Preliminary Results

Provexis PLC 22 July 2005 Provexis plc 22 July 2005 PROVEXIS plc ('Provexis' or the 'Group') PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005 Provexis plc, the leading nutraceutical business and developer and marketer of superior functional foods, announces its preliminary results for the year ended 31 March 2005 Key points for the period: • Turnover increased to £609,000 (2004: £75,000) • Loss before share option costs £1,319,000 (2004: £855,000) • Cash balances £1,106,000 (2004: £187,000) Following a successful reverse take-over of Nutrinnovator Holdings plc and fund-raising the new Provexis plc was re-admitted to trading on the AIM market of the London Stock Exchange plc on 23 June 2005 Stephen Franklin, Chief Executive Officer of Provexis plc, commented: 'It was a year of considerable progress for the business which culminated, after the year end, in the reverse takeover, fundraising and re-admission to AIM by Provexis on 23rd June 2005. The enlarged business has a management team which combines experienced marketing and sales talent with strong scientific credentials and capability coupled with a strong pipeline of innovative products that clearly differentiates us in the functional foods market. We believe the Group is well positioned to take advantage of the strong growth in functional foods and with Sirco, our heart health drink, scheduled to be launched later this year we look forward to the future with confidence.' For further information, please contact:- Provexis plc Tel: 020 8392 6631 Stephen Franklin, Chief Executive Officer Mob: 07710 348774 Stephen Moon, Commercial Director Arbuthnot Securities Limited Tel: 020 7012 2000 Tom Griffiths Bell Pottinger Tel: 020 7861 3932 Ann-marie Wilkinson Chairman's statement The Group achieved considerable progress both in the year under review and since the year end, culminating in the successful reverse takeover by Provexis Limited of Nutrinnovator Holdings plc and the associated fundraising and re-admission of the new Provexis plc to trading on the AIM market of the London Stock Exchange plc on 23 June 2005. The functional food sector continues to grow strongly in all major markets worldwide, and the strategy of developing food and beverage products to meet this demand was implemented effectively by the management team. September 2004 saw the management agree a joint venture with Provexis Limited to co-develop and commercialise Sirco(TM), a functional fruit juice proven to maintain heart health. Sirco(TM) contains Fruitflow(TM), a patented bioactive food technology developed over a five year period by Provexis Limited. As this venture developed, the complementary skills of the respective management teams became apparent, resulting in us entering discussions with Nutrinnovator to combine the businesses by means of a reverse takeover. Management have developed a strong functional food pipeline, through their relationships with globally renowned research institutes both in the UK and New Zealand, and have accessed new technologies in the areas of cancer prevention and heart health. Management has focused on cash preservation and despite slower than expected trading of Altu food bar and investment of resource into development of the pipeline, cash balances at the year end were in line with expectations. The reverse takeover resulted in the resignation of three directors in preparation for the merging of the Nutrinnovator and Provexis businesses. Doug Gardner and Thornton Mustard have left the Group, and I wish to thank them for their efforts in developing the Nutrinnovator business. Fiona Vigar has stepped down from the Board of the enlarged group, but continues to play an important role as Director of Marketing. With the benefit of the combined skills of the new management team, the depth of the science-based functional food pipeline and the forthcoming launch of Sirco(TM) with major food retailers in the UK, management are confident in its ability to enhance shareholder value. Dawson Buck Chairman Management review The enlarged business has a management team which now combines experienced marketing and sales talent with strong scientific credentials and capability. This mix of talent is core to our competitive advantage in a market where few companies are able to both develop, and successfully market, scientifically-proven functional foods. SircoTM heart health juice The Group has successfully developed and is preparing to launch Sirco(TM), the first heart health drink to contain the patented FruitflowTM technology. FruitflowTM, developed by Provexis Limited under the name CardioFlow(R), is a natural bioactive food ingredient extracted from tomato. When added to a fruit juice drink, where the extract is colourless and tasteless, it delivers proven heart health benefits to the consumer within hours of consumption. Fruitflow(TM) was developed by Provexis in order to help regular 'healthy' consumers reduce the risk of heart attack and stroke. The natural bioactive works by reducing blood platelet aggregation, a significant contributing factor to a thrombosis (internal blood clot). Considerable progress has been made with the new Sirco(TM) brand and two varieties (Orange, and Blueberry & Apple) have been developed in both one litre cartons and 250ml bottles. The product will carry the claim 'Helps to Maintain a Healthy Heart and Benefits Circulation' and this is supported by scientific data developed by Provexis over the last four years. Positive discussions have been held with major retailers regarding the launch of SircoTM and the UK launch date will be announced in due course. Altu food bar The limited investment in the Altu food bar, combined with a highly competitive market, resulted in sales of £299,667, significantly below expectations. The product enjoys national retail distribution in Waitrose, Boots, Holland & Barrett and Julian Graves, together with some wholesale distribution. A multipack format was launched in Waitrose in March, and Boots have agreed to extend the range and distribution in their stores. We believe that the palatability and nutritional values of the Altu product may lend itself as a vehicle to carry future functional food products. As most functional food products are either beverages or bars, Altu enables the business to potentially exploit both categories in the future. The Board of the enlarged group have agreed to closely monitor and review the future of the brand. New product development The emergence of the Fruitflow(TM) opportunity resulted in the withdrawal of Altu Black, the lower sugar cola, following a London-based test marketing exercise. Whilst this exercise established the potential of the Altu Black product, management felt that continuing to seek technologies with a point of difference based on scientifically-supported functional claims offered greater opportunities to enhance shareholder value. The Group reached heads of agreement with The Riddet Centre, a New Zealand based research institute, for a long-term collaboration with the Group having a right of first view of the Riddet pipeline. In addition, a specific Omega-3 heart health technology is currently being assessed, with a view to the Group entering into a joint venture agreement with The Riddet Centre to commercialise it. We are also in negotiation with both The Institute of Food Research and Seminis Inc. to develop beverages with an active ingredient which is shown to reduce the risk of developing certain types of cancer. The enlarged group (from the former Provexis Limited product development portfolio) now also benefits from a novel medical food product in development for the dietary management of Crohn's Disease. Crohn's Disease is a chronic, relapsing disease of the intestine which affects 1 in a 1000 people in the UK. Management of the condition is currently restricted to various drug regimes and surgery. The medical food, containing a patented extract from plantain, has successfully completed a pre-clinical phase and enters a human trial later in the year. The Group has a three year technology acquisition agreement with Plant Bioscience Limited who continue to access their global network of 35 research institutes to find further functional food opportunities. Financial performance The Group focused primarily on cash preservation, given the slower than expected trading of Altu food bar and the resource requirements of the new product development strategy. Cash balances of £1,105,689 at the year end were in line with expectations. The Group incurred losses of £1,824,094, which included a charge of £505,636 related to share options under accounting treatments UITF 17 and UITF 25. Net assets were £509,823 at the year end. Revenues were £608,667 which included £298,667 of Altu food bar sales, and a further £310,000 paid to the Group by Provexis Limited as part of a cost recovery agreement which reimbursed the Group for product development costs related to the new Sirco(TM) product. Outlook We believe the Group is well positioned to take advantage of the strong growth in functional foods. The quality of the science which will underpin our product claims and the speed with which we are able to develop and launch new products are both, in our view, primary differentiators from the competition. The major focus for management is the launch and establishment of the Sirco(TM) heart health product. Discussions with retailers, the development of the marketing and PR strategy, and the development of the required chilled supply chain are all well advanced. In addition, we will continue to maintain and develop the current distribution base for the Altu Food Bar and ongoing negotiations and technology acquisition discussions with new product development partners will continue, with the intention of building a solid future product pipeline. Stephen Franklin Chief Executive Officer Provexis plc Consolidated profit and loss account for the year ended 31 March 2005 ____________________________________________________________________________________________ Ten months Year ended ended 31 March 31 March Note 2005 2004 £ £ Turnover 608,667 74,878 Cost of sales (469,695) (52,328) ________ ________ Gross profit 138,973 22,550 Distribution costs (30,821) (9,575) Administrative expenses Share option costs 3 (505,636) - Other administrative expenses (1,441,158) (872,854) ________ ________ (1,946,794) (872,854) Operating loss (1,838,642) (859,879) Interest receivable 34,286 5,866 Interest payable and similar charges (19,738) (543) ________ ________ Loss on ordinary activities before and after taxation and transferred from reserves (1,824,094) (854,556) ________ ________ Loss per ordinary share Basic and diluted, pence (11.4) (6.4) ________ ________ All amounts relate to continuing activities. All recognised gains and losses in the current and prior periods are included in the profit and loss account. Provexis plc Consolidated balance sheet at 31 March 2005 _____________________________________________________________________________________________________ 31 March 31 March 31 March 31 March Note 2005 2005 2004 2004 £ £ £ £ Fixed assets Tangible assets 11,455 17,228 Current assets Stocks 47,243 61,891 Debtors 288,984 57,225 Cash at bank and in hand 1,105,689 186,938 ________ ________ 1,441,916 306,054 ________ ________ Creditors: amounts falling due within one year Convertible debt (400,000) - Other (543,548) (215,362) ________ ________ (943,548) (215,362) ________ ________ Net current assets 498,368 90,692 ________ ________ Total assets less current liabilities 509,823 107,920 Creditors: amounts falling due after more than one year - (129) ________ ________ Net assets 509,823 107,791 ________ ________ Capital and reserves Called up share capital 332,184 265,583 Share premium account 4 1,335,192 - Merger reserve 4 1,137,616 777,517 Share option reserve 4 420,903 - Profit and loss account 4 (2,716,073) (935,309) ________ ________ Shareholders' funds - equity 509,823 107,791 ________ ________ Provexis plc Consolidated cash flow statement for the year ended 31 March 2005 ____________________________________________________________________________________________________ Ten months Ten months Year ended Year ended ended ended 31 March 31 March 31 March 31 March Note 2005 2005 2004 2004 £ £ £ £ Net cash outflow from operating activities 5 (1,247,519) (767,645) Returns on investments and servicing of finance Interest received 25,566 5,854 Interest paid on convertible loan notes (16,900) - Interest element of finance lease rental payments (238) (543) ______ ________ 8,428 5,311 Capital expenditure Purchase of tangible fixed assets (2,282) (15,315) ________ ________ Cash outflow before use of liquid resources and financing (1,241,373) (777,649) Financing Issue of ordinary share capital 2,025,080 1,314,100 Exercise of share options 1,884 - Cost of share issues (265,071) (391,000) Capital element of finance lease rental payments (1,769) (1,671) Issue of convertible loan notes 400,000 - ________ ________ Cash inflow from financing 2,160,124 921,429 ________ ________ Increase in cash in the year 6 918,751 143,780 ________ ________ Notes 1 Financial information The financial information in this statement does not constitute the Company's statutory accounts for the year ended 31 March 2005 but is derived from those accounts. Statutory accounts for 2005 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on those accounts: their report was unqualified and did not contain statements under sub-sections 237(2) or(3) of the Companies Act 1985. This preliminary announcement of results for the year ended 31 March 2005 was approved by the directors on 22 July 2005. The Annual General Meeting of the Company will be held at the offices of Pinsent Masons, Dashwood House, 69 Old Broad Street, London EC2M 1NR on Tuesday 23 August 2005 at 10.00 am. 2 Accounting policies The financial statements have been prepared under the historical cost convention and are in accordance with applicable accounting standards. In preparing these financial statements the group has adopted merger accounting as set out in Financial Reporting Standard (FRS) 6 'Acquisitions and Mergers'. The following principal accounting policies have been applied: Basis of consolidation The consolidated financial statements incorporate the results of Provexis plc and all of its subsidiary undertakings as at 31 March 2005 using the merger method of accounting. Merger accounting Provexis plc was incorporated on 15 April 2004 and, following a group reorganisation effected on 12 May 2004, it acquired its interest in Provexis Nutrition Limited (formerly Nutrinnovator Limited) in consideration for the issue of shares. In accordance with the principles of merger accounting as set out in FRS 6 'Acquisitions and Mergers', the group financial statements have been prepared as if Provexis Nutrition Limited had always been a member of the group, with its results being included for the full period in which it has joined the group. The corresponding figures for the previous period include its results for that period, the assets and liabilities at the previous balance sheet date and the shares issued by the Company as consideration as if they had always been in issue. The comparatives for the previous period are for the ten months ended 31 March 2004 as Provexis Nutrition Limited changed its accounting reference date from 31 May to 31 March in that period. The difference between the nominal value of the shares acquired by the Company and those issued by the Company to acquire them is taken to reserves. Share based employee remuneration When shares and share options are awarded to employees a charge is made to the profit and loss account based on the difference between the market value of the Company's shares at the date of grant and the option exercise price in accordance with UITF Abstract 17 (Revised 2003) 'Employee Share Schemes'. The credit entry for this charge is taken to the profit and loss reserve and reported in the reconciliation of movements in shareholders' funds. National Insurance on Share Options To the extent that the share price at the balance sheet date is greater than the exercise price on options granted after 19 May 2002, provision for any National Insurance contribution has been made based on the prevailing rate of National Insurance. The provision is accrued over the performance period attaching to the award. 3 Share option costs Ten months Year ended ended 31 March 31 March 2005 2004 £ £ UITF 17 charge in respect of share options granted at below market price 464,233 - UITF 25 charge in respect of employer's national insurance on option benefit 41,403 - ________ ________ 505,636 - ________ ________ 4 Reserves Share Share Profit premium Merger option and loss account reserve reserve account £ £ £ £ At 1 April 2004 - 777,517 - (935,309) Premium on share issue 1,650,263 - - - Share issue costs (315,071) - - - Shares issued by Provexis Nutrition Limited prior to group reconstruction - 360,099 - - Loss for the year - - - (1,824,094) Share options granted - - 464,233 - Reserve transfer on share options exercised - - (43,330) 43,330 ________ ________ ________ ________ At 31 March 2005 1,335,192 1,137,616 420,903 (2,716,073) ________ ________ ________ ________ The merger reserve as at 1 April 2004 of £777,517 is the difference between the £265,583 nominal value of the shares issued by Provexis plc on the share for share exchange and the total of the share capital of Provexis Nutrition Limited of £274,600 and the associated share premium of £768,500 as at 1 April 2004. 5 Reconciliation of operating loss to net cash inflow from operating activities Ten months Year ended ended 31 March 31 March 2005 2004 £ £ Operating loss (1,838,642) (859,879) Depreciation 8,057 4,480 UITF 17 charge 464,233 - Increase in stocks 14,648 (61,891) Increase in debtors (223,040) (45,871) Increase in creditors 327,225 195,516 ________ ________ Net cash outflow from operating activities (1,247,519) (767,645) ________ ________ 6 Reconciliation of net cash flow to movement in net funds Ten months Year ended ended 31 March 31 March 2005 2004 £ £ Increase in cash in the year 918,751 143,780 Cash (inflow)/outflow from increase in debt (398,231) 1,671 ________ ________ Change in net funds resulting from cash flows 520,520 145,451 New finance leases - (1,249) ________ ________ Movement in net funds in the year 520,520 144,202 Opening net funds 184,547 40,345 ________ ________ Closing net funds 705,067 184,547 ________ ________ 7 Analysis of net funds At At 1 April Cash 31 March 2004 flow 2005 £ £ £ Cash at bank and in hand 186,938 918,751 1,105,689 ________ 918,751 Obligations under finance leases (2,391) 1,769 (622) Convertible loan notes - (400,000) (400,000) ________ (398,231) ________ ________ ________ Total 184,547 520,520 705,067 ________ ________ ________ This information is provided by RNS The company news service from the London Stock Exchange

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