TIDMPXS
RNS Number : 2569B
Provexis PLC
30 September 2022
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 2022 Provexis plc
("Provexis" or the "Company")
PRELIMINARY RESULTS for the YEAR ended 31 MARCH 2022
Provexis plc ('Provexis' or the 'Company'), the business that
develops, license s and sells the proprietary,
scientifically-proven Fruitflow(R) heart-health functional food
ingredie nt, announces its audited preliminary results for the year
ended 31 March 2022.
Key highlights
-- Two new agreements secured with DSM in June 2022 for
Fruitflow, to replace the Alliance Agreement: (i) a Transfer of
Business agreement and (ii) a Premix and Market-Ready Solutions
supply agreement, both to take effect from 1 January 2023.
-- DSM's existing and prospective pipeline customers for
Fruitflow as a straight ingredient will transfer to become direct
customers of Provexis WEF 1 January 2023, and Provexis will take
over the outsourced supply chain / production process for Fruitflow
at that time. The customer transfer process from DSM to Provexis is
currently ongoing, and thus far it has seen a number of positive
interactions with customers for direct sales of Fruitflow by
Provexis in 2023 and beyond.
-- New patent application filed in June 2022 relating to the use
of Fruitflow to confer health benefits in modulating the gut
microbiome of humans, following the completion of a successful
human study.
-- New partnership with DSM has been agreed relating to the gut
microbiome patent, subject to certain milestones which have been
agreed between the parties. Provexis and DSM are keen to progress
this encouraging new technology towards an early commercial launch
of products based on it.
-- Long term strategic co-operation framework agreement for
Fruitflow secured with By-Health in November 2021, with exclusive
supply and distribution rights for By-Health to commercialise
Fruitflow in China and Australia.
-- Planned launch by By-Health, a circa GBP4bn 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 continues to work on an extensive regulatory
submission to the Chinese State Administration for Market
Regulation (SAMR) for Fruitflow, seeking to establish a new
permitted health function claim for foods 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 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 SAMR for Fruitflow.
-- Total revenue for the year GBP426k, 16% behind the prior year
(2021: GBP505k), primarily due to short term lockdowns and other
COVID-19 disruptions in some of the growing markets for Fruitflow
in the Asia Pacific region.
-- Underlying operating loss* reduced to GBP173k, 23% lower than
the prior year (2021: GBP225k) and another new record low for the
Group for the year.
-- Cash GBP864k at 31 March 2022 (2021: GBP1.077m).
*Loss from operations, adjusted for (i) share-based payments of
GBP67k (2021: GBP135k), and (ii) R&D tax relief: receivable tax
credit of GBP59k (2021: GBP2k).
Annual report and accounts and notice of AGM
The Company's annual report and accounts for the year ended 31
March 2022 and the AGM notice are available from the Shareholder
information section of the Company's website www.provexis.com now,
and from the address below:
The Company Secretary
Provexis plc
2 Blagrave Street
Reading
RG1 1AZ
The Company's annual report and accounts and its AGM notice will
be distributed by post today to those shareholders who have elected
to continue to receive paper communications.
Proxy forms for use in connection with the AGM will also be
distributed by post today to all shareholders on the Company's
share register.
The AGM will be held at 12:30pm on 27 October 2022 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 / Freddie Wooding
Chairman and CEO's statement
The Company has had another very active year, and it has made
some significant progress with the commercial prospects of its
innovative, patented Fruitflow(R) heart-health ingredient.
The Group's total revenue for the year ended 31 March 2022 was
GBP426k, a 16% decrease relative to the prior year (2021:
GBP505k).
The decrease in revenue accruing to the Company for the year
reflects:
-- A decrease in the net income received from the Company's
Alliance Agreement with DSM, which fell by 21% to GBP282k in the
year (2021: GBP358k);
-- An increase in revenue, net of sales rebates, from the
Company's Fruitflow+ Omega-3 business, including the Company's
website www.fruitflowplus.com, Amazon UK, Holland & Barrett,
and the Company's distributor for Fruitflow+ Omega-3 in China
through the CBEC channel. This business grew by 4% to GBP144k, net
of sales rebates, in the year (2021: GBP138k).
-- Amounts of GBPNil received in the year for Fruitflow+
nitrates development products, compared to amounts of GBP9k in the
prior year.
The decrease in net income received from the Company's Alliance
Agreement with DSM was primarily due to short term lockdowns and
other COVID-19 disruptions in some of the growing markets for
Fruitflow in the Asia Pacific region, leading to more erratic
demand in the short term.
An increasing number of further commercial projects have been
initiated by DSM 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.
Loss from operations for the year was GBP299k, 17% lower than
the prior year (2021: GBP362k).
Underlying operating loss for the year (being the loss from
operations, adjusted for (i) share-based payments of GBP67k (2021:
GBP135k), and (ii) R&D tax relief: receivable tax credit of
GBP59k (2021: GBP2k)) was GBP173k, 23% lower than the prior year
(2021: GBP225k) and a new record low number for the Group.
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 100 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.
The Company's alliance agreement with DSM dates back to June
2010, with a contractual term which runs to 31 December 2022.
The Company announced in September 2021 that the Company and DSM
were engaged in constructive negotiations working towards a new
agreement for Fruitflow for the period after 31 December 2022 to
replace the Alliance Agreement, and in June 2022 the Company
announced that the parties had concluded their negotiations and had
entered into (i) a Transfer of Business agreement for Fruitflow and
(ii) a Premix and Market-Ready Solutions supply agreement for
Fruitflow, both to take effect from 1 January 2023.
The Company also announced the filing of a new patent
application in June 2022 relating to the use of Fruitflow to confer
health benefits in modulating the gut microbiome of humans. This
followed the completion of a successful human study, the results of
which strongly support the use of Fruitflow for modulating gut
microbiota to confer a number of health benefits.
Under the terms of the two new agreements with DSM, and the new
patent application:
-- DSM's existing and prospective pipeline customers for
Fruitflow as a straight ingredient (not a Premix or Market-Ready
solution) will transfer to become direct customers of Provexis WEF
1 January 2023.
-- DSM will help facilitate the transfer of its wholly
outsourced supply chain / production process for Fruitflow from DSM
to Provexis with effect from 1 January 2023.
-- A royalty will be payable to DSM on the gross profits
generated from Fruitflow sales to customers transferred from DSM
over the first four years of the Transfer of Business
agreement.
-- From 1 January 2023 the net profit accruing to Provexis on
sales of Fruitflow in the calendar year - on a pro-forma basis,
assuming like for like sales and margins - would be materially
ahead of the net share of the profit that would have accrued to
Provexis with like for like sales and margins under the existing
2010 Alliance Agreement; on the same pro-forma basis, assuming like
for like sales and margins, the net profit accruing to Provexis
would further increase in each of the subsequent three calendar
years.
-- A new partnership with DSM has been agreed relating to the
gut microbiome patent. This partnership will give DSM preferential
access to the use, marketing, and sale of Fruitflow based products
which are based on the patent, subject to certain milestones which
have been agreed between the parties. Provexis and DSM are keen to
progress this encouraging new technology towards an early
commercial launch of products which are based on it.
-- The results of the successful gut microbiome human study will
be submitted in due course for publication in a peer reviewed
scientific journal. The patent application (i) states that the
results of the human study strongly support the use of Fruitflow
for modulating gut microbiota to confer a number of health
benefits, and (ii) sets out some potential new uses for Fruitflow
in treating a wide variety of human health conditions, beyond
Fruitflow's existing established use in heart-health. The global
digestive health market size was US$38 billion in 2019 and it is
projected to grow to US$72 billion in 2027 at a high single-digit
CAGR in the 2020-2027 period (see
www.fortunebusinessinsights.com/digestive-health-market-104750).
-- Provexis will sell Fruitflow as a straight ingredient to DSM
exclusively for use in DSM's Premix Solutions
(www.dsm.com/human-nutrition/en/customized-services/customized-solutions/premix-solutions.html)
and Market-Ready Solutions
(www.dsm.com/human-nutrition/en/customized-services/customized-solutions/market-ready-solutions.html)
businesses, with DSM then looking to sell the resulting Premix and
Market-Ready Solutions products on to its customers. DSM's Premix
and Market-Ready Solutions businesses are part of DSM's Customized
Solutions business which also offers personalised nutrition
solutions to customers, a rapidly developing growth area. The
Company looks forward to supporting DSM and its Premix and
Market-Ready Solutions customers for many years to come.
-- A number of DSM's customers for Fruitflow which are set to be
transferred to Provexis have been Fruitflow customers for several
years, including some distributor customers which sell Fruitflow on
to third parties. The Company looks forward to progressing these
existing sales relationships, and confirms it will be able to
generate new customers for Fruitflow outside the royalty
arrangements with DSM, in addition to its existing supply and
distribution agreement for Fruitflow with By-Health. The Company is
in discussion with a number of third parties seeking to progress
new sales and distribution opportunities for Fruitflow.
From 1 January 2023 the Group's sales channels for Fruitflow
will therefore include:
1. Former DSM customers for Fruitflow;
2. DSM and its Premix and Market-Ready Solutions businesses,
which will leverage the resources and relationships of DSM in some
of the major global markets;
3. New customers for Fruitflow as a straight ingredient;
4. By-Health and its customers, through the Company's long term
supply and distribution agreement for Fruitflow with By-Health;
and
5. The Group's Fruitflow+ Omega-3 dietary supplement product
which is sold direct to consumers, the Group will also look to
serve its Chinese Cross-Border e-commerce distributor for this
product in China.
The year ended 31 March 2022 saw a decrease in the net income
received from the Company's Alliance Agreement with DSM, which fell
by 21% to GBP282k in the year (2021: GBP358k). The decrease was
primarily due to short term lockdowns and other COVID-19
disruptions in some of the growing markets for Fruitflow in the
Asia Pacific region, leading to more erratic demand in the short
term. This has continued into the early part of 2022/23, with a
31.5% fall in revenues in the first quarter of the 2022/23
financial year for this business.
The Alliance Agreement business for Fruitflow is effectively now
in a period of transition and handover; the customer transfer
process from DSM to Provexis, for sales of Fruitflow from 1 January
2023 onwards, is currently ongoing and thus far it has seen a
number of very positive interactions with customers for direct
sales of Fruitflow by Provexis in 2023 and beyond.
The Company can be contacted for all Fruitflow sales enquiries
by email at fruitflow@provexis.com.
By-Health Co., Ltd.
In November 2021 the Company announced it had entered into a
supply and distribution agreement (the 'By-Health Agreement') for
Fruitflow with By-Health, a listed Chinese dietary supplement
business with a market capitalisation of approximately GBP4
billion.
The By-Health Agreement, which followed the Company's extensive
work with By-Health over the last five years, will take full effect
from 1 January 2023 and it gives By-Health exclusive supply and
distribution rights to commercialise Fruitflow in Mainland China,
Hong Kong, Macau, Taiwan and Australia (the 'Territories').
Under the By-Health Agreement Provexis will be responsible for
the manufacture, supply and sale of Fruitflow to By-Health, and
By-Health will be responsible for the manufacture, marketing, and
sale of Fruitflow based functional food and dietary supplement
finished products in the Territories, through By-Health's extensive
sales network. By-Health will also have exclusive rights to act as
the distributor of Fruitflow as an ingredient in the
Territories.
Provexis and By-Health will seek to collaborate on research and
development projects which may result in the development and
approval of Fruitflow as a drug, for potential sale and
distribution in the Territories.
Regulatory progress in China - new permitted health function
claim
The Company has previously announced it has been working with
By-Health to support the planned launch of a number of Fruitflow
based products in the Chinese market, with potential volumes at a
significant multiple of current 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 its efficacy on
platelet function. The Chinese regulatory system for functional
health food ingredients such as Fruitflow is governed by the State
Administration for Market Regulation (SAMR), China's top market
regulator, and it 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 might 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.
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.
By-Health has recently updated its website (see
www.by-health.com/en/aboutus) stating that it has completed:
'Research comprehensively in the cardiovascular health area. We
have developed a new product made with Fruitflow(R), popularly
known as 'natural Aspirin'. It helps to maintain normal platelet
aggregation.'
By-Health currently expects to be in a position to complete the
last of its eight studies in 2022, and it will file its regulatory
submission to the SAMR for Fruitflow at the appropriate time
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 28th - or the
25th - 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.
Market opportunity
A study backed by scientists from the National Center for
Cardiovascular Diseases in China which was updated in 2020
(www.ncbi.nlm.nih.gov/pmc/articles/PMC7008101/#) stated that:
-- the prevalence of Cardiovascular Disease ('CVD') in China has
been increasing continuously since 2006, with approximately 290
million patients in China who now have CVD; and
-- two in five deaths in China are attributed to CVD, with CVD
remaining the leading cause of death in 2016.
In December 2020 the World Health Organisation reported
(www.who.int/news/item/09-12-2020-who-reveals-leading-causes-of-death-and-disability-worldwide-2000-2019):
'Heart disease has remained the leading cause of death at the
global level for the last 20 years. However, it is now killing more
people than ever before. The number of deaths from heart disease
increased by more than 2 million since 2000, to nearly 9 million in
2019. Heart disease now represents 16% of total deaths from all
causes. More than half of the 2 million additional deaths were in
the WHO Western Pacific region.' The WHO Western Pacific region
includes China.
By-Health's long-term goal of science-based nutrition is to
achieve 'comprehensive intervention for human health'
(www.by-health.com/en/aboutus), and Fruitflow is well placed to
provide such intervention in the Chinese cardiovascular health
market.
Fruitflow+ dietary supplement products
Fruitflow+ Omega-3 is available to purchase from the Company's
subscription focussed e-commerce website www.fruitflowplus.com,
Amazon UK and Holland & Barrett.
The Fruitflow+ Omega-3 business grew by 4% in the year to
GBP144k, net of sales rebates (2021: GBP138k), reflecting further
growth in subscriber numbers on the www.fruitflowplus.com
website.
In November 2020 the Company announced it had entered into a
distribution agreement for Fruitflow+ Omega-3 in China, exclusively
through the Chinese Cross-Border e-commerce ('CBEC') channel. A
first CBEC test order was placed in the year ended 31 March 2021,
and a further, larger order was placed in August 2022.
The distribution agreement in China is separate but wholly
complementary to the Company's work with By-Health, with the CBEC
regulations enabling sales of Fruitflow+ Omega-3 in China now,
prior to the health function claim which By-Health is seeking to
secure.
The Company's Fruitflow+ Omega-3 direct selling business has
been operating largely as normal throughout the COVID-19 pandemic,
and a further new production run of Fruitflow+ Omega-3 capsules was
completed in July 2021 thus ensuring continued supply of the
product.
Fruitflow+ Omega-3 has a social media presence on Facebook
www.facebook.com/FruitflowPlus, Instagram
www.instagram.com/fruitflowplus and Twitter
https://twitter.com/FruitflowPlus.
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.
Intellectual property
The Company is responsible for filing and maintaining patents
and trade marks for Fruitflow, 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-21 to Sep-22
Improved Fruitflow / Fruit Extracts
Improved Fruitflow / Fruit Extracts, Patents have been granted in Japan,
with patents granted by the European South Korea and the Philippines.
Patent Office in January 2017 and
September 2020. A third European patent, and a
Hong Kong patent based on it, are
Patents have been granted in eleven proceeding to grant (expected H1
other major territories to include 2023).
China and USA; and applications
are at a late stage of progression
in a further six global territories,
with potential patent protection
out to November 2029.
--------------------------------------
Antihypertensive (blood pressure
lowering) effects Patent applications are pending
This patent was originally developed in China, Japan and the US.
in collaboration with the University
of Oslo, and it has now been granted
for Fruitflow in Europe, the US
and two other major territories.
Patent applications are being progressed
in a further four major territories
to include the US and China, with
potential patent protection out
to April 2033.
In August 2020 the Company announced
it had agreed to purchase the background
and joint foreground blood pressure
lowering IP owned by Inven2 AS,
the technology transfer office at
the University of Oslo, and Provexis
now owns these important patents
outright, with the licensing option
originally held by Inven2 having
been cancelled.
--------------------------------------
Fruitflow with nitrates in mitigating
exercise-induced inflammation and
for promoting recovery from intense
exercise Patent applications are pending
Patents have been granted around in Canada, China, Europe, Hong
Europe and in the US, Australia, Kong, India and the US.
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.
--------------------------------------
Fruitflow for air pollution
The use of Fruitflow in protecting Australian, Indonesian, Israeli
against the adverse effects of air and Japanese patent protection
pollution on the body's cardiovascular has been secured.
system.
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.
US, Australian, Indonesian, Israeli
and Japanese patents have been secured
and there are pending applications
in 12 jurisdictions (including the
US where a further application has
been filed) which extends potential
patent protection for Fruitflow
out to November 2037.
--------------------------------------
Fruitflow to confer health benefits
in modulating the gut microbiome
of humans
The Company also announced the filing
of a new patent application in June
2022 relating to the use of Fruitflow
to confer health benefits in modulating
the gut microbiome of humans. This
followed the completion of a successful
human study, the results of which
strongly support the use of Fruitflow
for modulating gut microbiota to
confer a number of health benefits.
--------------------------------------
Scientific journal publications
In June 2021 a review article was published in the MDPI journal
Nutrients www.mdpi.com/2072-6643/13/7/2184/htm.
The article, titled 'Dietary Antiplatelets: A New Perspective on
the Health Benefits of the Water-Soluble Tomato Concentrate
Fruitflow(R)' concluded that: 'Platelets have multifaceted
functions which generate a complicated set of interactions with
other vascular cells, leading to many roles outside haemostasis. As
our understanding of the role of platelet activation in response to
- and in complicating - inflammatory and infectious illnesses grow,
it becomes more apparent that platelet-targeted treatments are
necessary outside the field of CVD. Dietary antiplatelets such as
Fruitflow(R) can help provide suitably gentle and safe yet
efficacious treatments to improve public health in response to a
wide range of health challenges.'
The publication of this article is a significant opportunity for
the Company and DSM to promote Fruitflow further across scientific,
trade customer and consumer channels.
Crohn's disease intellectual property
The Group has ceased 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 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 completed and
submitted in 2021, 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.
Under the terms of the DSM Transfer of Business agreement which
was announced in June 2022, DSM's existing and prospective pipeline
customers for Fruitflow as a straight ingredient (not a DSM Premix
or DSM Market-Ready solution) will transfer to become direct
customers of Provexis WEF 1 January 2023.
The Company will need to hold Fruitflow in stock from 1 January
2023 onwards, to sell to new and existing customers, and the
Company has therefore agreed to purchase from DSM the remaining
stocks of Fruitflow which DSM holds on 31 December 2022. It is
intended that the Company will pay DSM for this inventory over the
course of a three month sale back period commencing on 1 January
2023, with payments due equally (amounting to one third of DSM's 31
December 2022 inventory) on 31 January 2023, 28 February 2023 and
31 March 2023. The amount of inventory which DSM will hold at 31
December 2022 will depend primarily on DSM's sales of Fruitflow
over the remainder of 2022, hence it is not currently possible to
state with any certainty how much inventory will remain at 31
December 2022, or therefore the amount which the Company would need
to pay DSM for this inventory on 31 January 2023, 28 February 2023
and 31 March 2023.
Under the terms of the DSM Transfer of Business agreement, the
Company can elect in the first quarter of 2023 to purchase some but
not all of DSM's remaining stocks of Fruitflow at 31 December 2022,
being a decision which the Company will seek to make in the first
quarter of 2023 once the Company has a clearer understanding of (i)
the amount of stock remaining at 31 December 2022, (ii) the best
before dates of this inventory, which are currently estimated to be
favourable / long dated in light of recent production runs of new
Fruitflow material in 2022, (iii) likely customer demand in 2023
and beyond and (iv) the Company's financial resources at that
time.
The amount of stock which will remain at 31 December 2022
clearly remains uncertain as set out above, although it is
currently expected to be in excess of EUR1m (one million Euros), an
amount which - if the Company elected in the first quarter of 2023
to purchase this inventory in its entirety, which is likely to be
in the Company's best interests - would require further equity or
loan finance. Subject to the outcome of ongoing negotiations with a
third party, the Company might also be able to hold some of this
stock on a consignment basis, only paying for the stock when it was
required for sale.
Based on its current level of cash it is expected that the Group
will therefore need to raise further equity finance, or potentially
new loan finance, in the coming four months, a situation which is
deemed to represent a material uncertainty related to going
concern.
Considering the success of previous fundraisings and the current
performance of the business, the Directors have a reasonable
expectation of raising sufficient additional equity capital or new
loan finance to continue in operational existence for the
foreseeable future. Subject to the outcome of ongoing negotiations
with a third party, the Company might also be able to hold some of
its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale. For these reasons the
Directors continue to adopt the going concern basis in preparing
the Group's and Parent Company's financial statements.
Annual General Meeting
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 27 October 2022.
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.
The Company was delighted to announce the completion of two
significant agreements with DSM in June 2022, which will position
the Company extremely well for the next stage of its
development.
The Company was pleased to announce the filing of a new patent
application for Fruitflow in June 2022, relating to the use of
Fruitflow to confer health benefits in modulating the gut
microbiome of humans. The patent application follows the completion
of a successful human study, the results of which strongly support
the use of Fruitflow for modulating gut microbiota to confer a
number of health benefits. It is particularly encouraging to note
that some potential new uses for Fruitflow were identified in the
study, and have been highlighted in the patent application, looking
to treat some major health conditions which are beyond Fruitflow's
long established and proven use in heart-health.
The Company and DSM have had a strong long-term relationship
over the past twelve years, with the shared interest of both
companies always having been to maximise the commercial returns
that can be achieved from Fruitflow. The Company remains
appreciative of DSM's past help and support, and it looks forward
to building on this relationship in the coming years through the
new gut microbiome partnership, and through ongoing sales of
Fruitflow to DSM's Premix and Market-Ready Solutions
businesses.
The Company looks forward to welcoming and serving the majority
of DSM's existing customers for Fruitflow from January next year,
and is pleased to be taking over control of the supply chain /
production process for Fruitflow at the same time. There will be
some clear synergies from January 2023 as the Company will be
looking to sell Fruitflow to: (i) former DSM customers for
Fruitflow; (ii) DSM and its Premix and Market-Ready Solutions
businesses; (iii) new customers for Fruitflow as a straight
ingredient; and (iv) By-Health and its customers, through the
Company's long term supply and distribution agreement for Fruitflow
with By-Health. Provexis will continue to sell its Fruitflow+
Omega-3 dietary supplement product direct to consumers, and serve
its Chinese Cross-Border e-commerce distributor for this product in
China.
The Alliance Agreement business for Fruitflow is effectively now
in a period of transition and handover; the customer transfer
process from DSM to Provexis, for sales of Fruitflow from 1 January
2023 onwards, is currently ongoing and thus far it has seen a
number of very positive interactions with customers for direct
sales of Fruitflow by Provexis in 2023 and beyond.
The Company was also delighted to announce a supply and
distribution agreement for Fruitflow with By-Health in November
2021, which follows our extensive work with By-Health over the last
five years. The agreement will take full effect from 1 January
2023.
By-Health currently expects to be in a position to complete the
last of its eight studies in 2022, and it will file its regulatory
submission to the SAMR for Fruitflow at the appropriate time,
seeking to obtain a new permitted health function claim for foods
such as Fruitflow that can demonstrate an anti-platelet effect. 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.
Fruitflow is well placed to play an important role in the
Chinese cardiovascular health market under the permitted health
function claim legislation, and we look forward to working closely
with By-Health seeking to maximise the commercial success of this
agreement for the benefit of both companies.
The Company has developed a strong, long lasting and
wide-ranging patent portfolio for Fruitflow, and it owns outright
four existing patent families for Fruitflow. The new microbiome
patent application takes this to a potential total of five patent
families, with potential patent protection now running out to 2042.
The four existing patent families have a truly global footprint,
and the Company also holds other valuable intellectual property and
trade secrets for Fruitflow. 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.
The Company expects that the new gut microbiome patent
application, and the other significant changes announced in June
2022 to the sales and supply chain structure for Fruitflow, will
have a strongly beneficial effect on the current and future
commercial prospects for Fruitflow and the business worldwide.
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.
In June 2010 the Company announced 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 has seen the
partners collaborating to develop Fruitflow in all major global
markets, through an effective commercialisation of current formats
and through pioneering new and significant applications. DSM has
been responsible for manufacturing, marketing and selling via its
substantial sales force. Provexis has been 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 have been
shared by the parties on an agreed basis, linked to various
performance milestones.
The Company announced in September 2021 that the Company and DSM
were engaged in constructive negotiations working towards a new
agreement for Fruitflow for the period after 31 December 2022 to
replace the Alliance Agreement, and in June 2022 the Company
announced that the parties had concluded their negotiations and had
entered into (i) a Transfer of Business agreement for Fruitflow and
(ii) a Premix and Market-Ready Solutions supply agreement for
Fruitflow, both to take effect from 1 January 2023.
The Company also announced the filing of a new patent
application in June 2022 relating to the use of Fruitflow to confer
health benefits in modulating the gut microbiome of humans. This
followed the completion of a successful human study, the results of
which strongly support the use of Fruitflow for modulating gut
microbiota to confer a number of health benefits.
Under the terms of the two new agreements with DSM, and the new
patent application:
-- DSM's existing and prospective pipeline customers for
Fruitflow as a straight ingredient (not a Premix or Market-Ready
solution) will transfer to become direct customers of Provexis WEF
1 January 2023.
-- DSM will help facilitate the transfer of its wholly
outsourced supply chain / production process for Fruitflow from DSM
to Provexis with effect from 1 January 2023.
-- A royalty will be payable to DSM on the gross profits
generated from Fruitflow sales to customers transferred from DSM
over the first four years of the Transfer of Business
agreement.
-- From 1 January 2023 the net profit accruing to Provexis on
sales of Fruitflow in the calendar year - on a pro-forma basis,
assuming like for like sales and margins - would be materially
ahead of the net share of the profit that would have accrued to
Provexis with like for like sales and margins under the existing
2010 Alliance Agreement; on the same pro-forma basis, assuming like
for like sales and margins, the net profit accruing to Provexis
would further increase in each of the subsequent three calendar
years.
-- A new partnership with DSM has been agreed relating to the
gut microbiome patent. This partnership will give DSM preferential
access to the use, marketing, and sale of Fruitflow based products
which are based on the patent, subject to certain milestones which
have been agreed between the parties. Provexis and DSM are keen to
progress this encouraging new technology towards an early
commercial launch of products which are based on it.
-- The results of the successful gut microbiome human study will
be submitted in due course for publication in a peer reviewed
scientific journal. The patent application (i) states that the
results of the human study strongly support the use of Fruitflow
for modulating gut microbiota to confer a number of health
benefits, and (ii) sets out some potential new uses for Fruitflow
in treating a wide variety of human health conditions, beyond
Fruitflow's existing established use in heart-health. The global
digestive health market size was US$38 billion in 2019 and it is
projected to grow to US$72 billion in 2027 at a high single-digit
CAGR in the 2020-2027 period (see
www.fortunebusinessinsights.com/digestive-health-market-104750
).
-- Provexis will sell Fruitflow as a straight ingredient to DSM
exclusively for use in DSM's Premix Solutions (
www.dsm.com/human-nutrition/en/customized-services/customized-solutions/premix-solutions.html
) and Market-Ready Solutions (
www.dsm.com/human-nutrition/en/customized-services/customized-solutions/market-ready-solutions.html
) businesses, with DSM then looking to sell the resulting Premix
and Market-Ready Solutions products on to its customers. DSM's
Premix and Market-Ready Solutions businesses are part of DSM's
Customized Solutions business which also offers personalised
nutrition solutions to customers, a rapidly developing growth area.
The Company looks forward to supporting DSM and its Premix and
Market-Ready Solutions customers for many years to come.
-- A number of DSM's customers for Fruitflow which are set to be
transferred to Provexis have been Fruitflow customers for several
years, including some distributor customers which sell Fruitflow on
to third parties. The Company looks forward to progressing these
existing sales relationships, and confirms it will be able to
generate new customers for Fruitflow outside the royalty
arrangements with DSM, in addition to its existing supply and
distribution agreement for Fruitflow with By-Health. The Company is
in discussion with a number of third parties seeking to progress
new sales and distribution opportunities for Fruitflow.
The Directors believed at the time of signing the two new
agreements with DSM in June 2022, and still retain the belief, that
it will be advantageous for the Group to commercialise Fruitflow
from 1 January 2023 by way of selling Fruitflow to:
1. Former DSM customers for Fruitflow;
2. DSM and its Premix and Market-Ready Solutions businesses,
which will leverage the resources and relationships of DSM in some
of the major global markets;
3. New customers for Fruitflow as a straight ingredient;
4. By-Health and its customers, through the Company's long term
supply and distribution agreement for Fruitflow with By-Health.
Provexis will also continue to sell its Fruitflow+ Omega-3
dietary supplement product direct to consumers, and serve its
Chinese Cross-Border e-commerce distributor for this product in
China.
It has been a key strategic priority for the Group to develop a
strong, long lasting and wide-ranging patent portfolio for
Fruitflow. The Group now owns outright four patent families for
Fruitflow which have a truly global footprint. The company filed a
new patent application in June 2022 relating to the use of
Fruitflow to confer health benefits in modulating the gut
microbiome of humans. This followed the completion of a successful
human study, the results of which strongly support the use of
Fruitflow for modulating gut microbiota to confer a number of
health benefits.
The Company also holds other valuable intellectual property and
trade secrets for Fruitflow. 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.
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.
One of the Group's other key strategic priorities is its
relationship with By-Health Co., Ltd, a GBP4bn listed Chinese
dietary supplement business.
In November 2021 the Company announced it had entered into a
supply and distribution agreement for Fruitflow with By-Health. The
Agreement, which followed the Company's extensive work with
By-Health over the last five years, will take full effect from 1
January 2023 and it gives By-Health exclusive supply and
distribution rights to commercialise Fruitflow in Mainland China,
Hong Kong, Macau, Taiwan and Australia.
Under the agreement Provexis will be responsible for the
manufacture, supply and sale of Fruitflow to By-Health, and it will
contribute scientific expertise necessary for successful
commercialisation.
By-Health will be responsible for the manufacture, marketing,
and sale of Fruitflow based functional food and dietary supplement
finished products in the agreed territories (as above), through
By-Health's extensive sales network. Dietary supplement products
such as Fruitflow are required to be authorised by the relevant
Government authorities in each of the agreed territories in respect
of health claims.
By-Health will also have exclusive rights to act as the
distributor of Fruitflow as an ingredient in the agreed
territories, selling Fruitflow as an ingredient to other businesses
in the territories which wish to use Fruitflow to manufacture and
sell their own Fruitflow based finished products in the
territories.
Provexis and By-Health will seek to collaborate on research and
development projects which may result in the development and
approval of Fruitflow as a drug, for potential sale and
distribution in the territories.
The Agreement with By-Health, which will take full effect from 1
January 2023, commenced on 4 November 2021 and it has a term of ten
years, subject to extension and termination clauses.
By-Health regulatory progress in China - new permitted health
function claim
The Company has previously announced it has been working with
By-Health to support the planned launch of a number of Fruitflow
based products in the Chinese market, with potential volumes at a
significant multiple of current 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 its efficacy on
platelet function. The Chinese regulatory system for functional
health food ingredients such as Fruitflow is governed by the State
Administration for Market Regulation (SAMR), China's top market
regulator, and it 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 might 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.
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.
By-Health has recently updated its website (see
www.by-health.com/en/aboutus) stating that it has completed:
'Research comprehensively in the cardiovascular health area. We
have developed a new product made with Fruitflow(R), popularly
known as 'natural Aspirin'. It helps to maintain normal platelet
aggregation.'
By-Health currently expects to be in a position to complete the
last of its eight studies in 2022, and it will file its regulatory
submission to the SAMR for Fruitflow at the appropriate time
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 28th - or the
25th - 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.
Market opportunity
Fruitflow is a patented natural extract from tomatoes which has
been shown in human trials to reduce the propensity for aberrant
blood clotting, typically associated with cardiovascular disease,
which can lead to heart attack and stroke. The extract is available
in two formats, a syrup and a spray-dried powder and can be
included in a broad range of food, beverage and dietary supplement
formats.
In May 2009, the Company's Fruitflow technology was the first to
be substantiated by the European Food Safety Authority ('EFSA')
under the new Article 13(5) for proprietary and emerging science.
In December 2009 the European Commission authorised the health
claim 'Helps maintain normal platelet aggregation, which
contributes to healthy blood flow', which was the first wording to
be authorised under Article 13(5).
The global functional food market is estimated to be in excess
of US$170 billion per year, and it is forecast to reach US$276
billion by 2025, with products addressing cardiovascular disease
forming the largest segment of the market (source:
www.grandviewresearch.com/press-release/global-functional-foods-market).
Global awareness of heart health is increasing and a rising number
of people are taking a proactive approach to improving heart
health. The Directors believe that products addressing blood flow
and circulation issues continue to represent a long-term
opportunity in the expanding cardiovascular sector.
Financial review
The financial review has been prepared on the basis of Group's
continuing operations, as further detailed in the consolidated
statement of comprehensive income.
Revenue
The Company's long-term Alliance Agreement with DSM Nutritional
Products for Fruitflow includes a financial model which is based
upon the division of profits between the two partners on an agreed
basis, linked to certain revenue targets, following the deduction
of the cost of goods and a fixed level of overhead from sales.
In June 2016 the Company announced the launch of its Fruitflow+
Omega-3 dietary supplement product, which was sold initially from a
separate, dedicated website www.fruitflowplus.com on a mail order
basis, particularly focussed on subscription orders.
In August 2018 Fruitflow+ Omega-3 was launched in more than 660
Holland & Barrett stores across the UK and Ireland, giving
Fruitflow+ Omega-3 widespread consumer exposure, with all of the
revenue and costs attributable to this listing accruing to the
Company.
Fruitflow+ Omega-3 is also available to purchase from Amazon UK,
and the product has a Facebook page at
www.facebook.com/FruitflowPlus and an Instagram page at
www.instagram.com/fruitflowplus.
Fruitflow+ Omega-3 is 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 2022 was
GBP426k, a 16% decrease relative to the prior year (2021:
GBP505k).
The decrease in revenue accruing to the Company for the year
reflects:
-- A decrease in the net income received from the Company's
Alliance Agreement with DSM, which fell by 21% to GBP282k in the
year (2021: GBP358k);
-- An increase in revenue, net of sales rebates, from the
Company's Fruitflow+ Omega-3 business, including the Company's
website www.fruitflowplus.com, Amazon UK, Holland & Barrett,
and the Company's distributor for Fruitflow+ Omega-3 in China
through the CBEC channel. This business grew by 4% to GBP144k, net
of sales rebates, in the year (2021: GBP138k).
-- Amounts of GBPNil received in the year for Fruitflow+
nitrates development products, compared to amounts of GBP9k in the
prior year.
Underlying operating loss
Underlying operating loss for the year was GBP173k (2021:
GBP225k), a GBP52k year on year improvement which reflects a year
on year GBP76k decrease in gross profit, a GBP4k decrease in
selling and distribution costs, a GBP54k reduction in research and
development costs, a GBP57k increase in R&D tax relief and a
GBP13k reduction in administrative costs.
A reconciliation of the underlying operating loss to statutory
operating loss is provided below:
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
-------------------------------------------- ----------- -----------
Revenue 426,168 505,330
Cost of goods (46,119) (49,136)
-------------------------------------------- ----------- -----------
Gross profit 380,049 456,194
Selling and distribution costs (45,268) (48,689)
Research and development costs (249,694) (303,898)
Administrative costs - share-based payment
charges (67,119) (134,700)
Administrative costs - other (317,173) (330,823)
-------------------------------------------- ----------- -----------
Loss from operations (299,205) (361,916)
Adjust loss from operations for:
Administrative costs - share-based payment
charges 67,119 134,700
Taxation - R&D tax relief: receivable tax
credit 58,905 2,460
Underlying operating loss for the year (173,181) (224,756)
-------------------------------------------- ----------- -----------
The Group has chosen to report underlying operating loss as the
Directors believe that the operating loss before share-based
payments, and including R&D tax relief, provides additional
useful information for shareholders on underlying trends and
performance. 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 decreased by 21% to GBP250k (2021:
GBP304k).
R&D tax relief: payable tax credit
A current tax credit of GBP59k (2021: GBP2k), in respect of
research and development tax relief has been recognised in the
financial statements, GBP30k of which (2021: GBPNil) relates to
prior years.
Taxation
The current tax charge is GBPNil (2021: GBPNil) due to the loss
made in the year. No amounts in respect of deferred tax were
recognised in profit and loss from continuing operations or charged
/ credited to equity for the current or prior year.
Results and dividends
The loss attributable to equity holders of the parent for the
year ended 31 March 2022 was GBP224k (2021: GBP341k) and the basic
loss per share was 0.01p (2021: 0.02p). The Directors are unable to
recommend the payment of a dividend (2021: GBPNil).
Consideration of section 656 of the Companies Act 2006
On 28 August 2014 it was noted in the Company's Notice of Annual
General Meeting that Section 656 of the Companies Act 2006
('section 656') had been brought to the attention of the Directors
as part of the 31 March 2014 year end accounts and audit. Section
656 states that where the net assets of a public company are half
or less of its called-up share capital, the Directors must call a
general meeting of the company to consider whether any, and if so
what, steps should be taken to deal with the situation.
Further details of the issue were provided in the Company's AGM
notice of 28 August 2014 which is available to download from the
Company's website here
www.provexis.org/wp-content/uploads/Provexis-plc-notice-of-22-Sep-14-AGM-FINAL.pdf
A resolution was not put to the 2014 Annual General Meeting in
connection with section 656 and it was noted that the Directors'
view in August 2014 was that the most appropriate course of action
was to continue to maintain tight control over the running costs of
the Company and to wait for revenues from its core Fruitflow
product to increase. Subsequent to the Company's AGM on 22
September 2014 the net assets of the Company and Group have
remained less than half of the Company's called-up share capital
and a further general meeting of the Company is not required under
section 656.
The annual financial statements of the Company for the year
ended 31 March 2022 and the reports of the Directors thereon
include a going concern statement which concludes that the
necessity to raise additional equity or loan finance represents a
material uncertainty that may cast significant doubt upon the
Group's and Parent Company's ability to continue as a going concern
and that should it be unable to raise further funds, the Group may
be unable to realise its assets and discharge its liabilities in
the normal course of business.
However, considering the success of previous fundraisings and
the current performance of the business, the Directors have a
reasonable expectation of raising sufficient additional equity
capital or new loan finance to continue in operational existence
for the foreseeable future. Subject to the outcome of ongoing
negotiations with a third party, the Company might also be able to
hold some of its future stock requirements on a consignment basis,
only paying for the stock when it was required for sale. For these
reasons the Directors continue to adopt the going concern basis in
preparing the Group's and Parent Company's financial
statements.
It remains the Directors' view on 29 September 2022 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.
Under the terms of the DSM Transfer of Business agreement which
was announced in June 2022, DSM's existing and prospective pipeline
customers for Fruitflow as a straight ingredient (not a DSM Premix
or DSM Market-Ready solution) will transfer to become direct
customers of Provexis WEF 1 January 2023.
The Company will need to hold Fruitflow in stock from 1 January
2023 onwards, to sell to new and existing customers, and the
Company has therefore agreed to purchase from DSM the remaining
stocks of Fruitflow which DSM holds on 31 December 2022. It is
intended that the Company will pay DSM for this inventory over the
course of a three month sale back period commencing on 1 January
2023, with payments due equally (amounting to one third of DSM's 31
December 2022 inventory) on 31 January 2023, 28 February 2023 and
31 March 2023. The amount of inventory which DSM will hold at 31
December 2022 will depend primarily on DSM's sales of Fruitflow
over the remainder of 2022, hence it is not currently possible to
state with any certainty how much inventory will remain at 31
December 2022, or therefore the amount which the Company would need
to pay DSM for this inventory on 31 January 2023, 28 February 2023
and 31 March 2023.
Under the terms of the DSM Transfer of Business agreement, the
Company can elect in the first quarter of 2023 to purchase some but
not all of DSM's remaining stocks of Fruitflow at 31 December 2022,
being a decision which the Company will seek to make in the first
quarter of 2023 once the Company has a clearer understanding of (i)
the amount of stock remaining at 31 December 2022, (ii) the best
before dates of this inventory, which are currently estimated to be
favourable / long dated in light of recent production runs of new
Fruitflow material in 2022, (iii) likely customer demand in 2023
and beyond and (iv) the Company's financial resources at that
time.
The amount of stock which will remain at 31 December 2022
clearly remains uncertain as set out above, although it is
currently expected to be in excess of EUR1m (one million Euros), an
amount which - if the Company elected in the first quarter of 2023
to purchase this inventory in its entirety, which is likely to be
in the Company's best interests - would require further equity or
loan finance. Subject to the outcome of ongoing negotiations with a
third party, the Company might also be able to hold some of this
stock on a consignment basis, only paying for the stock when it was
required for sale.
Based on its current level of cash it is expected that the Group
will therefore need to raise further equity finance, or potentially
new loan finance, in the coming four months, a situation which is
deemed to represent a material uncertainty related to going
concern.
Considering the success of previous fundraisings and the current
performance of the business, the Directors have a reasonable
expectation of raising sufficient additional equity capital or new
loan finance to continue in operational existence for the
foreseeable future. Subject to the outcome of ongoing negotiations
with a third party, the Company might also be able to hold some of
its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale. For these reasons the
Directors continue to adopt the going concern basis in preparing
the Group's and Parent Company's financial statements.
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 loss from operations adjusted for share-based payment
charges and R&D tax relief, for the two years ended 31 March
2022:
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
-------------------------------------------- ----------- -----------
Loss from operations 299,205 361,916
Adjust loss from operations for:
Administrative costs - share-based payment
charges (67,119) (134,700)
Taxation - R&D tax relief: receivable tax
credit (58,905) (2,460)
Underlying operating loss 173,181 224,756
-------------------------------------------- ----------- -----------
The trading results are further detailed in this strategic
report.
The table below shows the Group's cash position at 31 March 2022
and 31 March 2021:
31 March 31 March
2022 2021
GBP GBP
Cash and cash equivalents 863,873 1,077,410
--------------------------- --------- ----------
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 GBP213,537 decrease 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 announced in September 2021 that the Company and DSM
were engaged in constructive negotiations working towards a new
agreement for Fruitflow for the period after 31 December 2022 to
replace the Alliance Agreement, and in June 2022 the Company
announced that the parties had concluded their negotiations and had
entered into (i) a Transfer of Business agreement for Fruitflow and
(ii) a Premix and Market-Ready Solutions supply agreement for
Fruitflow, both to take effect from 1 January 2023.
Under these new agreements the Company is seeking to expand its
Fruitflow direct selling business from 1 January 2023 and thereby
reduce its commercial reliance on the Alliance Agreement with DSM,
as further outlined above. For some time the Company has been
seeking to expand its Fruitflow+ Omega-3 dietary supplement
business. The Company is therefore seeking to increase its
opportunities for growth and decrease the risk inherent in its
commercial reliance on the Alliance Agreement with DSM.
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 have in the past been 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 attracting customers to purchase
Fruitflow; unexpected opportunities to develop additional products
or acquire additional technologies, products or businesses; costs
incurred in relation to the protection of Provexis' intellectual
property, and the additional working capital (in particular:
inventory) which Provexis will be required to hold as a result of
the June 2022 (i) Transfer of Business agreement for Fruitflow with
DSM and (ii) Premix and Market-Ready Solutions supply agreement for
Fruitflow with DSM, both to take effect from 1 January 2023.
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.
For the purposes of the Group's Fruitflow+ Omega-3 business 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. The Group has a number of manufacturing
options available to it for this business, and it is also exploring
some alternative sales and fulfilment options available to it
outside the UK for the delivery of finished goods in the EU.
Under the terms of the June 2022 (i) Transfer of Business
agreement for Fruitflow with DSM and (ii) Premix and Market-Ready
Solutions supply agreement for Fruitflow with DSM, both to take
effect from 1 January 2023, DSM's existing and prospective pipeline
customers for Fruitflow as a straight ingredient (not a Premix or
Market-Ready solution) will transfer to become direct customers of
Provexis WEF 1 January 2023, and DSM will help facilitate the
transfer of its wholly outsourced supply chain / production process
for Fruitflow from DSM to Provexis with effect from 1 January
2023.
The outsourced supply chain / production process for Fruitflow
is based solely in the EU, and the Group expects to maintain its
principal stocks of Fruitflow in the EU, which should mitigate
against any significant Brexit risks for this business.
Covid-19
The full impact of the Covid-19 pandemic remains uncertain.
Scientific research into Covid-19 is being undertaken at
considerable scale, and it is already clear that in many patients
the virus is having a significant adverse effect on circulation,
and 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.
Some of the growing markets for Fruitflow in the Asia Pacific
region have been affected in the short term by further lockdowns
and other COVID-19 disruptions, leading to more erratic demand for
Fruitflow.
The Company's Fruitflow+ Omega-3 direct selling business has
been operating largely as normal throughout the pandemic.
Commercialisation
For the past twelve years, due to the terms of the Alliance
Agreement, Provexis has been largely dependent on DSM in respect of
the development, production, marketing and commercialisation of
Fruitflow, and Provexis' long-term success has been largely
dependent on the ability of DSM to sell Fruitflow.
It has been noted in prior years that Provexis' negotiating
position with DSM could have been affected by its size and limited
cash resources relative to DSM which has substantial cash resources
and established levels of commercial success. An inability to enter
into any discussions with DSM on equal terms could have led to
reduced revenue from the Alliance Agreement which may have had 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 has been 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.
In June 2022 the Company announced that the Company and DSM had
concluded their negotiations to replace the Alliance Agreement and
had entered into (i) a Transfer of Business agreement for Fruitflow
and (ii) a Premix and Market-Ready Solutions supply agreement for
Fruitflow, both to take effect from 1 January 2023.
Under these new agreements the Company is seeking to expand its
Fruitflow direct selling business from 1 January 2023 and thereby
reduce its commercial reliance on the Alliance Agreement with DSM,
as further outlined above. For some time the Company has been
seeking to expand its Fruitflow+ Omega-3 dietary supplement
business. The Company is therefore seeking to increase its
opportunities for growth and decrease the risk inherent in its
commercial reliance on the Alliance Agreement with DSM.
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
2022 2021
Notes GBP GBP
---------------------------------------- ------ ---------- ----------
Revenue 1,3 426,168 505,330
Cost of goods sold (46,119) (49,136)
---------------------------------------- ------ ---------- ----------
Gross profit 380,049 456,194
Selling and distribution costs (45,268) (48,689)
Research and development costs 4 (249,694) (303,898)
Administrative costs - share-based
payment charges 4,16 (67,119) (134,700)
Administrative costs - other (317,173) (330,823)
---------------------------------------- ------ ---------- ----------
Loss from operations 4 (299,205) (361,916)
Finance income 7 73 113
Loss before taxation (299,132) (361,803)
Taxation - R&D tax relief: receivable
tax credit 8 58,905 2,460
Loss and total comprehensive loss for
the year (240,227) (359,343)
---------------------------------------- ------ ---------- ----------
Attributable to:
Owners of the parent (224,250) (341,007)
Non-controlling interest (15,977) (18,336)
Loss and total comprehensive loss for
the year (240,227) (359,343)
---------------------------------------- ------ ---------- ----------
Loss per share to owners of the parent
Basic - pence 9 (0.01) (0.02)
Diluted - pence 9 (0.01) (0.02)
---------------------------------------- ------ ---------- ----------
Consolidated statement of financial position
Company number 05102907 As at As at
31 March 31 March
2022 2021
Notes GBP GBP
----------------------------------- ------ ------------- -------------
Assets
Current assets
Inventories 11 85,808 60,576
Trade and other receivables 12 104,443 140,923
Corporation tax asset 8 72,865 13,960
Cash and cash equivalents 863,873 1,077,410
----------------------------------- ------ ------------- -------------
Total current assets 1,126,989 1,292,869
----------------------------------- ------ ------------- -------------
Total assets 1,126,989 1,292,869
----------------------------------- ------ ------------- -------------
Liabilities
Current liabilities
Trade and other payables 13 (157,909) (150,681)
Total current liabilities (157,909) (150,681)
----------------------------------- ------ ------------- -------------
Total liabilities (157,909) (150,681)
----------------------------------- ------ ------------- -------------
Total net assets 969,080 1,142,188
----------------------------------- ------ ------------- -------------
Capital and reserves attributable
to
owners of the Parent company
Share capital 15 2,210,822 2,210,822
Share premium 17 18,675,221 18,675,221
Merger reserve 17 6,599,174 6,599,174
Retained earnings 17 (25,986,138) (25,829,007)
----------------------------------- ------ ------------- -------------
1,499,079 1,656,210
Non-controlling interest (529,999) (514,022)
----------------------------------- ------ ------------- -------------
Total equity 969,080 1,142,188
----------------------------------- ------ ------------- -------------
Consolidated statement of cash flows
Year Year
ended ended
31 March 31 March
2022 2021
Notes
---------------------------------------------- ------ ---------- ----------
GBP GBP
---------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Loss after tax (240,227) (359,343)
Adjustments for:
Finance income 7 (73) (113)
Tax credit receivable 8 (58,905) (2,460)
Share-based payment charges - share options 16 67,119 55,925
Share-based payment charges - blood pressure
IP 15 - 78,775
Changes in inventories (25,232) (50,492)
Changes in trade and other receivables 36,475 (1,374)
Changes in trade and other payables 7,228 604
---------------------------------------------- ------ ---------- ----------
Net cash flow from operations (213,615) (278,478)
---------------------------------------------- ------ ---------- ----------
Tax credits received - 16,202
Total cash flow from operating activities (213,615) (262,276)
---------------------------------------------- ------ ---------- ----------
Cash flow from investing activities
Purchase of blood pressure IP - cash
element - (250)
Interest received 78 201
Total cash flow from investing activities 78 (49)
---------------------------------------------- ------ ---------- ----------
Cash flow from financing activities
Proceeds from issue of share capital 15 - 1,048,400
Total cash flow from financing activities - 1,048,400
---------------------------------------------- ------ ---------- ----------
Net change in cash and cash equivalents (213,537) 786,075
---------------------------------------------- ------ ---------- ----------
Opening cash and cash equivalents 1,077,410 291,335
---------------------------------------------- ------ ---------- ----------
Closing cash and cash equivalents 863,873 1,077,410
---------------------------------------------- ------ ---------- ----------
Consolidated statement of changes in equity
Share Share Merger Retained Total Non-controlling Total
capital premium reserve earnings equity interests equity
attributable
to owners
of
the
parent
GBP GBP GBP GBP GBP GBP GBP
-------------------- ---------- ----------- ---------- ------------- -------------- ---------------- ----------
At 31 March 2020 2,059,322 17,699,796 6,599,174 (25,543,925) 814,367 (495,686) 318,681
Share-based charges
- share options - - - 55,925 55,925 - 55,925
Share-based charges
- purchase of
blood
pressure IP - - - 78,775 78,775 - 78,775
Issue of shares 19
August 2020 -
blood
pressure IP 11,500 67,025 - (78,775) (250) - (250)
Issue of shares -
placing
23 December 2020 133,333 865,417 - - 998,750 - 998,750
Issue of shares -
placing
25 February 2021 6,667 42,983 - - 49,650 - 49,650
Total comprehensive
loss for the year - - - (341,007) (341,007) (18,336) (359,343)
At 31 March 2021 2,210,822 18,675,221 6,599,174 (25,829,007) 1,656,210 (514,022) 1,142,188
-------------------- ---------- ----------- ---------- ------------- -------------- ---------------- ----------
Share-based charges
- share options - - - 67,119 67,119 - 67,119
Total comprehensive
loss for the year - - - (224,250) (224,250) (15,977) (240,227)
At 31 March 2022 2,210,822 18,675,221 6,599,174 (25,986,138) 1,499,079 (529,999) 969,080
-------------------- ---------- ----------- ---------- ------------- -------------- ---------------- ----------
Notes to the preliminary results for the year ended 31 March
2022
1. Accounting policies
General information
Provexis plc is a public limited company incorporated and
domiciled in the United Kingdom (registration number 05102907). The
address of the registered office is 2 Blagrave Street, Reading,
Berkshire RG1 1AZ, UK. The functional and presentational currency
is pounds sterling and the financial statements are rounded to the
nearest GBP1.
The main activities of the Group are those of developing,
licensing and selling the proprietary, scientifically-proven
Fruitflow heart-health functional food ingredient for the global
functional food sector.
Basis of preparation
The financial information set out in this release does not
constitute the Company's full statutory accounts for the year ended
31 March 2022 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 2021 have been delivered to the
Registrar of Companies and those for 2022 will be delivered on 30
September 2022. The auditors have reported on the accounts for the
year ended 31 March 2022; and whilst their audit report was not
modified their report does contain a material uncertainty related
to going concern, as set out in the going concern paragraph of this
announcement.
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 use in the United Kingdom, 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 2022 that comply with IFRS
on 30 September 2022.
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 United Kingdom, and
International Financial Reporting Interpretations Committee
('IFRIC') interpretations that were applicable for the year ended
31 March 2022.
These accounting policies are consistent with those applied in
the year ended 31 March 2021, as amended to reflect any new
Standards, amendments to Standards and interpretations which are
mandatory for the year ended 31 March 2022. 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 GBP240,227 (2021:
GBP359,343), which includes non-cash share-based payment charges of
GBP67,119 (2021: GBP134,700) and expects to make a further loss
during the year ending 31 March 2023. The total cash outflow from
operations in the year was GBP213,615 (2021: GBP262,276). At 31
March 2022 the Group had cash balances of GBP863,873 (2021:
GBP1,077,410).
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 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.
Under the terms of the DSM Transfer of Business agreement which
was announced in June 2022, DSM's existing and prospective pipeline
customers for Fruitflow as a straight ingredient (not a DSM Premix
or DSM Market-Ready solution) will transfer to become direct
customers of Provexis WEF 1 January 2023.
The Company will need to hold Fruitflow in stock from 1 January
2023 onwards, to sell to new and existing customers, and the
Company has therefore agreed to purchase from DSM the remaining
stocks of Fruitflow which DSM holds on 31 December 2022. It is
intended that the Company will pay DSM for this inventory over the
course of a three month sale back period commencing on 1 January
2023, with payments due equally (amounting to one third of DSM's 31
December 2022 inventory) on 31 January 2023, 28 February 2023 and
31 March 2023. The amount of inventory which DSM will hold at 31
December 2022 will depend primarily on DSM's sales of Fruitflow
over the remainder of 2022, hence it is not currently possible to
state with any certainty how much inventory will remain at 31
December 2022, or therefore the amount which the Company would need
to pay DSM for this inventory on 31 January 2023, 28 February 2023
and 31 March 2023.
Under the terms of the DSM Transfer of Business agreement, the
Company can elect in the first quarter of 2023 to purchase some but
not all of DSM's remaining stocks of Fruitflow at 31 December 2022,
being a decision which the Company will seek to make in the first
quarter of 2023 once the Company has a clearer understanding of (i)
the amount of stock remaining at 31 December 2022, (ii) the best
before dates of this inventory, which are currently estimated to be
favourable / long dated in light of recent production runs of new
Fruitflow material in 2022, (iii) likely customer demand in 2023
and beyond and (iv) the Company's financial resources at that
time.
The amount of stock which will remain at 31 December 2022
clearly remains uncertain as set out above, although it is
currently expected to be in excess of EUR1m (one million Euros), an
amount which - if the Company elected in the first quarter of 2023
to purchase this inventory in its entirety, which is likely to be
in the Company's best interests - would require further equity or
loan finance. Subject to the outcome of ongoing negotiations with a
third party, the Company might also be able to hold some of this
stock on a consignment basis, only paying for the stock when it was
required for sale.
Based on its current level of cash it is expected that the Group
will therefore need to raise further equity finance, or potentially
new loan finance, in the coming four months, a situation which is
deemed to represent a material uncertainty related to going
concern.
Considering the success of previous fundraisings and the current
performance of the business, the Directors have a reasonable
expectation of raising sufficient additional equity capital or new
loan finance to continue in operational existence for the
foreseeable future. Subject to the outcome of ongoing negotiations
with a third party, the Company might also be able to hold some of
its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale. For these reasons the
Directors continue to adopt the going concern basis in preparing
the Group's and Parent Company's 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 in the Strategic Report.
Intangible assets
Research and development
Expenditure incurred on the development of internally generated
products is capitalised if it can be demonstrated that:
-- It is technically feasible to develop the product for it to be sold;
-- Adequate resources are available to complete the development;
-- There is an intention to complete and sell the product;
-- The Group is able to sell the product;
-- Sale of the product will generate future economic benefits; and
-- Expenditure on the project can be measured reliably.
The value of the capitalised development cost is assessed for
impairment annually. The value is written down immediately if
impairment has occurred. Development costs are not being amortised
as income has not yet been realised from the underlying technology.
Development expenditure, not satisfying the above criteria, and
expenditure on the research phase of internal projects is
recognised in profit and loss as incurred.
Patents and trade marks
The costs incurred in establishing patents and trade marks are
either expensed or capitalised in accordance with the corresponding
treatment of the development expenditure for the product to which
they relate.
Impairment of non- financial assets
Assets that have a finite useful life but that are not yet in
use and are therefore not subject to amortisation or depreciation
are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment annually and when events
or circumstances suggest that the carrying amount may not be
recoverable, an impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable
amount.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately in profit and loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss is recognised immediately in the
statement of comprehensive income, unless the relevant asset is
carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. Impairment
losses on goodwill are not reversed.
Inventories
Inventories, representing finished goods, are stated at the
lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and other costs incurred in bringing
the inventories to their present location and condition. Cost is
calculated on a first in, first out basis.
Net realisable value is based on estimated selling price less
further costs to completion and disposal. A charge is made to the
income statement for slow moving inventories. The charge is
reviewed at each reporting date.
Financial instruments
Financial assets
The Group's financial assets are comprised of 'trade and other
receivables' and 'cash and cash equivalents'. They are recognised
initially at their fair value and subsequently at amortised cost
using the effective interest method, less provision for impairment.
Impairment provisions for trade and other receivables are
recognised based on the simplified approach within IFRS 9 using a
provision matrix in the determination of lifetime expected credit
losses.
Financial liabilities
The Group's financial liabilities comprise 'trade and other
payables' and 'borrowings'. These are recognised initially at fair
value and subsequently at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
Government grants
Government grants are recognised when there is reasonable
assurance that the grant will be received and the Group will comply
with all attached conditions. Government grants are recognised in
the statement of comprehensive income in the same period to which
the costs that they are intended to compensate are expensed.
When research and development tax credits are claimed they are
recognised on an accruals basis and are included as other
income.
Taxation
Current tax is provided at amounts expected to be recovered or
to be paid using the tax rates and tax laws that have been enacted
or substantively enacted at the reporting date.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability on the statement of
financial position differs from its tax base, except for
differences arising on:
-- The initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- Investments in subsidiaries where the Group is able to
control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profits will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered). Deferred tax balances
are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- The same taxable Group Company; or
-- Different Group entities which intend to settle current tax
assets and liabilities on a net basis, or to realise the assets and
settle the liabilities simultaneously, on each future period in
which significant amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Foreign currency translation
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit and loss.
Benefits for Directors and consultants
(i) Defined contribution plans
The Group provides retirement benefits to the Executive
Directors, who are the Group's only employees. The assets of these
schemes are held separately from those of the Group in
independently administered funds. Contributions made by the Group
are charged to the statement of comprehensive income in the period
in which they become payable.
(ii) Accrued holiday pay
Provision has been made at the balance sheet date for holidays
accrued but not taken at the salary of the relevant employee at
that date.
(iii) Share-based payment transactions for Directors and
consultants
The Group operates an equity-settled, share-based compensation
plan. Vesting conditions are service conditions and performance
conditions only. Where share options are awarded to employees and
others providing similar services, the fair value of the options at
the date of grant is charged to profit and loss over the vesting
period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options that eventually vest.
If non-market related terms and conditions of options are
modified before they vest, the number of instruments expected to
vest at each reporting date, and therefore the cumulative charge,
is amended accordingly. Where equity instruments are granted to
persons other than employees and others providing similar services,
profit and loss is charged with the fair value of goods and
services received.
The proceeds received when options are exercised, net of any
directly attributable transaction costs, are credited to share
capital (nominal value) and the remaining balance to share
premium.
Other share-based payment transactions
The fair value of equity-settled share payments made in exchange
for goods and services received by the Group, outside of the
Group's share-based compensation plan, is determined at the date
the payment is made. The nature of the payment is assessed, and the
fair value of the payment is either capitalised or charged to the
consolidated statement of comprehensive income.
National insurance on share options
All employee option holders sign statements that they will be
liable for any employers national insurance arising on the exercise
of share options.
Interest income
Interest income is recognised on a time-proportion basis using
the effective interest rate method.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.
Estimates and judgements are continually made and are based on
historic experience and other factors, including expectations of
future events that are believed to be reasonable in the
circumstances.
As the use of estimates is inherent in financial reporting,
actual results could differ from these estimates. The Directors
believe the following to be the key areas of estimation and
judgement:
(i) Research and development
Under IAS 38 Intangible Assets, development expenditure which
meets the recognition criteria of the standard must be capitalised
and amortised over the useful economic lives of intangible assets
from product launch.
(ii) Share-based payments
The Group operates an equity-settled, share-based compensation
plan. The charge for share-based payments is determined based on
the fair value of awards at the date of grant partly by use of a
Binomial / Black-Scholes convergence pricing model which require
judgements to be made regarding expected volatility, dividend
yield, risk free rates of return and expected option lives. The
inputs used in these pricing models to calculate the fair values
are set out in note 16.
2. Financial risk management
2.1 Financial risk factors
The Group's activities inevitably expose it to a variety of
financial risks: market risk (including currency risk, cash flow
interest rate risk and fair value interest rate risk), credit risk
and liquidity risk.
It is Group policy not to enter into speculative positions using
complex financial instruments. The Group's primary treasury
objective is to minimise exposure to potential capital losses
whilst at the same time securing favourable market rates of
interest on Group cash deposits using money market deposits with
banks. Cash balances used to settle the liabilities from operating
activities are also maintained in current accounts which earn
interest at variable rates.
(a) Market risk
Foreign exchange risk
The Group's largest contract, the long-term Alliance Agreement
with DSM Nutritional Products for Fruitflow, is primarily
denominated in Euros. The Alliance Agreement is underpinned by a
financial model which is based upon the division of profits between
the two partners on an agreed basis, linked to certain revenue
targets, following the deduction of the cost of goods and a fixed
level of overhead from sales.
DSM Nutritional Products seeks to sell Fruitflow in Euros, but
its customers for Fruitflow are world-wide and world-wide exchange
rate fluctuations may have an impact on the revenues accruing to
DSM, and thus the profit share accruing to the Group. The cost of
goods for Fruitflow is primarily denominated in and incurred in
Euros.
Where customer or supplier transactions of more than GBP25,000
total value are to be settled in foreign currencies consideration
is given to settling the sums to be received or paid through
foreign exchange conversion at the outset of the transactions to
minimise the risk of adverse currency fluctuations.
Cash flow and fair value interest rate risk
The Group's interest rate risk arises from medium term and short
term money market deposits. Deposits which earn variable rates of
interest expose the Group to cash flow interest rate risk. Deposits
at fixed rates expose the Group to fair value interest rate
risk.
The Group analyses its interest rate exposure on a dynamic basis
throughout the year.
(b) Credit risk
Credit risk arises from cash and cash equivalents and deposits
with banks and financial institutions as well as credit exposure in
relation to outstanding receivables. Group policy is to place
deposits with institutions with investment grade A2 or better
(Moody's credit rating) and deposits are made in sterling only. The
Group does not expect any losses from non-performance by these
institutions. Management believes that the carrying value of
outstanding receivables and deposits with banks represents the
Group's maximum exposure to credit risk.
(c) Liquidity risk
Liquidity risk arises from the Group's management of working
capital, it is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. Prudent
liquidity risk management implies maintaining sufficient cash and
cash equivalents and management monitors rolling forecasts of the
Group's liquidity on the basis of expected cash flow.
The Group had trade and other payables at the statement of
financial position date of GBP157,909 (2021: GBP150,681) 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
2022 2021
GBP GBP
------------------------------------------ ----------- -----------
DSM Alliance Agreement 281,899 357,879
Fruitflow+ Omega 3 144,269 138,251
Fruitflow+ nitrates development products - 9,200
426,168 505,330
------------------------------------------ ----------- -----------
4. Loss from continuing operations
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
------------------------------------------------- ----------- -----------
Loss from continuing operations is stated after
charging:
Research and development costs 249,694 303,898
Foreign exchange losses 2,990 10,109
------------------------------------------------- ----------- -----------
Equity-settled share-based payment expense:
Share-based payment charges - share options 67,119 55,925
Share-based payment charges - blood pressure
IP - 78,775
------------------------------------------------- ----------- -----------
Total share-based payment charges 67,119 134,700
------------------------------------------------- ----------- -----------
The total fees of the Group's auditor, for services provided are
analysed below:
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
--------------------------- ----------- -----------
Audit services
Parent company 9,250 9,250
Subsidiaries 8,750 6,750
Tax services - compliance
Parent company 500 500
Subsidiaries 2,500 2,350
Other services
iXBRL services 2,100 2,000
Total fees 23,100 20,850
--------------------------- ----------- -----------
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
2022 2021
----------- ----------- -----------
Directors 4 4
----------- ----------- -----------
4 4
----------- ----------- -----------
Their aggregate emoluments were:
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
------------------------------------------ ----------- -----------
Wages and salaries 235,746 236,380
Social security costs 20,402 23,878
Pension and other staff costs 10,502 10,202
------------------------------------------ ----------- -----------
Total cash settled emoluments 266,650 270,460
Share-based payment remuneration charge:
equity settled 51,898 51,898
------------------------------------------ ----------- -----------
Total emoluments 318,548 322,358
------------------------------------------ ----------- -----------
6. Directors' remuneration
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
------------------------------------------ ----------- -----------
Directors
Aggregate emoluments 235,746 236,380
Company pension contributions 10,502 10,202
------------------------------------------ ----------- -----------
246,248 246,582
Share-based payment remuneration charge:
equity settled 51,898 51,898
Total Directors' emoluments 298,146 298,480
------------------------------------------ ----------- -----------
Emoluments disclosed above include the following amounts in
respect of the highest paid Director:
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
------------------------------------------------- ----------- -----------
Aggregate emoluments 127,008 124,008
Company pension contributions 6,350 6,200
------------------------------------------------- ----------- -----------
Share-based payment remuneration charge:
equity settled 22,370 22,370
------------------------------------------------- ----------- -----------
Total of the highest paid Director's emoluments 155,728 152,578
------------------------------------------------- ----------- -----------
During the current year and the prior year two Directors
participated in defined contribution pension schemes.
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
2022 2021
GBP GBP
-------------------------- ----------- -----------
Finance income
Bank interest receivable 73 113
-------------------------- ----------- -----------
73 113
-------------------------- ----------- -----------
8. R&D tax relief: payable tax credit and taxation
Year ended Year ended
31 March 31 March
2022 2021
GBP GBP
---------------------------------------------- ----------- -----------
R&D tax relief: payable tax credit
Research and development credit - current
year 28,769 2,460
Research and development credit - in respect 30,136 -
of prior periods
---------------------------------------------- ----------- -----------
Taxation credit 58,905 2,460
---------------------------------------------- ----------- -----------
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
2022 2021
GBP GBP
---------------------------------------------- ----------- -----------
Loss before tax (299,132) (361,803)
---------------------------------------------- ----------- -----------
Loss before tax multiplied by the
standard rate of corporation tax in the UK
of 19% 56,835 68,743
Effects of:
Expenses not deductible for tax purposes (12,752) (25,593)
Unutilised tax losses and other deductions
arising in the year (33,854) (44,504)
Adjustment for R&D tax relief (10,229) 1,354
Research and development credit - current
year 28,769 2,460
Research and development credit - in respect 30,136 -
of prior periods
---------------------------------------------- ----------- -----------
Total taxation credit for the year 58,905 2,460
---------------------------------------------- ----------- -----------
At 31 March 2022 the Group UK tax losses to be carried forward
are estimated to be GBP20,370,000 (2021: GBP20,200,000).
The tax losses represent deferred tax assets amounting to
GBP3,870,655 (2021: GBP3,834,700) which have not been recognised on
the basis that their future economic benefit is not probable.
R&D tax relief: payable tax credit receivable 31 March 31 March
within one year 2022 2021
GBP GBP
------------------------------------------------ --------- ---------
R&D tax relief: payable tax credit recoverable 72,865 13,960
72,865 13,960
------------------------------------------------ --------- ---------
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
2022 2021
Loss and total comprehensive loss
for the year attributable to owners of the
parent - GBP 224,250 341,007
Weighted average number of shares 2,210,821,523 2,102,799,137
Basic and diluted loss per share - pence 0.01 0.02
--------------------------------------------- -------------- --------------
10. Intangible assets
Goodwill Development Total
costs
GBP GBP GBP
----------------------------- ---------- ------------ ----------
Cost
At 1 April 2021 7,265,277 158,166 7,423,443
At 31 March 2022 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Amortisation and Impairment
At 1 April 2021 7,265,277 158,166 7,423,443
At 31 March 2022 7,265,277 158,166 7,423,443
----------------------------- ---------- ------------ ----------
Net book value
At 31 March 2022 - - -
----------------------------- ---------- ------------ ----------
At 31 March 2021 - - -
----------------------------- ---------- ------------ ----------
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 - - -
----------------------------- ---------- ------------ ----------
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
2022 2021
GBP GBP
---------------- --------- ---------
Finished goods 85,808 60,576
85,808 60,576
---------------- --------- ---------
There are no provisions included within inventories in relation
to the impairment of inventories (2021: GBPNil).
During the year inventories of GBP46,119 (2021: GBP49,136) were
recognised as an expense within cost of goods sold.
12. Trade and other receivables
31 March 31 March
2022 2021
GBP GBP
----------------------------------------------- --------- ---------
Amounts receivable within one year:
Trade receivables 3,655 5,916
Other receivables 40,846 29,659
----------------------------------------------- --------- ---------
Total financial assets other than cash
and cash equivalents classified as loans and
receivables 44,501 35,575
Prepayments and accrued income 59,942 105,348
----------------------------------------------- --------- ---------
Total trade and other receivables 104,443 140,923
----------------------------------------------- --------- ---------
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 2022 trade receivables of GBPNil (2021: GBPNil) were
more than 60 days past due, and there were no lifetime expected
credit losses of the full value of trade receivables (2021:
GBPNil).
13. Trade and other payables
31 March 31 March
2022 2021
GBP GBP
-------------------------------------------------- -------- --------
Trade payables 24,705 20,502
Accruals 124,666 120,449
-------------------------------------------------- -------- --------
Total financial liabilities measured at amortised
cost 149,371 140,951
Other taxes and social security 8,538 9,730
Total trade and other payables 157,909 150,681
-------------------------------------------------- -------- --------
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% (2021: 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% (2021:
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, but this increase is no longer expected to come into
effect following recent announcements by Government.
Deferred tax assets amounting to GBP3,870,655 (2021:
GBP3,834,700) have not been recognised on the basis that their
future economic benefit is not probable. Assuming a prevailing tax
rate of 19% (2021: 19%) when the timing differences reverse, the
unrecognised deferred tax asset comprises:
31 March 31 March
2022 2021
GBP GBP
---------------------------------------------- ------------- ----------
Depreciation in excess of capital allowances - -
Unutilised tax losses 3,870,655 3,834,700
3,870,655 3,834,700
---------------------------------------------- ------------- ----------
15. Share capital
Allotted, called up and fully paid Ordinary Ordinary
0.1p shares 0.1p shares
GBP number
------------------------------------ ------------- --------------
At 31 March 2021 2,210,822 2,210,821,523
At 31 March 2022 2,210,822 2,210,821,523
------------------------------------ ------------- --------------
Allotted, called up and fully paid Ordinary Ordinary
0.1p shares 0.1p shares
GBP number
-------------------------------------------- ------------- --------------
At 31 March 2020 2,059,322 2,059,321,507
Issue of shares 19 August 2020 - purchase
of blood pressure IP 11,500 11,500,000
Issue of shares - placing 23 December 2020 133,333 133,333,349
Issue of shares - placing 25 February 2021 6,667 6,666,667
At 31 March 2021 2,210,822 2,210,821,523
-------------------------------------------- ------------- --------------
16. Share options
The Company's share option scheme for employees ('the Provexis
2005 share option scheme') was adopted in June 2005. Under the
scheme, options to purchase ordinary shares are granted by the
Board of Directors, normally 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 2022 the number of ordinary shares subject to
options granted over the 2005 share option scheme was:
EMI options
31 March 2022 31 March 2021
------------------------------ ------------------------ -----------------------
Weighted Number Weighted Number
average average
exercise exercise
price price
(pence) (pence)
------------------------------ ---------- ------------ ---------- -----------
Outstanding at the beginning
of the year 1.04 22,284,990 1.04 22,284,990
Lapsed during the year 1.85 (1,649,990) - -
------------------------------ ---------- ------------ ---------- -----------
Outstanding at the end of
the year 0.97 20,635,000 1.04 22,284,990
------------------------------ ---------- ------------ ---------- -----------
The exercise price of EMI options outstanding at the end of the
year was 0.97p (2021: ranged between 0.97p and 1.85p) and their
weighted average contractual life was 1.2 years (2021: 2.1
years).
Of the total number of EMI options outstanding at the end of the
year, 20,635,000 (2021: 22,284,990) had vested and were exercisable
at the end of the year. Their weighted average exercise price was
0.97 pence (2021: 1.04 pence).
Unapproved options
31 March 2022 31 March 2021
Weighted Number Weighted Number
average average
exercise exercise
price price
(pence) (pence)
------------------------------ ---------- ------------- ---------- ------------
Outstanding at the beginning
of the year 0.71 171,215,010 0.71 171,215,010
Granted during the year 0.80 10,000,000 - -
Lapsed during the year 1.85 (23,350,010) - -
Outstanding at the end of
the year 0.55 157,865,000 0.71 171,215,010
------------------------------ ---------- ------------- ---------- ------------
The exercise price of unapproved options outstanding at the end
of the year ranged between 0.30p and 0.97p (2021: 0.30p and 1.85p)
and their weighted average contractual life was 5.9 years (2021:
5.8 years).
Of the total number of unapproved options outstanding at the end
of the year, 85,365,000 (2021: 108,715,010) had vested and were
exercisable at the end of the year. Their weighted average exercise
price was 0.71 pence (2021: 0.95 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 for the
options granted during the year of 74%.
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 GBP67,119 (2021: GBP55,925)
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 2022 amounted to GBP10,502 (2021:
GBP10,202). Employee and employer pension contributions payable but
not yet paid at 31 March 2022 totalled GBP396 (2021: GBPNil).
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. 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. 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 GBP281,899 (2021: GBP367,079). At 31 March 2022 the
Group was owed GBPNil (2021: GBPNil) by DSM.
On 19 February 2021 the Group announced that Dawson Buck
(Non-executive Chairman) had subscribed for 1,666,667 new ordinary
shares of 0.1p each as part of a placing at a gross 0.75p per
share. The placing shares were admitted to trading on AIM on 25
February 2021.
Key management compensation
The Directors represent the key management personnel. Details of
their compensation and share options are given in note 6.
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END
FR BKLLLLKLFBBQ
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September 30, 2022 02:00 ET (06:00 GMT)
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