Pyxis Tankers Annual Report 2013

FY2013 Annual Report · Pyxis Tankers
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Provexis plc

Annual report and accounts 2013

Company number 05102907

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Contents

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53
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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

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Key highlights

Key highlights

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*

*

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*

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*

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

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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

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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.

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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

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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.

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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.

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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.

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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.

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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,

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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.

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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.

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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

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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.

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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.

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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.

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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).

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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

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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

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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

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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

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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

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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

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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

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