Preliminary Results
Provexis PLC
22 July 2005
Provexis plc
22 July 2005
PROVEXIS plc
('Provexis' or the 'Group')
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005
Provexis plc, the leading nutraceutical business and developer and marketer of
superior functional foods, announces its preliminary results for the year ended
31 March 2005
Key points for the period:
• Turnover increased to £609,000 (2004: £75,000)
• Loss before share option costs £1,319,000 (2004: £855,000)
• Cash balances £1,106,000 (2004: £187,000)
Following a successful reverse take-over of Nutrinnovator Holdings plc and
fund-raising the new Provexis plc was re-admitted to trading on the AIM market
of the London Stock Exchange plc on 23 June 2005
Stephen Franklin, Chief Executive Officer of Provexis plc, commented:
'It was a year of considerable progress for the business which culminated, after
the year end, in the reverse takeover, fundraising and re-admission to AIM by
Provexis on 23rd June 2005.
The enlarged business has a management team which combines experienced marketing
and sales talent with strong scientific credentials and capability coupled with
a strong pipeline of innovative products that clearly differentiates us in the
functional foods market.
We believe the Group is well positioned to take advantage of the strong growth
in functional foods and with Sirco, our heart health drink, scheduled to be
launched later this year we look forward to the future with confidence.'
For further information, please contact:-
Provexis plc Tel: 020 8392 6631
Stephen Franklin, Chief Executive Officer Mob: 07710 348774
Stephen Moon, Commercial Director
Arbuthnot Securities Limited Tel: 020 7012 2000
Tom Griffiths
Bell Pottinger Tel: 020 7861 3932
Ann-marie Wilkinson
Chairman's statement
The Group achieved considerable progress both in the year under review and since
the year end, culminating in the successful reverse takeover by Provexis Limited
of Nutrinnovator Holdings plc and the associated fundraising and re-admission of
the new Provexis plc to trading on the AIM market of the London Stock Exchange
plc on 23 June 2005.
The functional food sector continues to grow strongly in all major markets
worldwide, and the strategy of developing food and beverage products to meet
this demand was implemented effectively by the management team.
September 2004 saw the management agree a joint venture with Provexis Limited to
co-develop and commercialise Sirco(TM), a functional fruit juice proven to
maintain heart health. Sirco(TM) contains Fruitflow(TM), a patented bioactive
food technology developed over a five year period by Provexis Limited. As this
venture developed, the complementary skills of the respective management teams
became apparent, resulting in us entering discussions with Nutrinnovator to
combine the businesses by means of a reverse takeover.
Management have developed a strong functional food pipeline, through their
relationships with globally renowned research institutes both in the UK and New
Zealand, and have accessed new technologies in the areas of cancer prevention
and heart health.
Management has focused on cash preservation and despite slower than expected
trading of Altu food bar and investment of resource into development of the
pipeline, cash balances at the year end were in line with expectations.
The reverse takeover resulted in the resignation of three directors in
preparation for the merging of the Nutrinnovator and Provexis businesses. Doug
Gardner and Thornton Mustard have left the Group, and I wish to thank them for
their efforts in developing the Nutrinnovator business. Fiona Vigar has stepped
down from the Board of the enlarged group, but continues to play an important
role as Director of Marketing.
With the benefit of the combined skills of the new management team, the depth of
the science-based functional food pipeline and the forthcoming launch of
Sirco(TM) with major food retailers in the UK, management are confident in its
ability to enhance shareholder value.
Dawson Buck
Chairman
Management review
The enlarged business has a management team which now combines experienced
marketing and sales talent with strong scientific credentials and capability.
This mix of talent is core to our competitive advantage in a market where few
companies are able to both develop, and successfully market,
scientifically-proven functional foods.
SircoTM heart health juice
The Group has successfully developed and is preparing to launch Sirco(TM), the
first heart health drink to contain the patented FruitflowTM technology.
FruitflowTM, developed by Provexis Limited under the name CardioFlow(R), is a
natural bioactive food ingredient extracted from tomato. When added to a fruit
juice drink, where the extract is colourless and tasteless, it delivers proven
heart health benefits to the consumer within hours of consumption. Fruitflow(TM)
was developed by Provexis in order to help regular 'healthy' consumers reduce
the risk of heart attack and stroke. The natural bioactive works by reducing
blood platelet aggregation, a significant contributing factor to a thrombosis
(internal blood clot).
Considerable progress has been made with the new Sirco(TM) brand and two
varieties (Orange, and Blueberry & Apple) have been developed in both one litre
cartons and 250ml bottles.
The product will carry the claim 'Helps to Maintain a Healthy Heart and Benefits
Circulation' and this is supported by scientific data developed by Provexis over
the last four years.
Positive discussions have been held with major retailers regarding the launch of
SircoTM and the UK launch date will be announced in due course.
Altu food bar
The limited investment in the Altu food bar, combined with a highly competitive
market, resulted in sales of £299,667, significantly below expectations. The
product enjoys national retail distribution in Waitrose, Boots, Holland &
Barrett and Julian Graves, together with some wholesale distribution. A
multipack format was launched in Waitrose in March, and Boots have agreed to
extend the range and distribution in their stores.
We believe that the palatability and nutritional values of the Altu product may
lend itself as a vehicle to carry future functional food products. As most
functional food products are either beverages or bars, Altu enables the business
to potentially exploit both categories in the future. The Board of the enlarged
group have agreed to closely monitor and review the future of the brand.
New product development
The emergence of the Fruitflow(TM) opportunity resulted in the withdrawal of
Altu Black, the lower sugar cola, following a London-based test marketing
exercise. Whilst this exercise established the potential of the Altu Black
product, management felt that continuing to seek technologies with a point of
difference based on scientifically-supported functional claims offered greater
opportunities to enhance shareholder value.
The Group reached heads of agreement with The Riddet Centre, a New Zealand based
research institute, for a long-term collaboration with the Group having a right
of first view of the Riddet pipeline. In addition, a specific Omega-3 heart
health technology is currently being assessed, with a view to the Group entering
into a joint venture agreement with The Riddet Centre to commercialise it.
We are also in negotiation with both The Institute of Food Research and Seminis
Inc. to develop beverages with an active ingredient which is shown to reduce the
risk of developing certain types of cancer.
The enlarged group (from the former Provexis Limited product development
portfolio) now also benefits from a novel medical food product in development
for the dietary management of Crohn's Disease. Crohn's Disease is a chronic,
relapsing disease of the intestine which affects 1 in a 1000 people in the UK.
Management of the condition is currently restricted to various drug regimes and
surgery. The medical food, containing a patented extract from plantain, has
successfully completed a pre-clinical phase and enters a human trial later in
the year.
The Group has a three year technology acquisition agreement with Plant
Bioscience Limited who continue to access their global network of 35 research
institutes to find further functional food opportunities.
Financial performance
The Group focused primarily on cash preservation, given the slower than expected
trading of Altu food bar and the resource requirements of the new product
development strategy. Cash balances of £1,105,689 at the year end were in line
with expectations.
The Group incurred losses of £1,824,094, which included a charge of £505,636
related to share options under accounting treatments UITF 17 and UITF 25. Net
assets were £509,823 at the year end.
Revenues were £608,667 which included £298,667 of Altu food bar sales, and a
further £310,000 paid to the Group by Provexis Limited as part of a cost
recovery agreement which reimbursed the Group for product development costs
related to the new Sirco(TM) product.
Outlook
We believe the Group is well positioned to take advantage of the strong growth
in functional foods. The quality of the science which will underpin our product
claims and the speed with which we are able to develop and launch new products
are both, in our view, primary differentiators from the competition.
The major focus for management is the launch and establishment of the Sirco(TM)
heart health product. Discussions with retailers, the development of the
marketing and PR strategy, and the development of the required chilled supply
chain are all well advanced.
In addition, we will continue to maintain and develop the current distribution
base for the Altu Food Bar and ongoing negotiations and technology acquisition
discussions with new product development partners will continue, with the
intention of building a solid future product pipeline.
Stephen Franklin
Chief Executive Officer
Provexis plc
Consolidated profit and loss account for the year ended 31 March 2005
____________________________________________________________________________________________
Ten months
Year ended ended
31 March 31 March
Note 2005 2004
£ £
Turnover 608,667 74,878
Cost of sales (469,695) (52,328)
________ ________
Gross profit 138,973 22,550
Distribution costs (30,821) (9,575)
Administrative expenses
Share option costs 3 (505,636) -
Other administrative expenses (1,441,158) (872,854)
________ ________
(1,946,794) (872,854)
Operating loss (1,838,642) (859,879)
Interest receivable 34,286 5,866
Interest payable and similar charges (19,738) (543)
________ ________
Loss on ordinary activities
before and after taxation
and transferred from reserves (1,824,094) (854,556)
________ ________
Loss per ordinary share
Basic and diluted, pence (11.4) (6.4)
________ ________
All amounts relate to continuing activities.
All recognised gains and losses in the current and prior periods are included in
the profit and loss account.
Provexis plc
Consolidated balance sheet at 31 March 2005
_____________________________________________________________________________________________________
31 March 31 March 31 March 31 March
Note 2005 2005 2004 2004
£ £ £ £
Fixed assets
Tangible assets 11,455 17,228
Current assets
Stocks 47,243 61,891
Debtors 288,984 57,225
Cash at bank and in hand 1,105,689 186,938
________ ________
1,441,916 306,054
________ ________
Creditors: amounts falling due
within one year
Convertible debt (400,000) -
Other (543,548) (215,362)
________ ________
(943,548) (215,362)
________ ________
Net current assets 498,368 90,692
________ ________
Total assets less current liabilities 509,823 107,920
Creditors: amounts falling due
after more than one year - (129)
________ ________
Net assets 509,823 107,791
________ ________
Capital and reserves
Called up share capital 332,184 265,583
Share premium account 4 1,335,192 -
Merger reserve 4 1,137,616 777,517
Share option reserve 4 420,903 -
Profit and loss account 4 (2,716,073) (935,309)
________ ________
Shareholders' funds - equity 509,823 107,791
________ ________
Provexis plc
Consolidated cash flow statement for the year ended 31 March 2005
____________________________________________________________________________________________________
Ten months Ten months
Year ended Year ended ended ended
31 March 31 March 31 March 31 March
Note 2005 2005 2004 2004
£ £ £ £
Net cash outflow from operating
activities 5 (1,247,519) (767,645)
Returns on investments and
servicing of finance
Interest received 25,566 5,854
Interest paid on convertible loan
notes (16,900) -
Interest element of finance lease
rental payments (238) (543)
______ ________
8,428 5,311
Capital expenditure
Purchase of tangible fixed assets (2,282) (15,315)
________ ________
Cash outflow before use of liquid
resources and financing (1,241,373) (777,649)
Financing
Issue of ordinary share capital 2,025,080 1,314,100
Exercise of share options 1,884 -
Cost of share issues (265,071) (391,000)
Capital element of finance lease rental
payments (1,769) (1,671)
Issue of convertible loan notes 400,000 -
________ ________
Cash inflow from financing 2,160,124 921,429
________ ________
Increase in cash in the year 6 918,751 143,780
________ ________
Notes
1 Financial information
The financial information in this statement does not constitute the Company's
statutory accounts for the year ended 31 March 2005 but is derived from those
accounts. Statutory accounts for 2005 will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The auditors have
reported on those accounts: their report was unqualified and did not contain
statements under sub-sections 237(2) or(3) of the Companies Act 1985. This
preliminary announcement of results for the year ended 31 March 2005 was
approved by the directors on 22 July 2005.
The Annual General Meeting of the Company will be held at the offices of
Pinsent Masons, Dashwood House, 69 Old Broad Street, London EC2M 1NR on Tuesday
23 August 2005 at 10.00 am.
2 Accounting policies
The financial statements have been prepared under the historical cost convention
and are in accordance with applicable accounting standards. In preparing these
financial statements the group has adopted merger accounting as set out in
Financial Reporting Standard (FRS) 6 'Acquisitions and Mergers'. The following
principal accounting policies have been applied:
Basis of consolidation
The consolidated financial statements incorporate the results of Provexis plc
and all of its subsidiary undertakings as at 31 March 2005 using the merger
method of accounting.
Merger accounting
Provexis plc was incorporated on 15 April 2004 and, following a group
reorganisation effected on 12 May 2004, it acquired its interest in Provexis
Nutrition Limited (formerly Nutrinnovator Limited) in consideration for the
issue of shares.
In accordance with the principles of merger accounting as set out in FRS 6
'Acquisitions and Mergers', the group financial statements have been prepared as
if Provexis Nutrition Limited had always been a member of the group, with its
results being included for the full period in which it has joined the group.
The corresponding figures for the previous period include its results for that
period, the assets and liabilities at the previous balance sheet date and the
shares issued by the Company as consideration as if they had always been in
issue. The comparatives for the previous period are for the ten months ended 31
March 2004 as Provexis Nutrition Limited changed its accounting reference date
from 31 May to 31 March in that period. The difference between the nominal
value of the shares acquired by the Company and those issued by the Company to
acquire them is taken to reserves.
Share based employee remuneration
When shares and share options are awarded to employees a charge is made to the
profit and loss account based on the difference between the market value of the
Company's shares at the date of grant and the option exercise price in
accordance with UITF Abstract 17 (Revised 2003) 'Employee Share Schemes'. The
credit entry for this charge is taken to the profit and loss reserve and
reported in the reconciliation of movements in shareholders' funds.
National Insurance on Share Options
To the extent that the share price at the balance sheet date is greater than the
exercise price on options granted after 19 May 2002, provision for any National
Insurance contribution has been made based on the prevailing rate of National
Insurance. The provision is accrued over the performance period attaching to
the award.
3 Share option costs Ten months
Year ended ended
31 March 31 March
2005 2004
£ £
UITF 17 charge in respect of share options
granted at below market price 464,233 -
UITF 25 charge in respect of employer's
national insurance on option benefit 41,403 -
________ ________
505,636 -
________ ________
4 Reserves
Share Share Profit
premium Merger option and loss
account reserve reserve account
£ £ £ £
At 1 April 2004 - 777,517 - (935,309)
Premium on share issue 1,650,263 - - -
Share issue costs (315,071) - - -
Shares issued by Provexis Nutrition
Limited prior to group reconstruction - 360,099 - -
Loss for the year - - - (1,824,094)
Share options granted - - 464,233 -
Reserve transfer on share options
exercised - - (43,330) 43,330
________ ________ ________ ________
At 31 March 2005 1,335,192 1,137,616 420,903 (2,716,073)
________ ________ ________ ________
The merger reserve as at 1 April 2004 of £777,517 is the difference between the
£265,583 nominal value of the shares issued by Provexis plc on the share for
share exchange and the total of the share capital of Provexis Nutrition Limited
of £274,600 and the associated share premium of £768,500 as at 1 April 2004.
5 Reconciliation of operating loss to net cash inflow from operating
activities
Ten months
Year ended ended
31 March 31 March
2005 2004
£ £
Operating loss (1,838,642) (859,879)
Depreciation 8,057 4,480
UITF 17 charge 464,233 -
Increase in stocks 14,648 (61,891)
Increase in debtors (223,040) (45,871)
Increase in creditors 327,225 195,516
________ ________
Net cash outflow from operating activities (1,247,519) (767,645)
________ ________
6 Reconciliation of net cash flow to movement in net funds
Ten months
Year ended ended
31 March 31 March
2005 2004
£ £
Increase in cash in the year 918,751 143,780
Cash (inflow)/outflow from increase in debt (398,231) 1,671
________ ________
Change in net funds resulting from cash flows 520,520 145,451
New finance leases - (1,249)
________ ________
Movement in net funds in the year 520,520 144,202
Opening net funds 184,547 40,345
________ ________
Closing net funds 705,067 184,547
________ ________
7 Analysis of net funds
At At
1 April Cash 31 March
2004 flow 2005
£ £ £
Cash at bank and in hand 186,938 918,751 1,105,689
________
918,751
Obligations under finance leases (2,391) 1,769 (622)
Convertible loan notes
- (400,000) (400,000)
________
(398,231)
________ ________ ________
Total 184,547 520,520 705,067
________ ________ ________
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