TIDMPXS
RNS Number : 4653N
Provexis PLC
30 September 2021
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the UK Market Abuse Regulation.
With the publication of this announcement, this information is now
considered to be in the public domain.
30 September 2021
Provexis plc
("Provexis" or the "Company")
PRELIMINARY RESULTS for the YEAR ended 31 MARCH 2021
Provexis plc ('Provexis' or the 'Company'), the business that
develops, licenses and sells the proprietary, scientifically-proven
Fruitflow(R) heart-health functional food ingredient, announces its
audited preliminary results for the year ended 31 March 2021.
Key highlights
-- Total revenue for the year GBP505k, a 45% year on year increase (2020: GBP348k).
-- Planned launch by By-Health, a circa GBP5bn listed Chinese
dietary supplement business, of a number of Fruitflow based
products in the Chinese market is progressing well. Potential sales
volumes remain at a significant multiple of existing Fruitflow
sales.
-- By-Health has made a significant investment in eight separate
studies in China, at its sole expense, in support of the Fruitflow
based products which it plans to launch in China.
-- The five studies which have been completed by By-Health
showed excellent results in use for Fruitflow, and provide strong
evidence for By-Health in its regulatory submissions to the Chinese
State Administration for Market Regulation (SAMR) for
Fruitflow.
-- By-Health is now working on an extensive regulatory
submission to the SAMR for Fruitflow, seeking to establish a new
permitted health function claim for food ingredients such as
Fruitflow that can demonstrate an anti-platelet effect, addressing
the aberrant blood clots which can lead to heart attacks and
strokes.
-- By-Health currently expects to be in a position to complete
the last of its eight studies and file its regulatory submission to
the SAMR for Fruitflow in the first half of 2022. If By-Health is
successful in obtaining a new permitted health function claim it is
currently expected that this would result in some significant
orders for Fruitflow, potentially at a multiple of current total
sales values.
-- The Company and its commercial partner DSM have been engaged
in constructive negotiations, working towards a new agreement for
Fruitflow for the period after 31 December 2022.
-- By default from 1 January 2023 the existing Alliance
Agreement (i) permits DSM to continue to sell Fruitflow to its
existing customers, on the basis that a royalty on Fruitflow sales,
fixed at favourable market conditions, will remain payable to the
Company; and (ii) permits the Company to sell Fruitflow as an
ingredient directly to third parties, outside the existing profit
sharing arrangements. The Company will provide shareholders with a
further update in due course.
-- Fruitflow has been recognised in a further four published
scientific journals, two of them in the context of COVID-19; the
Frontiers in Nutrition journal stated that nutraceuticals such as
Fruitflow may serve as a 'safe antiplatelet prophylactic treatment
for those at high risk of COVID-19.'
-- GBP1.0 million placing completed in December 2020,
significantly strengthening the Company's capital base and
de-risking the business.
-- Purchase of background and joint foreground Oslo blood
pressure lowering IP in August 2020, for a total consideration of
11.5m new ordinary shares in Provexis, giving the Company full
ownership of its four key patent families for Fruitflow.
-- Underlying operating loss* reduced to GBP225k, 30% lower than
the prior year (2020: GBP321k) and another new record low for the
Group for the year.
-- Cash GBP1.077m at 31 March 2021 (2020: GBP291k).
*before share-based payments of GBP135k (2020: GBP104k), as set
out on the face of the Consolidated Statement of Comprehensive
Income
Annual report and accounts and notice of AGM
The Company's annual report and accounts for the year ended 31
March 2021 and the AGM notice are available from the Shareholder
information section of the Company's website www.provexis.com now,
and from the address below:
The Company Secretary
Provexis plc
2 Blagrave Street
Reading
RG1 1AZ
The Company's annual report and accounts and its AGM notice will
be distributed by post today to those shareholders who have elected
to continue to receive paper communications.
Proxy forms for use in connection with the AGM will also be
distributed by post today to all shareholders on the Company's
share register.
The AGM will be held at 12:30pm on 4 November 2021 at the
offices of Allenby Capital Limited, 5th Floor, 5 St Helen's Place,
London EC3A 6AB.
For further information please contact:
Provexis plc Tel: 07490 391888
Ian Ford, CEO enquiries@provexis.com
Dawson Buck, Chairman
Allenby Capital Limited Tel: 020 3328 5656
Nick Naylor / Liz Kirchner
Chairman and CEO's statement
The Company has had a very active year, and it has made some
significant progress with the commercial prospects of its
innovative, patented Fruitflow(R) heart-health ingredient.
The Company is pleased to report a 45% year on year increase in
revenues to GBP505k (2020: GBP348k), reflecting:
-- An increase in the net income received from the Company's
Alliance Agreement with DSM, which grew by 54% to GBP358k in the
year (2020: GBP233k);
-- An increase in revenue, net of sales rebates, from the
Company's Fruitflow+ Omega-3 business, including the Company's
website www.fruitflowplus.com, Amazon UK, Holland & Barrett,
and the Company's distributor for Fruitflow+ Omega-3 in China
through the CBEC channel. This business grew by 20% to GBP138k, net
of sales rebates, in the year (2020: GBP115k).
-- Amounts of GBP9k received in the year for Fruitflow+ nitrates
development products, compared to amounts of GBPNil in the prior
year.
Underlying operating loss for the year was GBP225k, 30% lower
than the prior year (2020: GBP321k) and a new record low number for
the Group.
By-Health Co., Ltd.
The Company has previously announced it was working with
By-Health Co., Ltd. ('By-Health'), a listed Chinese dietary
supplement business valued at approximately GBP5bn, to support the
planned launch of a number of Fruitflow based products in the
Chinese market, with potential volumes at a significant multiple of
existing Fruitflow sales.
The planned launch of Fruitflow based products in the Chinese
market has been progressing well. Clinical studies conducted in
China are typically required to obtain the necessary regulatory
clearances in China, and a significant investment in eight separate
Fruitflow studies has been undertaken at By-Health's expense.
Five studies have been successfully completed in China, and two
clinical studies and one animal study are currently ongoing.
The five completed studies showed excellent results in use for
Fruitflow, and they provide strong evidence for By-Health in its
regulatory submissions to the State Administration for Market
Regulation (SAMR), China's top market regulator. Regulatory
submissions to the SAMR are also supported by the Company's
existing European Food Safety Authority ('EFSA') health claim for
Fruitflow.
The existing Chinese SAMR regulatory system for functional
health food ingredients such as Fruitflow is based on a defined
list of 27 permitted health function claims, which brand owners are
permitted to use on product labels.
Health function claims are based on test methods and criteria
that have been systematically evaluated and verified, and it is
currently envisaged that the existing list of 27 permitted health
function claims will be reduced to a revised list of 24 permitted
claims. The SAMR provides the possibility of adding new health
function claims to the list, as long as the claim can be evaluated
and verified by the SAMR.
Under SAMR regulations functional health foods need to indicate
a relationship between a food or nutrient and a consequent health
improvement which falls under one of the permitted health function
claims. This relationship must be supported by scientific tests
which are performed by the SAMR.
SAMR certified functional health foods are required to use a
blue cap / blue hat logo on their product packaging, which
identifies products as approved functional health foods.
By-Health's regulatory clearance preparations for Fruitflow were
originally focussed on obtaining blue cap health claim status for
some Fruitflow based products in China, under the existing 27
permitted health function claim structure.
By-Health is now working on an extensive regulatory submission
to the SAMR for Fruitflow, seeking to establish a new permitted
health function claim for foods such as Fruitflow that can
demonstrate an anti-platelet effect, inhibiting platelet function
and conferring beneficial effects for people who are at risk of
platelet hyperactivity-associated thrombosis - the aberrant blood
clots which lead to heart attacks and strokes.
By-Health has recently updated its website
www.by-health.com/en/aboutus stating that it has completed:
'Research comprehensively in the cardiovascular health area. We
have developed a new product made with Fruitflow(R), popularly
known as 'natural Aspirin'. It helps to maintain normal platelet
aggregation.'
By-Health currently expects to be in a position to complete the
last of its eight studies and file its regulatory submission to the
SAMR for Fruitflow in the first half of 2022, seeking to obtain a
new permitted health function claim which would be in addition to
the currently defined list of 27 (reducing to 24) permitted claims.
Subject to the timing the new anti-platelet claim, if approved,
would therefore represent the 28(th) - or the 25(th) - permitted
health function claim in China.
If By-Health is successful in obtaining a new permitted health
function claim for functional health foods such as Fruitflow that
can demonstrate an anti-platelet effect, it is currently expected
that this would result in some significant orders for Fruitflow,
potentially at a multiple of current total sales values. The
Company will provide shareholders with as much information as it
can on the timing of this commercially sensitive and potentially
transformative process, subject to the multi-party confidentiality
arrangements which surround the process.
A study backed by scientists from the National Center for
Cardiovascular Diseases in China which was updated in 2020
(www.ncbi.nlm.nih.gov/pmc/articles/PMC7008101/#) stated that:
-- The prevalence of Cardiovascular Disease ('CVD') in China has
been increasing continuously since 2006, with approximately 290
million patients in China who now have CVD;
-- Two in five deaths in China are attributed to CVD, with CVD
remaining the leading cause of death in 2016.
In December 2020 the WHO reported
(www.who.int/news/item/09-12-2020-who-reveals-leading-causes-of-death-and-disability-worldwide-2000-2019):
'Heart disease has remained the leading cause of death at the
global level for the last 20 years. However, it is now killing more
people than ever before. The number of deaths from heart disease
increased by more than 2 million since 2000, to nearly 9 million in
2019. Heart disease now represents 16% of total deaths from all
causes. More than half of the 2 million additional deaths were in
the WHO Western Pacific region.' The WHO Western Pacific region
includes China.
By-Health's long-term goal of science-based nutrition is to
achieve 'comprehensive intervention for human health'
(www.by-health.com/en/aboutus), and the Company continues to
believe that Fruitflow has the potential to play an important role
in the Chinese cardiovascular health market.
DSM Nutritional Products
The Company's Alliance partner DSM Nutritional Products ('DSM')
has continued to develop the market for Fruitflow in all global
markets. More than 90 regional consumer healthcare brands have now
been launched by direct customers of DSM, and a number of further
regional brands have been launched through DSM's distributor
channels.
An increasing number of further commercial projects have been
initiated with prospective customers, including some prospective
customers which are part of global businesses, and the total
projected annual sales value of the prospective sales pipeline for
Fruitflow continues to stand at a substantial multiple of existing
annual sales.
The Company and DSM have experienced increased consumer interest
for Fruitflow over the past eighteen months in light of the
COVID-19 pandemic, as consumers have looked to nutritional
interventions to help them fortify the circulatory system against
the effects of COVID-19. This helped to generate an increase in the
net income received by the Company from the Alliance Agreement with
DSM for the financial year, which grew by 54% to GBP358k (2020:
GBP233k). More recently some of the growing markets for Fruitflow
in the Asia Pacific region have been affected in the short term by
lockdowns and other COVID-19 disruptions, leading to more erratic
demand which has seen a 9.5% fall in revenues in the first quarter
of the 2021/22 financial year for this business, relative to a very
strong first quarter in 2020/21.
The Alliance Agreement with DSM dates back to June 2010, with a
contractual term which runs to 31 December 2022.
By default from 1 January 2023 the agreement (i) permits DSM to
continue to sell Fruitflow to its existing customers, on the basis
that a royalty on Fruitflow sales, fixed at favourable market
conditions, will remain payable to the Company; and (ii) permits
the Company to sell Fruitflow as an ingredient directly to third
parties, outside the existing profit sharing arrangements.
The Company and DSM have started and are currently engaged in
constructive negotiations working towards a new agreement. The
commercial terms of the negotiations remain confidential between
the two parties, and the Company will provide shareholders with a
further update in due course.
Fruitflow+ dietary supplement products
Fruitflow+ Omega-3 is available to purchase from the Company's
subscription focussed e-commerce website www.fruitflowplus.com,
Amazon UK and Holland & Barrett.
In November 2020 the Company announced it had entered into a
distribution agreement with a company which is now acting as the
distributor for Fruitflow+ Omega-3 in China, exclusively through
the Chinese Cross-Border e-commerce ('CBEC') channel. A first test
order has been placed by the distributor and shipped to China.
The distribution agreement in China is separate but wholly
complementary to the Company's work with By-Health, with the CBEC
regulations enabling the distributor to sell Fruitflow+ Omega-3 in
China now, prior to the health function claim which By-Health is
seeking to secure.
Fruitflow+ Omega-3 has a social media presence on Facebook
www.facebook.com/FruitflowPlus, Instagram
www.instagram.com/fruitflowplus and Twitter
https://twitter.com/FruitflowPlus, and the Company was pleased to
support Brentford FC in January 2021 as their Emirates FA Cup
Fourth Round tie sleeve sponsor.
The Company believes that Fruitflow has an important role to
play in women's cardiovascular health, and there is a dedicated
section of its consumer website addressing this topic at
www.fruitflowplus.com/womens-health.
Further interest in the role of Fruitflow in exercise has been
generated by pro cycling Team DSM (formerly Team Sunweb)'s use of
Fruitflow in the Tour de France. The benefits that Fruitflow can
provide for athletes in terms of improved recovery are set out in
more detail on the website at
www.fruitflowplus.com/sportrecovery.
The Company continues to work on a potential Fruitflow+ nitrates
product which would be supported by the Company's strong patent
position in this area. The product would have anti-inflammatory and
circulation benefits for athletes seeking to recover after
exercise, properties which would also be potentially beneficial to
a wide range of other consumers to include people who are less
active and people who suffering from the symptoms of basic ageing.
In collaboration with DSM a trial batch of Fruitflow+ nitrates
development products was manufactured during the year and sold to
DSM.
The Company's Fruitflow+ Omega-3 direct selling business has
been operating largely as normal throughout the COVID-19 pandemic,
and despite some initial delays in the supply chain a production
run of Fruitflow+ Omega-3 capsules was completed in July 2020 thus
ensuring continued supply of the product. A further new production
run of Fruitflow+ Omega-3 capsules was completed in July 2021.
Subscriber numbers on the www.fruitflowplus.com website have
been growing steadily, and currently stand at a further new
all-time high level.
The Company is seeking to expand further its commercial
activities with Fruitflow+ Omega-3 and other Fruitflow+ combination
products, and it is currently in dialogue with some other potential
international direct selling customers.
Scientific journal publications
1. In September 2020 Fruitflow was recognised in a review
article by the Frontiers in Nutrition journal
www.frontiersin.org/articles/10.3389/fnut.2020.583080/full which
stated that nutraceuticals such as Fruitflow may serve as:
'A safe antiplatelet prophylactic treatment for those at high
risk of COVID-19 who may also be at increased risk of thrombotic
complications and an alternative to pharmacological compounds that
may cause greater risk of bleeding.'
2. In January 2021 a review article was published by the
influential journal Medical Hypotheses, a leading peer-reviewed
journal which advances new discussion and innovation in medical
treatments.
The article
www.sciencedirect.com/science/article/pii/S0306987720333715, titled
'Platelet hyperactivity in COVID-19: Can the tomato extract
Fruitflow(R) be used as an antiplatelet regime?' was written by
Professor Asim K Duttaroy, who was the original inventor of
Fruitflow, and Dr Niamh O'Kennedy, Provexis plc's Chief Scientific
Officer.
3. In January 2021 a review article was published in the MDPI journal Nutrients www.mdpi.com/2072-6643/13/1/144/htm.
The article, titled the 'Role of Gut Microbiota and Their
Metabolites on Atherosclerosis, Hypertension and Human Blood
Platelet Function' was written by Professor Asim K Duttaroy and it
noted that emerging data suggest a strong relationship between
microbiota-derived compounds and an increased risk of CVD, with
widely accumulated data also indicating that Fruitflow may be
useful in the primary prevention of CVD. The article concluded that
there is a 'strong possibility of finding new approaches to treat
or prevent CVD' with further scientific work required seeking to
develop novel preventative or therapeutic regimes.
4. In June 2021 a further review article was published in the MDPI journal Nutrients www.mdpi.com/2072-6643/13/7/2184/htm.
The article, titled 'Dietary Antiplatelets: A New Perspective on
the Health Benefits of the Water-Soluble Tomato Concentrate
Fruitflow(R)' concluded that: 'Platelets have multifaceted
functions which generate a complicated set of interactions with
other vascular cells, leading to many roles outside haemostasis. As
our understanding of the role of platelet activation in response to
- and in complicating - inflammatory and infectious illnesses grow,
it becomes more apparent that platelet-targeted treatments are
necessary outside the field of CVD. Dietary antiplatelets such as
Fruitflow(R) can help provide suitably gentle and safe yet
efficacious treatments to improve public health in response to a
wide range of health challenges.'
The publication of these four articles is a significant
opportunity for the Company and DSM to promote Fruitflow further
across scientific, trade customer and consumer channels.
Intellectual property
The Company is responsible for filing and maintaining patents
and trade marks for Fruitflow as part of the Alliance Agreement
with DSM, and patent coverage for Fruitflow now includes the
following patent families which are all owned outright by
Provexis:
Patent family Developments in the period from
Sep-20 to Sep-21
Improved Fruitflow / Fruit Extracts
Improved Fruitflow / Fruit Extracts, A second European patent has been
with patents granted by the European secured (previously referred to
Patent Office in January 2017 and as proceeding to grant) and national
September 2020. protection has been secured in
major European states.
The patent has been granted in ten
other major territories to include Patents have been granted in Hong
China and USA; a patent application Kong, Israel, South Korea and the
is proceeding to grant in the Philippines; USA, with a further application
and applications are at a late stage in the Philippines now proceeding
of progression in a further six to grant.
global territories, with potential
patent protection out to November
2029.
----------------------------------------
Antihypertensive (blood pressure
lowering) effects US patent protection has been secured
This patent was originally developed for Fruitflow as an antihypertensive
in collaboration with the University (blood pressure lowering) agent.
of Oslo, and it has now been granted A Canadian patent application is
for Fruitflow in Europe, the US proceeding to grant.
and two other major territories.
Patent applications are being progressed
in a further four major territories
to include the US and China, with
potential patent protection out
to April 2033.
In August 2020 the Company announced
it had agreed to purchase the background
and joint foreground blood pressure
lowering IP owned by Inven2 AS,
the technology transfer office at
the University of Oslo, and Provexis
now owns these important patents
outright, with the licensing option
originally held by Inven2 having
been cancelled.
----------------------------------------
Fruitflow with nitrates in mitigating
exercise-induced inflammation and
for promoting recovery from intense
exercise Patents have been secured (previously
Patents have been granted around referred to as proceeding to grant)
Europe and in the US, Australia, in the US and also Europe, with
Brazil, China, Hong Kong, Israel, national protection also secured
Japan, South Korea, the Philippines, in major European states.
New Zealand and Mexico. Further
patent protection is being sought Patent protection has also been
in six territories, with potential secured in Brazil, China, Japan,
patent protection out to December Mexico, South Korea, Israel, the
2033. Philippines and Hong Kong.
----------------------------------------
Fruitflow for air pollution
The use of Fruitflow in protecting US patent protection has been secured
against the adverse effects of air covering the use of Fruitflow in
pollution on the body's cardiovascular protecting subjects who have certain
system. medical conditions and who have
been exposed to air pollution.
Laboratory work has shown that Fruitflow
can reduce the platelet activation
caused by airborne particulate matter,
such as that from diesel emissions,
by approximately one third.
A US application has proceeded to
grant and there are pending applications
in 16 jurisdictions (including the
US where a further application has
been filed) which extends potential
patent protection for Fruitflow
out to November 2037.
----------------------------------------
Crohn's disease intellectual property
The Group continues to maintain the Crohn's disease intellectual
property registered in Provexis (IBD) Limited, a company which is
75% owned by Provexis plc and 25% owned by The University of
Liverpool. The Group continues to investigate further options for
the Crohn's disease project, seeking to maximise its value.
The Company has been conducting some research on a
'contrabiotic' in collaboration with Prof Barry Campbell at the
University of Liverpool. A new scientific paper was recently
completed and submitted, focussing on a type of polysaccharide
which show efficacy against pathogens such as E coli, C difficile
and S typhimurium.
Capital structure and funding
The Company is seeking to maximise the commercial returns that
can be achieved from its Fruitflow technology, and the Company's
cost base and its resources continue to be very tightly managed.
The Company remains keen to minimise dilution to shareholders and
it is focussed on moving into profitability as Fruitflow revenues
increase, but while the Company remains in a loss-making position
it may need to raise funds to support working capital on
occasions.
On 17 December 2020 the Group announced it had raised proceeds
of a gross GBP1.0 million via the placing of 133,333,349 new
ordinary shares of 0.1p each at a gross 0.75p per share with
investors, with no commissions payable. The placing shares were
admitted to trading on AIM on 23 December 2020.
On 19 February 2021 the Group announced it had raised proceeds
of a gross GBP50,000 via the placing of 6,666,667 new ordinary
shares of 0.1p each at a gross 0.75p per share with investors, with
no commissions payable. The placing shares were admitted to trading
on AIM on 25 February 2021.
The Company intends to hold its Annual General Meeting at the
offices of Allenby Capital Limited, 5th Floor, 5 St Helen's Place,
London EC3A 6AB at 12:30pm on 4 November 2021.
People
The Board would like to thank the Company's small team of sales,
marketing, e-commerce, PR and scientific consultants for their
professionalism, enthusiasm and dedication in driving the business
forward over the last year. The Company would also like to thank
its key professional advisers for their valuable help and
support.
Outlook
The Company is pleased to report on another strong year of
progress.
Revenues grew by 45% year on year to GBP505k, reflecting strong
growth from the Company's Alliance Agreement with DSM, and an
increase in revenue from the Company's Fruitflow+ Omega-3 business
which has seen subscriber numbers increase to a further new
all-time high level.
The Company and DSM have had a strong long-term relationship,
with the shared interest of both companies being to maximise the
commercial returns that can be achieved from Fruitflow. The total
projected annual sales value of the prospective sales pipeline for
Fruitflow continues to stand at a substantial multiple of existing
annual sales.
The Alliance Agreement with DSM dates back to June 2010, with a
contractual term which runs to 31 December 2022. By default from 1
January 2023 the agreement (i) permits DSM to continue to sell
Fruitflow to its existing customers, on the basis that a royalty on
Fruitflow sales, fixed at favourable market conditions, will remain
payable to the Company; and (ii) permits the Company to sell
Fruitflow as an ingredient directly to third parties, outside the
existing profit sharing arrangements.
The Company and DSM have started and are currently engaged in
constructive negotiations working towards a new agreement. The
commercial terms of the negotiations remain confidential between
the two parties, and the Company will provide shareholders with a
further update in due course.
The Company has developed a strong, long lasting and
wide-ranging patent portfolio for Fruitflow, and it now owns
outright four patent families for Fruitflow which have a truly
global footprint. The Company also holds other valuable
intellectual property and trade secrets for the technology. The
intellectual property for Fruitflow is of fundamental importance to
the Company and its current and future commercial partners, to
include DSM and By-Health, and it underpins the numerous commercial
opportunities which the Company and its partners are pursuing for
Fruitflow.
By-Health's planned launch of Fruitflow based products in the
Chinese market has been progressing well. Clinical studies
conducted in China are typically required to obtain the necessary
regulatory clearances in China, and a significant investment in
eight separate Fruitflow studies has been undertaken at By-Health's
expense.
Five studies have been successfully completed in China, and two
clinical studies and one animal study are currently ongoing.
The five completed studies showed excellent results in use for
Fruitflow, and they provide strong evidence for By-Health in its
regulatory submissions to the State Administration for Market
Regulation (SAMR), China's top market regulator.
By-Health has been working on an extensive regulatory submission
to the SAMR for Fruitflow, seeking to establish a new permitted
health function claim for foods such as Fruitflow that can
demonstrate an anti-platelet effect, conferring beneficial effects
for people who are at risk of platelet hyperactivity-associated
thrombosis - the aberrant blood clots which lead to heart attacks
and strokes.
By-Health currently expects to be in a position to complete the
last of its eight studies and file its regulatory submission to the
SAMR for Fruitflow in the first half of 2022, seeking to obtain a
new permitted health function claim which would be in addition to
the currently defined list of permitted health claims in China.
If By-Health is successful in obtaining a new permitted health
function claim, it is currently expected that this would result in
some significant orders for Fruitflow, potentially at a multiple of
current total sales values. The Company continues to believe that
Fruitflow has the potential to play an important role in the
Chinese cardiovascular health market.
The Board was delighted to announce a GBP1.0 million placing in
December 2020, and a smaller GBP50k placing in February 2021, with
the funds raised helping to provide the Company with additional
working capital to support its international growth plans. The
placing has significantly strengthened the Company's capital base
and de-risked the business, to the benefit of all shareholders.
The Company would like to thank its customers and shareholders
for their continued support, and the Board remains positive about
the outlook for Fruitflow and the Provexis business for the coming
year and beyond.
Dawson Buck Ian Ford
Chairman CEO
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. In June
2015 the Company confirmed that it had agreed significantly
enhanced financial terms with DSM for the Company's Alliance
Agreement for Fruitflow.
The Directors believed at the time of signing the Alliance
Agreement, and still retain the belief, that it is advantageous for
the Group to commercialise Fruitflow in conjunction with DSM as it
enables Provexis to leverage the resources and relationships of DSM
in some of the major global markets.
One of the Group's key strategic priorities 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 and minimising cash
utilised in operations.
In June 2016 Provexis launched a high-quality dietary supplement
product containing Fruitflow and Omega-3 which is being sold from a
separate, dedicated website www.fruitflowplus.com on a mail order
basis. The product is also available to purchase from Amazon.co.uk
and from Holland & Barrett.
The Company's Fruitflow+ Omega-3 dietary supplement business is
expected to provide the Company with an additional long-term income
and profit stream. The dietary supplement business is complementary
to the Company's Alliance Agreement with DSM and it is supported by
DSM, reflecting the continued strength of the long-term
relationship between Provexis and DSM and the shared interest of
both companies in seeking to maximise the commercial returns that
can be achieved from Fruitflow.
The Alliance Agreement with DSM has a contractual term which
runs from June 2010 to 31 December 2022.
By default from 1 January 2023 the agreement (i) permits DSM to
continue to sell Fruitflow to its existing customers, on the basis
that a royalty on Fruitflow sales, fixed at favourable market
conditions, will remain payable to the Company; and (ii) permits
the Company to sell Fruitflow as an ingredient directly to third
parties, outside the existing profit sharing arrangements.
The Company and DSM have started and are currently engaged in
constructive negotiations working towards a new agreement. The
commercial terms of the negotiations remain confidential between
the two parties, and the Company will provide shareholders with a
further update in due course.
One of the Group's other key strategic priorities is its
relationship with By-Health Co., Ltd, a GBP5bn listed Chinese
dietary supplement business. The Group has been working with
By-Health to support the planned launch of some Fruitflow based
products in the Chinese market. The planned launch is progressing
well with potential sales volumes remaining at a significant
multiple of existing Fruitflow sales.
By-Health has made a significant investment in eight separate
clinical studies in China, at its sole expense, in support of the
Fruitflow based products which it plans to launch in China. The
five studies which have been completed by By-Health showed
excellent results in use for Fruitflow, and provide strong evidence
for By-Health in its regulatory submissions to the Chinese State
Administration for Market Regulation (SAMR).
By-Health has been working on an extensive regulatory submission
to the SAMR for Fruitflow, seeking to establish a new permitted
health function claim for food ingredients such as Fruitflow that
can demonstrate an anti-platelet effect, addressing the aberrant
blood clots which can lead to heart attacks and strokes. By-Health
currently expects to be in a position to complete the last of its
eight studies and file its regulatory submission to the SAMR for
Fruitflow in the first half of 2022. If By-Health is successful in
obtaining a new permitted health function claim it is currently
expected that this would result in some significant orders for
Fruitflow, potentially at a multiple of current total sales
values.
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 US$170 billion per year, and it is forecast to reach US$276
billion by 2025, with products addressing cardiovascular disease
forming the largest segment of the market (source:
www.grandviewresearch.com/press-release/global-functional-foods-market).
Global awareness of heart health is increasing and a rising number
of people are taking a proactive approach to improving heart
health. The Directors believe that products addressing blood flow
and circulation issues continue to represent a long-term
opportunity in the expanding cardiovascular sector.
Financial review
The financial review has been prepared on the basis of Group's
continuing operations, as further detailed in the consolidated
statement of comprehensive income.
Revenue
The Company's long-term Alliance Agreement with DSM Nutritional
Products for Fruitflow includes a financial model which is based
upon the division of profits between the two partners on an agreed
basis, linked to certain revenue targets, following the deduction
of the cost of goods and a fixed level of overhead from sales. In
June 2015 the Company confirmed that revised terms for the Alliance
Agreement had been agreed with DSM, under which the fixed level of
overhead deduction from sales permanently decreased with effect
from 1 January 2015, backdated, thus increasing the profit share
payable to the Company.
In June 2016 the Company announced the launch of its Fruitflow+
Omega-3 dietary supplement product, which was sold initially from a
separate, dedicated website www.fruitflowplus.com on a mail order
basis, particularly focussed on subscription orders.
In August 2018 Fruitflow+ Omega-3 was launched in more than 660
Holland & Barrett stores across the UK and Ireland, giving
Fruitflow+ Omega-3 widespread consumer exposure, with all of the
revenue and costs attributable to this listing to accrue to the
Company.
Fruitflow+ Omega-3 is also available to purchase from Amazon UK,
and the product has a Facebook page at
www.facebook.com/FruitflowPlus and an Instagram page at
www.instagram.com/fruitflowplus.
Fruitflow+ Omega-3 is a two-in-one supplement in an easy to take
capsule, supporting healthy blood flow and normal heart function,
and it achieved sales of GBP138k in the year to 31 March 2021,
compared to GBP115k in the prior year.
Fruitflow+ Omega-3 is expected to provide the Company with an
additional long-term income and profit stream, and the
fruitflowplus.com website will be able to accommodate further
potential Fruitflow combination product derivatives. Further sales
channel opportunities for the product are currently being
explored.
The Group's total revenue for the year ended 31 March 2021 was
GBP505k, a 45% increase relative to the prior year (2020:
GBP348k).
The increase in revenue accruing to the Company for the year
reflects:
-- An increase in the net income received from the Company's
Alliance Agreement with DSM, which grew by 54% to GBP358k in the
year (2020: GBP233k);
-- An increase in revenue, net of sales rebates, from the
Company's Fruitflow+ Omega-3 business, including the Company's
website www.fruitflowplus.com, Amazon UK, Holland & Barrett,
and the Company's distributor for Fruitflow+ Omega-3 in China
through the CBEC channel. This business grew by 20% to GBP138k, net
of sales rebates, in the year (2020: GBP115k).
-- Amounts of GBP9k received in the year for Fruitflow+ nitrates
development products, compared to amounts of GBPNil in the prior
year.
Underlying operating loss
Underlying operating loss for the year was GBP225k (2020:
GBP321k), a GBP96k year on year improvement which reflects a year
on year GBP144k increase in gross profit, an GBP8k increase in
selling and distribution costs, a GBP52k increase in research and
development costs, a GBP9k reduction in R&D tax relief and a
GBP21k reduction in administrative costs.
The Group has chosen to report underlying operating loss as the
Directors believe that the operating loss before share-based
payments provides additional useful information for shareholders on
underlying trends and performance. A reconciliation of underlying
operating loss to statutory operating loss is presented on the face
of the consolidated statement of comprehensive income. This measure
is used for internal performance analysis. The Group's cost base
and its resources have been and will continue to be tightly managed
within budgets approved and monitored by the Board.
Research and development costs
Research and development costs are primarily composed of patent,
trade mark and other research agreement costs, with the Group
seeking to maintain and strengthen the breadth and duration of its
patent and trade mark coverage for Fruitflow. Research and
development costs have increased by 21% to GBP304k (2020:
GBP252k).
R&D tax relief: payable tax credit
A current tax credit of GBP2k (2020: GBP11k), in respect of
research and development tax relief has been recognised in the
financial statements. The tax credit claim for the year ended 31
March 2019 totalling GBP16k was paid to the Group in May 2020.
Taxation
The current tax charge is GBPNil (2020: GBPNil) due to the loss
made in the year. No amounts in respect of deferred tax were
recognised in profit and loss from continuing operations or charged
/ credited to equity for the current or prior year.
Results and dividends
The loss attributable to equity holders of the parent for the
year ended 31 March 2021 was GBP341k (2020: GBP406k) and the basic
loss per share was 0.02p (2020: 0.02p). The Directors are unable to
recommend the payment of a dividend (2020: GBPNil).
Consideration of section 656 of the Companies Act 2006
On 28 August 2014 it was noted in the Company's Notice of Annual
General Meeting that Section 656 of the Companies Act 2006
('section 656') had been brought to the attention of the Directors
as part of the 31 March 2014 year end accounts and audit. Section
656 states that where the net assets of a public company are half
or less of its called-up share capital, the Directors must call a
general meeting of the company to consider whether any, and if so
what, steps should be taken to deal with the situation.
Further details of the issue were provided in the Company's AGM
notice of 28 August 2014 which is available to download from the
Company's website here
www.provexis.org/wp-content/uploads/Provexis-plc-notice-of-22-Sep-14-AGM-FINAL.pdf
A resolution was not put to the 2014 Annual General Meeting in
connection with section 656 and it was noted that the Directors'
view in August 2014 was that the most appropriate course of action
was to continue to maintain tight control over the running costs of
the Company and to wait for revenues from its core Fruitflow
product to increase. Subsequent to the Company's AGM on 22
September 2014 the net assets of the Company and Group have
remained less than half of the Company's called-up share capital
and a further general meeting of the Company is not required under
section 656.
The annual financial statements of the Company for the year
ended 31 March 2021 and the report of the Directors thereon include
a going concern statement which concludes that based on the level
of existing cash, projected income and expenditure, and excluding
the potential additional sources of funding, the directors are
satisfied that the Company and the Group have adequate resources to
continue in business for a period of more than twelve months from
the date of approval of the financial statements. Accordingly, the
going concern basis has been used in preparing the financial
statements.
It remains the Directors' view on 29 September 2021 that the
most appropriate course of action in respect of section 656 is to
continue to seek to maximise the commercial returns that can be
achieved from the Company's Fruitflow technology, and continue to
maintain very tight control over the running costs of the
Company.
Capital structure and funding
The Company is seeking to maximise the commercial returns that
can be achieved from its Fruitflow technology, and the Company's
cost base and its resources continue to be very tightly managed.
The Company remains keen to minimise dilution to shareholders and
it is focussed on moving into profitability as Fruitflow revenues
increase, but while the Company remains in a loss-making position
it may need to raise funds to support working capital on
occasions.
On 17 December 2020 the Group announced it had raised proceeds
of a gross GBP1.0 million via the placing of 133,333,349 new
ordinary shares of 0.1p each at a gross 0.75p per share with
investors, with no commissions payable. The placing shares were
admitted to trading on AIM on 23 December 2020.
On 19 February 2021 the Group announced it had raised proceeds
of a gross GBP50,000 via the placing of 6,666,667 new ordinary
shares of 0.1p each at a gross 0.75p per share with investors, with
no commissions payable. The placing shares were admitted to trading
on AIM on 25 February 2021.
Key performance indicators
The principal financial KPIs monitored by the Board relate to
underlying operating loss and cash and cash equivalents.
The table below shows the Group's underlying operating loss,
calculated as operating profit before share-based payment expense,
from continuing operations for the two years ended 31 March
2021:
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
Underlying operating loss 224,756 320,888
--------------------------- ----------- -----------
The trading results are further detailed in this strategic
report.
The table below shows the Group's cash position at 31 March 2021
and 31 March 2020:
31 March 31 March
2021 2020
GBP GBP
Cash and cash equivalents 1,077,410 291,335
--------------------------- ---------- ---------
The monitoring of cash gives due consideration to anticipated
future spend required to prioritise development opportunities and
to plan the resources required to achieve the goals of the
business. The GBP786,075 increase in cash and cash equivalents
during the financial year is further detailed in the consolidated
statement of cash flows.
Principal risks and uncertainties
In the course of its normal business the Group is exposed to a
range of risks and uncertainties which could impact on the results
of the Group.
The Board considers that risk-management is an integral part of
good business process and, it maintains a register of risks across
several categories including consultants, clients, competition,
finance, technical and legal. For each risk the Board estimates the
impact, likelihood as well as identify mitigating strategies.
This register is reviewed periodically as the Company's
situation changes. During such reviews, each risk category is
considered by the Directors with a view to understanding (i)
whether the nature, impact or likelihood of any risks has changed,
(ii) whether the mitigating actions taken by the Company should
change as a result and (iii) whether any new risks or categories of
risk have arisen since the last review.
The Company is seeking to expand its Fruitflow+ Omega-3 dietary
supplement business and thereby reduce its commercial reliance on
the Alliance Agreement with DSM, as further outlined above, thus
increasing opportunities for growth and decreasing risk.
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 and sales 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.
Brexit
The long term impact of the UK leaving the EU remains
uncertain.
The trade deal announced in December 2020 removed key tariffs
which were the main potential impact identified for the business,
and the Group remains in dialogue with some potential UK
manufacturers for its Fruitflow+ Omega-3 product, with a number of
manufacturing options in hand. The Group is also exploring some
alternative sales and fulfilment options available to it outside
the UK for the delivery of finished goods in the EU.
The Group has registered for the Import One-Stop Shop (IOSS), an
electronic portal which businesses have been able to use since 1
July 2021 to comply with their VAT e-commerce obligations on
distance sales to the EU.
Covid-19
The impact of the Covid-19 pandemic remains uncertain.
Scientific research into Covid-19 is being undertaken at
considerable scale, with more than two thousand studies in progress
worldwide. It is already clear that in many patients the virus is
having a significant adverse effect on circulation, and it is
causing wider issues with inflammation. Fruitflow is a natural,
breakthrough ingredient that helps with platelet aggregation,
supporting normal blood flow and circulation which in turn benefits
cardiovascular health.
The Company and its Alliance partner DSM Nutritional Products
have experienced increased consumer interest for Fruitflow in light
of the Covid-19 pandemic, as consumers look to nutritional
interventions to help them fortify the circulatory system against
the effects of Covid-19. The Company and DSM will look to maximise
the commercial opportunities arising from this increased consumer
interest in Fruitflow, and will further promote the core blood
circulatory and anti-inflammatory benefits of the product.
Some of the growing markets for Fruitflow in the Asia Pacific
region have recently been affected in the short term by lockdowns
and other COVID-19 disruptions, leading to more erratic demand for
Fruitflow which has seen a 9.5% fall in revenues in the first
quarter of the 2021/22 financial year for this business, relative
to a very strong first quarter in 2020/21.
The Company's Fruitflow+ Omega-3 direct selling business has
been operating largely as normal throughout the pandemic, and
despite some initial delays in the supply chain a new production
run of Fruitflow+ Omega-3 capsules was completed in July 2020, and
a further production run was completed in July 2021, thus ensuring
continued supply of the product.
Commercialisation
Due to the terms of the Alliance Agreement, Provexis is largely
dependent on DSM in respect of the development, production,
marketing and commercialisation of Fruitflow. Fruitflow is solely
reliant on DSM under the terms of the Alliance Agreement for its
commercialisation.
Provexis' long-term success is largely dependent on the ability
of DSM to sell Fruitflow. 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 one product, Fruitflow, and any problems with
the commercial success of Fruitflow will impact the financial
performance of Provexis.
Intellectual property protection
Provexis is heavily dependent on its intellectual property and,
in particular, its patents. No assurance can be given that any
pending patent applications or any future patent applications will
result in granted patents, that any patents will be granted on a
timely basis, that the scope of any copyright or patent protection
will exclude competitors or provide competitive advantages to
Provexis, that any of Provexis' patents will be held valid if
challenged, or that third parties will not claim rights in or
ownership of the copyright, patents and other proprietary rights
held by Provexis.
Further, there can be no assurance that others have not
developed or will not develop similar products, duplicate any of
Provexis' products or design around any patents held by Provexis.
Others may hold or receive patents which contain claims having a
scope that covers products developed by Provexis (whether or not
patents are issued to Provexis).
Provexis may rely on patents to protect its assets. These rights
act only to prevent a competitor copying and not to prevent a
competitor from independently developing products that perform the
same functions. No assurance can be given that others will not
independently develop or otherwise acquire substantially equivalent
functional food IP or otherwise gain access to Provexis' unpatented
proprietary technology or disclose such technology or that Provexis
can ultimately protect meaningful rights to such unpatented
technology.
Once granted, a patent can be challenged both in the patent
office and in the courts by third parties. Third parties can bring
material and arguments which the patent office granting the patent
may not have seen. Therefore, issued patents may be found by a
court of law or by the patent office to be invalid or unenforceable
or in need of further restriction.
A substantial cost may be incurred if Provexis is required to
assert its intellectual property rights, including any patents or
trade marks against third parties. Litigation is costly and time
consuming and there can be no assurance that Provexis will have, or
will be able to devote, sufficient resources to pursue such
litigation. Potentially unfavourable outcomes in such proceedings
could limit Provexis' intellectual property rights and activities.
There is no assurance that obligations to maintain Provexis' know
how would not be breached or otherwise become known in a manner
which provides Provexis with no recourse.
Any claims made against Provexis' intellectual property rights,
even without merit, could be time consuming and expensive to defend
and could have a materially detrimental effect on Provexis'
resources. A third party asserting infringement claims against
Provexis could require Provexis to cease the infringing activity
and/or require Provexis to enter into licensing and royalty
arrangements. The third party could also take legal action which
could be costly. In addition, Provexis may be required to develop
alternative non-infringing solutions that may require significant
time and substantial unanticipated resources. There can be no
assurance that such claims will not have a material adverse effect
on Provexis' business, financial condition or results.
Future development
The future development of the Company is discussed in the
Chairman and CEO's statement.
Ian Ford
Director
Consolidated statement of comprehensive income
Year Year
ended ended
31 March 31 March
2021 2020
Notes GBP GBP
--------------------------------------------- ------ ---------- ----------
Revenue 1,3 505,330 347,937
Cost of goods (49,136) (35,782)
--------------------------------------------- ------ ---------- ----------
Gross profit 456,194 312,155
Selling and distribution costs (48,689) (40,656)
Research and development costs 4 (303,898) (251,865)
Administrative costs (including share-based
payment charges) (465,523) (455,948)
R&D tax relief: receivable tax credit 8 2,460 11,502
Underlying operating loss (224,756) (320,888)
Share-based payment charges - share
options 16 (55,925) (103,924)
Share-based payment charges - blood
pressure IP 15 (78,775) -
--------------------------------------------- ------ ---------- ----------
Loss from operations 4 (359,456) (424,812)
Finance income 7 113 347
Loss before taxation (359,343) (424,465)
Taxation 8 - -
Loss and total comprehensive loss for
the year (359,343) (424,465)
--------------------------------------------- ------ ---------- ----------
Attributable to:
Owners of the parent (341,007) (406,229)
Non-controlling interest (18,336) (18,236)
Loss and total comprehensive loss for
the year (359,343) (424,465)
--------------------------------------------- ------ ---------- ----------
Loss per share to owners of the parent
Basic - pence 9 (0.02) (0.02)
Diluted - pence 9 (0.02) (0.02)
--------------------------------------------- ------ ---------- ----------
Consolidated statement of financial position
Company number 05102907 As at As at
31 March 31 March
2021 2020
Notes GBP GBP
----------------------------------- ------ ------------- -------------
Assets
Current assets
Inventories 11 60,576 10,084
Trade and other receivables 12 140,923 139,637
Corporation tax asset 8 13,960 27,702
Cash and cash equivalents 1,077,410 291,335
----------------------------------- ------ ------------- -------------
Total current assets 1,292,869 468,758
----------------------------------- ------ ------------- -------------
Total assets 1,292,869 468,758
----------------------------------- ------ ------------- -------------
Liabilities
Current liabilities
Trade and other payables 13 (150,681) (150,077)
Total current liabilities (150,681) (150,077)
----------------------------------- ------ ------------- -------------
Net current assets 318,681
Total liabilities (150,681) (150,077)
----------------------------------- ------ ------------- -------------
Total net assets 1,142,188 318,681
----------------------------------- ------ ------------- -------------
Capital and reserves attributable
to
owners of the Parent company
Share capital 15 2,210,822 2,059,322
Share premium 17 18,675,221 17,699,796
Merger reserve 17 6,599,174 6,599,174
Retained earnings 17 (25,829,007) (25,543,925)
----------------------------------- ------ ------------- -------------
1,656,210 814,367
Non-controlling interest (514,022) (495,686)
----------------------------------- ------ ------------- -------------
Total equity 1,142,188 318,681
----------------------------------- ------ ------------- -------------
Consolidated statement of cash flows
Year Year
ended ended
31 March 31 March
2021 2020
Notes
---------------------------------------------- ------ ---------- ----------
GBP GBP
---------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Loss after tax (359,343) (424,465)
Adjustments for:
Finance income 7 (113) (347)
Tax credit receivable 8 (2,460) (11,502)
Share-based payment charges - share options 16 55,925 103,924
Share-based payment charges - blood pressure
IP 15 78,775 -
Changes in inventories (50,492) 35,782
Changes in trade and other receivables (1,374) (80,086)
Changes in trade and other payables 604 26,934
---------------------------------------------- ------ ---------- ----------
Net cash flow from operations (278,478) (349,760)
---------------------------------------------- ------ ---------- ----------
Tax credits received 16,202 14,720
Total cash flow from operating activities (262,276) (335,040)
---------------------------------------------- ------ ---------- ----------
Cash flow from investing activities
Purchase of blood pressure IP - cash (250) -
element
Interest received 201 399
Total cash flow from investing activities (49) 399
---------------------------------------------- ------ ---------- ----------
Cash flow from financing activities
Proceeds from issue of share capital 15 1,048,400 300,334
Total cash flow from financing activities 1,048,400 300,334
---------------------------------------------- ------ ---------- ----------
Net change in cash and cash equivalents 786,075 (34,307)
---------------------------------------------- ------ ---------- ----------
Opening cash and cash equivalents 291,335 325,642
---------------------------------------------- ------ ---------- ----------
Closing cash and cash equivalents 1,077,410 291,335
---------------------------------------------- ------ ---------- ----------
Consolidated statement of changes in equity
Share Share Merger Retained Total Non-controlling Total
capital premium reserve earnings equity interests equity
attributable
to owners
of
the parent
GBP GBP GBP GBP GBP GBP GBP
-------------------- ---------- ----------- ---------- ------------- -------------- ---------------- ----------
At 31 March 2019 1,983,988 17,474,796 6,599,174 (25,241,620) 816,338 (477,450) 338,888
Share-based charges
- share options - - - 103,924 103,924 - 103,924
Issue of shares -
placing
17 December 2019 75,334 225,000 - - 300,334 - 300,334
Total comprehensive
loss for the year - - - (406,229) (406,229) (18,236) (424,465)
At 31 March 2020 2,059,322 17,699,796 6,599,174 (25,543,925) 814,367 (495,686) 318,681
-------------------- ---------- ----------- ---------- ------------- -------------- ---------------- ----------
Share-based charges
- share options - - - 55,925 55,925 - 55,925
Share-based charges
- purchase of
blood
pressure IP - - - 78,775 78,775 - 78,775
Issue of shares 19
August 2020 -
blood
pressure IP 11,500 67,025 - (78,775) (250) - (250)
Issue of shares -
placing
23 December 2020 133,333 865,417 - - 998,750 - 998,750
Issue of shares -
placing
25 February 2021 6,667 42,983 - - 49,650 - 49,650
Total comprehensive
loss for the year - - - (341,007) (341,007) (18,336) (359,343)
At 31 March 2021 2,210,822 18,675,221 6,599,174 (25,829,007) 1,656,210 (514,022) 1,142,188
-------------------- ---------- ----------- ---------- ------------- -------------- ---------------- ----------
Notes to the preliminary results for the year ended 31 March
2021
1. Accounting policies
General information
Provexis plc is a public limited company incorporated and
domiciled in the United Kingdom (registration number 05102907). The
address of the registered office is 2 Blagrave Street, Reading,
Berkshire RG1 1AZ, UK. The functional and presentational currency
is pounds sterling and the financial statements are rounded to the
nearest GBP1.
The main activities of the Group are those of developing,
licensing and selling the proprietary, scientifically-proven
Fruitflow heart-health functional food ingredient for the global
functional food sector.
Basis of preparation
The financial information set out in this release does not
constitute the Company's full statutory accounts for the year ended
31 March 2021 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 2020 have been delivered to the
Registrar of Companies and those for 2021 will be delivered on 30
September 2021. The auditors have reported on the accounts for the
year ended 31 March 2021, their report was unqualified, and did not
contain statements under s498(2) or (3) Companies Act 2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement principles of International Financial Reporting
Standards (IFRS) as endorsed for the use in the European Union,
this announcement does not itself contain sufficient information to
comply with IFRS. The Company expects to publish full financial
statements for the year ended 31 March 2021 that comply with IFRS
on 30 September 2021.
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 2021.
These accounting policies are consistent with those applied in
the year ended 31 March 2020, as amended to reflect any new
Standards, amendments to Standards and interpretations which are
mandatory for the year ended 31 March 2021. The adoption of these
revised standards and interpretations has not had an impact on the
current and comparative figures recorded.
The IASB has issued a number of standards and interpretations
with an effective date after the date of these financial
statements, none of which are expected to have a material impact on
the Group's reported financial performance or position.
Going concern
The Group's business activities together with the factors likely
to affect its future development, and the financial position of the
Group, its cash flows and liquidity position are set out in the
strategic report. In addition note 2 to the financial statements
includes the Group's objectives, policies and processes for
managing its capital; its financial risk management objectives;
details of its financial instruments and its exposure to credit and
liquidity risk.
The Group made a loss for the year of GBP359,343 (2020:
GBP424,465), which includes non-cash share-based payment charges of
GBP134,700 (2020: GBP103,924) and expects to make a further loss
during the year ending 31 March 2022. The total cash outflow from
operations in the year was GBP262,276 (2020: GBP335,040). At 31
March 2021 the Group had cash balances of GBP1,077,410 (2020:
GBP291,335).
On 17 December 2020 the Group announced it had raised proceeds
of a gross GBP1.0 million via the placing of 133,333,349 new
ordinary shares of 0.1p each at a gross 0.75p per share with
investors, with no commissions payable. The placing shares were
admitted to trading on AIM on 23 December 2020.
On 19 February 2021 the Group announced it had raised proceeds
of a gross GBP50,000 via the placing of 6,666,667 new ordinary
shares of 0.1p each at a gross 0.75p per share with investors, with
no commissions payable. The placing shares were admitted to trading
on AIM on 25 February 2021.
The directors have prepared projected cash flow information for
a period of more than twelve months from the date of approval of
these financial statements and have reviewed this information as at
the date of these financial statements.
The Group is seeking to maximise the commercial returns that can
be achieved from its Fruitflow technology, and the Group's cost
base and its resources continue to be very tightly managed.
The Group remains keen to minimise dilution to shareholders and
it is focussed on moving into profitability as Fruitflow revenues
increase, but while the Group remains in a loss-making position it
may need to raise working capital on occasions, and the Group has
access to future equity financings as potential additional sources
of funding.
Based on the level of existing cash, projected income and
expenditure, and excluding the potential additional sources of
funding, the directors are satisfied that the Company and the Group
have adequate resources to continue in business for a period of
more than twelve months from the date of approval of the financial
statements.
Accordingly, the going concern basis has been used in preparing
the financial statements.
Basis of consolidation
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The consolidated financial information presents the results of
the Company and its subsidiaries, Provexis Nutrition Limited,
Provexis Natural Products Limited and Provexis (IBD) Limited as if
they formed a single entity ('the Group'). All subsidiaries share
the same reporting date, 31 March, as Provexis plc. All intra group
balances are eliminated in preparing the financial statements.
Non-controlling interest
Profit or loss and each component of other comprehensive income
are attributed to the owners of the parent and to the
non-controlling interests. Total comprehensive income is attributed
to the owners of the parent and the non-controlling interests even
if this results in the non-controlling interests having a deficit
balance.
Revenue
(i) Performance obligations and timing of revenue
recognition
The group's revenue is primarily derived from:
-- The group's profit-sharing Alliance Agreement with DSM, with
the group's profit-sharing income from this agreement being
recognised on an accruals basis in accordance with the substance of
the agreement, based on the receipt from DSM of the relevant
information to enable calculation of the profit-sharing payment due
to the group.
-- Selling goods, with revenue recognised at a point in time
when control of the goods has transferred to the customer. Revenue
from sales to external customers is recognised when goods are
despatched.
There is limited judgment needed in identifying the point at
which these performance obligations are satisfied.
(ii) Determining the transaction price
The amount of revenue to be earned is determined by reference to
(i) the provisions of the group's profit-sharing Alliance Agreement
with DSM, which is based on DSM's fixed price contracts with their
customers, and (ii) the fixed price contracts which the group has
with its customers, in respect of the direct sale of goods to these
customers. Variable consideration relating to volume rebates has
been constrained in estimating contract revenue in order that it is
highly probable there will not be a future reversal in the amount
of revenue recognised when the amount of volume rebates has been
determined.
(iii) Allocating amounts to performance obligations
For most contracts, there is a fixed unit price for each product
sold, with discounts given for bulk orders placed at a specific
time. Therefore, there is no judgement involved in allocating the
contract price to each unit ordered in such contracts (it is the
total contract price divided by the number of units ordered).
Sales rebate and discount reserves are established based on
management's best estimate of the amounts necessary to meet claims
by customers in respect of these rebates and discounts. A refund
liability is made at the time of sale and updated at the end of
each reporting period for changes in circumstances.
(iv) Practical exemptions
The Group has taken advantage of the practical exemption not to
account for significant financing components where the time
difference between receiving consideration and transferring control
of goods to its customer is less than one year.
Segment reporting
The Group determines and presents operating segments based on
the information that internally is provided to the Board of
Directors, which is the Group's 'chief operating decision maker'
('CODM').
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. An operating
segment's operating results are reviewed regularly by the CODM to
make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial
information is available.
Segment results that are reported to the Group Board include
items directly attributable to a segment as well as those that can
be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during
the period to acquire property, plant and equipment, and intangible
assets.
Use of non-GAAP profit measure - underlying operating profit
The Directors believe that the operating loss before share-based
payments measure provides additional useful information for
shareholders on underlying trends and performance. This measure is
used for internal performance analysis. Underlying operating loss
is not defined by IFRS and therefore may not be directly comparable
with other companies' adjusted profit measures. It is not intended
to be a substitute for, or superior to IFRS measurements of
profit.
A reconciliation of underlying operating profit to statutory
operating profit is set out on the face of the Statement of
Comprehensive Income.
Intangible assets
Research and development
Expenditure incurred on the development of internally generated
products is capitalised if it can be demonstrated that:
-- It is technically feasible to develop the product for it to be sold;
-- Adequate resources are available to complete the development;
-- There is an intention to complete and sell the product;
-- The Group is able to sell the product;
-- Sale of the product will generate future economic benefits; and
-- Expenditure on the project can be measured reliably.
The value of the capitalised development cost is assessed for
impairment annually. The value is written down immediately if
impairment has occurred. Development costs are not being amortised
as income has not yet been realised from the underlying technology.
Development expenditure, not satisfying the above criteria, and
expenditure on the research phase of internal projects is
recognised in profit and loss as incurred.
Patents and trade marks
The costs incurred in establishing patents and trade marks are
either expensed or capitalised in accordance with the corresponding
treatment of the development expenditure for the product to which
they relate.
Impairment of non- financial assets
Assets that have a finite useful life but that are not yet in
use and are therefore not subject to amortisation or depreciation
are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment annually and when events
or circumstances suggest that the carrying amount may not be
recoverable, an impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable
amount.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately in profit and loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss is recognised immediately in the
statement of comprehensive income, unless the relevant asset is
carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. Impairment
losses on goodwill are not reversed.
Inventories
Inventories, representing finished goods, are stated at the
lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and other costs incurred in bringing
the inventories to their present location and condition. Cost is
calculated on a first in, first out basis.
Net realisable value is based on estimated selling price less
further costs to completion and disposal. A charge is made to the
income statement for slow moving inventories. The charge is
reviewed at each reporting date.
Financial instruments
Financial assets
The Group's financial assets are comprised of 'trade and other
receivables' and 'cash and cash equivalents'. They are recognised
initially at their fair value and subsequently at amortised cost
using the effective interest method, less provision for impairment.
Impairment provisions for trade and other receivables are
recognised based on the simplified approach within IFRS 9 using a
provision matrix in the determination of lifetime expected credit
losses.
Financial liabilities
The Group's financial liabilities comprise 'trade and other
payables' and 'borrowings'. These are recognised initially at fair
value and subsequently at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
Government grants
Government grants are recognised when there is reasonable
assurance that the grant will be received and the Group will comply
with all attached conditions. Government grants are recognised in
the statement of comprehensive income in the same period to which
the costs that they are intended to compensate are expensed.
When research and development tax credits are claimed they are
recognised on an accruals basis and are included as other
income.
Taxation
Current tax is provided at amounts expected to be recovered or
to be paid using the tax rates and tax laws that have been enacted
or substantively enacted at the reporting date.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability on the statement of
financial position differs from its tax base, except for
differences arising on:
-- The initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- Investments in subsidiaries where the Group is able to
control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profits will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered). Deferred tax balances
are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- The same taxable Group Company; or
-- Different Group entities which intend to settle current tax
assets and liabilities on a net basis, or to realise the assets and
settle the liabilities simultaneously, on each future period in
which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Foreign currency translation
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit and loss.
Benefits for Directors and consultants
(i) Defined contribution plans
The Group provides retirement benefits to the Executive
Directors, who are the Group's only employees. 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 for Directors and
consultants
The Group operates an equity-settled, share-based compensation
plan. Vesting conditions are service conditions and performance
conditions only. Where share options are awarded to employees and
others providing similar services, the fair value of the options at
the date of grant is charged to profit and loss over the vesting
period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options that eventually vest.
If non-market related terms and conditions of options are
modified before they vest, the number of instruments expected to
vest at each reporting date, and therefore the cumulative charge,
is amended accordingly. Where equity instruments are granted to
persons other than employees and others providing similar services,
profit and loss is charged with the fair value of goods and
services received.
The proceeds received when options are exercised, net of any
directly attributable transaction costs, are credited to share
capital (nominal value) and the remaining balance to share
premium.
Other share-based payment transactions
The fair value of equity-settled share payments made in exchange
for goods and services received by the Group, outside of the
Group's share-based compensation plan, is determined at the date
the payment is made. The nature of the payment is assessed, and the
fair value of the payment is either capitalised or charged to the
consolidated statement of comprehensive income.
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.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.
Estimates and judgements are continually made and are based on
historic experience and other factors, including expectations of
future events that are believed to be reasonable in the
circumstances.
As the use of estimates is inherent in financial reporting,
actual results could differ from these estimates. The Directors
believe the following to be the key areas of estimation and
judgement:
(i) Research and development
Under IAS 38 Intangible Assets, development expenditure which
meets the recognition criteria of the standard must be capitalised
and amortised over the useful economic lives of intangible assets
from product launch.
(ii) Share-based payments
The Group operates an equity-settled, share-based compensation
plan. The charge for share-based payments is determined based on
the fair value of awards at the date of grant partly by use of a
Binomial / Black-Scholes convergence pricing model which require
judgements to be made regarding expected volatility, dividend
yield, risk free rates of return and expected option lives. The
inputs used in these pricing models to calculate the fair values
are set out in note 16.
2. Financial risk management
2.1 Financial risk factors
The Group's activities inevitably expose it to a variety of
financial risks: market risk (including currency risk, cash flow
interest rate risk and fair value interest rate risk), credit risk
and liquidity risk.
It is Group policy not to enter into speculative positions using
complex financial instruments. The Group's primary treasury
objective is to minimise exposure to potential capital losses
whilst at the same time securing favourable market rates of
interest on Group cash deposits using money market deposits with
banks. Cash balances used to settle the liabilities from operating
activities are also maintained in current accounts which earn
interest at variable rates.
(a) Market risk
Foreign exchange risk
The Group's largest contract, the long-term Alliance Agreement
with DSM Nutritional Products for Fruitflow, is primarily
denominated in Euros. The Alliance Agreement is underpinned by a
financial model which is based upon the division of profits between
the two partners on an agreed basis, linked to certain revenue
targets, following the deduction of the cost of goods and a fixed
level of overhead from sales.
DSM Nutritional Products seeks to sell Fruitflow in Euros, but
its customers for Fruitflow are world-wide and world-wide exchange
rate fluctuations may have an impact on the revenues accruing to
DSM, and thus the profit share accruing to the Group. The cost of
goods for Fruitflow is primarily denominated in and incurred in
Euros.
Where customer or supplier transactions of more than GBP25,000
total value are to be settled in foreign currencies consideration
is given to settling the sums to be received or paid through
foreign exchange conversion at the outset of the transactions to
minimise the risk of adverse currency fluctuations.
Cash flow and fair value interest rate risk
The Group's interest rate risk arises from medium term and short
term money market deposits. Deposits which earn variable rates of
interest expose the Group to cash flow interest rate risk. Deposits
at fixed rates expose the Group to fair value interest rate
risk.
The Group analyses its interest rate exposure on a dynamic basis
throughout the year.
(b) Credit risk
Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions as well as credit exposure in
relation to outstanding receivables. Group policy is to place
deposits with institutions with investment grade A2 or better
(Moody's credit rating) and deposits are made in sterling only. The
Group does not expect any losses from non-performance by these
institutions. Management believes that the carrying value of
outstanding receivables and deposits with banks represents the
Group's maximum exposure to credit risk.
(c) Liquidity risk
Liquidity risk arises from the Group's management of working
capital, it is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. Prudent
liquidity risk management implies maintaining sufficient cash and
cash equivalents and management monitors rolling forecasts of the
Group's liquidity on the basis of expected cash flow.
The Group had trade and other payables at the statement of
financial position date of GBP150,681 (2020: GBP150,077) as
disclosed in note 13.
2.2 Capital risk management
The Group considers its capital to comprise its ordinary share
capital, share premium, merger reserve and accumulated retained
earnings as disclosed in the consolidated statement of financial
position.
The Group remains funded exclusively by equity capital. The
Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for equity holders of the Company and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
3. Segmental reporting
The Group's operating segments are determined based on the
Group's internal reporting to the Chief Operating Decision Maker
(CODM). The CODM has been determined to be the Board of Directors
as it is primarily responsible for the allocation of resources to
segments and the assessment of performance of the segments. The
performance of operating segments is assessed on revenue.
The CODM uses revenue as the key measure of the segments'
results as it reflects the segments' underlying trading performance
for the financial period under evaluation. Revenue is reported
separately to the CODM and all other reports are prepared as a
single business unit.
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
------------------------------------------ ----------- -----------
DSM Alliance Agreement 357,879 232,667
Fruitflow+ Omega 3 138,251 115,270
Fruitflow+ nitrates development products 9,200 -
505,330 347,937
------------------------------------------ ----------- -----------
4. Loss from continuing operations
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
------------------------------------------------- ----------- -----------
Loss from continuing operations is stated after
charging:
Research and development costs 303,898 251,865
Foreign exchange losses / (gains) 10,109 (4,048)
Equity-settled share-based payment expense 134,700 103,924
The total fees of the Group's auditor, for services provided are
analysed below:
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
--------------------------- ----------- -----------
Audit services
Parent company 9,250 9,000
Subsidiaries 6,750 6,500
Tax services - compliance
Parent company 500 500
Subsidiaries 2,350 2,250
Other services
iXBRL services 2,000 1,950
Total fees 20,850 20,200
--------------------------- ----------- -----------
5. Wages and salaries
The average monthly number of persons, including all Directors,
employed or engaged under contracts for services by the Group
during the year was as follows:
Year ended Year ended
31 March 31 March
2021 2020
----------- ----------- -----------
Directors 4 4
----------- ----------- -----------
4 4
----------- ----------- -----------
Their aggregate emoluments were:
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
------------------------------------------ ----------- -----------
Wages and salaries 236,380 232,026
Social security costs 25,733 10,038
Pension and other staff costs 10,202 380
------------------------------------------ ----------- -----------
Total cash settled emoluments 272,315 242,444
Share-based payment remuneration charge:
equity settled 51,898 73,860
------------------------------------------ ----------- -----------
Total emoluments 324,213 316,304
------------------------------------------ ----------- -----------
6. Directors' remuneration
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
------------------------------------------ ----------- -----------
Directors
Aggregate emoluments 236,380 229,856
Company pension contributions 10,202 4,251
------------------------------------------ ----------- -----------
246,582 234,107
Share-based payment remuneration charge:
equity settled 51,898 73,656
Total Directors' emoluments 298,480 307,763
------------------------------------------ ----------- -----------
Emoluments disclosed above include the following amounts in
respect of the highest paid Director:
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
------------------------------------------------- ----------- -----------
Aggregate emoluments 124,008 120,006
Company pension contributions 6,200 2,583
------------------------------------------------- ----------- -----------
Share-based payment remuneration charge:
equity settled 22,370 31,567
------------------------------------------------- ----------- -----------
Total of the highest paid Director's emoluments 152,578 154,156
------------------------------------------------- ----------- -----------
During the year, two Directors participated in defined
contribution pension schemes (2020: Nil).
During the current year and the prior year the Directors did not
receive any benefits in kind.
7. Finance income
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
-------------------------- ----------- -----------
Finance income
Bank interest receivable 113 347
-------------------------- ----------- -----------
113 347
-------------------------- ----------- -----------
8. R&D tax relief: payable tax credit and taxation
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
---------------------------------------------- ----------- -----------
R&D tax relief: payable tax credit
Research and development credit - current
year 2,460 11,500
Research and development credit - in respect
of prior periods - 2
---------------------------------------------- ----------- -----------
Taxation credit 2,460 11,502
---------------------------------------------- ----------- -----------
The tax assessed for the year is different from the standard
rate of corporation tax in the UK. The differences are explained
below:
Year ended Year ended
31 March 31 March
2021 2020
GBP GBP
--------------------------------------------- ----------- -----------
Loss before tax (359,343) (424,465)
--------------------------------------------- ----------- -----------
Loss before tax multiplied by the
standard rate of corporation tax in the UK
of 19% 68,275 80,648
Effects of:
Expenses not deductible for tax purposes (25,593) (19,746)
Unutilised tax losses and other deductions
arising in the year (44,504) (62,874)
Adjustment for R&D tax relief 1,822 1,972
Total taxation charge for the year - -
--------------------------------------------- ----------- -----------
At 31 March 2021 the Group UK tax losses to be carried forward
are estimated to be GBP20,200,000 (2020: GBP19,900,000).
The tax losses represent deferred tax assets amounting to
GBP3,834,700 (2020: GBP3,781,200) which have not been recognised on
the basis that their future economic benefit is not probable.
R&D tax relief: payable tax credit receivable 31 March 31 March
within one year 2021 2020
GBP GBP
------------------------------------------------ --------- ---------
R&D tax relief: payable tax credit recoverable 13,960 27,702
13,960 27,702
------------------------------------------------ --------- ---------
9. Earnings per share and diluted earnings per share
Basic earnings per share amounts are calculated by dividing the
profit or loss attributable to owners of the parent by the weighted
average number of ordinary shares in issue during the financial
year.
The loss attributable to equity holders of the Company for the
purpose of calculating the fully diluted loss per share is
identical to that used for calculating the basic loss per share.
The exercise of share options, disclosed in note 16, would have the
effect of reducing the loss per share and is therefore
anti-dilutive under the terms of IAS 33 'Earnings per Share'.
Basic and diluted loss per share amounts are in respect of all
activities.
Year ended Year ended
31 March 31 March
2021 2020
Loss and total comprehensive loss
for the year attributable to owners of the
parent - GBP 341,007 406,229
Weighted average number of shares 2,102,799,137 2,005,600,196
Basic and diluted loss per share - pence 0.02 0.02
--------------------------------------------- -------------- --------------
10. Intangible assets
Goodwill Development Total
costs
GBP GBP GBP
----------------------------- ---------- ------------ ----------
Cost
At 1 April 2020 7,265,277 158,166 7,423,443
At 31 March 2021 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Amortisation and Impairment
At 1 April 2020 7,265,277 158,166 7,423,443
At 31 March 2021 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Net book value
At 31 March 2021 - - -
----------------------------- ---------- ------------ ----------
At 31 March 2020 - - -
----------------------------- ---------- ------------ ----------
Cost
At 1 April 2019 7,265,277 158,166 7,423,443
At 31 March 2020 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Amortisation and Impairment
At 1 April 2019 7,265,277 158,166 7,423,443
At 31 March 2020 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Net book value
At 31 March 2020 - - -
----------------------------- ---------- ------------ ----------
At 31 March 2019 - - -
----------------------------- ---------- ------------ ----------
Development costs represent costs incurred in registering
patents that meet the capitalisation criteria set out in IAS 38,
see also note 1.
11. Inventories
31 March 31 March
2021 2020
GBP GBP
---------------- --------- ---------
Finished goods 60,576 10,084
60,576 10,084
---------------- --------- ---------
There are no provisions included within inventories in relation
to the impairment of inventories (2020: GBPNil).
During the year inventories of GBP49,136 (2020: GBP35,782) were
recognised as an expense within cost of goods.
12. Trade and other receivables
31 March 31 March
2021 2020
GBP GBP
----------------------------------------------- --------- ---------
Amounts receivable within one year:
Trade receivables 5,916 4,709
Other receivables 29,659 51,533
----------------------------------------------- --------- ---------
Total financial assets other than cash
and cash equivalents classified as loans and
receivables 35,575 56,242
Prepayments and accrued income 105,348 83,395
----------------------------------------------- --------- ---------
Total trade and other receivables 140,923 139,637
----------------------------------------------- --------- ---------
Trade and other receivables do not contain any impaired
assets.
Trade receivables represent debts due for the sale of goods to
customers.
The Directors consider that the carrying amount of these
receivables approximates to their fair value. All amounts shown
under receivables fall due for payment within one year. The Group
does not hold any collateral as security.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure
expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and
aging.
Any impairment review based on the Group's expected loss rates
is currently deemed to be immaterial to the Group.
At 31 March 2021 trade receivables of GBPNil (2020: GBPNil) were
more than 60 days past due, and there were no lifetime expected
credit losses of the full value of trade receivables (2020:
GBPNil).
13. Trade and other payables
31 March 31 March
2021 2020
GBP GBP
-------------------------------------------------- -------- --------
Trade payables 20,502 22,297
Accruals 120,449 112,749
-------------------------------------------------- -------- --------
Total financial liabilities measured at amortised
cost 140,951 135,046
Other taxes and social security 9,730 15,031
Total trade and other payables 150,681 150,077
-------------------------------------------------- -------- --------
The Directors consider that the carrying amount of these
liabilities approximates to their fair value.
All amounts shown fall due within one year.
14. Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 19% (2020: 19%).
No amounts in respect of deferred tax were recognised in profit
and loss from continuing operations or charged / credited to equity
for the current or prior year.
The UK corporation tax rate for the year was 19.0% (2020:
19.0%). In March 2021, the UK Government announced an increase in
the UK corporation tax rate to 25.0% from 1 April 2023. The
increase in UK corporation tax rate was substantively enacted on 24
May 2021.
Deferred tax assets amounting to GBP3,834,700 (2020:
GBP3,781,200) have not been recognised on the basis that their
future economic benefit is not probable. Assuming a prevailing tax
rate of 19% (2020: 19%) when the timing differences reverse, the
unrecognised deferred tax asset comprises:
31 March 31 March
2021 2020
GBP GBP
---------------------------------------------- ------------- ----------
Depreciation in excess of capital allowances - -
Unutilised tax losses 3,834,700 3,781,200
3,834,700 3,781,200
---------------------------------------------- ------------- ----------
15. Share capital
Allotted, called up and fully paid Ordinary Ordinary
0.1p shares 0.1p shares
GBP number
-------------------------------------------- ------------- --------------
At 31 March 2020 2,059,322 2,059,321,507
Issue of shares 19 August 2020 - purchase
of blood pressure IP 11,500 11,500,000
Issue of shares - placing 23 December 2020 133,333 133,333,349
Issue of shares - placing 25 February 2021 6,667 6,666,667
At 31 March 2021 2,210,822 2,210,821,523
-------------------------------------------- ------------- --------------
On 13 August 2020 the Group announced the purchase of the
background and joint foreground antihypertensive (blood pressure
lowering) intellectual property and patents from Inven2 AS, the
technology transfer office at the University of Oslo. The total
consideration was 11,500,000 new ordinary shares of 0.1p, valued at
GBP78,775 on the date the shares were issued, and this amount was
fully expensed during the year in accordance with the Group's
accounting policy.
On 17 December 2020 the Group announced it had raised proceeds
of a gross GBP1.0 million via the placing of 133,333,349 new
ordinary shares of 0.1p each at a gross 0.75p per share with
investors, with no commissions payable. The placing shares were
admitted to trading on AIM on 23 December 2020.
On 19 February 2021 the Group announced it had raised proceeds
of a gross GBP50,000 via the placing of 6,666,667 new ordinary
shares of 0.1p each at a gross 0.75p per share with investors, with
no commissions payable. The placing shares were admitted to trading
on AIM on 25 February 2021.
Allotted, called up and fully paid Ordinary Ordinary
0.1p shares 0.1p shares
GBP number
-------------------------------------------- ------------- --------------
At 31 March 2019 1,983,988 1,983,988,174
Issue of shares - placing 17 December 2019 75,334 75,333,333
At 31 March 2020 2,059,322 2,059,321,507
-------------------------------------------- ------------- --------------
16. 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.
Share 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 an option holder's employment
is terminated, the option may not be exercised unless the Board of
Directors so permits. Share options expire 10 years from the date
of grant.
Share options are exercisable between 3 and 10 years from date
of grant and are subject to performance criteria, including share
price appreciation. The Company believes the grant of options
closely aligns the interests of the option holders with those of
shareholders.
The fair values of options granted are estimated at the date of
grant in accordance with IFRS 2, using a Binomial / Black-Scholes
convergence model.
At 31 March 2021 the number of ordinary shares subject to
options granted over the 2005 and prior option schemes were:
EMI options
31 March 2021 31 March 2020
------------------------------ ----------------------- -----------------------
Weighted Number Weighted Number
average average
exercise exercise
price price
(pence) (pence)
------------------------------ ---------- ----------- ---------- -----------
Outstanding at the beginning
of the year 1.04 22,284,990 1.04 22,284,990
Outstanding at the end of
the year 1.04 22,284,990 1.04 22,284,990
------------------------------ ---------- ----------- ---------- -----------
The exercise price of EMI options outstanding at the end of the
year ranged between 0.97p and 1.85p (2020: 0.97p and 1.85p) and
their weighted average contractual life was 2.1 years (2020: 3.1
years).
Of the total number of EMI options outstanding at the end of the
year, 22,284,990 (2020: 22,284,990) had vested and were exercisable
at the end of the year. Their weighted average exercise price was
1.04 pence (2020: 1.04 pence).
Unapproved options
31 March 2021 31 March 2020
Weighted Number Weighted Number
average average
exercise exercise
price price
(pence) (pence)
------------------------------ ---------- ------------ ---------- ------------
Outstanding at the beginning
of the year 0.71 171,215,010 1.14 115,715,010
Granted during the year - - 0.30 62,500,000
Lapsed during the year - - 0.97 (7,000,000)
Outstanding at the end of
the year 0.71 171,215,010 0.71 171,215,010
------------------------------ ---------- ------------ ---------- ------------
The exercise price of unapproved options outstanding at the end
of the year ranged between 0.30p and 1.85p (2020: 0.30p and 1.85p)
and their weighted average contractual life was 5.8 years (2020:
6.8 years).
Of the total number of unapproved options outstanding at the end
of the year, 108,715,010 (2020: 68,215,010) had vested and were
exercisable at the end of the year. Their weighted average exercise
price was 0.95 pence (2020: 1.19 pence).
The fair values of the options have been estimated at the date
of grant using a Binomial / Black-Scholes convergence model, with
an expected dividend yield of 0% and an expected volatility of
81%.
The expected life of the options is based on historical data and
is not necessarily indicative of the exercise patterns that may
occur. The expected volatility reflects the assumption that the
historical volatility is indicative of future trends, which may not
necessarily be the actual outcome.
The total share-based payment charge for the year relating to
employee share-based payment plans was GBP55,925 (2020: GBP103,924)
all of which related to equity settled share-based payment
transactions.
17. Reserves
Details of movements in reserves are provided as part of the
consolidated statement of changes in equity.
The following describes the nature and purpose of each reserve
within total equity:
Share premium Amount subscribed for share capital in excess of
nominal value, less the related costs of share issues.
Merger reserve The merger reserve arose on the reverse takeover
in 2005 of Provexis Natural Products Limited (formerly
Provexis Limited) by Provexis plc through a share
for share exchange and on the issue of shares for
the acquisition of SiS (Science in Sport) Limited
in 2011. SiS (Science in Sport) Limited was demerged
from Provexis with effect from 9 August 2013 by way
of a capital reduction demerger and transferred to
a newly incorporated parent company, Science in Sport
plc.
Retained earnings Cumulative net gains and losses recognised in the
consolidated statement of comprehensive income.
18. 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 2021 amounted to GBP10,202 (2020:
GBP4,251). Employee and employer pension contributions payable but
not yet paid at 31 March 2021 totalled GBPNil (2020: GBP5,611).
19. 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, and in June 2015 it was announced that the Company had
agreed significantly enhanced financial terms for its long-term
Alliance Agreement with DSM, involving a reduction in the fixed
level of overhead deduction from sales which permanently decreased
with effect from 1 January 2015, backdated, thus increasing the
profit share payable to the Company. It is not possible to
determine the financial impact of the Alliance Agreement at this
time.
DSM is classified as a related party of the Group in accordance
with IAS 24 as it holds shares in the Group. Further, F Boned is a
Director of the Company, and a senior employee of DSM.
Revenue recognised by the Group under agreements with DSM
amounted to GBP367,079 (2020: GBP232,667). At 31 March 2021 the
Group was owed GBPNil (2020: GBPNil) by DSM.
On 19 February 2021 the Group announced that Dawson Buck
(Non-executive Chairman) had subscribed for 1,666,667 new ordinary
shares of 0.1p each as part of a placing at a gross 0.75p per
share. The placing shares were admitted to trading on AIM on 25
February 2021.
Key management compensation
The Directors represent the key management personnel. Details of
their compensation and share options are given in note 6. At 31
March 2021 the Directors were owed GBPNil (2020: GBPNil).
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END
FR FKLLLFKLZBBQ
(END) Dow Jones Newswires
September 30, 2021 02:00 ET (06:00 GMT)
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