REG - OptiBiotix Health - Final Results
28/06/2022 07:01
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RNS Number : 3507Q OptiBiotix Health PLC 28 June 2022
28 June 2022
OptiBiotix Health plc
("OptiBiotix" or the "Company" or the "Group")
Final results and Notice of AGM
OptiBiotix Health plc (AIM: OPTI), a life sciences business developing
compounds to tackle obesity, high cholesterol, diabetes and skin care
announces its audited results for the 12 months ended 31 December 2021.
Highlights
Financial
· Full year revenue of £2.2m a 45.3% increase on 2020 (£1.5m)
· A 27.7% increase in gross profit from £879K (2020) to £1.1m (2021)
· The Probiotic business increased sales by 34.0% to £1.1m (2020:
£0.8m) with underlying year-on-year product sales (excluding a £250K
milestone) increasing by 92.6%
· The Prebiotic business increased sales by 59.3% to £1.1m (2020:
£0.6m), with underlying sales (excluding milestone fees) growing by 122%
· Both Probiotic and Prebiotic trading businesses profitable at EBITDA
level, generating EBITDAs of £179K and £13K respectively
· A substantial increase in the value of the Group's holding in
SkinBioTherapeutics plc ('SBTX') from £8.9m (2020) to £13.7m as of 31
December 2021. The increase in the value of this investment resulting in a
Group net profit for the year of £6.3m (2020: £5.8m)
· Total cash on the balance sheet at the year-end increased by 122% to
£2m (2020: £0.9m)
Commercial
· René Kamminga appointed as Chief Executive Officer of our prebiotic
business as part of a long-planned strategy to appoint experienced industry
commercial leaders to run each part of the business
· The signing of an agreement and launch of LeanBiome® in The Hut
Groups (THG) Myprotein product range extending our reach in the sports
nutrition market
· The signing of agreements with large national partners, Apollo
Hospitals in India and Nahdi Medical in Saudi Arabia
· Launch by Arrotex Pharmaceuticals, Australia's largest private
pharmaceutical company, of a Very Low Calorie Diet (VLCD) weight management
product containing SlimBiome®
· Expansion of Holland & Barrett SlimExpert® own brand range
weight management product range containing SlimBiome® from three to eight
products
· SlimBiome® winning best weight management product in the USA
(Nutrition Industry Executive Award)
Regulatory and Scientific
· Approval of SlimBiome® as a licensed product with health claims
for weight management by Health Canada
· The achievement of British Retail Consortium accreditation,
confirming our compliance with the Global Food Safety Initiative ('GFSI')
benchmark. This certification is one of the leading international food safety
standards, accepted by most large retailers and their suppliers
· The Company has made significant progress in 2021 with the
manufacture of its SweetBiotix® and microbiome modulators
Post period end
· Publication of a human study in a peer reviewed scientific journal
showing LP(LDL)® can achieve similar reductions in total cholesterol and LDL
(bad cholesterol) to statins, without side effects
· Flotation of ProBiotix Health plc on the AQSE Growth Market in March
2022 with a distribution of approximately 0.55 ProBiotix shares for every
OptiBiotix ordinary share held at close of business on 25 March 2022
· New key appointments of Zac Sniderman as Business Development &
Sales Director in North America, and Shiraz Butt as E-Commerce Director
reflecting a focus on the US market and direct to consumer sales
· Appointment of Steen Andersen as CEO of ProBiotix Health plc
Stephen O'Hara, CEO of OptiBiotix, commented: "The Company has achieved a
second year of strong sales growth with a 45% increase in revenues, a 27.7%
increase in gross profit, both ProBiotic and PreBiotic business's EBITDA
profitable, and a Group net profit of £6.3m (including the increase in the
Group's investment in SBTX).
"With our products winning awards in several jurisdictions and an increasing
number of large companies like The Hut Group, Holland and Barrett, AlfaSigma,
Apollo Hospitals, and Nahdi Medical using our products, we are in strong
position for further growth.
"The Company has invested substantially in building its senior commercial team
reflecting our focus on commercialising products with larger partners, growing
the US market, and developing our direct to consumer business. After a period
of senescence due to COVID, we are pleased to report strong progress on our
path to manufacture and distribute our second generation SweetBiotix® and
Microbiome modulators.
"Post period-end, the Company successfully floated its formerly wholly-owned
probiotic subsidiary, ProBiotix Health plc, returning a dividend to OptiBiotix
shareholders. OptiBiotix shareholders now have a diversified interest in
multiple areas within the microbiome space with the Group looking to
accelerate bringing its second-generation technologies to market and acquire
and/or develop new technologies to build the product pipeline and subsidiaries
of the future. This strategy (RNS July 5 2016) reduces investor risk and
offers the potential for significant value uplift through realisation of the
Company's assets by trade sale or IPO and the potential for multiple dividend
returns for shareholders.
"With no debt, a healthy balance sheet, a growing reputation within the
industry, second-generation products close to commercialisation, and growing
consumer interest in the microbiome and gut health, the Company is in a strong
position for continued growth in this exciting area of healthcare."
This announcement contains information which, prior to its disclosure, was
considered inside information for the purposes of the UK Market Abuse
Regulation and the Directors of the Company are responsible for the release of
this announcement.
For further information, please contact:
OptiBiotix Health plc www.optibiotix.com (http://www.optibiotix.com/)
Neil Davidson, Chairman Contact via Walbrook below
Stephen O'Hara, Chief Executive
Cairn Financial Advisers LLP (NOMAD) Tel: 020 7213 0880
Liam Murray / Jo Turner / Ludovico Lazzaretti
Cenkos Securities plc (Broker) Tel: 020 7397 8900
Callum Davidson / Neil McDonald
Michael Johnson / Russell Kerr (Sales)
Walbrook PR Ltd Mob: 07876 741 001
Anna Dunphy
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
Chairman's Report
The Group continued to make excellent strategic, commercial, scientific and
financial progress during the year, despite the challenging and uncertain
trading environment created by the global Covid pandemic. Both the Probiotic
and Prebiotic businesses achieved strong turnover growth and improved profits,
as they successfully built sales of the first-generation ingredients developed
by the Group, secured additional regulatory approvals, and reached new
agreements with larger commercial partners to extend their global reach. Since
the year-end the Group has successfully floated its formerly wholly-owned
probiotic subsidiary, ProBiotix Health plc, as a separate company to maximise
its growth potential and deliver increased value to Group shareholders,
following the model set by the flotation of SkinBioTherapeutics plc in 2017.
The Group's financial strength provides it with an excellent platform to
accelerate the commercialisation of first-generation products via partners and
increasingly direct sales to consumers, and take to market its
second-generation technologies which have the potential for sustained future
growth.
Results
Group sales for the 12 months ended 31 December 2021 grew by 45.3% to £2.2m
(2020: £1.5m). Administrative expenses (excluding non-cash items such as
share-based payments and amortisation) increased by 32.4% to £2.1m (2020:
£1.6m), largely due to one-off recruitment and consultancy costs, and
investment in strengthening our commercial management team. Gross profit
increased by 27.7% to £1.1m (2020: £0.9m). Both the Probiotic and Prebiotic
divisions, which first achieved profitability in 2020, delivered substantially
increased EBITDA.
The Company received an additional £2.9m (2020: £0.7m) during the year in
proceeds from the sale of shares in SkinBioTherapeutics plc (SBTX), which is
not included in the Group sales figures. As of 31 December 2021, the Company
continued to hold 20.8% of the issued share capital of SBTX, valued at £13.7m
(31 December 2020: £8.9m). The increase in the value of the continuing
investment in SBTX resulted in a Group net profit for the year of £6.3m
(2020: £5.8m).
The Group's financial position remains strong, with total cash on the balance
sheet at the year-end increasing by 122% to £2.0m (2020: £0.9m). Once
R&D tax credits, recoverable VAT, and debtors and creditors are accounted
for the balance is £3.2m (2020: £1.4m).
Strategy
Optibiotix Health is a life sciences business founded on the development of
probiotic and prebiotic compounds which modify the microbiome to tackle
obesity, high cholesterol, diabetes, and skincare: all markets offering strong
growth potential in many parts of the world.
Our proven two-stage growth strategy has been to build the brand presence and
early sales of our first-generation products (principally LPLDL® in
Probiotics and SlimBiome® in Prebiotics) through deals with multiple partners
in multiple territories around the world, while at the same time pursuing the
development of our more innovative second-generation products that offer
potentially larger future returns. This means that our partners cover the
marketing and regulatory costs of entering new markets with new products
whilst allowing us to build a brand presence.
This strategy has been designed with two separate legal entities (ProBiotix
Health Ltd and OptiBiotix Ltd) focused on commercialising products, while the
holding company OptiBiotix Health plc acquires and develops the novel
technologies to build the new product pipeline, and provide the necessary
scientific and clinical studies, publications and regulatory approvals.
We also have a significant shareholding in a third company,
SkinBiotherapeutics plc, which was founded by our group CEO, and has delivered
£4.3m of value to our shareholders through share sales since its IPO in 2017,
and in which we retain a stake valued at £8.4m as at 1 June 2022.
OptiBiotix Health plc Overview: shareholding and key products
As we have always stated, this structure (see annual report for graph) gives
our shareholders exposure to multiple opportunities within the emerging
microbiome space, and affords the potential to deliver additional value
through separate public listing of the divisions, as we have accomplished
since the beginning of the new financial year with the flotation of ProBiotix
Health plc. This has allowed ProBiotix Health to raise £2.5m to accelerate
the commercial development of its products and has given our shareholders a
direct stake in the business through the distribution of shares. The Company
retains a substantial shareholding of 44% in its former subsidiary, which will
in future be accounted for as an associate.
Business development
Among the many positive developments during the year, which the Chief
Executive discusses more fully in his report, I would particularly like to
highlight:
· the significant strengthening and professionalisation of our business
development and commercial management team, most notably through the
appointment of René Kamminga as CEO of our Prebiotic business, OptiBiotix
Ltd;
· the conclusion of major new commercial agreements with market-leading
partners in both the Probiotic and Prebiotic businesses, moving us towards our
goal of having eight to ten large national or international partners for our
first-generation products, and two to three partners for each of our
second-generation technologies;
· the publication of multiple scientific and clinical studies and
industry reports affirming our position as an industry leader in understanding
of the microbiome; and
· further regulatory endorsements, including Health Canada approval of
our SlimBiome® weight management product.
The Board and senior management
As noted in the last annual report, we significantly strengthened the Board
through new appointments in the opening months of the financial year, ensuring
that we have the right mix of skills to lead the Group through the next stage
of its strategic development.
Christopher Brinsmead CBE joined the Board as a non-executive director on 1
January 2021, bringing to us more than 30 years of experience in the
pharmaceutical and healthcare sectors as a senior executive FTSE 350 company
director and chairman. Chris was Chairman of AstraZeneca Pharmaceuticals UK
and President of AstraZeneca UK and Ireland from 2001-2010, and President of
the Association of the British Pharmaceutical Industry (ABPI) from
2008-2010.
Stephen Hammond MP joined the Board as a non-executive director on 2 March
2021, further complementing our skillset through his experience of a
successful career in fund management and investment banking with Dresdner
Kleinwort Benson and Commerzbank Securities prior to entering Parliament in
2005, and his subsequent senior roles in government.
René Kamminga joined us on 6 April 2021 as Chief Executive Officer of our
wholly owned subsidiary OptiBiotix Ltd. We are already seeing the benefits of
his long experience and track record of growing sales of speciality
ingredients and products, and his extensive network of industry contacts.
Since the year-end we have significantly strengthened our senior executive team below the main Board, as the Chief Executive reports below.
Outlook
Following the restructuring of the Group through the successful flotation of
ProBiotix Health plc, we are focused on the development of our exciting
prebiotic business OptiBiotix Ltd, while retaining a substantial stake in the
continuing growth of ProBiotix Health as an associate.
The three commercial agreements we signed at the end of 2021 with well-known
national and international brands are indicative of the future direction of
the Group as we move to focus on fewer and larger business partners. This
long-planned strategic shift creates the potential for extending our global
reach, enhancing the reputation of our products and generating substantial
volume sales, though it should also be recognised that these larger partners
tend to operate on longer timescales than the smaller and quicker-to-market
enterprises with which we forged our initial commercial agreements. It also
means that we will receive fewer but much larger orders for our products than
in the past, so that revenues will accrue less evenly through the year, and
our results for future financial periods may reflect such timing differences.
We have invested substantially in building a stronger professional commercial
management team that is well qualified and equipped to lead the business in
this next phase of its development, as we look to launch more new products and
focus increasingly on selling finished products direct to consumers, while
continuing to develop sales of our first-generation ingredients to businesses
and working to realise the commercial potential of our development pipeline.
British Retail Consortium accreditation, achieved at the beginning of the new
financial year, demonstrates our compliance with an internationally recognised
food safety standard that will allow us to greatly accelerate the development
and sales of finished products to consumers through the retail channel.
Although the war in Ukraine and global inflationary pressures have created an
undoubtedly challenging trading environment for many companies including our
own, I am confident that we have the right structure, strategy, management
skills, technologies and commercial partners to deliver growing value for our
shareholders and an exciting long-term future for the Group.
N Davidson
Chairman
27 June 2022
Chief Executive Officer's Report
OptiBiotix offers investors a unique opportunity to participate in the growth
potential afforded by one of the most progressive and exciting areas of
biotechnological research: the modulation of the human microbiome. This is a
market projected to grow at a CAGR of 31% between 2023 and 2029 (Markets and
Markets, 2022). The Group develops unique innovative products across multiple
areas of the microbiome that are protected by an extensive and growing
international portfolio of patents and trademark underpinned by strong science
and clinical studies. Products are transferred for commercial exploitation to
trading divisions which have the ability to deliver additional shareholder
value through the achievement of separate listings or exits. Everything we do
is designed to maximise the earning potential of each of our products while
maintaining tight cost control and limiting investor risk.
STRATEGIC DEVELOPMENT
We are successfully progressing a two-stage strategy that continues to deliver
for our investors as planned. In the first stage of development, our two
independent trading businesses have built a strong recurring revenue base and
achieved profitability through the development of business-to-business sales
of our first-generation functional ingredients: principally LP(LDL)® in
Probiotics and SlimBiome® in Prebiotics. The Group has also benefited
substantially from our investment in SkinBioTherapeutics plc (SBTX).
Our business model has been designed to maximise the income potential of each
of our products while limiting investment risk and managing costs by securing
appropriate business partners in a wide and growing range of territories.
Having established our scientific and brand credibility through an initial
focus on smaller partners that were able to bring products quickly to market,
we are now able to develop a smaller number of relationships with larger
partners that offer the opportunity both to increase volume sales in existing
markets, and to extend our geographical reach.
As anticipated, the increasing association of our products with
internationally recognised retail and pharmaceutical partners and established
brands (e.g. MyProtein, OptiSlim) has created a virtuous circle of further
interest from other potential partners and markets. As we engage with an
increasing number of larger partners, the Company will have to manage
competing interests for product and territory exclusivity.
Now we have established a strong financial base and brand credibility through
our business-to-business sales, we are increasing our efforts on developing
higher-margin final product sales, including direct sales to consumers in
strategic markets. This direct sales strategy will have a mutually beneficial
effect in also driving sales of ingredients included in final products we sell
direct to consumers.
Our products continue to gain endorsement from scientific studies, industry
awards and regulatory approvals. We were particularly pleased that SlimBiome®
won first place in the Weight Maintenance Category of the US Nutrition
Industry Executive Awards in 2021 and was approved as a licensed product with
strong health claims for weight management by Health Canada, which is renowned
as one of the world's most demanding regulators. We believe these are
substantive achievements for early-stage products.
Following the separate flotation of our Probiotic business as ProBiotix Health
plc in March 2022, we are now strongly placed to focus on the growth potential
of our Prebiotic business, OptiBiotix Ltd, through our new CEO, René
Kamminga. The conclusion of three new commercial agreements with
market-leading partners in the UK, India and Saudi Arabia at the end of the
year have delivered an important extension of our geographic reach for
SlimBiome® in the main markets of Europe and Asia, while the launch of new
lean muscle mass ingredient, LeanBiome® provides us with a point of entry to
the lucrative and fast-growing sports nutrition market.
After COVID-19 delayed product development we are making good progress with
the commercialisation of our second-generation prebiotic products: the growing
SweetBiotix® family of functional fibres that act as low calorie, prebiotic
sweeteners; and Microbiome Modulators to target a range of human diseases.
These products carry higher development risks than our first-generation
products but address much larger market opportunities, affording very
substantial potential for future growth in revenues and profits.
FINANCIAL RESULTS
As the Chairman has noted, Group sales for the 12 months ended 31 December
2021 grew by 45.3% to £2.2m (2020: £1.5m), despite difficult global trading
conditions.
The Probiotic business, contained within our wholly owned subsidiary ProBiotix
Health Ltd, increased sales by 34.0% to £1.1m (2020: £0.8m). However, income
for the prior year included a £250,000 milestone payment for the development
of LP(LDL)® into a pharmaceutical, so that underlying product sales growth
year-on-year was 92.6%. The division delivered a 104% increase in EBITDA to
£179K (2020: £88K).
The Prebiotic business, within our wholly owned subsidiary OptiBiotix Ltd,
increased sales by 59.3% to £1.1m (2020: £0.6m), with underlying sales
(excluding licensing fees) growing by 122%, with an EBITDA of £13K (2020:
£36k).
Group administrative expenses (excluding non-cash items such as share-based
payments and amortisation) increased by 32.4% to £2.1m (2020: £1.6m),
largely due to one-off recruitment and consultancy costs, and investment in
strengthening our management team.
As the Chairman has noted, the Company received an additional £2.9m (2020:
£0.7m) during the year from the sale of shares in SkinBioTherapeutics plc
(SBTX), which is not included in the Group sales figures. As of 31 December
2021, the Company continued to hold 20.8% of the issued share capital of SBTX,
valued at £13.7m (2020: £8.9m). The increase in the value of the continuing
investment in SBTX resulted in a Group net profit for the year of £6.3m
(2020: £5.8m).
SBTX continues to make progress commercialising its products. It is worth
noting that our initial investment of approximately £700,000 in this business
in 2016 has delivered £4.3m of value to OptiBiotix shareholders through share
sales to date (a multiple of 6.1 of our initial investment). If OptiBiotix had
raised funds via a placing rather than sold SBTX shares this would equate to
an additional 9.7m shares (11.1%) and associated shareholder dilution. The
Company's continuing interest in SBTX is valued at approximately £8.4m as of
1 June 2022.
PROBIOTICS: ProBiotix Health plc
The cornerstone of our Probiotic business is LP(LDL)®, a unique probiotic for
cardiovascular health, the sales of which, either as an ingredient or final
product, grew by 34% during the year, or as direct comparison by 92.6% when
excluding the £250K milestone payment received in 2020.
The Group developed the science, carried out human studies to confirm product
safety and efficacy, and protected its commercial interests with a broad IP
portfolio comprising some 36 patents. In line with our strategy, ProBiotix
Health then took responsibility for commercialising the product by building a
supply chain of licensed partners to manufacture, formulate, and distribute
LP(LDL)® around the world.
By the end of 2021 we had partners commercialising LP(LDL)® in over 60
countries including the world's largest probiotic market, the USA, in
partnership with Seed Health. Four new commercial agreements were concluded in
2021, of which the most significant was the signing in August of a new
agreement with Seed Health expanding its territories from the US to include
Europe, Oceania (Australia, New Zealand etc.) and Asia (excluding India) for
the supply of LP(LDL)® in Seed's DS-01 multi-strain synbiotic product.
We reached new agreements with Compson Biotechnology in Taiwan, INSCOBEE Inc
in South Korea and Bioscience Marketing in Malaysia, all covering both
LP(LDL)® and our own branded CholBiome® range containing it, designed to
build the reputation and brand awareness of our own label products across
Asia.
We have developed our own unique range of patented and proprietary food
supplements containing LP(LDL)® under the CholBiome® brand, comprising
CholBiome(x3) to reduce cholesterol, CholBiome(BP) to lower blood pressure and
CholBiome(VH) to promote vascular health. This gives us a product portfolio
which allows us to create different formulations to allow us to enter
international markets around the world. This is important as regulatory
conditions vary widely across the world. For example, Monacolin K is used
extensively across Asia but prohibited in food supplements in North America
and has restricted dosage in Europe. Our CholBiome product range has been
developed to meet existing and anticipated regulatory requirements in
international markets.
Actial Farmaceutica Srl, with which we announced an agreement in July 2020 for
the distribution of CholBiome® products, is taking longer to launch products
than originally planned due to COVID-19 delays impacting on regulatory
approvals. However, ProBiotix Health hopes to announce progress on this in the
months ahead.
Whilst ProBiotix Health's focus is on commercialising products into the
supplement and over the counter pharma markets there is potential for the
further development of LP(LDL)® in drug biotherapeutics. This is a complex
area where regulatory pathways are not fully established, timescales are long
and investment costs and development risks are high. As such, this is being
progressed with partners with the necessary skills and expertise to take drug
products to market who pay milestones and royalties.
As part of our exploration of potential additional applications for the
product, we announced in January that we are jointly funding a PhD studentship
and clinical study into the role of the microbiome in stress, anxiety and
sleep disorders with the Universities of Southampton and Trento. We hope to
have some early data at the start of 2023.
LP(LDL)® has been determined as Generally Recognized As Safe ('GRAS') by the
US (https://en.wikipedia.org/wiki/United_States) Food and Drug Administration
(https://en.wikipedia.org/wiki/Food_and_Drug_Administration_(United_States))
(FDA) and has pharmaceutical GMP manufacture designation. Post period we began
to see the benefits of achieving GRAS with our partner in Uruguay, Grancha
Poncha, launching a yoghurt, Yo-Life®, with a cholesterol health claim. This
is a significant milestone, as it extends the use of LP(LDL)® into functional
dairy foods with a health claim which may be replicated in other territories
and other functional foods on a global scale. The launch follows over two and
a half years of product development to ensure the addition of LP(LDL)® to
yoghurt does not change its taste, texture, or shelf life, and provides an
active dose in milligram amounts and a cost advantage over stanols or sterols
which typically require doses of 2gms.
With the dairy sector accounting for over 85% of the global probiotic market,
we believe that this is an area with potential for significant future growth.
PREBIOTICS: OptiBiotix Ltd
Our Prebiotic business continues its focus on growing sales of its
first-generation prebiotic weight management ingredient SlimBiome®, and on
continuing to progress the commercialisation of more innovative
second-generation products including SweetBiotix® and Microbiome Modulators.
SlimBiome®/LeanBiome®
Despite the global slump in the weight-management sales during the COVID-19
pandemic (Nutritional Outlook, 24, 4) sales of SlimBiome® and LeanBiome® as
an ingredient or final product grew by 122% during the year, aided by
significant new product launches such as THG and range extensions in the UK
and Oceania.
Our established UK partner Holland & Barrett expanded their SlimExpert®
own brand range of weight management products containing SlimBiome® from
three to eight products in March 2021, with the range now including powdered
beverages, shakes and porridge.
In July 2021, Arrotex Pharmaceuticals, Australia's largest private
pharmaceutical company, launched a Very Low Calorie Diet (VLCD) weight
management product containing SlimBiome®, Bioslim VLCD, through pharmacies
and online across Australia.
Also, in July 2021 our existing customer Optipharm expanded their portfolio of
products containing SlimBiome® with the launch of the Optiman brand, sold
exclusively through the Chemist Warehouse online pharmacy.
In October 2021 we extended our market reach by entering the sports nutrition
market with LeanBiome® a scientifically formulated sports nutrition
ingredient which supports athletes seeking to increase lean muscle mass to
change their body composition.
In December 2021 we signed a number of significant new commercial agreements
with large partners Apollo Hospitals in India and Nahdi Medical in Saudi
Arabia which extended the geographic reach of the business and will hopefully
lead to important new product launches in 2022.
In January 2022, The Hut Group's Myprotein launched the Impact Diet Lean (IDL)
product range containing LeanBiome®, developed to build lean muscle mass
faster. IDL shakes were launched into the main markets of Europe and Asia
during Q1 and will be followed up by product range extensions throughout the
year.
SweetBiotix®
Our second-generation SweetBiotix® family of products is based on the concept
of creating a sweet fibre that has a low glycaemic index, which enhances the
microbiome. The concept uses recent advances in science, requires new
manufacturing processes to be developed, and represents a step change from
existing products on the market or to the best of our knowledge and partner
discussions, known to be under development. Our aim is to build a broad range
of products suitable for a wide range of application areas which can meet the
needs of multiple partners, on applications as diverse as dairy, cereals, and
hot and cold beverages. Each of these must be assessed in terms of flavour
optimisation, stability (typically 12 months with 24 months preferred),
dosage, safety, tolerance, health benefits, and the final product cost
profile.
We are progressing the commercialisation of SweetBiotix® on a number of
fronts. Following the agreement we signed in the second half of 2020, our US
manufacturing partner has successfully manufactured SweetBiotix® using an
industrial scale process and is now optimising yields and reducing wastage.
Our agreement, covering only one part of the SweetBiotix® portfolio, grants
an exclusive licence in return for our partner making a significant investment
to cover all the manufacturing, marketing and commercialisation costs, while
paying annual royalties to OptiBiotix.
Additionally, we are working with one of the world's leading companies
specialising in taste and sweetness on jointly developing, scaling up and
commercialising another group of SweetBiotix® products. A number of
corporates with leading positions in the food and beverages markets have also
signed Material Transfer Agreements to develop applications for SweetBiotix®.
Microbiome Modulators
The Company has developed an innovative approach to allow it to precision
engineer the microbiome. This is one of the most exciting areas of
microbiome therapeutics as it creates the potential for targeted treatment of
a range of human diseases. Development work was slowed by COVID-19 reducing
access to Universities and Contract Research Organisations in 2020 and early
2021. This work has now progressed and we have achieved the production of
Microbiome Modulators using a process suitable for industrial scale-up. Work
is ongoing to optimise the process and test whether the functionality has been
retained before initiating full scale-up and commercialisation.
This is a really exciting area of development which, if successful, could
revolutionise the use of the microbiome therapies in healthcare, potentially
allowing the creation of precision prebiotics which can engineer the gut
microbiome to prevent, manage and treat human diseases. We will be increasing
our investment in Microbiome Modulators to accelerate the development
activities currently taking place.
INTELLECTUAL PROPERTY
Our Intellectual Property strategy has been based of building a portfolio of
overlapping patents to protect our commercial interests and reduce the risk of
any particular patents failing to grant or being opposed by a
competitor. This means that we have multiple composition, application, and
process patents to protect each area of our business. Whilst this approach is
more costly, it reduces our future commercial risk. As patents are granted in
key territories (typically the US, Europe, Canada, Japan, Australia, India)
the Group has been able to refine its patent portfolio to reduce IP costs
whilst continuing to protect its commercial interests.
Our strategy and investment have enabled the Group to build an extensive and
valuable intellectual property portfolio of more than 100 patents worldwide:
36 in ProBiotix Health and 73 in OptiBiotix. In addition to these patents, we
have registered approximately over 80 trademarks (21 in ProBiotix Health and
62 in Optibiotix) providing 'double IP' - a combination of patents and
supporting trademarks which allows the Group to build its trademarked brands
supported by its patents. This approach allows the Group to protect its
commercial interests and limit competitors from launching similar products and
in combination creates a valuable IP portfolio in the microbiome field. We
are constantly reviewing and updating our patent and trademark portfolio
according to commercial needs.
MANAGEMENT
As the Chairman has reported, we substantially strengthened our Board and
senior management team through new non-executive and executive appointments in
the early months of the financial year under review. I am pleased to note that
a number of these new senior colleagues have demonstrated their commitment to
the Group, and their confidence in our future prospects, by making personal
investments in the Company's shares. It is also pleasing to note that other
members of the Board and senior management team took the opportunity to invest
in OptiBiotix during 2021.
Since the beginning of the new financial year, we have made a number of senior appointments below the level of the main Board. Paul Cannings joined us in January 2022 as Head of Operations & Quality, and in March 2022 we announced the appointments of Zac Sniderman as Business Development & Sales Director North America, Shiraz Butt as E-Commerce Director, and Karl Burkitt as Marketing Director. These new additions will ensure that we continue to meet the quality and regulatory requirements of our growing network of commercial partners around the world; maintain our drive to expand ingredient sales, particularly in the large North American market; and develop the sales of final products containing our unique ingredients both to businesses and direct to consumers.
PROSPECTS
We have continued to make good progress since the beginning of the current
financial year, despite the challenging global trading environment.
Significant developments in the year to date include:
· The achievement of British Retail Consortium accreditation,
confirming our compliance with the Global Food Safety Initiative ('GFSI')
benchmark. This certification by one of the leading international food safety
standards, accepted by most large retailers and their suppliers worldwide, is
an important support to our commercial strategy of increasing our sales of
final product solutions to partners in the retail channel.
· Our entry into the sports nutrition market with the launch of
LeanBiome®, a scientifically supported dietary fibres and a trace mineral,
developed to support athletes increase lean muscle mass and to improve
metabolism, gut health and satiety. Our new distribution agreement with
leading e-commerce retailer The Hut Group, signed in December 2021, saw
LeanBiome® launched in January 2022 in its Impact Diet Lean product as part
of its My Protein range in the UK, with territorial expansion across Europe,
Asia and the USA planned in the course of the year.
· The reformulation of WellBiome®, our functional fibre and mineral
blend, with new ingredients that will allow us to make new health claims for
the products. The new WellBiome® will form the basis for a science-based
health and wellness platform offering a range of products to improve
cognitive, immune, bone, digestive and cardiovascular health to support
healthy ageing.
· Publication in January 2022 of a third human volunteer study on the
medical efficacy of LP(LDL)®, demonstrating through a placebo-controlled
trial that LP(LDL)® delivered large and statistically significant reductions
in total cholesterol, LDL-C (bad) cholesterol and Apolipoprotein B (widely
accepted as the most important causal agent of atherosclerotic cardiovascular
disease), with no compliance, tolerance or safety issues. The results of this
and other studies suggest efficacy similar to many statins and other
treatments more typically associated with pharmaceuticals, suggesting
considerable potential in high value pharmaceutical and OTC markets for the
use of LP(LDL)® in individuals who are unwilling or unable to tolerate other
treatments.
· Publication in February 2022 of a consumer study undertaken among
purchasers from our own e-commerce website of CholBiome(x3), our proprietary
food supplement containing LP(LDL)®, which confirmed its effectiveness in
reducing cholesterol with no reports of side-effects or any tolerance issues.
· Admission of ProBiotix Health plc to the AQSE Growth Market on 31
March 2022, raising £2.5m for the further development of our former Probiotic
subsidiary through a placing and subscription of new shares, while giving our
own shareholders a dividend in specie of 0.554673 ProBiotix share for every
OptiBiotix share held.
· Good progress in the development of OptiBiotix Health India, the new
subsidiary whose formation we announced in November 2021. This gives us much
improved access to a huge, rapidly growing and increasingly prosperous market
of 1.3bn people. India is expected to account for the majority of the world's
middle-class consumers by 2035. With high levels of cardiovascular disease and
obesity already prevalent in the country, we see excellent opportunities to
improve engagement with our local manufacturing partners and to develop sales
of both ingredients and higher-margin final products in the years ahead.
· The appointment of Steen Andersen as Chief Executive Officer of
ProBiotix Health plc. This is part of a long-planned strategy to appoint
experienced industry business leaders to each part of the business allowing
me, as Group CEO to focus on identifying and developing the new technologies
that will provide the Group with a pipeline of products to deliver future
growth and market value.
As the Group matures, we are moving on from a period when we announced very
frequent news reports on our progress in developing the science behind our
products and in growing our global network of relatively small business
partners. The focus now is on building our sales by extending product ranges
and territories, gaining regulatory approvals for health claims, migrating to
larger partners, and developing sales of final products direct to consumers.
This will lead to us reporting less news, but of a more substantive nature. It
also means, as the Chairman has noted, that our future financial results will
reflect fewer but much larger sales to a smaller number of big partners and
consequently revenues reported less evenly through the year.
The strong growth in revenues and profits in 2021 despite the difficult global
environment is testimony to the effectiveness of our strategy. We continue to
make good progress against our stated aims of focusing on a smaller number of
large partners in key strategic markets and grow our direct-to-consumer sales,
the benefits of which we expect to begin realising in the current year. There
is an exciting opportunity for growth as we bring the second-generation
products to market, while we retain exposure to the growth potential in
probiotics and skincare through the Group's shareholdings in ProBiotix Health
plc and SkinBioTherapeutics plc.
Our strong financial position has allowed us to invest in expanded sales and
marketing capabilities that will help us to increase our sales of final
products direct to consumers through retail channels. We hope to see the
return on this investment later this year and beyond. It also gives us the
capability to in-license or acquire additional technologies that will ensure a
continuous pipeline of solutions to deliver diversified growth for the Group
and strengthen our position as one of the leading companies in the rapidly
growing microbiome space.
Stephen O'Hara
Chief Executive
27 June 2022
Consolidated statement of comprehensive income
Notes Year ended Year ended
31 December 31 December
2021 2020
£ £
Revenue from contracts with customers 2,212,932 1,523,247
Cost of sales (1,089,589) (643,428)
─────── ───────
Gross Profit 1,123,343 879,819
Share based payments (60,288) (127,248)
Depreciation and amortisation (288,455) (247,895)
Other administrative costs (2,139,915) (1,616,069)
Total administrative expenses 6 (2,488,657) (1,991,212)
─────── ───────
Operating loss (1,365,314) (1,111,393)
Finance cost 5 (47,600) (44,954)
Finance income 5 122 98
─────── ───────
(47,478) (44,856)
Share of loss from associate 11 - (303,448)
Gain on disposal of an associate 11 - 4,165,223
Gain on investments 11 7,500,681 2,955,739
Profit on disposal of investments 11 88,618 48,967
─────── ───────
Profit/(Loss) before tax 6,176,507 5,710,232
Corporation tax 7 84,523 91,635
─────── ───────
Profit/(Loss)for the period 6,261,030 5,801,867
Other comprehensive income - -
─────── ───────
Total comprehensive income for the period 6,261,030 5,801,867
═══════ ═══════
Total comprehensive income attributable to:
Owners of the company 6,261,030 5,801,867
Non-controlling interests - -
─────── ───────
6,261,030 5,801,867
═══════ ═══════
Earnings per share from continued operations
Basic profit/(loss) per share - pence 8 7.15p 6.65p
Diluted profit/(loss) per share - pence 6.55p 6.07p
═══════ ═══════
All activities relate to continuing operations
Consolidated statement of financial position
Notes As at As at
31 December 2021 31 December 2020
ASSETS £ £
Non-current assets
Intangibles 9 2,640,672 2,735,621
Investments 11 13,650,927 8,962,564
─────── ───────
16,291,599 11,698,185
─────── ───────
CURRENT ASSETS
Inventories 12 101,877 184,236
Trade and other receivables 13 1,552,490 645,823
Current tax asset 7 191,249 310,435
Cash and cash equivalents 14 2,007,448 864,680
─────── ───────
3,853,064 2,005,174
─────── ───────
TOTAL ASSETS 20,144,663 13,703,359
═══════ ═══════
EQUITY
Shareholders' Equity
Called up share capital 15 1,758,812 1,758,812
Share premium 16 2,537,501 2,537,501
Share based payment reserve 16 927,595 867,307
Merger relief reserve 16 1,500,000 1,500,000
Convertible debt - reserve 16 92,712 92,712
Retained Earnings 16 11,319,998 5,058,968
Non-controlling interest 16 35,782 35,782
─────── ───────
Total Equity 18,172,400 11,851,082
─────── ───────
LIABILITIES
Current liabilities
Trade and other payables 17 600,904 518,995
─────── ───────
600,904 518,995
─────── ───────
Non - current liabilities
Deferred tax liability 18 552,000 561,523
Convertible loan notes 19 819,359 771,759
─────── ───────
1,371,359 1,333,282
─────── ───────
TOTAL LIABILITIES 1,972,263 1,852,277
─────── ───────
TOTAL EQUITY AND LIABILITIES 20,144,663 13,703,359
═══════ ═══════
These financial statements were approved and authorised for issue by the Board
of Directors on 27 June 2022 and were signed on its behalf by:
S P O'Hara
Director
Company Registration no. 05880755
Consolidated statement of changes in equity
Non-Controlling Share-based
Called up interest Convertible Merger Relief Reserve Payment reserve
Share capital Retained Earnings Share Debt Total
Premium Reserve equity
£ £ £ £ £ £ £ £
Balance at 31 December 2019 1,708,811 (742,899) 1,646,873 35,782 92,712 1,500,000 740,059 4,981,338
Profit for the year - 5,801,867 - - - - - 5,801,867
Issues of shares during the year 50,001 - 950,003 - - - - 1,000,004
Share issue costs - - (59,375) - - - - (59,375)
Share options and warrants - - - - - - 127,248 127,248
────── ─────── ────── ────── ───── ────── ────── ───────
Balance at 31 December 2020 1,758,812 5,058,968 2,537,501 35,782 92,712 1,500,000 867,307 11,851,082
Profit for the year - 6,261,030 - - - - - 6,261,030
Share options and warrants - - - - - - 60,288 60,288
────── ─────── ────── ────── ───── ────── ────── ───────
Balance at 31 December 2021 1,758,812 11,319,998 2,537,501 35,782 92,712 1,500,000 927,595 18,172,400
══════ ═══════ ══════ ══════ ═════ ══════ ══════ ═══════
Consolidated statement of cash flows
Notes Year ended Year ended
31 December 2021 31 December 2020
£ £
Cash flows from operating activities
Cash utilised by operations 1 (1,759,446) (928,061)
Tax received 194,664 -
Interest received 121 98
────── ──────
Net cash outflow from operating activities (1,564,661) (927,963)
Cash flows from investing activities
Purchase of intangible assets (193,506) (350,345)
────── ──────
Net cash outflow from investing activities (193,506) (350,345)
────── ──────
Cash flows from financing activities
Share issues - 940,629
Disposal of investments 2,900,936 746,751
────── ──────
Net cash inflow from financing activities 2,900,936 1,687,380
────── ──────
Increase/(decrease) in cash and equivalents 1,142,769 409,072
Cash and cash equivalents at beginning of period 864,680 455,608
────── ──────
Cash and cash equivalents at end of period 2 2,007,448 864,680
══════ ══════
Notes to consolidated statement of cash flows
1. Reconciliation of loss before income tax to cash outflow from
operations
Year ended Year ended
31 December 31 December
2021 2020
£ £
Operating loss (1,365,314) (1,111,393)
Decrease/(Increase) in inventories 82,359 (121,475)
(Increase) in trade and other receivables (906,666) (37,190)
Increase/ (Decrease) in trade and other payables 81,910 (42,630)
Depreciation charge - 393
Share Option expense 60,288 127,248
Amortisation of patents and development costs 288,455 247,502
Net forex differences (478) 9,484
────── ──────
Net cash outflow from operations (1,759,446) (928,061)
══════ ══════
2. Cash and Cash Equivalents
Year ended
31 December Year ended
2021 31 December 2020
£ £
Cash and cash equivalents 2,007,448 864,680
═══════ ════════
Company statement of financial position
Notes As at As at
31 December 2021 31 December 2020
ASSETS £ £
Non-current assets
Investments 11 15,731,832 11,043,469
Other receivables 13 318,127 329,057
─────── ───────
16,049,959 11,372,526
─────── ───────
CURRENT ASSETS
Trade and other receivables 13 65,900 89,420
Cash and cash equivalents 14 1,705,291 532,769
─────── ───────
1,771,191 622,189
─────── ───────
TOTAL ASSETS 17,821,150 11,994,715
═══════ ═══════
EQUITY
Shareholders' Equity
Called up share capital 15 1,758,812 1,758,812
Share premium 16 2,537,501 2,537,501
Merger relief reserve 16 1,500,000 1,500,000
Share based payment reserve 16 927,595 867,307
Accumulated profit 16 11,055,990 5,268,171
─────── ───────
Total Equity 17,779,898 11,931,791
─────── ───────
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 17 41,252 62,924
─────── ───────
TOTAL LIABILITIES 41,252 62,924
─────── ───────
TOTAL EQUITY AND LIABILITIES 17,821,150 11,994,715
═══════ ═══════
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 not to present the parent Company income statement account.
The profit for the parent Company for the year was £5,787,819 (2020: Loss
£1,168,767).
These financial statements were approved and authorised for issue by the Board
of Directors on 27 June 2021 and were signed on its behalf by:
S P O'Hara
Director
Company Registration no. 05880755
Company statement of changes in equity
Share-based
Called up Merger Relief Reserve Payment reserve
Share capital Retained Earnings Share Total
Premium equity
£ £ £ £ £ £
Balance at 31 December 2019 1,708,811 6,436,938 1,646,873 1,500,000 740,059 12,032,681
Loss for the year - (1,168,767) - - - (1,168,767)
Issues of shares during the year 50,001 - 950,003 - - 1,000,004
Financing costs - - (59,375) - - (59,375)
Share options and warrants - - - - 127,248 127,248
────── ─────── ─────── ────── ────── ───────
Balance at 31 December 2020 1,758,812 5,268,171 2,537,501 1,500,000 867,307 11,931,791
Profit for the year - 5,787,819 - - - 5,787,819
Share options and warrants - - - - 60,288 60,288
────── ─────── ─────── ────── ────── ───────
Balance at 31 December 2021 1,758,812 11,055,990 2,537,501 1,500,000 927,595 17,779,898
══════ ═══════ ═══════ ══════ ══════ ═══════
Company statement of cash flows
Notes Year ended
31 December Year ended
2021 31 December 2020
£ £
Cash flows from operating activities
Cash utilised by operations 1 (1,754,689) (369,036)
Interest received - 46
─────── ───────
Net cash outflow from operating activities (1,754,689) (368,990)
Cash flows from financing activities
Net amounts to subsidiaries 26,275 (924,864)
Share issues - 940,629
Proceeds from disposal of investments 2,900,936 746,751
─────── ───────
Net cash inflow from financing activities 2,927,211 762,516
─────── ───────
Increase/(decrease) in cash and equivalents 1,172,522 393,526
Cash and cash equivalents at beginning of period 532,769 139,243
─────── ───────
Cash and cash equivalents at end of period 2 1,705,291 532,769
═══════ ═══════
Notes to company statement of cash flows
1. Reconciliation of loss before income tax to cash generated from
operations
Year ended
31 December Year ended
2021 31 December 2020
£ £
Operating (loss)/Profit (2,748,727) (6,760,976)
Increase/(Decrease) in trade and other receivables 23,521 (64,713)
Loan Write off 931,903 6,301,667
(Decrease)/Increase in trade and other payables (21,673) 27,738
Share Option expense 60,287 127,248
────── ──────
Net cash outflow from operations (1,754,689) (369,036)
══════ ══════
2. Cash and Cash Equivalents
As at As at
31 December 31 December 2020
2021
£ £
Cash and cash equivalents 1,705,291 532,769
══════ ═══════
Notes to the financial statements
1. General Information
OptiBiotix Health plc is a Public Limited Company incorporated and domiciled
in England and Wales. Details of the registered office, the officers and
advisers to the Company are presented on the company information page at the
start of this report. The Company's offices are at Innovation centre,
Innovation Way, Heslington, York, YO10 5DG. The Company is listed on the AIM
market of the London Stock Exchange (ticker: OPTI).
The principal activity is that of identifying and developing microbial
strains, compounds, and formulations for use in food ingredients, supplements
and active compounds that can impact on human physiology, deriving potential
health benefits.
2. Accounting Policies
Statement of compliance
The consolidated financial statements of Optibiotix Health Plc have been
prepared in accordance with UK adopted international accounting standards
(IFRSs), IFRIC interpretations and the Companies Act 2006 applicable to
companies reporting under IFRS. These are the first financial statements
prepared under UK adopted international accounting standards. On 31 December
2020, IFRS as adopted by the European Union at that date was brought into UK
law and became UK adopted international accounting standards, with future
changes being subject to endorsement by the UK Endorsement Board. Optibiotix
Health Plc transitioned to UK-adopted International Accounting Standards in
its consolidated and parent company financial statements on 1 January 2021.
This change constitutes a change in accounting framework. However, there is no
change on recognition, measurement or disclosure in the financial year
reported as a result of the change in framework.
Basis of preparation
The financial statements have been prepared under the historical cost
convention. The functional currency is GBP.
The principal accounting policies are summarised below. They have all been
applied consistently throughout the period under review.
Going concern
The financial statements have been prepared on the assumption
that the Group is a going concern. When assessing the foreseeable future, the
Directors have looked at the budget for the next 12 months from the date of
this report, the cash at bank available as at the date of approval of these
financial statements and are satisfied that the group should be able to cover
its quoted maintenance costs, other administrative expenses and its ongoing
research and development expenditure.
Management have considered its forecast of the group's cash requirements
reflecting contracted and anticipated future revenue and the resulting net
cash outflows. Management have not seen a material disruption to the business
as a result of the COVID-19 pandemic, nor the current political crises in
Europe. Management will keep events under constant review, and remedial action
will be taken if the situation demands it.
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt a going concern basis
in preparing the annual report and financial statements.
2. Accounting Policies (continued)
Standards, amendments and interpretations effective and adopted in 2021
Several amendments and interpretations apply for the first time in 2021.
Effective for annual
Standard or periods beginning
Interpretation Title on or after
IFRS 16 COVID-19-Related Rent Concessions 1 June 2020
(Amendment to IFRS 16)
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2 1 January 2021
(Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
Standards, amendments and interpretations issued and effective in 2021 but not
relevant
There are no IFRSs or IFRIC interpretations that are effective and not
relevant to the Group.
2. Accounting Policies (continued)
Standards, amendments and interpretations issued but not yet effective in 2021
There were a number of standards and interpretations which were in issue at
31 December 2021 but not effective for periods commencing 1 January 2021 and
have not been adopted for these financial statements. The Directors have
assessed the full impact of these accounting changes on the Company. To the
extent that they may be applicable, the Directors have concluded that none of
these pronouncements will cause material adjustments to the Group's financial
statements. They may result in consequential changes to the accounting
policies and other note disclosures. The new standards will not be early
adopted by the Group and will be incorporated in the preparation of the Group
financial statements from the effective dates noted below.
Effective for annual
Standard or periods beginning
Interpretation Title on or after
IFRS 16 COVID-19-Related Rent Concessions beyond 30 June 2021. (Amendment to IFRS 16) 1 April 2021
IAS 37 Onerous Contracts - Cost of Fulfilling a Contract. (Amendments to IAS 37) 1 January 2022
IAS 16 Property, Plant and Equipment: Proceeds before Intended Use. (Amendments to 1 January 2022
IAS 16)
IFRS Annual Improvements to IFRS Standards 2018-2020 1 January 2022
IFRS 3 Reference to the Conceptual Framework. (Amendments to IFRS 3) 1 January 2022
IAS 1 Classification of Liabilities as Current or Non-current. (Amendments to IAS 1) 1 January 2023
IFRS 17 IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts. 1 January 2023
IAS 1 Disclosure of Accounting Policies. (Amendments to IAS 1 and IFRS Practice 1 January 2023
Statement 2)
IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single 1 January 2023
Transaction. (Amendments to IAS 12)
IAS 8 Definition of Accounting Estimates. (Amendments to IAS 8) 1 January 2023
There are no other IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Group.
The Directors anticipate that the adoption of these standard and the
interpretations in future period will have no material impact on the financial
statements of the company.
2. Accounting Policies (continued)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 December each year. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated statement of comprehensive income from the
effective date of acquisition or up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with those used by
other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Changes in the Group's ownership interests in subsidiaries that do not result
in the Group losing control over the subsidiaries are accounted for as equity
transactions. The carrying amounts of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by
which the non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed
to owners of the Company.
When the Group loses control of a subsidiary, the profit or loss on disposal
is calculated as the difference between (i) the aggregate of the fair value of
the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests. Where certain
assets of the subsidiary are measured at revalued amounts or fair values and
the related cumulative gain or loss has been recognised in other comprehensive
income and accumulated in equity, the amounts previously recognised in other
comprehensive income and accumulated in equity are accounted for as if the
Company had directly disposed of the related assets (i.e. reclassified to
profit or loss or transferred directly to retained earnings).
The fair value of any investment retained in the former subsidiary at the date
when control is lost is regarded as the fair value on initial recognition for
subsequent accounting under IFRS 9 "Financial Instruments: Recognition and
Measurement" or, when applicable, the cost on initial recognition of an
investment in an associate or a jointly controlled entity
2. Accounting Policies (continued)
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of the
assets transferred by the Group, liabilities incurred by the group to the
former owners of the acquiree and the equity interests issued by the group in
exchange for control of the acquiree. Acquisition-related costs are recognised
in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognised at their fair value at the acquisition date, except
that:
- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and measured in
accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
- liabilities or equity instruments related to share-based payment
transactions of the acquiree or the replacement of an acquiree's share-based
payment transactions with share-based payment transactions of the group are
measured in accordance with IFRS 2 Share-based Payment at the acquisition
date; and
- assets (or disposal groups) that are classified as held for sale
in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations are measured in accordance with that standard.
Goodwill is measured as the excess of the sum
of the consideration transferred, the amount of any non-controlling interests
in the acquiree, and the fair value of the acquirer's previously held equity
interest in the acquiree (if any) over the net of the acquisition-date amounts
of the identifiable assets acquired and the liabilities assumed. If, after
assessment, the net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and
the fair value of the acquirer's previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
Revenue recognition
Revenue is measured at the fair value of sales of goods and services less
returns and sales taxes. The Group has analysed its business activities and
applied the five-step model prescribed by IFRS 15 to each material line of
business, as outlined below:
Sale of products
The contract to provide a product is established when the customer places a
purchase order. The performance obligation is to provide the product requested
by an agreed date, and the transaction price is the value of the product as
stated in our order acknowledgement. The performance obligation is typically
met when the product is dispatched and so revenue is primarily recognised for
each product when dispatching takes place. In some limited situations when the
product is complete but the customer is unable to take delivery the
performance obligation is met when the customer formally accepts transfer of
risk and control even though the product has not been dispatched.
2. Accounting Policies (continued)
License arrangements
Revenue is recognised when the customer obtains control of the rights to use
the IP. The performance obligations are considered to be distinct from any
ongoing distribution arrangements which are treated in line with sales of
products.
Milestone payments
Where the transaction price includes consideration that is contingent upon a
future event or circumstance, the contingent amount is allocated entirely to
that performance obligation if certain criteria are met. Revenue is recognised
at the point of time of the performance obligation being satisfied.
Investments in associates
Associates are those entities in which the Group has significant influence,
but not control or joint control over the financial and operating policies.
Significant influence is presumed to exist when the Group holds between 20 and
50 percent of the voting power of another entity. Investments in associates
are accounted for under the equity method and are recognised initially at
cost. The cost of the investment includes transaction costs.
The consolidated financial statements include the Group's share of profit or
loss and other comprehensive income of equity-accounted investees, after
adjustments to align the accounting policies with those of the Group, from the
date that significant influence commences until the date that significant
influence ceases.
When the Group's share of losses exceeds its interest in an equity-accounted
investee, the carrying amount of the investment, including any long-term
interests that form part thereof, is reduced to zero, and the recognition of
further losses is discontinued except to the extent that the Group has an
obligation or has made payments on behalf of the investee.
Investments at fair value
Equity investments are held at fair value at the balance sheet date with any
profit or loss for the year being taken to the Income statement. The value of
listed investments being calculated at the closing price on the balance sheet
date.
Employee Benefits
The Group operates a defined contribution pension scheme. Contributions
payable by the Group's pension scheme are charged to the income statement in
the period in which they relate.
2. Accounting Policies (continued)
Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
(i) Current tax
Current taxes are based on the results shown in
the financial statements and are calculated according to local tax rules using
tax rates enacted or substantially enacted by the statement of financial
position date.
Income tax is recognised in the income
statement or in equity if it relates to items that are recognised in the same
or a different period, directly in equity.
Current tax assets and liabilities for the
current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities.
(ii) Deferred tax
Deferred tax is provided, using the liability
method, on temporary differences at the statement of financial position date
between the tax base of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred tax liabilities are recognised for all
taxable temporary differences.
Deferred tax assets are recognised for all
deductible temporary differences, carry forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will
be available against which the deductible
temporary differenced and the carrying forward or unused tax assets and unused
tax losses can be utilised.
The carrying amount of deferred tax assets is
reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all
or part of the deferred tax assets to be utilised. Conversely, previously
unrecognised deferred tax assets are recognised to the extent that it is
probable that sufficient taxable profit that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on the tax rates and tax
laws that have been enacted or substantively enacted at the balance sheet
date.
Financial instruments
Financial assets and financial liabilities are recognised when
the group becomes a party to the contractual provisions of the instrument.
Loans and receivables are initially measured at fair value and are
subsequently measured at amortised cost, plus accrued interest, and are
reduced by appropriate provisions for estimated irrecoverable amounts. Such
provisions are recognised in the statement of income.
2. Accounting Policies (continued)
Equity investments comprise investments which do have a fixed maturity and are
classified as non current assets if they are intended to be held for the
medium to long term. They are measured at fair value through profit or loss.
Trade receivables are initially measured at fair value and are subsequently
measured at amortised cost less appropriate provisions for estimated
irrecoverable amounts. Such provisions are recognised in the statement of
income.
Cash and cash equivalents comprise cash in hand and demand deposits and other
short-term highly liquid investments with maturities of three months or less
at inception that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Trade payables are not interest-bearing and are initially valued at their fair
value and are subsequently measured at amortised cost.
Equity instruments are recorded at fair value, being the proceeds received,
net of direct issue costs.
Share Capital - Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of taxation, from the proceeds.
Financial instruments require classification of fair value as determined by
reference to the source of inputs used to derive the fair value. This
classification uses the following three-level hierarchy:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2 - inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e., as prices) or
indirectly (i.e., derived from prices);
Level 3 - inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the first-in, first-out (FIFO) method. Net realisable value
is the estimated selling price in the ordinary course of business, less
applicable variable selling expenses.
2. Accounting Policies (continued)
Impairment of non-financial assets
At each statement of financial position date, the Group reviews the carrying
amounts of its investments to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless the relevant asset is
carried at a re-valued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (cash-generating unit) in prior years. A
reversal of an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the reversal of
the impairment loss is treated as a revaluation increase.
Capital management
Capital is made up of stated capital, premium, other reserves
and retained earnings. The objective of the Group's capital management is to
ensure that it maintains strong credit ratings and capital ratios. This will
ensure that the business is correctly supported and shareholder value is
maximised.
The Group manages its capital structure through adjustments
that are dependent on economic conditions. In order to maintain or adjust the
capital structure, the Company may choose to change or amend dividend payments
to shareholders or issue new share capital to shareholders. There were no
changes to the objectives, policies or processes during the period ended 31
December 2021.
2. Accounting Policies (continued)
Convertible Loans
Compound financial instruments issued by the Group comprise convertible notes
that can be converted to share capital at the option of the holder, and the
number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is recognised
initially at the fair value of a similar liability that does not have an
equity conversion option. The equity component is recognised initially at the
difference between the fair value of the compound financial instrument as a
whole and the fair value of the liability component. Any directly attributable
transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amount.
Convertible debt reserve
The convertible debt reserve is the equity component of the convertible loan
notes that have been issued.
Share-based compensation
The fair value of the employee and suppliers services received in exchange for
the grant of the options is recognised as an expense. The total amount to be
expensed over the vesting year is determined by reference to the fair value of
the options granted, excluding the impact of any non-market vesting conditions
(for example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options that are
expected to vest. At each statement of financial position date, the entity
revises its estimates of the number of options that are expected to vest. It
recognises the impact of the revision to original estimates, if any, in the
income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options
are exercised.
The fair value of share-based payments recognised in the income statement is
measured by use of the Black Scholes model, which takes into account
conditions attached to the vesting and exercise of the equity instruments. The
expected life used in the model is adjusted; based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future share
price behaviour and is selected based on past experience, future expectations
and benchmarked against peer companies in the industry.
2. Accounting Policies (continued)
Property, plant and equipment
Property, plant and equipment are stated at historical cost less subsequent
accumulated depreciation and accumulated impairment losses, if any. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance are
charged to profit or loss during the financial period in which they are
incurred.
Depreciation on property, plant and equipment is calculated using the
straight-line method to write off their cost over their estimated useful lives
at the following annual rates:
Computer
equipment
30%
Useful lives and depreciation method are reviewed and adjusted if appropriate,
at the end of each reporting period.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of
the asset. Any gain or loss arising on the disposal or retirement of an item
of property, plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the relevant asset and is recognised
in profit or loss in the year in which the asset is derecognised.
Intangibles - Patents
Separately acquired patents are shown at historical cost. Patents have a
finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight line method to allocate the cost
of the patents over their estimated useful life of twenty years once the
patents have been granted.
Research and Development
Research expenditure is written off to the statement of comprehensive income
in the year in which it is incurred. Development expenditure is written off in
the same way unless the Directors are satisfied as to the technical,
commercial and financial viability of individual projects. In this situation,
the expenditure is deferred and amortised over the 10 years during which the
Company is expected to benefit.
Merger relief reserve
The merger relief reserve arises from the 100% acquisition of OptiBiotix
Limited whereby the excess of the fair value of the issued ordinary share
capital issued over the nominal value of these shares is transferred to this
reserve in accordance with section 612 of the Companies Act 2006.
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the financial statements requires management to make
estimates and assumptions concerning the future that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts
of revenues and expenses during the reporting periods.
2. Accounting Policies (continued)
The resulting accounting estimates will, by definition, differ from the
related actual results.
· Share based payments
The fair value of share based payments recognised in the income statement is
measured by use of the Black Scholes model, which takes into account
conditions attached to the vesting and exercise of the equity instruments. The
expected life used in the model is adjusted; based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future share
price behaviour and is selected based on past experience, future expectations
and benchmarked against peer companies in the industry.
· Amortisation
Management have estimated that the useful life of the fair value of the
patents acquired on the acquisition to be 20 years. Research and developments
that have been capitalised in line with the recognition criteria of IAS38 have
been estimated to have a useful economic life of 10 years. These estimates
will be reviewed annually and revised if the useful life is deemed to be lower
based on the trading business or any changes to patent law.
· Impairment reviews
IFRS requires management to undertake an annual test for impairment of
indefinite lived assets and, for finite lived assets to test for impairment if
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Impairment testing is an area involving
management judgement, requiring assessment as to whether the carrying value of
assets can be supported by the net present value of future cash flows derived
from such assets using cash flow projections which have been discounted at an
appropriate rate. In calculating the net present value of the future cash
flows, certain assumptions are required to be made in respect of highly
uncertain matters.
· Derecognition of an associate
Management have reviewed the existing relationship with Skinbiotherapeutics
Plc in light of changes in the Group's power to participate in the financial
and operating decisions of the entity, in line with the requirements of IAS28.
In the prior year following a significant dilution in shareholding and a
change to the board structure of the entity, it was determined that the
significant influence had been lost and the associate would be de-recognised.
This year it is still considered to be an investment.
3. Segmental Reporting
In the opinion of the directors, the Group has one class of business, in three
geographical areas being that of identifying and developing microbial strains,
compounds and formulations for use in the nutraceutical industry. The Group
sells into three highly interconnected markets, all costs assets and
liabilities are derived from the UK location.
Revenue analysed by market
Year ended Year ended
31 December 31 December 2020
2021
£ £
Probiotics 1,100,132 821,126
Functional Fibres 1,112,800 702,121
────── ──────
2,212,932 1,523,247
══════ ══════
Revenue analysed by geographical market
Year ended Year ended
31 December 31 December 2020
2021
£ £
UK 647,649 369,892
US 827,135 654,524
Rest of world 738,148 498,831
────── ──────
2,212,932 1,523,247
══════ ══════
During the reporting period one customer represented £727,135 (32.9%) of
Group revenues. (2020: one customer generated £497,416 representing 32.6% of
Group revenues)
4. Employees and Directors
Year ended Year ended
31 December 31 December 2020
2021
£ £
Wages and salaries 181,702 82,448
Directors' remuneration* 493,987 404,500
Directors' fees* 455,400 406,399
Social security costs 82,754 52,231
Pension costs 43,542 33,518
────── ──────
1,257,386 979,096
══════ ══════
*Total Directors' remuneration £949,387 (2020: £810,899) see Directors'
remuneration note below
Year ended Year ended
31 December 31 December 2020
2021
No. No.
The average monthly number of employees during the period was as follows:
Directors 9 6
Research and development 3 2
────── ──────
12 8
══════ ══════
Year ended Year ended
31 December 31 December 2020
2021
£ £
Directors' remuneration 841,888 763,399
Directors' share based payments 33,514 102,533
Bonus* 107,500 47,500
Pension 34,882 33,518
────── ──────
Total emoluments 1,017,784 946,950
══════ ══════
Emoluments paid to the highest paid director 254,000 218,000
══════ ══════
*Total Directors' remuneration £949,388 see Directors' remuneration note
below
Included in total emoluments paid to Directors are capitalised wages of
£92,611 (2020: £187,241)
4. Employees and Directors (continued)
Directors' remuneration
Details of emoluments received by Directors of the Group for the period ended
31 December 2021 are as follows:
Remuneration Share based Pension Costs Total
and fees payments
£ £ £ £
A Reynolds* 24,996 - - 24,996
S P O'Hara 254,000 - 7,800 261,800
F Narbel * 82,867 - 4,143 87,010
S Christie 25,000 8,259 - 33,259
R Davidson 55,000 17,526 - 72,526
S Kolyda 114,250 7,729 5,572 127,551
C Brinsmead 25,000 - - 25,000
S Hammond 20,738 - - 20,738
M Hvid-Hansen* 152,002 - 7,600 159,602
R Kamminga 195,535 - 9,767 205,302
Total 949,388 33,514 34,882 1,017,784
*For disclosure in relation to directors' fees please refer to
Note 20.
5. Net Finance Income / (Costs)
Year ended Year ended
31 December 31 December
2021 2020
£ £
Finance Income:
Bank Interest 121 98
Finance Cost:
Loan note interest (47,600) (44,954)
────── ──────
Net Finance Income / (Costs) (47,479) (44,856)
══════ ══════
6. Expenses - analysis by nature
Year ended Year ended
31 December 31 December
2021 2020
£ £
Research and development 64,319 85,703
Directors' fees & remuneration (Note 4)* 856,777 623,658
Salaries 181,702 82,448
Auditor remuneration - audit fees (Consolidated accounts £21,250 (2020: 41,822 42,720
£18,250)
Auditor remuneration - non audit fees (tax compliance) 12,700 11,400
Brokers & Advisors 208,579 123,531
Advertising & marketing 41,506 86,673
Share based payments charge 60,288 127,248
Depreciation on property, plant and equipment - 393
Amortisation of patents and development costs 288,455 247,502
Patent and IP costs 114,788 136,762
Consultancy fees 262,262 76,704
Legal and professional fees 28,389 42,625
Public Relations costs 68,185 82,394
Travel costs 16,061 31,434
Other expenses 242,824 190,017
────── ──────
Total administrative expenses 2,488,657 1,991,212
══════ ══════
*£856,777 is net of £92,611 capitalised in the year, total remuneration
£949,388 as per note 4.
7. Corporation Tax
Corporation Tax
Year ended Year ended
31 December 31 December 2020
2021
£ £
Corporation tax credit (75,000) (120,000)
Under provision prior year -
Deferred tax movement (9,523) 28,185
Overseas tax suffered - 180
────── ──────
Total taxation (84,523) (91,635)
══════ ══════
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2021 nor for the year ended 31 December 2020.
Year ended Year ended
31 December 2021 31 December 2020
£ £
Profit (Loss) on ordinary activities before income tax 6,176,506 5,710,232
═══════ ═══════
Loss on ordinary activities multiplied by the standard rate of corporation tax 1,173,536 1,084,944
in UK of 19% (2020 - 19%)
Effects of:
Disallowables 13,619 89,931
Income not taxable (1,545,707) (1,362,28)
Accelerated depreciation - 75
R&D tax credit claimed (75,000) (120,000)
Amortisation 33,342 27,851
Revenue items capitalised (36,785) (66,566)
Other timing differences (9,477) 28,185
Overseas tax suffered - 180
Unused tax losses carried forward 342,995 226,052
────── ──────
Tax credit (84,523) (91,635)
══════ ══════
The Group has estimated losses of £4,626,000 (2020: £4,266,000) and
estimated excess management expenses of £3,786,000 (2020: £2,555,000).
7. Corporation Tax (continued)
The tax losses have resulted in a deferred tax asset at 25% (2020: 19%) of
approximately £1,156,000 (2020: £810,000) which has not been recognized as
it is uncertain whether future taxable profits will be sufficient to utilise
the losses.
2021 2020
Current tax asset - Group £ £
Balance brought forward 310,435 190,435
Received during the year (194,663) -
Prior year adjustment 477 -
Research & development tax credit claimed 75,000 120,000
────── ──────
191,249 310,435
8. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable shareholders by the weighted average number of ordinary shares
outstanding during the period.
Reconciliations are set out below:
2021
Weighted average
Basic and diluted EPS Earnings Number of shares Profit per-share
£ No. Pence
Basic EPS 6,261,029 87,574,152 7.15p
Diluted EPS 6,261,029 95,536,395 6.55p
══════ ════════ ══════
2020
Weighted average
Earnings Number of shares Loss per-share
£ £ Pence
Basic EPS 5,801,867 87,207,703 6.65
Diluted EPS 5,801,867 95,569,946 6.07
══════ ════════ ══════
As at 31 December 2021 there were 7,632,907 (2020: 8,032,907)
outstanding share options and 329,336 (2020: 329,386) outstanding share
warrants.
9. Intangible assets
Group Development Costs and Patents
£
Cost
At 31 December 2019 3,321,930
Additions 350,345
Disposals -
───────
At 31 December 2020 3,672,275
Additions 193,506
Disposals -
───────
At 31 December 2021 3,865,781
═══════
Amortisation
At 31 December 2019 689,152
Amortisation charge for the year 247,502
───────
At 31 December 2020 936,654
Amortisation charge for the year 288,455
───────
At 31 December 2021 1,225,109
═══════
Carrying amount
At 31 December 2021 2,640,672
At 31 December 2020 2,735,621
═══════
The company had no intangible assets.
10. Property, plant and equipment
Group
£
Cost
At 31 December 2019 8,461
Additions -
Disposals -
───────
At 31 December 2020 8,461
Additions -
Disposals -
───────
At 31 December 2021 8,461
═══════
Depreciation
At 31 December 2019 8,068
Charge for the year 393
───────
At 31 December 2020 8,461
Charge for the year -
───────
At 31 December 2021 8,461
═══════
Carrying amount
At 31 December 2021 -
At 31 December 2020 -
═══════
The company had no property plant and equipment.
11. Investments
Group Investments
Set out below is the investment in SkinBioTherapeutics PLC which is material
to the Group. The investment treated as an associate of the group until 2
November 2020, after which time the shareholding dropped to 24.65% and has
been recalculated as an equity investment. The entity listed below have share
capital consisting solely of ordinary shares, which are held by the Group. The
country of incorporation is also the principal place of business and the
proportion of ownership interest is the same as the proportion of voting
rights held.
2021 2020
£ £
Available for sale investments
At the beginning of the period 8,962,564 2,842,834
Additions
Revaluations 7,500,681 7,120,962
Share of loss - (303,449)
Disposal of shares during year (2,812,318) (697,783)
At 31 December 13,650,927 8,962,564
Company Investments
2021 2020
£ £
Available for sale investments
At the beginning of the period 8,962,564 4,131,651
Additions
Revaluations 7,500,681 5,528,696
Disposal of shares during year (2,812,318) (697,783)
───── ─────
13,650,927 8,962,564
Investments in subsidiary undertakings
At the beginning of the period 2,080,905 2,080,905
- -
Addition: Equity element of convertible loan notes
───── ─────
2,080,905 2,080,905
At 31 December 15,731,832 11,043,469
11. Investments (continued)
As at 31 December 2021 the Company directly held the following subsidiaries:
Name of company Principal Country of incorporation Proportion of
activities and place of business equity interest
OptiBiotix Limited Research & Development United Kingdom 100% of ordinary shares
Optibiotix Health India Private Limited Health foods India 100% of ordinary shares
The Healthy Weight Loss Company Limited Health foods United Kingdom 68% of ordinary shares
ProBiotix Health Ltd Health foods United Kingdom 100% of ordinary shares
Probiotix Limited Health foods United Kingdom 100% of ordinary shares
12. Inventories
Group Company
2021 2020 2021 2020
£ £ £ £
Finished goods 101,877 184,236 - -
══════ ══════ ══════ ══════
During the period £1,089,588 (2020: £643,428) has been
expensed to the income statement.
13. Trade and other Receivables
Group Company
2021 2020 2021 2020
Non- current £ £ £ £
Amounts owed by group undertakings - - 318,127 329,057
───── ───── ───── ─────
- - 318,127 329,057
═════ ═════ ═════ ═════
Current
Accounts receivable 1,413,882 512,437 - -
Other receivables 82,587 110,634 39,544 71,278
Prepayments and accrued income 56,021 22,752 26,356 18,142
───── ───── ───── ─────
1,552,490 645,823 65,900 89,420
═════ ═════ ═════ ═════
14. Cash and Cash Equivalents
Group Company
2021 2020 2021 2020
£ £ £ £
Cash and bank balances 2,007,448 864,680 1,705,291 532,769
══════ ══════ ══════ ══════
15. Called Up Share Capital
2021 2020
Issued share capital comprises: £ £
Ordinary shares of 2p each - 87,940,601 (2020: 87,940,601) 1,758,812 1,758,812
────── ──────
1,758,812 1,758,812
══════ ══════
16. Reserves
Share capital is the amount subscribed for shares at nominal value. Share
premium represents amounts subscribed for share capital in excess of nominal
value, net of expenses.
The convertible debt reserve is the equity component of the convertible loan
notes that have been issued.
Merger relief reserve arises from the 100% acquisition of OptiBiotix Limited
on 5 August 2014 whereby the excess of the fair value of the issued ordinary
share capital issued over the nominal value of these shares is transferred to
this reserve in accordance with section 612 of the Companies Act 2006.
Retained earnings represents the cumulative profits and losses of the group
attributable to the owners of the company.
Share based payment reserve represents the cumulative amounts charged in
respect of unsettled warrants and options issued.
17. Trade and other payables
Current:
Group Company
2021 2020 2021 2020
£ £ £ £
Accounts Payable 422,948 359,321 18,452 40,174
- Accrued expenses 175,138 157,039 22,800 22,750
- Other payables 2,818 2,635 - -
- ─────── ─────── ─────── ───────
Total trade and other payables 600,904 518,995 41,252 62,924
─────── ─────── ─────── ───────
18. Deferred Tax
Deferred tax is provided, using the liability method, on temporary differences
at the statement of financial position date between the tax base of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred tax is calculated in full on temporary differences under the
liability method using a tax rate of 25% (2020: 19%).
The movement on the deferred tax account is as shown below:
2021 2020
£ £
At 31 December 2020 561,523 522,350
Movement in the period (9,523) 39,173
────── ──────
At 31 December 2021 552,000 561,523
══════ ══════
Deferred tax assets have not been recognised in respect of tax losses and
other temporary differences giving rise to deferred tax assets as the
directors believe there is uncertainty whether the assets are recoverable.
19. Convertible Loan Notes
ProBiotix Health Limited issued 1,025,000 floating rate convertible loan notes
(CLN) for £1,025,000 on 11 December 2018. The notes are convertible into
ordinary shares of the Company and converted into shares immediately prior to
the occurrence of a listing of the company, or repayable on December 2023. The
conversion rate is 1 share for each note held at an amount which is equal to
50% of the listing price.
OptiBiotix Health Plc has subscribed 250,000 of the CLN for £250,000
The convertible notes are presented in the Group balance sheet as follows:
2021 2020
£ £
Balance brought forward 771,759 726,805
Additions - -
Equity element - -
Liability component 771,759 726,805
Interest charged at effective interest rate 47,600 44,954
Non-current liability 819,359 771,759
Interest expense is calculated by applying the effective interest rate of 6%
to the liability component.
20. Related Party Disclosures
Group
During the year to 31 December 2021 £87,010 (2020: £184,132) was paid to F
Narbel in respect of Director's services provided.
During the year to 31 December 2021 £24,996 (2020: £24,996) was paid to
Reyco Limited for the services of Adam Reynolds as Director of ProBiotix
Health Limited
Company
During the year to 31 December 2021 the Group was charged £44,507 (2020:
£42,000) for services provided by Morrison Kingsley Consultants Limited, a
company controlled by Mark Collingbourne, Chief Financial Officer.
During the year Optibiotix Health PLC loaned Probiotix limited £570. The
balance owing at the 31 December 2021 was £53,835 (2020: £80,119). There was
no interest charged during the year
During the year Optibiotix Health PLC loaned Optibiotix Limited £1,551,651
during the year of which £619,749 was repaid. The balance at the yearend of
£931,903 (2020, £6,301,666 was cancelled. This does not impact on the
consolidated Group accounts.
21. Ultimate Controlling Party
No one shareholder has control of the company.
22. Share Based payment Transactions
(i) Share options
The Company had introduced a share option
programme to grant share options as an incentive for employees of the former
subsidiaries.
Each share option converts into one ordinary share of the Company on
exercise. No amounts are paid or payable by the recipient on receipt of the
option and the Company has no legal obligation to repurchase or settle the
options in cash. The options carry neither rights to dividends nor voting
rights prior to the date on which the options are exercised. Options may be
exercised at any time from the date of vesting to the date of expiry.
Movements in the number of share options outstanding and their related
weighted average exercise prices are as follows:
Number of options Average exercise price
2021 2020 2021 2020
No. No. £ £
Outstanding at the beginning of the period 8,032,907 7,765,907 0.21 0.20
- Granted during the period 300,000 - 0.57
- Forfeited/cancelled during the year (400,000) (33,000) 0.785 0.695
- Exercised during the period - -
- ─────── ─────── ────── ──────
Outstanding at the end of the period 7,632,907 8,032,907 0.18 0.21
─────── ─────── ────── ──────
22. Share Based payment Transactions (continued)
For the share options issued in 2014 vesting conditions dictate that half will
vest if the middle market quotation of an existing Ordinary share is 16p or
more on each day during any period
of at least 30 consecutive Dealing days and half will vest when a commercial
contract is signed. The two conditions are not dependent on each other and
will vest separately.
For the share options issued in 2015 vesting conditions dictate that some of
the options will vest if the middle market quotation of an existing Ordinary
share is 40p or more on each day during any period of at least 30 consecutive
Dealing days and some will vest if certain revenue targets are met or if
certain scientific studies are completed. The conditions are not dependent on
each other and will vest separately.
For the share options issues in 2017 vesting conditions dictate that the
options will vest if certain revenue conditions are met.
For the share options issues in 2018 vesting conditions dictate that the
options will vest if certain revenue conditions are met.
For the share options issues in 2019 vesting conditions dictate that the
options will vest if certain revenue conditions are met.
For the share options issues in 2020 vesting conditions dictate that the
options will vest if certain revenue conditions are met.
The share options outstanding at the period end had a weighted average
remaining contractual life of 1,241 days (2020: 1,639 days) and the maximum
term is 10 years.
The share price per share at 31/12/21 was £0.46 (31/12/2020: £0.55)
(i) Share options
Expected volatility is based on a best estimate for an AIM listed entity. The
expected life used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
The fair values of the last share options issued were derived using the Black
Scholes model. The following assumptions were used in the calculations:
Grant date 02/06/2020
Exercise price 57p
Share price at grant date 57p
Risk-free rate 0.25%
Volatility 35%
Expected life 10 years
Fair value 24p
22. Share Based payment Transactions (continued)
(i) Warrants
On 20 February 2014, an open offer was made to the potential investors to
subscribe for 203,380,942 new ordinary shares of £0.0001 each at £0.0001
each. On a 1:1 basis, warrants attach to any shares issued under the open
offer convertible at any time to 30 November 2018 at £0.0004 per shares.
On 4 August 2014, the warrants in issue were consolidated in the ratio of
200:1 as part of the share reorganisation.
At a meeting of warrant holders on 24 January 2017 it was agreed to extend the
exercise period for all remaining warrants to 28 January 2022 and 19 February
2022
Movements in the number of share warrants outstanding and their related
weighted average exercise prices are as follows:
Number of warrants Average exercise price
2021 2020 2021 2020
No. No. £ £
Outstanding at the beginning of the period 329,336 329,386 0.08 0.08
- ─────── ─────── ─────── ───────
Outstanding at the end of the period 329,386 329,336 0.08 0.08
─────── ─────── ─────── ───────
A charge of £60,288 (2020: £127,248) has been recognised during the year for
the share based payments over the vesting period.
23. Financial Risk Management Objectives and Policies
The Group's financial instruments comprise cash balances and
receivables and payables that arise directly from its operations.
The main risks the Group faces are liquidity risk and capital
risk.
The Board regularly reviews and agrees policies for managing
each of these risks. The Group's policies for managing these risks are
summarised below and have been applied throughout the period. The numerical
disclosures exclude short-term debtors and their carrying amount is considered
to be a reasonable approximation of their fair value.
Interest risk
The Group is not exposed to significant interest rate risk as
it has limited interest bearing liabilities at the year end.
Credit risk
The Group is not exposed to significant credit risk as it did
not make any credit sales during the year.
Liquidity risk
Liquidity risk is the risk that Group will encounter difficulty
in meeting these obligations associated with financial liabilities.
The responsibility for liquidity risks management rest with the
Board of Directors, which has established appropriate liquidity risk
management framework for the management of the Group's short term and
long-term funding risks management requirements.
During the period under review, the Group has not utilised any
borrowing facilities.
The Group manages liquidity risks by maintaining adequate
reserves and reserve borrowing facilities by continuously monitoring forecast
and actual cash flows, and by matching the maturity profiles of financial
assets and liabilities.
Capital risk
The Group's objectives when managing capital are to safeguard the ability to
continue as a going concern in order to provide returns for shareholders and
benefits to other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
24. Post Balance Sheet Events
On 7 January 2022 the Company cancelled 800,000 options with the agreement of
option holders and reissued 500,000 options at a nominal value of 2 pence per
share.
On 27 January 2022 the Company issued 125,000 new shares following the
exercise of warrants at 8 pence per share.
On 9 March 2022 the Company issued 60 new shares following the exercise of
warrants at 8 pence per share.
On 31 March 2022 Probiotix Health Limited a wholly owned subsidiary of the
Company was listed on the AQSE Growth Market with an associated fund raise and
distribution is specie. Following the listing the Company retains 43.99% of
the issued share capital.
NOTICE OF ANNUAL GENERAL MEETING
OPTIBIOTIX HEALTH PLC
Notice is hereby given that the Annual General Meeting of OptiBiotix Health
PLC (the "Company") will be held at the offices of Walbrook PR Ltd, 75 King
William Street, London, EC3V 9HD on 26 July 2022 at 12:00noon for the
following purposes:
1. To receive the Company's Report and Accounts for the year
ended 31 December 2021.
2. To re-elect Stephen O'Hara, who retires by rotation, as a
Director.
3. To re-elect Neil Davidson, who retires by rotation, as a
Director.
4. To re-appoint Jeffrey's Henry LLP as auditors of the
Company and to authorise the Directors to determine their remuneration.
Special Business
To consider and, if thought fit, to pass the following resolutions as to the
resolution numbered 5 as an Ordinary Resolution and as to the resolutions
numbered 6 as Special Resolutions:
5. THAT the Directors be and they are hereby authorised
generally and unconditionally for the purposes of Section 551 of the Companies
Act 2006 (the "Act") to exercise all powers of the Company to allot shares in
the Company or to grant rights to subscribe for, or to convert any security
into, shares in the Company (such shares and/or rights being "Relevant
Securities") up to an aggregate nominal amount of £586,270.51 being one third
of the current issued share capital, provided that this authority shall,
unless renewed, varied or revoked by the Company, expire on the date being the
earlier of the date 15 months after the passing of this Resolution and the
conclusion of the Annual General Meeting of the Company to be held in 2023,
save that the Company may, before such expiry, make offers or agreements which
would or might require Relevant Securities to be allotted and the Directors
may allot Relevant Securities in pursuance of such offer or agreement
notwithstanding that the authority conferred by this Resolution has expired.
This authority shall be in substitution for and shall replace any existing
authority
pursuant to Section 551 of the Act to the extent not utilised at the date this
resolution is passed.
6. THAT, subject to and conditional upon the passing of
resolution 5, the Directors be and they are hereby generally empowered
pursuant to Section 570 of the Act to allot equity securities (as defined in
Section 560 of the Act) for cash pursuant to the authority conferred under
Resolution 5 above as if sub-section 561(1) of the Act did not apply to such
allotment, provided that this power shall be limited to:-
(a) the allotment of equity securities in connection with a
rights issue or any pre-emptive offer in favour of holders of ordinary shares
in the Company where the equity securities attributable to the respective
interests of such holders are proportionate (as nearly as maybe) to the
respective numbers of ordinary shares held by them on the record date for such
allotment subject to such exclusions or other arrangements as the Directors
may deem necessary or expedient to deal with fractional entitlements or any
legal or practical difficulties under the laws of, or the requirements of, any
regulatory body or stock exchange of any overseas territory or otherwise;
(b) the allotment (otherwise than pursuant to sub-paragraph
(a) above) of equity securities up to an aggregate nominal value of
£527,643.46 being 30% of the current issued share capital;
and shall expire on the date being the earlier of the date 15 months after the
passing of this Resolution and the conclusion of the Annual General Meeting of
the Company to be held in 2023, provided that the Company may before such
expiry make an offer or agreement which would require equity securities to be
allotted in pursuance of such offer or agreement as if the power conferred
hereby had not expired and provided further that this authority shall be in
substitution for and supersede and revoke any earlier power given to
directors.
By Order of the Board Registered Office:
Stephen O'Hara Innovation Centre
Innovation Way
Heslington
York
YO10 5DG
27 June 2022
EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING
Notes:
1. A member of the Company is entitled to appoint a proxy or proxies to
attend, speak and vote at the meeting in his stead. A member may appoint more
than one proxy provided each proxy is appointed to exercise rights attached to
different shares. A member may not appoint more than one proxy to exercise
rights attached to any one share. A proxy does not need to be a member of the
Company.
2. To be effective Forms of Proxy can be registered as follows:-
• by logging on to www.shareregistrars.uk.com
(http://www.shareregistrars.uk.com/) , clicking on the "Proxy Vote" button and
then following the on-screen instructions;
• by post or by hand to Share Registrars Limited, 3 The Millennium Centre,
Crosby Way, Farnham, Surrey GU9 7XX using the proxy form accompanying this
notice;
• in the case of CREST members, by utilising the CREST electronic proxy
appointment service in
accordance with the procedures set out in note 00 below.
In order for a proxy appointment to be valid the proxy must be received by
Share Registrars Limited by 12:00 Noon on 22 July 2022
3. To change your proxy instructions simply submit a new proxy
appointment using the methods set out above and in the notes to the Form of
Proxy. Note that the cut-off times for receipt of proxy appointments (see
above) also apply in relation to amended instructions; any amended proxy
appointment received after the relevant cut-off time will be disregarded.
4. To be entitled to vote at the meeting (and for the purpose of the
determination by Company of the number of votes they may cast), members must
be entered in the Register of members at 12:00noon on 22 July 2022 ("the
specified time"). If the meeting is adjourned to a time not more than 48 hours
after the specified time applicable to the original meeting, that time will
also apply for the purpose of determining the entitlement of members to attend
and vote (and for the purpose of determining the number of votes they may
cast) at the adjourned meeting. If however the meeting is adjourned for a
longer period then, to be so entitled, members must be entered on the
Company's Register of Members at the time which is not less than 48 hours
before the time fixed for the adjourned meeting or, if the Company gives
notice of the adjourned meeting, at the time specified in that notice.
Resolution 1
The Directors are required by law to present to the meeting the Audited
Accounts and
Directors' Report for the period ended 31 December 2021.
Resolutions 2-3
Each of the Company's Directors listed in this resolution offer themselves up
for re-appointment under the terms of the Company's articles of association
which state that each director must offer himself or herself up for
re-appointment every three years.
Resolution 4
The Auditors are required to be re-appointed at each Annual General Meeting at
which
the Company's Audited Accounts are presented.
Resolution 5
Under the Act, the Directors may only allot shares if authorised to do so.
Whilst the current authority has not yet expired, it is customary to grant a
new authority at each Annual General Meeting. Accordingly, this resolution
will be proposed as an ordinary resolution to grant a new authority to allot
or grant rights over up to £586,270.51 in nominal value of the Company's
unissued share capital. If given, this authority will expire at the Company's
next annual general meeting following the date of the resolution. Although the
Directors currently have no present intention of exercising this authority,
passing this resolution will allow the Directors flexibility to act in the
best interests of the Company's shareholders when opportunities arise.
Resolution 6
The Directors require additional authority from the Company's shareholders to
allot shares where they propose to do so for cash and otherwise than to the
Company's shareholders pro rata to their holdings. This resolution will give
the Directors power to issue new ordinary shares for cash other than to the
Company's shareholders on a pro rata basis
(i) by way of a rights or similar issue or
(ii) with a nominal value of up to £527,643.36. This resolution will be
proposed as a special resolution.
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