average
exercise exercise
price price
(pence) (pence)
------------------------------ ---------- ------------ ---------- -----------
Outstanding at the beginning
of the year 1.12 82,539,530 1.19 62,539,530
Granted during the year 0.54 40,500,000 0.92 20,000,000
Outstanding at the end of
the year 0.93 123,039,530 1.12 82,539,530
------------------------------ ---------- ------------ ---------- -----------
The exercise price of unapproved options outstanding at the end
of the year ranged between 0.49p and 1.85p (2017: 0.49p and 1.85p)
and their weighted average contractual life was 6.7 years (2017:
6.3 years).
Of the total number of unapproved options outstanding at the end
of the year, 60,039,530 (2017: 50,039,530) had vested and were
exercisable at the end of the year. Their weighted average exercise
price was 1.22 pence (2017: 1.32 pence).
Grant of options
The fair values of the options have been estimated at the date
of grant using a Binomial / Black-Scholes convergence model, using
the following assumptions:
Date of Exercise Number Share price Expected Risk free Expected Fair value
grant price of options at grant volatility rate life per share
date under option
pence
pence pence years
---------- -------- ----------- ----------- ----------- --------- -------- -------------
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
31-Jul-17 0.52 13,000,000 0.52 90% 0.55% 10 0.414
29-Dec-17 0.55 27,500,000 0.55 91% 0.73% 10 0.431
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 GBP106,307 (2017: GBP44,134)
all of which related to equity settled share-based payment
transactions.
18. Reserves
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 reserve The warrant reserve represents warrants 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 earnings Cumulative net gains and losses recognised 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 2018 amounted to GBPNil (2017:
GBPNil). Pension contributions payable but not yet paid at 31 March
2018 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 (2017:
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, F Boned is a
director of the Company, and a senior employee of DSM.
Revenue recognised by the Group under agreements with DSM
amounted to GBP162,486 (2017: GBP198,228). At 31 March 2018 the
Group was owed GBPNil (2017: GBPNil) by DSM.
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 2018 the Company's Chairman Dawson Buck was owed GBPNil, and
the Company's Finance Director Ian Ford was owed GBP261. The
Company settled its liability to Ian Ford in May 2018.
21. Events after the reporting period
On 27 September 2018 the Group announced it had raised proceeds
of GBP395,000 via the placing of 98,750,000 new ordinary shares of
0.1p each at a gross 0.40p per share with investors, with no
commissions payable. It is envisaged that the placing shares will
be admitted to AIM on 5 October 2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR XQLLLVKFEBBX
(END) Dow Jones Newswires
September 27, 2018 02:10 ET (06:10 GMT)
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