Provexis plc
Annual report and accounts 2012
Company number 05102907
Contents
1
2
3
4
6
8
14
19
21
22
23
24
25
55
56
60
Corporate statement
Key highlights
Chairman’s statement
Chief Executive’s statement
Directors’ report - financial review
Directors’ report - business overview
Remuneration report
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Parent company balance sheet
Notes to the parent company financial statements
Company information
Corporate statement
The Provexis strategy is the development, licensing and marketing of scientifically-proven functional food,
and sports nutrition technologies, with four areas of focus:
To develop SiS® into the leader in elite endurance sports nutrition in major global markets;
Collaborate closely with partners to maximise the commercial success of Fruitflow® globally;
Underpin the competitiveness of these revenue streams with scientific excellence and regulatory
capability; and
Seek further opportunities in the global functional food and sports nutrition sectors through being
recognised as a partner of choice.
Provexis plc Annual report and accounts 2012
1
Key highlights
Key highlights
Science in Sport generated revenues of £3.48m in the nine months from acquisition, representing like for
like revenue growth of 12% compared to the same period last year;
Substantial investment made in SiS® in order to execute the Board’s growth plan for FY2012/13,
including new supply facility and plant, investment in marketing and sales, and enhanced innovation
pipeline;
First two SiS® innovations in market, with Fruitflow® product to follow in Q3 FY2012/13;
Good progress with proprietary Fruitflow® heart health technology with seven regional consumer
products containing Fruitflow® syrup now on sale in various global markets, and at least five further
launches expected in 2012;
Tablet grade powder format of Fruitflow® now complete, with good levels of interest from potential
customers;
DSM Nutritional Products (“DSM” or “Alliance partner”) continuing commercial discussions with a wide
range of consumer healthcare businesses including global brand owners;
Significant restructuring across the Company to reduce cash burn and improve the operating margin of
SiS®; and
Appointment of John Clarke, formerly Global President of GlaxoSmithKline’s Consumer Healthcare
business, as Non-executive Director.
Revenues £3.48m (2011: £50k).
Key financial results
Underlying operating loss* reduced to £2.18m (2011: £2.41m); the 2012 underlying operating loss
includes £0.66m of costs which are non-recurring, following the restructuring undertaken during the
financial year.
Statutory loss from operations of £4.33m (2011: £2.48m); this loss is after charging £1.39m of non-cash
amortisation and impairment charges (2011: £Nil), £0.15m of acquisition costs (2011: £Nil), £0.46m of
restructuring costs (2011: £Nil) and a £0.14m non cash share based payment charge (2011: £0.07m).
Cash balance at 31 March 2012 £1.45m (2011: £7.55m).
Loss per share 0.28p (2011: 0.17p).
*before impairment and amortisation of intangible assets, share based payments and exceptional costs of £2.15m (2011: £69k), as
set out on the face of the Consolidated Statement of Comprehensive Income
Provexis plc Annual report and accounts 2012
2
Chairman’s statement
The past year has seen substantial change with the acquisition of SiS® and good progress with our
proprietary Fruitflow® heart health technology. The Board announced at the interim results that it was to
focus on these two assets, and as a result major reductions in cash burn have been made in the second half.
Following the acquisition of SiS® last June, we have made great progress in developing a platform to drive
long-term shareholder value. Key steps include opening a new supply chain facility including state of the art
gel filling, investment in an enhanced marketing and sales strategy, and a range of science-led innovation
initiatives to solidify our position as leading nutrition suppliers to elite athletes.
DSM has now completed the development of a tablet grade version of Fruitflow® and we see this as a major
milestone in the commercialisation of the technology, this being borne out by high interest from brand owners
across the globe. The syrup version of Fruitflow® continues to gain traction in the marketplace, with seven
regional healthcare products now on sale, with at least a further five expected in the second half of the year.
Other pipeline projects were ceased or wound down at the half-year, and the focus is now firmly on the
revenue generation potential of Fruitflow® and SiS®. As a Board, we continue to examine the business for
further efficiencies and savings, as we seek to drive towards profitability.
While the Board believes that the economic environment is challenging and will remain so for the
foreseeable future, we believe that all due steps have been taken to develop a viable growth platform based
on two promising revenue streams, while reducing cash usage and entrenching a culture of cost reduction.
Dr Neville Bain resigned as non-executive Director, for health reasons, during the year. Sadly, Neville
passed away in May 2012, and I would like to register on behalf of the Board my appreciation for the
immeasurable value he contributed to the Company during his years of service. Dr Bain was replaced by
John Clarke, formerly Global President of GlaxoSmithKline’s Consumer Healthcare business. The wealth of
sector experience John brings to the Board will be a great asset to the business in the coming years.
Following a year of wide ranging change in the business, including the acquisition and integration of SiS®,
and further major development steps for Fruitflow®, I would like to thank the executive team and all of our
staff and advisors for their continued high levels of commitment and professionalism.
Dawson Buck
Chairman
Provexis plc Annual report and accounts 2012
3
Chief Executive’s statement
SiS®
Revenues were £3.48m from the acquisition at the end of June, through to the end of the period,
representing like for like revenue growth of 12% compared to the same period last year. The underlying
operating loss was £226k, this being related to low season sales levels in the winter months and high levels
of investment in the new supply chain facility, together with increased investment in marketing and sales. We
believe that following this period of investment, the SiS® business has a very solid growth platform.
Much focus has been given to developing heartland sales in independent cycle, triathlon and running shops
and we will continue to invest in this important sector. In addition we have made good progress in multiple
retailers and this progress has continued into the new financial year, with new listings being secured for the
second half of the current financial year. New advertising and public relations strategies have re-established
the brand, together with continuation of many of the existing sponsorship arrangements with elite athletes
and teams in cycling, triathlon and rowing. Investment in marketing and sales has increased significantly
when compared with the last financial year under previous ownership. The Company hopes to benefit
following the Olympic Games, as interest in elite athletes increases and given the expected uplift in sports
participants.
Substantial investment has been made in the development of a new e-commerce platform and this will
launch in the second half of the year. While export sales have remained stable, we continue to examine
options for expansion into new markets and again, we expect to see progress later in the year.
We believe that continuous science-led innovation is important in maintaining and enhancing our reputation
with elite athletes. We developed the novel Go Gel® plus Nitrates during the year, launching it in April 2012.
May saw us launch Go Hydro hydration tablets. During the year we also significantly advanced the
development of a Go Gel® with Fruitflow® and this novel and proprietary product will launch later in the
calendar year. All three of these innovations are supported by research and development programmes,
including collaboration with research institutes. A promising innovation pipeline is in development for 2013
and 2014. Key to this strong innovation drive is the combined scientific and regulatory expertise of the
enlarged business, together with strong relationships with leading figures, teams and research institutes in
the sports science arena.
The move to the new supply chain facility and the installation of a new gel-filling machine has resulted in cost
efficiencies and we are seeing improved gross margin in the current financial year as a result. In addition we
have made savings in overheads and instituted an ongoing cost improvement programme to improve
margins further and facilitate investment in revenue growth and innovation.
Fruitflow®
DSM has developed a tablet grade version of Fruitflow® and this represents a major milestone in the
commercialisation of the technology, as evidenced by the large number of requests for samples from brand
owners. Manufacturing facilities for both the syrup and powder formats are now in place and in addition,
DSM has used its expertise in ingredient development to significantly reduce the cost in use of Fruitflow®.
Seven regional consumer healthcare brands incorporating Fruitflow® syrup are now for sale in a range of
global markets, and it is expected at least a further five brands will launch in the second half of the year. The
introduction of the tablet grade format is expected to drive further interest in the technology and the current
sales enquiry pipeline is promising and includes some global brands.
Whilst revenues for Fruitflow® are nominal in the last period, the overall trend is that the technology is
gaining market acceptance via the increasing number of brands in market. This together with the new tablet
grade format and progress made on reducing cost in use provides a promising outlook for the technology.
Pipeline restructuring
At the interim results we announced the decision to halt, postpone or review other activities in the pipeline in
order to deliver a focused, revenue-oriented strategy based on Fruitflow® and SiS®. This resulted in the
halting of the Crohn’s disease trial and the closure of the Liverpool facility. We have since halted the
cardiovascular inflammation project. Together, these actions will result in an annualised reduction in cash
burn of £1.15m.
Provexis plc Annual report and accounts 2012
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Chief Executive’s statement
The second interim review of the Crohn’s disease trial showed an inconclusive result in terms of efficacy. We
are currently assessing the residual value of the intellectual property (‘IP’) related to the technology, both in
the area of Crohn’s disease and other potential applications, before arriving at a decision as to whether to
seek a development partner or purchaser for the IP.
Following the cessation of the cardiovascular inflammation project, we have chosen not to retain any of the
jointly owned IP, although background IP was developed by the Group which may be used in the future. On
the DSM-owned blood glucose technology, while we have successfully developed a pilot scale product, we
are not pursuing any further activity at this stage.
These actions in closing or suspending pipeline activities are consistent with our previously announced
strategy of focusing our efforts and resources on the revenue generating potential of Fruitflow® and SiS®.
Strategy
Our strategy has been aligned to focus on developing the Fruitflow® heart health technology and the SiS®
sports nutrition business, with these two areas underpinned by the scientific and regulatory expertise of the
Group. The closure of other pipeline activities has resulted in annualised underlying expenditure being
reduced by £1.15m. In addition, we have reduced overheads in the SiS® business and we are improving
operating margins through investment in supply chain and other efficiency initiatives. The combination of
focus on revenue generation, reduced costs and improved margins are targeted at achieving breakeven and
then operating profit for the business.
Scientific capability will remain at the heart of the enlarged Company, both to support our Alliance partner
DSM in the development of Fruitflow® and to achieve our goal of being a global leader in endurance sports
nutrition.
Outlook
The economic climate remains challenging and we expect this to continue through the coming year, affecting
both brand owner attitudes to innovation, and consumer spending. The poor weather in the first quarter of
the year has also constrained the growth of SiS®, although we believe we will achieve our growth target for
the full year. Overall, the medium to long-term growth prospects for the sports nutrition category are very
promising.
We will continue to work closely with our Alliance partner DSM on the commercialisation of Fruitflow® as a
priority, particularly in the areas of scientific and technical support, as well as refining the commercial
positioning.
On SiS® we will drive our growth model of improving gross margin and reducing costs, in order to invest
further in marketing, sales and science-led innovation. In the second half of the year we also expect to
progress our major e-commerce initiative, together with firming up international expansion plans. The Board
believes the Company is well placed for sustained long-term growth and we are looking forward to the year
ahead.
Stephen Moon
Chief Executive
Provexis plc Annual report and accounts 2012
5
Directors’ report – financial review
Acquisition of SiS (Science in Sport) Limited (“SiS®”)
On 24 June 2011 the Group acquired SiS®, a company which manufactures and sells sports nutrition
products. The Acquisition of SiS® was for a total consideration of £7.36 million, of which £7.0 million was
satisfied in cash and a further £0.36 million was satisfied in new Ordinary Shares. Further details of the
acquisition accounting are set out in note 10.
The Group has identified the fair values of the consideration paid and of the assets acquired and liabilities
assumed, including the separate identification of intangible assets in accordance with IFRS 3 ‘Business
Combinations’. This formal process involves an assessment of the assets acquired and liabilities assumed
with assistance provided by external valuation specialists where appropriate. The assessment period
remains open up to a maximum of 12 months from the relevant acquisition date. As at 31 March 2012, the
assessment was not complete and accordingly the fair values presented are provisional.
Research and development costs
Research and development costs for the year ended 31 March 2012 were £818,186 (2011: £1,268,874)
including £56,729 capitalised under IAS 38 (2011: £17,959).
The suspension of work on the Crohn’s disease trial does not constitute discontinued operations as defined
by ‘IFRS 5 Non-current assets Held for Sale and Discontinued Operations’ as the operations have neither
been permanently abandoned nor are being actively marketed for sale at this stage, and therefore no
discontinued operations disclosures are necessary.
Impairment of goodwill and restructuring costs
During the year the Group took the decision to halt the Crohn’s disease trial and suspend other activity
related to the NSP#3G technology. The Group has fully impaired the goodwill relating to the Crohn’s disease
CGU, given the uncertainty regarding the future cash flows of the CGU, resulting in a non-cash goodwill
impairment charge for the year of £1,140,806 within the Provexis CGU.
The Directors have concluded that no other indication of impairment to goodwill exists because the results of
SiS® have been in line with budget since acquisition, and the Alliance partners have made good progress
with Fruitflow®.
The suspension of work on the Crohn’s disease trial and the cardiovascular inflammation project and the
closure of the Liverpool facility have resulted in an annualised reduction in cash burn of £1.15m.
Restructuring costs of £205,746 were incurred as part of this process.
Restructuring and rebranding costs of a further £258,767 have been incurred as part of the reorganisation
and rebranding of the SiS® business since acquisition.
Total restructuring costs arising during the financial year from these activities were £464,513.
Underlying operating loss
Underlying operating loss has reduced to £2,180,362 (2011: £2,406,253).
The Group has chosen to report underlying operating loss as the Directors believe that the operating loss
before amortisation and impairment of acquired intangible assets, share based payments and exceptional
items measure provides additional useful information for shareholders on underlying trends and
performance. A reconciliation of underlying operating loss to statutory loss is presented on the face of the
Statement of Comprehensive Income. The underlying operating loss 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.
Taxation
A research and development tax credit of £150,000 (2011: £221,218) in respect of research and
development expenditure incurred and deferred tax credit of £49,590 (2011: £Nil) in respect of the
amortisation of acquired intangible assets have been recognised in the financial statements. A £121,220
research and development tax credit claim primarily relating to the year ended 31 March 2010 was paid to
the Group during the year.
Provexis plc Annual report and accounts 2012
6
Directors’ report – financial review
Losses and dividends
The loss attributable to equity holders of the parent for the year ended 31 March 2012 was £3,873,215
(2011: £1,984,206) and the basic and diluted loss per share was 0.28p (2011: 0.17p).
The directors are unable to recommend the payment of a dividend (2011: £Nil).
Capital structure and funding
On 17 June 2011 the Company announced that it had raised £2.5 million before expenses via a placing of
new ordinary shares of 0.1 pence each in the Company, in connection with the acquisition of SiS®.
On 5 July 2011 the Company announced an Open Offer to shareholders at 1.5 pence per share, on the basis
of 1 offer share for every 10 existing ordinary shares, with an excess application facility. On 26 July 2011 the
Company announced that it had raised approximately £1.025 million before expenses from the Open Offer.
On 8 November 2011 the Company announced that it had renewed a 3 year equity financing facility of up to
£25m (the “EFF”).
The EFF agreement, which was arranged by Darwin Strategic Limited (“Darwin”), provides the Company with
a facility which (subject to certain limited restrictions) can be drawn down at any time over the 3 years ending
6 November 2014, the timing and amount of any draw down being at the discretion of Provexis.
Provexis is under no obligation to make a draw down and may make as many drawdowns as its wishes, up
to the total value of the EFF, by way of issuing subscription notices to Darwin.
The subscription price for any ordinary shares to be subscribed by Darwin under a subscription notice will be
at a 7.5% discount to an agreed reference price determined during 5, 10 or 15 trading days following delivery
of a subscription notice (the ‘pricing period’). The length of the pricing period is at the discretion of Provexis
and is set at each relevant subscription notice. Provexis is also obliged to specify in each subscription notice
a minimum price below which ordinary shares will not be issued. The Company will have the right (with the
agreement of Darwin) to modify that minimum price at any time during the relevant Pricing Period.
On 17 May 2012 the Company announced that it had raised a net £244,336 by drawing down on the EFF,
allotting 13,197,880 new ordinary shares of 0.1p each to Darwin.
Further details of the EFF agreement and the drawdowns made using the EFF are available to download
from the announcements section of the Company’s website www.provexis.com.
The Directors are of the opinion that at 31 July 2012, the Group's liquidity and capital resources are
adequate to deliver the current strategic objectives and 2012/13 business plan and that the Group and
Company remain a going concern. See also note 1 to the consolidated financial statements on page 25.
Cash and cash equivalents at 31 March 2012 were £1.4m (31 March 2011: £7.6m).
Provexis plc Annual report and accounts 2012
7
Directors’ report – business overview
Principal activities
Provexis plc is a business that develops, licenses and markets scientifically-proven functional food and
sports nutrition technologies.
Provexis plc has three wholly owned subsidiaries, SiS (Science in Sport) Limited (“SiS”), Provexis Nutrition
Limited (“PNL”) and Provexis Natural Products Limited (“PNP”) which are registered in England and Wales.
Provexis plc also owns 75% of Provexis (IBD) Limited (“IBD”) which is also registered in England and Wales.
Group strategy
The Provexis strategy is the discovery, development, licensing and marketing of scientifically-proven
functional food and sports nutrition technologies, with four areas of focus:
Developing credible scientific proof to demonstrate efficacy and support product claims
Gaining regulatory and safety clearances in relevant global markets
Implementing global IP strategies, underpinned by strong patent portfolios
Commercialising technologies through collaboration and licensing with global brand owners and
ingredients corporations.
Review of the performance of the business and future developments
The Chairman’s Statement on page 3, the Chief Executive’s Statement on pages 4 and 5 and the Financial
Review on pages 6 and 7 report on the Group’s performance during the year ended 31 March 2012,
its position at that date and its likely future development.
Internal control and risk management
The Board is responsible for maintaining a sound system of internal control to safeguard shareholders’
investment and the Group’s assets, as well as reviewing its effectiveness. The system of internal control is
designed to manage rather than eliminate the risk of failure to achieve business objectives and can only
provide reasonable and not absolute assurance against material loss and misstatement.
The Audit Committee continues to monitor and review the effectiveness of the system of internal control and
report to the Board when appropriate with recommendations. There have been no significant changes to the
system of internal control throughout the year.
The key control procedures operating within the Group include, but are not limited to:
1. a comprehensive system of financial budgeting, forecasting and then reporting and reviewing actual
monthly results for the current year against these expectations;
2. a system of operational and financial Key Performance Indicators (“KPIs”), which are reviewed on a
weekly and monthly basis;
3. procedures for appraisal, review and authorisation of capital expenditure;
4. properly authorised treasury procedures and banking arrangements;
regular review of materials and services supply agreements; and
5.
regular review of tax, insurance and health and safety matters.
6.
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 for the two years ended 31 March 2012:
Underlying operating loss
Year ended
31 March
2012
£
Year ended
31 March
2011
£
2,180,362
2,406,253
Provexis plc Annual report and accounts 2012
8
Directors’ report – business overview
Internal control and risk management (continued)
The £225,891 reduction in underlying operating loss in 2012 is primarily attributable to the R&D cost savings
made during the financial year, which are further detailed in the financial review on page 6. The underlying
operating loss for 2012 includes £656,348 of costs which are non-recurring, following the restructuring
undertaken during the financial year, as further described in the financial review on page 6.
The table below shows the Group’s cash position at 31 March 2012 and 31 March 2011:
Cash and cash equivalents
31 March
2012
£
31 March
2011
£
1,447,405
7,551,505
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 £6,104,100
reduction in cash and cash equivalents during the financial year is primarily due to the acquisition of SiS, as
further detailed in the consolidated statement of cash flows on page 23, and in note 10 on page 39.
The R&D cost savings realised during the financial year will result in an annualised reduction in operating
costs and cash burn of £1.15m, to the direct advantage of the underlying operating loss and cash and cash
equivalents KPIs.
In 2011 KPIs included the ratio of R&D expenditure to administrative expenditure. Following the restructuring
of the business and the acquisition of SiS this KPI is no longer considered relevant.
At this stage in the Group’s development, the Board does not consider it appropriate to establish an internal
audit function.
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, on a bi-annual basis, reviews the industry, operational and financial risks facing the
Group and considers the adequacy of the controls & mitigants to manage the risks.
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.
Intellectual property
The Group’s success will depend in part on its ability to obtain and maintain rigorous patent protection for its
technologies both in the UK and internationally. The Group cannot give definitive assurance that pending or
future patent applications will be granted or that patents granted will not be challenged, invalidated or held
unenforceable.
The Group cannot assure that its intellectual property rights are sufficiently broad to prevent third parties
from producing competing functional food and sports nutrition technologies similar in nature to its own. The
Group also relies on protection of trade secrets, know-how and confidential and proprietary information. To
mitigate this, the Group enters into non-disclosure agreements with employees, consultants and prospective
commercial partners but cannot assure that such agreements will provide complete safeguards against
unauthorised disclosure of confidential information.
The Group’s commercial success will also depend in part on avoiding infringement of other third parties’
patents or proprietary rights and the breach of any licences in connection with the pursuit of its technologies.
Management is of the opinion that it does not infringe third parties’ patents or other rights and is not aware of
any such infringements but cannot assure that it will not be found in the future to infringe such rights.
Provexis plc Annual report and accounts 2012
9
Directors’ report – business overview
Principal risks and uncertainties (continued)
Food quality and safety
A major incident resulting from a food quality or health and safety failure could pose a risk to consumers and
therefore have reputational and financial implications for the Group.
The Group’s stringent approach to food quality and safety is controlled via quality assurance procedures
which are based on a risk management approach. Internal systems are reviewed continuously and potential
for improvement is monitored.
The Group’s SiS® manufacturing facility is subject to regular food safety and quality control audits, including
those carried out by, and/or for, major customers. The Group’s products are analysed and tested regularly
for banned substances by an experienced, independent surveillance company. Where appropriate, additional
investment is made to optimise ingredient screening efficiency and effectiveness.
The Group maintains product liability insurance cover to mitigate the potential impact of such an event.
The Group believes that the quality of its raw materials is critical to the quality of its product. The availability
and resultant price levels of ingredients meeting the Group’s high standards of quality may adversely affect
the margins available to the Group, subject to the ability to pass through corresponding price increases to
customers.
Movement in the commodity prices of raw materials and, in the case of imported raw materials and other
goods, the value of Sterling against other currencies may have a corresponding impact on finished product
cost. Failure to manage the Group’s exposure to price increase may adversely affect the Group’s financial
performance.
Customers and consumers
The Group operates in a competitive market sector and its ability to compete effectively requires an on-going
commitment to marketing, product development, innovation, product quality and ability to offer value for
money.
A significant proportion of the Group’s sales is generated from a small number of customers and hence there
is a risk from loss of a key customer of a significant piece of business. Significant resources are devoted to
forging strong relationships with customers.
The Group relies on potential license partners to meet certain commercial and development milestones and
their failure to achieve this, or other delays or cancellation of projects due to internal or market factors
affecting potential license partners could affect the execution of the Group’s business plan, with a material
adverse effect on the business.
People
The Group recognises that its employees are critical to the successful delivery of service to customers. The
failure to retain people of high quality would have an adverse effect on Group performance. The Group has
high expectations of all staff and in return strives to provide an environment that is both challenging and
rewarding.
Funding and other risks
The Group may require additional funding. To the extent that the current cash resources of the Group are
insufficient to cover the Group's liabilities in the longer term it may be necessary to seek additional funds
through future equity or debt financings and there is no certainty that such funds would be available. Any
such further financings, if available at all, may be on terms that are not favourable to the Group. Further, if
adequate capital cannot be obtained, the Group's operating results and financial condition could be
adversely affected.
The Group continues to pursue acquisitions as part of its growth strategy. Such acquisitions may not realise
expected benefits.
Provexis plc Annual report and accounts 2012
10
Directors’ report – business overview
Policy on the payment of creditors
It is the policy of the Group to pay creditors and suppliers in accordance with their normal terms of business.
Creditor days outstanding for the Group at 31 March 2012 amounted to 51 days compared to 22 days at
31 March 2011.
Board of Directors
The Board of Directors has overall responsibility for the Group.
The Board comprises a Non-executive Chairman, two additional Non-executive Directors, all of whom are
independent, and two further Executive Directors. The Board continues to be satisfied that it has an
appropriate mix of independence and experience in its Non-executive Directors.
The Directors of the Company during the year and up to the date that the financial statements were
approved are shown below.
Executive Directors
S N Moon
S N Morrison (resigned 30 November 2011)
I Ford
Phil Walker (appointed 24 September 2011 - resigned 29 November 2011)
Non-executive Directors
C D Buck
N C Bain (resigned 30 November 2011)
J M Clarke (appointed 1 April 2012)
K Rietveld
A qualifying third-party indemnity provision as defined in Section 234 of the Companies Act 2006 is in force
for the benefit of each of the Directors in respect of liabilities incurred as a result of their office, to the extent
permitted by law. In respect of those liabilities for which Directors may not be indemnified, the Company
maintained a Directors’ and officers’ liability insurance policy throughout the financial year.
Audit Committee
The Audit Committee comprises two Non-executive Directors and is chaired by Dawson Buck as Chairman.
It meets as required and specifically to review the Interim Report and Annual Report and to consider the
suitability and monitor the effectiveness of the internal control processes. There were two Audit Committee
meetings during the year. The Audit Committee reviews the findings of the external auditors and reviews
accounting policies and material accounting judgements.
The independence of the auditors is considered by the Audit Committee. The Audit Committee (with no
Executive Director present) meets at least once per calendar year with the auditors to discuss their
objectivity and independence, the Annual Report, any audit issues arising, internal control processes and
any other appropriate matters. As well as providing audit related services, the auditors provide taxation
advice, corporate finance services and share scheme advice and undertake work in relation to the interim
report. The fees in respect of the non-audit services provided are £63,500 for the year ended 31 March 2012
(2011: £27,300). Further, the overall fees paid to the auditors are not deemed to be of such significance to
them as to impair their independence. The Audit Committee considers that the objectivity and independence
of the auditors is safeguarded.
The current terms of reference of the Audit Committee are set out in the governance pages on the Group’s
website www.provexis.com.
Going concern
The Directors have a reasonable expectation that the Group and the Company will continue in operational
existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in
preparing the Group’s financial statements.
See also note 1 to the consolidated financial statements on page 25.
Provexis plc Annual report and accounts 2012
11
Directors’ report – business overview
Employees
The Executive Directors keep staff informed of the progress and development of the Group regularly through
formal and informal meetings and employee feedback is encouraged. The Company has a policy of offering
share options to all eligible employees, subject to availability under the option plan rules and with due
consideration to the level of dilution to shareholders.
The Group does not discriminate between employees and prospective employees on grounds of age, race,
religion or gender. Every effort is made to provide the same opportunities to disabled persons as to others.
The Board recognises its obligation towards its employees to provide a safe and healthy working
environment. The Group complies with health and safety legislation including conducting regular inspections
and risk assessments.
Environmental, social and community matters
As a result of the size and nature of the Group’s operations, the impact of the Group’s operations on the local
community and the environment is not considered to be significant. Recycling of office supplies is undertaken
where possible.
Relationship with shareholders
The Directors seek to build a mutual understanding of objectives between the Company and its
shareholders. The Group reports formally to shareholders in its interim and annual reports setting out details
of its activities. In addition, the Group keeps shareholders informed of events and progress through the issue
of regulatory news in accordance with the AIM rules of the London Stock Exchange. The Chief Executive
and Finance Director seek to meet with significant shareholders following interim and final results. The Group
also maintains investor relations pages and other information regarding the business, its products and
activities on its website www.provexis.com.
Where possible the Annual Report is sent to shareholders at least 20 working days before the Annual
General Meeting. Directors are required to attend Annual General Meetings of the Company unless unable
to do so for personal reasons or due to pressing commercial commitments. Shareholders are given the
opportunity to vote on each separate issue. The Company counts all proxy votes and will indicate the level of
proxies lodged on each resolution, after it has been dealt with by a show of hands.
Adequacy of information supplied to auditors
Each Director has taken all reasonable steps to make himself aware of any information needed by the
Company’s auditors for the purpose of their audit and to establish that the auditors are aware of that
information. The Directors are not aware of any relevant audit information of which the auditors are unaware.
BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint BDO LLP will
be proposed at the forthcoming AGM.
Provexis plc Annual report and accounts 2012
12
Directors’ report – business overview
Directors’ responsibilities
The directors are responsible for preparing the directors’ report and the financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law
the directors have elected to prepare the group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and the company financial
statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and
company and of the profit or loss of the group for that period. The directors are also required to prepare
financial statements in accordance with the rules of the London Stock Exchange for companies trading
securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether the group financial statements have been prepared in accordance with IFRSs as adopted
by the European Union, subject to any material departures disclosed and explained in the financial
statements;
state whether the company financial statements have been prepared in accordance with applicable UK
Accounting Standards, subject to any material departures disclosed and explained in the financial
statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the company’s transactions and disclose with reasonable accuracy at any time the financial position
of the company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available
on a website. Financial statements are published on the company's website in accordance with legislation in
the United Kingdom governing the preparation and dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance and integrity of the company's website is the
responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the
financial statements contained therein.
By order of the Board
Ian Ford
Secretary
31 July 2012
Provexis plc Annual report and accounts 2012
13
Remuneration report
Remuneration Committee: composition and terms of reference
The Group’s Remuneration Committee during the year ended 31 March 2012 comprised three independent
Non-executive Directors and was chaired by Dawson Buck.
The purpose of the Remuneration Committee is to ensure that the Executive Directors are fairly rewarded for
their individual contribution to the overall performance of the Company. The Committee considers and
recommends to the Board the remuneration of the Executive Directors and is kept informed of the
remuneration packages of senior staff and invited to comment on these.
Policy on Executive Directors’ remuneration
Executive remuneration packages are designed to attract and retain executives of the necessary skill and
calibre to run the Company successfully but avoiding paying more than is necessary. Direct benchmarking of
remuneration is not possible given the specialised nature and size of the Company. The Remuneration
Committee recommends to the Board remuneration packages by reference to individual performance and
uses the knowledge and experience of the Non-executive Directors and published surveys relating to AIM
Directors, and market changes generally. The Remuneration Committee has responsibility for recommending
any long term incentive schemes.
The full Board determines whether or not Executive Directors are permitted to serve in roles with other
companies. Such permission is only granted where a role is on a strictly limited basis, where there are no
conflicts of interest or competing activities and providing there is not an adverse impact on the commitments
required to the Group. Earnings from such roles are not disclosed nor paid to the Group.
There are four main elements of the remuneration package for Executive Directors and senior staff:
(i) Basic salaries and benefits in kind
Basic salaries are recommended to the Board by the Remuneration Committee, taking into account the
performance of the individual and the rates for similar positions in comparable companies. Benefits in kind
comprising private medical insurance are available to all senior staff and Executive Directors.
(ii) Share option scheme
The Company operates a share option scheme which was established in June 2005 (”the Provexis 2005
share option scheme”) to motivate the Executive Directors and employees through equity participation in the
Company. Options granted pursuant to the Provexis 2005 share option scheme may take the form of either
unapproved share options or tax favoured EMI options. Exercise of options under the scheme is subject to
specified exercise periods and compliance with the AIM rules of the London Stock Exchange.
The scheme is overseen by the Remuneration Committee which recommends to the Board all grants of
share options based on the Committee’s assessment of personal performance and specifying the terms
under which eligible individuals may be invited to participate.
In June 2005 the Company undertook a reverse takeover of Provexis Natural Products Limited (“PNP”,
formerly Provexis Limited) through a share for share exchange. Prior to the takeover the Company and PNP
had granted EMI options and unapproved options. Options granted by the Company prior to the takeover
remain subject to the same terms as contained in the individual share option contracts under which they
were originally granted. The PNP EMI options and unapproved options were rolled over into options over the
Company’s ordinary shares, and these replacement options remain subject to the same terms as contained
in the individual PNP share option contracts under which they were originally granted.
The UK Corporate Governance Code refers to the requirement for the performance-related elements of
remuneration to form a significant proportion of the total remuneration package of Executive Directors and
should be designed to align their interests with those of shareholders. In the development phase of the
Group the Remuneration Committee currently considers that the best alignment of these interests is through
continued use of incentives for performance through the award of share options or other share-based
arrangements.
Provexis plc Annual report and accounts 2012
14
Remuneration report
Policy on Executive Directors’ remuneration (continued)
(iii) Bonus scheme
The Company has an established discretionary non-pensionable bonus scheme for Executive Directors,
which is subject to the achievement of agreed goals and targets that are designed to incentivise Directors to
perform at the highest levels, and align Directors’ interests with those of the shareholders.
For the Executive Directors the performance-related annual bonus potential is up to 40% of basic salary. The
Remuneration Committee approved no bonuses in 2012. In 2011 annual bonuses of between 20% and 40%
of salary were paid.
(iv) Pension contributions
The Group pays a defined contribution to the pension scheme of Executive Directors and employees. The
individual pension schemes are private and their assets are held separately from those of the Group.
Salaries and benefits were reviewed in April 2011 to cover the year from 1 April 2011 to 31 March 2012.
Future reviews will continue to be undertaken on an annual basis each April to enable the Group’s
performance over the preceding financial year and the strategy for the forthcoming year to be considered.
Service contracts
The Chief Executive is employed under a service contract requiring twelve months’ notice by either party,
and the Finance Director is employed under a service contract requiring three months’ notice. All Non-
executive Directors receive payments under appointment letters which are terminable by three months’
notice from either party.
Policy on Non-executive Directors’ remuneration
Dawson Buck and John Clarke each receive a fee for their services as a director, which is approved by the
Board, mindful of the time commitment and responsibilities of their roles and of current market rates for
comparable organisations and appointments. Non-executive Directors are reimbursed for travelling and other
minor expenses incurred.
Gains made on exercise of directors’ share options
No directors’ share options were exercised during the year (2011: Nil).
Details of directors’ remuneration
The emoluments of the individual Directors for the year were as follows:
Executive Directors
S N Moon
S N Morrison (resigned 30 November 2011)
I Ford
P Walker (appointed 24 September 2011 -
resigned 29 November 2011)
Non-executive Directors
C D Buck
N C Bain (resigned 30 November 2011)
K Rietveld
Year ended
31 March
2012
Benefits
in kind
Pension
Loss of
office
Total
Year ended
31 March
2011
Total
£
£
£
£
£
943
1,269
1,914
9,362
4,314
6,029
-
30,000
-
197,553
128,006
127,619
255,817
158,080
148,597
500
2,604
61,250
116,437
-
-
-
-
4,626
-
-
-
22,309
-
-
-
91,250
27,500
11,667
-
608,782
35,000
17,500
-
614,994
Salary and
directors’
fees
£
187,248
92,423
119,676
52,083
27,500
11,667
-
490,597
The above fees and emoluments exclude reimbursed expenditure incurred in the conduct of Group business.
Provexis plc Annual report and accounts 2012
15
Remuneration report
Share-based payment expense
The share-based payment expenses of the individual Directors recognised for the year were as follows:
Executive Directors
S N Moon
S N Morrison (resigned 30 November 2011)
I Ford
P Walker (appointed 24 September 2011 - resigned 29 November 2011)
Non-executive Directors
C D Buck
N C Bain (resigned 30 November 2011)
K Rietveld
Year ended
31 March
2012
£
Year ended
31 March
2011
£
69,504
-
32,708
-
-
-
-
102,212
15,857
11,666
12,324
-
-
-
-
39,847
Directors’ interests in shares
Ordinary shares of
0.1 pence each
Ordinary shares of
0.1 pence each
Beneficial interests
31 March 2012
1 April 2011
S N Moon
S N Morrison (resigned 30 November 2011)
I Ford
N C Bain (resigned 30 November 2011)
C D Buck
2,060,666
-
2,201,832
-
12,906,433
17,168,931
1,540,000
1,668,333
1,668,333
5,608,416
11,271,359
21,756,441
Other than as shown in the table and as further disclosed above in respect of Deferred Shares in note 19
and disclosed in respect of share options on page 17, no Director had any interest in the shares of the
Company or its subsidiary companies at 31 March 2012.
Provexis plc Annual report and accounts 2012
16
Remuneration report
Directors’ interests in share options
The Board uses share options to align Directors and employees interests with those of shareholders in order
to provide incentives and reward them based on improvements in Company performance.
On 17 June 2011 the Company announced that the Company's Remuneration Committee had approved the
grant of options over 51,300,000 ordinary shares of 0.1p each to certain Directors and employees of the
Company. During the year 22,000,000 of these options were surrendered by Directors leaving the company.
The share options held by the Directors and not exercised at 31 March 2012 are summarised below.
At 1 April 2011
Options granted
in year
Resignation as a
director
At 31 March 2012
S N Moon
S N Morrison (resigned 30 November 2011)
I Ford
Phil Walker (appointed 24 September 2011 -
resigned 29 November 2011)
21,117,620
12,000,000
10,000,000
17,000,000
-
8,000,000
-
(12,000,000)
-
-
10,000,000
(10,000,000)
38,117,620
-
18,000,000
-
43,117,620
35,000,000
(22,000,000)
56,117,620
The unapproved share options at 31 March 2012 of the Directors who served during the year are set
out below:
Grant date
Number
awarded
Exercise
price/share
Earliest
exercise date
Expiry date
S N Moon
S N Moon
I Ford
August 2008
June 2011
June 2011
7,324,520
17,000,000
6,350,010
30,674,530
0.900p
2.800p
2.800p
April 2011
April 2014
April 2014
August 2018
June 2021
June 2021
The EMI share options at 31 March 2012 of the Directors who served during the year are set out below:
Grant date
Number
awarded
Exercise
price/share
Earliest
exercise date
Expiry date
S N Moon
S N Moon
S N Moon
S N Morrison
S N Morrison
I Ford
I Ford
I Ford
August 2008
August 2008
August 2008
October 2008
October 2008
August 2008
August 2008
June 2011
1,117,620
2,675,480
10,000,000
3,000,000
6,000,000
5,000,000
5,000,000
1,649,990
34,443,090
1.000p
0.900p
0.900p
0.900p
0.900p
0.900p
0.900p
2.800p
August 2008
April 2011
October 2009
April 2011
October 2009
April 2011
October 2009
April 2014
August 2018
August 2018
August 2018
October 2018
October 2018
August 2018
August 2018
June 2021
All options were granted with an exercise price at or above market value on the date of grant.
The Company carried out a share re-organisation on 28 August 2008, which is further detailed in note 19 to
the consolidated financial statements on page 49.
Provexis plc Annual report and accounts 2012
17
Remuneration report
Directors’ interests in share options (continued)
Share options which had been granted prior to 28 August 2008 over existing ordinary shares with a nominal
value of 1p each in the capital of the Company became options over new ordinary shares with a nominal
value of 0.1p each in the capital of the Company. The options remain subject to the same terms as contained
in the individual option contracts under which they were originally granted.
Share options issued after 28 August 2008 are options over new ordinary shares with a nominal value of
0.1p each in the capital of the Company.
Dawson Buck
Chairman of the Remuneration Committee
Provexis plc Annual report and accounts 2012
18
Independent auditor’s report to the members of Provexis
plc
TO THE MEMBERS OF PROVEXIS PLC
We have audited the financial statements of Provexis plc for the year ended 31 March 2012 which comprise
the consolidated statement of comprehensive income, the consolidated statement of financial position, the
consolidated statement of cash flows, the consolidated statement of changes in equity, the parent company
balance sheet and the related notes. The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been
applied in preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with sections Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group’s and the parent company’s
affairs as at 31 March 2012 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company’s financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Provexis plc Annual report and accounts 2012
19
Independent auditor’s report to the members of Provexis
plc continued
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns;
or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Christopher Pooles (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Reading
United Kingdom
Date
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
Provexis plc Annual report and accounts 2012
20
Consolidated statement of comprehensive income
Year
ended
31 March
2012
£
3,477,862
(1,720,241)
1,757,621
(761,457)
(5,326,301)
(2,180,362)
(1,390,638)
(153,163)
(464,513)
(141,461)
Year
ended
31 March
2011
£
50,086
-
50,086
(1,250,915)
(1,274,493)
(2,406,253)
-
-
-
(69,069)
(4,330,137)
(2,475,322)
46,111
133,439
(4,284,026)
(2,341,883)
328,538
(3,955,488)
221,218
(2,120,665)
(3,873,215)
(82,273)
(3,955,488)
(1,984,206)
(136,459)
(2,120,665)
0.28
0.17
Notes
1,3
4
11
10
4
20
4
7
8
21
21
21
9
Revenue
Cost of goods
Gross profit
Research and development costs
Administrative costs
Underlying operating loss
Amortisation and impairment charges
Costs of acquisition
Restructuring costs
Share based payment charges
Loss from operations
Net finance income
Loss before taxation
Taxation
Loss and total comprehensive expense for the period
Attributable to:
Owners of the parent
Non-controlling interest
Loss and total comprehensive expense for the period
Loss per share to owners of the parent
Basic and diluted – pence
All amounts relate to continuing operations.
Provexis plc Annual report and accounts 2012
21
Consolidated statement of financial position
Company number 05102907
Assets
Non-current assets
Intangible assets
Plant and equipment
Deferred tax
Total non-current assets
Current assets
Inventories
Trade and other receivables
Corporation tax asset
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Total current liabilities
Net current assets
Non-current liabilities
Deferred tax
Total non-current liabilities
Total liabilities
Total net assets
Capital and reserves attributable to
owners of the parent company
Share capital
Share premium reserve
Warrant reserve
Merger reserve
Retained earnings
Non-controlling interest
Total equity
As at
31 March
2012
£
As at
31 March
2011
£
Notes
11
13
18
14
15
8
16
17
18
19
21
21
21
21
9,369,603
598,430
128,948
10,096,981
635,771
934,773
300,000
1,447,405
3,317,949
3,878,577
89,769
-
3,968,346
-
253,249
271,220
7,551,505
8,075,974
13,414,930
12,044,320
(1,541,839)
(39,133)
(1,580,972)
1,736,977
(535,072)
(535,072)
(563,190)
-
(563,190)
7,512,784
-
-
(2,116,044)
(563,190)
11,298,886
11,481,130
5,085,352
19,998,832
60,000
6,599,174
(20,225,740)
11,517,618
(218,732)
11,298,886
4,812,036
16,909,650
115,980
6,273,909
(16,493,986)
11,617,589
(136,459)
11,481,130
These consolidated financial statements were approved and authorised for issue by the Board on 31 July
2012. The notes on pages 25 to 54 form part of these consolidated financial statements.
Stephen Moon
Director
On behalf of the Board of Provexis plc
Ian Ford
Director
Provexis plc Annual report and accounts 2012
22
Consolidated statement of cash flows
Notes
11
13
Year
ended
31 March
2012
£
Year
ended
31 March
2011
£
(3,955,488)
(2,120,665)
1,390,638
89,360
9,872
(3,631)
(46,111)
(328,538)
141,461
-
28,697
-
-
(133,439)
(221,218)
69,069
Cash flows from operating activities
Loss after tax
Adjustments for:
Amortisation and impairment
Depreciation
Loss on disposal of intangible assets
Profit on sale of fixed assets
Net finance income
Taxation
Share-based payment charge
Operating cash outflow before changes in working capital
(2,702,437)
(2,377,556)
Changes in inventories
Changes in trade and other receivables
Changes in trade and other payables
Total cash outflow from operations
Tax paid
Tax credits received
Total cash flow from operating activities
42,239
81,419
320,426
-
(5,898)
267,692
(2,258,353)
(2,115,762)
(28,134)
121,220
-
61,844
(2,165,267)
(2,053,918)
Cash flow from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Interest received
Acquisition of subsidiary net of cash acquired
Net cash (outflow)/inflow from investing activities
(458,984)
4,750
(62,356)
49,762
(6,786,036)
(7,252,864)
(57,285)
-
(17,959)
148,339
-
73,095
10
Cash flow from financing activities
Proceeds from issue of share capital
Expenses paid on share issues
Proceeds from exercise of share options
Interest paid
Net cash flow from financing activities
3,524,694
(236,919)
27,000
(744)
3,314,031
2,684,534
(201,340)
-
-
2,483,194
Net (decrease) / increase in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
16
16
(6,104,100)
7,551,505
1,447,405
502,371
7,049,134
7,551,505
Provexis plc Annual report and accounts 2012
23
Consolidated statement of changes in equity
Share
capital
Share
premium
Warrant
reserve
Merger
reserve
Retained
earnings
£
£
£
£
£
Total equity
attributable
to owners of
the parent
£
At 31 March 2010
4,723,601
14,527,277
115,980
6,273,909
(14,578,849)
11,061,918
Share-based charges
-
-
Issue of shares - EFF drawdown -
28-Jun-10
Issue of shares - EFF drawdown -
08-Oct-10
Total comprehensive expense for
the year
2,135
86,291
86,300
2,296,082
-
-
-
-
-
-
-
-
-
-
69,069
69,069
-
-
88,426
2,382,382
Non-
controlling
interests
£
-
-
-
-
Total
equity
£
11,061,918
69,069
88,426
2,382,382
At 31 March 2011
4,812,036
16,909,650
115,980
6,273,909
(16,493,986)
11,617,589
(136,459)
11,481,130
(1,984,206)
(1,984,206)
(136,459)
(2,120,665)
-
141,461
141,461
Share-based charges
Issue of shares - acquisition of SiS
(Science in Sport) 24 June 2011
-
35,336
-
-
Issue of shares - placing 24 June
2011
166,667
2,333,333
Issue costs - placing 24 June 2011
-
(199,380)
Issue of shares - open offer 27 July
2011
68,313
956,381
Issue costs - open offer 27 July
2011
Issue of shares - share options
exercised 13 December 2011
Cancellation of warrants - equity
financing facility 8 November 2011
Issue of warrants - equity financing
facility 8 November 2011
Total comprehensive expense for
the year
-
(37,539)
3,000
24,000
-
-
-
12,387
(115,980)
-
-
60,000
-
-
-
-
-
-
-
-
325,265
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
360,601
2,500,000
(199,380)
1,024,694
(37,539)
27,000
(103,593)
60,000
-
-
-
-
-
-
-
-
-
141,461
360,601
2,500,000
(199,380)
1,024,694
(37,539)
27,000
(103,593)
60,000
(3,873,215)
(3,873,215)
(82,273)
(3,955,488)
At 31 March 2012
5,085,352
19,998,832
60,000
6,599,174
(20,225,740)
11,517,618
(218,732)
11,298,886
Provexis plc Annual report and accounts 2012
24
Notes to the consolidated financial statements
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 Kings Road House, 2 Kings Road, Windsor,
Berkshire SL4 2AG, UK.
The main activities of the Group are those of developing, licensing and marketing scientifically-proven
functional food and sports nutrition technologies for the global functional food and sports nutrition sectors.
Basis of preparation
The Group financial statements have been prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the
International Accounting Standards Board (IASB) as adopted by the European Union (“adopted IFRS”) and
those parts of the Companies Act 2006 that are applicable to financial statements prepared in accordance
with IFRS.
The Company has elected to prepare its parent company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (“UK GAAP”), and these are set out on pages 55 to 59.
The accounting policies set out below have been applied to all periods presented in these Group financial
statements and are in accordance with IFRS, as adopted by the European Union, and International Financial
Reporting Interpretations Committee (“IFRIC”) interpretations that were applicable for the year ended
31 March 2012.
The following new amendment to IAS24 was applied for the first time from 1 April 2011:
IAS 24 (amended) ‘Related party disclosures’
The Group has adopted all amendments published in ‘Improvements to IFRSs’ issued in May 2010. The
adoption of the above amendment has not had any significant impact on the amounts reported in the Group
financial statements but may impact the disclosure of future transactions and arrangements.
The following new standards, amendments to standards and interpretations have been issued but are not
effective for the year ended 31 March 2012. The new standards, amendments to standards and
interpretations will be relevant to the Group but have not been adopted early as the Directors do not expect
these standards and interpretations to have a material effect on the consolidated financial statements:
IAS 1 (Amended) ‘Financial statement presentation’ is effective from periods commencing on or after 1
July 2012.
IFRS 7 (Amended) ‘Financial instruments: Disclosures’ and IAS 32 (Amended) Financial instruments:
Presentation’ are effective from 1 January 2013 and 2014 respectively.
IFRS 9 ‘Financial Instruments’ is effective from periods commencing on or after 1 January 2015.
IFRS 10 ‘Consolidated financial statements’ is effective from periods commencing on or after 1 January
2013.
IFRS 12 ‘Disclosures of interests in other entities’ is effective from periods commencing on or after 1
January 2013.
IFRS 13 ‘Fair value measurement’ is effective from periods commencing on or after 1 January 2013.
IAS 27 (Amended) ‘Separate financial statements’ is effective from periods commencing on or after 1
January 2013.
There are a number of standards, interpretations and amendments to published accounts not listed above
which the Directors consider not to be relevant to the Group.
Going concern
The Group’s business activities together with the factors likely to affect its future development are set out in
the Business Overview on pages 8 to 13. The financial position of the Group, its cash flows and liquidity
position are set out in the Financial Review on pages 6 and 7. 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.
Provexis plc Annual report and accounts 2012
25
Notes to the consolidated financial statements continued
1. Accounting policies (continued)
Going concern (continued)
The Group made a loss for the year attributable to owners of the parent of £3,873,215 (2011: £1,984,206)
and expects to make a further loss during the year ending 31 March 2013. At 31 March 2012 the Group had
cash balances of £1,447,405 (2011: £7,551,505).
The directors have prepared projected cash flow information for a period including 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 restructuring undertaken during the year ended 31 March 2012, as further set out in the Financial
Review on pages 6 and 7, has resulted in an annualised reduction in cash burn of £1.15m. The Group is able
to seek additional funds through future equity or debt financings, and is currently in negotiations with the
Group’s bankers seeking to obtain an overdraft and asset finance facility.
The Group has access to future equity or debt financings, overdraft and asset financing facilities as potential
additional sources of funding. Based on the level of existing cash, projected income and expenditure, and
excluding the potential additional sources of funding, the Directors are satisfied that the Company and the
Group have adequate resources to continue in business for the foreseeable future.
Accordingly the going concern basis has been used in preparing the financial statements.
Basis of consolidation
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to
govern the financial and operating policies generally accompanying a shareholding of more than one half of
the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date that control ceases.
The consolidated financial information presents the results of the Company and its subsidiaries,
Provexis Nutrition Limited, Provexis Natural Products Limited, Provexis (IBD) Limited and SiS (Science in
Sport) Limited as if they formed a single entity ("the Group"). All subsidiaries share the same reporting date,
31 March, as Provexis plc. All intra group balances are eliminated in preparing the financial statements.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The
cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as
goodwill. The direct costs of acquisition are recognised immediately as an expense.
Non-controlling interest
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent
and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent
and the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Revenue
Revenue comprises the fair value received or receivable for exclusivity arrangements, collaboration
agreements, royalties and sales net of sales rebates and excluding VAT and trade discounts.
The accounting policies for the principal revenue streams of the Group are as follows:
(i) Exclusivity arrangements and collaboration agreements are recognised as revenue in the accounting
period in which the related services, or required activities, are performed or specified conditions are fulfilled
in accordance with the terms of completion of the specific transaction.
(ii) Royalty income relating to the sale by a licensee of licensed product is recognised on an accruals basis in
accordance with the substance of the relevant agreement and based on the receipt from the licensee of the
relevant information to enable calculation of the royalty due.
Provexis plc Annual report and accounts 2012
26
Notes to the consolidated financial statements continued
1. Accounting policies (continued)
Revenue (continued)
(iii) Sales are recorded net of value added tax when the significant risks and rewards of ownership have
been transferred to the buyer in accordance with customer terms. This is normally when goods are
dispatched to export customers and when the goods are delivered for UK customers. Sales rebates and
discount reserves are established based on management’s best estimate of the amounts necessary to meet
claims by the Group’s customers in respect of these rebates and discounts. The provision is made at the
time of sale and released, if unutilised, after assessment that the likelihood of such a claim being made has
become remote.
Segment reporting
The Group determines and presents operating segments based on the information that internally is provided
to the Executive Committee of 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.
Exceptional items
Exceptional items are those material items which, by virtue of their size or incidence, are presented
separately in the Statement of Comprehensive Income to give a full understanding of the Group’s financial
performance. Transactions which may give rise to exceptional items include the restructuring of business
activities and acquisitions. Further details of exceptional items are set out on the face of the Statement of
Comprehensive Income and in the related notes.
Use of non-GAAP profit measure – underlying operating profit
The Directors believe that the operating loss before amortisation and impairment of acquired intangibles,
share based payments and exceptional items measure provides additional useful information for
shareholders on underlying trends and performance. This measure is used for internal performance analysis.
Underlying operating loss is not defined by IFRS and therefore may not be directly comparable with other
companies’ adjusted profit measures. It is not intended to be a substitute for, or superior to IFRS
measurements of profit.
Leased assets
Leases, which contain terms whereby the Group does not assume substantially all the risks and rewards
incidental to ownership of the leased item are classified as operating leases. Operating lease rentals are
charged to the statement of comprehensive income on a straight line basis over the lease term. The Group
does not hold any assets under finance leases.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the
identifiable net assets acquired. Goodwill on acquisition of subsidiaries is included in ‘intangible assets’.
Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses.
An impairment loss is recognised within administrative expenses in the consolidated statement of
comprehensive income for the amount by which the asset’s carrying amount exceeds its recoverable
amount. For the purposes of assessing impairment, assets are grouped into cash generating units (‘CGU’)
being the lowest levels for which there are separately identifiable cash flows. The recoverable amount of a
CGU is the higher of a CGU’s fair value less costs to sell and value in use.
Impairment losses on goodwill are not reversed.
Provexis plc Annual report and accounts 2012
27
Notes to the consolidated financial statements continued
1. Accounting policies (continued)
Intangible assets (continued)
Research and development
Certain Group products are in the research phase and others are in the development phase. Expenditure
incurred on the development of internally generated products is capitalised if it can be demonstrated that:
●
●
●
●
●
●
It is technically feasible to develop the product for it to be sold;
Adequate resources are available to complete the development;
There is an intention to complete and sell the product;
The Group is able to sell the product;
Sale of the product will generate future economic benefits; and
Expenditure on the project can be measured reliably.
The value of the capitalised development cost is assessed for impairment annually. The value is written
down immediately if impairment has occurred. Development costs are not being amortised as income has
not yet been realised from the underlying technology.
Development expenditure, not satisfying the above criteria, and expenditure on the research phase of
internal projects is recognised in the statement of comprehensive income as incurred.
Patents and trademarks
The costs incurred in establishing patents and trademarks are either expensed or capitalised in accordance
with the corresponding treatment of the development expenditure for the product to which they relate.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a
straight-line basis over their useful economic lives.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or
give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using
appropriate valuation techniques.
In-process research and development programmes acquired in such combinations are recognised as an
asset even if subsequent expenditure is written off because the criteria specified in the policy for research
and development costs above are not met.
The significant intangibles recognised by the Group, their useful economic lives and the methods used to
determine the cost of intangibles acquired in a business combination are as follows:
Intangible asset
Trademarks
Patents / recipes / formulations
Covenants not to compete
Customer relationships
Useful economic life
9.5
4.5 to 9.5
3.0
9.5
Valuation method
Relief From Royalty Rate Method
Relief From Royalty Rate Method
Comparative Business Valuation
Multi-Period Excess Earnings Method
Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held for sale when:
-
they are available for immediate sale;
- management is committed to a plan to sell;
-
-
-
-
it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;
an active programme to locate a buyer has been initiated;
the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and
a sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
-
their carrying amount immediately prior to being classified as held for sale in accordance with the group's
accounting policy; and
fair value less costs to sell.
-
Provexis plc Annual report and accounts 2012
28
Notes to the consolidated financial statements continued
1. Accounting policies (continued)
Non-current assets held for sale and disposal groups (continued)
Following their classification as held for sale, non-current assets (including those in a disposal group) are not
depreciated.
The results of operations disposed during the year are included in the consolidated statement of
comprehensive income up to the date of disposal.
A discontinued operation is a component of the Group's business that represents a separate major line of
business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that
has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.
Discontinued operations are presented in the consolidated statement of comprehensive income as a single
line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or
loss recognised on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal
groups constituting discontinued operations.
Plant and equipment
Plant and machinery, fixtures, fittings and computer equipment and laboratory equipment are stated at cost
less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items. Depreciation is charged to the Statement of
Comprehensive Income on all plant and equipment at rates calculated to write off the cost or valuation, less
estimated residual value, of each asset on a straight line basis over their estimated useful lives, which is:
between 3 and 8 years for motor vehicles, plant and machinery, fixtures, fittings and computer
equipment; and
5 years for laboratory equipment.
Leasehold improvements are depreciated on a straight line basis over the unexpired portion of the lease.
The assets’ residual values and useful lives are determined by the Directors and reviewed and adjusted if
appropriate at each balance sheet date in accordance with the Group policy for impairment of assets.
Impairment of assets
Assets that have a finite useful life but that are not yet in use and are therefore not subject to amortisation or
depreciation are tested annually for impairment. Assets that are subject to amortisation are reviewed for
impairment annually and when events or circumstances suggest that the carrying amount may not be
recoverable, an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount.
Goodwill is allocated to cash-generating units (‘CGU’) for the purpose of impairment testing to the extent that
it is possible to allocate goodwill to a CGU on a non-arbitrary basis. A CGU is identified at the lowest
aggregation of assets that generate largely independent cash inflows, and that which is looked at by
management for monitoring and managing the business.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of
the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the
statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which
case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset in
prior periods. A reversal of an impairment loss is recognised immediately in the statement of comprehensive
income, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase. Impairment losses on goodwill are not reversed.
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal
proceeds and the carrying amount of the asset and is recognised in the income statement.
Provexis plc Annual report and accounts 2012
29
Notes to the consolidated financial statements continued
1. Accounting policies (continued)
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated as follows:
Raw materials - cost of purchase on first in, first out basis.
Work in progress and finished goods - cost of raw materials and labour, together with attributable overheads
based on the normal level of activity.
Net realisable value is based on estimated selling price less further costs to completion and disposal. A
charge is made to the income statement for slow moving inventories. The charge is reviewed at each
balance sheet date.
Financial instruments
Financial assets
The Group’s financial assets are comprised of ‘trade and other receivables’ and ‘cash and cash equivalents’.
They are recognised initially at their fair value and subsequently at amortised cost. The Group will assess at
each balance sheet date whether there is objective evidence that the financial asset is impaired. If an asset
is judged to be impaired the carrying amount of the asset will be adjusted to its impaired valuation.
Financial liabilities
The Group’s financial liabilities comprise ‘trade and other payables’. These are recognised initially at fair
value and subsequently at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand.
Government grants
Government grants are recognised when there is reasonable assurance that the grant will be received and
the Group will comply with all attached conditions. Government grants are recognised in the statement of
comprehensive income in the same period to which the costs that they are intended to compensate are
expensed.
Taxation
Current tax is provided at amounts expected to be recovered or to be paid using the tax rates and tax laws
that have been enacted or substantively enacted at the balance sheet date. When research and
development tax credits are claimed they are recognised on an accruals basis and are included as a taxation
credit.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability on the
balance sheet differs from its tax base, except for differences arising on:
The initial recognition of goodwill
The initial recognition of an asset or liability in a transaction which is not a business combination and at
the time of the transaction affects neither accounting or taxable profit; and
Investments in subsidiaries where the Group is able to control the timing of the reversal of the difference
and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profits will
be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered). Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
The same taxable Group Company; or
Different Group entities which intend to settle current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, on each future period in which significant amounts of
deferred tax assets or liabilities are expected to be settled or recovered.
Provexis plc Annual report and accounts 2012
30
Notes to the consolidated financial statements continued
1. Accounting policies (continued)
Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement of comprehensive income.
Employee benefits
(i) Defined contribution plans
The Group provides retirement benefits to all employees and Executive Directors. The assets of these
schemes are held separately from those of the Group in independently administered funds. Contributions
made by the Group are charged to the statement of comprehensive income in the period in which they
become payable.
(ii) Accrued holiday pay
Provision has been made at the balance sheet date for holidays accrued but not taken at the salary of the
relevant employee at that date.
(iii) Share-based payment transactions
The Group operates an equity-settled, share-based compensation plan. Vesting conditions are service
conditions and performance conditions only. Where share options are awarded to employees and others
providing similar services, the fair value of the options at the date of grant is charged to the statement of
comprehensive income over the vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately,
the cumulative amount recognised over the vesting period is based on the number of options that eventually
vest. Market vesting conditions are factored into the fair value of the options when granted. As long as all
other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions
are satisfied. The cumulative charge is not adjusted for failure to achieve a market vesting condition. If
market related terms and conditions of options are modified before they vest, the change in the fair value of
the options, measured immediately before and after the modification, is also charged to the statement of
comprehensive income over the remaining vesting period. If non-market related terms and conditions of
options are modified before they vest, the number of instruments expected to vest at each balance sheet
date, and therefore the cumulative charge, is therefore amended accordingly. Where equity instruments are
granted to persons other than employees and others providing similar services, the statement of
comprehensive income is charged with the fair value of goods and services received.
The proceeds received when options are exercised, net of any directly attributable transaction costs, are
credited to share capital (nominal value) and the remaining balance to share premium.
National insurance on share options
All employee option holders sign statements that they will be liable for any employers national insurance
arising on the exercise of share options.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest rate method.
Warrants
The Group has issued warrants to Darwin Strategic Limited as part of the Equity Financing Facility. These
warrants have been measured at fair value at the date of grant using an appropriate options pricing model.
This fair value has been held on the balance sheet within prepayments and in the warrants reserve within
equity. The prepayment will be released against share premium as the equity financing facility is utilised. The
warrants reserve will be released to share premium when the warrants are exercised. If the warrants lapse or
are cancelled then the reserve is transferred to retained earnings.
Provexis plc Annual report and accounts 2012
31
Notes to the consolidated financial statements continued
1. Accounting policies (continued)
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. The Directors consider that the criteria to capitalise development expenditure were met in 2007 for
one of the Group’s products and have continued to be met since.
(ii) Share-based payments
The Group operates an equity-settled, share-based compensation plan. The charge for share-based
payments is determined based on the fair value of awards at the date of grant partly by use of the Black-
Scholes pricing model which require judgements to be made regarding expected volatility, dividend yield, risk
free rates of return and expected option lives. The inputs used in these pricing models to calculate the fair
values are set out in note 20. An element of the share-based payment charge also relies on certain
assumptions over the future performance of the share price which may not be met or may be exceeded by
the time the relevant awards vest.
(iii) Goodwill and impairment
The recoverable amount of goodwill is determined based on value in use calculations of the cash-generating
units to which it relates. Further detail on key assumptions, including growth rates, discount rates and the
time period of these value in use calculations is given in note 12 on page 42.
(iv) Fair value of identifiable net assets acquired
Upon acquisition of a business, its identifiable assets and liabilities are assessed to determine their fair
value. The values attributed to assets and liabilities as part of this process are, where appropriate, based on
market values identified for equivalent assets, together with management’s experience and assessments
including comparison to the carrying value of assets of a similar condition and age in the existing business.
(v) Valuation of inventories
Inventories are valued at the lower of cost and net realisable value. Cost comprises direct materials, labour
and, where appropriate, overheads that have been incurred in bringing the inventory to its present location
and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
(vi) Useful economic lives of intangible and tangible assets
In relation to the Group’s finite life intangible assets and property, plant and equipment, useful economic lives
and residual values of assets have been established using historical experience and an assessment of the
nature of the assets involved. Assets are assessed on an ongoing basis to determine whether circumstances
exist that could lead to potential impairment of the carrying value of such assets.
Provexis plc Annual report and accounts 2012
32
Notes to the consolidated financial statements continued
2. Financial risk management
2.1 Financial risk factors
The Group’s activities inevitably expose it to a variety of financial risks: market risk (including currency risk,
cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk.
It is Group policy not to enter into speculative positions using complex financial instruments. The Group’s
primary treasury objective is to minimise exposure to potential capital losses whilst at the same time securing
favourable market rates of interest on Group cash deposits using money market deposits with banks. Cash
balances used to settle the liabilities from operating activities are also maintained in current accounts which
earn interest at variable rates.
(a) Market risk
Foreign exchange risk
The Group primarily enters into contracts which are to be settled in UK pounds. However, some contracts
involve other major world currencies including the US Dollar and the Euro. Where large contracts of more
than £50,000 total value are to be settled in foreign currencies consideration is given to converting the
appropriate amounts to or from UK pounds at the outset of the contract to minimise the risk of adverse
currency fluctuations.
The Group incurred minimal expenditure in foreign currencies during the year, and the prior year, and
consequently there is no material exposure to foreign currency rate risk.
Cash flow and fair value interest rate risk
The Group’s interest rate risk arises from medium term and short term money market deposits. Deposits
which earn variable rates of interest expose the Group to cash flow interest rate risk. Deposits at fixed rates
expose the Group to fair value interest rate risk.
The Group analyses its interest rate exposure on a dynamic basis throughout the year.
(b) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions as well
as credit exposure in relation to outstanding receivables. Group policy is to place deposits with institutions
with investment grade A2 or better (Moody’s credit rating) and deposits are made in sterling only. The Group
does not expect any losses from non-performance by these institutions. Management believes that the
carrying value of outstanding receivables and deposits with banks represents the Group’s maximum
exposure to credit risk.
(c) Liquidity risk
Liquidity risk arises from the Group’s management of working capital, it is the risk that the Group will
encounter difficulty in meeting its financial obligations as they fall due. Prudent liquidity risk management
implies maintaining sufficient cash and cash equivalents and management monitors rolling forecasts of the
Group’s liquidity on the basis of expected cash flow.
The Group had trade and other payables at the statement of financial position date of £1,541,839 (2011:
£563,190) as disclosed in note 17 on page 46.
2.2 Capital risk management
The Group considers its capital to comprise its ordinary share capital, share premium, warrant reserve,
merger reserve and accumulated retained earnings as disclosed in the consolidated statement of financial
position on page 22.
The Group remains funded primarily by equity capital. The Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going concern in order to provide returns for equity holders of
the Company and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital.
2.3 Fair value estimation
The Group uses amortised cost, using the effective interest rate method, to determine subsequent fair value
after initial recognition, for its financial instruments.
Provexis plc Annual report and accounts 2012
33
Notes to the consolidated financial statements continued
3. Segmental reporting
The Group’s reporting 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 Executive Committee of 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 CODM uses underlying operating profit/(loss), as reviewed at monthly Executive Committee meetings,
as the key measure of the segments’ results as it reflects the segments’ underlying trading performance for
the financial period under evaluation.
Underlying operating profit/(loss) is a consistent measure within the Group which measures the performance
of each segment before goodwill and acquired intangible asset amortisation and impairment, share based
payment charges, restructuring charges and acquisition costs arising from acquisitions.
Segment assets include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis.
The segment results, the reconciliation of the segment measures to the respective statutory items included in
the Group Statement of Comprehensive Income and the segment assets and liabilities are as follows:
Year ended 31 March 2012
Revenue
Underlying operating loss
Intangible asset amortisation and impairment charges
Costs of SiS acquisition expensed
Restructuring costs
SG&A costs - share-based payment charges
Loss from operations
Net finance income
Loss before taxation
Provexis
£
5,779
(1,954,680)
(1,179,352)
(153,163)
(205,746)
(141,461)
(3,634,402)
46,853
(3,587,549)
SiS
£
3,472,083
(225,682)
(211,286)
-
(258,767)
-
(695,735)
(742)
(696,477)
Group
£
3,477,862
(2,180,362)
(1,390,638)
(153,163)
(464,513)
(141,461)
(4,330,137)
46,111
(4,284,026)
Additions to non-current assets
85,175
7,249,144
7,334,319
Reportable segment assets
4,503,878
8,911,052
13,414,930
Reportable segment liabilities
(355,755)
(1,760,289)
(2,116,044)
External revenue by location of customers
UK
Europe
Rest of the World
Revenue
2012
£
3,085,147
338,634
54,081
3,477,862
2011
£
50,086
-
-
50,086
All operations and assets are based in the UK. There were no intersegment sales or transfers for the period.
Revenues from one customer total £406,884 (2011: £Nil). This major customer purchases goods from the
SiS segment.
The segments identified include the following:
Provexis, being the development and marketing of health based nutritional products; and
SiS, being the development and marketing of sports based nutritional products
Comparatives have not been displayed since the Group had only one operating segment prior to the
acquisition of SiS®.
Provexis plc Annual report and accounts 2012
34
Notes to the consolidated financial statements continued
4. Loss from operations
Loss from operations is stated after charging:
Depreciation of plant and equipment
Amortisation and impairment of intangible assets
Research and development costs
Foreign exchange losses
Costs of acquisition
Restructuring costs
Loss on disposal of intangible assets
Profit on disposal of property, plant and equipment
Changes in inventories of finished goods and work in progress
UKTI TR&DE R&D Grant income
Operating lease costs - land and buildings
Equity-settled share based payment expense
Defined contribution pension expense
Year ended
31 March
2012
£
Year ended
31 March
2011
£
89,360
1,390,638
761,457
2,414
153,163
464,513
9,872
(3,631)
42,239
(3,000)
222,441
141,461
42,434
28,697
-
1,250,915
19
-
-
-
-
-
-
120,543
69,069
37,370
Restructuring costs of £205,746 were incurred as part of the suspension of work on the Crohn’s disease trial
and the cardiovascular inflammation project, and the closure of the Liverpool facility.
Restructuring and rebranding costs of a further £258,767 have been incurred as part of the reorganisation
and rebranding of the SiS® business since acquisition.
The total fees of the Group’s auditor, BDO LLP, for services provided are analysed below:
Audit services
Parent company
Subsidiaries
Tax services – compliance
Parent company
Subsidiaries
Other services
Tax advisory services
Parent company - share option scheme advice
Review of interim statement
Corporate finance - due diligence
Year ended
31 March
2012
£
Year ended
31 March
2011
£
28,000
46,500
4,000
12,500
-
15,000
7,000
25,000
14,000
27,500
4,000
10,600
700
-
5,000
7,000
Total fees
138,000
68,800
Provexis plc Annual report and accounts 2012
35
Notes to the consolidated financial statements continued
5. Wages and salaries
The average monthly number of persons (including all Directors) employed by the Group during the year was
as follows:
Sales staff
Manufacturing staff
Administrative staff
Research and development staff
Directors
Their aggregate emoluments were:
Wages and salaries
Social security costs
Other pension and insurance benefits costs
Total cash settled emoluments
Accrued holiday pay
Share-based payment remuneration charge: equity settled
Total emoluments
6. Directors’ remuneration
Directors
Aggregate emoluments
Compensation for loss of office
Company pension contributions
Share based payment remuneration charge: equity settled
Total Directors’ emoluments
Year ended
31 March
2012
Year ended
31 March
2011
5
8
12
7
4
36
-
-
1
8
6
15
Year ended
31 March
2012
£
Year ended
31 March
2011
£
1,736,465
191,772
69,205
1,997,442
42,498
141,461
2,181,401
953,287
102,944
48,089
1,104,320
13,429
69,069
1,186,818
Year ended
31 March
2012
£
Year ended
31 March
2011
£
495,223
91,250
22,309
608,782
102,212
710,994
594,299
-
20,695
614,994
39,847
654,841
Emoluments disclosed above include the following amounts in respect of the highest paid Director:
Aggregate emoluments
Company pension contributions
Share based payment remuneration charge: equity settled
Total of the highest paid Director’s emoluments
Year ended
31 March
2012
£
Year ended
31 March
2011
£
188,191
9,362
69,504
267,057
246,985
8,832
15,857
271,674
During the year, four Directors (2011: three Directors) participated in defined contribution pension schemes.
Directors’ emoluments include amounts attributable to benefits in kind comprising private medical insurance
on which the directors are assessed for tax purposes. The amounts attributable to benefits in kind are stated
at cost to the Group, which is also the tax value of the attributable benefits.
Further details of Directors’ emoluments are included in the Remuneration report on pages 14 to 18.
Provexis plc Annual report and accounts 2012
36
Notes to the consolidated financial statements continued
7. Finance income
Bank interest receivable
8. Taxation
Current tax income
United Kingdom corporation tax research and development credit
Adjustment in respect of prior period
United Kingdom corporation tax research and development credit
Total current tax income
Deferred tax
Origination and reversal of temporary differences
Tax on loss for the year
Year ended
31 March
2012
£
Year ended
31 March
2011
£
46,111
46,111
133,439
133,439
Year ended
31 March
2012
£
Year ended
31 March
2011
£
150,000
150,000
-
150,000
178,538
328,538
71,218
221,218
-
221,218
The tax assessed for the year is different from the standard rate of corporation tax in the UK. The differences
are explained below:
Loss before tax
Loss before tax multiplied by the
standard rate of corporation tax in the UK of 26% (2011: 28%)
Effects of:
Expenses not deductible for tax purposes
Difference between depreciation and capital allowances
Other short-term timing differences
Unutilised tax losses and other deductions arising in the year
Additional deduction for R&D expenditure
Surrender of tax losses for R&D tax credit refund
Adjustments in respect of prior years
Effect of rate change
Total tax credit for the year
Year ended
31 March
2012
£
Year ended
31 March
2011
£
4,284,026
2,341,883
1,113,846
655,727
(343,565)
19,432
(37,930)
(479,391)
221,808
(150,000)
-
(15,662)
328,538
(12,435)
8,005
(21,718)
(508,496)
178,917
(150,000)
71,218
-
221,218
At 31 March 2012 the Group UK tax losses to be carried forward are estimated to be £16,504,434
(2011: £14,488,679).
The 2010 Budget announced that the main rate of UK corporation tax was to be reduced from 28% to 24%
between 2011 and 2014. Further reductions were announced in the 2011 and 2012 Budgets, so that the
main rate of corporation tax was reduced to 26% from 1 April 2011, to 24% from 1 April 2012 and with more
reductions planned to reduce the main rate to 22% by 1 April 2014.
The rate change from 26% to 24% had been substantively enacted by the balance sheet date, so deferred
tax is provided for at a rate of 24%.
The other proposed changes had not been substantively enacted by the balance sheet date and it is not yet
possible to quantify the full effect of the announced further 2% rate reduction, although this will further reduce
the company’s future current tax charges and reduce the deferred tax assets accordingly.
Provexis plc Annual report and accounts 2012
37
Notes to the consolidated financial statements continued
8. Taxation (continued)
Income tax asset receivable within one year
Corporation tax recoverable
31 March
2012
£
300,000
300,000
31 March
2011
£
271,220
271,220
9. Loss per share
Basic and diluted loss per share amounts are calculated by dividing the loss attributable to owners of the
parent by the weighted average number of ordinary shares in issue during the period.
There are 94,071,648 share options in issue (2011: 62,471,648) that are all currently anti-dilutive and have
therefore been excluded from the calculations of the diluted loss per share.
Basic and diluted loss per share amounts are in respect of all activities.
Year ended
31 March
2012
Year ended
31 March
2011
Loss for the year attributable to owners of the parent - £
3,873,215
1,984,206
Weighted average number of shares
1,398,837,335
1,150,836,614
Basic and diluted loss per share – pence
0.28
0.17
Provexis plc Annual report and accounts 2012
38
Notes to the consolidated financial statements continued
10. Acquisition
As part of the Group’s strategy to grow through acquisition, on 24 June 2011 the Group acquired 100% of
the share capital of SiS (Science in Sport) Limited, a company which manufactures and sells sports nutrition
products. The principal reason for this acquisition is that it provides immediate revenue and cash flow to the
Group and diversifies the Group’s business model from its existing longer-term technology development and
licensing model. The Group believes it can use its management and technical capabilities to support growth
in the SiS business in the areas of product development, scientific and regulatory expertise and expertise in
the sports nutrition sector.
The purchase has been accounted for under the acquisition method of accounting.
The Group has identified the fair values of the assets acquired and liabilities assumed, including the separate
identification of intangible assets in accordance with IFRS 3 ‘Business Combinations’. This formal process
involves an assessment of the assets acquired and liabilities assumed with assistance provided by external
valuation specialists where appropriate. The assessment period remains open up to a maximum of 12
months from the relevant acquisition date. As at 31 March 2012, the assessment was not complete and
accordingly the fair values presented are provisional.
Adjustments are made to the assets acquired and liabilities assumed during the assessment period to the
extent that further information and knowledge come to light that more accurately reflect conditions at the
acquisition date.
The consideration paid or payable in respect of the acquisition comprises the amount paid on completion and
an amount held in escrow which is contingent on certain warranties and indemnities being satisfied and has
been allocated against the identified net assets, with the balance recorded as goodwill. Transaction costs
and expenses such as professional fees are charged to the Statement of Comprehensive Income.
Goodwill arose on the acquisition of SiS® because the cost of the combination included amounts in relation
to the benefit of expected synergies, revenue growth, future market development and the assembled
workforce of SiS®. These benefits are not recognised separately from goodwill because they do not meet
the recognition criteria for identifiable intangible assets. A summary of the effect of the acquisition is detailed
below:
Website costs capitalised
Trademarks
Patents / recipes / formulations
Covenants not to compete
Customer relationships
Property, plant and equipment
Inventories
Trade and other receivables
Net cash
Trade and other payables
Tax and deferred tax
Goodwill
Consideration
Satisfied by:
cash consideration
non-cash consideration (issue of shares)
cash consideration held in escrow
Net cash acquired
Transaction costs and expenses
Total expected net cost of acquisition
Provexis plc Annual report and accounts 2012
Book value
at
acquisition
£
Provisional
fair value
adjustments
£
16,201
-
-
-
-
140,155
711,010
809,444
213,964
(658,223)
(67,267)
1,165,284
-
1,004,029
180,886
22,480
1,228,696
-
(33,000)
-
-
-
(584,662)
1,818,429
6,750,000
1,000,000
250,000
8,000,000
-
(639,399)*
-
(639,399)
Fair value
£
16,201
1,004,029
180,886
22,480
1,228,696
140,155
678,010
809,444
213,964
(658,223)
(651,929)
2,983,713
4,376,888
7,360,601
6,750,000
360,601
250,000
7,360,601
(213,964)
153,163
7,299,800
39
Notes to the consolidated financial statements continued
10. Acquisition (continued)
The net cash outflow in the period in respect of
acquisitions comprised:
Cash consideration
Net cash acquired
Consideration held in escrow
Net cash outflow in respect of acquisitions
Acquisition related costs recognised as an expense
Total cash outflow in respect of acquisitions
Fair value
£
6,750,000
(213,964)
250,000
6,786,036
153,163
6,939,199
*In accordance with IFRS 3 Business Combinations (revised 2008) the fair value adjustment to consideration
paid in shares is based on the difference between the share price at the date on which the Company
obtained control of SiS and the price determined in the Sale and Purchase Agreement for calculating the
number of shares to be issued to the vendors.
The acquisition made during the year to 31 March 2012 contributed £3.5m to the Group’s revenue and a
£0.7m operating loss to the Group’s loss from operations.
The estimated contribution of Science in Sport to the results of the Group, as if the acquisition had been
made at the beginning of the year, is as follows:
Revenue
Underlying operating loss before amortisation,
exceptional restructuring and acquisition related costs
Loss from operations
£
4,977,156
43,014
576,442
Provexis plc Annual report and accounts 2012
40
Notes to the consolidated financial statements continued
11. Intangible assets
Goodwill
Development
costs
Trademarks
Patents /
recipes /
formulations
Covenants
not to
compete
Customer
relationships
Website
development
costs
Total
£
Cost
At 1 April 2011
Acquisitions
Additions
Disposals
At 31 March 2012
Amortisation and
impairment
At 1 April 2011
Charge for year
Disposals
At 31 March 2012
Net book value
At 31 March 2012
At 31 March 2011
Cost
At 1 April 2010
Additions
At 31 March 2011
Amortisation and
impairment
At 1 April 2010
At 31 March 2011
Net book value
At 31 March 2011
At 31 March 2010
£
£
£
7,265,277
4,376,888
-
-
11,642,165
75,892
-
56,729
-
132,621
-
1,004,029
-
-
1,004,029
-
180,886
-
-
180,886
-
20,696
-
20,696
-
22,480
-
-
22,480
-
5,745
-
5,745
-
1,228,696
-
-
1,228,696
-
16,201
5,627
(12,314)
9,514
7,341,169
6,829,180
62,356
(12,314)
14,220,391
-
99,158
-
99,158
-
4,660
(2,442)
2,218
3,462,592
1,390,638
(2,442)
4,850,788
-
81,027
-
81,027
923,002
-
160,190
-
16,735
-
1,129,538
-
7,296
-
9,369,603
3,878,577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,323,210
17,959
7,341,169
3,462,592
3,462,592
3,878,577
3,860,618
3,462,592
1,140,806
-
4,603,398
7,038,767
3,802,685
7,265,277
-
7,265,277
-
38,546
-
38,546
94,075
75,892
57,933
17,959
75,892
3,462,592
3,462,592
-
-
3,802,685
3,802,685
75,892
57,933
Development costs represent costs incurred in registering patents that meet the capitalisation criteria set out
in IAS 38, see also note 1.
Further detail on the components of acquisition intangibles is provided in Note 10 on page 39.
Provexis plc Annual report and accounts 2012
41
Notes to the consolidated financial statements continued
12. Goodwill and impairment
Goodwill arising on consolidation represents the excess of the cost of an acquisition over the fair value of the
Group’s share of the net assets of the acquired subsidiary at the date of acquisition. The carrying amount of
goodwill is allocated to the cash generating units (CGUs) as follows:
Provexis
SiS
Goodwill carrying amount
2011
£
3,802,685
-
3,802,685
2012
£
2,661,879
4,376,888
7,038,767
During the year the Group took the decision to halt the Crohn’s disease trial and suspend other activity
related to the NSP#3G technology. The Group has fully impaired the goodwill relating to the Crohn’s disease
CGU, given the uncertainty regarding the future cash flows of the CGU, resulting in a non-cash goodwill
impairment charge for the year of £1,140,806 within the Provexis CGU.
The Directors have concluded that no other indication of impairment to goodwill exists because the results of
SiS® have been in line with budget since acquisition, and the Alliance partners have made good progress
with Fruitflow®.
Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual
basis or more frequently if there are indications that goodwill may be impaired.
The recoverable amount of goodwill is determined based on value in use calculations of the cash-generating
units to which it has been allocated.
The major assumptions used in value in use calculations are as follows:
2012
Pre-tax discount rate
Growth rate*
Growth rate in perpetuity
Provexis
%
15.8
2
0
SiS
%
13
10
3
* The growth rate for cash flows from operating activities applies only to the period beyond the formal
budgeted period with the value in use calculation based on an extrapolation of the budgeted cash flows for
year seven for Provexis and year three for SiS.
The key assumptions for the value in use calculations are those regarding discount rates and growth rates.
Management estimate discount rates using pre-tax rates that reflect the current market assessment of the
time value of money and the risks specific to the cash-generating unit. Growth rates are based on
information received from commercial partners and market intelligence reports on expectations of future
changes in the market. The growth rate used in Provexis is below the long-term growth rate for the
Nutraceuticals industry. The growth rate used in SiS is higher than the long-term growth rate for the sports
nutrition market because the Directors believe they can gain market share.
The Directors believe that it is appropriate to use internally approved forecasts for a period of more than the
5 years recommended by IFRS as they consider this will give a more accurate estimate of the likely growth
patterns in the early stages of the product’s life and better reflect the growth of the sports nutrition market
than the application of a single growth rate.
The values used in the Group’s internal forecasts reflect anticipated market developments, following
discussions with prospective customers and suppliers. An element of the risk inherent in the forecast income
streams, which remain subject to contracts being agreed with prospective customers, has been incorporated
in the Group’s pre-tax cash flow projections and discount rates.
The pre-tax discount rate is based on a number of factors including the risk-free rate in the UK, the Group's
estimated market risk premium, and a premium to reflect the inherent risk of the forecast income streams
included in the Group’s cash flow projections, which remain subject to contracts being agreed with
prospective customers.
Provexis plc Annual report and accounts 2012
42
Notes to the consolidated financial statements continued
12. Goodwill and impairment (continued)
The results of the value in use calculations for the CGUs are as follows:
Provexis exceeds its carrying amount by £971,516 (2011: £5,796,075)
SiS exceeds its carrying amount by £442,581 (2011: £Nil)
If any one of the following changes were made to the above key assumptions, the carrying amount and
recoverable amount would be equal:
2012
Pre-tax discount rate
Growth rate
Growth rate in perpetuity
Provexis
%
increase from 15.8% to 18.4%
Not sensitive
Not sensitive
SiS*
%
increase from 13.0% to 13.5%
reduction from 10.0% to 8.3%
reduction from 3% to 2.0%
*The SiS business was acquired during the year and therefore the sensitivity of the key assumptions and
headroom by which the value in use calculations exceeds the carrying amount of the CGU reflects the fact
that there has been limited time to increase the value of the business beyond the acquisition price.
Provexis plc Annual report and accounts 2012
43
Notes to the consolidated financial statements continued
13. Plant and equipment
Leasehold
improvements
Fixtures,
fittings,
plant and
equipment
£
64,598
127,120
220,834
(2,157)
410,395
47,069
44,669
(1,039)
90,699
Laboratory
equipment
Motor
vehicles
Total
£
£
£
128,242
-
18,903
-
147,145
56,002
28,268
-
84,270
-
13,035
-
(1,508)
11,527
-
5,717
(1,508)
4,209
192,840
140,155
458,984
(3,665)
788,314
103,071
89,360
(2,547)
189,884
£
-
-
219,247
-
219,247
-
10,706
-
10,706
208,541
-
319,696
17,529
62,875
72,240
7,318
-
598,430
89,769
Laboratory
equipment
Motor
vehicles
Total
Fixtures,
fittings,
plant and
equipment
£
49,784
15,010
(196)
64,598
39,251
8,014
(196)
47,069
Leasehold
improvements
£
-
-
-
-
-
-
-
-
-
-
£
85,967
42,275
-
128,242
35,318
20,684
-
56,002
17,529
10,533
72,240
50,649
£
-
-
-
-
-
-
-
-
-
-
£
135,751
57,285
(196)
192,840
74,569
28,698
(196)
103,071
89,769
61,182
Cost
At 1 April 2011
Acquisitions
Additions
Disposals
At 31 March 2012
Depreciation
At 1 April 2011
Charge for the year
Disposals
At 31 March 2012
Net book value
At 31 March 2012
At 31 March 2011
Cost
At 1 April 2010
Additions
Disposals
At 31 March 2011
Depreciation
At 1 April 2010
Charge for the year
Disposals
At 31 March 2011
Net book value
At 31 March 2011
At 31 March 2010
Provexis plc Annual report and accounts 2012
44
Notes to the consolidated financial statements continued
14. Inventories
Raw materials
Finished goods
31 March
2012
£
351,744
284,027
635,771
31 March
2011
£
-
-
-
There is £61,103 included within inventories in relation to assets held at fair value less costs to sell acquired
with SiS. During the year inventories of £1,252,233 were recognised as an expense within cost of sales.
15. Trade and other receivables
Amounts receivable within one year:
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables - net
Other receivables
Total financial assets other than cash and cash equivalents classified
as loans and receivables
Prepayments and accrued income
Total trade and other receivables
31 March
2012
£
31 March
2011
£
600,649
(32,101)
568,548
178,571
747,119
187,654
934,773
48,708
-
48,708
39,862
88,570
164,679
253,249
Trade receivables represent debts due for the sale of goods to customers. The provision for impairment of
receivables is estimated by the Group’s management based on prior experience.
The balance at 31 March 2012 of £934,773 is £682,524 greater than the prior year due predominantly to the
incorporation of SiS net trade receivables of £568,548.
Trade receivables are denominated in Sterling. The Directors consider that the carrying amount of these
receivables approximates to their fair value. Trade and other receivables are categorised as loans and
receivables under IAS 39.
All amounts shown under receivables fall due for payment within one year.
At 31 March 2012, £476,551 (March 2011: £Nil) of trade receivables had been sold to a provider of invoice
discounting and debt factoring services. The Group is committed to underwrite any of the debts transferred
and therefore continues to recognise the debts sold within trade receivables until the debtors repay or
default.
The Group does not hold any collateral as security.
As at 31 March 2012 trade receivables of £154,902 (2011: £48,708) were past due but not impaired. They
relate to customers with no default history. The ageing analysis of these receivables is as follows:
Up to 3 months
31 March
2012
£
154,902
154,902
31 March
2011
£
48,708
48,708
As at 31 March 2012 trade receivables of £32,101 (2011: £Nil) were past due and impaired. The amount of
the provision as at 31 March was £32,101 (2011: £Nil).
Provexis plc Annual report and accounts 2012
45
Notes to the consolidated financial statements continued
15. Trade and other receivables (continued)
Movements on the group provision for impairment of trade receivables are as follows
At beginning of the year
Provided during the year
Receivable written off during the year as uncollectible
Unused amounts reversed
31 March
2012
£
31 March
2011
£
-
32,101
-
-
32,101
-
-
-
-
-
The movement on the provision for impaired receivables has been included in administrative expenses in the
consolidated statement of comprehensive income.
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
16. Cash and cash equivalents
Cash at bank and in hand
17. Trade and other payables
Trade payables
Other payables
Accruals
Total financial liabilities measured at amortised cost
Other taxes and social security
Total trade and other payables
31 March
2012
£
31 March
2011
£
1,447,405
1,447,405
7,551,505
7,551,505
31 March
2012
£
894,535
43,341
513,377
1,451,253
90,586
1,541,839
31 March
2011
£
91,529
-
409,285
500,814
62,376
563,190
The Directors consider that the carrying amount of these liabilities approximates to their fair value.
All amounts shown fall due within one year.
18. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 24%
(2011: 26%).
Details of the deferred tax asset and liability, amounts recognised in profit or loss and amounts recognised in
other comprehensive income are as follows:
Asset
2012
£
Liability
2012
£
Net
2012
£
(Charged) /
credited to
profit or
loss
2012
£
(Charged) /
credited to
equity
2012
£
Business combinations
Available losses
Net tax assets / (liabilities)
-
128,948
128,948
(535,072)
-
(535,072)
(535,072)
128,948
(406,124)
49,590
128,948
178,538
Provexis plc Annual report and accounts 2012
-
-
-
46
Notes to the consolidated financial statements continued
18. Deferred tax (continued)
A deferred tax asset of £128,948 (2011:£Nil) has been recognised in respect of tax losses in SiS and other
temporary differences giving rise to deferred tax assets where the directors believe it is probable that these
assets will be recovered. The Directors have made this assessment based on the evidence available from
projected budgets, forecasts of profitability and post year end profitability of the entity.
Deferred tax assets amounting to £4,199,712 (2011: £4,093,379) have not been recognised on the basis that
their future economic benefit is not certain. Assuming a prevailing tax rate of 24% (2011: 26%) when the
timing differences reverse, the unrecognised deferred tax asset comprises:
Depreciation in excess of capital allowances
Other short term timing differences
Unutilised tax losses
Share-based payments
Year ended
31 March
2012
£
Year ended
31 March
2011
£
38,846
7,314
3,832,116
321,436
4,199,712
4,324
6,773
3,767,057
315,225
4,093,379
Provexis plc Annual report and accounts 2012
47
Notes to the consolidated financial statements continued
19. Share capital
On 8 November 2011 the Company announced that it had signed a new 3 year Equity Financing Facility
(“EFF”) of up to £25m with Darwin Strategic Limited (“Darwin”). The new facility replaced the Company's
existing EFF and warrant agreements with Darwin, dated 30 March 2010, which have accordingly been
cancelled.
The EFF agreement provides the Company with a facility which (subject to certain limited restrictions) can be
drawn down at any time over the 3 years ending on 6 November 2014. The timing and amount of any draw
down is at the discretion of Provexis. Provexis is under no obligation to make a draw down and may make as
many draw downs as its wishes, up to the total value of the EFF, by way of issuing subscription notices to
Darwin. Following delivery of a subscription notice, Darwin will subscribe and Provexis will allot to Darwin
new ordinary shares of 0.1p each (“Ordinary Shares”).
The subscription price for any Ordinary Shares to be subscribed by Darwin under a subscription notice will
be at a 7.5% discount to an agreed reference price determined during 5, 10 or 15 trading days following
delivery of a subscription notice (the “Pricing Period”). The length of the Pricing Period is at the discretion of
Provexis and is set at each relevant subscription notice. Provexis is also obliged to specify in each
subscription notice a minimum price below which Ordinary Shares will not be issued.
Warrant reserve
In consideration of Darwin agreeing to provide the EFF the Company has entered into a new warrant
agreement dated 7 November 2011 for the grant to Darwin of warrants to subscribe for up to ten million
Ordinary Shares, such warrants to be exercisable at a price of 5 pence per share and to be exercisable at
any time prior to the expiry of 36 months following the date of the new warrant agreement. The ten million
warrants issued to Darwin in conjunction with the March 2010 EFF have been cancelled.
The warrants were measured at fair value at the date of grant using a Black-Scholes model, with the
following assumptions:
Date of
grant
Exercise
price
Number of
warrants
pence
Share
price at
grant date
pence
Expected
volatility
Risk free
rate
Expected
life
years
Fair value
per share
under
warrant
pence
7-Nov-11
5.0 10,000,000
2.0
75%
3.00%
3
0.6
An expected dividend yield of 0% was used in the above valuation.
The assumption made for the expected life of the warrants is not necessarily indicative of the exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility
is indicative of future trends, which may not necessarily be the actual outcome.
The total fair value of the warrants, £60,000, has been held on the balance sheet within prepayments and in
the warrants reserve within equity. The prepayment will be released against share premium as the equity
financing facility is utilised. The warrants reserve will be released to share premium when the warrants are
exercised. If the warrants lapse then the reserve is transferred to retained earnings.
Darwin or the Company may terminate the EFF in specified circumstances. The issue of subscription notices
is subject to specified pre-conditions. The Company has provided warranties and indemnities to Darwin and
affiliated persons. If the aggregate price paid for the Ordinary Shares allotted under the EFF by the second
anniversary of the EFF is not equal to or more than two and a half million pounds (subject to certain
exceptions), or if the EFF is terminated by Darwin in certain circumstances, then the Company will be
required to pay a fee to Darwin amounting to a maximum of £125,000 in cash or by an issue of fully paid
Ordinary Shares at the company’s discretion (such fee reducing pro rata with reference to the aggregate
price paid for the Ordinary Shares allotted under the EFF at the date the fee becomes payable).
Provexis plc Annual report and accounts 2012
48
Notes to the consolidated financial statements continued
19. Share capital (continued)
Share re-organisation
In August 2008, to facilitate a share placing, the company undertook a share re-organisation when It was
agreed to sub-divide:
each of the 401,724,366 then issued existing ordinary shares of 1p each in the capital of the Company
into one new ordinary share of 0.1p and one Deferred Share of 0.9p; and
each of the 148,275,634 unissued ordinary shares of 1p each into 10 new ordinary shares of 0.1p each,
The share re-organisation was approved at an EGM on 26 August 2008.
The rights attached to the new ordinary shares are substantially the same as the rights attached to the
original, pre placing ordinary shares. The Deferred Shares have very limited rights which are deferred to the
new ordinary shares and effectively carry no value as a result. Accordingly, the holders of the Deferred
Shares are not entitled to receive notice of, attend or vote at general meetings of the Company; nor be
entitled to receive any dividends or any payment on a return of capital until at least £10,000,000 has been
paid on each new ordinary share. No application will be made for the Deferred Shares to be admitted to
trading on AIM. No certificates for the Deferred Shares will be issued.
Full details of the share re-organisation were provided in a circular to shareholders on 1 August 2008. The
circular is available to download from the Company’s website www.provexis.com.
Allotted, called up and fully paid
At 31 March 2011
Issued on exercise of share options
Issued on acquisition
Issued on placing
Issued on open offer
At 31 March 2012
At 31 March 2011
Issued on exercise of share options
Issued on acquisition
Issued on placing
Issued on open offer
At 31 March 2012
Allotted, called up and fully paid
At 31 March 2010
Issued on subscription
At 31 March 2011
At 31 March 2010
Issued on subscription
At 31 March 2011
Ordinary
0.1p shares
number
Deferred
0.9p shares
number
Total
number
1,196,516,929
3,000,000
35,335,689
166,666,662
68,312,935
1,469,832,215
401,724,366
-
-
-
-
401,724,366
1,598,241,295
3,000,000
35,335,689
166,666,662
68,312,935
1,871,556,581
Ordinary
0.1p shares
£
Deferred
0.9p shares
£
1,196,517
3,000
35,336
166,667
68,313
1,469,833
3,615,519
-
-
-
-
3,615,519
Ordinary
0.1p shares
number
Deferred
0.9p shares
number
Total
£
4,812,036
3,000
35,336
166,667
68,313
5,085,352
Total
number
1,108,081,929
88,435,000
1,196,516,929
401,724,366
-
401,724,366
1,509,806,295
88,435,000
1,598,241,295
Ordinary
0.1p shares
£
Deferred
0.9p shares
£
Total
£
1,108,082
88,435
1,196,517
3,615,519
-
3,615,519
4,723,601
88,435
4,812,036
Provexis plc Annual report and accounts 2012
49
Notes to the consolidated financial statements continued
19. Share capital (continued)
During the year ended 31 March 2012 the Company issued ordinary shares of 0.1p each as follows:
Date
Reason for issue
24.06.11
24.06.11
27.07.11
13.12.11
Acquisition
Placing
Open offer
Exercise of share options
Shares issued
£
35,336
166,667
68,313
3,000
273,316
Number
35,335,689
166,666,662
68,312,935
3,000,000
273,315,286
During the year ended 31 March 2011 the Company issued ordinary shares of 0.1p each as follows:
Date
Reason for issue
22.06.10
04.10.10
Share subscription
Share subscription
Shares issued
£
2,135
86,300
88,435
Number
2,135,000
86,300,000
88,435,000
20. Share options
In June 2005 the Company adopted a new share option scheme for employees (”the Provexis 2005 share
option scheme”). Under the scheme, options to purchase ordinary shares are granted by the Board of
Directors, subject to the exercise price of the option being not less than the market value at the grant date.
The options typically vest after a period of 3 years and the vesting schedule is subject to predetermined
overall company selection criteria. In the event that the option holder’s employment is terminated, the option
may not be exercised unless the Board of Directors so permits. The options expire 10 years from the date
of grant.
The Company undertook a reverse takeover of Provexis Natural Products Limited (“PNP”, formerly Provexis
Limited) in June 2005 through a share for share exchange. Prior to the takeover the Company and PNP had
granted EMI options and unapproved options. Options granted by the Company prior to the takeover remain
subject to the same terms as contained in the individual share option contracts under which they were
originally granted. The PNP EMI options and unapproved options were rolled over into options over the
Company’s ordinary shares, and these replacement options remain subject to the same terms as contained
in the individual PNP share option contracts under which they were originally granted.
On 1 September 2008 the Company announced that further to an announcement on 1 August 2008 the
Company's Remuneration Committee had approved the grant of options over 62,471,648 ordinary shares of
0.1p each to certain Directors and employees of the Company. As a condition of the grant of options, certain
Directors surrendered 19,089,110 existing options and an additional 3,709,384 existing options were
surrendered by other existing employees.
On 15 October 2009 the Company’s Remuneration Committee modified the Performance Period and
Performance Target of share options over 62,471,648 ordinary shares of 0.1p each held by the Executive
Directors and employees of the Company.
Following the changes agreed to the Performance Period and Performance Target, share options over
27,305,073 ordinary shares of 0.1p each held by certain Directors and employees of the Company vested on
15 October 2009. Share options over 35,166,575 ordinary shares of 0.1p each held by certain Directors and
employees of the Company vested on 1 April 2011.
On 17 June 2011 the Company announced that the Company's Remuneration Committee had approved the
grant of options over 51,300,000 ordinary shares of 0.1p each to certain Directors and employees of the
Company. Subsequently 16,700,000 of these options were cancelled.
On 4 July 2011 the Company announced that the Company's Remuneration Committee had approved the
grant of options over 10,000,000 ordinary shares of 0.1p each to certain Directors and employees of the
Company. Subsequently these options were cancelled.
Provexis plc Annual report and accounts 2012
50
Notes to the consolidated financial statements continued
20. Share options (continued)
At 31 March 2012 the number of ordinary shares subject to options granted over the 2005 and prior option
schemes were:
EMI options
Weighted
average
exercise
price
(pence)
31 March 2012
Weighted
average
share price
at date of
exercise
(pence)
31 March 2011
Number
Number Weighted
average
exercise
price
(pence)
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Cancelled during the year
Outstanding at the end of the year
1.07
2.80
0.90
2.80
1.42
-
-
1.78
-
-
51,552,031
27,949,990
(3,000,000)
(16,700,000)
59,802,021
1.07
-
-
-
1.07
51,552,031
-
-
-
51,552,031
The exercise price of EMI options outstanding at the end of the year ranged between 0.9p and 6.28p
(2011: 0.9p and 6.28p) and their weighted average contractual life was 6.9 years (2011: 7.3 years).
Of the total number of EMI options outstanding at the end of the year, 37,385,456 (2011: 23,709,976) had
vested and were exercisable at the end of the year. Their weighted average exercise price was 1.16 pence
(2011: 1.27 pence).
Unapproved options
31 March 2012
Weighted
average
exercise price
(pence)
Number
31 March 2011
Number
Weighted
average
exercise
price
(pence)
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Cancelled during the year
Outstanding at the end of the year
1.18 10,919,617
2.80 23,350,010
-
-
2.28 34,269,627
-
-
1.18
-
-
-
1.18
10,919,617
-
-
-
10,919,617
The exercise price of unapproved options outstanding at the end of the year ranged between 0.9p and 6.28p
(2011: 0.9p and 6.28p) and their weighted average contractual life was 8 years (2011: 7.3 years).
Of the total number of unapproved options outstanding at the end of the year, 10,919,617 (2011: 3,595,097)
had vested and were exercisable at the end of the year. Their weighted average exercise price was 1.18
pence (2011: 1.7 pence).
Provexis plc Annual report and accounts 2012
51
Notes to the consolidated financial statements continued
20. Share options (continued)
Grant of options
The fair values of the options have been estimated at the date of grant using a Black-Scholes model, using
the following assumptions:
Tranche
Date of
grant
Exercise
price
Number of
options
pence
1
2
3
4
5
06-Jun-07
29-Nov-07
26-Aug-08
01-Oct-08
17-Jun-11
3.38
2.875 17,304,347
2,751,479
0.9 44,166,575
0.9 12,000,000
2.8 51,300,000
Share
price at
grant
date
pence
2.75
3.00
0.87
0.725
2.00
Expected
volatility
Risk free
rate
Expected
life
Fair value
per share
under
option
78%
65%
65%
65%
88%
4.44%
3.77%
4.45%
4.39%
4.48%
years
pence
10
10
10
10
10
1.42
1.06
0.585
0.485
1.17
An expected dividend yield of 0% has been used in all of the above valuations.
The expected life of the options is based on historical data and is not necessarily indicative of the exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility
is indicative of future trends, which may not necessarily be the actual outcome.
total charge
The
(2011: £69,069) all of which related to equity settled share-based payment transactions.
the year relating
to employee share-based payment plans was £141,461
for
The Company carried out a share re-organisation on 28 August 2008, which is further detailed in note 19 to
the consolidated financial statements on page 49.
Share options which had been granted prior to 28 August 2008 over existing ordinary shares with a nominal
value of 1p each in the capital of the Company became options over new ordinary shares with a nominal
value of 0.1p each in the capital of the Company. The options remain subject to the same terms as contained
in the individual option contracts under which they were originally granted.
Share options issued after 28 August 2008 are options over new ordinary shares with a nominal value of
0.1p each in the capital of the Company.
Provexis plc Annual report and accounts 2012
52
Notes to the consolidated financial statements continued
21. Reserves
Share
premium
reserve
Warrant
reserve
Merger
reserve
Retained
earnings
£
£
£
£
14,527,277
-
-
2,382,373
16,909,650
-
-
-
2,333,333
(199,380)
956,381
(37,539)
24,000
115,980
-
-
-
115,980
-
-
-
-
-
-
-
-
12,387
(115,980)
-
60,000
6,273,909
-
-
-
6,273,909
-
-
325,265
-
-
-
-
-
-
-
(14,578,849)
(1,984,206)
69,069
-
(16,493,986)
(3,873,215)
141,461
-
-
-
-
-
-
-
-
Total
attributable
to equity
holders of
the parent
£
6,338,317
(1,984,206)
69,069
2,382,373
6,805,553
(3,873,215)
141,461
325,265
2,333,333
(199,380)
956,381
(37,539)
24,000
(103,593)
60,000
Total reserves
Non-
controlling
interest
£
£
-
(136,459)
-
-
(136,459)
(82,273)
-
-
-
-
-
-
-
-
6,338,317
(2,120,665)
69,069
2,382,373
6,669,094
(3,955,488)
141,461
325,265
2,333,333
(199,380)
956,381
(37,539)
24,000
(103,593)
60,000
19,998,832
60,000
6,599,174
(20,225,740)
6,432,266
(218,732)
6,213,534
-
shares
At 31 March 2010
Loss for the year
Share-based charges
Issue
of
subscription
At 31 March 2011
Loss for the year
Share-based charges
Issue of shares - acquisition
Issue of shares - placing
Issue costs - placing
Issue of shares - open offer
Issue costs - open offer
Issue of shares - exercise of
share options
Warrants cancelled during
the year - equity financing
facility
Warrants issued during the
year
financing
facility
At 31 March 2012
- equity
The following describes the nature and purpose of each reserve within total equity:
Share capital
Share premium
Warrant reserve
Merger reserve
Retained earnings
Amount subscribed for share capital at nominal value.
Amount subscribed for share capital in excess of nominal value.
The warrant reserve arose in March 2010 when the Group issued warrants to
Evolution Securities Limited as part of the Equity Financing Facility (see Note 19).
These warrants were cancelled and new warrants were issued to Darwin Strategic
Limited on the renewal of the Equity Financing Facility in November 2011.
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.
Cumulative net gains and losses recognised in the consolidated statement of
comprehensive income.
22. Pension costs
The pension charge represents contributions payable by the Group to independently administered funds
which during the year ended 31 March 2012 amounted to £42,434 (2011: £37,370). Pension contributions
payable but not yet paid at 31 March 2012 totalled £30,474, in respect of pension contribution entitlements
where employees had not yet provided details of the funds to which the contributions should be made (2011:
£26,051).
23. Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases are as follows:
Due within 1 year
Due between 1 year and 2 years
Due between 2 years and 5 years
31 March
2012
£
146,456
152,500
372,500
671,456
31 March
2011
£
90,500
-
-
-
Operating lease payments represent rentals payable by the Group for various offices. The leases have
various terms, escalation clauses and renewal rights typical of lease agreements for the class of asset.
Provexis plc Annual report and accounts 2012
53
Notes to the consolidated financial statements continued
24. Related party transactions
On 1 June 2010 the Company announced a long-term Alliance Agreement with DSM Nutritional Products,
which has seen the Company collaborate with DSM to develop Fruitflow® in all major global markets. DSM
will invest substantially in the manufacture, technology development, marketing and sale of Fruitflow® in the
coming years. Provexis will continue to contribute scientific expertise and will collaborate in areas such as
cost of goods optimisation and regulatory matters. The financial model is based upon the division of profits
between the two partners on an agreed basis, linked to certain revenue targets, following the deduction of
the cost of goods and a fixed level of overhead from sales. The Company is working closely with DSM in
various areas of the project. It is not possible to determine the financial impact of the Alliance Agreement at
this time.
DSM is classified as a related party of the Group in accordance with IAS 24 as it holds shares in the Group.
Further, K Rietveld is a director of the Company, and a senior employee of DSM. The directors of Provexis
(the "Directors"), having consulted with Cenkos Securities Limited ("Cenkos Securities"), the Company's
nominated adviser, consider that the terms of the Alliance Agreement are fair and reasonable insofar as
Provexis's shareholders are concerned. In providing advice to the Directors, Cenkos Securities has taken
into account the Directors' commercial assessments.
Key management compensation
The Directors represent the key management personnel. Details of their compensation and share options are
given in note 6 and within the Remuneration report on pages 14 to 18.
Provexis plc Annual report and accounts 2012
54
Parent company balance sheet
Company number 05102907
Fixed assets
Investments
Current assets
Debtors - due within one year
Debtors - due after one year
Total debtors
Cash and cash equivalents
Total current assets and net current assets
Total assets
Creditors: amounts falling due after more than
one year
Net assets
Capital and reserves
Share capital
Share premium reserve
Warrant reserve
Retained earnings
Equity shareholders’ funds
Notes
3
4
4
5
6
8
9
9
9
10
As at
31 March
2012
£
As at
31 March
2011
£
8,151,922
1,117,336
60,000
103,593
5,206,256 10,143,754
5,266,256 10,247,347
7,508,925
1,151,476
6,417,732 17,756,272
14,569,654 18,873,608
(239,896)
(2,900,418)
14,329,758
15,973,190
5,085,352
4,812,036
19,998,832 16,909,650
115,980
60,000
(5,864,476)
(10,814,426)
14,329,758 15,973,190
These financial statements were approved and authorised for issue by the Board on 31 July 2012.
The notes on pages 56 to 59 form part of these parent company financial statements.
Stephen Moon
Director
Ian Ford
Director
On behalf of the Board of Provexis plc
Provexis plc Annual report and accounts 2012
55
Notes to the parent company financial statements
1. Accounting policies
The parent company financial statements have been prepared under the historical cost convention and in
accordance with applicable United Kingdom Accounting Standards.
Share-based employee remuneration
The Company has no employees however the Company will issue shares to satisfy share awards made by
its subsidiary companies. The Company records a management charge equivalent to the fair value of the
share-based payment incurred by its subsidiaries as disclosed in note 9 on page 59.
Taxation
Current tax, including UK corporation tax is provided at amounts expected to be paid (or recovered) using
the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax balances are recognised in respect of all timing differences that have originated but not
reversed by the balance sheet date, except that the recognition of deferred tax assets is limited to the extent
that the Company anticipates making sufficient taxable profits in the future to absorb the reversal of the
underlying timing differences. Deferred tax balances are not discounted.
Valuation of investments
Investments are stated at cost less any provision for impairment. Profits or losses arising from disposals of
fixed asset investments are treated as part of the result from ordinary activities.
Warrants
The Group has issued warrants to Darwin Strategic Limited as part of the Equity Financing Facility. These
warrants have been measured at fair value at the date of grant using an appropriate options pricing model.
This fair value has been held on the balance sheet within prepayments and in the warrants reserve within
equity. The prepayment will be released against share premium as the equity financing facility is utilised. The
warrants reserve will be released to share premium when the warrants are exercised. If the warrants lapse
then the reserve is transferred to retained earnings.
2. Profit attributable to shareholders
As permitted by Section 408 of the Companies Act 2006 no separate Company profit and loss account has
been included in these financial statements. The Group loss for the year includes a loss after tax of
£5,091,411 (2011: £64,065) which is dealt with in the financial statements of the Company. The total fees of
the Group’s auditor, BDO LLP, for services provided are analysed in note 4 to the consolidated financial
statements on page 35. Total fees for the year were £138,000 (2011: £68,800).
The parent company did not have any employees in the year and therefore there were no payroll costs or
pension costs (2011: Nil).
Provexis plc Annual report and accounts 2012
56
Notes to the parent company financial statements continued
3. Investments
Cost
Provision for impairment
Net book value
31 March
2012
£
8,418,255
(266,333)
8,151,922
31 March
2011
£
1,382,919
(265,583)
1,117,336
At 31 March 2012 the Company owned the following material subsidiary undertakings:
Share of issued
ordinary share
capital, and voting
rights
Country of
incorporation and
operation
Business activity
Provexis Nutrition Limited
100%
England and Wales
Provexis Natural Products Limited
100%
England and Wales
Provexis (IBD) Limited
75%
England and Wales
SiS (Science in Sport) Limited
100%
England and Wales
Functional food,
medical food and
dietary supplement
technologies
Functional food,
medical food and
dietary supplement
technologies
Functional food,
medical food and
dietary supplement
technologies
Sports nutrition
There are no significant restrictions on the ability of subsidiary undertakings to transfer funds to the parent,
other than those imposed by the Companies Act 2006.
4. Debtors
Debtors falling due within one year
Prepayments
Total debtors falling due within one year
Debtors falling due after one year
Amounts owed by subsidiaries
Total debtors falling due after one year
31 March
2012
£
31 March
2011
£
60,000
60,000
103,593
103,593
5,206,256
5,206,256
10,143,754
10,143,754
Total debtors
5,266,256
10,247,347
5. Cash and cash equivalents
Cash at bank and in hand
31 March
2012
£
1,151,476
1,151,476
31 March
2011
£
7,508,925
7,508,925
Provexis plc Annual report and accounts 2012
57
Notes to the parent company financial statements continued
6. Creditors: amounts falling due after one year
Creditors falling due after one year
Amounts owed to subsidiaries
Total creditors falling due after one year
31 March
2012
£
(239,896)
(239,896)
31 March
2011
£
2,900,418
2,900,418
7. Deferred tax
Deferred tax assets amounting to £257,959 (2011: £227,205) have not been recognised on the basis that
their future economic benefit is not certain.
8. Share capital
Allotted, called up and fully paid
At 31 March 2011
Issued on exercise of share options
Issued on acquisition
Issued on placing
Issued on open offer
At 31 March 2012
At 31 March 2011
Issued on exercise of share options
Issued on acquisition
Issued on placing
Issued on open offer
At 31 March 2012
Allotted, called up and fully paid
At 31 March 2010
Issued on subscription
At 31 March 2011
At 31 March 2010
Issued on subscription
At 31 March 2011
Ordinary
0.1p shares
number
Deferred
0.9p shares
number
Total
number
1,196,516,929
3,000,000
35,335,689
166,666,662
68,312,935
1,469,832,215
401,724,366
-
-
-
-
401,724,366
1,598,241,295
3,000,000
35,335,689
166,666,662
68,312,935
1,871,556,581
Ordinary
0.1p shares
£
Deferred
0.9p shares
£
1,196,517
3,000
35,336
166,667
68,313
1,469,833
3,615,519
-
-
-
-
3,615,519
Ordinary
0.1p shares
Number
Deferred
0.9p shares
number
Total
£
4,812,036
3,000
35,336
166,667
68,313
5,085,352
Total
number
1,108,081,929
88,435,000
1,196,516,929
401,724,366
-
401,724,366
1,509,806,295
88,435,000
1,598,241,295
Ordinary
0.1p shares
£
Deferred
0.9p shares
£
Total
£
1,108,082
88,435
1,196,517
3,615,519
-
3,615,519
4,723,601
88,435
4,812,036
Details of the share subscriptions, share placings, and the shares issued by the Company during the two
years ended 31 March 2012 are given in note 19 to the consolidated financial statements on pages 48 to 50.
Details on the share option scheme and share based payment charge for the year are given in note 20 to the
consolidated financial statements on page 50.
Provexis plc Annual report and accounts 2012
58
Notes to the parent company financial statements continued
9. Reserves
Share
premium
reserve
£
Warrant
reserve
Retained
earnings
£
£
At 1 April 2011
Retained loss for the year
Share-based charges
Issue of shares - placing
Issue of shares - open offer
Issue of shares - exercise of share options
Warrants cancelled on renewal of EFF 8 November 2011
Warrants issued on renewal of EFF 8 November 2011
At 31 March 2012
16,909,650
-
-
2,133,953
918,842
24,000
12,387
-
19,998,832
115,980
-
-
-
-
-
(115,980)
60,000
60,000
(5,864,476)
(5,091,411)
141,461
-
-
-
-
-
(10,814,426)
10. Shareholders’ funds
Reconciliation of movement in shareholders’ funds.
Loss for year
Share-based payment charge (note 20 - page 52)
Shares issued during the year
Premium on shares issued
Reduction of premium on share issue
Warrants cancelled on renewal of EFF 8 November 2011
Warrants issued on renewal of EFF 8 November 2011
Net (decrease) / increase in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
31 March
2012
£
(5,091,411)
141,461
273,316
3,076,795
-
(103,593)
60,000
(1,643,432)
15,973,190
14,329,758
31 March
2011
£
(64,065)
69,070
88,435
2,394,759
(12,386)
-
-
2,475,813
13,497,377
15,973,190
11. Related party transactions
The Company has taken advantage of the exemption conferred by Financial Reporting Standard 8 “Related
party disclosures” not to disclose transactions with 100% owned members of the Group headed Provexis plc
on the grounds that 100% of the voting rights of the Company are controlled within that Group.
Provexis (IBD) Limited is 75% owned by Provexis plc and 25% owned by Ulive Enterprises Limited. Ulive
Enterprises Limited is 75% owned by The University of Liverpool.
Provexis plc wholly owns Provexis Nutrition Limited, SiS (Science in Sport) Limited and Provexis Natural
Products Limited. Provexis Nutrition Limited, Provexis Natural Products Limited, SiS (Science in Sport)
Limited and Provexis (IBD) Limited are under the common control of Provexis plc.
The Company did not trade with Provexis (IBD) Limited during the year ended 31 March 2012 (2011: Nil). At
31 March 2012 the Company was owed £5,509 by Provexis (IBD) Limited (31 March 2011: owed £5,509).
Provexis (IBD) Limited does not have a bank account, and all its cash accounting transactions during the
year were processed by Provexis plc and Provexis Natural Products Limited (“Provexis group companies”).
Amounts transacted by Provexis (IBD) Limited with Provexis group companies are charged through inter
company accounts and the net amount transacted during the year was £329,091 (2011: £545,838). Provexis
(IBD) Limited owed Provexis group companies and Provexis Nutrition limited a total of £1,755,684 at 31
March 2012 (31 March 2011: owed £1,426,593). Provisions of £1,755,684 (2011: £Nil) have been
recognised in the accounts of Provexis group companies and Provexis Nutrition Limited.
Details of a related party transaction with DSM are given in note 24 to the consolidated financial statements
on page 54.
Provexis plc Annual report and accounts 2012
59
Company information
Company number
05102907
Directors
Audit committee
Remuneration committee
Registrars
Secretary and registered office
Nominated adviser and broker
Principal solicitors
Auditors
C D Buck
J M Clarke
K Rietveld
S N Moon
I Ford
C D Buck
J M Clarke
C D Buck
J M Clarke
K Rietveld
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
I Ford
Kings Road House
2 Kings Road
Windsor
Berkshire SL4 2AG
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Shoosmiths
Apex Plaza
Forbury Road
Reading
Berkshire RG1 1SH
BDO LLP
Kings Wharf
20–30 Kings Road
Reading
Berkshire RG1 3EX
Provexis plc Annual report and accounts 2012
60