REG - Provexis PLC - Preliminary Results <Origin Href="QuoteRef">PXSP.L</Origin> - Part 3
07/09/2016 07:07
- Part 3: For the preceding part double click ID:nRSG1654Jb
way of
an issue of 3,414,635 fully paid Ordinary Shares, at a gross 1.025p per share.
The contingent fee amounting to a maximum of £125,000 payable under the 7
November 2011 Equity Financing Facility was cancelled.
(ii) Enter into a new warrant agreement dated 10 September 2013 for
the grant to Darwin of warrants to subscribe for up to ten million Ordinary
Shares, such warrants to be exercisable at a price of 4.44 pence per share and
to be exercisable at any time prior to the expiry of five years following the
date of the new warrant agreement.
The warrants were measured at fair value at the date of grant using a
Black-Scholes model, with the following assumptions:
Date ofgrant Exercise price pence Number of warrants Share price at grant date pence Expected volatility Risk free rate Expected life years Fair value per share under warrantpence
11-Sep-13 4.44 10,000,000 0.915 75% 0.79% 5 0.262
An expected dividend yield of 0% was used in the above valuation.
The assumption made for the expected life of the warrants is not necessarily
indicative of the exercise patterns that may occur. The expected volatility
reflects the assumption that the historical volatility is indicative of future
trends, which may not necessarily be the actual outcome.
The existing 10 September 2013 warrant agreement with Darwin continues to be
in place under the new PrimaryBid.com arrangements.
The total fair value of the warrants, £26,200, has previously been held within
prepayments and in the warrants reserve within equity. During the year ended
31 March 2015 the prepayment was released in full against share premium.
The warrants reserve will be released to share premium if the warrants are
exercised. If the warrants lapse then the reserve will be transferred to
retained earnings.
Allotted, called up and fully paid Ordinary0.1p shares Ordinary0.1p shares
£ number
At 31 March 2015 1,584,846 1,584,845,944
Issue of shares - PrimaryBid placing 9 July 2015 62,222 62,222,223
At 31 March 2016 1,647,068 1,647,068,167
Allotted, called up and fully paid Ordinary0.1p shares Ordinary0.1p shares
£ number
At 31 March 2014 1,554,816 1,554,815,614
Issue on subscription - equity financing facility 30,030 30,030,330
At 31 March 2015 1,584,846 1,584,845,944
During the year ended 31 March 2016 the Company issued ordinary shares of 0.1p
each as follows:
Date Reason for issue Shares issued
£ Number
09.07.15 PrimaryBid placing 62,222 62,222,223
62,222 62,222,223
During the year ended 31 March 2015 the Company issued ordinary shares of 0.1p
each as follows:
Date Reason for issue Shares issued
£ Number
29.04.14 Share subscription - equity financing facility 7,000 7,000,000
15.12.14 Share subscription - equity financing facility 23,030 23,030,330
30,030 30,030,330
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.
The options typically vest after a period of 3 years and the vesting schedule
is subject to predetermined overall company selection criteria. In the event
that the option holder's employment is terminated, the option may not be
exercised unless the Board of Directors so permits. The options expire 10
years from the date of grant.
The Company undertook a reverse takeover of Provexis Natural Products Limited
('PNP', formerly Provexis Limited) in June 2005 through a share for share
exchange. Prior to the takeover the Company and PNP had granted EMI options
and unapproved options. Options granted by the Company prior to the takeover
remain subject to the same terms as contained in the individual share option
contracts under which they were originally granted. The PNP EMI options and
unapproved options were rolled over into options over the Company's ordinary
shares, and these replacement options remain subject to the same terms as
contained in the individual PNP share option contracts under which they were
originally granted.
Following the demerger of SiS (Science in Sport) Limited in August 2013
appropriate modifications were proposed to the exercise price of certain
outstanding EMI and unapproved share option awards under Provexis' share
option schemes. The proposed modifications were to reflect the reduction in
value of Provexis which arose from the share re-organisation, reduction of
capital and demerger of SiS (Science in Sport) Limited, calculated on a pro
rata basis immediately after the demerger using the respective market values
of Provexis plc and Science in Sport plc, net of Science in Sport plc's August
2013 placing ('the Demerger Modifications').
Details of the share re-organisation, reduction of capital, demerger of SiS
(Science in Sport) Limited and proposed option Demerger Modifications were
provided on 28 June 2013 in a circular to shareholders and in an AIM admission
document for Science in Sport plc, which are available to download from the
Company's website www.provexis.com.
As envisaged in the June 2013 circular to shareholders an advance assurance
was sought from HMRC to approve the variation in the exercise price arising
out of the reduction of capital and demerger for unexercised EMI options as at
9 August 2013, the demerger effective date. The advance assurance was not
successful, and the Company remains in dialogue with HMRC on this issue. On 20
August 2014 it was agreed that the modifications proposed to the exercise
price of certain outstanding awards under Provexis' share option schemes would
take immediate effect.
On 3 September 2015 the Company granted a total of 2,500,000 new options over
Ordinary Shares ('Options') under the Provexis 2005 share option scheme to
Professor Asim Duttaroy, with an exercise price of 0.49 pence, being the
closing mid-market price on 3 September 2015. The Options are exercisable
between 3 and 10 years from date of grant and are subject to performance
criteria, including share price appreciation.
Professor Asim Duttaroy was the original inventor of Fruitflow and he serves
on the Company's Scientific Advisory Board. On 18 November 2014 the Company
announced it had signed a collaboration agreement with the University of Oslo
to undertake further research into the relationship between Fruitflow and
blood pressure regulation, with the University's collaboration work to be led
by Professor Duttaroy. The Company believes the grant of these Options will
closely align the interests of Professor Duttaroy with those of shareholders.
Following the issue of the new Options the total number of Ordinary Shares
under option which could be issued if all of the performance criteria are met
are 118,617,620 Ordinary Shares.
The fair values of the options granted during the year were estimated at the
date of grant in accordance with IFRS 2, using a Black-Scholes model. Where
options have been approved but not formally granted and optionholders have
provided services in advance of the grant of options a charge is recognised
using an estimated fair value based on the period end share price.
At 31 March 2016 the number of ordinary shares subject to options granted over
the 2005 and prior option schemes were:
EMI options
31 March 2016 31 March 2015
Weighted average exercise price(pence) Weighted average share priceat date of exercise(pence) Number Weighted average exercise price(pence) Weighted average share priceat date of exercise(pence) Number
Outstanding at the beginning of the year 0.77 - 56,078,090 0.78 - 58,494,665
Cancelled during the year - - - 0.90 - (2,416,575)
Outstanding at the end of the year 0.77 - 56,078,090 0.77 - 56,078,090
The exercise price of EMI options outstanding at the end of the year ranged
between 0.59p and 1.85p (2015: 0.59p and 1.85p) and their weighted average
contractual life was 4.3 years (2015: 5.3 years).
Of the total number of EMI options outstanding at the end of the year,
49,078,090 (2015: 49,078,090) had vested and were exercisable at the end of
the year. Their weighted average exercise price was 0.74 pence (2015: 0.74
pence).
Unapproved options
31 March 2016 31 March 2015
Weightedaverageexercise price(pence) Number Weightedaverageexercise price(pence) Number
Outstanding at the beginning of the year 1.20 62,145,845 1.30 52,145,845
Granted during the year 0.49 2,500,000 0.67 10,000,000
Cancelled during the year 0.66 (2,106,315) - -
Outstanding at the end of the year 1.19 62,539,530 1.20 62,145,845
The exercise price of unapproved options outstanding at the end of the year
ranged between 0.49p and 1.85p (2015: 0.59p and 1.85p) and their weighted
average contractual life was 6.2 years (2015: 6.9 years).
Of the total number of unapproved options outstanding at the end of the year,
43,039,530 (2015: 45,145,845) had vested and were exercisable at the end of
the year. Their weighted average exercise price was 1.38 pence (2015: 1.35
pence).
Grant of options
The fair values of the options have been estimated at the date of grant using
a Black-Scholes model, using the following assumptions:
Tranche Date ofgrant Exercise price pence Number of options Share price at grant date pence Expected volatility Risk free rate Expected life years Fair value per share under option pence
1 26-Aug-08 0.9 44,166,575 0.87 65% 4.45% 10 0.585
2 17-Jun-11 2.8 51,300,000 2.00 88% 4.48% 10 1.17
3 27-Jun-13 1.475 40,000,000 1.475 88% 0.79% 10 0.785
4 17-Nov-14 0.67 10,000,000 0.67 74% 0.94% 10 0.515
5 03-Sep-15 0.49 2,500,000 0.49 66% 0.80% 10 0.350
The fair value of the Demerger Modifications made to the exercise price of
certain outstanding awards under Provexis' share option schemes has been
estimated in accordance with IFRS 2, using a Black-Scholes model. The fair
value of the Demerger Modifications is charged to the statement of
comprehensive income over the vesting period as part of the share based
payment charge.
An expected dividend yield of 0% has been used in all of the above
valuations.
The expected life of the options is based on historical data and is not
necessarily indicative of the exercise patterns that may occur. The expected
volatility reflects the assumption that the historical volatility is
indicative of future trends, which may not necessarily be the actual outcome.
The total share based payment charge for the year relating to employee share
based payment plans was £70,269 (2015: £54,375) all of which related to equity
settled share-based payment transactions. The Group's share based payment
charge for the year ended 31 March 2015 totalling £89,375 included an
additional £35,000 share based payment charge (2016: £Nil) in respect of a fee
which was paid to Darwin in September 2013 by way of an issue of Ordinary
Shares, as further detailed in note 15.
17. Reserves
Share premium reserve Warrant reserve Merger reserve Retained earnings Total attributable to equity holders of the parent Non-controlling interest Total reserves
£ £ £ £ £ £ £
At 31 March 2016 16,503,221 26,200 6,599,174 (24,226,036) (1,097,441) (406,789) (1,504,230)
At 31 March 2015 16,298,043 26,200 6,599,174 (23,886,736) (963,319) (375,627) (1,338,946)
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.
Warrant reserve The warrant reserve represents warrants issued as part of the Equity Financing Facility (see note 15).
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 2016 amounted to £Nil (2015: £Nil). Pension contributions
payable but not yet paid at 31 March 2016 totalled £3,871, in respect of
pension contribution entitlements where employees had not yet provided details
of the funds to which the contributions should be made (2015: £3,871).
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, K Rietveld is a director of the
Company, and a senior employee of DSM. The directors of Provexis (the
'Directors'), having consulted with Cenkos Securities Limited ('Cenkos
Securities'), the Company's nominated adviser, consider that the terms of the
Alliance Agreement are fair and reasonable insofar as Provexis's shareholders
are concerned. In providing advice to the Directors, Cenkos Securities has
taken into account the Directors' commercial assessments.
Revenue recognised by the Group under agreements with DSM amounted to £90,549
(2015: £37,124). At 31 March 2016 the Group was owed £Nil (2015: £Nil) by
DSM.
Key management compensation
The directors represent the key management personnel. Details of their
compensation and share options are given in note 6.
20. Post balance sheet events
On 29 June 2016 the Group announced the launch of a high quality dietary
supplement product containing Fruitflow and Omega-3 which is being sold
initially from a separate, dedicated website www.fruitflowplus.com on a mail
order basis. The new dietary supplement product is expected to provide the
Group with an additional income and profit stream.
On 2 August 2016 the Group announced that it had raised proceeds of £224,000
via the placing of 93,333,340 new ordinary shares of 0.1p each at a gross
0.24p per share with investors. The placing shares were admitted to AIM on 8
August 2016.
On 2 August 2016 as part of the placing announcement the Group also announced
that the Company's Chairman Dawson Buck had given a stated intention to
subscribe to 10,416,667 shares at a subscription price of 0.24p totalling
£25,000, with his formal commitment to and payment for the subscription to
take effect in September 2016 immediately after publication of the Company's
annual report and accounts.
This information is provided by RNS
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