REG - Provexis PLC - Preliminary Results <Origin Href="QuoteRef">NTR.L</Origin> - Part 2
29/10/2014 14:22
- Part 2: For the preceding part double click ID:nRSU7014Pa
report was unqualified, and did not contain statements under s498(2) or (3)
Companies Act 2006 in either 2014 or 2013, but included an emphasis of matter
in respect of going concern without qualifying their report in 2013.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement principles of
International Financial Reporting Standards (IFRS) as endorsed for the use in
the European Union, this announcement does not itself contain sufficient
information to comply with IFRS. The Company expects to publish full financial
statements for the year ended 31 March 2014 that comply with IFRS in August
2014.
The accounting policies set out below have been applied to all periods
presented in these Group financial statements and are in accordance with IFRS,
as adopted by the European Union, and International Financial Reporting
Interpretations Committee ("IFRIC") interpretations that were applicable for
the year ended 31 March 2014.
There have been no new or amended standards adopted by the Group since the
prior financial year.
The following new standards, amendments to standards or interpretations have
been issued and are effective for the year ended 31 March 2014, however, the
directors do not expect them to have a material effect on the Group's
financial statements:
· Amendments to IAS 1 - Presentation of Items of Other Comprehensive
Income
· Amendments to IAS 19 - Employee Benefits
· IAS 27 - Separate Financial Statements
· IAS 28 - Investments in Associates and Joint Ventures
· Amendments to IFRS 7 - Financial Instruments: Disclosures - Offsetting
Financial Assets and
· Financial Liabilities and IAS 32 (Amended) Financial instruments:
Presentation
· IFRS 10 Consolidated Financial Statements
· IFRS 11 Joint Arrangements
· IFRS 12 Disclosure of Interests in Other Entities
· IFRS 13 - Fair Value Measurements
· Annual Improvements 2009-2011 cycle
· Consolidated Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance
The following new standards, amendments to standards and interpretations have
been issued but are not effective for the year ended 31 March 2014. The new
standards, amendments to standards and interpretations (effective for periods
beginning on or after 1 January 2014 unless otherwise stated) will be relevant
to the Group but have not been adopted early as the directors do not expect
these standards and interpretations to have a material effect on the
consolidated financial statements:
· Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27
· Offsetting Financial Assets and Financial Liabilities - Amendments to
IAS 32
· Recoverable Amount Disclosures for Non-Financial Assets (Amendments to
IAS 36)
· Novation of Derivatives and Continuation of Hedge Accounting
(Amendments to IAS 39)
· IFRS 9 Financial Instruments (effective periods commencing on or after
1 January 2015)
There are a number of standards, interpretations and amendments to published
accounts not listed above which the directors consider not to be relevant to
the Group.
Going concern
The Group's business activities together with the factors likely to affect its
future development are set out in the strategic report. The financial position
of the Group, its cash flows and liquidity position are also set out in the
strategic report. In addition note 2 to the financial statements includes the
Group's objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments and
its exposure to credit and liquidity risk.
The Group made a loss for the year from continuing operations of £998,264
(2013: £4,170,342) and expects to make a further loss during the year ending
31 March 2015. The total cash outflow from continuing operations in the year
was £252,948 (2013: £287,931). At 31 March 2014 the Group had cash balances of
£514,827 (2013: £616,612).
The directors have prepared projected cash flow information for a period of
more than twelve months from the date of approval of these financial
statements and have reviewed this information as at the date of these
financial statements. The directors have also considered this issue in light
of the significant reduction in net assets following the demerger of the SiS
(Science in Sport) Limited business.
The Group has access to future equity financings, either through the Group's
existing equity drawdown facility with Darwin or through an equity fundraising
with the Company's shareholders, as potential additional sources of funding.
Based on the level of existing cash, projected income and expenditure, and
excluding the potential additional sources of funding, the directors are
satisfied that the Company and the Group have adequate resources to continue
in business for the foreseeable future.
Accordingly the going concern basis has been used in preparing the financial
statements.
Subsidiaries are all entities (including special purpose entities) over which
the Group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control
ceases.
Basis of consolidation
The consolidated financial information presents the results of the Company and
its subsidiaries, Provexis Nutrition Limited, Provexis Natural Products
Limited and Provexis (IBD) Limited as if they formed a single entity ("the
Group"). All subsidiaries share the same reporting date, 31 March, as Provexis
plc. All intra group balances are eliminated in preparing the financial
statements.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective
of the extent of any non-controlling interest. The excess of the cost of
acquisition over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. The direct costs of acquisition are
recognised immediately as an expense.
Non-controlling interest
Profit or loss and each component of other comprehensive income are attributed
to the owners of the parent and to the non-controlling interests. Total
comprehensive income is attributed to the owners of the parent and the
non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
Revenue
Revenue comprises the fair value received or receivable for exclusivity
arrangements, collaboration agreements, royalties and sales net of sales
rebates and excluding VAT and trade discounts.
The accounting policies for the principal revenue streams of the Group are as
follows:
(i) Exclusivity arrangements and collaboration agreements are recognised as
revenue in the accounting period in which the related services, or required
activities, are performed or specified conditions are fulfilled in accordance
with the terms of completion of the specific transaction.
(ii) Royalty income relating to the sale by a licensee of licensed product is
recognised on an accruals basis in accordance with the substance of the
relevant agreement and based on the receipt from the licensee of the relevant
information to enable calculation of the royalty due.
Segment reporting
The Group determines and presents operating segments based on the information
that internally is provided to the Chairman, who is the Group's 'chief
operating decision maker' ("CODM").
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group's
other components. An operating segment's operating results are reviewed
regularly by the CODM to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete financial
information is available.
Segment results that are reported to the Group Board include items directly
attributable to a segment as well as those that can be allocated on a
reasonable basis.
Segment capital expenditure is the total cost incurred during the period to
acquire property, plant and equipment, and intangible assets.
Use of non-GAAP profit measure - underlying operating profit
The directors believe that the operating loss before amortisation and
impairment of acquired intangibles, share based payments and exceptional items
measure provides additional useful information for shareholders on underlying
trends and performance. This measure is used for internal performance
analysis. Underlying operating loss is not defined by IFRS and therefore may
not be directly comparable with other companies' adjusted profit measures. It
is not intended to be a substitute for, or superior to IFRS measurements of
profit.
Exceptional items are those material items which, by virtue of their size or
incidence, are presented separately in the Statement of Comprehensive Income
to give a full understanding of the Group's underlying financial performance.
Transactions which may give rise to exceptional items include the
restructuring of business activities and acquisitions. A reconciliation of
underlying operating profit to statutory operating profit is set out on the
face of the Statement of Comprehensive Income.
Leased assets
Leases, which contain terms whereby the Group does not assume substantially
all the risks and rewards incidental to ownership of the leased item are
classified as operating leases. Operating lease rentals are charged to the
statement of comprehensive income on a straight line basis over the lease
term. The Group does not hold any assets under finance leases.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group's share of the identifiable net assets acquired. Goodwill
on acquisition of subsidiaries is included in 'intangible assets'. Separately
recognised goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses.
An impairment loss is recognised within administrative expenses in the
consolidated statement of comprehensive income for the amount by which the
asset's carrying amount exceeds its recoverable amount. For the purposes of
assessing impairment, assets are grouped into cash generating units ('CGU')
being the lowest levels for which there are separately identifiable cash
flows. The recoverable amount of a CGU is the higher of a CGU's fair value
less costs to sell and value in use.
Impairment losses on goodwill are not reversed.
Research and development
Certain Group products are in the research phase and others are in the
development phase. Expenditure incurred on the development of internally
generated products is capitalised if it can be demonstrated that:
● It is technically feasible to develop the product for it to be
sold;
● Adequate resources are available to complete the development;
● There is an intention to complete and sell the product;
● The Group is able to sell the product;
● Sale of the product will generate future economic benefits; and
● Expenditure on the project can be measured reliably.
The value of the capitalised development cost is assessed for impairment
annually. The value is written down immediately if impairment has occurred.
Development costs are not being amortised as income has not yet been realised
from the underlying technology. Development expenditure, not satisfying the
above criteria, and expenditure on the research phase of internal projects is
recognised in the statement of comprehensive income as incurred.
Patents and trademarks
The costs incurred in establishing patents and trademarks are either expensed
or capitalised in accordance with the corresponding treatment of the
development expenditure for the product to which they relate.
Website development costs
Website development costs are capitalised to the extent that it is capable of
generating direct revenues from enabling orders to be placed. Costs associated
with the planning stage are recognised in the Income Statement.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight-line basis over their useful economic
lives.
Intangible assets are recognised on business combinations if they are
separable from the acquired entity or give rise to other contractual/legal
rights. The amounts ascribed to such intangibles are arrived at by using
appropriate valuation techniques.
In-process research and development programmes acquired in such combinations
are recognised as an asset even if subsequent expenditure is written off
because the criteria specified in the policy for research and development
costs above are not met.
The significant intangibles recognised by the Group, their useful economic
lives and the methods used to determine the cost of intangibles acquired in a
business combination are as follows:
Intangible asset Useful economic life Valuation method
Trademarks 9.5 Relief From Royalty Rate Method
Patents / recipes / formulations 4.5 to 9.5 Relief From Royalty Rate Method
Covenants not to compete 3.0 Comparative Business Valuation
Customer relationships 9.5 Multi-Period Excess Earnings Method
Website development costs 5.0 Historic Cost
Non-current assets held for sale or distribution and disposal groups
Non-current assets and disposal groups are classified as held for sale when,
at the year end:
- they are available for immediate sale;
- management is committed to a plan to sell;
- it is unlikely that significant changes to the plan will be made or
that the plan will be withdrawn;
- an active programme to locate a buyer has been initiated;
- the asset or disposal group is being marketed at a reasonable price in
relation to its fair value; and
- a sale is expected to complete within 12 months from the date of
classification.
Non-current assets and disposal groups classified as held for sale are
measured at the lower of:
- their carrying amount immediately prior to being classified as held
for sale in accordance with the Group's accounting policy; and
- fair value less costs to sell.
Following their classification as held for sale, non-current assets (including
those in a disposal group) are not depreciated.
The results of operations disposed during the year are included in the
consolidated statement of comprehensive income up to the date of disposal.
A discontinued operation is a component of the Group's business that
represents a separate major line of business or geographical area of
operations or is a subsidiary acquired exclusively with a view to resale, that
has been disposed of, has been abandoned or that meets the criteria to be
classified as held for sale.
Discontinued operations are presented in the consolidated statement of
comprehensive income as a single line which comprises the post-tax profit or
loss of the discontinued operation along with the post-tax gain or loss
recognised on the re-measurement to fair value less costs to sell or on
disposal of the assets or disposal groups constituting discontinued
operations. The cash flows from discontinued operations are also disclosed as
a single-line item in each category of the cash flow statement.
Plant and equipment
Plant and machinery, fixtures, fittings and computer equipment and laboratory
equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses. Cost includes expenditure that is directly attributable to
the acquisition of the items. Depreciation is charged to the Statement of
Comprehensive Income on all plant and equipment at rates calculated to write
off the cost or valuation, less estimated residual value, of each asset on a
straight line basis over their estimated useful lives, which is:
· between 3 and 8 years for motor vehicles, plant and machinery,
fixtures, fittings and computer equipment; and
· 5 years for laboratory equipment.
Leasehold improvements are depreciated on a straight line basis over the
unexpired portion of the lease.
The assets' residual values and useful lives are determined by the directors
and reviewed and adjusted if appropriate at each balance sheet date in
accordance with the Group policy for impairment of assets.
The gain or loss arising on the disposal of an asset is determined as the
difference between the disposal proceeds and the carrying amount of the asset
and is recognised in the income statement.
Impairment of assets
Assets that have a finite useful life but that are not yet in use and are
therefore not subject to amortisation or depreciation are tested annually for
impairment. Assets that are subject to amortisation are reviewed for
impairment annually and when events or circumstances suggest that the carrying
amount may not be recoverable, an impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable amount.
Goodwill is allocated to cash-generating units ('CGU') for the purpose of
impairment testing to the extent that it is possible to allocate goodwill to a
CGU on a non-arbitrary basis. A CGU is identified at the lowest aggregation of
assets that generate largely independent cash inflows, and that which is
looked at by management for monitoring and managing the business.
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised immediately in the
statement of comprehensive income, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the
asset in prior periods. A reversal of an impairment loss is recognised
immediately in the statement of comprehensive income, unless the relevant
asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. Impairment losses on
goodwill are not reversed.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
calculated as follows:
Raw materials - cost of purchase on first in, first out basis.
Work in progress and finished goods - cost of raw materials and labour,
together with attributable overheads based on the normal level of activity.
Net realisable value is based on estimated selling price less further costs to
completion and disposal. A charge is made to the income statement for slow
moving inventories. The charge is reviewed at each balance sheet date.
Financial instruments
Financial assets
The Group's financial assets are comprised of 'trade and other receivables'
and 'cash and cash equivalents'. They are recognised initially at their fair
value and subsequently at amortised cost. The Group will assess at each
balance sheet date whether there is objective evidence that the financial
asset is impaired. If an asset is judged to be impaired the carrying amount of
the asset will be adjusted to its impaired valuation.
Financial liabilities
The Group's financial liabilities comprise 'trade and other payables' and
'borrowings'. These are recognised initially at fair value and subsequently at
amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
Government grants
Government grants are recognised when there is reasonable assurance that the
grant will be received and the Group will comply with all attached conditions.
Government grants are recognised in the statement of comprehensive income in
the same period to which the costs that they are intended to compensate are
expensed.
Taxation
Current tax is provided at amounts expected to be recovered or to be paid
using the tax rates and tax laws that have been enacted or substantively
enacted at the balance sheet date. When research and development tax credits
are claimed they are recognised on an accruals basis and are included as a
taxation credit.
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability on the balance sheet differs from its tax base,
except for differences arising on:
· The initial recognition of goodwill
· 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 balance sheet date and are
expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered). Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
· 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 the statement
of comprehensive income.
Employee benefits
(i) Defined contribution plans
The Group provides retirement benefits to all employees and Executive
Directors. The assets of these schemes are held separately from those of the
Group in independently administered funds. Contributions made by the Group are
charged to the statement of comprehensive income in the period in which they
become payable.
(ii) Accrued holiday pay
Provision has been made at the balance sheet date for holidays accrued but not
taken at the salary of the relevant employee at that date.
(iii) Share-based payment transactions
The Group operates an equity-settled, share-based compensation plan. Vesting
conditions are service conditions and performance conditions only. Where share
options are awarded to employees and others providing similar services, the
fair value of the options at the date of grant is charged to the statement of
comprehensive income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected
to vest at each balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest. Market vesting conditions are factored into the fair value of
the options when granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative charge is not adjusted for failure to
achieve a market vesting condition. If market related terms and conditions of
options are modified before they vest, the change in the fair value of the
options, measured immediately before and after the modification, is also
charged to the statement of comprehensive income over the remaining vesting
period. If non-market related terms and conditions of options are modified
before they vest, the number of instruments expected to vest at each balance
sheet date, and therefore the cumulative charge, is therefore amended
accordingly. Where equity instruments are granted to persons other than
employees and others providing similar services, the statement of
comprehensive income is charged with the fair value of goods and services
received.
The proceeds received when options are exercised, net of any directly
attributable transaction costs, are credited to share capital (nominal value)
and the remaining balance to share premium.
National insurance on share options
All employee option holders sign statements that they will be liable for any
employers national insurance arising on the exercise of share options.
Interest income
Interest income is recognised on a time-proportion basis using the effective
interest rate method.
Warrants
The Group has issued warrants to Darwin Strategic Limited as part of the
Equity Financing Facility. These warrants have been measured at fair value at
the date of grant using an appropriate options pricing model.
This fair value has been held on the balance sheet within prepayments and in
the warrants reserve within equity. The prepayment will be released against
share premium as the equity financing facility is utilised. The warrants
reserve will be released to share premium when the warrants are exercised. If
the warrants lapse or are cancelled then the reserve is transferred to
retained earnings.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs requires the
use of certain critical accounting estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
Estimates and judgements are continually made and are based on historic
experience and other factors, including expectations of future events that are
believed to be reasonable in the circumstances.
As the use of estimates is inherent in financial reporting, actual results
could differ from these estimates. The directors believe the following to be
the key areas of estimation and judgement:
(i) Research and development
Under IAS 38 Intangible Assets, development expenditure which meets the
recognition criteria of the standard must be capitalised and amortised over
the useful economic lives of intangible assets from product launch.
(ii) Share-based payments
The Group operates an equity-settled, share-based compensation plan. The
charge for share-based payments is determined based on the fair value of
awards at the date of grant partly by use of the Black-Scholes pricing model
which require judgements to be made regarding expected volatility, dividend
yield, risk free rates of return and expected option lives. The inputs used in
these pricing models to calculate the fair values are set out in note 21. An
element of the share-based payment charge also relies on certain assumptions
over the future performance of the share price which may not be met or may be
exceeded by the time the relevant awards vest.
(iii) Goodwill and impairment
The recoverable amount of goodwill is determined based on value in use
calculations of the cash-generating units to which it relates. Further detail
on key assumptions, including growth rates, discount rates and the time period
of these value in use calculations is given in note 12.
The Group prepares and approves formal five year management plans for its
operations, which are used in the value in use calculations. In certain cases
the fifth year of the management plan is not indicative of the long- term
future performance as operations may not have reached maturity. In this case
management extends the plan data for a longer period.
(iv) Fair value of identifiable net assets acquired
Upon acquisition of a business, its identifiable assets and liabilities are
assessed to determine their fair value. The values attributed to assets and
liabilities as part of this process are, where appropriate, based on market
values identified for equivalent assets, together with management's experience
and assessments including comparison to the carrying value of assets of a
similar condition and age in the existing business.
(v) Valuation of inventories
Inventories are valued at the lower of cost and net realisable value. Cost
comprises direct materials, labour and, where appropriate, overheads that have
been incurred in bringing the inventory to its present location and condition.
Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
(vi) Useful economic lives of intangible and tangible assets
In relation to the Group's finite life intangible assets and property, plant
and equipment, useful economic lives and residual values of assets have been
established using historical experience and an assessment of the nature of the
assets involved. Assets are assessed on an ongoing basis to determine whether
circumstances exist that could lead to potential impairment of the carrying
value of such assets.
2. Financial risk management
2.1 Financial risk factors
The Group's activities inevitably expose it to a variety of financial risks:
market risk (including currency risk, cash flow interest rate risk and fair
value interest rate risk), credit risk and liquidity risk.
It is Group policy not to enter into speculative positions using complex
financial instruments. The Group's primary treasury objective is to minimise
exposure to potential capital losses whilst at the same time securing
favourable market rates of interest on Group cash deposits using money market
deposits with banks. Cash balances used to settle the liabilities from
operating activities are also maintained in current accounts which earn
interest at variable rates.
(a) Market risk
Foreign exchange risk
The Group primarily enters into contracts which are to be settled in UK
pounds. However, some contracts involve other major world currencies including
the US Dollar and the Euro. Where large contracts of more than £50,000 total
value are to be settled in foreign currencies consideration is given to
converting the appropriate amounts to or from UK pounds at the outset of the
contract to minimise the risk of adverse currency fluctuations.
The Group incurred minimal expenditure in foreign currencies during the year,
and the prior year, and consequently there is no material exposure to foreign
currency rate risk.
Cash flow and fair value interest rate risk
The Group's interest rate risk arises from medium term and short term money
market deposits. Deposits which earn variable rates of interest expose the
Group to cash flow interest rate risk. Deposits at fixed rates expose the
Group to fair value interest rate risk.
The Group analyses its interest rate exposure on a dynamic basis throughout
the year.
(b) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and
financial institutions as well as credit exposure in relation to outstanding
receivables. Group policy is to place deposits with institutions with
investment grade A2 or better (Moody's credit rating) and deposits are made in
sterling only. The Group does not expect any losses from non-performance by
these institutions. Management believes that the carrying value of outstanding
receivables and deposits with banks represents the Group's maximum exposure to
credit risk.
(c) Liquidity risk
Liquidity risk arises from the Group's management of working capital, it is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. Prudent liquidity risk management implies
maintaining sufficient cash and cash equivalents and management monitors
rolling forecasts of the Group's liquidity on the basis of expected cash
flow.
The Group had trade and other payables at the statement of financial position
date of £108,212 (2013: £1,787,569) as disclosed in note 17.
2.2 Capital risk management
The Group considers its capital to comprise its ordinary share capital, share
premium, warrant reserve, merger reserve and accumulated retained earnings as
disclosed in the consolidated statement of financial position.
The Group remains funded primarily by equity capital. The Group's objectives
when managing capital are to safeguard the Group's ability to continue as a
going concern in order to provide returns for equity holders of the Company
and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
3.Segmental reporting
Following the demerger of SiS (Science in Sport) Limited in August 2013 the
directors have determined that only one operating segment exists under the
terms of International Financial Reporting Standard 8 'Operating Segments', as
the Group is organised and operates as a single business unit and all
activities are based in the UK. The Group's reporting segment is determined
based on the Group's internal reporting to the Chief Operating Decision Maker
(CODM). The CODM has been determined to be the Chairman of the Board of
Directors as he is primarily responsible for the allocation of resources to
segments and the assessment of performance of the segments.
The CODM uses underlying operating profit/(loss) as the key measure of the
segments' results as it reflects the segments' underlying trading performance
for the financial period under evaluation.
Underlying operating profit/(loss) is a consistent measure within the Group
which measures the performance of the segment before goodwill and acquired
intangible asset amortisation and impairment, share based payment charges,
restructuring charges and acquisition costs arising from acquisitions.
The results of the former SiS segment for the period up to the demerger can be
seen in note 10.
4. Loss from continuing operations
Year ended31 March2014 Year ended31 March2013restated
£ £
Loss from continuing operations is stated after charging:
Depreciation of plant and equipment 9,140 35,027
Amortisation and impairment of intangible assets - 2,781,499
Research and development costs 142,985 324,468
Foreign exchange gains (603) (1,191)
Costs of demerger of SiS (Science in Sport) Limited 49,824 -
Restructuring costs - 135,787
Loss on disposal of property, plant and equipment - 1,556
Grant income - (3,000)
Operating lease costs - land and buildings 12,266 57,568
Equity-settled share based payment expense 391,191 179,283
Defined contribution pension expense 7,624 1,552
Restructuring costs of £135,787 were incurred in 2013 as part of the closure
of the group's R&D facility at the University of Aberdeen, along with other
reductions in group administrative headcount.
The total fees of the Group's auditor, for services provided are analysed
below:
Chantrey Vellacott DFK BDO LLP
Year ended31 March2014 Year ended31 March2013 Year ended31 March2014 Year ended31 March2013
£ £ £ £
Audit services
Parent company 13,000 15,000 - -
Subsidiaries 12,000 24,500 - -
Tax services - compliance
Parent company 2,000 2,500 - -
Subsidiaries 3,000 6,000 - -
Other services
iXBRL services 2,000 2,000 - -
Review of interim statement - - - 5,000
Corporate finance- demerger of SiS (Science in Sport) 15,000 - - -
Total fees 47,000 50,000 - 5,000
The Group engaged Chantrey Vellacott DFK LLP to assist the Group with the
demerger of SiS (Science in Sport) Limited from the Provexis Group to a new
company called Science in Sport plc. Science in Sport plc engaged Chantrey
Vellacott DFK to assist it with the admission of its entire issued and to be
issued ordinary share capital to trading on AIM on 9 August 2013.
Further information on the demerger and admission of Science in Sport plc to
AIM can be found in the circular, and admission to trading on AIM document,
which were issued on 28 June 2013. Copies of the circular and the admission to
trading on AIM document can be downloaded from Provexis plc's website
www.provexis.com.
5. Wages and salaries
The average monthly number of persons (including all directors) employed by
the Group during the year for continuing operations was as follows:
Year ended31 March2014 Year ended31 March2013restated
Research and development staff - 3
Directors 4 4
4 7
Their aggregate emoluments were:
Year ended31 March2014 Year ended31 March2013restated
£ £
Wages and salaries 289,307 673,253
Social security costs 23,960 75,486
Other pension and insurance benefits costs 11,476 7,181
Total cash settled emoluments 324,743 755,920
Accrued holiday pay (28,343) (5,066)
Share-based payment remuneration charge: equity settled 391,191 179,283
Total emoluments 687,591 930,137
6. Directors' remuneration
Year ended31 March2014 Year ended31 March2013
£ £
Directors
Aggregate emoluments 245,600 396,490
Company pension contributions 6,046 16,469
251,646 412,959
Share based payment remuneration charge: equity settled 417,789 129,540
Total Directors' emoluments 669,435 542,499
Emoluments disclosed above include the following amounts in respect of the
highest paid director:
Year ended31 March2014 Year ended31 March2013
£ £
Aggregate emoluments 89,814 201,473
Company pension contributions 3,678 10,018
Share based payment remuneration charge: equity settled 259,707 88,087
Total of the highest paid director's emoluments 353,199 299,578
During the year, two directors (2013: two directors) participated in defined
contribution pension schemes.
Directors' emoluments include amounts attributable to benefits in kind
comprising private medical insurance on which the directors are assessed for
tax purposes. The amounts attributable to benefits in kind are stated at cost
to the Group, which is also the tax value of the attributable benefits.
7. Finance income
Year ended31 March2014 Year ended31 March2013restated
£ £
Finance income
Bank interest receivable 4,889 12,407
4,889 12,407
8. Taxation
Year ended31 March2014 Year ended31 March2013restated
£ £
Current tax income
United Kingdom corporation tax - research and development credit 15,823 65,740
Adjustment in respect of prior period
United Kingdom corporation tax - research and development credit - 17,347
Taxation credit 15,823 83,087
The tax assessed for the year is different from the standard rate of
corporation tax in the UK. The differences are explained below:
Year ended31 March2014 Year ended31 March2013restated
£ £
Loss before tax 1,014,087 4,253,429
Loss before tax multiplied by thestandard rate of corporation tax in the UK of 23% (2013: 24%) 233,240 1,020,823
Effects of:
Expenses not deductible for tax purposes (535) (43,491)
Difference between depreciation and capital allowances (2,102) (17,564)
Other short-term timing differences (89,974) (661,853)
Unutilised tax losses and other deductions arising in the year (130,271) (255,246)
Additional deduction for R&D expenditure 18,380 79,752
Surrender of tax losses for R&D tax credit refund (17,262) (77,692)
Share scheme deduction 4,347 21,011
Adjustments in respect of prior years - 17,347
Total tax credit for the year 15,823 83,087
At 31 March 2014 the Group UK tax losses to be carried forward are estimated
to be £17,833,920 (2013: £17,622,991).
The rate change from 23% to 21% had been substantively enacted by the balance
sheet date, so deferred tax is provided for at a rate of 21%.
Income tax asset receivable within one year 31 March2014 31 March2013
£ £
Corporation tax recoverable 15,823 288,801
15,823 288,801
9. Earnings per share and diluted earnings per share
Basic earnings per share amounts are calculated by dividing the profit
attributable to owners of the parent by the weighted average number of
ordinary shares in issue during the financial year.
Diluted earnings per share amounts are calculated by dividing the profit
attributable to owners of the parent by the weighted average number of
ordinary shares in issue during the financial year adjusted for the effects of
potentially dilutive options. The dilutive effect is calculated on the full
exercise of all potentially dilutive ordinary share options granted by the
Group.
Year ended 31 March 2014 Year ended 31 March 2013
Basic Potentiallydilutiveshare optionsand warrants Diluted Basic Potentiallydilutiveshare optionsand warrants Diluted
Profit / (loss) - £
Continuing operations (946,630) - (946,630) (4,117,236) - (4,117,236)
Discontinued operations 1,434,983 - 1,434,983 (221,364) - (221,364)
Total operationsattributable to owners 488,353 - 488,353 (4,338,600) - (4,338,600)
Share options - 110,640,510 - - 90,071,648 -
Warrants - 10,000,000 - - 10,000,000 -
Weighted averagenumber of shares 1,537,655,373 120,640,510 1,658,295,883 1,502,924,005 100,071,648 1,602,995,653
Earnings / (loss) per share (pence)
Continuing operations (0.06) 0.00 (0.06) (0.27) 0.00 (0.27)
Discontinued operations 0.09 0.00 0.09 (0.02) 0.00 (0.02)
Total 0.03 0.00 0.03 (0.29) 0.00 (0.29)
There have been no transactions involving ordinary shares between the
reporting date and the date of approval of these financial statements which
would significantly change the earnings per share calculations shown above.
The earnings per share for continuing operations do not include potentially
dilutive share options and warrants on the basis that the continuing
operations made a loss.
10. Discontinued operations
SiS (Science in Sport) Limited , which was acquired by Provexis plc in June
2011, was demerged from Provexis with effect from 9 August 2013 by way of a
capital reduction demerger and transferred to a newly incorporated parent
company, Science in Sport plc.
The Company incurred certain demerger costs as part of this process:
Year ended31 March2014 Year ended31 March2013restated
£ £
Costs of demerger of SiS (Science in Sport) Limited 49,824 -
Pursuant to the terms of the demerger agreement Science in Sport plc allotted
and issued to the holders of ordinary shares in the capital of Provexis plc
15,188,000 ordinary shares of 10 pence each in consideration of the transfer
to Science in Sport plc by Provexis plc of the whole of the issued share
capital of SiS (Science in Sport) Limited. Science in Sport plc was admitted
to the AIM segment of the London Stock Exchangeʼs market for listed securities
as from 9 August 2013.
At the date of the demerger, Science in Sport plc acquired the entire issued
share capital of SiS (Science in Sport) Limited in return for issuing shares
to the shareholders of Provexis plc.
These transactions resulted in the demerger of SiS (Science in Sport) Limited
from the Group.
SiS (Science in Sport) Limited represented a separate major line of business
for the Group under the definitions within IFRS 5, hence the results of SiS
(Science in Sport) Limited up to the date of the demerger are shown as
discontinued in these financial statements. Prior year comparatives have been
restated as necessary. There is no impact on the prior year balance sheet.
Prior to the demerger, Provexis plc converted £448,163 of an intercompany debt
from SiS (Science in Sport) Limited into equity by way of a capital
contribution. At the time of the demerger, a payment of £290,000 was made to
Provexis plc to settle the remaining outstanding intercompany debt.
The disclosures below relate to the SiS (Science in Sport) Limited demerged
business segment.
a) The results of SiS (Science in Sport) Limited before demerger were as
follows:
Period Year
ended ended
8 August 31 March
2014 2013
£ £
Revenue 2,617,857 5,522,240
Cost of goods (1,096,643) (2,418,177)
Gross profit 1,521,214 3,104,063
Research and development costs (57,571) (151,085)
Administrative costs (1,449,638) (3,343,966)
Underlying operating profit 147,962 74,330
Amortisation and impairment charges (101,576) (286,735)
Restructuring costs (32,381) (178,583)
Profit / (loss) from operations 14,005 (390,988)
Finance income 26 -
Finance costs (2,214) (3,275)
Profit / (loss) before taxation 11,817 (394,263)
Taxation 20,663 172,899
Loss and total comprehensive expense for the period 32,480 (221,364)
The results of discontinued operations were previously recorded in the SiS
segment, see also note 3.
b) Income tax relating to the SiS (Science in Sport) Limited business is as
follows:
Period Year
ended ended
8 August 31 March
2014 2013
£ £
Current tax income
United Kingdom corporation tax - research and development credit - -
Adjustment in respect of prior period
United Kingdom corporation tax - research and development credit - 39,950
United Kingdom corporation tax - other adjustments - 67,267
Total current tax income - 107,217
Deferred tax
Origination and reversal of temporary differences 20,663 65,682
Tax on loss for the year 20,663 172,899
c) The profit from discontinued operations shown in the income statement is
made up as follows:
Year
ended
31 March
2014
£
Profit in the financial period up to demerger of the discontinued business 32,480
Dividend in specie, at fair value - 1,518,650,979 shares at 0.56 pence 8,504,445
Net assets of SiS (Science in Sport) Limited business demerged
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