Interim Results
Provexis PLC
23 November 2005
Provexis plc
('Provexis' or 'the Group')
Interim Results for the half year ended 30 September 2005
Provexis plc, the nutraceutical company that develops scientifically-proven
functional and medical foods, today announces its interim results for the six
months ended 30 September 2005.
Key Highlights
• Successful integration of the businesses following the reverse takeover
of Nutrinnovator Holdings plc by Provexis
• Costs of maintaining business (£821,000) in-line with Directors'
expectations, before one-off share option and re-organisation costs
(£575,000)
• Disposal of the Altu food-bar business completed 4 October 2005 in-line
with strategy; results include non-recurring losses of £173,000
• SircoTM product approved by HEART UK in run-up to launch in January
2006
• On-going licensing talks with regard to the FruitflowTM technology
remain positive
• Collaboration agreement signed with global clinical nutrition company
for the development and marketing of a medical food for the dietary
management of Crohn's disease
Commenting on the results Stephen Franklin, CEO of Provexis, said:
'The Group has made considerable progress in the last six months following the
successful reverse takeover of Nutrinnovator and integration of the two
businesses. The enlarged group is firmly focussed on the core business of
developing scientifically-proven functional foods that provide health benefits
associated with major areas of consumer concern, including cardiovascular
disease and cancer.
We have secured approval from the heart health charity, HEART UK, for our
SircoTM product which remains on track for a UK launch in January 2006. Good
progress is also being made in discussions to license our unique FruitflowTM
technology and we have secured a collaboration agreement with a global nutrition
company for our Crohn's disease technology.
The Group is well positioned to maximise the opportunities offered by the
functional food market. We have the product pipeline, technology and marketing
capability to fully commercialise patented food-based technologies via a
combination of new brands and licensing activity.'
For further information, please contact:-
Provexis plc Tel: 020 8392 6631
Stephen Franklin, Chief Executive Officer Mob: 07710 348774
Arbuthnot Securities Limited Tel: 020 7012 2000
Tom Griffiths
Bell Pottinger Corporate and Financial Tel: 020 7861 3932
Ann-Marie Wilkinson/ Victoria Geoghegan
Chairman's statement
The Group has achieved considerable progress in the six months to 30 September
2005. We completed the reverse takeover of Nutrinnovator Holdings plc by
Provexis Limited and this has been followed by a successful integration of the
businesses. The new Provexis plc combines excellent scientific, marketing and
sales talent thereby enabling us to rapidly develop and commercialise new
functional food technologies via a combination of licensing and new brands.
The Group has completed the development of its first functional food product,
the fruit juice SircoTM, containing the patented FruitflowTM technology, and we
are now fully prepared for the launch of SircoTM in the UK in January 2006.
SircoTM is the culmination of seven years of research and development and the
Directors believe it is one of the most significant developments in the
functional food industry. Existing heart-health products focus on cholesterol
management with benefits that are only derived after long-term consumption
patterns. The SircoTM product is unique in that its health benefit is associated
with 'blood thinning' and it is effective from the first drink. SircoTM has been
designed to help consumers reduce the risk of thrombosis which can in-turn cause
heart attack and stroke.
Cardiovascular disease and cancer, together, kill the significant majority of
people in the western world and to have two functional food developments with
associated benefits in both of these areas is extremely exciting for the
business. With regard to the latter, Provexis continues to work closely with
Plant Bioscience Limited (PBL), the intellectual property management arm of The
Institute of Food Research in Norwich, to develop a functional food product
containing a glucosinolate-enriched broccoli extract. We believe this
development programme will yield a new generation of food-based products with
benefits associated with reducing the risks of specific cancers. This new
product goes into human trials next year with a view to launching a new product
in early 2007.
In conjunction with the University of Liverpool and Professor Jon Rhodes, the
Company continues to develop a medical food, based on a patented extract from
the plantain banana, for the dietary management of Crohn's disease, a condition
for which there is currently no cure. During the reporting period we entered
into a collaboration with a global clinical nutrition company. This gives the
business further options with regard to route to market. In addition, as
announced on 7 November 2005, Provexis was awarded a research grant of £180,000
from the North West Development Agency for the Crohn's disease technology.
The functional food sector continues to grow strongly in all major markets
worldwide and I believe that Provexis, with its evidence-based approach, is
uniquely positioned to be a significant source of innovation for the industry.
With the depth of the science-based functional food pipeline, the forthcoming
launch of SircoTM in the UK, and the licensing interest in the FruitflowTM
technology, we look forward to making yet further progress during the second
half of the year.
Dawson Buck
Chairman
Management review
The enlarged business has a management team which combines experienced marketing
and sales talent with strong scientific credentials and capability. This mix of
talent is core to our competitive advantage in a market where few companies are
able to both develop, and successfully market, scientifically-proven functional
foods.
SircoTM heart health juice
The Group has successfully developed and is preparing to launch SircoTM, the
first heart health drink to contain the patented FruitflowTM technology.
FruitflowTM was developed by Provexis in order to help regular 'healthy'
consumers reduce the risk of heart attack and stroke. The natural bioactive
works by reducing blood platelet aggregation, a significant contributing factor
to a thrombosis (internal blood clot). SircoTM, which will initially be
available in two flavours, will be launched in the UK in January 2006.
Confirmation of the specific retailers for the launch date, and the number of
initial distribution points, have still to be confirmed. We expect to be in a
position prior to Christmas to confirm the number of distribution points at
launch.
The product will carry the claim 'Helps to Maintain a Healthy Heart and Benefits
Circulation' and this is supported by 5 years of human trials carried out by
Provexis. The science supporting the claim has been approved by independent
scientists at HEART UK.
Licensing of FruitflowTM technology
The FruitflowTM intellectual property rights are broad and well protected, and
the core patent has now been granted in the United States, Europe and Australia,
with forthcoming grants anticipated in Japan, Canada and Mexico. The recent
grant in the United States was an important development for our licensing
ambitions, and gives us access to the principal market for heart-healthy foods.
Licensing discussions have been initiated with all the major food and beverage
corporations and it is through this route that the technology will be
globalised.
Altu food bar
On 4 October 2005 we completed the disposal of the Altu food-bar business in
order to focus on the core business of developing and commercialising functional
foods.
New product development
The Group entered into a collaboration agreement with a global clinical
nutrition company in order to facilitate the development of a novel medical
food, based on a patented extract from plantain, for the dietary management of
Crohn's disease and has secured significant government funding to expand the
scope of the clinical trial which commences next year. Crohn's disease is a
chronic, relapsing disease of the intestine which affects 1 in a 1000 people in
the UK. Management of the condition is currently restricted to various drug
regimes and surgery.
We continue to work closely with the technology transfer organisation of The
Institute of Food Research to develop a functional beverage containing a natural
bioactive ingredient associated with a reduced risk of developing certain types
of cancer. This enters human trials next year at the Rowett Research Institute
and, subject to success, is anticipated to be ready for launch in the UK
in early 2007.
The Group is one year into a three year technology acquisition agreement with
Plant Bioscience Limited who continue to access their global network of 35
research institutes to find further functional food opportunities.
Financial performance
Costs of maintaining the business in the period of £821,000 were in line with
Directors' expectation. Also recognised in the period were £455,000 of one-off
share option costs, which are not a cash item, and £120,000 of one-off
re-organisation costs, relating to personnel changes effected in integrating the
two businesses.
Losses relating to the Altu food-bar business, which was disposed of shortly
after the period end, have been presented separately in the profit and loss
account as a discontinued operation. These losses, which are non-recurring,
total £173,000 for the period and include an exceptional provision of £34,000
for disposal costs.
The group balance sheet at the period-end reflects the successful completion on
23 June 2005 of the proposals in connection with the acquisition of Provexis
Limited and the associated capital re-organisation, debt conversion and placing
which were effected with the Company's re-admission to AIM on that date.
Under these proposals each existing Ordinary share of 2 pence in the Company was
sub-divided into two new Ordinary shares of 1 pence each. The whole of the
issued share capital of Provexis Limited was acquired for a consideration of
£6,253,000 new Ordinary shares at 5.6 pence per share, and goodwill on
acquisition recognised of £7,265,000. Existing and new loans for a total of
£2,090,000 were converted into new equity, and £3,776,000 before expenses was
raised via a placing, both at 5.6 pence per share.
Resulting net funds at the period-end were £3,798,000 compared to £705,000 at
the start of the period.
Outlook
The next 12 months will be a defining period for the business. Retail success of
SircoTM in the UK and securing the first license to the FruitflowTM technology
remain critical milestones for the success of the business. However, the
technology pipeline following FruitflowTM is strong, and with the marketing
capability and licensing opportunities available, we believe that the company is
well positioned to take advantage of the increasing global demand for functional
foods.
Stephen Franklin
Chief Executive Officer
Consolidated profit and loss account
for the six months ended 30 September 2005
Six months
Note ended
30 September
2005
(unaudited)
Continuing Discontinued Total
£ £ £
Turnover - 127,688 127,688
Cost of Sales - (100,091) (100,091)
--------- ---------- -----------
Gross Profit - 27,596 27,596
Distribution
Costs - (14,299) (14,299)
Administrative Expenses
Share option costs (455,446) - (455,446)
Re-organisation costs (119,850) - (119,850)
Other administrative expenses (821,085) (152,545) (973,630)
(1,396,381) (152,545) (1,548,926)
--------- ---------- -----------
Operating Loss (1,396,381) (139,248) (1,535,629)
Interest receivable 52,020 - 52,020
Interest payable and similar charges (6,500) - (6,500)
--------- ---------- -----------
Loss on ordinary activities before
and after taxation 3 (1,350,861) (139,248) (1,490,109)
Exceptional items
Provision for loss on disposal 1 - (33,676) (33,676)
--------- ---------- -----------
Loss transferred from reserves (1,350,861) (172,924) (1,523,785)
--------- ---------- -----------
Loss per ordinary share
Basic and diluted, p 5 (0.9) (0.1) (1.0)
Discontinued activities relate to the Altu food-bar business (see Note 1)
All recognised gains and losses in the current and prior periods are included
in the profit and loss account.
Consolidated profit and loss account
for the six months ended 30 September 2005
Note Six months
ended
30 September
2004
(unaudited)
Continuing Discontinued Total
£ £ £
Turnover - 138,143 138,143
Cost of Sales - (96,013) (96,013)
--------- ---------- -----------
Gross
Profit - 42,130 42,130
Distribution
Costs - (14,819) (14,819)
Administrative Expenses
Share option costs (487,358) - (487,358)
Re-organisation costs - - -
Other administrative
expenses (316,004) (554,114) (870,118)
(803,362) (554,114) (1,357,476)
--------- ---------- -----------
Operating Loss (803,362) (526,803) (1,330,165)
Interest receivable 14,195 - 14,195
Interest payable and similar
charges (6,680) - (6,680)
--------- ---------- -----------
Loss on ordinary activities
before and after taxation 3 (795,847) (526,803) (1,322,650)
Exceptional items
Provision for loss on disposal 1 - - -
--------- ---------- -----------
Loss transferred
from reserves (795,847) (526,803) (1,322,650)
--------- ---------- -----------
Loss per ordinary share
Basic and diluted, p 5 (2.6) (1.7) (4.3)
Discontinued activities relate to the Altu food-bar business (see Note 1)
All recognised gains and losses in the current and prior periods are included
in the profit and loss account.
Consolidated profit and loss account
for the six months ended 30 September 2005
Note Year ended
31 March
2005
(unaudited) (unaudited) (audited)
Continuing Discontinued Total
£ £ £
Turnover 310,000 298,667 608,667
Cost of Sales (246,709) (222,985) (469,694)
--------- ---------- ---------
Gross Profit 63,291 75,682 138,973
Distribution Costs - (30,821) (30,821)
Administrative Expenses
Share option costs (505,636) - (505,636)
Re-organisation costs - - -
Other administrative expenses (664,370) (776,788) (1,441,158)
(1,170,006) (776,788) (1,946,794)
--------- ---------- ---------
Operating Loss (1,106,715) (731,927) (1,838,642)
Interest receivable 34,286 - 34,286
Interest payable and
similar charges (19,738) - (19,738)
--------- ---------- ---------
Loss on ordinary activities
before and after taxation 3 (1,092,167) (731,927) (1,824,094)
Exceptional items
Provision for loss on disposal 1 - - -
--------- ---------- ---------
Loss transferred from reserves (1,092,167) (731,927) (1,824,094)
--------- ---------- ---------
Loss per ordinary share
Basic and diluted, p 5 (3.4) (2.3) (5.7)
Discontinued activities relate to the Altu food-bar business (see Note 1)
All recognised gains and losses in the current and prior periods are included
in the profit and loss account.
Consolidated balance sheet as at
30 September 2005
Note As at As at As at
30 30 31
September September March
2005 2004 2005
(unaudited) (unaudited) (audited)
£ £ £
Fixed Assets
Intangible assets 2 7,144,189 - -
Tangible assets 9,399 15,544 11,455
----------- ----------- ---------
7,153,588 15,544 11,455
Current Assets
Stocks 55,634 108,745 47,243
Debtors 300,958 138,878 288,984
Cash at bank and
in hand 10 3,797,636 1,566,538 1,105,689
----------- ----------- ---------
4,154,228 1,814,161 1,441,916
Creditors: amounts falling
due within one year
Convertible debt - - (400,000)
Other (578,939) (441,652) (543,549)
----------- ----------- ---------
(578,939) (441,652) (943,549)
Net current assets 3,575,289 1,372,509 498,367
----------- ----------- ---------
Total assets less current
liabilities 10,728,877 1,388,053 509,822
Creditors: amounts falling
due after more than one
year
Convertible debt - (400,000) -
----------- ----------- ---------
Net assets 10,728,877 988,053 509,822
----------- ----------- ---------
Capital and reserves
Called up share capital 6 2,496,284 332,184 332,184
Share premium account 7 10,444,355 1,335,192 1,335,192
Merger reserve 7 1,137,616 1,137,616 1,137,616
Share option reserve 7 890,480 397,690 420,903
Profit and loss account 7 (4,239,858) (2,214,629) (2,716,073)
----------- ----------- ---------
Shareholders'funds 10,728,877 988,053 509,822
----------- ----------- ---------
Consolidated cash flow statement
for the six months ended 30 September 2005
Six months Six months
Note ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
(unaudited) (unaudited) (audited)
£ £ £
Net cash outflow
from operating activities 8 (1,010,298) (779,265) (1,247,519)
Returns on investments and
servicing of finance
Interest received 58,083 584 25,566
Interest paid on
convertible loan notes (6,500) - (16,900)
Interest element of finance
lease rental payments ----------- ---------- ---------
- (180) (238)
----------- ---------- ---------
51,583 404 8,428
Capital expenditure
Purchase of tangible
fixed assets (2,977) (2,283) (2,282)
----------- ---------- ---------
(2,977) (2,283) (2,282)
Acquisitions and disposals
Purchase of Provexis
Limited 724,211 - -
----------- ---------- ---------
Cash outflow before
financing (237,481) (781,144) (1,241,373)
Financing
Issue of ordinary
share capital 3,775,744 2,020,764 2,025,080
Exercise of share options - - 1,884
Costs of share issues (845,694) (258,871) (265,071)
Capital element of
finance lease rental
payments (622) (1,149) (1,769)
Issue of convertible
loan notes - 400,000 400,000
----------- ---------- ---------
Cash inflow from financing 2,929,428 2,160,744 2,160,124
----------- ---------- ---------
Increase in cash in
the period 9 2,691,947 1,379,600 918,751
----------- ---------- ---------
Notes to the consolidated accounts
for the six months ended 30 September 2005
1. Financial information
The interim financial information for the six months ended 30 September 2005 and
the six months ended 30 September 2004 are unaudited and do not constitute
statutory accounts within the meaning of section 240 of the Companies Act. This
information has been drawn up using accounting policies and principles
consistent with those applied in the preparation of the audited accounts of
Provexis plc for the year ended 31 March 2005 and the new accounting policy for
goodwill arising on acquisition.
The comparative information in the report for the year ended 31 March 2005
constitutes the statutory accounts for that financial period. Those accounts
have been reported on by the Company's auditors and delivered to the Registrar
of Companies. The report of the auditors was unqualified.
Discontinued activities for all periods relate to the Altu food-bar business,
the disposal of which was completed on 4 October 2005 for gross consideration of
£75,000. An exceptional charge has been recognised in the six months ended 30
September 2005 to provide for costs relating to this disposal and to write down
the carrying value of the relevant assets to realisable value.
Copies of this interim financial information are being sent to shareholders.
These interim results are also available on the internet at www.provexis.com
2. Goodwill arising on acquisition
The consolidated financial statements include the accounts of Provexis plc and
its subsidiary undertakings.
On 23 June 2005 the Company acquired the entire issued share capital of Provexis
Limited, a private nutraceutical company. Provexis Limited has been consolidated
using the acquisition method and its results are incorporated from that date.
The difference between the cost of acquisition and the fair value of the
separable net assets acquired, 'goodwill', is amortised over 15 years as, in the
opinion of the directors, this represents the period over which the goodwill is
effective.
3. Taxation
Based upon the results of the Group, there is no tax charge / (credit) for the
period.
4. Dividend
No interim dividend is proposed.
5. Loss per ordinary share
The calculation of basic loss per ordinary share is based upon the losses after
taxation for the period for continuing operations of £1,350,861; for
discontinued operations of £172,924; and in total of £1,523,785 (2004 : losses
for continuing operations £795,847; for discontinued operations £526,803; and in
total of £1,322,650 ; year ended 31 March 2005 : losses for continuing
operations £1,092,167; for discontinued operations £731,927; and in total of
£1,824,094) and the weighted average number of ordinary shares, as adjusted for
the 2 for 1 share split effected 23 June 2005, in issue during the period of
151,475,184 (2004 : 30,681,903 ; year ended 31 March 2005 : 32,064,060). There
are no potentially dilutive shares in issue.
6. Share capital
As at As at As at
30 30
September September 31 March
2005 2004 2005
(unaudited) (unaudited) (audited)
Ordinary Ordinary Ordinary
shares shares of shares of
2p each 2p each
Number £ Number £ Number £
In issue at
start of
period 16,609,194 332,184 13,279,150 265,583 13,279,150 265,583
Share split 2
for 1:
Issue of new
shares of 1p
each 16,609,194 - - - - -
Issued for
acquisition of
Provexis
Limited 111,658,555 1,116,586 - - - -
Issued for
loan
conversions 37,327,381 373,274 - - - -
Issued via
placing 67,424,000 674,240 3,235,849 64,717 3,235,849 64,717
Exercise of
share options - - 94,195 1,884 94,195 1,884
--------- --------- -------- --------- -------- --------
In issue at end
of period 249,628,324 2,496,284 16,609,194 332,184 16,609,194 332,184
--------- --------- -------- --------- -------- --------
On 23 June 2005 the following changes to the Company's share capital occurred:
- a capital re-organisation was effected so that each existing 2p Ordinary
share was split into two new 1p Ordinary shares.
- 111,658,555 new Ordinary shares of 1p each were issued at 5.6p per share as
consideration for the acquisition of the entire issued share capital of
Provexis Limited.
- 37,327,381 new Ordinary shares of 1p each were issued at 5.6p per share in
satisfaction of outstanding loans in the Company and Provexis Limited
- 67,424,000 new Ordinary shares of 1p each were issued at 5.6p per share for
cash consideration under the placing effected with the Company's
re-admission to AIM.
7. Reserves
Share Merger Share Profit
premium Reserve option and loss
account reserve account
£ £ £ £
At 1 April 2005 1,335,192 1,137,616 420,903 (2,716,073)
Premium on share issue 9,954,857 - - -
Share issue costs (845,694) - - -
Loss for the period - - - (1,523,785)
Share options granted - - 469,577 -
--------- -------- -------- ---------
At 30 September 2005 10,444,355 1,137,616 890,480 (4,239,858)
--------- -------- -------- ---------
8. Reconciliation of operating loss to net cash outflow from operating
activities
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2005 2004 2005
(unaudited) (unaudited) (audited)
£ £ £
Operating loss (1,535,629) (1,330,165) (1,838,642)
Depreciation and
amortisation 131,530 3,967 8,057
UITF 17 charge 469,577 441,020 464,233
(Increase)/ decrease in
stocks (8,391) (46,854) 14,648
Decrease/ (increase) in
debtors 48,847 (68,043) (223,040)
(Decrease)/ increase in
creditors (116,233) 220,810 327,225
Net cash outflow from ---------- ---------- -----------
operating activities (1,010,298) (779,265) (1,247,519)
---------- ---------- -----------
9. Reconciliation of net cash flow to movement in net funds
Six months Six months
ended ended Year ended
30 30 31
September September March
2005 2004 2005
(unaudited) (unaudited) (audited)
£ £ £
Increase in cash in the
period 2,691,947 1,379,600 918,751
Cash outflow/ (inflow) from
increase in debt and
lease financing 400,622 (398,851) (398,231)
--------- --------- ---------
Change in net funds
resulting from cash flows 3,092,569 980,749 520,520
Opening net funds 705,067 184,547 184,547
--------- --------- ---------
Closing net funds 3,797,636 1,165,296 705,067
--------- --------- ---------
10. Analysis of net funds
At Cash Other At
1 April 2005 flow non-cash 30 September
changes 2005
£ £ £ £
Cash at bank and in
hand 1,105,689 2,691,947 - 3,797,636
--------
2,691,947
Obligations under finance
leases (622) 622 - -
Convertible loan
notes (400,000) - 400,000 -
--------- -------- --------- ----------
Total 705,067 2,692,569 400,000 3,797,636
--------- -------- --------- ----------
Further to the completion of the Company's acquisition of Provexis Limited,
the loan notes were converted into new equity in the Company on 23 June
2005 at the placing price of 5.6 pence per new Ordinary share.
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