Nov. 19 - Provexis plc, 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 2007.
Key highlights
•Strategy refocused on discovery, development and licensing of functional food, medical food and dietary supplement technologies.
•Collaboration Agreement with Unilever to develop advanced format of Fruitflow(R) heart-health technology extended for a further 12 months.
•Exclusive technology assessment agreement signed with The Coca-Cola Company to assess the feasibility of the launch of a beverage product containing Fruitflow(R).
•Sirco(R) juice brand exited and asset transferred to a third-party.
•Cash burn significantly reduced as part of this restructuring.
•Research and development team strengthened further, in addition to capital investment in key analytical technology.
Key financial results
•Adjusted loss before interest, share compensation expense and tax of £753,000 (2006: loss of £1,374,000).
•Cash balance £1.085m (2006: £1.007m).
•Loss per share from continuing operations 0.17p (2006: 0.30p).
Stephen Moon, Chief Executive Officer of Provexis plc, commented:
"Since announcing our intention to focus the business on discovery, development and licensing in May 2007, we have made strong progress by exiting the Sirco(R) juice brand and significantly reducing cash burn. Our new assessment agreement with The Coca-Cola Company and extended exclusivity agreement with Unilever endorse the strong credentials of our Fruitflow(R) heart-health technology. We continue to develop further potential partners for the technology in dietary supplements and certain food formats, in addition to developing new claims in the areas of deep vein thrombosis and metabolic syndrome. Our patented Crohn's Disease technology is now entering human trials, with a full clinical trial commencing in January. We have invested significant effort into identifying potential technology acquisitions for our pipeline and expect to report further progress in the coming weeks."
Chairman's statement
At our Annual General Meeting on 24 July 2007 I announced the Company would focus its strategy on the discovery, development and licensing of scientifically-proven functional food, medical food and dietary supplement
technologies.
The management team has made very good progress in implementing this strategy, exiting the Sirco(R) juice brand in July, with a resultant significant reduction in cash burn.
In pursuit of our licensing strategy, focusing on four key areas we have made great strides in identifying potential major partners. Our first step forward came in May with an agreement with Unilever. Subsequently we have entered into an exclusivity agreement for our Fruitflow(R) heart-health technology with The Coca-Cola Company for beverages. This has underpinned our progress towards licensing revenues and given considerable validation to the potential for our research. Several other initiatives to secure Fruitflow(R) partners in the areas of deep vein thrombosis, dietary supplements and certain food and dairy formats are also progressing well.
Our patented technology for the treatment of Crohn's Disease patients is now in healthy human trial and a two-centre clinical trial will commence in January.
The research team continues to seek opportunities to extend the claims areas for our Fruitflow(R), with deep vein thrombosis and metabolic syndrome being key scientific investigation areas.
The team have carried out an extensive screening exercise to identify potential new technologies to add to our pipeline, as we believe an acquisition will significantly enhance shareholder value in the medium term.
The business has made good progress in the last six months and I believe this positive trend will continue during the remainder of the year, as the management team continue to implement our focused discovery, development and licensing strategy.
Dawson Buck
Chairman
Chief Executive's statement
Strategy and management structure
Since a thorough business review in May of this year, the management team has implemented a strategy of focusing on the discovery, development and licensing of scientifically-proven functional food, medical food and dietary supplement
technologies.
A key step was to exit the Sirco(R) juice brand in July and we have subsequently transferred the brand to a third-party, together with a non-exclusive licence for Fruitflow(R). The research and development team has been strengthened with the addition of two highly-qualified new members, while capital investment in analytical equipment has extended our research capability. Overall, cash burn has been significantly reduced.
We have conducted a thorough global screening exercise in order to identify new technologies for our development pipeline and are pleased to have developed a short-list of candidates which we expect to progress over coming weeks.
Discussions are currently underway with international potential strategic partners in the ingredients industry in order to provide us with large-scale manufacturing capability, access to extended sales and marketing capability and potential acceleration of our research activities through joint ventures.
I was pleased to welcome Ian Ford as Finance Director in July and his broad financial and commercial experience has resulted in a strengthening of the management team.
Fruitflow licensing
Our collaboration with Unilever has made good progress on the development of an advanced, concentrated format of Fruitflow(R) and a successful human trial on the new format in May was an important milestone. We have now extended the exclusivity agreement with Unilever for the global spreads market for a further 12 months. Over the next months, our development team will incorporate the concentrated format into an application for spreads.
We entered into a 12 month period of exclusivity for the beverages market with The Coca-Cola Company recently, as part of a technology assessment agreement. During the period of the agreement the parties will carry out a programme of work including consumer testing, commercial assessment and finalising regulatory approval in a range of territories. Subject to positive results in these areas, the parties intend to proceed to a licensing agreement during the period of
exclusivity.
We have transferred the rights to the Sirco(R) brand, together with a non-exclusive license of Fruitflow(R) for the UK market, to Multiple Marketing Limited, which is part of the group of companies that owns the Eat Naturalcereal bar brand and Sunmagic fruit juices. Multiple Marketing expect to relaunch the brand in major retailers early in 2008. The granting of this non-exclusive license has been agreed with The Coca-Cola Company as part of their broader international rights to exclusivity.
The research team are implementing a development plan to further our patented deep vein thrombosis claim for Fruitflow(R) and human trials will commence in 2008 to underpin this. Work will also commence on developing claims in the area
of metabolic syndrome during 2008. Metabolic syndrome is estimated to affect 50 million US citizens and as such the area represents a significant opportunity.
Pipeline
A healthy human trial on our patented technology for the treatment of Crohn's Disease has commenced and will conclude in January 2008. A full clinical trial on Crohn's Disease patients will commence at two centres in Liverpool in January 2008 and will run for approximately 12 months.
We are carrying out further due diligence on promising technologies identified at various universities and research institutes in recent months. Subject to the due diligence and being able to agree appropriate commercial terms, we expect to add at least one technology to our pipeline in this financial year.
Outlook
The outlook for the business is promising, given the quality of our current Fruitflow(R) partners and potential strategic partners in manufacturing, selling and marketing the technology. Moving a second technology into clinical trial will represent another important step in developing shareholder value, while the potential addition of further technologies will further enhance the longer term
prospects.
Stephen Moon
Chief Executive
Finance Director's statement
From 1 April 2007 Provexis plc and its subsidiary companies (the "Group") have adopted International Financial Reporting Standards (IFRS) accounting policies, the date of IFRS transition being 1 April 2006.
This is the first set of results announced under IFRS and prior period comparatives have been restated.
The most significant IFRS adjustments for the Group are:
• Under IFRS 3 Business Combinations, goodwill is subject to impairment reviews and is not amortised This reduced the reported loss before taxation for the year ended 31 March 2007 by £484,000 (£242,000 reduction in loss for the six months ended 30 September 2006).
• Under IAS 38 Intangible Assets, development expenditure which meets the recognition criteria of the standard is capitalised and amortised on a straight-line basis over the useful economic lives of intangible assets from product launch. Previously under UK GAAP all development expenditure was expensed. Development expenditure of £18,000 was capitalised over the six months ended 30 September 2007 (£NIL for the six months ended 30 September 2006 and £NIL for the year ended 31 March 2007).
• Under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the exit of the Sirco(R) juice brand has been treated as a discontinued operation in the Income Statement for the current and prior periods.
Further details of the Group's transition to IFRS are shown in notes 2, 6 and 7 to the interim results.
The operating loss from continuing operations for the six months ended 30 September 2007 was £686,000 (2006: restated operating loss from continuing operations £691,000) and the loss per share from continuing operations was 0.17p (2006, restated: 0.30p).
The overall loss from continuing and discontinued operations for the six months ended 30 September 2007 was £791,000, a significant reduction relative to the prior period comparative (six months ended 30 September 2006, restated:
£1,503,000). The loss per share for the six month period from continuing and discontinued operations fell to 0.20p per share in 2007, from 0.60p per share in 2006.
On 12 April 2007 the Company raised £2,150,000 gross from a new share placing to new shareholders, existing substantial shareholders and non-executive directors. The net proceeds were £1,861,000 after the repayment of the short term bridging loan and share issue costs.
The restructuring in April 2007 and the Company's exit from the Sirco(R) juice brand in July 2007 have led to a considerable reduction in the Group's cost base, and monthly trading losses have been reduced accordingly. The Group's trading results continue to be monitored very closely and the Group's resources and discretionary expenditure are tightly managed.
The Directors are of the opinion that at 19 November 2007, the Company's liquidity and capital resources are adequate to deliver the current strategic objectives and 2008 business plan and that the Company meets Going Concern criteria.
Cash at bank at 30 September 2007 was £1.085m (30 September 2006: £1.007m).
Group income statement Restated Restated
Six months ended 30 September 2007 Unaudited Unaudited Audited
6 months 6 months Year
Ended ended ended
30-Sep-07 30-Sep-06 31-Mar-07
Notes £ £ £
Continuing operations
Revenue 60,936 66,653 66,653
Cost of sales (19,170) - -
------------ ------------ ------------
Gross profit 41,766 66,653 66,653
Research and development (181,987) (205,981) (295,234)
Other administrative costs (483,075) (489,944) (1,141,912)
Share option costs (62,959) (62,099) (118,619)
------------ ------------ ------------
Administrative costs (728,021) (758,024) (1,555,765)
------------ ------------ ------------
Operating loss (686,255) (691,371) (1,489,112)
Finance income 26,284 23,223 28,435
Finance costs (1,250) (90,000) (90,000)
------------ ------------ ------------
Loss before taxation from (661,221) (758,148) (1,550,677)
continuing operations
Taxation - - -
------------ ------------ ------------
Loss for the period from continuing (661,221) (758,148) (1,550,677)
operations
Discontinued operation
Loss from discontinued operation (129,348) (744,984) (898,979)
------------ ------------ ------------
Loss for the period (790,569) (1,503,132) (2,449,656)
======= ======= =======
Attributable to:
Equity holders of the parent (768,549) (1,503,132) (2,437,855)
Minority interests (22,020) - (11,801)
------------ ------------ ------------
(790,569) (1,503,132) (2,449,656)
======= ======= =======
Loss per share from continuing and
discontinued operations
Basic and diluted - pence 5 0.20 0.60 0.97
======= ======= =======
Loss per share from continuing
operations
Basic and diluted - pence 5 0.17 0.30 0.61
======= ======= =======
Restated Restated
Group balance sheet
30 September 2007 Unaudited Unaudited Audited
30-Sep-07 30-Sep-06 31-Mar-07
£ £ £
Non-current assets
Goodwill 6,902,013 6,902,013 6,902,013
Other intangible assets - development 18,002 - -
costs
Plant and equipment 34,244 15,846 12,607
------------ ------------ ------------
6,954,259 6,917,859 6,914,620
Current assets
Inventories 19,345 50,870 38,466
Trade and other receivables 307,331 347,758 378,626
Cash and cash equivalents 1,084,910 1,007,483 115,824
------------ ------------ ------------
1,411,586 1,406,111 532,916
Current liabilities
Trade and other payables (377,691) (825,405) (738,975)
Borrowings - short term bridging loan - - (100,000)
------------ ------------ ------------
(377,691) (825,405) (838,975)
------------ ------------ ------------
Net assets 7,988,154 7,498,565 6,608,561
======= ======= =======
Equity
Called up share capital 4,017,244 2,510,386 2,510,386
Share premium account 5,992,212 5,391,867 5,391,867
Other reserves 6,273,909 6,273,909 6,273,909
Retained earnings - share option 1,053,522 934,043 990,563
reserve
Retained earnings - other (9,300,280) (7,597,008) (8,531,731)
------------ ------------ ------------
Equity attributable to equity holders 8,036,607 7,513,197 6,634,994
of the parent
Minority interests (48,453) (14,632) (26,433)
------------ ------------ ------------
Total equity 7,988,154 7,498,565 6,608,561
======= ======= =======
Restated Restated
Group cash flow statement
Six months ended 30 September 2007 Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30-Sep-07 30-Sep-06 31-Mar-07
£ £ £
Loss for the financial period (790,569) (1,503,132) (2,449,656)
Net finance costs (25,034) 66,777 61,565
Depreciation of property, plant and 5,617 796 4,035
equipment
Share option charge 62,959 62,099 118,619
Operating cash flows before movements in ------------ ------------ ------------
working capital and provisions (747,027) (1,373,460) (2,265,437)
Changes in inventories 19,121 (32,907) (20,503)
Changes in receivables 172,156 206,344 175,476
Changes in payables (361,284) 18,165 (68,265)
------------ ------------ ------------
Net cash outflow from operating (917,034) (1,181,858) (2,178,729)
activities
------------ ------------ ------------
Cash flows from investing activities
Purchase of property, plant and equipment (27,254) (125) (125)
Purchase of intangible assets (18,002) - -
Interest received 26,284 23,223 28,435
------------ ------------ ------------
Net cash used in investing activities (18,972) 23,098 28,310
------------ ------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital 2,149,750 - -
Expenses paid on share issue (188,283) - -
Proceeds from exercise of share options 44,875 - -
Gross (repayment of) / increase in (100,000) - 100,000
borrowings
Interest paid (1,250) - -
------------ ------------ ------------
Net cash from financing activities 1,905,092 - 100,000
------------ ------------ ------------
------------ ------------ ------------
Net increase / (decrease) in cash and 969,086 (1,158,760) (2,050,419)
cash equivalents
Opening cash and cash equivalents 115,824 2,166,243 2,166,243
------------ ------------ ------------
Closing cash and cash equivalents 1,084,910 1,007,483 115,824
======= ======= =======
Group statement Other Total equity
of changes in
equity
30 September reserves Retained earnings attributable
2007
to equity
Share Share Merger Share option Retained holders of Minority Total
capital premium reserve reserve earnings the parent interests
£ £ £ £ £ £ £ £
At 1 April 2006 2,500,010 5,312,243 6,273,909 871,944 (6,093,876) 8,864,230 (14,632) 8,849,598
Share based - - - 62,099 - 62,099 - 62,099
charges
Issue of shares 10,376 79,624 - - - 90,000 - 90,000
- SEDA
implementation
fee
Loss for the - - - - (1,503,132) (1,503,132) - (1,503,132)
period
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase / 10,376 79,624 - 62,099 (1,503,132) (1,351,033) - (1,351,033)
(decrease)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
At 30 September 2,510,386 5,391,867 6,273,909 934,043 (7,597,008) 7,513,197 (14,632) 7,498,565
2006 - restated
Share based - - - 56,520 - 56,520 - 56,520
charges
Loss for the - - - - (934,723) (934,723) (11,801) (946,524)
period
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase / - - - 56,520 (934,723) (878,203) (11,801) (890,004)
(decrease)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
At 31 March 2,510,386 5,391,867 6,273,909 990,563 (8,531,731) 6,634,994 (26,433) 6,608,561
2007 - restated
Share based - - - 62,959 - 62,959 - 62,959
charges
Issue of shares 1,433,166 528,301 - - - 1,961,467 - 1,961,467
- placing 12
April 2007
Issue of shares 73,692 72,044 - - - 145,736 - 145,736
- exercise of
share options
Loss for the - - - - (768,549) (768,549) (22,020) (790,569)
period
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase / 1,506,858 600,345 - 62,959 (768,549) 1,401,613 (22,020) 1,379,593
(decrease)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
At 30 September 4,017,244 5,992,212 6,273,909 1,053,522 (9,300,280) 8,036,607 (48,453) 7,988,154
2007
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