Pyxis Tankers Annual Report 2013

Plain-text annual report

Provexis plc Annual report and accounts 2013 Company number 05102907 P r o o f 1 : 2 8 . 6 . 1 3 Contents 1 2 3 4 6 8 14 18 20 21 22 23 24 53 54 58 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 SiS1 into the leader in elite endurance sports nutrition in major global markets; Collaborate closely with Alliance partner DSM Nutritional Products to maximise the commercial success of Fruitﬂow1 globally; Underpin the competitiveness of capability; and these revenue streams with scientiﬁc excellence and regulatory 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 2013 1 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Key highlights Key highlights * * * * * * * * * * * * Science in Sport generated revenues of £5.52m in the year, in line with management expectations, representing like for like revenue growth of 11% compared to the same period last year, with growth in the second half being 17%; Substantial including support for marketing, sales and e-commerce; investment made in SiS1 in order to execute the Board’s growth plan for FY2012/13, Gross margin for SiS1 improved by 6% as a result of initiatives; factory efﬁciencies and cost saving Further progress with proprietary Fruitﬂow1 heart health technology, partner DSM, with 17 branded consumer products now on sale in various global markets; in conjunction with Alliance Powder format of Fruitﬂow1, suitable for dietary supplements, now fully commercialised, with 4 of the 17 products in market using this format and strong interest from potential customers; Successful efforts to control costs across the Group, along with revenue growth, resulting in a 50% reduction in underlying operating loss*; and Equity ﬁnancing facility to drawdown £244k in May to support our innovation programme, further £541k drawdown in September to meet the increasing working capital needs of the growing SiS1 business. Key ﬁnancial results Revenues £5.56m (2012: £3.48m). Underlying operating loss* reduced to £1.09m (2012: £2.18m); Statutory operating loss £4.66m (2012: £4.33m); statutory loss attributable to owners of the parent £4.34m (2012: £3.87m). These losses are after charging £3.07m (2012: £1.39m) of non-cash amortisation and impairment charges, £0.31m (2012: £0.46m) of restructuring costs and a £0.18m (2012: £0.14m) non-cash share based payment charge. Cash balance at 31 March 2013 £0.62m (2012: £1.45m). Loss per share 0.29p (2012: 0.28p). *before impairment and amortisation of intangible assets, share based payments and exceptional costs of £3.56m (2012: £2.15m), as set out on the face of the Consolidated Statement of Comprehensive Income Provexis plc Annual report and accounts 2013 2 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Chairman’s statement The past year has seen substantial progress across the Group as a result of our clear focus on the strategic objectives of developing revenues from our Fruitﬂow1 and SiS1 assets, together with reducing costs and seeking efﬁciencies. SiS1 delivered revenues in line with our expectations and while the summer of 2012 was challenging due to historically poor weather and adverse trading conditions, we ﬁnished the year very strongly and have carried this momentum into the new ﬁnancial year. Investment in all our key growth drivers has seen a good return, with the areas of sales excellence, and e-commerce staff and infrastructure having received major focus. The new factory has developed well during the year and is now in a position to effectively meet the growing demand of the SiS1 business. We continue to develop new SiS1 products both in-house and in collaboration with strategic partners, and we believe this to be a key competitive advantage for us. The completion of a commercially viable powder version of Fruitﬂow1 in the ﬁnal quarter of the year was an important milestone for our collaboration with DSM, given feedback from potential customers in the global dietary supplement sector. DSM have brought 17 products to market in conjunction with their international consumer brand customers, and are seeing strong interest in all major global markets for the powder version of Fruitﬂow1. We have focused strongly on controlling the cost base of the business and the results of this are evident given the 50% reduction in underlying operating losses for the Group. We will continue to seek further savings and efﬁciencies in the coming months, and since the year end we have closed our R&D facility at the University of Aberdeen as part of this drive. With the investment cycle for Fruitﬂow1 now complete, and given ongoing cost reduction initiatives, the Board also propose the demerger of SiS1 from the Group, in order to optimise the future prospects of both of our revenue generating assets. The details of the proposed demerger are set out in a separate circular and announcement. Shareholders will receive one share in the new SiS1 business for each 100 Provexis shares already owned, allowing investors the ﬂexibility to participate in the growth story for either or both of our revenue generating assets. The demerger will also see a share placing to capitalise the new SiS1 business and to fund its growth strategy. I would like to thank the executive team and all of our staff and advisors for their high levels of commitment and professionalism, not only in developing the business, but in putting in place the strategy to demerge SiS1 from the Group in order to deliver value for shareholders. Dawson Buck Chairman Provexis plc Annual report and accounts 2013 3 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Chief Executive’s statement Strategy Our strategic priority for the year was to focus on developing revenues from the SiS1 business, and the Fruitﬂow1 technology together with our Alliance partner DSM. In addition, further efforts to reduce costs across the Group were a parallel strategic activity. We believe we have succeeded in all three areas, with strong revenue growth from SiS1, good progress with Fruitﬂow1 in bringing a powder version to market, and wide ranging cost reductions reﬂected in the 50% reduction in underlying operating loss for the Group. in conjunction with the Board, a next With these three strategic areas all making good progress, strategic phase is proposed, which will see the separation of SiS1 and Fruitﬂow1 businesses, in order to optimise the proﬁt potential of each. The details of this are contained within a circular posted today to shareholders and an announcement. We used our equity ﬁnancing facility to drawdown £244k in May to support our innovation programme, with a further £541k drawdown in September to meet the growing SiS1 business. the increasing working capital needs of SiS1 Revenue in FY12/13 was £5.52m, representing like for like revenue growth of 11% compared to the same period last year. Growth was constrained to 7% in the ﬁrst half due to historically poor weather and adverse trading conditions. However trading in the second half was much stronger as a range of initiatives took effect, resulting in second half revenue growth of 17% and ﬁnal quarter revenue growth of 25%. This momentum has carried into FY13/14. We have continued to invest in the heartland of independent cycle, triathlon and running shops, through investment in display stands. This has paid dividends, as we have seen extra sales staff and capital growth through all our key wholesale accounts. In major grocers and high street accounts, we have both broadened our range and space in key accounts, together with extending distribution via the addition of new accounts including Sainsbury’s, Boots, Costco and since the year end, Halfords. International markets have continued to develop well for us, with strong performances by our distributors in Benelux and Denmark, and the appointment of a new distributor in France. Direct selling is a strategic growth driver and as a result we developed and launched a new website and e-commerce platform in the second half, and recruited an e-commerce team, resulting in good growth in this channel. Further investment in direct selling is continuing. Good levels of investment have been made in marketing, through the acquisition of brand ambassadors Sir Chris Hoy and Helen Jenkins, taking substantial share of voice through press advertising, generating brand proﬁle through social media channels, and substantially increased PR. Innovation has been a key growth driver, with Go Hydro tablets, Go Gel1 plus Fruitﬂow1 and Go Gel1 plus Nitrates being notable and successful launches in the year. We have a strong research programme in conjunction with our partner sports teams and athletes, and through in place, collaboration with leading research institutes. The Directors believe that a promising pipeline is in place for 2013 and 2014. largely carried out The move to a new supply facility has proved effective as gross margin improved by 6%. In addition the commissioning of the new Go Gel1 ﬁlling machine has given us capacity to deal with the strong growth in this product format, and we have recently moved to a 24 hour manufacturing operation to meet growing demand. Fruitﬂow1 The Alliance with DSM has made good progress during the year, with commercial progress with the existing Fruitﬂow1 syrup format in a range of global markets, and the launch of a powder format, suitable for use in dietary supplement formats such as capsules and tablets. There are now 17 consumer brands containing Fruitﬂow1 syrup on sale in a range of global markets. As well as the core blood ﬂow targeted products, DSM customers have also launched brands in the sports nutrition and travel-related sectors. Our SiS1 Go Gel1 plus Fruitﬂow1 sports recovery product also launched during the year. Provexis plc Annual report and accounts 2013 4 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Chief Executive’s statement continued Fruitﬂow1 (continued) The powder format was completed by the DSM team in the ﬁnal quarter of the year, and the product was ofﬁcially launched at Vitafoods in May 2013. The format has broad potential applications in dietary supplements, dairy shots, nutrition bars and spreads. Four products containing this format are now in market, and interest from potential customers is strong, especially in the USA. We collaborated with DSM to complete a substantial piece of consumer research to more fully understand consumer attitudes to Fruitﬂow1 and blood ﬂow, in order to support potential customers in understanding the key success factors for any new brand launches. The DSM marketing and sales teams are using the ﬁndings from this research to assist their customers with potential brand positioning. Whilst revenues for Fruitﬂow1 remain low in the year, there has been a marked improvement over the year both in revenues and number of brands in the market. In addition, interest in the technology and awareness of Fruitﬂow1 continues to develop. These trends, together with the availability of the powder format are a source of continued optimism for the prospects of this novel technology. With the investment cycle completed for Fruitﬂow1 we continue to focus keenly on costs. Since the year end, we have to this end, closed our facility at the University of Aberdeen. Residual ongoing costs for Fruitﬂow1 are largely related to IP maintenance and management time for the Alliance with DSM. Outlook The outlook for SiS1 is positive as we continue to invest in marketing, sales and direct selling to drive revenue growth, underpinned by an increasingly effective supply chain. With our current sales momentum, the continued resilience in the sports nutrition category, the Board believes we are placed for strong growth for the coming year and beyond. While the investment cycle is completed for Fruitﬂow1 we continue to work closely with DSM to explore all avenues for growing revenues for our novel international brands containing Fruitﬂow1 continues to steadily increase and the availability of the powder format enhances further the prospects for the technology. While the economic climate is still affecting the attitude of global brand owners towards large-scale innovation, the general outlook is positive. technology. The number of The proposed demerger of SiS1, subject to shareholder approval, will further optimise the outlook for both the Fruitﬂow1 and SiS1 businesses. Stephen Moon Chief Executive Provexis plc Annual report and accounts 2013 5 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Directors’ report – ﬁnancial review Underlying operating loss Underlying operating loss has reduced by 50% to £1,094,937 (2012: £2,180,362), reﬂecting the signiﬁcant restructuring conducted between 2011 and 2013, and continued progress with SiS1 and Fruitﬂow1. The Group has chosen to report underlying operating loss as the Directors believe that the operating loss before amortisation and impairment of acquired goodwill and other intangible assets, share based payments and exceptional information for shareholders on underlying trends and performance. A reconciliation of underlying operating loss to statutory operating loss is presented on the face of the consolidated statement of comprehensive income. This measure is used for internal performance analysis. items measure provides additional useful The Group’s cost base and its resources have been and will continue to be tightly managed within budgets approved and monitored by the Board. Research and development costs Research and development costs for the year ended 31 March 2013 were £501,098 (2012: £818,186) including £25,545 capitalised under IAS 38 (2012: £56,729). 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 – amortisation and impairment charges The consolidated balance sheet of (CGUs), Provexis and SiS. the Group includes goodwill relating to two cash generating units Under IAS 36, management must test this goodwill for impairment annually by comparing the carrying value of assets in each CGU with either the fair value less costs to sell or value in use. judgement Signiﬁcant is exercised in determining the underlying assumptions used in the impairment review; the assumptions include the discount rate, operating margin and growth rate, as further detailed in note 12. On 28 June 2013 the Company announced its intention to separate SiS (Science in Sport) Limited from the Provexis Group by way of a demerger, as further detailed in note 26, with a consequent signiﬁcant reduction envisaged in the annual central running costs of the Provexis Group. For the purposes of IAS 36 the proposed demerger amounts to a future restructuring to which an entity is not yet committed at the year end, hence the future estimated cash ﬂows of the Provexis CGU used in the calculations do not include the signiﬁcant annual central cost savings which are expected to result from the demerger. rate and growth rates shown in note 12, and without the Using the discount signiﬁcant annual central cost savings which are expected to result the carrying amount of the Provexis CGU exceeds its recoverable amount hence a total non cash impairment loss of £2,781,499 has been recognised in the year, as further detailed in notes 11 and 12. The impairment loss is made up of the existing £2,661,879 carrying value of the Provexis CGU and a related £119,620 of intangible assets in respect of previously capitalised intangible development costs. from the demerger, taking into account The Directors have concluded that no other indication of results of SiS1 have been in line with budget since acquisition. impairment to goodwill exists because the A further £269,512 non cash amortisation charge has been recognised during the year in respect of the intangible assets acquired by the Company on its acquisition of SiS in June 2011. Restructuring costs Restructuring costs of £314,370 (2012: £464,513) were incurred during the year primarily in respect of staff reductions, as the Group has continued to seek to reduce its cost base. The restructuring charge this year includes all the costs of closing the Group’s facility at the University of Aberdeen. Provexis plc Annual report and accounts 2013 6 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Directors’ report – ﬁnancial review continued Taxation A current tax credit of £190,304 (2012: £150,000), primarily in respect of research and development expenditure incurred, and a deferred tax credit of £65,682 (2012: £178,538) primarily in respect of the amortisation of acquired intangible assets have been recognised in the ﬁnancial statements. A £162,369 tax credit claim for the year ended 31 March 2011 was paid to the Group during the year, and further group tax credit claims amounting to £194,927 for the year ended 31 March 2012 were paid to the Group in May 2013, after the year end. Losses and dividends The loss attributable to equity holders of the parent for the year ended 31 March 2013 was £4,338,600 (2012: £3,873,215) and the basic and diluted loss per share was 0.29p (2012: 0.28p). The directors are unable to recommend the payment of a dividend (2012: £Nil). Capital structure and funding On 23 April 2012 the Company announced that application had been made for the admission to AIM of 4,000,000 ordinary shares of 0.1p each in the Company, pursuant to the exercise of options by a former employee. The Company received net proceeds of £36,000 in respect of this transaction. On 17 May 2012 the Company announced that it had raised a net £244,336 by drawing down on the Company’s equity ﬁnancing facility (the ‘‘EFF’’) which was arranged by Darwin Strategic Limited (‘‘Darwin’’), allotting 13,197,880 new ordinary shares of 0.1p each to Darwin. On 28 August 2012 the Company announced that it had raised a net £541,111 by drawing down on the Company’s EFF, allotting 31,620,884 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. In September 2012 an asset ﬁnance agreement was secured with HSBC Equipment Finance for a number of assets acquired in the last year by SiS1 for the Company’s new Nelson factory. HSBC remitted £258,544 to the Group in September 2012. A £200,000 bank overdraft providing the Group with greater headroom. facility for SiS1 was additionally agreed with HSBC in September 2012, Going concern the parent of £4,338,600 (2012: The Group made a loss for £3,873,215) and expects to make a further loss during the year ending 31 March 2014. The total cash outﬂow from operating activities in the year was £1,433,348 (2012: £2,165,267). At 31 March 2013 the Group had cash balances of £616,612 (2012: £1,447,405). the year attributable to owners of The directors have prepared projected cash ﬂow information for a period including twelve months from the date of approval of these ﬁnancial statements on the basis that the demerger of SiS (Science in Sport) Limited and concurrent placing, as further detailed in note 26, will proceed. inter alia upon the approval of the Company’s shareholders at the General The demerger is conditional Meeting proposed for 15 July 2013 and the conﬁrmation of the Company’s reduction of capital by the Court. It is the directors’ current belief and intention that the demerger will proceed as intended and accordingly the going concern basis has been used in preparing the ﬁnancial statements. likely Should the demerger not proceed the Company would be forced to seek further ﬁnance, most through the Group’s existing equity drawdown facility with Darwin or through an equity fundraising with the Company’s shareholders, albeit to meet the ongoing working capital requirements of the Group. that such funds realised may be insufﬁcient Were the demerger not to proceed it may not be appropriate for the directors to prepare the accounts on a going concern basis and adjustments may need to be made accordingly. The directors have concluded that these circumstances represent a material uncertainty that casts signiﬁcant doubt upon the Group’s ability to continue as a going concern and that therefore, if the demerger is not approved, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless after making enquiries, the directors have a reasonable expectation that the demerger will proceed as expected. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual ﬁnancial statements. Provexis plc Annual report and accounts 2013 7 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 development, licensing and marketing of scientiﬁcally-proven functional food, and sports nutrition technologies, with four areas of focus: * * * * To develop SiS1 into the leader in elite endurance sports nutrition in major global markets; Collaborate closely with Alliance partner DSM Nutritional Products to maximise the commercial success of Fruitﬂow1 globally; Underpin the competitiveness of capability; and these revenue streams with scientiﬁc excellence and regulatory Seek further opportunities in the global functional food and sports nutrition sectors through being recognised as a partner of choice. 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 2013, 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. 2. 3. 4. 5. 6. a comprehensive system of ﬁnancial budgeting, forecasting and then reporting and reviewing actual monthly results for the current year against these expectations; a system of operational and ﬁnancial Key Performance Indicators (‘‘KPIs’’), which are reviewed on a weekly and monthly basis; procedures for appraisal, review and authorisation of capital expenditure; properly authorised treasury procedures and banking arrangements; regular review of materials and services supply agreements; and regular review of tax, insurance and health and safety matters. The principal ﬁnancial KPIs monitored by the Board relate to underlying operating loss and cash and cash equivalents. Provexis plc Annual report and accounts 2013 8 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Directors’ report – business overview continued Internal control and risk management (continued) The table below shows the Group’s underlying operating loss for the two years ended 31 March 2013: Underlying operating loss Year ended 31 March 2013 £ Year ended 31 March 2012 £ 1,094,937 2,180,362 The £1,085,425 reduction in underlying operating loss in 2013 was primarily attributable to the £285,904 R&D cost savings made during the ﬁnancial year, a reduction in central administrative costs of £330,075 and a £300,013 increase in the underlying operating proﬁt of SiS. The trading results are further detailed in the ﬁnancial review on pages 6 and 7. The table below shows the Group’s cash position at 31 March 2013 and 31 March 2012: Cash and cash equivalents 31 March 2013 £ 31 March 2012 £ 616,612 1,447,405 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 £830,793 reduction in cash and cash equivalents during the ﬁnancial year is primarily the result of the operating cash outﬂows arising during the year, as further detailed in the consolidated statement of cash ﬂows on page 22. 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 2013 9 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Directors’ report – business overview continued 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 SiS1 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 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. its raw materials is critical to the quality of the quality of in the commodity prices of raw materials and, Movement 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. in the case of Customers and consumers The Group operates in a competitive market sector and its ability to compete effectively requires an on- going commitment innovation, product quality and ability to offer value for money. to marketing, product development, 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. license partners to meet certain commercial and development milestones The Group relies on potential 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 is both Group has high expectations of all staff and in return strives to provide an environment challenging and rewarding. that 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, in particular should the demerger and placing not go ahead, 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 if adequate capital cannot be obtained, the Group’s operating results and ﬁnancial condition could be adversely affected. it may be necessary to seek additional favourable to the Group. Further, Provexis plc Annual report and accounts 2013 10 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Directors’ report – business overview continued 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 2013 amounted to 62 days compared to 51 days at 31 March 2012. 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 I Ford Non-executive Directors C D Buck 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 least once per calendar year with the auditors to discuss their Executive Director present) meets at 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 £10,500 for the year ended 31 March 2013 (2012: £63,500). The Audit Committee have considered the non- audit fees agreed with Chantrey Vellacott DFK in respect of the objectivity and independence of the auditors is safeguarded. the demerger and are satisﬁed that terms of reference of The current Group’s website www.provexis.com. the Audit Committee are set out in the governance pages on the Going concern The Directors have a reasonable expectation that operational existence for the foreseeable future. For this reason, concern basis in preparing the Group’s ﬁnancial statements. the Group and the Company will continue in the going they continue to adopt This expectation is contingent upon the successful completion of the demerger and placing as further detailed in note 1 and note 26 to the consolidated ﬁnancial statements. Provexis plc Annual report and accounts 2013 11 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Directors’ report – business overview continued 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 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. its activities. In addition, Where possible the Annual Report is sent to shareholders at least 20 working days before the Annual the Company unless General Meeting. Directors are required to attend Annual General Meetings of 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. Post balance sheet events On 28 June 2013 the Group announced its intention to separate SiS (Science in Sport) Limited from the Provexis Group. this separation will be effected by way of a demerger of SiS (Science in Sport) Limited to a new company called Science in Sport plc. Science in Sport plc will seek admission of its entire issued and to be issued ordinary share capital to trading on AIM on or around 9 August 2013. is proposed that It In order to provide ongoing working capital for each of the demerged businesses and to pay the costs associated with the demerger, Science in Sport plc has announced that it has undertaken a conditional placing to raise £2.25 million (before commission and expenses). The demerger and placing are conditional General Meeting proposed for 15 July 2013, and the subsequent conﬁrmation of reduction of capital by the Court. inter alia upon the approval of Provexis plc shareholders at a the Company’s 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. Following a tender process, Chantrey Vellacott DFK LLP were appointed as the Company’s external auditor commencing with the 2013 ﬁnancial year. Chantrey Vellacott DFK LLP have expressed their willingness to continue in ofﬁce and a resolution to re- appoint them will be proposed at the next annual general meeting. Provexis plc Annual report and accounts 2013 12 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Directors’ report – business overview continued Directors’ responsibilities The directors are responsible for preparing the directors’ accordance with applicable law and regulations. report and the ﬁnancial statements in 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 ﬁnancial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the fraud and other company and hence for taking reasonable steps for the prevention and detection of irregularities. the company and enable them to ensure that 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 the directors. The directors’ responsibility also extends to the ongoing website is the responsibility of integrity of the ﬁnancial statements contained therein. By order of the Board Ian Ford Secretary 28 June 2013 Provexis plc Annual report and accounts 2013 13 c 1 0 8 5 9 7 p u 0 1 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 7 B / L R e v i s i o n : 0 O p e r a t o r P u t A Remuneration report Remuneration Committee: composition and terms of reference The Group’s Remuneration Committee during the year ended 31 March 2013 comprised three independent Non-executive Directors and was chaired by Dawson Buck. the Remuneration Committee is to ensure that The purpose of rewarded for their individual contribution to the overall performance of considers and recommends to the Board the remuneration of informed of the remuneration packages of senior staff and invited to comment on these. the Executive Directors are fairly the Company. The Committee the Executive Directors and is kept 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: Basic salaries and beneﬁts in kind (i) 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 2013 14 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Remuneration report continued 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 2013 or 2012. (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 2012 to cover the year from 1 April 2012 to 31 March 2013. to enable the Group’s Future reviews will continue to be undertaken on an annual basis each April to be performance over considered. the preceding ﬁnancial year and the strategy for the forthcoming year 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. Non-executive Directors receive payments under appointment letters which are terminable by six 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 (2012: 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 J M Clarke (appointed 1 April 2012) N C Bain (resigned 30 November 2011) K Rietveld Year ended 31 March 2013 Year ended 31 March 2012 Beneﬁts in kind Pension Total Total £ £ £ £ 1,109 — 1,993 — — — — — 10,018 — 6,451 — 211,491 — 137,468 — 197,553 128,006 127,619 116,437 — — — — 35,000 29,000 — — 27,500 — 11,667 — Salary and directors’ fees £ 200,364 — 129,024 — 35,000 29,000 — — 393,388 3,102 16,469 412,959 608,782 The above fees and emoluments exclude reimbursed expenditure incurred in the conduct of Group business. Provexis plc Annual report and accounts 2013 15 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Remuneration report continued 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 Directors’ interests in shares S N Moon I Ford C D Buck Year ended 31 March 2013 £ Year ended 31 March 2012 £ 88,087 — 41,453 — — — — 69,504 — 32,708 — — — — 129,540 102,212 Ordinary shares of 0.1 pence each Ordinary shares of 0.1 pence each Beneﬁcial interests 31 March 2013 2,060,666 2,201,832 12,906,433 17,168,931 1 April 2012 2,060,666 2,201,832 12,906,433 17,168,931 Other than as shown in the table and as further disclosed above in respect of Deferred Shares in note 20 and disclosed in respect of share options in note 21, no Director had any interest in the shares of the Company or its subsidiary companies at 31 March 2013. Provexis plc Annual report and accounts 2013 16 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Remuneration report continued 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. The share options held by the Directors and not exercised at 31 March 2013 are summarised below. S N Moon I Ford 31 March 2013 38,117,620 18,000,000 56,117,620 31 March 2012 38,117,620 18,000,000 56,117,620 The unapproved share options at 31 March 2013 of the Directors who served during the year are set out below: S N Moon S N Moon I Ford Grant date August 2008 June 2011 June 2011 Number awarded 7,324,520 17,000,000 6,350,010 30,674,530 Exercise price/share Earliest exercise date Expiry date 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 2013 of the Directors who served during the year are set out below: S N Moon S N Moon S N Moon I Ford I Ford I Ford Grant date August 2008 August 2008 August 2008 August 2008 August 2008 June 2011 Number awarded 1,117,620 2,675,480 10,000,000 5,000,000 5,000,000 1,649,990 25,443,090 Exercise price/share Earliest exercise date 1.000p 0.900p 0.900p 0.900p 0.900p 2.800p August 2008 April 2011 October 2009 April 2011 October 2009 April 2014 Expiry date August 2018 August 2018 August 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 20 to the consolidated ﬁnancial statements. 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. On 28 June 2013, meeting on 1 May 2012, the Company will grant a further 35,000,000 options to Directors. following a recommendation from the Company’s Remuneration Committee at a Dawson Buck Chairman of the Remuneration Committee Provexis plc Annual report and accounts 2013 17 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 2013 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 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 the 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 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 auditors’ 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 directors’ responsibilities statement, 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 Ethical Standards for Auditors. Scope of the audit of the ﬁnancial statements A description of www.frc.org.uk/apb/scope/private.cfm. the scope of an audit of ﬁnancial statements is provided on the APB’s website at Opinion on ﬁnancial statements In our opinion: * * * * the ﬁnancial statements give a true and fair view of company’s affairs as at 31 March 2013 and of the group’s loss for the year then ended; the state of the group’s and the parent 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. Emphasis of matter-going concern In forming our opinion on the ﬁnancial statements, which is not modiﬁed, we have considered the adequacy of the disclosure made in note 1 to the ﬁnancial statements concerning the group’s ability to continue as a going concern. The group incurred a net loss of £4,391,706 and net cash outﬂows from operating activities of £1,433,348 during the year ended 31 March 2013 and the directors expect the group to incur further losses in the year ended 31 March 2014. The directors have projected cash ﬂows on the basis that the demerger of SiS (Science in Sport) Limited and concurrent placing will proceed as planned. The demerger is conditional inter alia upon the approval of the Company’s shareholders at the General Meeting proposed for 15 July 2013 and the conﬁrmation of the Company’s reduction of capital by the Court. These conditions along with the other matters explained in note 1 to the ﬁnancial statements, indicate the existence of a material uncertainty that casts signiﬁcant doubt about the group’s ability to continue as a going concern. The ﬁnancial statements do not if the group was unable to continue as a going concern. include the adjustments that would result Provexis plc Annual report and accounts 2013 18 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Independent auditor’s report to the members of Provexis plc continued 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. 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 returns; or in agreement with the accounting records and 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. Neil Tustian (Senior Statutory Auditor) For and on behalf of Chantrey Vellacott DFK LLP, Chartered accountant and statutory auditor Reading 28 June 2013 Provexis plc Annual report and accounts 2013 19 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Consolidated statement of comprehensive income 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 Finance income Finance costs 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. Year ended 31 March 2013 £ Year ended 31 March 2012 £ 5,559,591 (2,418,177) 3,141,414 (475,553) (7,322,685) (1,094,937) (3,068,234) — (314,370) (179,283) 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) (4,656,824) (4,330,137) 12,407 (3,275) 46,853 (742) (4,647,692) (4,284,026) 255,986 328,538 (4,391,706) (3,955,488) (4,338,600) (53,106) (3,873,215) (82,273) (4,391,706) (3,955,488) 0.29 0.28 Notes 1,3 4 11 10 4 21 4 7 7 8 22 22 22 9 Provexis plc Annual report and accounts 2013 20 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 Borrowings Current tax liabilities Total current liabilities Net current assets Non-current liabilities Borrowings 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 2013 £ As at 31 March 2012 £ Notes 11 13 19 14 15 8 16 17 18 18 19 20 22 22 22 22 22 6,553,502 634,920 110,348 9,369,603 598,430 128,948 7,298,770 10,096,981 913,387 1,253,305 288,801 616,612 635,771 934,773 300,000 1,447,405 3,072,105 3,317,949 10,370,875 13,414,930 (1,787,569) (64,774) — (1,541,839) — (39,133) (1,852,343) (1,580,972) 1,219,762 1,736,977 (161,871) (450,789) (612,660) — (535,072) (535,072) (2,465,003) (2,116,044) 7,905,872 11,298,886 5,134,170 20,769,423 60,000 6,599,174 (24,385,057) 5,085,352 19,998,832 60,000 6,599,174 (20,225,740) 8,177,710 (271,838) 11,517,618 (218,732) 7,905,872 11,298,886 These consolidated ﬁnancial statements were approved and authorised for 28 June 2013. The notes on pages 24 to 52 form part of these consolidated ﬁnancial statements. issue by the Board on Stephen Moon Director Ian Ford Director On behalf of the Board of Provexis plc Provexis plc Annual report and accounts 2013 21 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Consolidated statement of cash ﬂows Cash ﬂows from operating activities Loss after tax Adjustments for: Amortisation and impairment Impairment of ﬁxed assets Depreciation Loss on disposal of intangible assets Loss / (proﬁt) on sale of ﬁxed assets Net ﬁnance income Taxation Share-based payment charge Year ended 31 March 2013 £ Year ended 31 March 2012 £ Notes 11 13 (4,391,706) (3,955,488) 3,068,234 37,876 187,712 — 1,556 (9,132) (255,986) 179,283 1,390,638 — 89,360 9,872 (3,631) (46,111) (328,538) 141,461 Operating cash outﬂow before changes in working capital (1,182,163) (2,702,437) 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 outﬂow from operating activities 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 from investing activities Cash ﬂow from ﬁnancing activities Proceeds from issue of share capital Expenses paid on share issues Proceeds from borrowings Repayment of borrowings Proceeds from exercise of share options Interest paid Net cash ﬂow from ﬁnancing activities Net decrease in cash and cash equivalents Opening cash and cash equivalents Closing cash and cash equivalents (338,719) (320,590) 245,755 42,239 81,419 320,426 (1,595,717) (2,258,353) — 162,369 (28,134) 121,220 (1,433,348) (2,165,267) (263,634) — (191,030) 12,427 (458,984) 4,750 (62,356) 49,762 — (6,786,036) (442,237) (7,252,864) 10 785,447 — 258,544 (31,924) 36,000 (3,275) 3,524,694 (236,919) — — 27,000 (744) 1,044,792 3,314,031 (830,793) 1,447,405 (6,104,100) 7,551,505 616,612 1,447,405 16 16 Provexis plc Annual report and accounts 2013 22 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Consolidated statement of changes in equity Share capital Share premium Warrant reserve Merger reserve Retained earnings £ 115,980 — — £ £ 6,273,909 — 325,265 (16,493,986) 141,461 — Total equity attributable to owners of the parent £ 11,617,589 141,461 360,601 Non- controlling interests Total equity £ £ (136,459) — — 11,481,130 141,461 360,601 At 31 March 2011 Share-based charges Issue of shares – acquisition of SiS (Science in Sport) 24 June 2011 Issue of shares – placing 24 June 2011 Issue costs – placing 24 June 2011 Issue of shares – open offer 27 July 2011 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 £ £ 4,812,036 — 35,336 16,909,650 — — 166,667 2,333,333 (199,380) 956,381 (37,539) 24,000 — — — — — 12,387 (115,980) — — 60,000 — — 68,313 — 3,000 — — — — — — — — — — — — — — — — — — 2,500,000 (199,380) 1,024,694 (37,539) 27,000 (103,593) 60,000 — — — — — — — 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 Share-based charges Issue of shares – share options exercised 27 April 2012 Issue of shares – equity ﬁnancing facility 23 May 2012 Issue of shares – equity ﬁnancing facility 3 September 2012 Total comprehensive expense for the year — 4,000 — 32,000 13,198 230,504 31,620 508,087 — — — — — — — — — — — — 179,283 — — — 179,283 36,000 243,702 539,707 — — — — 179,283 36,000 243,702 539,707 (4,338,600) (4,338,600) (53,106) (4,391,706) At 31 March 2013 5,134,170 20,769,423 60,000 6,599,174 (24,385,057) 8,177,710 (271,838) 7,905,872 Provexis plc Annual report and accounts 2013 23 c 1 0 8 5 9 7 p u 0 2 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 8 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements Accounting policies 1. 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 sectors. food and sports nutrition technologies for the global functional Basis of preparation The Group ﬁnancial statements have been prepared in accordance with International Financial Reporting issued by the Standards, 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. International Accounting Standards and Interpretations (collectively 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 53 to 57. 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 2013. There have been no new or amended standards adopted by the Group since the prior ﬁnancial year. The following new standards, amendments to standards and interpretations have been issued but are not effective for the year ended 31 March 2013. 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’ after 1 July 2012. is effective from periods commencing on or IFRS 7 (Amended) instruments: Presentation’ are effective from 1 January 2013. ‘Financial instruments: Disclosures’ and IAS 32 (Amended) Financial IFRS 9 ‘Financial Instruments’ is effective from periods commencing on or after 1 January 2015. IFRS 10 ‘Consolidated ﬁnancial statements’ 1 January 2014. is effective from periods commencing on or after IFRS 12 ‘Disclosures of interests in other entities’ 1 January 2014. is effective from periods commencing on or after IFRS 13 ‘Fair value measurement’ 2013. is effective from periods commencing on or after 1 January IAS 27 (Amended) ‘Separate ﬁnancial statements’ is effective from periods commencing on or after 1 January 2014. Improvements to IFRS 2009-2011 cycle, effective for periods beginning on or after 1 January 2013 There are a number of standards, above which the Directors consider not to be relevant to the Group. interpretations and amendments to published accounts not listed Phase 1 of IFRS 9 ‘Financial instruments’ was issued in November 2009 and has subsequently been updated and amended. The standard is effective for annual periods commencing on or after 1 January 2015 and has not yet been endorsed for use by the EU. The Group is currently assessing the impact of this standard on its results, ﬁnancial position and cash ﬂows. Provexis plc Annual report and accounts 2013 24 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 1. Accounting policies (continued) 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. The Group made a loss for the parent of £4,338,600 (2012: £3,873,215) and expects to make a further loss during the year ending 31 March 2014. The total cash outﬂow from operating activities in the year was £1,433,348 (2012: £2,165,267). At 31 March 2013 the Group had cash balances of £616,612 (2012: £1,447,405). the year attributable to owners of The directors have prepared projected cash ﬂow information for a period including twelve months from the date of approval of these ﬁnancial statements on the basis that the demerger of SiS (Science in Sport) Limited and concurrent placing, as further detailed in note 26, will proceed. The demerger is conditional inter alia upon the approval of the Company’s shareholders at the General Meeting proposed for 15 July 2013 and the conﬁrmation of the Company’s reduction of capital by the Court. It is the directors’ current belief and intention that the demerger will proceed as intended and accordingly the going concern basis has been used in preparing the ﬁnancial statements. Should the demerger not proceed the Company would be forced to seek further ﬁnance, most likely through the Group’s existing equity drawdown facility with Darwin or through an equity fundraising with to meet the ongoing the Company’s shareholders, albeit working capital requirements of the Group. that such funds realised may be insufﬁcient Were the demerger not to proceed it may not be appropriate for the directors to prepare the accounts on a going concern basis and adjustments may need to be made accordingly. The directors have concluded that these circumstances represent a material uncertainty that casts signiﬁcant doubt upon the Group’s ability to continue as a going concern and that therefore, if the demerger is not approved, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless after making enquiries, the directors have a reasonable expectation that the demerger will proceed as expected. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual 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. Provexis plc Annual report and accounts 2013 25 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 1. Accounting policies (continued) Revenue Revenue comprises the fair value received or agreements, royalties and sales net of sales rebates and excluding VAT and trade discounts. receivable for exclusivity arrangements, collaboration 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. (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 internally is The Group determines and presents operating segments based on the information that 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. 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 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. items measure provides additional useful items are those material Exceptional separately in the Statement of Comprehensive Income to give a full understanding of underlying ﬁnancial performance. Transactions which may give rise to exceptional restructuring of business activities and acquisitions. A reconciliation of underlying operating proﬁt statutory operating proﬁt is set out on the face of the Statement of Comprehensive Income. their size or incidence, are presented the Group’s items include the to items which, by virtue of 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. Provexis plc Annual report and accounts 2013 26 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 1. Accounting policies (continued) 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 less accumulated impairment losses. impairment and carried at cost is tested annually for loss is recognised within administrative expenses in the consolidated statement of An impairment comprehensive income for the amount by which the asset’s carrying amount exceeds its recoverable amount. For the purposes of assessing impairment, assets are grouped into cash generating units (‘CGU’) being the lowest levels for which there are separately identiﬁable cash ﬂows. The recoverable amount of a CGU is the higher of a CGU’s fair value less costs to sell and value in use. Impairment losses on goodwill are not reversed. Research and development Certain Group products are in the research phase and others are in the development phase. Expenditure incurred on the development of it can be demonstrated that: internally generated products is capitalised if * * * * * * It is technically feasible to develop the product for it to be sold; Adequate resources are available to complete the development; There is an intention to complete and sell the product; The Group is able to sell the product; Sale of the product will generate future economic beneﬁts; and Expenditure on the project can be measured reliably. The value of the capitalised development cost is assessed for impairment annually. The value is written down immediately if impairment has occurred. Development costs are not being amortised as income has not yet been realised from the underlying technology. Development expenditure, not satisfying the above criteria, and expenditure on the research phase of internal projects is recognised in the statement of comprehensive income as incurred. Patents and trademarks The costs incurred in establishing patents and trademarks are either expensed or capitalised in accordance with the corresponding treatment of the development expenditure for the product to which they relate. Website development costs Website development costs are capitalised to the extent that it is capable of generating direct revenues from enabling orders to be placed. Costs associated with the planning stage are recognised in the Income Statement. Externally acquired intangible assets Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques. In-process research and development programmes acquired in such combinations are recognised as an asset even if subsequent expenditure is written off because the criteria speciﬁed in the policy for research and development costs above are not met. Provexis plc Annual report and accounts 2013 27 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued Accounting policies (continued) 1. Externally acquired intangible assets (continued) 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 Website development costs Useful economic life 9.5 4.5 to 9.5 3.0 9.5 5.0 Valuation method Relief From Royalty Rate Method Relief From Royalty Rate Method Comparative Business Valuation Multi-Period Excess Earnings Method Historic Cost Non-current assets held for sale or distribution and disposal groups Non-current assets and disposal groups are classiﬁed as held for sale when, at the year end: – – – – – – they are available for immediate sale; management is committed to a plan to sell; it is unlikely that signiﬁcant changes to the plan will be made or that the plan will be withdrawn; an active programme to locate a buyer has been initiated; the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and a sale is expected to complete within 12 months from the date of classiﬁcation. Non-current assets and disposal groups classiﬁed as held for sale are measured at the lower of: – their carrying amount immediately prior to being classiﬁed as held for sale in accordance with the Group’s accounting policy; and fair value less costs to sell. – Following their classiﬁcation as held for sale, non-current assets (including those in a disposal group) are not depreciated. The results of operations disposed during the year are included in the consolidated statement of comprehensive income up to the date of disposal. A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classiﬁed as held for sale. Discontinued operations are presented in the consolidated statement of comprehensive income as a single line which comprises the post-tax proﬁt or loss of the discontinued operation along with the post- tax gain or loss recognised on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations. 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 if appropriate at each balance sheet date in accordance with the Group policy for impairment of assets. lives are determined by the Directors and reviewed and adjusted Provexis plc Annual report and accounts 2013 28 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued Accounting policies (continued) 1. Plant and equipment (continued) The gain or loss arising on the disposal of an asset disposal proceeds and the carrying amount of the asset and is recognised in the income statement. is determined as the difference between the Impairment of assets Assets that have a ﬁnite useful to that are not yet amortisation or depreciation are tested annually for impairment. Assets that are subject to amortisation the carrying are reviewed for impairment annually and when events or circumstances suggest amount may not be recoverable, an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. in use and are therefore not subject life but that 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. is estimated to be less than its carrying amount, the carrying If the recoverable amount of an asset amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Impairment losses on goodwill are not reversed. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is calculated as follows: Raw materials – cost of purchase on ﬁrst in, ﬁrst out basis. Work in progress and ﬁnished goods – cost of raw materials and labour, overheads based on the normal level of activity. together with attributable 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 receivables’ and ‘cash and cash The Group’s ﬁnancial assets are comprised of 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. ‘trade and other Financial liabilities The Group’s ﬁnancial recognised initially at fair value and subsequently at amortised cost. liabilities comprise ‘trade and other payables’ and ‘borrowings’. These are Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand. Provexis plc Annual report and accounts 2013 29 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 1. Accounting policies (continued) 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 proﬁts will be available against which the difference can be utilised. is probable that taxable The amount of 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. the asset or Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either: * * The same taxable Group Company; or Different Group entities which intend to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, on each future period in which signiﬁcant amounts of deferred tax assets or liabilities are expected to be settled or recovered. Foreign currency translation Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the 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. the dates of Employee beneﬁts Deﬁned contribution plans (i) 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. Provexis plc Annual report and accounts 2013 30 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued Accounting policies (continued) 1. Employee beneﬁts (continued) (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, 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 number of 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 These warrants have been measured at pricing model. fair value at the Equity Financing Facility. the date of grant using an appropriate options This fair value has been held on the balance sheet within prepayments and in the warrants reserve within equity. The prepayment will be released against share premium as the equity ﬁnancing facility is utilised. The warrants reserve will be released to share premium when the warrants are exercised. If the warrants lapse or are cancelled then the reserve is transferred to retained earnings. Critical accounting estimates and judgements The preparation of ﬁnancial statements in conformity with IFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the revenues and expenses during the date of reporting period. the ﬁnancial statements and the reported amounts of 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: Research and development (i) the Under IAS 38 Intangible Assets, development expenditure which meets the recognition criteria of 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. Provexis plc Annual report and accounts 2013 31 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued Accounting policies (continued) 1. Critical accounting estimates and judgements (continued) (ii) Share-based payments The Group operates an equity-settled, share-based compensation plan. The charge for share-based payments is determined based on the fair value of awards at the date of grant partly by use of the Black-Scholes pricing model which require judgements to be made regarding expected volatility, dividend yield, risk free rates of return and expected option lives. The inputs used in these pricing models to calculate the fair values are set out in note 21. An element of the share-based payment charge also relies on certain assumptions over the future performance of the share price which may not be met or may be exceeded by the time the relevant awards vest. (iii) Goodwill and impairment the cash- The recoverable amount of goodwill 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. is determined based on value in use calculations of The Group prepares and approves formal ﬁve year management plans for its operations, which are used in the value in use calculations. In certain cases the ﬁfth year of the management plan is not indicative of In this case term future performance as operations may not have reached maturity. management extends the plan data for a longer period. the long- (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. Financial risk management 2. 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. Provexis plc Annual report and accounts 2013 32 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued Financial risk management (continued) 2. 2.1 Financial risk factors (continued) 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. Liquidity risk (c) 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 £1,787,569 (2012: £1,541,839) as disclosed in note 17. 2.2 Capital risk management The Group considers its capital to comprise its ordinary share capital, share premium, warrant reserve, merger reserve and accumulated retained earnings as disclosed in the consolidated statement of ﬁnancial position on page 21. 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. Segmental reporting 3. 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. Provexis plc Annual report and accounts 2013 33 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 3. Segmental reporting (continued) results, The segment 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: the reconciliation of Year ended 31 March Provexis £ 2013 SiS £ Group £ Provexis £ 2012 SiS £ Group £ Revenue 37,351 5,522,240 5,559,591 5,779 3,472,083 3,477,862 Underlying operating (loss)/ proﬁt Intangible asset amortisation and impairment charges Costs of SiS acquisition expensed Restructuring costs Share-based payment charges Loss from operations Net ﬁnance income/(expense) (1,169,268) 74,331 (1,094,937) (1,954,680) (225,682) (2,180,362) (2,781,499) (286,735) (3,068,234) (1,179,352) (211,286) (1,390,638) — (135,787) — (178,583) — (314,370) (153,163) (205,746) — (258,767) (153,163) (464,513) (179,283) (4,265,837) 12,407 — (179,283) (141,461) — (141,461) (390,987) (3,275) (4,656,824) 9,132 (3,634,402) 46,853 (695,735) (742) (4,330,137) 46,111 Loss before taxation (4,253,430) (394,262) (4,647,692) (3,587,549) (696,477) (4,284,026) Additions to non-current assets 28,582 487,185 515,767 85,175 7,249,144 7,334,319 Reportable segment assets 880,077 9,490,798 10,370,875 4,503,878 8,911,052 13,414,930 Reportable segment liabilities (333,672) (2,131,331) (2,465,003) (355,755) (1,760,289) (2,116,044) External revenue by location of customers UK Europe Rest of the World Revenue 2013 £ 2012 £ 4,804,440 679,830 75,321 3,085,147 338,634 54,081 5,559,591 3,477,862 All operations and assets are based in the UK. There were no intersegment sales or transfers for the period. Revenues from three customers individually exceed 10% of group revenue, respectively £651,768 (2012: £406,884), £648,988 (2012: £286,690) and £588,760 (2012: £331,770). These major customers purchase 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. Provexis plc Annual report and accounts 2013 34 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 (gains) / losses Costs of acquisition Restructuring costs Loss on disposal of intangible assets Loss / (proﬁt) on disposal of property, plant and equipment Changes in inventories of ﬁnished goods and work in progress Grant income Operating lease costs – land and buildings Equity-settled share based payment expense Deﬁned contribution pension expense Year ended 31 March 2013 £ Year ended 31 March 2012 £ 187,712 3,068,234 475,553 (6,245) — 314,370 — 1,556 (338,719) (3,000) 157,374 179,283 24,903 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 Restructuring costs of £135,787 were incurred as part of the closure of the group’s R&D facility at the University of Aberdeen, along with other reductions in group administrative headcount. The restructuring costs in 2012 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 £178,583 (2012: £258,767) have been incurred as part of the reorganisation and rebranding of the SiS1 business. The total fees of the Group’s auditor, for services provided are analysed below: Chantrey Vellacott DFK Year ended Year ended 31 March 31 March 2013 2012 £ £ BDO LLP Year ended 31 March 2013 £ Year ended 31 March 2012 £ Audit services Parent company Subsidiaries Tax services – compliance Parent company Subsidiaries Other services iXBRL services Parent company – share option scheme advice Review of interim statement Corporate ﬁnance – due diligence Total fees 15,000 24,500 2,500 6,000 2,000 — — — 50,000 — — — — — — — — — — — — — — — 5,000 — 5,000 28,000 46,500 4,000 12,500 — 15,000 7,000 25,000 138,000 The Group has engaged Chantrey Vellacott DFK LLP to assist the Group with the proposed demerger of SiS (Science in Sport) Limited from the Provexis Group to a new company called Science in Sport plc. Science in Sport plc has engaged Chantrey Vellacott DFK to assist it with the proposed admission of its entire issued and to be issued ordinary share capital to trading on AIM on or around 9 August 2013, as further detailed in note 26. Further information on the proposed demerger and admission of Science in Sport plc to AIM can be found in the Circular, and Admission to trading on AIM document, which were issued on 28 June 2013. Copies of the Circular and the Admission to trading on AIM document can be downloaded from Provexis plc’s website www.provexis.com. Provexis plc Annual report and accounts 2013 35 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 2013 Year ended 31 March 2012 8 33 6 4 4 55 5 8 12 7 4 36 Year ended 31 March 2013 £ Year ended 31 March 2012 £ 1,983,247 197,930 27,361 2,208,538 (5,066) 179,283 1,736,465 191,772 69,205 1,997,442 42,498 141,461 2,382,755 2,181,401 Year ended 31 March 2013 £ Year ended 31 March 2012 £ 396,490 — 16,469 412,959 129,540 542,499 495,223 91,250 22,309 608,782 102,212 710,994 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 2013 £ Year ended 31 March 2012 £ 201,473 10,018 88,087 299,578 188,191 9,362 69,504 267,057 During the year, schemes. two Directors (2012: four Directors) participated in deﬁned contribution pension 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 17. Provexis plc Annual report and accounts 2013 36 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 7. Finance income and costs Finance income Bank interest receivable Finance costs Interest payable on bank loans and overdrafts Interest payable on asset loans 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 United Kingdom corporation tax – other adjustments Total current tax income Deferred tax Origination and reversal of temporary differences Tax on loss for the year Year ended 31 March 2013 £ Year ended 31 March 2012 £ 12,407 12,407 190 3,085 3,275 46,853 46,853 — 742 742 Year ended 31 March 2013 £ Year ended 31 March 2012 £ 65,740 150,000 57,297 67,267 — — 190,304 150,000 65,682 255,986 178,538 328,538 The tax assessed for the year is different differences are explained below: from the standard rate of corporation tax in the UK. The Loss before tax Loss before tax multiplied by the standard rate of corporation tax in the UK of 24% (2012: 26%) 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 Share scheme deduction Adjustments in respect of prior years Effect of rate change on deferred tax balances Total tax credit for the year Year ended 31 March 2013 £ Year ended 31 March 2012 £ 4,647,692 4,284,026 1,115,446 1,113,846 (48,095) (17,564) (661,853) (255,246) 154,354 (77,692) 35,676 (3,842) 14,802 255,986 (343,565) 19,432 (37,930) (479,391) 221,808 (150,000) — — (15,662) 328,538 At 31 March 2013 the Group UK tax losses to be carried forward are estimated to be £17,622,991 (2012: £16,504,434). The rate change from 24% to 23% had been substantively enacted by the balance sheet date, so deferred tax is provided for at a rate of 23%. Provexis plc Annual report and accounts 2013 37 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 8. Taxation (continued) The 2013 Budget conﬁrmed that the main rate of UK corporation tax was to be reduced from 23% to 21% from 1 April 2014, and announced a further reduction to 20% from 1 April 2015. The 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 further rate reductions, although they will further reduce the company’s future current tax charges and reduce the deferred tax assets accordingly. Income tax asset receivable within one year Corporation tax recoverable 31 March 2013 £ 288,801 288,801 31 March 2012 £ 300,000 300,000 Loss per share 9. 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 90,071,648 share options in issue (2012: 94,071,648) 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. Loss for the year attributable to owners of the parent – £ 4,338,600 3,873,215 Weighted average number of shares Basic and diluted loss per share – pence 1,502,924,005 1,398,837,335 0.29 0.28 Year ended 31 March 2013 Year ended 31 March 2012 Provexis plc Annual report and accounts 2013 38 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 10. 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 purchase has been accounted for under the acquisition method of accounting. including the The Group has identiﬁed the fair values of the assets acquired and liabilities assumed, 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. The assessment was completed in the period ended 24 June 2012 and accordingly the fair values presented are now ﬁnal. 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 fair value of inventories acquired was decreased by £61,103 In this context during the year, with a commensurate increase in goodwill. Goodwill arose on the acquisition of SiS1 because the cost of the combination included amounts in relation to the beneﬁt of expected synergies, future market development and the revenue growth, assembled workforce of SiS1. These beneﬁts are not recognised separately from goodwill because they do not meet the acquisition is detailed below: the recognition criteria for identiﬁable intangible assets. A summary of the effect of 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 net cost of acquisition Book value at acquisition £ 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 — (94,103) — — — (584,662) 1,757,326 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 1,228,696 140,155 616,907 809,444 213,964 (658,223) (651,929) 2,922,610 4,437,991 7,360,601 6,750,000 360,601 250,000 7,360,601 (213,964) 153,163 7,299,800 The Company now intends to separate SiS (Science in Sport) Limited from the Provexis Group by way of a demerger, further details of which are provided in note 26. Provexis plc Annual report and accounts 2013 39 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 2012 Additions 11,642,165 61,103 132,621 25,545 1,004,029 — At 31 March 2013 11,703,268 158,166 1,004,029 180,886 — 180,886 22,480 — 1,228,696 — 9,514 165,485 14,220,391 252,133 22,480 1,228,696 174,999 14,472,524 Amortisation and impairment At 1 April 2012 Charge for year Impairment 4,603,398 — 2,661,879 At 31 March 2013 7,265,277 38,546 — 119,620 158,166 Net book value At 31 March 2013 4,437,991 — At 31 March 2012 7,038,767 94,075 81,027 105,687 — 186,714 817,315 923,002 Cost At 1 April 2011 Acquisitions Additions Disposals 7,265,277 4,376,888 — — 75,892 — — 1,004,029 — — 56,729 — At 31 March 2012 11,642,165 132,621 1,004,029 20,696 26,995 — 47,691 133,195 160,190 — 180,886 — — 180,886 5,745 7,493 — 13,238 99,158 129,337 — 228,495 2,218 17,223 4,850,788 286,735 — 2,781,499 19,441 7,919,022 9,242 1,000,201 155,558 6,553,502 16,735 1,129,538 7,296 9,369,603 — 22,480 — — — 1,228,696 — — — 7,341,169 6,829,180 62,356 (12,314) 16,201 5,627 (12,314) 22,480 1,228,696 9,514 14,220,391 Amortisation and impairment At 1 April 2011 Charge for year Disposals 3,462,592 1,140,806 — At 31 March 2012 4,603,398 Net book value At 31 March 2012 7,038,767 At 31 March 2011 3,802,685 — 38,546 — 38,546 94,075 75,892 — 81,027 — 81,027 — 20,696 — 20,696 — 5,745 — 5,745 — 99,158 — 99,158 — 3,462,592 1,390,638 (2,442) 4,660 (2,442) 2,218 4,850,788 923,002 160,190 16,735 1,129,538 7,296 9,369,603 — — — — — 3,878,577 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. Provexis plc Annual report and accounts 2013 40 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 date of acquisition. The consolidated balance sheet of the Group includes goodwill relating to two cash generating units (CGUs), Provexis, in respect of Fruitﬂow1, and SiS. the acquired subsidiary at the Group’s share of the net assets of The carrying amount of goodwill is allocated to the CGUs as follows: Goodwill carrying amount Year ended 31 March 2013 £ Year ended 31 March 2012 £ At start of year Additions Impairment charge for year Provexis 2,661,879 — (2,661,879) SiS Total Provexis SiS Total 4,376,888 61,103 7,038,767 61,103 — (2,661,879) 3,802,685 (1,140,806) — 4,376,888 — 3,802,685 4,376,888 — (1,140,806) At end of year — 4,437,991 4,437,991 2,661,879 4,376,888 7,038,767 Under IAS 36, management must test this goodwill for impairment annually by comparing the carrying value of assets in each CGU with either the ‘fair value less costs to sell’ or the ‘value in use’ of the CGU. The Group determines the recoverable amount of goodwill based on value in use calculations of the cash-generating units to which goodwill has been allocated. The major assumptions used in these calculations are as follows: Pre-tax discount rate Growth rate* Growth rate in perpetuity Year 1 to 5 growth rate Gross proﬁt margin 2013 Provexis % 15.8 2.0 0.0 N/A N/A SiS % 13.0 10.0 3.0 15.0 60.3 to 64.0 2012 Provexis % 15.8 2.0 0.0 — — SiS % 13.0 10.0 3.0 — — * 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 nine for Provexis (2012: year seven) and year six (2012: year three) for SiS. Signiﬁcant review; the assumptions include the discount rate, operating margin and growth rate. is exercised in determining the underlying assumptions used in the impairment judgement 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. 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 income streams included in the the forecast the inherent risk of premium, and a premium to reﬂect Group’s cash ﬂow projections, which remain subject to contracts being agreed with prospective customers. Operating margins are based on past practices and expectations of future changes in the market. 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 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 sports nutrition market than the application of a single growth rate. the product’s life and better reﬂect the growth of Provexis plc Annual report and accounts 2013 41 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 12. Goodwill and impairment (continued) IAS 36 stipulates that future cash ﬂows shall be estimated for assets in their current condition. Estimates of future cash ﬂows should not include estimated future cash inﬂows or outﬂows that are expected to arise from a future restructuring, to which an entity is not yet committed at the balance sheet date. On 28 June 2013 the Company announced its intention to separate SiS (Science in Sport) Limited from the Provexis Group by way of a demerger, as further detailed in note 26, with a consequent signiﬁcant reduction in the annual central running costs of the Provexis Group. For the purposes of IAS 36 the proposed demerger amounts to a future restructuring to which an entity is not yet committed, hence the future estimated cash ﬂows of include the signiﬁcant annual central cost savings which are expected to result from the demerger. the Provexis CGU do not Using the discount rate and growth rates shown in the table above, and without taking into account the the carrying signiﬁcant annual central cost savings which are expected to result amount of the Provexis CGU exceeds its recoverable amount, hence a total non cash impairment loss of £2,781,499 has been recognised in the year, as further detailed in note 11. The impairment loss is made up of the existing £2,661,879 carrying value of the Provexis CGU, and the related £119,620 of intangible assets, in respect of previously capitalised intangible development costs. from the demerger, The values used in the Group’s internal 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. forecasts reﬂect anticipated market developments, The results of the value in use calculations for the CGUs are as follows: * * Provexis exceeds its carrying amount by £NIL (2012: £971,516) SiS exceeds its carrying amount by £8,778,687 (2012: £442,581) If any one of the following changes were made to the above key assumptions, the carrying amount and recoverable amount would be equal: 2013 Pre-tax discount rate Growth rate in perpetuity Year 1 to 5 growth rate Gross proﬁt margin 2012 Provexis % — — — — SiS* % increase from 13.0% to 20.9% reduction from 3% to NIL reduction from 15% to 9.6% reduction from 64% to 53% Pre-tax discount rate increase from 15.8% to 18.4% increase from 13.0% to 13.5% Growth rate Growth rate in perpetuity Not sensitive Not sensitive reduction from 10.0% to 8.3% reduction from 3% to 2.0% Provexis plc Annual report and accounts 2013 42 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 13. Plant and equipment Leasehold improvements Laboratory equipment Motor vehicles Total £ £ £ Fixtures, ﬁttings, plant and equipment £ 410,395 251,925 (3,275) 659,045 90,699 109,548 — (1,719) 198,528 £ 219,247 11,709 — 230,956 10,706 48,000 — — 58,706 147,145 — — 147,145 84,270 24,999 37,876 — 147,145 172,250 208,541 460,517 319,696 — 62,875 11,527 — — 11,527 788,314 263,634 (3,275) 1,048,673 4,209 5,165 — — 9,374 2,153 7,318 189,884 187,712 37,876 (1,719) 413,753 634,920 598,430 Total Leasehold improvements £ — — 219,247 — 219,247 — 10,706 — 10,706 Fixtures, ﬁttings, plant and equipment £ 64,598 127,120 220,834 (2,157) 410,395 47,069 44,669 (1,039) 90,699 208,541 — 319,696 17,529 Laboratory equipment Motor vehicles £ £ £ 128,242 — 18,903 — 147,145 56,002 28,268 — 84,270 62,875 72,240 — 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 7,318 — 598,430 89,769 Cost At 1 April 2012 Additions Disposals At 31 March 2013 Depreciation At 1 April 2012 Charge for the year Impairment – site closure Disposals At 31 March 2013 Net book value At 31 March 2013 At 31 March 2012 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 The carrying amount of ﬁxtures, ﬁttings, plant and equipment includes an amount of £245,266 (2012: £Nil) in respect of assets held under an asset loan agreement. Provexis plc Annual report and accounts 2013 43 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 14. Inventories Raw materials Finished goods 31 March 2013 £ 503,093 410,294 913,387 31 March 2012 £ 351,744 284,027 635,771 There is £Nil (2012: £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 £1,746,504 (2012: £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 2013 £ 31 March 2012 £ 755,106 (32,233) 722,873 124,615 847,488 405,817 1,253,305 600,649 (32,101) 568,548 178,571 747,119 187,654 934,773 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 2013 of £1,253,305 is £318,532 greater than the prior year due predominantly to an increase in trade receivables and prepayments. 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 2013, £Nil (2012: £476,551) of trade receivables had been sold to a provider of invoice discounting and debt factoring services. The invoice discounting and debt factoring service was cancelled in September 2012. The Group does not hold any collateral as security. As at 31 March 2013 trade receivables of £125,319 (2012: £154,902) 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 2013 £ 125,319 125,319 31 March 2012 £ 154,902 154,902 As at 31 March 2013 trade receivables of £32,233 (2012: £32,101) were past due and impaired. The amount of the provision as at 31 March was £32,233 (2012: £32,101). Provexis plc Annual report and accounts 2013 44 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 2013 £ 31 March 2012 £ 32,101 5,750 — (5,618) 32,233 — 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 2013 £ 616,612 616,612 31 March 2012 £ 1,447,405 1,447,405 31 March 2013 £ 929,939 109,171 680,805 1,719,915 67,654 31 March 2012 £ 894,535 43,341 513,377 1,451,253 90,586 1,787,569 1,541,839 The Directors consider that the carrying amount of these liabilities approximates to their fair value. All amounts shown fall due within one year. 18. Borrowings Secured borrowings at amortised cost Asset loan agreement at ﬁxed rate Amounts due for settlement within 12 months Amounts due for settlement after 12 months 31 March 2013 £ 31 March 2012 £ 226,645 226,645 64,774 161,871 226,645 — — — — — The asset loan agreement was provided in September 2012 by HSBC Asset Finance (UK) Limited, and loan it agreement is for a four year term, expiring in September 2016, at a ﬁxed interest rate of 3.96%. is secured over plant and equipment acquired by SiS1 at its Nelson factory. The asset Provexis plc Annual report and accounts 2013 45 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 19. Deferred tax Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 23% (2012: 24%). Details of recognised in other comprehensive income are as follows: the deferred tax asset and liability, amounts recognised in proﬁt or loss and amounts Asset 2013 £ — 110,348 110,348 Asset 2012 £ — 128,948 128,948 Liability 2013 £ (450,789) — (450,789) Liability 2012 £ (535,072) — (535,072) (Charged) / credited to proﬁt or loss 2013 £ (Charged) / credited to equity 2013 £ Net 2013 £ (450,789) 110,348 (340,441) 84,283 (18,600) 65,683 — — — (Charged) / credited to proﬁt or loss 2012 £ (Charged) / credited to equity 2012 £ Net 2012 £ (535,072) 128,948 (406,124) 49,590 128,948 178,538 — — — Business combinations Available losses Net tax assets / (liabilities) Business combinations Available losses Net tax assets / (liabilities) A deferred tax asset of £110,348 (2012: £128,948) 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 £4,030,256 (2012: £4,199,712) have not been recognised on the basis is not certain. Assuming a prevailing tax rate of 23% (2012: 24%) that when the timing differences reverse, the unrecognised deferred tax asset comprises: their future economic beneﬁt Depreciation in excess of capital allowances Other short term timing differences Unutilised tax losses Share-based payments Year ended 31 March 2013 £ Year ended 31 March 2012 £ 23,068 1,540 3,922,672 82,976 38,846 7,314 3,832,116 321,436 4,030,256 4,199,712 Provexis plc Annual report and accounts 2013 46 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 20. 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 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 7-Nov-11 5.0 10,000,000 pence Share price at grant date pence 2.0 Expected volatility Risk free rate Expected life 75% 3.00% years 3 Fair value per share under warrant pence 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 the historical volatility is patterns that may occur. The expected volatility reﬂects the assumption that 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 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 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). fully paid Ordinary Shares at the EFF is not equal Provexis plc Annual report and accounts 2013 47 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 20. 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 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 the new ordinary shares and effectively carry no value as a result. Accordingly, the holders of 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 2012 Issued on exercise of share options Issued on subscription – equity ﬁnancing facility At 31 March 2013 Ordinary 0.1p shares number 1,469,832,215 4,000,000 44,818,764 Deferred 0.9p shares number 401,724,366 — — Total number 1,871,556,581 4,000,000 44,818,764 1,518,650,979 401,724,366 1,920,375,345 At 31 March 2012 Issued on exercise of share options Issued on subscription – equity ﬁnancing facility At 31 March 2013 Ordinary 0.1p shares £ Deferred 0.9p shares £ 1,469,833 4,000 44,818 1,518,651 3,615,519 — — 3,615,519 Total £ 5,085,352 4,000 44,818 5,134,170 Total number Ordinary 0.1p shares number 1,196,516,929 3,000,000 35,335,689 166,666,662 68,312,935 Deferred 0.9p shares number 1,598,241,295 401,724,366 3,000,000 — 35,335,689 — — 166,666,662 68,312,935 — 1,469,832,215 401,724,366 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 Total £ 4,812,036 3,000 35,336 166,667 68,313 5,085,352 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 Provexis plc Annual report and accounts 2013 48 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 20. Share capital (continued) Share re-organisation (continued) During the year ended 31 March 2013 the Company issued ordinary shares of 0.1p each as follows: Date 27.04.12 23.05.12 03.09.12 Reason for issue Exercise of share options Share subscription – equity ﬁnancing facility Share subscription – equity ﬁnancing facility Shares issued £ Number 4,000 13,198 31,620 4,000,000 13,197,880 31,620,884 48,818 48,818,764 During the year ended 31 March 2012 the Company issued ordinary shares of 0.1p each as follows: Date 24.06.11 24.06.11 27.07.11 13.12.11 As part of shares. Reason for issue Acquisition Placing Open offer Exercise of share options Shares issued £ Number 35,336 35,335,689 166,667 166,666,662 68,312,935 3,000,000 68,313 3,000 the proposed demerger, detailed in note 26, the directors intend to cancel the deferred 273,316 273,315,286 21. 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. is In the event 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 option holder’s employment that formerly The Company undertook a reverse takeover of Provexis Natural Products Limited (‘‘PNP’’, 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. At 31 March 2013 the number of ordinary shares subject to options granted over the 2005 and prior option schemes were: EMI options 31 March 2013 31 March 2012 Weighted average exercise price (pence) Weighted average share price at date of exercise (pence) Number Weighted average exercise price (pence) Number 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 1.42 — 0.90 — 1.44 — 59,802,021 — — (4,000,000) 2.00 — — 1.07 51,552,031 2.80 27,949,990 0.90 (3,000,000) 2.80 (16,700,000) — 55,802,021 1.42 59,802,021 Provexis plc Annual report and accounts 2013 49 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 21. Share options (continued) EMI options (continued) The exercise price of EMI options outstanding at the end of the year ranged between 0.9p and 6.28p (2012: 0.9p and 6.28p) and their weighted average contractual life was 3.9 years (2012: 6.9 years). Of the total number of EMI options outstanding at the end of the year, 44,552,031 (2012: 37,385,456) had vested and were exercisable at the end of the year. Their weighted average exercise price was 1.09 pence (2012: 1.16 pence). Unapproved options Outstanding at the beginning of the year Granted during the year Outstanding at the end of the year 31 March 2013 31 March 2012 Weighted average exercise price (pence) Number Weighted average exercise price (pence) Number 2.28 34,269,627 — — 1.18 10,919,617 2.80 23,350,010 2.30 34,269,627 2.28 34,269,627 The exercise price of unapproved options outstanding at the end of the year ranged between 0.9p and 6.28p (2012: 0.9p and 6.28p) and their weighted average contractual life was 6.9 years (2012: 8 years). the total number of unapproved options outstanding at Of the year, 10,919,617 (2012: 10,919,617) had vested and were exercisable at the end of the year. Their weighted average exercise price was 1.23 pence (2012: 1.18 pence). the end of 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 Share price at grant date Expected volatility Risk free rate Expected life 1 2 3 4 5 06-Jun-07 29-Nov-07 26-Aug-08 01-Oct-08 17-Jun-11 pence 2.875 3.38 0.9 0.9 2.8 17,304,347 2,751,479 44,166,575 12,000,000 51,300,000 pence 2.75 3.00 0.87 0.725 2.00 78% 65% 65% 65% 88% 4.44% 3.77% 4.45% 4.39% 4.48% years 10 10 10 10 10 An expected dividend yield of 0% has been used in all of the above valuations. Fair value per share under option pence 1.42 1.06 0.585 0.485 1.17 The expected life of exercise patterns that may occur. The expected volatility reﬂects the assumption that volatility is indicative of future trends, which may not necessarily be the actual outcome. the options is based on historical data and is not necessarily indicative of the the historical The total charge for the year relating to employee share-based payment plans was £179,283 (2012: £141,461) all of which related to equity settled share-based payment transactions. The Company carried out a share re-organisation on 28 August 2008, which is further detailed in note 20 to the consolidated ﬁnancial statements. 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 2013 50 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 22. Reserves 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 – equity ﬁnancing facility At 31 March 2012 Loss for the year Share-based charges Issue of shares – exercise of share options Issue of shares – equity ﬁnancing facility 23 May 2012 Issue of shares – equity ﬁnancing facility 3 September 2012 Share premium reserve £ 16,909,650 — — — 2,333,333 (199,380) 956,381 (37,539) 24,000 Warrant reserve Merger reserve Retained earnings Total attributable to equity holders of the parent £ Non- controlling interest Total reserves £ £ 6,669,094 (136,459) (3,955,488) (82,273) 141,461 — — 325,265 — 2,333,333 (199,380) — — 956,381 (37,539) — 24,000 £ 115,980 — — — — — — — — £ £ 6,805,553 6,273,909 (16,493,986) (3,873,215) — (3,873,215) 141,461 141,461 — — 325,265 325,265 — 2,333,333 — (199,380) — — 956,381 — — (37,539) — — 24,000 — — 12,387 (115,980) — 60,000 — — — — (103,593) 60,000 — — (103,593) 60,000 19,998,832 — — 32,000 230,504 508,087 60,000 — — — 6,599,174 (20,225,740) — (4,338,600) 179,283 — — — 6,432,266 (4,338,600) 179,283 32,000 (218,732) (53,106) — — 6,213,534 (4,391,706) 179,283 32,000 — — — — — — 230,504 508,087 — — 230,504 508,087 At 31 March 2013 20,769,423 60,000 6,599,174 (24,385,057) 3,043,540 (271,838) 2,771,702 The following describes the nature and purpose of each reserve within total equity: Share capital Amount subscribed for share capital at nominal value. Share premium Amount subscribed for share capital in excess of nominal value. Warrant reserve Merger reserve 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 20). 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. Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income. 23. Pension costs The pension charge represents contributions payable by the Group to independently administered funds which during the year ended 31 March 2013 amounted to £24,903 (2012: £42,434). Pension in respect of pension contributions payable but not yet paid at 31 March 2013 totalled £9,057, contribution entitlements where employees had not yet provided details of the funds to which the contributions should be made (2012: £30,474). Provexis plc Annual report and accounts 2013 51 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the consolidated ﬁnancial statements continued 24. 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 2013 £ 189,403 151,342 186,762 527,507 31 March 2012 £ 146,456 152,500 372,500 671,456 Operating lease payments primarily 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. 25. 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 Fruitﬂow1 in all major global markets. DSM will invest substantially in the manufacture, technology development, marketing and sale of Fruitﬂow1 in the coming years. Provexis will continue to contribute scientiﬁc expertise and will is collaborate in areas such as cost of goods optimisation and regulatory matters. The ﬁnancial model 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. Revenue recognised by the Group under agreements with DSM amounted to £34,351 (2012: £5,779). At 31 March 2013 the Group was owed £23,009 (2012: £5,779) by DSM. 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 17. 26. Post balance sheet events On 28 June 2013 the Group announced its intention to separate SiS (Science in Sport) Limited from the this separation will be effected by way of a demerger of SiS Provexis Group. (Science in Sport) Limited to a new company called Science in Sport plc. Science in Sport plc will seek admission of its entire issued and to be issued ordinary share capital to trading on AIM on or around 9 August 2013. is proposed that It In order to provide ongoing working capital for each of the demerged businesses and to pay the costs associated with the demerger, Science in Sport plc has announced that it has undertaken a conditional placing to raise £2.25 million (before commission and expenses). The demerger and placing are conditional General Meeting proposed for 15 July 2013, and the subsequent conﬁrmation of reduction of capital by the Court. inter alia upon the approval of Provexis plc shareholders at a the Company’s Further information on the proposed demerger and admission of Science in Sport plc to AIM can be found in the Circular, and Admission to trading on AIM document, which were issued on 28 June 2013. Copies of the Circular and the Admission to trading on AIM document can be downloaded from Provexis plc’s website www.provexis.com. Provexis plc Annual report and accounts 2013 52 c 1 0 8 5 9 7 p u 0 3 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 As at 31 March 2013 £ As at 31 March 2012 £ 7,035,336 8,151,922 57,962 1,337,898 1,395,860 450,591 60,000 5,206,256 5,266,256 1,151,476 1,846,451 6,417,732 8,881,787 14,569,654 — (239,896) 8,881,787 14,329,758 5,134,170 20,769,423 60,000 (17,081,806) 5,085,352 19,998,832 60,000 (10,814,426) Notes 3 4 4 5 6 8 9 9 9 Equity shareholders’ funds 10 8,881,787 14,329,758 These ﬁnancial statements were approved and authorised for issue by the Board on 28 June 2013. The notes on pages 54 to 57 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 2013 53 c 1 0 8 5 9 7 p u 0 4 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the parent company ﬁnancial statements Accounting policies 1. The parent company ﬁnancial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards. Going concern The going concern basis has been applied in preparing the parent company ﬁnancial statements for the reasons identiﬁed and disclosed in note 1 to the consolidated ﬁnancial statements. 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. 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 Equity Financing Facility. The Group has issued warrants to Darwin Strategic Limited as part of These warrants have been measured 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. fair value at Post balance sheet events Details of post balance sheet events relevant consolidated ﬁnancial statements. to the parent company are included in note 26 to the Proﬁt attributable to shareholders 2. 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 £6,446,663 (2012: £5,091,411) which is dealt with in the ﬁnancial statements of the Company. The total fees of the Group’s auditor, Chantrey Vellacott DFK LLP, for services provided are analysed in note 4 to the consolidated ﬁnancial statements. Total fees for the year were £15,000 (2012: £28,000 payable to BDO LLP). The parent company did not have any employees in the year and therefore there were no payroll costs or pension costs (2012: Nil). Provexis plc Annual report and accounts 2013 54 c 1 0 8 5 9 7 p u 0 4 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the parent company ﬁnancial statements continued 3. Investments Cost Provision for impairment Net book value 31 March 2013 £ 31 March 2012 £ 8,418,255 (1,382,919) 8,418,255 (266,333) 7,035,336 8,151,922 At 31 March 2013 the Company owned the following material subsidiary undertakings: Share of issued ordinary share capital, and voting rights Country of incorporation and operation 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 Business activity 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 Total debtors 5. Cash and cash equivalents Cash at bank and in hand 31 March 2013 £ 31 March 2012 £ 57,962 57,962 60,000 60,000 1,337,898 5,206,256 1,337,898 5,206,256 1,395,860 5,266,256 31 March 2013 £ 450,591 450,591 31 March 2012 £ 1,151,476 1,151,476 Provexis plc Annual report and accounts 2013 55 c 1 0 8 5 9 7 p u 0 4 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A 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 2013 £ 31 March 2012 £ — — (239,896) (239,896) Deferred tax 7. Deferred tax assets amounting to £59,331 (2012: £257,959) 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 2012 Issued on exercise of share options Issued on subscription – equity ﬁnancing facility Ordinary 0.1p shares number 1,469,832,215 4,000,000 44,818,764 Deferred 0.9p shares number 401,724,366 — — Total number 1,871,556,581 4,000,000 44,818,764 At 31 March 2013 1,518,650,979 401,724,366 1,920,375,345 At 31 March 2012 Issued on exercise of share options Issued on subscription – equity ﬁnancing facility At 31 March 2013 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 Ordinary 0.1p shares £ 1,469,833 4,000 44,818 1,518,651 Ordinary 0.1p shares Number 1,196,516,929 3,000,000 35,335,689 166,666,662 68,312,935 Deferred 0.9p shares £ 3,615,519 — — 3,615,519 Deferred 0.9p shares number 401,724,366 — — — — Total £ 5,085,352 4,000 44,818 5,134,170 Total number 1,598,241,295 3,000,000 35,335,689 166,666,662 68,312,935 1,469,832,215 401,724,366 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 Total £ 4,812,036 3,000 35,336 166,667 68,313 5,085,352 Details of the share subscriptions, share placings, and the shares issued by the Company during the two years ended 31 March 2013 are given in note 20 to the consolidated ﬁnancial statements. Details on the share option scheme and share based payment charge for the year are given in note 21 to the consolidated ﬁnancial statements. Provexis plc Annual report and accounts 2013 56 c 1 0 8 5 9 7 p u 0 4 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Notes to the parent company ﬁnancial statements continued 9. Reserves At 1 April 2012 Retained loss for the year Share-based charges Issue of shares equity ﬁnancing facility 23 May 2012 Issue of shares equity ﬁnancing facility 3 September 2012 Issue of shares – exercise of share options At 31 March 2013 10. Shareholders’ funds Reconciliation of movement in shareholders’ funds. Loss for year Share-based payment charge (note 21) 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 in shareholders’ funds Opening shareholders’ funds Closing shareholders’ funds Share premium reserve £ 19,998,832 — — 230,504 508,087 32,000 20,769,423 Warrant reserve Retained earnings £ £ 60,000 (10,814,426) — (6,446,663) 179,283 — — — — — — — 60,000 (17,081,806) 31 March 2013 £ (6,446,663) 179,283 48,818 770,591 — — — 31 March 2012 £ (5,091,411) 141,461 273,316 3,076,795 — (103,593) 60,000 (5,447,971) 14,329,758 (1,643,432) 15,973,190 8,881,787 14,329,758 11. Related party transactions the exemption conferred by Financial Reporting Standard 8 The Company has taken advantage of ‘‘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 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 2013 (2012: Nil). At 31 March 2013 the Company was owed £5,509 by Provexis (IBD) Limited (31 March 2012: 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 £212,426 (2012: £329,091). Provexis (IBD) Limited owed Provexis group companies and Provexis Nutrition limited a total of £1,968,110 at 31 March 2013 (31 March 2012: owed £1,755,684). Provisions of £1,968,110 (2012: £1,755,684) 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 25 to the consolidated ﬁnancial statements. Provexis plc Annual report and accounts 2013 57 c 1 0 8 5 9 7 p u 0 4 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A Company information Company number Directors Audit committee Remuneration committee Registrars Secretary and registered ofﬁce Nominated adviser and broker Principal solicitors Auditors 05102907 C D Buck J M Clarke K Rietveld S N Moon I Ford C D Buck J M Clarke K Rietveld 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 Chantrey Vellacott DFK LLP Prospect House Queens Road Reading Berkshire RG1 4RP Provexis plc Annual report and accounts 2013 58 c 1 0 8 5 9 7 p u 0 4 0 P r o o f 2 : 2 8 . 6 . 1 3 _ 0 9 : 2 9 B / L R e v i s i o n : 0 O p e r a t o r P u t A

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