Half Yearly Report

RNS Number : 4945D

Provexis PLC

03 December 2009

 



PROVEXIS plc

("Provexis" or the "Company")

UNAUDITED INTERIM RESULTS for the SIX MONTHS ended 30 SEPTEMBER 2009

Provexis plc (PXS.L), the life-science business that discovers, develops and licenses scientifically-proven functional food, medical food and dietary supplement technologies, announces its unaudited interim results for the six months ended 30 September 2009.

Key highlights

·         Fruitflow® gains Article 13(5) adoption of scientific substantiation of health claim under European Food Safety Authority regulatory framework.

 

·         Commercial discussions for Fruitflow® continue with potential global license and alliance partners.

 

·         Clinical trial for Crohn's Disease medical food started during the period, with first patients now recruited and treatment to commence in December.

 

·         £5m capital raised in two-part subscription in September and October 2009. 

 

·         Open offer announced today to raise up to £2.1m.

 

·         Company actively reviewing potential acquisitions of functional foods, medical foods and dietary supplements to complement existing technology portfolio.

 

 

Key financial results

 

·         Reduced loss for the period of £642,000 (2008: loss of £766,000).

 

·         Cash balance £2.280m (2008: £2.223m).

 

·         Loss per share 0.08p (2008: 0.16p).

 

Stephen Moon, Chief Executive Officer of Provexis plc, commented:

"We have made very good progress in the first half of this year on a number of fronts, including a significant strengthening of the balance sheet and an industry first European health claim adoption for our lead Fruitflow® heart health technology. I expect that once we receive final consumer claim wording from the European Commission, this will accelerate our discussions with global food and ingredient partners and allow us to successfully commercialise Fruitflow®. We will also focus on extending the product pipeline through acceleration of current technologies and the potential acquisition of new technologies. The second half of the year promises to be exciting for Provexis."

-ends-

For further information please contact:

Stephen Moon, Chief Executive

Provexis plc                                                       Tel:    [phone]      

Evolution Securities Limited (NOMAD)         Tel:    [phone]

Sam Plumptre/Bobbie Hilliam

McGrory Communications (PR)                      Tel:    [phone]

Geraldine McGrory

  Chairman's statement

While the difficult economic climate has presented companies in the sector with some significant challenges, I am pleased to say that Provexis has made very good progress in the first half of the year and shareholder value has been substantially enhanced. We strengthened our balance sheet through a £5m share subscription and today we have announced an open offer to raise up to a further £2.1m by the end of the year. 

The Board is also currently working together with the executive team to capitalise on the Company's balance sheet strength by accelerating development of the product pipeline and evaluating potential acquisition opportunities for new technologies. This work is being undertaken to provide medium and long-term shareholder value beyond the opportunities available to the Company from Fruitflow®. 

We will continue to enhance our scientific capability through the recruitment of further scientific skills and intend to build a greater presence in the North West of England, focused on gastro-intestinal health. This will complement our already established cardiovascular health capability.

Even with many exciting developments underway at the Company, the Directors will continue to remain focused on overhead control and cash management. 

The Directors believe that a current opportunity exists to grow Provexis into a leading company in the functional food, medical food and dietary supplement technology markets, through developing its portfolio of technologies and we will focus on this in the remainder of the financial year.

Dawson Buck 

Chairman  

  Chief Executive's statement

Strategy

We continue to execute our strategy of discovery, development and licensing functional food, medical food and dietary supplements. The Company raised £5.0m of capital by way of a share subscription and we have announced today an open offer to raise up to a further £2.1m before the end of the financial year. The Directors believe that these cash resources are sufficient to commercialise the existing technologies of the Company.

Given the substantially strengthened balance sheet of the Company, while remaining focused on the commercialisation of our existing technology, the Directors intend to pursue new opportunities where available to increase shareholder value. These opportunities may include, but are not limited to, acquiring functional food, medical food and dietary supplement technologies that complement our current pipeline and/or acquiring companies with existing revenue generating products. The Directors believe that a current opportunity exists to grow Provexis into a leading company in the functional food, medical food and dietary supplement technology markets, through developing its portfolio of technologies. An extensive screening process of technologies and companies is underway and the Company will provide a further update in due course.

The Directors believe that difficult economic conditions and the uncertainty caused in the sector by the new European Commission health claims legislation resulted in some slowing or reprioritisation of innovation across the industry. However, the recent adoption by the European Food Safety Authority of an opinion on the scientific substantiation of a health claim for our lead Fruitflow® heart health technology has raised the profile of Provexis and we are well placed to capitalise as market conditions improve, given that once approved health claims will be more attractive to license partners. We continue to maintain dialogue with global brand owners and ingredients companies and expect these discussions to progress once the European Commission publishes the approved consumer wording for Fruitflow®. With the clinical trial for Crohn's Disease now underway, we intend to commence discussions with potential commercial partners in early 2010.   

We continue to strengthen our scientific team and are currently expanding our operations in Liverpool, recruiting a research and development director and scientists to support our gastro-intestinal programme. Together with our already established cardiovascular team in Aberdeen, the Company will have highly capable research centres in two important areas of consumer health concern.

While we are committed to judiciously expanding our scientific team and extending our product pipeline, the focus will remain on overhead and cost management.     

Fruitflow®

The Company announced on 28 May 2009, that Fruitflow® was the first technology to have an opinion adopted on the scientific substantiation of a health claim by the European Food Safety Authority under Article 13(5) of Regulation (EC) No 1924/2006 on nutrition and health claims made on foods. As previously announced, the European Commission has since been in an ongoing period of review, as it considers the health claim wording for Fruitflow® which may be used on end consumer products under the Regulation. The Company has been in regular contact with the European Commission throughout this period and confirms that it has been informed that the process is now in an advanced stage. 

The Company continues to maintain dialogue with global brand owners and ingredients companies for the commercialisation of Fruitflow® and the Directors expect these discussions to advance significantly once the health claim wording is finalised.

A human trial comparing the Fruitflow® technology with aspirin, a recognised anti-thrombotic product, is underway in Aberdeen. Interim results were positive, with Fruitflow® showing up to 28% reduction from baseline platelet aggregation occurring through three different biological pathways, while aspirin showed up to 60% reduction in one of these pathways, but no effect on the other two. The broader antiplatelet effect of Fruitflow® reflects the Company's aim to provide a daily dietary supplement with a significant effect on blood flow, but without suppressing platelet aggregation completely. The trial is due to be completed and results announced in January 2010.

The focus for the research and development programme currently and for 2010 is the development of our current Deep Vein Thrombosis claim area, as well as extending the range of product applications. In the longer term we will seek to develop the technology for use in the areas of metabolic syndrome and type-II diabetes.

  NSP#3G plantain extract

The first patients have now been recruited for the two-centre Crohn's disease trial in the North West of England. This recruitment phase has seen a substantial number of responses and first patient treatments will take place by the end of December 2009. We expect this trial to conclude by the end of 2010. The commencement of the trial is an important milestone and it will help facilitate the start of discussions with potential commercial partners.

The research and development team has also further developed the application of NSP#3G for c.difficile, the so called hospital 'super bug' and a development programme for this application may commence in early 2010, subject to prioritisation within the broader pipeline.  

Helicobacter pylori

Our option agreement with the University of Manchester and associated research work into an extract for the treatment of helicobacter pylori, a major cause of peptic ulcers, has been extended for a period, to further analyse the efficacy of the extract. The Northwest Regional Development Agency granted the Company £100,000 for this project which has directly funded a significant portion of the costs of the development programme. 

Outlook

While the outlook for economic environment remains cautious, we expect to see commercial progress in 2010 and this will be further supported by our ground breaking European Commission health claim. We remain very focused on revenue development for our key Fruitflow® technology with positive discussions in place with global brand owners and ingredients companies. We also expect to accelerate commercial progress for our NSP#3G plantain product for the treatment of Crohn's Disease. 

In addition to accelerating the development of our current pipeline, we expect to make progress in seeking acquisitions to extend the product portfolio, in order to diversify risk and create medium and long-term shareholder value.

Stephen Moon 

Chief Executive

  Finance Director's statement

Revenue and grant income

Revenue for the six months ended 30 September 2009 was £10,000 (2008: £NIL).

Grant income was £80,000 (2008: £NIL), being the final part of a £100,000 grant which was awarded to the Group in January 2009 by The Northwest Regional Development Agency (NWDA). The grant is in respect of the Group's helicobacter pylori project with the University of Manchester, for a new technology for the treatment and prevention of peptic ulcers.

Research and development costs

Research and development costs for the six months ended 30 September 2009 were £289,000 (2008: £315,000).

Administrative costs

Expenditure on administrative costs for the six months ended 30 September 2009 was reduced to £487,000, from £491,000 in the six months ended 30 September 2008. The Group's cost base and its resources have been and will continue to be tightly managed.

Taxation

A research and development tax credit of £24,000 (2008: £26,000) in respect of research and development expenditure incurred has been recognised in the financial statements for the period and has been included in other receivables at 30 September 2009. A £46,000 tax credit claim for the year ended 31 March 2008 was paid to the Group during the period.

Loss for the period

The overall loss after taxation for the six months ended 30 September 2009 was £642,000 (2008: £766,000) and the basic and diluted loss per share was reduced to 0.08p (2008: 0.16p).

Principal risks and uncertainties

The principal risks and uncertainties facing the Group remain those set out on pages 11 and 12 of the 2009 annual report and accounts, a copy of which is available on the Company's website www.provexis.com. The risks and uncertainties relate to patent protection and intellectual property rights, development risk, regulatory and competition risk, staff risk, collaboration and third party risk and financial risk. The Group's principal risks and uncertainties are expected to remain the same for the second half of the financial year.

Capital structure and funding

On 30 September 2009 the Company raised £1.024m gross from the first tranche of a £5.0m gross new share subscription to provide working capital and funding for pipeline development.

The net proceeds of the first tranche of the share subscription were £956,000 after share issue costs.

Cash and cash equivalents at 30 September 2009 were £2.280m (30 September 2008: £2.223m).

On 16 October 2009 the Company raised £3.976m gross from the second tranche of the £5.0m gross new share subscription. The net proceeds of the second tranche of the share subscription were £3.794m after share issue costs.

The £5.0m gross subscription involved the issue of 200,000,000 new ordinary shares at 2.5p per share. Full details of the subscription were provided in a circular to shareholders on 28 September 2009. The circular is available to download from the Company's website www.provexis.com.

On 3 December 2009 the Company announced that it proposed to raise up to a further £2.130m gross  from an Open Offer to shareholders, involving the issue of up to 85,211,664 new ordinary shares at 2.5p per share. Full details of the Open Offer were provided in a circular to shareholders on 3 December 2009. The circular is available to download from the Company's website www.provexis.com.

The Directors are of the opinion that at 3 December 2009, the Company's liquidity and capital resources are adequate to deliver the current strategic objectives and 2010 business plan and that the Group and Company remain a going concern.

Ian Ford

Finance Director

Consolidated statement of comprehensive income
Six months ended 30 September 2009		Unaudited	Unaudited	Audited
		six months	six months	year
		ended	ended	ended
		30 September	30 September	31 March
		2009	2008	2009
	Notes	£	£	£
Revenue		10,328	-	5,400
Grant income		80,000	-	20,000
Research and development costs		(288,871)	(307,975)	(634,611)
Administrative costs before impairment of goodwill		(486,581)	(491,162)	(967,111)
Impairment of goodwill		-	-	(3,099,328)
Total administrative costs		(486,581)	(491,162)	(4,066,439)
		------------	------------	------------
Loss from operations		(685,124)	(799,137)	(4,675,650)
Finance income		18,775	17,248	65,161
Finance costs		-	(10,016)	(10,017)
		------------	------------	------------
Loss before taxation		(666,349)	(791,905)	(4,620,506)
Taxation		24,000	25,945	50,000
		------------	------------	------------
Loss and total comprehensive expense for the period attributable to equity holders of the parent		(642,349)	(765,960)	(4,570,506)
		=======	=======	=======
Attributable to:
Equity holders of the parent		(642,349)	(765,960)	(4,570,506)
Minority interest		-	-	-
		------------	------------	------------
		(642,349)	(765,960)	(4,570,506)
		=======	=======	=======
Loss per share to equity holders of the parent
Basic and diluted - pence	2	0.08	0.16	0.71
		=======	=======	=======

All amounts relate to continuing operations.

Consolidated statement of financial position
30 September 2009	Unaudited	Unaudited	Audited
	30 September	30 September	31 March
	2009	2008	2009
	£	£	£
Non-current assets
Goodwill	3,802,685	6,902,013	3,802,685
Other intangible assets - development costs	37,541	27,610	37,287
Plant and equipment	57,573	64,619	66,941
	------------	------------	------------
Total non-current assets	3,897,799	6,994,242	3,906,913
Current assets
Trade and other receivables	114,413	132,850	76,942
Income tax asset	81,436	79,596	103,651
Cash and cash equivalents	2,279,932	2,223,256	1,678,263
	------------	------------	------------
Total current assets	2,475,781	2,435,702	1,858,856
Current liabilities
Trade and other payables	(339,907)	(311,508)	(233,973)
	------------	------------	------------
Total liabilities	(339,907)	(311,508)	(233,973)
	------------	------------	------------
Total net assets	6,033,673	9,118,436	5,531,796
	=======	=======	=======
Capital and reserves attributable to equity holders of the parent company
Share capital	4,479,029	4,404,138	4,434,907
Share premium reserve	8,996,187	7,875,441	7,979,558
Merger reserve	6,273,909	6,273,909	6,273,909
Retained earnings	(13,715,452)	(9,435,052)	(13,156,578)
	------------	------------	------------
Equity attributable to equity holders of the parent	6,033,673	9,118,436	5,531,796
Minority interests	-	-	-
	------------	------------	------------
Total equity	6,033,673	9,118,436	5,531,796
	=======	=======	=======

Consolidated statement of cash flows
Six months ended 30 September 2009	Unaudited	Unaudited	Audited
	six months	six months	year
	ended	ended	ended
	30 September	30 September	31 March
	2009	2008	2009
	£	£	£
Cash flows from operating activities
Loss after tax	(642,349)	(765,960)	(4,570,506)
Adjustments for:
Depreciation	9,833	10,482	20,917
Impairment of goodwill	-	-	3,099,328
Net finance income	(18,775)	(7,232)	(55,144)
Taxation	(24,000)	(25,945)	(50,000)
Share-based payment charge	83,475	29,610	112,630
	------------	------------	------------
Operating cash outflow before changes in working capital	(591,816)	(759,045)	(1,442,775)
Changes in trade and other receivables	(37,471)	147,250	147,435
Changes in trade and other payables	37,854	(49,988)	(127,523)
	------------	------------	------------
Cash used in operations	(591,433)	(661,783)	(1,422,863)
Tax credits received	46,215	83,123	83,123
	------------	------------	------------
Net cash outflow from operating activities	(545,218)	(578,660)	(1,339,740)
	------------	------------	------------
Cash flows from investing activities
Purchase of plant and equipment	(465)	(1,007)	(13,764)
Purchase of intangible assets	(254)	(7,013)	(16,690)
Interest received	18,775	17,248	61,770
	------------	------------	------------
Cash generated by investing activities	18,056	9,228	31,316
	------------	------------	------------
Cash flows from financing activities
Proceeds from issue of share capital - share placing	1,024,235	2,514,813	2,714,812
Expenses paid on share issue	-	(244,690)	(250,689)
Proceeds from exercise of share options	104,596	-	-
Interest paid	-	(10,016)	(10,017)
	------------	------------	------------
Cash generated by financing activities	1,128,831	2,260,107	2,454,106
	------------	------------	------------
	------------	------------	------------
Net increase in cash and cash equivalents	601,669	1,690,675	1,145,682
Opening cash and cash equivalents	1,678,263	532,581	532,581
	------------	------------	------------
Closing cash and cash equivalents	2,279,932	2,223,256	1,678,263
	=======	=======	=======

Consolidated statement of changes in equity					Total equity
30 September 2009					attributable
					to equity
	Share	Share	Merger	Retained	holders of	Minority	Total
	capital	premium	reserve	earnings	the parent	interests	equity
	£	£	£	£	£	£	£
At 31 March 2008	4,017,244	5,992,212	6,273,909	(8,698,702)	7,584,663	-	7,584,663
Share-based charges	-	-	-	29,610	29,610	-	29,610
Issue of shares - placing 28 August 2008	386,894	1,883,229	-	-	2,270,123	-	2,270,123
Total comprehensive expense for the period	-	-	-	(765,960)	(765,960)	-	(765,960)
	------------	------------	------------	------------	------------	------------	------------
At 30 September 2008	4,404,138	7,875,441	6,273,909	(9,435,052)	9,118,436	-	9,118,436
Share-based charges	-	-	-	83,020	83,020	-	83,020
Issue of shares - placing 8 October 2008	30,769	163,231	-	-	194,000	-	194,000
Reduction of premium on share issue	-	(59,114)	-	-	(59,114)	-	(59,114)
Total comprehensive expense for the period	-	-	-	(3,804,546)	(3,804,546)	-	(3,804,546)
	------------	------------	------------	------------	------------	------------	------------
At 31 March 2009	4,434,907	7,979,558	6,273,909	(13,156,578)	5,531,796	-	5,531,796
Share-based charges	-	-	-	83,475	83,475	-	83,475
Issue of shares - exercise of share options	3,152	101,444	-	-	104,596	-	104,596
Issue of shares - subscription 30 September 2009	40,970	915,185	-	-	956,155	-	956,155
Total comprehensive expense for the period	-	-	-	(642,349)	(642,349)	-	(642,349)
	------------	------------	------------	------------	------------	------------	------------
At 30 September 2009	4,479,029	8,996,187	6,273,909	(13,715,452)	6,033,673	-	6,033,673
	=======	=======	=======	=======	=======	=======	=======

1.    General information, basis of preparation and accounting policies

General information

Provexis plc is a public limited company incorporated and domiciled in Great Britain under the Companies Act 1985 (registration number 5102907). The address of the registered office is Thames Court, 1 Victoria Street, Windsor, Berkshire SL4 1YB, UK.

The main activities of the Group are those of discovering, developing and licensing scientifically-proven technologies for the global functional food, medical food and dietary supplement sectors.

Basis of preparation

The financial information presented in this document has been prepared in accordance with the Group's accounting policies as described below.

The interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and has neither been audited nor reviewed by the Company's auditors BDO LLP pursuant to guidance issued by the Auditing Practices Board.

The condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS). The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements. While the financial figures included in this half-yearly report have been computed in accordance with IFRS applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

The results for the year ended 31 March 2009 are not statutory accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s237(2) or (3) Companies Act 1985.

Copies of the interim results for the six months ended 30 September 2009 are being sent to all shareholders. Details can also be found on the Company's website at www.provexis.com. Further copies of the interim results and copies of the 2009 annual report and accounts can be obtained by writing to the Company Secretary, Provexis plc, Thames Court, 1 Victoria Street, Windsor, Berkshire SL4 1YB, UK.

This announcement was approved by the Board of Provexis plc for release on 3 December 2009.

Going concern

The Directors are of the opinion that at 3 December 2009, the Group and Company's liquidity and capital resources are adequate to deliver the current strategic objectives and 2010 business plan and that the Group and Company remain a going concern.

Use of estimates and assumptions

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and judgements are continually made and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable in the circumstances. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates.

The estimates and assumptions used are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

The Directors believe the main accounting judgements relate to the capitalisation of development expenditure under IAS38, the share-based payments charge and the recoverable amount of goodwill. Fuller information concerning the use of estimates and assumptions is provided in the 2009 annual report and accounts which can be found on the Company's website www.provexis.com.

Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2009, as described in those annual financial statements.

IAS 1 (Revised), 'Presentation of Financial Statements', has been adopted. The revised standard prohibits the

presentation of items of income and expense in the statement of changes in equity, requiring non-shareholder changes in equity to be presented separately from shareholder changes in equity. All non-shareholder changes in equity are required to be presented in a performance statement. IAS 1 (Revised) permits a choice between presenting a single performance statement (being a Statement of Comprehensive Income) or two statements (being an Income Statement and a Statement of Comprehensive Income). The Group has elected to present a single statement.

IFRS 8, 'Operating Segments', has been adopted. This standard replaces IAS 14, 'Segment Reporting' and effectively requires segmental information reported to be based on that which the Group's Board, which is considered the Group's chief operating decision maker, uses internally for the purposes of evaluating the performance of the Group's operating segments.

Revenue, net assets and results are wholly attributable to the principal activity of the Group and arise solely within the United Kingdom, therefore no segmental analysis has been reported.

The following new standards, amendments to standards and interpretations have been issued but are not effective for the year ending 31 March 2010. The new standards, amendments to standards and interpretations will be relevant to the Group but they have not been adopted early as the Directors do not expect these standards and interpretations to have a material effect on the financial statements:

• IFRS 3 (Revised) 'Business Combinations' effective 1 July 2009.

• IAS 27 (Amendment) 'Consolidated and Separate Financial Statements' effective 1 July 2009.

• 'Improvements to IFRSs (2010)' effective 1 July 2009 and 1 January 2010.

There are a number of standards, interpretations and amendments to published accounts not listed above which the Directors consider not to be relevant to the group.

2.    Loss per share

	Unaudited	Unaudited	Audited
	six months	six months	Year
	ended	ended	ended
	30 September	30 September	31 March
	2009	2008	2009
Basic and diluted loss per share amounts are calculated by
dividing the loss attributable to equity holders of the parent by
the weighted average number of ordinary shares in issue during
the period.
There are 62,801,948 share options in issue that are currently
anti-dilutive and have therefore been excluded from
the calculation of the diluted loss per share.
Loss for the period - £	642,349	765,960	4,570,506
	=======	=======	=======
Weighted average number of shares	819,782,706	471,492,178	644,794,819
	=========	=========	=========
Basic and diluted loss per share - pence	0.08	0.16	0.71
	=======	=======	=======

3.   Post balance sheet events

On 15 October 2009 the Company's Remuneration Committee modified the Performance Period and Performance Target of share options over 42,000,000 ordinary shares of 0.1p each held by certain Directors of the Company, 4.1% of the Company's 1,022,539,965 existing issued ordinary shares.

Following the changes agreed to the Performance Period and Performance Target share options over 21,000,000 ordinary shares of 0.1p each held by certain Directors of the Company vested on 15 October 2009. Share options over 21,000,000 ordinary shares of 0.1p each held by certain Directors of the Company will vest on 1 April 2011.

On 16 October 2009 the Company raised £3.976m gross from the second tranche of the £5.0m gross new share subscription. The net proceeds of the second tranche of the share subscription were £3.794m after share issue costs.

 

END

 

 

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