REG - Provexis PLC - Final Results
30/09/2021 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20210930:nRSd4653Na&default-theme=true
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®
heart-health functional food ingredient, announces its audited preliminary
results for the year ended 31 March 2021.
Key highlights
· Total revenue for the year £505k, a 45% year on year increase
(2020: £348k).
· Planned launch by By-Health, a circa £5bn 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.'
· £1.0 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 £225k, 30% lower than the
prior year (2020: £321k) and another new record low for the Group for the
year.
· Cash £1.077m at 31 March 2021 (2020: £291k).
*before share-based payments of £135k (2020: £104k), 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 (http://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®
heart-health ingredient.
The Company is pleased to report a 45% year on year increase in revenues to
£505k (2020: £348k), reflecting:
· An increase in the net income received from the Company's Alliance
Agreement with DSM, which grew by 54% to £358k in the year (2020: £233k);
· An increase in revenue, net of sales rebates, from the Company's
Fruitflow+ Omega-3 business, including the Company's website
www.fruitflowplus.com (http://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 £138k, net of sales
rebates, in the year (2020: £115k).
· Amounts of £9k received in the year for Fruitflow+ nitrates
development products, compared to amounts of £Nil in the prior year.
Underlying operating loss for the year was £225k, 30% lower than the prior
year (2020: £321k) 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 £5bn, 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
(http://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®, 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/#
(http://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
(http://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
(http://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 £358k (2020: £233k). 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
(http://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 (http://www.facebook.com/FruitflowPlus) ,
Instagram www.instagram.com/fruitflowplus
(http://www.instagram.com/fruitflowplus) and Twitter
https://twitter.com/FruitflowPlus (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
(http://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
(http://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 (http://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
(http://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
(http://www.sciencedirect.com/science/article/pii/S0306987720333715) , titled
'Platelet hyperactivity in COVID-19: Can the tomato extract Fruitflow® 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
(http://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
(http://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®' 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® 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, with patents granted by the European A second European patent has been secured (previously referred to as
Patent Office in January 2017 and September 2020. proceeding to grant) and national protection has been secured in major
European states.
The patent has been granted in ten other major territories to include China
and USA; a patent application is proceeding to grant in the Philippines; and Patents have been granted in Hong Kong, Israel, South Korea and the USA, with
applications are at a late stage of progression in a further six global a further application in the Philippines now proceeding to grant.
territories, with potential patent protection out to November 2029.
Antihypertensive (blood pressure lowering) effects
This patent was originally developed in collaboration with the University of US patent protection has been secured for Fruitflow as an antihypertensive
Oslo, and it has now been granted for Fruitflow in Europe, the US and two (blood pressure lowering) agent. A Canadian patent application is proceeding
other major territories. Patent applications are being progressed in a further to grant.
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 granted around Europe and in the US, Australia, Brazil,
China, Hong Kong, Israel, Japan, South Korea, the Philippines, New Zealand and
Mexico. Further patent protection is being sought in six territories, with
potential patent protection out to December 2033. Patents have been secured (previously referred to as proceeding to grant) in
the US and also Europe, with national protection also secured in major
European states.
Patent protection has also been secured in Brazil, China, Japan, Mexico, South
Korea, Israel, the Philippines and Hong Kong.
Fruitflow for air pollution
The use of Fruitflow in protecting against the adverse effects of air US patent protection has been secured covering the use of Fruitflow in
pollution on the body's cardiovascular system. protecting subjects who have certain 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
£1.0 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
£50,000 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 £505k, 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 £1.0 million placing in December 2020,
and a smaller £50k 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 (http://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 £5bn 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
(http://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 (http://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
(http://www.facebook.com/FruitflowPlus) and an Instagram page at
www.instagram.com/fruitflowplus (http://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 £138k in the year to 31 March 2021, compared to £115k 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 £505k, a 45%
increase relative to the prior year (2020: £348k).
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 £358k in the year (2020: £233k);
· An increase in revenue, net of sales rebates, from the Company's
Fruitflow+ Omega-3 business, including the Company's website
www.fruitflowplus.com (http://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 £138k, net of sales
rebates, in the year (2020: £115k).
· Amounts of £9k received in the year for Fruitflow+ nitrates
development products, compared to amounts of £Nil in the prior year.
Underlying operating loss
Underlying operating loss for the year was £225k (2020: £321k), a £96k year
on year improvement which reflects a year on year £144k increase in gross
profit, an £8k increase in selling and distribution costs, a £52k increase
in research and development costs, a £9k reduction in R&D tax relief and
a £21k 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 £304k
(2020: £252k).
R&D tax relief: payable tax credit
A current tax credit of £2k (2020: £11k), 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 £16k was paid to
the Group in May 2020.
Taxation
The current tax charge is £Nil (2020: £Nil) 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 £341k (2020: £406k) and the basic loss per share was 0.02p
(2020: 0.02p). The Directors are unable to recommend the payment of a dividend
(2020: £Nil).
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
(http://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
£1.0 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
£50,000 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
£ £
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
£ £
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 £786,075 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 £ £
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 £ £
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
£ £
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 element (250) -
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 equity Non-controlling Total
capital premium reserve earnings attributable to owners of interests equity
the parent
£ £ £ £ £ £ £
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 75,334 225,000 - - 300,334 - 300,334
17 December 2019
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 133,333 865,417 - - 998,750 - 998,750
23 December 2020
Issue of shares - placing 6,667 42,983 - - 49,650 - 49,650
25 February 2021
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 £1.
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 £359,343 (2020: £424,465), which
includes non-cash share-based payment charges of £134,700 (2020: £103,924)
and expects to make a further loss during the year ending 31 March 2022. The
total cash outflow from operations in the year was £262,276 (2020:
£335,040). At 31 March 2021 the Group had cash balances of £1,077,410 (2020:
£291,335).
On 17 December 2020 the Group announced it had raised proceeds of a gross
£1.0 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
£50,000 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 £25,000 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 £150,681 (2020: £150,077) 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
£ £
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
£ £
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
£ £
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
£ £
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
£ £
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
£ £
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
£ £
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
£ £
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
£ £
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 £20,200,000 (2020: £19,900,000).
The tax losses represent deferred tax assets amounting to £3,834,700 (2020:
£3,781,200) which have not been recognised on the basis that their future
economic benefit is not probable.
R&D tax relief: payable tax credit receivable within one year 31 March 31 March
2021 2020
£ £
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 - £ 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 costs Total
£ £ £
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
£ £
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: £Nil).
During the year inventories of £49,136 (2020: £35,782) were recognised as an
expense within cost of goods.
12. Trade and other receivables
31 March 31 March
2021 2020
£ £
Amounts receivable within one year:
Trade receivables 5,916 4,709
Other receivables 29,659 51,533
Total financial assets other than cash 35,575 56,242
and cash equivalents classified as loans and receivables
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 £Nil (2020: £Nil) were more than 60
days past due, and there were no lifetime expected credit losses of the full
value of trade receivables (2020: £Nil).
13. Trade and other payables
31 March 31 March
2021 2020
£ £
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 £3,834,700 (2020: £3,781,200) 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
£ £
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
£ 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 £78,775 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
£1.0 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
£50,000 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
£ 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 average exercise price Number Weighted average exercise price Number
(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 price exercise 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 £55,925 (2020: £103,924) 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 £10,202 (2020: £4,251). Employee and
employer pension contributions payable but not yet paid at 31 March 2021
totalled £Nil (2020: £5,611).
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
£367,079 (2020: £232,667). At 31 March 2021 the Group was owed £Nil (2020:
£Nil) 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 £Nil (2020: £Nil).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FKLLLFKLZBBQRecent news on Provexis
See all newsREG - Provexis PLC - Grant of Options and Warrants
AnnouncementREG - Provexis PLC - Total Voting Rights
AnnouncementREG - Provexis PLC - Half-year Report
AnnouncementREG - AIM - AIM Notice - 24/12/2024
AnnouncementREG - Provexis PLC - Purchase of Fruitflow® II SD & royalty payment
Announcement