REG - Provexis PLC - Half-year Report
29/12/2023 13:00
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RNS Number : 2479Y Provexis PLC 29 December 2023
Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
UK Market Abuse Regulation. With the publication of this announcement, this
information is now considered to be in the public domain.
29 December 2023
Provexis plc
UNAUDITED INTERIM RESULTS FOR SIX MONTHS TO 30 SEPTEMBER 2023
Provexis plc ("Provexis" or the "Company"), the business that develops,
licenses and sells the proprietary, scientifically-proven Fruitflow®
heart-health functional food ingredient, announces its unaudited interim
results for the six months ended 30 September 2023.
Highlights
· DSM's existing and prospective pipeline customers for Fruitflow
as a straight ingredient transferred to become direct customers of Provexis
WEF 1 January 2023, and the customer transfer process has continued to
progress well, with strong and growing interest in the Company's Fruitflow II
SD ingredient.
· Total revenue for the period £388k (2022: £179k), to include
£299k from Fruitflow II SD (2022: DSM Alliance Agreement income of £97k) and
£89k (2022: £82k) from Fruitflow+ Omega-3.
· Fruitflow II SD sales of more than £270k have been made in the
quarter ending on 31 December 2023, and confirmed sales orders for Fruitflow
II SD in excess of £320k are currently being processed. The Company is
dealing with numerous sales enquiries from existing and new customers for
further direct sales of Fruitflow in 2024 and beyond.
· The new long term partnership with DSM based on the use of
Fruitflow to confer health benefits in modulating the gut microbiome of humans
has continued to progress well. Strong launch of this new technology by DSM in
January 2023, with widespread trade press coverage and encouraging early
interest from some significant global customers.
· Planned launch by BYHEALTH, a circa £4bn listed Chinese dietary
supplement business, of a number of Fruitflow based products in the Chinese
market has been progressing well, with potential sales volumes remaining at a
significant multiple of existing Fruitflow sales.
· BYHEALTH has been working since 2015 on an extensive regulatory
submission to the Chinese State Administration for Market Regulation (SAMR)
for Fruitflow, seeking to establish a new permitted health function claim for
foods such as Fruitflow that can demonstrate an anti-platelet effect.
· In August 2023 BYHEALTH submitted: i) the first application under
the new SAMR Implementation Rules, seeking to obtain a new permitted health
function claim for foods such as Fruitflow which help to 'maintain normal
platelet aggregation function and benefit blood flow health'; and ii) some
related product registration applications. BYHEALTH stated publicly that it
has been working on the project since 2015, with 'tens of millions of funds'
(RMB) invested by BYHEALTH in the research and development work.
· The exclusive Fruitflow supply and distribution agreement which
was agreed with BYHEALTH in 2021 took full effect from 1 January 2023, with
exclusive supply and distribution rights for BYHEALTH to commercialise
Fruitflow in China and Australia.
Provexis Chairman Dawson Buck and CEO Ian Ford commented:
'The Company is pleased to report on another strong period of progress, to
include £388k of revenue in the period from sales of the Company's Fruitflow
II SD ingredient and its consumer product Fruitflow+ Omega-3.
Fruitflow II SD sales of more than £270k have been made in the quarter ending
on 31 December 2023, and confirmed sales orders for Fruitflow II SD in excess
of £320k are currently being processed. The Company is dealing with numerous
sales enquiries from existing and new customers for further direct sales of
Fruitflow in 2024 and beyond.
The new long term partnership with DSM based on the use of Fruitflow to confer
health benefits in modulating the gut microbiome of humans has continued to
progress well, with a strong launch of this new technology by DSM in January
2023 to include widespread trade press coverage. There has been some
encouraging interest in this technology from some significant global
customers.
The Company has been delighted to welcome and serve the majority of DSM's
existing customers for Fruitflow from January this year, and was pleased to
take over control of the supply chain / production process for Fruitflow at
the same time.
There have been some clear synergies from January 2023 as the Company has been
looking to sell Fruitflow to: (i) former DSM customers for Fruitflow; (ii) DSM
and its Premix and Market-Ready Solutions businesses; (iii) new customers for
Fruitflow as a straight ingredient; and (iv) BYHEALTH and its customers,
through the Company's long term supply and distribution agreement for
Fruitflow with BYHEALTH. Provexis will continue to sell its Fruitflow+ Omega-3
dietary supplement product direct to consumers, and serve its Chinese
Cross-Border e-commerce distributor for this product in China.
Provexis has been working with BYHEALTH for more than seven years to support
the planned launch of a number of Fruitflow based products in the Chinese
market. Clinical studies conducted in China are typically required to obtain
the necessary regulatory clearances in China, and a significant investment in
eight separate Fruitflow studies has been undertaken at BYHEALTH's expense.
Completed studies have shown excellent results in use for Fruitflow, and they
provide strong evidence for the efficacy of Fruitflow on platelet function.
The Chinese regulatory system for functional health food ingredients, such as
Fruitflow, is governed by the State Administration for Market Regulation (the
'SAMR') and it is based on a defined list of permitted health function claims
which brand owners are permitted to use on product labels.
In August 2023 the Company was delighted to report that BYHEALTH had
submitted: i) the first application for a new permitted health function claim
and ii) some related product registration applications.
The significance of these major developments for Fruitflow in China is further
outlined here
www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods#.
BYHEALTH has noted that it has been working on the project since 2015, with
'tens of millions of funds' (RMB) invested by BYHEALTH in the research and
development work.
Fruitflow is well placed to play an important role in the Chinese
cardiovascular health market under the permitted health function claim
legislation, and we look forward to working closely with BYHEALTH seeking to
maximise the commercial success of this agreement for the benefit of both
companies.
The Company has developed a strong, long lasting and wide-ranging patent
portfolio for Fruitflow, and it owns outright four existing patent families
for Fruitflow. The new microbiome patent application takes this to a potential
total of five patent families, with potential patent protection now running
out to 2042. The four existing patent families have a truly global footprint,
and the Company also holds other valuable intellectual property and trade
secrets for Fruitflow. The intellectual property for Fruitflow is of
fundamental importance to the Company and its current and future commercial
partners, to include DSM and BYHEALTH, and it underpins the numerous
commercial opportunities which the Company and its partners are pursuing for
Fruitflow.
The Company expects that the new gut microbiome patent application, the
significant changes to the sales and supply chain structure for Fruitflow from
January 2023, and the recent BYHEALTH regulatory developments in China, will
have a strongly beneficial effect on the current and future commercial
prospects for Fruitflow and the business worldwide.
The Company would like to thank its customers and shareholders for their
continued support, and the Board remains strongly positive about the outlook
for Fruitflow and the Provexis business for the coming year and beyond.'
For further information please contact:
Provexis plc Tel: 07490 391888
Ian Ford, CEO enquiries@provexis.com
Dawson Buck, Non-executive Chairman
Allenby Capital Limited (Nominated Adviser and Broker) Tel: 020 3328 5656
Nick Naylor / Lauren Wright / Liz Kirchner
Chairman and CEO's statement
The Company has had an extremely active first six months of the year, and it
has made some further significant progress with the commercial prospects of
its innovative, patented Fruitflow® heart-health ingredient.
DSM Nutritional Products - new agreements for Fruitflow®
Provexis entered into a long-term Alliance Agreement with DSM Nutritional
Products in 2010 to commercialise Fruitflow through sales as an ingredient to
brand owners in the food, beverage and dietary supplement categories, with a
contractual term for the Agreement which ran to 31 December 2022.
More than 100 regional consumer healthcare brands have now been launched by
direct customers of DSM, and a number of further regional brands have been
launched through DSM's distributor channels. An increasing number of
commercial projects have been initiated by DSM with prospective customers in
recent years, including some prospective customers which are part of global
businesses, and the total projected annual sales value of the prospective
sales pipeline for Fruitflow, which is now shared across Provexis and DSM,
continues to stand at a substantial multiple of existing annual sales.
In June 2022 Provexis announced it had secured two new agreements with DSM for
Fruitflow, to replace the Alliance Agreement: (i) a Transfer of Business
agreement and (ii) a Premix and Market-Ready Solutions supply agreement, which
both took effect on 1 January 2023.
The Company also announced the filing of a new patent application in June 2022
relating to the use of Fruitflow to confer health benefits in modulating the
gut microbiome of humans. This followed the completion of a successful human
study, the results of which strongly support the use of Fruitflow for
modulating gut microbiota to confer a number of health benefits, to include a
reduction in TMAO (trimethylamine-n-oxide).
Under the terms of the two new agreements with DSM, and the new patent
application:
· DSM's existing and prospective pipeline customers for Fruitflow
as a straight ingredient (not a Premix or Market-Ready solution) transferred
to become direct customers of Provexis WEF 1 January 2023, and the Company
took over the wholly outsourced supply chain / production process for
Fruitflow from DSM at that time.
· A royalty will be payable to DSM on the gross profits generated
from Fruitflow sales to customers transferred from DSM over the first four
years of the Transfer of Business agreement.
· From 1 January 2023 the net profit accruing to Provexis on sales
of Fruitflow in the calendar year - on a pro-forma basis, assuming like for
like sales and margins - would be materially ahead of the net share of the
profit that would have accrued to Provexis with like for like sales and
margins under the 2010 Alliance Agreement. On the same pro-forma basis,
assuming like for like sales and margins, the net profit accruing to Provexis
would further increase in each of the subsequent three calendar years.
· A new partnership was agreed with DSM in 2022 relating to the gut
microbiome patent, giving DSM preferential access to the use, marketing, and
sale of Fruitflow based products which are based on the patent, subject to
certain milestones which have been agreed between the parties.
· In addition to the patent's core claim for Fruitflow, for
modulating gut microbiota to confer a number of health benefits, the patent
also sets out some potential new uses for Fruitflow in treating a wide variety
of human health conditions, beyond Fruitflow's existing established use in
heart-health. The global digestive health market size was US$38 billion in
2019 and it is projected to grow to US$72 billion in 2027 at a high
single-digit CAGR in the 2020-2027 period (see
www.fortunebusinessinsights.com/digestive-health-market-104750
(http://www.fortunebusinessinsights.com/digestive-health-market-104750) ).
· The results of the successful gut microbiome human study have
been submitted for publication in a peer reviewed scientific journal
www.sciencedirect.com/science/article/pii/S0022316622131275
(http://www.sciencedirect.com/science/article/pii/S0022316622131275) .
· DSM conducted a strong launch of the new microbiome technology in
January 2023
(www.dsm.com/human-nutrition/en/talking-nutrition/press-releases/2023-01-20-new-study-reveals-dsms-fruitflow-activates-gut-heart.html
(http://www.dsm.com/human-nutrition/en/talking-nutrition/press-releases/2023-01-20-new-study-reveals-dsms-fruitflow-activates-gut-heart.html)
), with widespread trade press coverage and encouraging early interest shown
from some significant global customers.
· Provexis will sell Fruitflow as a straight ingredient to DSM
exclusively for use in DSM's Premix Solutions and Market-Ready Solutions
businesses, with DSM then looking to sell the resulting Premix and
Market-Ready Solutions products on to its customers. DSM's Premix and
Market-Ready Solutions businesses are part of DSM's Customized Solutions
business which also offers personalised nutrition solutions to customers, a
rapidly developing growth area. The Company looks forward to supporting DSM
and its Premix and Market-Ready Solutions customers for many years to come.
· A number of DSM's customers for Fruitflow which have been
transferred to Provexis have been Fruitflow customers for several years,
including some distributor customers which sell Fruitflow on to third parties.
The Company has been progressing these sales relationships since the Transfer
of Business agreement was announced in June 2022, and confirms it will be able
to generate new customers for Fruitflow outside the royalty arrangements with
DSM, in addition to its existing supply and distribution agreement for
Fruitflow with BYHEALTH.
From 1 January 2023 the Group's sales channels for Fruitflow therefore
included:
1. Former DSM customers for Fruitflow;
2. DSM and its Premix and Market-Ready Solutions businesses, which will
leverage the resources and relationships of DSM in some of the major global
markets;
3. New customers for Fruitflow as a straight ingredient;
4. BYHEALTH and its customers, through the Company's long term supply and
distribution agreement for Fruitflow with BYHEALTH; and
5. The Group's Fruitflow+ Omega-3 dietary supplement product which is sold
direct to consumers, the Group will also look to serve its Chinese
Cross-Border e-commerce distributor for this product in China.
The Company is in discussions with a number of third parties seeking to
progress new sales and distribution opportunities for Fruitflow, and it can be
contacted for all Fruitflow sales enquiries by email at
fruitflow@provexis.com.
Fruitflow® transfer arrangements from 1 January 2023, and trading for the
year
The customer transfer process from DSM to Provexis has continued to progress
well, with sales commencing to customers for Fruitflow II SD (Fruitflow II SD
is Fruitflow as an ingredient, in Spray Dried powder form) in February 2023,
when the first batch of Fruitflow inventory was transferred from DSM's
fulfilment centre in The Netherlands to the Company's outsourced fulfilment
centre in the UK.
Total revenue:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
Fruitflow II SD ingredient - from 1 January 2023 298,879 - 74,239
DSM Alliance Agreement - up to 31 December 2022 - 97,194 170,269
Fruitflow+ Omega-3 88,655 82,175 145,408
387,534 179,369 389,916
Fruitflow II SD sales of more than £270k have been made in the quarter ending
on 31 December 2023, and confirmed sales orders for Fruitflow II SD in excess
of £320k are currently being processed. The Company is dealing with numerous
sales enquiries from existing and new customers for further direct sales of
Fruitflow in 2024 and beyond.
Fruitflow II SD is currently manufactured in the EU. Rules of origin under the
BREXIT trade deal announced in December 2020 have meant that shipments of
Fruitflow II SD from a UK fulfilment centre for re-export and sale to EU
customers are at potential risk of additional tariffs on re-entry into the EU
(see www.bbc.co.uk/news/55648201 (http://www.bbc.co.uk/news/55648201) ).
Consequently, the Company is in the process of setting up a new Irish
subsidiary company, which will use an outsourced fulfilment centre in Ireland
to serve EU customers for Fruitflow. This is expected to be an attractive new
sales channel for EU customers, facilitating greater sales of Fruitflow II SD
into the EU.
BYHEALTH Co., Ltd.
In November 2021 the Company announced it had entered into a supply and
distribution agreement (the 'BYHEALTH Agreement') for Fruitflow with BYHEALTH,
a listed Chinese dietary supplement business with a market capitalisation of
approximately £4 billion.
The BYHEALTH Agreement, which followed the Company's extensive work with
BYHEALTH over the last seven years, took full effect from 1 January 2023 and
it gives BYHEALTH exclusive supply and distribution rights to commercialise
Fruitflow in Mainland China, Hong Kong, Macau, Taiwan and Australia (the
'Territories').
Under the BYHEALTH Agreement Provexis will be responsible for the manufacture,
supply and sale of Fruitflow to BYHEALTH, and BYHEALTH will be responsible for
the manufacture, marketing, and sale of Fruitflow based functional food and
dietary supplement finished products in the Territories, through BYHEALTH's
extensive sales network. BYHEALTH will also have exclusive rights to act as
the distributor of Fruitflow as an ingredient in the Territories.
Provexis and BYHEALTH will seek to collaborate on research and development
projects which may result in the development and approval of Fruitflow as a
drug, for potential sale and distribution in the Territories.
Regulatory progress in China - new permitted health function claim
Provexis has been working with BYHEALTH for more than seven years to support
the planned launch of a number of Fruitflow based products in the Chinese
market. Clinical studies conducted in China are typically required to obtain
the necessary regulatory clearances in China, and a significant investment in
eight separate Fruitflow studies has been undertaken at BYHEALTH's expense.
Completed studies have shown excellent results in use for Fruitflow, and they
provide strong evidence for the efficacy of Fruitflow on platelet function.
The Chinese regulatory system for functional health food ingredients, such as
Fruitflow, is governed by the State Administration for Market Regulation (the
'SAMR') and it is based on a defined list of permitted health function claims
which brand owners are permitted to use on product labels.
The SAMR provides the possibility of adding new health function claims to the
list, with claims needing to demonstrate a relationship between a food or
nutrient and a consequent health improvement, subject to evaluation and
verification by the SAMR.
SAMR certified functional health foods are required to use a blue cap / blue
hat logo on their product packaging, which identifies products as approved
functional health foods in China.
BYHEALTH has been working on an extensive regulatory submission to the SAMR
seeking to establish a new permitted health function claim for foods such as
Fruitflow that can demonstrate an anti-platelet effect, inhibiting platelet
function and conferring beneficial health effects.
On 28 August 2023 the SAMR announced in China that the 'Implementation Rules
for Health Food New Functions and Product Technology Evaluation' (the
'Implementation Rules') had been agreed by the SAMR in June 2023, with these
new rules to take effect from 28 August 2023.
On 29 August 2023 it was announced in China that BYHEALTH had submitted: i)
the first application under the Implementation Rules, seeking to obtain a new
permitted health function claim for foods such as Fruitflow which help to
'maintain normal platelet aggregation function and benefit blood flow health';
and ii) some related product registration applications.
The significance of these major developments for Fruitflow in China is further
outlined here
www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods#
(http://www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods)
. BYHEALTH has noted that it has been working on the project since 2015, with
'tens of millions of funds' (RMB) invested by BYHEALTH in the research and
development work.
The Company has previously stated that if BYHEALTH is successful in obtaining
a new permitted health function claim in China for functional health foods,
such as Fruitflow, that can demonstrate an anti-platelet effect, it is
expected that this would result in some significant orders for Fruitflow,
potentially at a multiple of current total sales values.
Intellectual property
The Company is responsible for filing and maintaining patents and trade marks
for Fruitflow, and patent coverage for Fruitflow now includes the following
patent families which are all owned outright by Provexis:
Patent family Developments in the period from
Sep-23 to Dec-23
Improved Fruitflow / Fruit Extracts
Improved Fruitflow / Fruit Extracts, with patents granted by the European A patent is expected to issue in Brazil in Q1 2024.
Patent Office in January 2017, September 2020 and April 2023.
Patents have been granted in eleven other major territories to include China
and USA; and applications are at a late stage of progression in a further five
global territories, with potential patent protection out to November 2029.
Antihypertensive (blood pressure lowering) effects
This patent was originally developed in collaboration with the University of
Oslo, and it has now been granted for Fruitflow in Europe, the US and four
other territories. Patent applications are being progressed in China and Patent applications are pending in China and Japan.
Japan, with potential patent protection out to April 2033.
In August 2020 the Company announced it had agreed to purchase the background
and joint foreground blood pressure lowering IP owned by Inven2 AS, the
technology transfer office at the University of Oslo, and Provexis now owns
these important patents outright.
Fruitflow with nitrates in mitigating exercise-induced inflammation and for
promoting recovery from intense exercise
Patents have been granted around Europe and in the US, Australia, Brazil,
Canada, China, Hong Kong, India, Israel, Japan, South Korea, the Philippines,
New Zealand and Mexico.
Patent applications are pending in Europe, Hong Kong and the US.
Further patent protection is being sought in three territories, with potential
patent protection out to December 2033.
Fruitflow for air pollution
The use of Fruitflow in protecting against the adverse effects of air Brazilian and Malaysian Grant certificates issued.
pollution on the body's cardiovascular system.
Laboratory work has shown that Fruitflow can reduce the platelet activation
caused by airborne particulate matter, such as that from diesel emissions, by
approximately one third.
US, Australian, Brazilian, Indonesian, Israeli, Japanese and Malaysian patents
have been secured and there are pending applications in 10 jurisdictions
(including the US where a further application has been filed) which extends
potential patent protection for Fruitflow out to November 2037.
Fruitflow to confer health benefits in modulating the gut microbiome of humans
The Company also announced the filing of a new patent application in June 2022
relating to the use of Fruitflow to confer health benefits in modulating the
gut microbiome of humans. This followed the completion of a successful human The international Patent Application published in December 2023.
study, the results of which strongly support the use of Fruitflow for
modulating gut microbiota to confer a number of health benefits.
An international Patent Application was filed in June 2023 (covering all major
jurisdictions), with potential patent protection out to June 2043.
Outlook
The Company is pleased to report on another strong period of progress, to
include £388k of revenue in the period from sales of the Company's Fruitflow
II SD ingredient and its consumer product Fruitflow+ Omega-3.
Fruitflow II SD sales of more than £270k have been made in the quarter ending
on 31 December 2023, and confirmed sales orders for Fruitflow II SD in excess
of £320k are currently being processed. The Company is dealing with numerous
sales enquiries from existing and new customers for further direct sales of
Fruitflow in 2024 and beyond.
The new long term partnership with DSM based on the use of Fruitflow to confer
health benefits in modulating the gut microbiome of humans has continued to
progress well, with a strong launch of this new technology by DSM in January
2023 to include widespread trade press coverage. There has been some
encouraging interest in this technology from some significant global
customers.
The Company has been delighted to welcome and serve the majority of DSM's
existing customers for Fruitflow from January this year, and was pleased to
take over control of the supply chain / production process for Fruitflow at
the same time.
There have been some clear synergies from January 2023 as the Company has been
looking to sell Fruitflow to: (i) former DSM customers for Fruitflow; (ii) DSM
and its Premix and Market-Ready Solutions businesses; (iii) new customers for
Fruitflow as a straight ingredient; and (iv) BYHEALTH and its customers,
through the Company's long term supply and distribution agreement for
Fruitflow with BYHEALTH. Provexis will continue to sell its Fruitflow+ Omega-3
dietary supplement product direct to consumers, and serve its Chinese
Cross-Border e-commerce distributor for this product in China.
Provexis has been working with BYHEALTH for more than seven years to support
the planned launch of a number of Fruitflow based products in the Chinese
market. Clinical studies conducted in China are typically required to obtain
the necessary regulatory clearances in China, and a significant investment in
eight separate Fruitflow studies has been undertaken at BYHEALTH's expense.
Completed studies have shown excellent results in use for Fruitflow, and they
provide strong evidence for the efficacy of Fruitflow on platelet function.
The Chinese regulatory system for functional health food ingredients, such as
Fruitflow, is governed by the State Administration for Market Regulation (the
'SAMR') and it is based on a defined list of permitted health function claims
which brand owners are permitted to use on product labels.
In August 2023 the Company was delighted to report that BYHEALTH had
submitted: i) the first application for a new permitted health function claim
and ii) some related product registration applications.
The significance of these major developments for Fruitflow in China is further
outlined here
www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods#
(http://www.nutraingredients-asia.com/Article/2023/09/05/china-set-to-approve-new-function-claims-for-health-foods)
. BYHEALTH has noted that it has been working on the project since 2015, with
'tens of millions of funds' (RMB) invested by BYHEALTH in the research and
development work.
Fruitflow is well placed to play an important role in the Chinese
cardiovascular health market under the permitted health function claim
legislation, and we look forward to working closely with BYHEALTH seeking to
maximise the commercial success of this agreement for the benefit of both
companies.
The Company has developed a strong, long lasting and wide-ranging patent
portfolio for Fruitflow, and it owns outright four existing patent families
for Fruitflow. The new microbiome patent application takes this to a potential
total of five patent families, with potential patent protection now running
out to 2042. The four existing patent families have a truly global footprint,
and the Company also holds other valuable intellectual property and trade
secrets for Fruitflow. The intellectual property for Fruitflow is of
fundamental importance to the Company and its current and future commercial
partners, to include DSM and BYHEALTH, and it underpins the numerous
commercial opportunities which the Company and its partners are pursuing for
Fruitflow.
The Company expects that the new gut microbiome patent application, the
significant changes to the sales and supply chain structure for Fruitflow from
January 2023, and the recent BYHEALTH regulatory developments in China, will
have a strongly beneficial effect on the current and future commercial
prospects for Fruitflow and the business worldwide.
The Company would like to thank its customers and shareholders for their
continued support, and the Board remains strongly positive about the outlook
for Fruitflow and the Provexis business for the coming year and beyond.
Dawson
Buck Ian
Ford
Chairman CEO
Consolidated statement of comprehensive income Unaudited Unaudited Audited
Six months ended 30 September 2023 six months six months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
£ £ £
Notes
Revenue 387,534 179,369 389,916
Cost of goods (249,870) (26,730) (95,497)
Gross profit 137,664 152,639 294,419
Selling and distribution costs (32,744) (23,974) (51,609)
Research and development costs (140,225) (107,398) (237,221)
Administrative costs - share based payment charges (60,526) (11,318) (40,591)
Administrative costs - other (180,504) (183,955) (385,925)
Loss from operations (174,006) (420,927)
Finance income 1,029 264 1,011
Loss before taxation (275,306) (173,742) (419,916)
Taxation - R&D tax relief: receivable tax credit 8,200 16,108 32,800
Loss and total comprehensive loss for the period (267,106) (157,634) (387,116)
Attributable to:
Owners of the parent (267,106) (155,759) (385,241)
Non-controlling interest - (1,875) (1,875)
Loss and total comprehensive loss for the period (267,106) (157,634) (387,116)
Loss per share to owners of the parent
Basic and diluted - pence 3 (0.01) (0.01) (0.02)
Consolidated statement of financial position Unaudited Unaudited Audited
30 September 2023 30 September 30 September 31 March
2023 2022 2023
Notes £ £ £
Assets
Current assets
Inventories 145,863 63,964 327,797
Trade and other receivables 264,410 140,809 61,114
Corporation tax asset 41,000 61,268 77,960
Cash and cash equivalents 318,819 744,551 379,121
Total current assets 770,092 1,010,592 845,992
Total assets 770,092 1,010,592 845,992
Liabilities
Current liabilities
Trade and other payables (319,017) (152,728) (188,337)
Total current liabilities (319,017) (152,728) (188,337)
Total liabilities (319,017) (152,728) (188,337)
Total net assets 451,075 857,864 657,655
Capital and reserves attributable to
owners of the parent company
Share capital 2,217,822 2,217,822 2,217,822
Share premium reserve 18,703,321 18,703,321 18,703,321
Merger reserve 6,599,174 6,599,174 6,599,174
Retained earnings (26,537,368) (26,130,579) (26,330,788)
982,949 1,389,738 1,189,529
Non-controlling interest (531,874) (531,874) (531,874)
Total equity 451,075 857,864 657,655
Consolidated statement of cash flows Unaudited Unaudited Audited
30 September 2023 six months six months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
£ £ £
Cash flows from operating activities
Loss after tax (267,106) (157,634) (387,116)
Adjustments for:
Finance income (1,029) (264) (1,011)
Tax credit receivable (8,200) (16,108) (32,800)
Share-based payment charge - share options 60,526 11,318 40,591
Changes in inventories 181,934 21,844 (241,989)
Changes in trade and other receivables (203,436) (36,292) 43,453
Changes in trade and other payables 130,680 (5,181) 30,428
Net cash flow from operations (106,631) (182,317) (548,444)
Tax credits received 45,160 27,705 27,705
Total cash flow from operating activities (61,471) (154,612) (520,739)
Cash flow from investing activities
Interest received 1,169 190 887
Total cash flow from investing activities 1,169 190 887
Cash flow from financing activities
Proceeds from issue of share capital - share options - 35,100 35,100
Total cash flow from financing activities - 35,100 35,100
Net change in cash and cash equivalents (60,302) (119,322) (484,752)
Opening cash and cash equivalents 379,121 863,873 863,873
Closing cash and cash equivalents 318,819 744,551 379,121
Consolidated statement of changes in equity Share Share Merger Retained Total equity Non- Total
30 September 2023 capital premium reserve earnings attributable to owners of controlling interests equity
the parent
£ £ £ £ £ £ £
At 31 March 2022 2,210,822 18,675,221 6,599,174 (25,986,138) 1,499,079 (529,999) 969,080
Share-based charges - share options - - - 11,318 11,318 - 11,318
Issue of shares - share options exercised 23-May-22 7,000 28,100 - - 35,100 - 35,100
Total comprehensive expense for the period - - - (155,759) (155,759) (1,875) (157,634)
At 30 September 2022 2,217,822 18,703,321 6,599,174 (26,130,579) 1,389,738 (531,874) 857,864
Share-based charges - share options - - - 29,273 29,273 - 29,273
Total comprehensive expense for the period - - - (229,482) (229,482) - (229,482)
At 31 March 2023 2,217,822 18,703,321 6,599,174 (26,330,788) 1,189,529 (531,874) 657,655
Share-based charges - share options - - - 60,526 60,526 - 60,526
Total comprehensive expense for the period - - - (267,106) (267,106) - (267,106)
At 30 September 2023 2,217,822 18,703,321 6,599,174 (26,537,368) 982,949 (531,874) 451,075
1. General information, basis of preparation and accounting policies
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 2 Blagrave Street, Reading, Berkshire RG1 1AZ, UK.
The main activities of the Group are those of developing, licensing and
selling the proprietary, scientifically-proven Fruitflow® heart-health
functional food ingredient.
Basis of preparation
This condensed financial information has been prepared using accounting
policies consistent with International Financial Reporting Standards in the
European Union (IFRS).
The same accounting policies, presentation and methods of computation are
followed in this condensed financial information as are applied in the Group's
latest annual audited financial statements, except as set out below. 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.
Use of non-GAAP profit measure - underlying operating profit
The directors believe that the operating loss before share based payments
measure provides additional useful 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.
The interim financial information does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006 and has been neither audited
nor reviewed by the Company's auditors Shipleys pursuant to guidance issued by
the Auditing Practices Board.
The results for the year ended 31 March 2023 are not statutory accounts. The
statutory accounts for the last year ended 31 March 2023 were approved by the
Board on 29 September 2023 and are filed at Companies House. The report of the
auditors on those accounts was unqualified, contained an emphasis of matter
with respect to going concern, and did not contain a statement under section
498 of the Companies Act 2006.
The interim report for the six months ended 30 September 2023 can be
downloaded from the Company's website www.provexis.com. Further copies of the
interim report and copies of the 2023 annual report and accounts can be
obtained by writing to the Company Secretary, Provexis plc, 2 Blagrave Street,
Reading, Berkshire RG1 1AZ, UK.
This announcement was approved by the Board of Provexis plc for release on 29
December 2023.
Going concern
Under the terms of the DSM Transfer of Business agreement which was announced
in June 2022, DSM's existing and prospective pipeline customers for Fruitflow
II SD as a straight ingredient (not a DSM Premix or DSM Market-Ready solution)
transferred to become direct customers of Provexis WEF 1 January 2023.
The Company has needed to hold Fruitflow II SD in stock from 1 January 2023
onwards, to sell to new and existing customers, and the Company therefore
agreed to purchase from DSM the remaining stocks of Fruitflow which DSM held
on 31 December 2022.
It was originally intended that the Company would pay DSM for this inventory
over the course of a three month sale back period, commencing on 1 January
2023, with the Company having the option to purchase some but not all of DSM's
remaining stocks of Fruitflow at 31 December 2022.
The Company and DSM have been in further negotiations around the inventory
transfer throughout the course of 2023, and the parties expect to be able to
conclude these further negotiations in the coming months. The amount of stock
which the Company will finally elect to purchase from DSM remains uncertain,
and it will ultimately depend on (i) the best before dates of this inventory,
which remain favourable / long dated in light of recent production runs of new
Fruitflow material, (ii) recent stability data which suggests that the best
before dates could be further extended, (iii) estimated customer demand in
2024 and beyond, (iv) the comparative costs and timing of a potential
production run for a new batch of material and (v) the Company's financial
resources at that time.
Based on its current level of cash it is expected that the Group may therefore
need to raise further equity finance, or potentially new loan finance, in the
coming months, a situation which is deemed to represent a material uncertainty
related to going concern.
Considering the success of previous fundraisings and the current performance
of the business, the Directors have a reasonable expectation of raising
sufficient additional equity capital or new loan finance to continue in
operational existence for the foreseeable future. Subject to the outcome of
ongoing negotiations with a third party, the Company might also be able to
hold some of its future stock requirements on a consignment basis, only paying
for the stock when it was required for sale.
For these reasons the Directors are of the opinion that at 29 December 2023,
the Group and Company's liquidity and capital resources are adequate to
deliver the current strategic objectives and 2024 business plan and that the
Group and Company remain a going concern.
Accounting policies
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 March 2023, as described in those
annual financial statements.
2. Segmental reporting
The Group's operating 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 Board of Directors as it is primarily responsible for the
allocation of resources to segments and the assessment of performance of the
segments. The performance of operating segments is assessed on revenue.
The CODM uses revenue as the key measure of the segments' results as it
reflects the segments' underlying trading performance for the financial period
under evaluation. Revenue is reported separately to the CODM and all other
reports are prepared as a single business unit.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
Fruitflow II SD ingredient - from 1 January 2023 298,879 - 74,239
DSM Alliance Agreement - up to 31 December 2022 - 97,194 170,269
Fruitflow+ Omega-3 88,655 82,175 145,408
387,534 179,369 389,916
3. Earnings per share
Basic earnings per share amounts are calculated by dividing the profit
attributable to owners of the parent by the weighted average number of
ordinary shares in issue during the period.
The loss attributable to equity holders of the Company for the purpose of
calculating the fully diluted loss per share is identical to that used for
calculating the basic loss per share. The exercise of share options would have
the effect of reducing the loss per share and is therefore anti-dilutive under
the terms of IAS 33 'Earnings per Share'.
Basic and diluted loss per share amounts are in respect of all activities.
There were 188,500,000 share options in issue at 30 September 2023 (2022:
171,500,000) that are currently anti-dilutive and have therefore been excluded
from the calculations of the diluted loss per share.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2023 2022 2023
Loss for the period attributable 267,106 155,759 385,241
to owners of the parent - £
Weighted average number of shares 2,217,821,523 2,215,794,201 2,216,805,085
Basic and diluted loss per share - pence 0.01 0.01 0.02
4. Share capital and Total Voting Rights
At 29 December 2023, the date of this announcement, the Company's issued share
capital comprises 2,217,821,523 ordinary shares of 0.1 pence each, each with
equal voting rights. The Company does not hold any shares in treasury and
therefore the total number of ordinary shares and voting rights in the Company
is 2,217,821,523.
The above figure may be used by shareholders in the Company as the denominator
for the calculations by which they will determine if they are required to
notify their interest in, or change to their interest in, the share capital of
the Company under the FCA's Disclosure Guidance and Transparency Rules.
5. Cautionary statement
This document contains certain forward-looking statements with respect to the
financial condition, results and operations of the business. These statements
involve risk and uncertainty as they relate to events and depend on
circumstances that will incur in the future. Nothing in this interim report
should be construed as a profit forecast.
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