Provexis to demerge Science in Sport
SPECIALIST food supplement developer Provexis has announced plans to split the group into two separate companies because it does not believe the market values its sport nutrition arm Science in Sport.
The company, which also posted a pre-tax loss of £4.6m on sales of £5.5m, warned investors that it would need to seek alternative finance if the plan was not approved. Losses increased from £4.3m on sales of £3.4m last time.
The AIM-listed group wants to demerge Science in Sport and raise £2.25m by floating it separately with the issue of four million shares at 56p, giving the newly independent business a market value of £10.9m.
Provexis, which has a manufacturing facility in Nelson, Lancashire, will continue to be listed but is being scaled back. Its main interest is Fruitflow, a tomato-based drink which thins the blood and helps circulation.
The company said it wants to cut costs by £250,000 a year as the investment phase of the product is now complete.
“The board believe that these obligations can be met with a very small team comprising two part-time executives, together with two non-executive directors to oversee strategy and governance matters,” said the company.
“Subject to completion of the demerger, each member of the existing executive board will enter into new agreements with Provexis that reflect the services required to manage the Fruitflow business only. All other operational staff currently employed by the Provexis Group will become employees of the Science in Sport Group following completion of the demerger.”
It added: “Further to the above, the board does not believe that the market fully appreciates the value of the Science in Sport business while it is combined with the Fruitflow business. Businesses with similar characteristics and revenue growth to the Science in Sport Business historically command a multiple of sales valuation, something which has not been recognised in the valuation of the Provexis Group since the acquisition of Science in Sport.”
