Preliminary Results

RNS Number : 7014P
Provexis PLC
21 August 2014
 



21 August 2014                                                        

Provexis plc

("Provexis" or the "Company")

 

PRELIMINARY RESULTS for the YEAR ended 31 MARCH 2014

 

Provexis plc ("Provexis" or the "Company"), the business that develops and licenses the proprietary, scientifically-proven Fruitflow® heart-health functional food ingredient, announces its audited preliminary results for the year ended 31 March 2014.

 

 

Key highlights

 

·      Demerger of Science in Sport, delivering an initial 25% return on Provexis' original investment, with shareholders receiving underlying one SiS share for each Provexis share

 

·      Restructuring of Company resulting in a low overhead licensing business model

 

·      Over 27 regional consumer healthcare brands containing Fruitflow® have now been launched by DSM customers

 

·      An increasing number of further commercial projects have been initiated by the Company's Alliance partner DSM with prospective customers, with good prospects for these projects to be launched as consumer products; interest in the technology exists in all major global markets

 

·      Fruitflow® powder for tablets, gel capsules and dietary supplements commercially launched by DSM and manufacturing plant in place

 

·      Revenues from profit sharing Alliance for the period £4k (2013: £37k) largely due to high scale-up costs in the initial powder manufacturing setup phase, which are now at an end

 

·      Cash £515k (2013: £617k) following fundraising of £287k using Equity Financing Facility in September 2013

 

·      Further fundraising of £45k using Equity Financing Facility in April 2014

 

 

Key financial results

 

 

 

 

 

 

*before impairment and amortisation of intangible assets, share based payments and exceptional costs of £0.44m (2013: £3.10m), as set out on the face of the Consolidated Statement of Comprehensive Income

 

 

For further information please contact:

 

Provexis plc                                                       Tel:       07917 670260

Dawson Buck, Chairman                                    enquiries@provexis.com

Ian Ford, Finance Director

 

Cenkos Securities plc                                        Tel:       020 7397 8900

Bobbie Hilliam

 



Chairman's statement

The past year has seen substantial change and progress across the Group. During the year the Science in Sport business was demerged from Provexis, delivering an initial 25% return on the original acquisition price, and the cost base of the legacy Provexis business was significantly reduced. The Company's Alliance partner DSM Nutritional Products has continued to develop the market actively for the Company's novel, patented Fruitflow® heart-health ingredient in all global markets.

 

During the first half of the year the Company substantially reduced the running costs of the business. The Aberdeen R&D facility was closed in April 2013 with a resulting reduction in full time staff costs; the Company has retained the services of its key R&D officer in a consultancy role.

 

In August 2013 the demerger of the Company's Science in Sport business became effective, which lead to further considerable cost savings for the Group, particularly in respect of staff and other central administrative expenditure.

 

The actions taken in 2013 were as envisaged reflected in a 51% reduction in underlying operating loss from continuing operations for the year, which fell to £0.58m.

 

We used our equity financing facility to drawdown £287k in September 2013 to bolster the Company's cash reserves, with a further £45k drawdown in April 2014 to strengthen the balance sheet further, and help fund the Company's patent and trade mark costs for Fruitflow®.

 

Fruitflow®

The Company's Alliance partner DSM Nutritional Products has continued to make good progress marketing Fruitflow®, with 10 new consumer brands having been launched in the year. Over 27 regional consumer brands worldwide containing our novel, patented technology have been launched since the Alliance Agreement was signed in 2010.

 

An increasing number of further commercial projects have been initiated by DSM with prospective customers, with good prospects for these projects to be launched as consumer products. Interest in the technology exists in all major global markets.

 

The powder format of Fruitflow® was officially launched by DSM at Vitafoods in May 2013. The format has broad potential applications in tablet, gel capsule and dietary supplement products, and interest from potential customers for this format remains strong.

 

The Company's long-term Alliance Agreement with DSM Nutritional Products for Fruitflow® 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.

 

DSM has invested substantial resource into establishing a commercial scale supply chain for powder manufacturing and cost of goods has been high in this start-up phase, on a low volume base, which is typical for a new ingredient launch. DSM's manufacturing and technical teams have been highly focused on reducing Fruitflow® production costs and as manufacturing volume increases unit costs will decrease, enabling more positive margins and thus profit distributions to Provexis.

 

The initial powder manufacturing setup phase for Fruitflow® has now been concluded, and a reduction in Fruitflow® powder production costs was realised towards the close of the quarter ended 30 June 2014.

 

We collaborated with DSM at the start of the financial year to complete a substantial piece of consumer research to understand more fully consumer attitudes to Fruitflow® and blood flow, in order to support potential customers in understanding the key success factors for any new brand launches. The DSM marketing and sales teams are using the findings from this research to assist their customers with potential brand positioning. DSM has also been able to assist the Company in the development of its web site.

 

 

Intellectual property

The Company is responsible for filing and maintaining patents and trade marks for Fruitflow® as part of the Alliance Agreement with DSM. We are pursuing a strategy to strengthen the breadth and duration of our 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®.

 

In December 2013 British and international patent applications were filed for the use of Fruitflow® 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.

 

Trade marks for Fruitflow® have been registered in the EU, US, China, Japan and a further six international territories, and trade marks have been applied for in a further thirteen territories to support existing and forthcoming consumer brands across all major global markets.

 

People

I would like to thank the executive team and our staff and advisors for their high levels of commitment and professionalism throughout the year.

 

Outlook

While DSM's high scale-up related costs of powder manufacturing reduced our share of profits in the year, it is pleasing to note that a reduction in production costs for Fruitflow® powder was realised after the close of the financial year. Having capacity in place for the powder format is a strategically important milestone, and we continue to work closely with DSM to explore all avenues for growing revenues for our novel technology.

 

The number of international brands containing Fruitflow® continues to steadily increase, with a further 10 consumer brands launched in the year. Over 27 regional consumer brands worldwide have now been launched, and an increasing number of further commercial projects have been initiated with prospective customers.

 

With DSM making good progress in the marketplace it remains our belief that products addressing blood flow and circulation issues represent a long-term opportunity in the functional food sector. With the Company's very low operational costs we are well positioned to drive value for shareholders, and we remain positive about the outlook for the Fruitflow® business.

 

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® 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®, 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® 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®, 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.

 

The directors believed at the time of signing the Alliance Agreement, and still retain the belief, that the commercialisation of Fruitflow® is best undertaken in conjunction with DSM as it enables Provexis to leverage the resources and relationships of DSM in the major global markets.

 

In June 2011 the Group acquired SiS (Science in Sport) Limited, a sports nutrition business focused on the SiS brand of endurance sports nutrition products., which gave the Group two operating segments, the existing Fruitflow® business and SiS (Science in Sport) Limited.

 

Following a strategic review the Board concluded in June 2013 that a demerger of SiS (Science in Sport) Limited to a new AIM listed company called Science in Sport plc would be in the best interests of shareholders, as more fully detailed in a circular to shareholders and admission to trading on AIM document for Science in Sport plc which were issued on 28 June 2013. Copies of the circular and the admission to trading on AIM document can be downloaded from Provexis plc's website www.provexis.com.

 

Pursuant to the terms of the demerger agreement Science in Sport plc allotted and issued to the holders of ordinary shares in the capital of Provexis plc 15,188,000 ordinary shares of 10 pence each in consideration of the transfer to Science in Sport plc by Provexis plc of the whole of the issued share capital of SiS (Science in Sport) Limited. Science in Sport plc was admitted to the AIM segment of the London Stock Exchangeʼs market for listed securities as from 9 August 2013.

 

At the date of the demerger, Science in Sport plc acquired the entire issued share capital of SiS (Science in Sport) Limited in return for issuing shares to the shareholders of Provexis plc.

 

These transactions resulted in the demerger of SiS (Science in Sport) Limited from the Group.

 

Following the demerger the Group's strategic priority is to focus on developing revenues from the Fruitflow® 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® 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.

 

The Group continues to maintain the Crohn's disease intellectual property registered in Provexis (IBD) Limited, and continues to seek a purchaser for the intellectual property as part of the completion of the R&D rationalisation phase.

 

Market opportunity

Fruitflow® 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® 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

SiS (Science in Sport) Limited represented a separate major line of business for the Group under the definitions within IFRS 5, hence the results of SiS (Science in Sport) Limited up to the date of the demerger are shown as discontinued in these financial statements. Prior year comparatives have been restated as necessary.

 

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

Revenue from the profit sharing Alliance for Fruitflow® for the year ended 31 March 2014 was £3,967 (2013: £37,351).

 

The Company's long-term Alliance Agreement with DSM Nutritional Products for Fruitflow® 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.

 

The reduction in revenue accruing to the Company for the year is primarily due to the high scale-up costs of the initial powder manufacturing setup phase for Fruitflow®, which increased the cost of goods and reduced the gross margin, despite an increase in the overall sales of Fruitflow®. DSM's manufacturing and technical teams remain highly focused on reducing Fruitflow® production costs, and as manufacturing volume increases unit costs will decrease, enabling more positive margins and thus profit distributions. The initial powder manufacturing setup phase for Fruitflow® has now been completed, and a resulting reduction in the cost of goods was achieved during the quarter ended 30 June 2014.

 

Underlying operating loss

Underlying operating loss has reduced by 51% to £577,961 (2013: £1,169,267), reflecting the significant restructuring conducted between 2012 and 2013, and continued progress with Fruitflow®.

 

The Group has chosen to report underlying operating loss as the directors believe that the operating loss before amortisation and impairment of acquired goodwill and other intangible assets, share based payments and exceptional items measure provides additional useful information for shareholders on underlying trends and performance. A reconciliation of underlying operating loss to statutory operating loss is presented on the face of the consolidated statement of comprehensive income. This measure is used for internal performance analysis.

 

The Group's cost base and its resources have been and will continue to be tightly managed within budgets approved and monitored by the Board.

 

Research and development costs

Research and development costs have reduced by 56% to £142,985 (2013: £324,468), also reflecting the significant restructuring conducted between 2012 and 2013.

 

Restructuring costs

Restructuring costs of £Nil (2013: £135,787) were incurred during the year. The prior year's costs primarily related to staff reductions and all the costs of closing the Group's facility at the University of Aberdeen, as the Group sought to reduce its cost base.

 

Taxation

A current tax credit of £15,823 (2013: £83,087), primarily in respect of research and development tax credits has been recognised in the financial statements. Tax credit claims totalling £220,717 were paid to the Group during the year in respect of research and development expenditure for the two years ended 31 March 2013.

 

Results and dividends

The profit attributable to equity holders of the parent for the year ended 31 March 2014, including discontinued operations, was £488,353 (2013: loss of £4,338,600) and the basic profit per share was 0.03p (2013: loss of 0.29p). The profit attributable to equity holders of the parent for the year ended 31 March 2014 included a profit from discontinued operations of £1,434,983 (2013: loss of £221,364) in respect of SiS (Science in Sport) Limited, which was demerged from the Group in August 2013. The profit from discontinued operations in the year ended 31 March 2014 includes the profit arising from the demerger itself, as further detailed in note 10.

 

The directors are unable to recommend the payment of a dividend (2013: £Nil).

 

Capital structure and funding

Prior to the demerger of SiS (Science in Sport) Limited in August 2013, Provexis plc converted £448,163 of an intercompany debt from SiS (Science in Sport) Limited into equity by way of a capital contribution.

 

In August 2013, following the completion of the demerger, SiS (Science in Sport) Limited made payments amounting to £290,000 to Provexis to settle the remaining outstanding intercompany debt.

 

On 11 September 2013 the Company announced that it had raised a net £286,750 by drawing down on the Company's equity financing facility (the "EFF") which was arranged by Darwin Strategic Limited ("Darwin"), allotting 31,000,000 new ordinary shares of 0.1p each to Darwin.

 

On 19 November 2013 the Company announced that application had been made for the admission to AIM of 1,750,000 ordinary shares of 0.1p each in the Company, pursuant to the exercise of options by former employees. The Company received net proceeds of £15,750 in respect of this transaction.

 

On 23 April 2014 the Company announced that it had raised a net £45,403 by drawing down on the Company's EFF, allotting 7,000,000 new ordinary shares of 0.1p each to Darwin.

 

Further details of the EFF agreement and the drawdowns made using the EFF are available to download from the announcements section of the Company's website www.provexis.com.

 

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 from continuing operations of £998,264 (2013: £4,170,342) and expects to make a further loss during the year ending 31 March 2015. The total cash outflow from continuing operations in the year was £252,948 (2013: £287,931). At 31 March 2014 the Group had cash balances of £514,827 (2013: £616,612).

 

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 directors have also considered this issue in light of the significant reduction in net assets following the demerger of the SiS (Science in Sport) Limited business.

 

The Group has access to future equity financings, either through the Group's existing equity drawdown facility with Darwin or through an 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 the foreseeable future.

 

Accordingly the going concern basis has been used in preparing the financial statements.

 

Principal risks and uncertainties

In the course of its normal business the Group is exposed to a range of risks and uncertainties which could impact on the results of the Group. The Board considers that risk-management is an integral part of good business process and, on a bi-annual basis, reviews the industry, operational and financial risks facing the Group and considers the adequacy of the controls and mitigants to manage the risks.

 

The directors have identified the following principal risks and uncertainties that could have the most significant impact on the Group's long-term value generation.

 

Funding and other risks

Provexis has experienced operating losses from continuing operations in each year since its inception. Accordingly until Provexis has sufficient commercial success with Fruitflow® 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 revenues from Fruitflow®, there is no certainty that such revenues will be generated. Furthermore, the amount and timing of revenues from Fruitflow® 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®; 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®, Fruitflow® 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®.

 

Provexis is heavily dependent on DSM in marketing and selling Fruitflow® to achieve market acceptance, market penetration and, ultimately, sales of products that contain Fruitflow® 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 solely dependent on DSM in respect of the development, production, marketing and commercialisation of Fruitflow®. Fruitflow® is solely reliant on DSM under the terms of the Alliance Agreement for its commercialisation.

 

Provexis' long-term success is fully dependent on the ability of DSM to sell Fruitflow®. 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® 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® 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®

The success of Provexis will depend on the market's acceptance and valuing of Fruitflow® 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® 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®. Notwithstanding the health claims made in respect of Fruitflow®, 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® and may never achieve profitability.

 

Limited product offering

Provexis has only have one product, Fruitflow®, and any problems with the commercial success of Fruitflow® will impact the financial performance of Provexis. Provexis does not have sufficient funds to develop new functional food technology or alternative product versions of Fruitflow®.

 

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

Finance Director



Consolidated statement of comprehensive income

 

 

 

Year

Year

 

 

ended

ended

 

 

31 March

31 March

 

 

2014

2013

 

 

 

restated1

 

Notes

£

£

 


 

 

 

 

 

 

Revenue

1,3

3,967

37,351

Research and development costs

4

(142,985)

(324,468)

Administrative costs

 

(879,958)

(3,978,719)

 

 

 

 

Underlying operating loss

 

(577,961)

(1,169,267)

Amortisation and impairment charges

11

-

(2,781,499)

Costs of demerger of SiS (Science in Sport) Limited

10

(49,824)

-

Restructuring costs

4

-

(135,787)

Share based payment charges

21

(391,191)

(179,283)

 

 

 

 

Loss from continuing operations

4

(1,018,976)

(4,265,836)

 

 

 

 

Finance income

7

4,889

12,407

Loss before taxation

 

(1,014,087)

(4,253,429)

 

 

 

 

Taxation

8

15,823

83,087

 

 

 

 

Loss for the year from continuing operations

 

(998,264)

(4,170,342)

 

 

 

 

Discontinued operation

 

 

 

Profit / (loss) for the year from discontinued operation

10

1,434,983

(221,364)

 

 

 

 

Profit / (loss) and total comprehensive

income / (expense) for the year

 

436,719

(4,391,706)

 

 

 

 

Attributable to:

 

 

 

Owners of the parent

22

488,353

(4,338,600)

Non-controlling interest

22

(51,634)

(53,106)

Profit / (loss) and total comprehensive

income / (expense) for the year

22

436,719

(4,391,706)

 

 

 

 

Earnings / (loss) per share to owners of the parent

 

 

 

From continuing and discontinued operations

 

 

 

Basic - pence

9

0.03

(0.29)

Diluted - pence

9

0.03

(0.29)

 

 

 

 

From continuing operations

 

 

 

Basic - pence

9

(0.06)

(0.27)

Diluted - pence

9

(0.06)

(0.27)

 

1 The results for the year ended 31 March 2013 have been restated to reflect the presentation of the SiS (Science in Sport) business as discontinued in the year.



Consolidated statement of financial position

 

 

Company number 05102907

 

As at

As at

 

 

31 March

31 March

 

 

2014

2013

 

Notes

£

£

 

 

 

 

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets

11

-

6,553,502

Plant and equipment

13

-

634,920

Deferred tax

19

-

110,348

Total non-current assets

 

-

7,298,770

 

 

 

 

Current assets

 

 

 

Inventories

14

-

913,387

Trade and other receivables

15

112,637

1,253,305

Corporation tax asset

8

15,823

288,801

Cash and cash equivalents

16

514,827

616,612

Total current assets

 

643,287

3,072,105

 

 

 

 

Total assets

 

643,287

10,370,875

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

17

(108,212)

(1,787,569)

Borrowings

18

-

(64,774)

Total current liabilities

 

(108,212)

(1,852,343)

Net current assets

 

535,075

1,219,762

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

18

-

(161,871)

Deferred tax

19

-

(450,789)

Total non-current liabilities

 

-

(612,660)

 

 

 

 

Total liabilities

 

(108,212)

(2,465,003)

 

 

 

 

Total net assets

 

535,075

7,905,872

 

 

 

 

Capital and reserves attributable to

owners of the parent company

 

 

 

Share capital

20

1,554,816

5,134,170

Share premium reserve

22

16,183,870

20,769,423

Warrant reserve

22

26,200

60,000

Merger reserve

22

6,599,174

6,599,174

Retained earnings

22

(23,505,513)

(24,385,057)

 

 

858,547

8,177,710

Non-controlling interest

22

(323,472)

(271,838)

Total equity

 

535,075

7,905,872

 

 



Consolidated statement of cash flows

 

 

Year

Year

 

 

ended

ended

 

 

31 March

31 March

 

 

2014

2013

 

 

 

restated

 

Notes

£

£

 

 

 

 

Cash flows from operating activities

 

 

 

Loss after tax

 

(998,264)

(4,170,342)

Adjustments for:

 

 

 

Amortisation and impairment

11

-

2,781,499

Impairment of fixed assets

 

-

37,876

Depreciation

13

9,140

35,027

Loss on sale of fixed assets

 

-

1,556

Net finance income

 

(4,889)

(12,407)

Taxation

 

(15,823)

(83,087)

Share-based payment charge

 

391,191

179,283

Changes in trade and other receivables

 

63,177

(2,914)

Changes in trade and other payables

 

(225,460)

(22,083)

Net cash flow from continuing operations

 

(780,928)

(1,255,592)

 

 

 

 

Tax credits received

 

220,717

162,369

Cash flow from discontinued operations

 

(13,133)

(340,125)

Total cash flow from operations

 

(573,344)

(1,433,348)

 

 

 

 

Cash flow from investing activities

 

 

 

Purchase of property, plant and equipment

 

-

(3,037)

Purchase of intangible assets

 

-

(25,545)

Interest received

 

4,763

12,427

Net cash flow from continuing operations

 

4,763

(16,155)

Cash flow from discontinued operations

 

(113,599)

(426,082)

Total cash flow from investing activities

 

(108,836)

(442,237)

 

 

 

 

Cash flow from financing activities

 

 

 

Proceeds from issue of share capital

 

286,750

785,447

Proceeds from exercise of share options

 

15,750

36,000

Net cash flow from continuing operations

 

302,500

821,447

Cash flow from discontinued operations

 

(23,797)

223,345

Total cash flow from financing activities

 

278,703

1,044,792

 

 

 

 

Net decrease in cash and cash equivalents

 

 

 

 - from continuing operations

 

(252,948)

(287,931)

 - from discontinued operations

 

(150,529)

(542,862)

 - add: inter company debt repaid by SiS business at demerger

 

290,000

-

 - add: bank overdraft held by SiS business at demerger

 

11,692

-

Net decrease in cash and cash equivalents

 

(101,785)

(830,793)

 

 

 

 

Opening cash and cash equivalents

16

616,612

1,447,405

Closing cash and cash equivalents

16

514,827

616,612

 



Consolidated statement of changes in equity

 











Share

capital

Share

premium

Warrant

reserve

Merger

reserve

Retained

earnings

Total equity

attributable to owners of

the parent

Non-controlling

interests

Total

equity


£

£

£

£

£

£

£

£










At 31 March 2012

5,085,352

19,998,832

60,000

6,599,174

(20,225,740)

11,517,618

(218,732)

11,298,886










Share-based charges

-

-

-

-

179,283

179,283

-

179,283










Issue of shares - share options exercised 27 April 2012

4,000

32,000

-

-

-

36,000

-

36,000










Issue of shares - equity financing facility 23 May 2012

13,198

230,504

-

-

-

243,702

-

243,702










Issue of shares - equity financing facility 3 September 2012

31,620

508,087

-

-

-

539,707

-

539,707










Total comprehensive expense for the year

-

-

-

-

(4,338,600)

(4,338,600)

(53,106)

(4,391,706)










At 31 March 2013

5,134,170

20,769,423

60,000

6,599,174

(24,385,057)

8,177,710

(271,838)

7,905,872










Share-based charges

-

-

-

-

391,191

391,191

-

391,191










Demerger of SiS (Science in Sport) - issue redeemable shares

50,000

-

-

-

-

50,000

-

50,000










Demerger of SiS (Science in Sport) - issue SiS cancellation shares

1,518,651

(1,518,651)

-

-

-

-

-

-










Demerger of SiS (Science in Sport) - redeem redeemable shares

(50,000)

-

-

-

-

(50,000)

-

(50,000)










Demerger of SiS (Science in Sport) - transfer to Science in Sport plc

(5,134,170)

(3,370,275)

-

-

-

(8,504,445)

-

(8,504,445)










Warrants cancelled during the period - equity financing facility

-

2,038

(60,000)

-

-

(57,962)

-

(57,962)










Warrants issued during the period - equity financing facility

-

-

26,200

-

-

26,200

-

26,200










Issue of shares - equity financing facility 11 September 2013

31,000

255,750

-

-

-

286,750

-

286,750










Issue of shares - equity financing facility fee 11 September 2013

3,415

31,585

-

-

-

35,000

-

35,000










Issue of shares - share options exercised 22 November 2013

1,750

14,000

-

-

-

15,750

-

15,750










Total comprehensive income for the period

-

-

-

-

488,353

488,353

(51,634)

436,719



















At 31 March 2014

1,554,816

16,183,870

26,200

6,599,174

(23,505,513)

858,547

(323,472)

535,075



















 



Notes to the preliminary results for the year ended 31 March 2014

 

1. Accounting policies

General information

Provexis plc is a public limited company incorporated and domiciled in the United Kingdom (registration number 05102907). The address of the registered office is Prospect House, Queens Road, Reading, Berkshire RG1 4RP, UK.

 

The main activities of the Group are those of developing and licensing the proprietary, scientifically-proven Fruitflow® heart-health functional food ingredient for the global functional food sector.

 

Company reorganisation and demerger

SiS (Science in Sport) Limited was demerged from Provexis plc 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.

 

Pursuant to the terms of the demerger agreement Science in Sport plc allotted and issued to the holders of ordinary shares in the capital of Provexis plc 15,188,000 ordinary shares of 10 pence each in consideration of the transfer to Science in Sport plc by Provexis plc of the whole of the issued share capital of SiS (Science in Sport) Limited. Science in Sport plc was admitted to the AIM segment of the London Stock Exchangeʼs market for listed securities as from 9 August 2013.

 

At the date of the demerger, Science in Sport plc acquired the entire issued share capital of SiS (Science in Sport) Limited in return for issuing shares to the shareholders of Provexis plc.

 

These transactions resulted in the demerger of SiS (Science in Sport) Limited from the Group.

 

SiS (Science in Sport) Limited represented a separate major line of business for the Group under the definitions within IFRS 5, hence the results of SiS (Science in Sport) Limited up to the date of the demerger are shown as discontinued in these financial statements. Prior year comparatives have been restated as necessary.

 

Prior to the demerger, Provexis plc converted £448,163 of an intercompany debt from SiS (Science in Sport) Limited into equity by way of a capital contribution. At the time of the demerger, a payment of £290,000 was made to Provexis plc to settle the remaining outstanding intercompany debt.

 

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 2014 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 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered after the forthcoming AGM. The auditors have reported on those accounts; their report was unqualified, and did not contain statements under s498(2) or (3) Companies Act 2006 in either 2014 or 2013, but included an emphasis of matter in respect of going concern without qualifying their report in 2013.

 

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 2014 that comply with IFRS in August 2014.

 

 

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 2014.

 

There have been no new or amended standards adopted by the Group since the prior financial year.

 

The following new standards, amendments to standards or interpretations have been issued and are effective for the year ended 31 March 2014, however, the directors do not expect them to have a material effect on the Group's financial statements:

 

 

The following new standards, amendments to standards and interpretations have been issued but are not effective for the year ended 31 March 2014. The new standards, amendments to standards and interpretations (effective for periods beginning on or after 1 January 2014 unless otherwise stated) will be relevant to the Group but have not been adopted early as the directors do not expect these standards and interpretations to have a material effect on the consolidated financial statements:

 

 

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 are set out in the strategic report. The financial position of the Group, its cash flows and liquidity position are also 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 from continuing operations of £998,264 (2013: £4,170,342) and expects to make a further loss during the year ending 31 March 2015. The total cash outflow from continuing operations in the year was £252,948 (2013: £287,931). At 31 March 2014 the Group had cash balances of £514,827 (2013: £616,612).

 

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 directors have also considered this issue in light of the significant reduction in net assets following the demerger of the SiS (Science in Sport) Limited business.

 

The Group has access to future equity financings, either through the Group's existing equity drawdown facility with Darwin or through an 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 the foreseeable future.

 

Accordingly the going concern basis has been used in preparing the financial statements.

 

Subsidiaries are all entities (including special purpose 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.

 

Basis of consolidation

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.

 

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. The direct costs of acquisition are recognised immediately as an expense.

 

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.

 

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 amortisation and impairment of acquired intangibles, share based payments and exceptional items measure provides additional useful information for shareholders on underlying trends and performance. This measure is used for internal performance analysis. Underlying operating loss is not defined by IFRS and therefore may not be directly comparable with other companies' adjusted profit measures. It is not intended to be a substitute for, or superior to IFRS measurements of profit.

 

Exceptional items are those material items which, by virtue of their size or incidence, are presented separately in the Statement of Comprehensive Income to give a full understanding of the Group's underlying financial performance. Transactions which may give rise to exceptional items include the restructuring of business activities and acquisitions. A reconciliation of underlying operating profit to statutory operating profit is set out on the face of the Statement of Comprehensive Income.

 

Leased assets

Leases, which contain terms whereby the Group does not assume substantially all the risks and rewards incidental to ownership of the leased item are classified as operating leases. Operating lease rentals are charged to the statement of comprehensive income on a straight line basis over the lease term. The Group does not hold any assets under finance leases.

 


Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the identifiable net assets acquired. Goodwill on acquisition of subsidiaries is included in 'intangible assets'. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

 

An impairment loss is recognised within administrative expenses in the consolidated statement of comprehensive income for the amount by which the asset's carrying amount exceeds its recoverable amount. For the purposes of assessing impairment, assets are grouped into cash generating units ('CGU') being the lowest levels for which there are separately identifiable cash flows. The recoverable amount of a CGU is the higher of a CGU's fair value less costs to sell and value in use.

 

Impairment losses on goodwill are not reversed.

 

Research and development

Certain Group products are in the research phase and others are in the development phase. Expenditure incurred on the development of internally generated products is capitalised if it can be demonstrated that:

●          It is technically feasible to develop the product for it to be sold;

●          Adequate resources are available to complete the development;

●          There is an intention to complete and sell the product;

●          The Group is able to sell the product;

●          Sale of the product will generate future economic benefits; and

●          Expenditure on the project can be measured reliably.

 

The value of the capitalised development cost is assessed for impairment annually. The value is written down immediately if impairment has occurred. Development costs are not being amortised as income has not yet been realised from the underlying technology. Development expenditure, not satisfying the above criteria, and expenditure on the research phase of internal projects is recognised in the statement of comprehensive income as incurred.

 

Patents and trademarks

The costs incurred in establishing patents and trademarks are either expensed or capitalised in accordance with the corresponding treatment of the development expenditure for the product to which they relate.

 

Website development costs

Website development costs are capitalised to the extent that it is capable of generating direct revenues from enabling orders to be placed. Costs associated with the planning stage are recognised in the Income Statement.

 

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.

 

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.

 

In-process research and development programmes acquired in such combinations are recognised as an asset even if subsequent expenditure is written off because the criteria specified in the policy for research and development costs above are not met.

 

The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

 

Intangible asset

Useful economic life

Valuation method

Trademarks

9.5

Relief From Royalty Rate Method

Patents / recipes / formulations

4.5 to 9.5

Relief From Royalty Rate Method

Covenants not to compete

3.0

Comparative Business Valuation

Customer relationships

9.5

Multi-Period Excess Earnings Method

Website development costs

5.0

 Historic Cost

 



 

Non-current assets held for sale or distribution and disposal groups

Non-current assets and disposal groups are classified as held for sale when, at the year end:

-       they are available for immediate sale;

-       management is committed to a plan to sell;

-       it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;

-       an active programme to locate a buyer has been initiated;

-       the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and

-       a sale is expected to complete within 12 months from the date of classification.

 

Non-current assets and disposal groups classified as held for sale are measured at the lower of:

-       their carrying amount immediately prior to being classified as held for sale in accordance with the Group's accounting policy; and

-       fair value less costs to sell.

 

Following their classification as held for sale, non-current assets (including those in a disposal group) are not depreciated.

 

The results of operations disposed during the year are included in the consolidated statement of comprehensive income up to the date of disposal.

 

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.

 

Discontinued operations are presented in the consolidated statement of comprehensive income as a single line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognised on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations. The cash flows from discontinued operations are also disclosed as a single-line item in each category of the cash flow statement.

 

Plant and equipment

Plant and machinery, fixtures, fittings and computer equipment and laboratory equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is charged to the Statement of Comprehensive Income on all plant and equipment at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight line basis over their estimated useful lives, which is:

 

 

Leasehold improvements are depreciated on a straight line basis over the unexpired portion of the lease.

 

The assets' residual values and useful lives are determined by the directors and reviewed and adjusted if appropriate at each balance sheet date in accordance with the Group policy for impairment of assets.

 

The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in the income statement.

 

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.

 

Goodwill is allocated to cash-generating units ('CGU') for the purpose of impairment testing to the extent that it is possible to allocate goodwill to a CGU on a non-arbitrary basis. A CGU is identified at the lowest aggregation of assets that generate largely independent cash inflows, and that which is looked at by management for monitoring and managing the business.

 

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Impairment losses on goodwill are not reversed.

 

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated as follows:

Raw materials - cost of purchase on first in, first out basis.

Work in progress and finished goods - cost of raw materials and labour, together with attributable overheads based on the normal level of activity.

 

Net realisable value is based on estimated selling price less further costs to completion and disposal. A charge is made to the income statement for slow moving inventories. The charge is reviewed at each balance sheet 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 balance sheet date whether there is objective evidence that the financial asset is impaired. If an asset is judged to be impaired the carrying amount of the asset will be adjusted to its impaired valuation.

 

Financial liabilities

The Group's financial liabilities comprise 'trade and other payables' and 'borrowings'. These are recognised initially at fair value and subsequently at amortised cost.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand.

 

Government grants

Government grants are recognised when there is reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants are recognised in the statement of comprehensive income in the same period to which the costs that they are intended to compensate are expensed.

 

Taxation

Current tax is provided at amounts expected to be recovered or to be paid using the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. When research and development tax credits are claimed they are recognised on an accruals basis and are included as a taxation credit.

 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability on the balance sheet differs from its tax base, except for differences arising on:

 

 

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 balance sheet 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:

 

 

Foreign currency translation

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

 

Employee benefits

(i) Defined contribution plans

The Group provides retirement benefits to all employees and Executive Directors. The assets of these schemes are held separately from those of the Group in independently administered funds. Contributions made by the Group are charged to the statement of comprehensive income in the period in which they become payable.

 

(ii) Accrued holiday pay

Provision has been made at the balance sheet date for holidays accrued but not taken at the salary of the relevant employee at that date.

 

(iii) Share-based payment transactions

The Group operates an equity-settled, share-based compensation plan. Vesting conditions are service conditions and performance conditions only. Where share options are awarded to employees and others providing similar services, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options when granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative charge is not adjusted for failure to achieve a market vesting condition. If market related terms and conditions of options are modified before they vest, the change in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of comprehensive income over the remaining vesting period. If non-market related terms and conditions of options are modified before they vest, the number of instruments expected to vest at each balance sheet date, and therefore the cumulative charge, is therefore amended accordingly. Where equity instruments are granted to persons other than employees and others providing similar services, the statement of comprehensive income is charged with the fair value of goods and services received.

 

The proceeds received when options are exercised, net of any directly attributable transaction costs, are credited to share capital (nominal value) and the remaining balance to share premium.

 

National insurance on share options

All employee option holders sign statements that they will be liable for any employers national insurance arising on the exercise of share options.

 

Interest income

Interest income is recognised on a time-proportion basis using the effective interest rate method.

 

Warrants

The Group has issued warrants to Darwin Strategic Limited as part of the Equity Financing Facility. These warrants have been measured at fair value at the date of grant using an appropriate options pricing model.

 

This fair value has been held on the balance sheet within prepayments and in the warrants reserve within equity. The prepayment will be released against share premium as the equity financing facility is utilised. The warrants reserve will be released to share premium when the warrants are exercised. If the warrants lapse or are cancelled then the reserve is transferred to retained earnings.

 

Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

 

Estimates and judgements are continually made and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable in the circumstances.

 

As the use of estimates is inherent in financial reporting, actual results could differ from these estimates. The directors believe the following to be the key areas of estimation and judgement:

 

(i) Research and development

Under IAS 38 Intangible Assets, development expenditure which meets the recognition criteria of the standard must be capitalised and amortised over the useful economic lives of intangible assets from product launch.

 

(ii) Share-based payments

The Group operates an equity-settled, share-based compensation plan. The charge for share-based payments is determined based on the fair value of awards at the date of grant partly by use of the Black-Scholes pricing model which require judgements to be made regarding expected volatility, dividend yield, risk free rates of return and expected option lives. The inputs used in these pricing models to calculate the fair values are set out in note 21. An element of the share-based payment charge also relies on certain assumptions over the future performance of the share price which may not be met or may be exceeded by the time the relevant awards vest.

 

(iii) Goodwill and impairment

The recoverable amount of goodwill is determined based on value in use calculations of the cash-generating units to which it relates. Further detail on key assumptions, including growth rates, discount rates and the time period of these value in use calculations is given in note 12.

 

The Group prepares and approves formal five year management plans for its operations, which are used in the value in use calculations. In certain cases the fifth year of the management plan is not indicative of the long- term future performance as operations may not have reached maturity. In this case management extends the plan data for a longer period.

 

(iv) Fair value of identifiable net assets acquired

Upon acquisition of a business, its identifiable assets and liabilities are assessed to determine their fair value. The values attributed to assets and liabilities as part of this process are, where appropriate, based on market values identified for equivalent assets, together with management's experience and assessments including comparison to the carrying value of assets of a similar condition and age in the existing business.

 

(v) Valuation of inventories

Inventories are valued at the lower of cost and net realisable value. Cost comprises direct materials, labour and, where appropriate, overheads that have been incurred in bringing the inventory to its present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

 

(vi) Useful economic lives of intangible and tangible assets

In relation to the Group's finite life intangible assets and property, plant and equipment, useful economic lives and residual values of assets have been established using historical experience and an assessment of the nature of the assets involved. Assets are assessed on an ongoing basis to determine whether circumstances exist that could lead to potential impairment of the carrying value of such assets.

 

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 primarily enters into contracts which are to be settled in UK pounds. However, some contracts involve other major world currencies including the US Dollar and the Euro. Where large contracts of more than £50,000 total value are to be settled in foreign currencies consideration is given to converting the appropriate amounts to or from UK pounds at the outset of the contract to minimise the risk of adverse currency fluctuations.

 

The Group incurred minimal expenditure in foreign currencies during the year, and the prior year, and consequently there is no material exposure to foreign currency rate risk.

 

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 £108,212 (2013: £1,787,569) as disclosed in note 17.

 

2.2 Capital risk management

The Group considers its capital to comprise its ordinary share capital, share premium, warrant reserve, merger reserve and accumulated retained earnings as disclosed in the consolidated statement of financial position.

 

The Group remains funded primarily by equity capital. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for equity holders of the Company and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

 

3. Segmental reporting

Following the demerger of SiS (Science in Sport) Limited in August 2013 the directors have determined that only one operating segment exists under the terms of International Financial Reporting Standard 8 'Operating Segments', as the Group is organised and operates as a single business unit and all activities are based in the UK. The Group's reporting segment is determined based on the Group's internal reporting to the Chief Operating Decision Maker (CODM). The CODM has been determined to be the Chairman of the Board of Directors as he is primarily responsible for the allocation of resources to segments and the assessment of performance of the segments.

 

The CODM uses underlying operating profit/(loss) as the key measure of the segments' results as it reflects the segments' underlying trading performance for the financial period under evaluation.

 

Underlying operating profit/(loss) is a consistent measure within the Group which measures the performance of the segment before goodwill and acquired intangible asset amortisation and impairment, share based payment charges, restructuring charges and acquisition costs arising from acquisitions.

 

The results of the former SiS segment for the period up to the demerger can be seen in note 10.

 

 

4. Loss from continuing operations

 

Year ended

31 March

2014

Year ended

31 March

2013

restated

 

£

£

Loss from continuing operations is stated after charging:

 

 

 

 

 

Depreciation of plant and equipment

9,140

35,027

Amortisation and impairment of intangible assets

-

2,781,499

Research and development costs

142,985

324,468

Foreign exchange gains

(603)

(1,191)

Costs of demerger of SiS (Science in Sport) Limited

49,824

-

Restructuring costs

-

135,787

Loss on disposal of property, plant and equipment

-

1,556

Grant income

-

(3,000)

Operating lease costs - land and buildings

12,266

57,568

Equity-settled share based payment expense

391,191

179,283

Defined contribution pension expense

7,624

1,552

 

Restructuring costs of £135,787 were incurred in 2013 as part of the closure of the group's R&D facility at the University of Aberdeen, along with other reductions in group administrative headcount.

 

The total fees of the Group's auditor, for services provided are analysed below:

 

 

Chantrey Vellacott DFK

BDO LLP

 

Year ended

31 March

2014

Year ended

31 March

2013

Year ended

31 March

2014

Year ended

31 March

2013

 

£

£

£

£

Audit services

 

 

 

 

Parent company

13,000

15,000

-

-

Subsidiaries

12,000

24,500

-

-

Tax services - compliance

 

 

 

 

Parent company

2,000

2,500

-

-

Subsidiaries

3,000

6,000

-

-

Other services

 

 

 

 

iXBRL services

2,000

2,000

-

-

Review of interim statement

-

-

-

5,000

Corporate finance

- demerger of SiS (Science in Sport)

 

15,000

 

-

 

-

 

-

 

 

 

 

 

Total fees

47,000

50,000

-

5,000

 

The Group engaged Chantrey Vellacott DFK LLP to assist the Group with the demerger of SiS (Science in Sport) Limited from the Provexis Group to a new company called Science in Sport plc. Science in Sport plc engaged Chantrey Vellacott DFK to assist it with the admission of its entire issued and to be issued ordinary share capital to trading on AIM on 9 August 2013.

 

Further information on the demerger and admission of Science in Sport plc to AIM can be found in the circular, and admission to trading on AIM document, which were issued on 28 June 2013. Copies of the circular and the admission to trading on AIM document can be downloaded from Provexis plc's website www.provexis.com.

 

 

5. Wages and salaries

The average monthly number of persons (including all directors) employed by the Group during the year for continuing operations was as follows:

 

 

Year ended

31 March

2014

Year ended

31 March

2013

restated

 

 

 

Research and development staff

-

3

Directors

4

4

 

4

7

 

Their aggregate emoluments were:

 

Year ended

31 March

2014

Year ended

31 March

2013

restated

 

£

£

 

 

 

Wages and salaries

289,307

673,253

Social security costs

23,960

75,486

Other pension and insurance benefits costs

11,476

7,181

Total cash settled emoluments

324,743

755,920

Accrued holiday pay

(28,343)

(5,066)

Share-based payment remuneration charge: equity settled

391,191

179,283

Total emoluments

687,591

930,137

 

6. Directors' remuneration

 

Year ended

31 March

2014

Year ended

31 March

2013

 

£

£

Directors

 

 

Aggregate emoluments

245,600

396,490

Company pension contributions

6,046

16,469

 

251,646

412,959

Share based payment remuneration charge: equity settled

417,789

129,540

Total Directors' emoluments

669,435

542,499

 

Emoluments disclosed above include the following amounts in respect of the highest paid director:

 

 

Year ended

31 March

2014

Year ended

31 March

2013

 

£

£

 

 

 

Aggregate emoluments

89,814

201,473

Company pension contributions

3,678

10,018

Share based payment remuneration charge: equity settled

259,707

88,087

Total of the highest paid director's emoluments

353,199

299,578

 

During the year, two directors (2013: two directors) participated in defined contribution pension schemes.

 

Directors' emoluments include amounts attributable to benefits in kind comprising private medical insurance on which the directors are assessed for tax purposes. The amounts attributable to benefits in kind are stated at cost to the Group, which is also the tax value of the attributable benefits.

 

 

7. Finance income

 

Year ended

31 March

2014

Year ended

31 March

2013

restated

 

£

£

 

 

 

Finance income

 

 

Bank interest receivable

4,889

12,407

 

4,889

12,407

 

8. Taxation

 

 

 

Year ended

31 March

2014

Year ended

31 March

2013

restated

 

£

£

Current tax income

 

 

United Kingdom corporation tax - research and development credit

15,823

65,740

Adjustment in respect of prior period

 

 

United Kingdom corporation tax - research and development credit

-

17,347

Taxation credit

15,823

83,087

 

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

31 March

2014

Year ended

31 March

2013

restated

 

£

£

 

 

 

Loss before tax

1,014,087

4,253,429

 

 

 

Loss before tax multiplied by the

standard rate of corporation tax in the UK of 23% (2013: 24%)

 

233,240

 

1,020,823

Effects of:

 

 

Expenses not deductible for tax purposes

(535)

(43,491)

Difference between depreciation and capital allowances

(2,102)

(17,564)

Other short-term timing differences

(89,974)

(661,853)

Unutilised tax losses and other deductions arising in the year

(130,271)

(255,246)

Additional deduction for R&D expenditure

18,380

79,752

Surrender of tax losses for R&D tax credit refund

(17,262)

(77,692)

Share scheme deduction

4,347

21,011

Adjustments in respect of prior years

-

17,347

Total tax credit for the year

15,823

83,087

 

At 31 March 2014 the Group UK tax losses to be carried forward are estimated to be £17,833,920 (2013: £17,622,991).

 

The rate change from 23% to 21% had been substantively enacted by the balance sheet date, so deferred tax is provided for at a rate of 21%.

 

Income tax asset receivable within one year

31 March

2014

31 March

2013

 

£

£

 

 

 

Corporation tax recoverable

15,823

288,801

 

15,823

288,801

 

 

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.

 

Diluted 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 adjusted for the effects of potentially dilutive options. The dilutive effect is calculated on the full exercise of all potentially dilutive ordinary share options granted by the Group.

 


Year ended 31 March 2014

Year ended 31 March 2013


Basic

Potentially

dilutive

share options

and warrants

Diluted

Basic

Potentially

dilutive

share options

and warrants

Diluted








Profit / (loss) - £







Continuing operations

(946,630)

-

(946,630)

(4,117,236)

-

(4,117,236)

Discontinued operations

1,434,983

-

1,434,983

(221,364)

-

(221,364)

Total operations

attributable to owners

488,353

-

488,353

(4,338,600)

-

(4,338,600)








Share options

-

110,640,510

-

-

90,071,648

-

Warrants

-

10,000,000

-

-

10,000,000

-

Weighted average

number of shares

1,537,655,373

120,640,510

1,658,295,883

1,502,924,005

100,071,648

1,602,995,653








Earnings / (loss) per share (pence)

Continuing operations

(0.06)

0.00

(0.06)

(0.27)

0.00

(0.27)

Discontinued operations

0.09

0.00

0.09

(0.02)

0.00

(0.02)

Total

0.03

0.00

0.03

(0.29)

0.00

(0.29)

 

There have been no transactions involving ordinary shares between the reporting date and the date of approval of these financial statements which would significantly change the earnings per share calculations shown above.

 

The earnings per share for continuing operations do not include potentially dilutive share options and warrants on the basis that the continuing operations made a loss.

 

10. Discontinued operations

SiS (Science in Sport) Limited , which was acquired by Provexis plc in June 2011, 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.

 

The Company incurred certain demerger costs as part of this process:

 

Year ended

31 March

2014

Year ended

31 March

2013

restated

 

£

£

 

 

 

Costs of demerger of SiS (Science in Sport) Limited

49,824

-

 

Pursuant to the terms of the demerger agreement Science in Sport plc allotted and issued to the holders of ordinary shares in the capital of Provexis plc 15,188,000 ordinary shares of 10 pence each in consideration of the transfer to Science in Sport plc by Provexis plc of the whole of the issued share capital of SiS (Science in Sport) Limited. Science in Sport plc was admitted to the AIM segment of the London Stock Exchangeʼs market for listed securities as from 9 August 2013.

 

At the date of the demerger, Science in Sport plc acquired the entire issued share capital of SiS (Science in Sport) Limited in return for issuing shares to the shareholders of Provexis plc.

 

These transactions resulted in the demerger of SiS (Science in Sport) Limited from the Group.

 

SiS (Science in Sport) Limited represented a separate major line of business for the Group under the definitions within IFRS 5, hence the results of SiS (Science in Sport) Limited up to the date of the demerger are shown as discontinued in these financial statements. Prior year comparatives have been restated as necessary. There is no impact on the prior year balance sheet.

 

Prior to the demerger, Provexis plc converted £448,163 of an intercompany debt from SiS (Science in Sport) Limited into equity by way of a capital contribution. At the time of the demerger, a payment of £290,000 was made to Provexis plc to settle the remaining outstanding intercompany debt.

 

The disclosures below relate to the SiS (Science in Sport) Limited demerged business segment.

 

a) The results of SiS (Science in Sport) Limited before demerger were as follows:

 


Period

Year


ended

ended


8 August

31 March


2014

2013


£

£




Revenue

2,617,857

5,522,240

Cost of goods

(1,096,643)

(2,418,177)

Gross profit

1,521,214

3,104,063

Research and development costs

(57,571)

(151,085)

Administrative costs

(1,449,638)

(3,343,966)

Underlying operating profit

147,962

74,330

Amortisation and impairment charges

(101,576)

(286,735)

Restructuring costs

(32,381)

(178,583)

Profit / (loss) from operations

14,005

(390,988)

Finance income

26

-

Finance costs

(2,214)

(3,275)

Profit / (loss) before taxation

11,817

(394,263)

Taxation

20,663

172,899

Loss and total comprehensive expense for the period

32,480

(221,364)

 

The results of discontinued operations were previously recorded in the SiS segment, see also note 3.

 

b) Income tax relating to the SiS (Science in Sport) Limited business is as follows:

 

 

Period

Year

 

ended

ended

 

8 August

31 March

 

2014

2013

 

£

£

Current tax income

 

 

United Kingdom corporation tax - research and development credit

-

-

Adjustment in respect of prior period

 

 

United Kingdom corporation tax - research and development credit

-

39,950

United Kingdom corporation tax - other adjustments

-

67,267

Total current tax income

-

107,217

Deferred tax

 

 

Origination and reversal of temporary differences

20,663

65,682

Tax on loss for the year

20,663

172,899

 



 

c) The profit from discontinued operations shown in the income statement is made up as follows:

 

 

Year

 

ended

 

31 March

 

2014

 

£

 

 

Profit in the financial period up to demerger of the discontinued business

32,480

Dividend in specie, at fair value - 1,518,650,979 shares at 0.56 pence

8,504,445

Net assets of SiS (Science in Sport) Limited business demerged

(775,799)

SiS intercompany debt converted into equity by way of a capital contribution

(448,163)

Intangible assets - goodwill at net book value

(4,437,991)

Intangible assets - other fair value adjustments on acquisition

(1,870,115)

Deferred tax

430,126

Profit for the year from discontinued operation

1,434,983

 

The value of the dividend in specie represents the fair value of SiS (Science in Sport) Limited, which has been derived from the placing price of Science in Sport plc at the time of the demerger, on admission.

 

11. Intangible assets

 


Goodwill

Development costs

Trademarks

Patents / recipes / formulations

Covenants not to compete

Customer relationships

Website development costs

Total

 


£

£

£

£

£

£

£

£










Cost









At 1 April 2013

11,703,268

158,166

1,004,029

180,886

22,480

1,228,696

174,999

14,472,524

Additions

-

-

-

-

-

-

7,172

7,172

Demerger of SiS

(Science in Sport)

(4,437,991)

-

(1,004,029)

(180,886)

(22,480)

(1,228,696)

(182,171)

(7,056,253)

At 31 March 2014

7,265,277

158,166

-

-

-

-

-

7,423,443










Amortisation and

impairment









At 1 April 2013

7,265,277

158,166

186,714

47,691

13,238

228,495

19,441

7,919,022

Charge for year

-

-

35,229

8,999

2,498

43,112

11,738

101,576

Demerger of SiS

(Science in Sport)

-

-

(221,943)

(56,690)

(15,736)

(271,607)

(31,179)

(597,155)

At 31 March 2014

7,265,277

158,166

-

-

-

-

-

7,423,443










Net book value









At 31 March 2014

-

-

-

-

-

-

-

-

At 31 March 2013

4,437,991

-

817,315

133,195

9,242

1,000,201

155,558

6,553,502





































Cost









At 1 April 2012

11,642,165

132,621

1,004,029

180,886

22,480

1,228,696

9,514

14,220,391

Additions

61,103

25,545

-

-

-

-

165,485

252,133

At 31 March 2013

11,703,268

158,166

1,004,029

180,886

22,480

1,228,696

174,999

14,472,524










Amortisation and

impairment









At 1 April 2012

4,603,398

38,546

81,027

20,696

5,745

99,158

2,218

4,850,788

Charge for year

-

-

105,687

26,995

7,493

129,337

17,223

286,735

Impairment

2,661,879

119,620

-

-

-

-

-

2,781,499

At 31 March 2013

7,265,277

158,166

186,714

47,691

13,238

228,495

19,441

7,919,022










Net book value









At 31 March 2013

4,437,991

-

817,315

133,195

9,242

1,000,201

155,558

6,553,502

At 31 March 2012

7,038,767

94,075

923,002

160,190

16,735

1,129,538

7,296

9,369,603










 

 

Development costs represent costs incurred in registering patents that meet the capitalisation criteria set out in IAS 38, see also note 1.

 



12. Goodwill and impairment

Goodwill arising on consolidation represents the excess of the cost of an acquisition over the fair value of the Group's share of the net assets of the acquired subsidiary at the date of acquisition. The consolidated balance sheet of the Group at the start of the prior year included goodwill relating to two cash generating units (CGUs), Provexis, in respect of Fruitflow®, and SiS.

 

SiS (Science in Sport) Limited, which was acquired by Provexis plc in June 2011, was demerged from Provexis by way of a capital reduction demerger with effect from 9 August 2013 and the goodwill arising on the cost of its acquisition in 2011 was reversed as part of the demerger.

 

For the Provexis CGU, a total non cash impairment loss of £2,781,499 was recognised in the year ended 31 March 2013, made up of the existing £2,661,879 carrying value of the Provexis CGU, and the related £119,620 of intangible assets, in respect of previously capitalised intangible development costs. At the time the impairment loss was recognised the proposed demerger of SiS (Science in Sport) Limited remained conditional inter alia upon the approval of the Company's shareholders at a General Meeting, and the confirmation of the Company's reduction of capital by the Court, hence for the purposes of IAS 36 it amounted to a future restructuring to which an entity was not yet committed.

 

The carrying amount of goodwill is allocated to the CGUs as follows:

 


Goodwill carrying amount


Year ended 31 March 2013

£


Provexis

SiS

Total

Provexis

SiS

Total








At start of year

-

4,437,991

4,437,991

2,661,879

4,376,888

7,038,767

Additions

-

-

-

-

61,103

61,103

Impairment charge for year

-

-

-

(2,661,879)

-

(2,661,879)

Demerger of SiS

(Science in Sport)

-

(4,437,991)

(4,437,991)

-

-

-

At end of year

-

-

-

-

4,437,991

4,437,991

 

Under IAS 36 the reversal of an impairment loss for goodwill is prohibited.

 



 

13. Plant and equipment

 

Leasehold improvements

Fixtures, fittings, plant and equipment

Laboratory equipment

Motor vehicles

Total

 

 

£

£

£

£

£

Cost

 

 

 

 

 

At 1 April 2013

230,956

659,045

147,145

11,527

1,048,673

Additions

-

106,453

-

-

106,453

Demerger of SiS

(Science in Sport)

(230,956)

(691,402)

-

(11,527)

(933,885)

At 31 March 2014

-

74,096

147,145

-

221,241

 

 

 

 

 

 

Depreciation

 

 

 

 

 

At 1 April 2013

58,706

198,528

147,145

9,374

413,753

Charge for the year

16,409

54,702

-

1,722

72,833

Demerger of SiS

(Science in Sport)

(75,115)

(179,134)

-

(11,096)

(265,345)

At 31 March 2014

-

74,096

147,145

-

221,241

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 31 March 2014

-

-

-

-

-

At 31 March 2013

172,250

460,517

-

2,153

634,920

 

 

 

Leasehold improvements

Fixtures, fittings, plant and equipment

Laboratory equipment

Motor vehicles

Total

 

 

£

£

£

£

£

Cost

 

 

 

 

 

At 1 April 2012

219,247

410,395

147,145

11,527

788,314

Additions

11,709

251,925

-

-

263,634

Disposals

-

(3,275)

-

-

(3,275)

At 31 March 2013

230,956

659,045

147,145

11,527

1,048,673

 

 

 

 

 

 

Depreciation

 

 

 

 

 

At 1 April 2012

10,706

90,699

84,270

4,209

189,884

Charge for the year

48,000

109,548

24,999

5,165

187,712

Impairment - site closure

-

-

37,876

-

37,876

Disposals

-

(1,719)

-

-

(1,719)

At 31 March 2013

58,706

198,528

147,145

9,374

413,753

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 31 March 2013

172,250

460,517

-

2,153

634,920

At 31 March 2012

208,541

319,696

62,875

7,318

598,430

 

The carrying amount of fixtures, fittings, plant and equipment includes an amount of £Nil (2013: £245,266) in respect of assets held under an asset loan agreement.

 



14. Inventories

 

31 March

2014

31 March

2013

 

£

£

 

 

 

Raw materials

-

503,093

Finished goods

-

410,294

 

-

913,387

 

During the year inventories of £816,438 (2013: £1,746,504) were recognised as an expense within cost of sales in discontinued operations.

 

15. Trade and other receivables

 

31 March

2014

31 March

2013

 

£

£

 

 

 

Amounts receivable within one year:

 

 

Trade receivables

-

755,106

Less: provision for impairment of trade receivables

-

(32,233)

Trade receivables - net

-

722,873

Other receivables

33,207

124,615

Total financial assets other than cash

and cash equivalents classified as loans and receivables

33,207

847,488

Prepayments and accrued income

79,430

405,817

Total trade and other receivables

112,637

1,253,305

 

Trade receivables represent debts due for the sale of goods to customers. The provision for impairment of receivables is estimated by the Group's management based on prior experience.

 

The balance at 31 March 2014 of £112,637 is £1,140,668 less than the prior year due predominantly to the demerger of SiS (Science in Sport) Limited in August 2013.

 

Trade receivables are denominated in Sterling. The directors consider that the carrying amount of these receivables approximates to their fair value. Trade and other receivables are categorised as loans and receivables under IAS 39.

 

All amounts shown under receivables fall due for payment within one year.

 

The Group does not hold any collateral as security.

 

As at 31 March 2014 trade receivables of £Nil (2013: £125,319) were past due but not impaired. They relate to customers with no default history. The ageing analysis of these receivables is as follows:

 

 

31 March

2014

31 March

2013

 

£

£

 

 

 

Up to 3 months

-

125,319

 

-

125,319

 

As at 31 March 2014 trade receivables of £Nil (2013: £32,233) were past due and impaired. The amount of the provision as at 31 March was £Nil (2013: £32,233).

 



 

Movements on the group provision for impairment of trade receivables are as follows

 

 

31 March

2014

31 March

2013

 

£

£

 

 

 

At beginning of the year

32,233

32,101

Provided during the year

2,000

5,750

Unused amounts reversed

-

(5,618)

Demerger of SiS (Science in Sport) Limited

(34,233)

-

 

-

32,233

 

The movement on the provision for impaired receivables has been included in administrative expenses within discontinued operations in the consolidated statement of comprehensive income.

 

Other classes of financial assets included within trade and other receivables do not contain impaired assets.

 

16. Cash and cash equivalents

 

31 March

2014

31 March

2013

 

£

£

 

 

 

Cash at bank and in hand

514,827

616,612

 

514,827

616,612

 

17. Trade and other payables

 

31 March

2014

31 March

2013

 

£

£

 

 

 

Trade payables

19,028

929,939

Other payables

-

109,171

Accruals

85,313

680,805

Total financial liabilities measured at amortised cost

104,341

1,719,915

Other taxes and social security

3,871

67,654

Total trade and other payables

108,212

1,787,569

 

The directors consider that the carrying amount of these liabilities approximates to their fair value.

 

All amounts shown fall due within one year.

 

18. Borrowings

 

31 March

2014

31 March

2013

 

£

£

 

 

 

Secured borrowings at amortised cost

 

 

Asset loan agreement at fixed rate

-

226,645

 

-

226,645

 

 

 

Amounts due for settlement within 12 months

-

64,774

Amounts due for settlement after 12 months

-

161,871

 

-

226,645

 

The asset loan agreement at 31 March 2013 was provided in September 2012 by HSBC Asset Finance (UK) Limited for SiS (Science in Sport) Limited, and it ceased to be a liability of the Provexis Group when SiS (Science in Sport) Limited was demerged from Provexis in August 2013.

 



 

19. Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 21% (2013: 23%).

 

Details of the deferred tax asset and liability are as follows:

 

 

Asset

2014

Liability

2014

Net

2014

Asset

2013

Liability

2013

Net

2013

 

£

£

£

£

£

£

 

 

 

 

 

 

 

Business combinations

-

-

-

-

(450,789)

(450,789)

Available losses

-

-

-

110,348

-

110,348

Net tax assets / (liabilities)

-

-

-

110,348

(450,789)

(340,441)

 

No amounts in respect of deferred tax were recognised in the income statement from continuing operations or charged / credited to equity for the current or prior year.

 

At 31 March 2014 a deferred tax asset of £Nil (2013: £110,348) was recognised in respect of tax losses in SiS and other temporary differences giving rise to deferred tax assets where the directors believed it was probable that these assets would be recovered. The directors made this assessment based on the evidence available from projected budgets, forecasts of profitability and post year end profitability of the entity.

 

Deferred tax assets amounting to £3,789,701 (2013: £4,030,256) have not been recognised on the basis that their future economic benefit is not certain. Assuming a prevailing tax rate of 21% (2013: 23%) when the timing differences reverse, the unrecognised deferred tax asset comprises:

 

 

Year ended

31 March

2014

Year ended

31 March

2013

 

£

£

 

 

 

Depreciation in excess of capital allowances

22,981

23,068

Other short term timing differences

1,540

1,540

Unutilised tax losses

3,745,123

3,922,672

Share-based payments

20,057

82,976

 

3,789,701

4,030,256

 

20. Share capital

On 11 September 2013 the Company announced that it had signed a new 5 year Equity Financing Facility ("EFF") with Darwin Strategic Limited ("Darwin"). The new facility, which is up to £10m, replaced the Company's existing EFF and warrant agreements with Darwin, dated 7 November 2011, which have accordingly been cancelled.

 

The new EFF agreement, dated 10 September 2013, provides the Company with a facility which (subject to certain limited restrictions) can be drawn down at any time over the 5 years ending on 9 September 2018. The timing and amount of any draw down is at the discretion of Provexis. Provexis is under no obligation to make a draw down and may make as many draw downs as its wishes, up to the total value of the EFF, by way of issuing subscription notices to Darwin. Following delivery of a subscription notice, Darwin will subscribe and Provexis will allot to Darwin new ordinary shares of 0.1p each ("Ordinary Shares").

 

The subscription price for any Ordinary Shares to be subscribed by Darwin under a subscription notice will be at a 7.5% discount to an agreed reference price determined during 5, 10 or 15 trading days following delivery of a subscription notice (the "Pricing Period"). The length of the Pricing Period is at the discretion of Provexis and is set at each relevant subscription notice. Provexis is also obliged to specify in each subscription notice a minimum price below which Ordinary Shares will not be issued.

 

EFF fee and warrant reserve

In consideration of Darwin agreeing to provide the EFF the Company agreed to:

 

(i)         Pay a fee to Darwin amounting to approximately £35,000 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 £125,000 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 ten million warrants issued to Darwin in conjunction with the September 2011 EFF were cancelled.

 

The warrants were measured at fair value at the date of grant using a Black-Scholes model, with the following assumptions:

 

Date of

grant

Exercise price

 

 

pence

Number of warrants

Share price at grant date

 

pence

Expected volatility

Risk free rate

Expected life

 

 

years

Fair value per share under warrant

pence









11-Sep-13

4.44

10,000,000

0.915

75%

0.79%

5

0.262

 

An expected dividend yield of 0% was used in the above valuation.

 

The assumption made for the expected life of the warrants is not necessarily indicative of the exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome.

 

The total fair value of the warrants, £26,200, has been held on the balance sheet within prepayments and in the warrants reserve within equity. The prepayment will be released against share premium as the equity financing facility is utilised. The warrants reserve will be released to share premium when the warrants are exercised. If the warrants lapse then the reserve is transferred to retained earnings.

 

Darwin or the Company may terminate the EFF in specified circumstances. The issue of subscription notices is subject to specified pre-conditions. The Company has provided warranties and indemnities to Darwin and affiliated persons.

 

Share re-organisation and reduction of capital

In August 2013, following a general meeting held on 15 July 2013, the Company undertook a share re-organisation and reduction of capital to facilitate the demerger of SiS (Science in Sport) Limited.

 

The demerger was effected by Provexis returning to Provexis shareholders capital in an amount equal to the market value of the ordinary shares of £1 each in the capital of SiS (Science in Sport) Limited as at 9 August 2013, the demerger effective date. The return of capital to Provexis shareholders was satisfied by the transfer by Provexis to Science in Sport plc of SiS (Science in Sport) Limited's ordinary shares of £1 each, and the allotment and issue of Science in Sport plc ordinary shares credited as fully paid to the holders of Provexis ordinary shares who were registered on the Provexis share register at 5.00 p.m. on 6 August 2013, the demerger record time, in accordance with the terms of the demerger agreement.

 

This involved:

(i)         the allotment and issue of Science in Sport Cancellation Shares credited as fully paid;

(ii)         the cancellation of the Company's existing 0.9p deferred shares of £3.6 million, followed by the cancellation of the Science in Sport Cancellation Shares and the reduction of Provexis' share premium account, which amounted to £8.5 million in aggregate;

(iii)        the return of capital by Provexis to Provexis shareholders of an amount equal to the market value of the SiS (Science in Sport) Limited ordinary shares of £1 each. The return of capital to Provexis shareholders was satisfied by the transfer by Provexis to Science in Sport plc of the SiS (Science in Sport) Limited ordinary shares of £1 each held by Provexis, and the allotment and issue of Science in Sport plc ordinary shares credited as fully paid by Science in Sport plc to Provexis shareholders who were registered on the Provexis share register at 5.00 p.m. on 6 August 2013, the demerger record time, on the basis of one Science in Sport plc ordinary share for every one hundred Provexis ordinary shares then held.

 

Science in Sport plc's share capital then comprised one ordinary share and 50,000 redeemable shares and, therefore, Provexis allotted and issued 50,000 redeemable shares in Provexis plc prior to the demerger becoming effective in order to ensure that the share capital of Science in Sport plc mirrored as nearly as may be the share capital of Provexis at the demerger record time. Provexis shareholders continued to hold their existing shares in Provexis and, immediately following the demerger, each Provexis shareholder held as nearly as may be the same percentage of Provexis plc ordinary shares and Science in Sport plc ordinary shares in each of Provexis and Science in Sport respectively. Science in Sport plc was admitted to trading on AIM on 9 August 2013.

 

Full details of the demerger, share re-organisation and reduction of capital were provided on 28 June 2013 in a circular to shareholders and in an AIM admission document for Science in Sport plc. The circular and AIM admission document are available to download from the Company's website www.provexis.com.

 

Allotted, called up and fully paid

Ordinary

0.1p shares

Deferred

0.9p shares

Science in Sport 0.1p Cancellation

Shares

Redeemable

£1 shares

Total


number

number

number

number

number







At 31 March 2013

1,518,650,979

401,724,366

-

-

1,920,375,345

Demerger  of SiS (Science in Sport)

- issue redeemable shares

-

-

-

50,000

50,000

Demerger  of SiS (Science in Sport)

- issue Science in Sport Cancellation Shares

-

-

1,518,650,979

-

1,518,650,979

Demerger  of SiS (Science in Sport)

- redeem redeemable shares

-

-

-

(50,000)

(50,000)

Demerger  of SiS (Science in Sport)

- cancel deferred shares

-

(401,724,366)

-

-

(401,724,366)

Demerger  of SiS (Science in Sport)

- cancel Science in Sport Cancellation Shares

-

-

(1,518,650,979)

-

(1,518,650,979)

Issued on subscription - equity financing facility

31,000,000

-

-

-

31,000,000

Issued for equity financing facility fee

3,414,635

-

-

-

3,414,635

Issued on exercise of share options

1,750,000

-

-

-

1,750,000

At 31 March 2014

1,554,815,614

-

-

-

1,554,815,614

 

 


Ordinary

0.1p shares

Deferred

0.9p shares

Science in Sport 0.1p Cancellation

Shares

Redeemable

£1 shares

Total


£

£

£

£

£







At 31 March 2013

1,518,651

3,615,519

-

-

5,134,170

Demerger  of SiS (Science in Sport)

- issue redeemable shares

-

-

-

50,000

50,000

Demerger  of SiS (Science in Sport)

- issue Science in Sport Cancellation Shares

-

-

1,518,651

-

1,518,651

Demerger  of SiS (Science in Sport)

- redeem redeemable shares

-

-

-

(50,000)

(50,000)

Demerger  of SiS (Science in Sport)

- cancel deferred shares

-

(3,615,519)

-

-

(3,615,519)

Demerger  of SiS (Science in Sport)

- cancel Science in Sport Cancellation Shares

-

-

(1,518,651)

-

(1,518,651)

Issued on subscription - equity financing facility

31,000

-

-

-

31,000

Issued for equity financing facility fee

3,415

-

-

-

3,415

Issued on exercise of share options

1,750

-

-

-

1,750

At 31 March 2014

1,554,816

-

-

-

1,554,816

 

 

Allotted, called up and fully paid

Ordinary

0.1p shares

Deferred

0.9p shares

Total

 

number

number

number

 

 

 

 

At 31 March 2012

1,469,832,215

401,724,366

1,871,556,581

Issued on exercise of share options

4,000,000

-

4,000,000

Issued on subscription - equity financing facility

44,818,764

-

44,818,764

At 31 March 2013

1,518,650,979

401,724,366

1,920,375,345

 

 

 Ordinary

0.1p shares

Deferred

0.9p shares

Total

 

£

£

£

 

 

 

 

At 31 March 2012

1,469,833

3,615,519

5,085,352

Issued on exercise of share options

4,000

-

4,000

Issued on subscription - equity financing facility

44,818

-

44,818

At 31 March 2013

1,518,651

3,615,519

5,134,170

 



 

During the year ended 31 March 2014 the Company issued ordinary shares of 0.1p each as follows:

 

Date

Reason for issue

Shares issued

 

 

£

Number

17.09.13

Share subscription - equity financing facility

31,000

31,000,000

17.09.13

Share subscription - equity financing facility fee

3,415

3,414,635

22.11.13

Exercise of share options

1,750

1,750,000

 

 

36,165

36,164,635

 

During the year ended 31 March 2013 the Company issued ordinary shares of 0.1p each as follows:

 

Date

Reason for issue

Shares issued

 

 

£

Number

27.04.12

Exercise of share options

4,000

4,000,000

23.05.12

Share subscription - equity financing facility

13,198

13,197,880

03.09.12

Share subscription - equity financing facility

31,620

31,620,884

 

 

48,818

48,818,764

 

21. 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.

 

The Company undertook a reverse takeover of Provexis Natural Products Limited ("PNP", formerly Provexis Limited) in June 2005 through a share for share exchange. Prior to the takeover the Company and PNP had granted EMI options and unapproved options. Options granted by the Company prior to the takeover remain subject to the same terms as contained in the individual share option contracts under which they were originally granted. The PNP EMI options and unapproved options were rolled over into options over the Company's ordinary shares, and these replacement options remain subject to the same terms as contained in the individual PNP share option contracts under which they were originally granted.

 

Following the demerger of SiS (Science in Sport) Limited in August 2013 appropriate modifications were proposed to the exercise price of certain outstanding EMI and unapproved share option awards under Provexis' share option schemes. The proposed modifications were to reflect the reduction in value of Provexis which arose from the share re-organisation, reduction of capital and demerger of SiS (Science in Sport) Limited, calculated on a pro rata basis immediately after the demerger using the respective market values of Provexis plc and Science in Sport plc, net of Science in Sport plc's August 2013 placing ("the Demerger Modifications").

 

Details of the share re-organisation, reduction of capital, demerger of SiS (Science in Sport) Limited and proposed option Demerger Modifications were provided on 28 June 2013 in a circular to shareholders and in an AIM admission document for Science in Sport plc, which are available to download from the Company's website www.provexis.com.

 

As envisaged in the June 2013 circular to shareholders an advance assurance was sought from HMRC to approve the variation in the exercise price arising out of the reduction of capital and demerger for unexercised EMI options as at 9 August 2013, the demerger effective date. The advance assurance was not successful, and the Company remains in dialogue with HMRC on this issue. On 20 August 2014 it was agreed that the modifications proposed to the exercise price of certain outstanding awards under Provexis' share option schemes would take immediate effect.

 

The fair values of the options granted during the year were estimated at the date of grant in accordance with IFRS 2, using a Black-Scholes model.

 

At 31 March 2014 the number of ordinary shares subject to options granted over the 2005 and prior option schemes were:

 

EMI options


31 March 2014


31 March 2013


Weighted average exercise price

(pence)

Weighted average share price

at date of exercise

(pence)

Number

Weighted average exercise price

(pence)

Weighted average share price

at date of exercise

(pence)

Number








Outstanding at the beginning of the year

1.44

-

55,802,021

1.42

-

59,802,021

Granted during the year

0.97

-

20,635,000

-

-

-

Exercised during the year

0.90

1.98

(1,750,000)

0.90

2.00

(4,000,000)

Cancelled during the year

2.56

-

(16,192,356)

-

-

-

Outstanding at the end of the year

0.78

-

58,494,665

1.44

-

55,802,021

 

The exercise price of EMI options outstanding at the end of the year ranged between 0.59p and 1.85p (2013: 0.9p and 6.28p) and their weighted average contractual life was 6.0 years (2013: 3.9 years).

 

Of the total number of EMI options outstanding at the end of the year, 49,844,675 (2013: 44,552,031) had vested and were exercisable at the end of the year. Their weighted average exercise price was 0.71 pence (2013: 1.09 pence).

 

Unapproved options

 

31 March 2014

31 March 2013

 

Weighted

average

exercise price

(pence)

Number

Weighted

average

exercise price

(pence)

Number

 

 

 

 

 

Outstanding at the beginning of the year

2.30

34,269,627

2.28

34,269,627

Granted during the year

0.97

19,365,000

-

-

Cancelled during the year

3.20

(1,488,782)

 

 

Outstanding at the end of the year

7.33

52,145,845

2.30

34,269,627

 

The exercise price of unapproved options outstanding at the end of the year ranged between 0.59p and 1.85p (2013: 0.9p and 6.28p) and their weighted average contractual life was 7.3 years (2013: 6.9 years).

 

Of the total number of unapproved options outstanding at the end of the year, 38,795,835 (2013: 10,919,617) had vested and were exercisable at the end of the year. Their weighted average exercise price was 1.27 pence (2013: 1.23 pence).

 

Grant of options

The fair values of the options have been estimated at the date of grant using a Black-Scholes model, using the following assumptions:

 

Tranche

 

Date of

grant

Exercise price

 

 

 

pence

Number of options

Share price at grant date

 

pence

Expected volatility

Risk free rate

Expected life

 

 

 

years

Fair value per share under option

 

pence










1

06-Jun-07

2.875

17,304,347

2.75

78%

4.44%

10

1.42

2

29-Nov-07

3.38

2,751,479

3.00

65%

3.77%

10

1.06

3

26-Aug-08

0.9

44,166,575

0.87

65%

4.45%

10

0.585

4

01-Oct-08

0.9

12,000,000

0.725

65%

4.39%

10

0.485

5

17-Jun-11

2.8

51,300,000

2.00

88%

4.48%

10

1.17

6

27-Jun-13

1.475

40,000,000

1.475

88%

0.79%

10

0.785










 

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 charge for the year relating to employee share-based payment plans was £391,191 (2013: £179,283) all of which related to equity settled share-based payment transactions.

 

22. Reserves


Share premium reserve

Warrant reserve

Merger reserve

Retained earnings

Total attributable to equity holders of the parent

Non-controlling interest

Total reserves


£

£

£

£

£

£

£









At 31 March 2012

19,998,832

60,000

6,599,174

(20,225,740)

6,432,266

(218,732)

6,213,534

Loss for the year

-

-

-

(4,338,600)

(4,338,600)

(53,106)

(4,391,706)

Share-based charges

-

-

-

179,283

179,283

-

179,283

Issue of shares - exercise of share options

32,000

-

-

-

32,000

-

32,000

Issue of shares - equity financing facility 23 May 2012

230,504

-

-

-

230,504

-

230,504

Issue of shares - equity financing facility 3 September 2012

508,087

-

-

-

508,087

-

508,087

At 31 March 2013

20,769,423

60,000

6,599,174

(24,385,057)

3,043,540

(271,838)

2,771,702

Loss for the year

-

-

-

488,353

488,353

(51,634)

436,719

Share-based charges

-

-

-

391,191

391,191

-

391,191

Demerger of SiS (Science in Sport) - issue SiS cancellation shares

(1,518,651)

-

-

-

(1,518,651)

-

(1,518,651)

Demerger of SiS (Science in Sport) - transfer to Science in Sport plc

(3,370,275)

-

-

-

(3,370,275)

-

(3,370,275)

Warrants cancelled during the period - equity financing facility

2,038

(60,000)

-

-

(57,962)

-

(57,962)

Warrants issued during the period - equity financing facility

-

26,200

-

-

26,200

-

26,200

Issue of shares - equity financing facility 11 September 2013

255,750

-

-

-

255,750

-

255,750

Issue of shares - equity financing facility fee 11 September 2013

31,585

-

-

-

31,585

-

31,585

Issue of shares - share options exercised 22 November 2013

14,000

-

-

-

14,000

-

14,000

At 31 March 2014

16,183,870

26,200

6,599,174

(23,505,513)

(696,269)

(323,472)

(1,019,741)

 

The following describes the nature and purpose of each reserve within total equity:

 

Share capital

Amount subscribed for share capital at nominal value.

Share premium

Amount subscribed for share capital in excess of nominal value.

Warrant reserve

The warrant reserve represents warrants issued as part of the Equity Financing Facility (see note 20).

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.

Retained earnings

Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

 

23. 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 2014 amounted to £7,624 (2013, restated: £1,552). Pension contributions payable but not yet paid at 31 March 2014 totalled £3,871, in respect of pension contribution entitlements where employees had not yet provided details of the funds to which the contributions should be made (2013: £9,057).

 



 

24. Operating lease commitments

Future minimum rentals payable under non-cancellable operating leases are as follows:

 

 

31 March

2014

31 March

2013

 

£

£

Due within 1 year

8,151

189,403

Due between 1 year and 2 years

-

151,342

Due between 2 years and 5 years

-

186,762

 

8,151

527,507

 

Operating lease payments primarily represent rentals payable by the Group for various offices. The leases have various terms, escalation clauses and renewal rights typical of lease agreements for the class of asset.

 

25. 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® in all major global markets. DSM has invested substantially in the manufacture, technology development, marketing and sale of Fruitflow® 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. It is not possible to determine the financial impact of the Alliance Agreement at this time.

 

DSM is classified as a related party of the Group in accordance with IAS 24 as it holds shares in the Group. Further, K Rietveld is a director of the Company, and a senior employee of DSM. The directors of Provexis (the "Directors"), having consulted with Cenkos Securities Limited ("Cenkos Securities"), the Company's nominated adviser, consider that the terms of the Alliance Agreement are fair and reasonable insofar as Provexis's shareholders are concerned. In providing advice to the Directors, Cenkos Securities has taken into account the Directors' commercial assessments.

 

Revenue recognised by the Group under agreements with DSM amounted to £3,967 (2013: £34,351). At 31 March 2014 the Group was owed £Nil (2013: £23,009) by DSM.

 

Key management compensation

The directors represent the key management personnel. Details of their compensation and share options are given in note 6.

 

26. Post balance sheet events

On 23 April 2014 the Group announced that it had raised net proceeds of £45,403 by drawing down on its Equity Financing Facility with Darwin Strategic Limited.

 

Under the terms of the Equity Financing Facility agreement the Company allotted 7,000,000 new ordinary shares of 0.1p each to Darwin Strategic Limited which were admitted to AIM on 29 April 2014.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Provexis (PXS)
UK 100

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