REG - SkinBioTherapeutics - Final Results
04/12/2024 16:00
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RNS Number : 8480O SkinBioTherapeutics PLC 04 December 2024
SkinBioTherapeutics plc
("SkinBioTherapeutics" or "the Group")
Full Year results for the year ended 30 June 2024
· Active 12 months of organic and inorganic growth including the
first acquisition of the M&A strategy, with second acquisition post year
end
· Significant evolution of the Group, operationally and
financially, as commercial product range broadened and introduction of
distribution and manufacturing capabilities
· Post year end, Croda commercial terms finalised
· Post acquisitions, annualised Group turnover for FY25 expected to be
£6.3m; post Croda agreement, Directors anticipate the Group will be cash flow
positive from FY25 on an annual basis, with no further need to seek additional
funds for working capital
4 December 2024, SkinBioTherapeutics plc (AIM: SBTX), a life science group
focused on skin health, announces its fully consolidated audited results for
the 12 months to 30 June 2024.
Operational highlights
· SkinBiotix: Croda contract extended for 12 months for further
studies
o Studies completed post year end and commercial agreement finalised;
o Now moving into commercialisation phase with official industry launch in
April 2025
· AxisBiotix:
o Ongoing sales growth in psoriasis and strong customer retention, European
launches in France, Spain and Italy, and launch on Amazon UK
o Positive results from consumer study in acne in June 2024, now seeking
best format for commercialisation in 2025
· Acquisitions:
o Dermatonics, an established topical dermatological player in the skincare
/ wound care space acquired in January 2024; launched its Once Heel Balm via a
commercial agreement with the Umesh Modi Group in Africa, Middle East and Asia
o Post year end, Bio-Tech Solutions, adding manufacture and packaging of
health, hygiene and personal care products, and future development platform
for topical products
· R&D programmes: new Epiderm project initiated with University
of Manchester with aim of developing a technology to promote wound healing
· Management changes:
o Prof Cath O'Neill stood down as CSO to become a scientific advisor to the
Board
o Post year end, appointment of Dr Surinder 'Dass' Chahal, formerly a senior
Croda VP, as Cosmetic Science / Customer Alliances Advisor to the Board
Financial highlights
· Revenues up to £1.2m (2023: £0.1m) reflecting continuing
increase in AxisBiotix-Ps™ sales and the addition of five months of
Dermatonics revenues
· Operating loss £2.9m (2023: loss £3.0m) with increase in sales
balancing the increase in headcount costs
· Cash and cash equivalents as at 30 June 2024 was £0.8m (2023:
£1.3m), reflecting the £0.5m earn-out payment in May 2024 with respect to
the Dermatonics acquisition
· Financial transactions during and after the year end reflecting
the active operations and acquisition strategy
o November 2023 Placing and Retail offer raised £3.0m
o January 2024: £5.0m convertible bond facility taken on to support the
Dermatonics acquisition; £1.6m drawn down only, before its closure in July
2024
o Post year end, in August 2024: investment of £1.56m from new investors
o To support acquisition of Bio-Tech Solutions, SBTX took a loan of
£950,000 with an existing shareholder and a subscription for 2,349,624 new
Ordinary Shares at 10.64p raising £250,000 and 3,289,474 warrants exercisable
at the issue price.
· Post acquisitions, the Group is now forecasting a projected
annualised Group turnover for FY25 of £6.3m, and cash runway to be cash
positive from FY25, with no further need to fund raise for working capital
Stuart Ashman, CEO of SkinBioTherapeutics plc, said:
"This year has presented incredible achievements and significant challenges as
we have driven growth in the underlying business as well as acquiring
value-added businesses that have brought scale and synergies. This has all
been done in an incredibly tough economic environment, especially for a small
AIM quoted company.
"Progress in our strategic pillars has been led by AxisBiotix-Ps growth in
sales, and post year end, the completion of the commercial agreement around
SkinBiotix with Croda, with the official launch to the cosmetics industry in
April 2025.
"In parallel, we are delivering on our strategy to become a consolidator in
the skin health market. Having greater scale and a firmer financial footing
will enable us to strike the most advantageous deals with current and
potential new partners. Bringing in businesses such as Dermatonics and
Bio-Tech Solutions absolutely does this - we are building a platform which
brings synergies and value, and derisks the business each time we add to it.
"We have also boosted capability and expertise in manufacturing, sales,
marketing and distribution. Financially, our projected annualised turnover for
FY25 has significantly increased and we expect to be cash flow positive from
FY2025 on an annual basis, therefore requiring no further fund raising for
working capital purposes.
"The culmination of all these activities is evolving the business into a much
broader group. Our operational and financial position is completely different
to last year; we are growing and growing fast. We thank our shareholders for
their ongoing support and look forward to another busy year."
-Ends-
FY results presentation webinar
Stuart Ashman, CEO and Manprit Randhawa, CFO will provide a live presentation
via the Investor Meet company platform at 10.00am GMT on Tuesday 10 December
2024.
The presentation is open to all existing and potential SkinBioTherapeutics
shareholders. Questions can be submitted pre-event via the Investor Meet
Company dashboard
(https://www.investormeetcompany.com/companies/skinbiotherapeutics-plc) up
until
9 December 2024, 09.00am GMT, or at any time during the live presentation.
Investors who already follow SkinBioTherapeutics plc on the Investor Meet
Company platform will automatically be invited.
Investors who already follow SkinBioTherapeutics on the Investor Meet Company
platform will automatically be invited. Investors can sign up to Investor Meet
Company for free via this link
(http://www.investormeetcompany.com/companies/skinbiotherapeutics-plc) .
Notice of Annual General Meeting
The Annual General Meeting will be held at 9:00am on Friday 27 December 2024
at The Clarion Hotel, Witney Way, Boldon, NE35 9PE.
For more information please contact:
SkinBioTherapeutics plc +44 (0) 191 495 7325
Stuart J. Ashman, CEO
Manprit Randhawa, CFO
Cavendish Capital Markets Limited +44 (0) 20 7397 8900
(Nominated Adviser & Broker)
Giles Balleny, Dan Hodkinson (Corporate Finance)
Charlie Combe (Broking)
Dale Bellis, Tamar Cranford-Smith (Sales)
Vigo Consulting (financial media) +44 (0) 20 7390 0231
Rozi Morris
+44 (0) 7740 859 962
Skinbio@vigoconsulting.com
Notes to Editors
About SkinBioTherapeutics plc
SkinBioTherapeutics is a life science company focused on skin health. The
Group's proprietary platform technology, SkinBiotix(®), is based upon
discoveries made by the translational dermatology team at the University of
Manchester.
The Group's foundation business is targeting the skin healthcare market via
five pillars, the most advanced of which are cosmetic skincare (SkinBiotix)
and food supplements to modulate the immune system by harnessing the gut-skin
axis (AxisBiotix). The cosmetic pillar has a partnership with Croda plc and
the Group's first in-house product, AxisBiotix-Ps™, is a food supplement to
address the symptoms of mild to moderate psoriasis.
The Group is also acting as a consolidator and is making acquisitions in
complementary areas such as skin care and cosmetic applications, that also
bring new distribution and geographical platforms, and manufacturing
capabilities through which it can funnel its in-house pillar products.
The Company listed on AIM in April 2017 and is based in Newcastle, UK. For
more information, visit: www.skinbiotherapeutics.com
(http://www.skinbiotherapeutics.com) .
Chairman's Statement
The word 'transformation' can be overused, but this financial year and post
year end, SkinBioTherapeutics has started to evolve significantly as a Group.
The original five pillars, based on the SkinBiotix technology, have progressed
during the year. Notable successes have included the development of the Croda
partnership, first with an extension to the contract to enable further
research and post year end, the completion of those studies and contract
negotiation, to move to a more commercial setting. AxisBiotix has also seen
sales growth and new geographical markets in Europe for the psoriasis product,
and very positive results from the consumer study for Acne.
The Group has also started making acquisitions in complementary areas such as
skin care and cosmetic applications. These bring new distribution and
geographical platforms, and manufacturing capabilities through which we can
funnel our in-house pillar products. In the CEO's report, there are fuller
details on these transactions.
Financial summary
The acquisition of Dermatonics before the year end has also made a significant
change to the financial landscape of the Group, not only in FY2024 but for the
longer term.
The CFO's statement provides more detail, but in summary, the revenues grew
815% to £1.21m (FY2023: £132k) reflecting the growth of AxisBiotix-Ps sales
and the introduction of sales from Dermatonics products. The operating loss
was £2.91m (FY2023: £3.0m), again reflecting the increase in costs of
operations and headcount, before and after the acquisition. Cash at the year
end was £0.8m (FY2023: £1.3m), comprising incoming cash balances from
Dermatonics and a successful Placing and Retail Offer raising £3.3m.
Post year-end there was an investment of £1.56m from new investors alongside
a loan and equity placing with a long standing shareholder to support the cash
acquisition of Bio-Tech Solutions. For the Dermatonics acquisition, the Group
drew funds from a £5.0m convertible bond facility, but this has now been
closed in response to shareholders' concerns.
Strategy
In 2019, Management laid out its strategy to apply the SkinBiotix technology
across multiple pillars - from skin health as an active ingredient, to
tackling skin conditions, to wound care. In 2022, this strategy was extended
to look at complementary products and operations that would accelerate
revenue, earnings and technology adoption.
Dermatonics and Bio-Tech Solutions are good examples of the types of company
and offerings that Management is looking at to add to the Group. They provide
not only new opportunities through the introduction of new products, but also
support in-house products and technology.
Board and Leadership
During the financial year, Professor Cath O'Neill decided to step down as
Chief Scientific Officer and move to a Scientific Advisor role. Since the
Company was founded, Cath has combined her academic and corporate roles, but
the Board has always been aware of her eventual desire to return to full time
academia. She played an important role at SBTX and we wish her all the best
and look forward to retaining a strong connection with her.
Post year end, the Group welcomed Dr Surinder 'Dass' Chahal, formerly a senior
Croda VP, as Cosmetic Science / Customer Alliances Advisor to the Board. The
team has got to know Dass well since he was a key member of the Croda team
that spotted the potential of SkinBiotix as an active ingredient. We're
delighted to have him on the SBTX team.
Outlook
In my opinion, we will look back on financial and calendar year 2024 as the
beginnings of the evolution of SBTX, from a one technology company, albeit
with multiple pillars, to a more integrated, diverse Group with multinational
distribution and manufacturing capabilities. With the addition of Dermatonics
and post year end, the acquisition of Bio-Tech Solutions, SkinBioTherapeutics
has grown dramatically into a very different Group, both operationally and
financially.
As a team, we continue to work hard to build value for our shareholders, and
we are grateful for their continuing support as we navigate the highs and lows
of being a small AIM quoted business in difficult markets. The two
acquisitions this year are just the beginning; we have further ambitions to
act as a consolidator in the skincare market, so we expect 2025 (CY) to be
just as busy.
On behalf of the Board, I would like to take the opportunity to thank everyone
at SBTX for the considerable progress achieved by the Group over the course of
the year. We look forward to continuing the execution of our strategy in the
year ahead.
Martin Hunt
Chairman
4 December 2024
Strategic and Financial Review
Company background and strategy
SkinBioTherapeutics is a life science company focused on skin health. The
original platform strategy focuses on the proprietary technology, SkinBiotix,
which harnesses the microbiome to promote wound healing and reduce the risk of
infection. The second part of the strategy, introduced in 2022, is based on
inorganic growth i.e. acquisitions to bring in technological, operational and
financial benefits.
SkinBiotix strategy
Realising the multiple benefits of the SkinBiotix platform, Management has
created five strategic pillars based on market sector: SkinBiotix, AxisBiotix,
MediBiotix, CleanBiotix and PharmaBiotix.
The first two pillars are:
· SkinBiotix™, the proprietary technology, is based on a lysate -
the fluid resulting from the breaking up of bacterial cells - developed by the
translational dermatology team at the University of Manchester. There is a
commercial and manufacturing agreement with the multinational Group, Croda
plc, developing SkinBiotix as an active ingredient for the skincare /
cosmetics industry.
· AxisBiotix™, based on SkinBiotix and formulated into a probiotic
supplement. The theory is based on research on the gut-skin axis; calming the
gut microbiome with the introduction of 'friendly' bacteria and therefore
reducing the inflammatory pathways associated with irritable skin conditions.
The first product is called AxisBiotix-Ps, to alleviate the symptoms associate
with psoriasis. This same approach is also being investigated for acne.
The other pillars - MediBiotix, CleanBiotix and PharmaBiotix - are in earlier
stages of development.
SkinBioTherapeutics' aim is to commercialise the products itself where
feasible (e.g. AxisBiotix-Ps), or license out the technology to specialist
industry partners (e.g. SkinBiotix to Croda plc.)
M&A strategy
From 2022, the Directors put in place an accelerated growth strategy looking
at acquisition opportunities outside the Group's in-house technology. The
criteria included complementary product lines that had the potential to be
microbiome-driven, distribution platforms and/or provide manufacturing
capabilities. Any acquisitions should also strengthen and accelerate
SkinBioTherapeutics' financial position bringing economies of scale for the
day-to-day business, providing scale to aid partnering negotiations and
ultimately increase shareholder value.
The first acquisition, Dermatonics, occurred in FY24 with a second taking
place post year end, Bio-Tech Solutions.
· Dermatonics is an established topical dermatological player in the
skincare and woundcare space. Its products range from heel balm to treatments
for warts and verrucas, and dry skin relief. The products are sold through its
sales platform and also via a commercial partnership with the Umesh Modi
Group, into Africa, the Middle East and Asia.
· Bio-Tech Solutions is the newest addition to the Group and brings
specialist health, hygiene and personal care product manufacturing and
packaging. This company also has potential as a future development platform
for advanced topical creams.
Into FY25, the Group will continue to drive both strategies together to build
scale and value.
Operational review
Biotix division
· SkinBiotix (skincare/cosmetics)
SkinBioTherapeutics has had a commercial and manufacturing agreement with
Croda plc since 2019. Croda is a specialist manufacturer of ingredients which
it supplies to the international cosmetics and FMCG industry. It has been
investigating the use of SkinBiotix as a novel bioactive ingredient.
Normally, the time taken for an ingredient to be researched and tested by the
Croda team is seven years before it enters commercialisation; in
SkinBioTherapeutics' case, the process has taken only five years which is real
testament to the technology. During this time, Croda has been investigating
the best quality formulations for its customers as well as scaling-up the
manufacture of SkinBiotix to commercial levels i.e. 20,000 litres, in order to
be able to service the global market.
In October 2023, Croda extended its development agreement in order to explore
evidence of additional activity. This study was successfully completed post
year end in September 2024, with validation of additional efficacy and
marketing claims for Croda's commercialisation team to use with potential
customers.
Samples are now being sent out to prospective customers and the formal launch
of SkinBiotix as an active ingredient is planned to take place at In-Cosmetics
Global, the world's largest cometic ingredients exhibition, taking place in
Amsterdam (8-10 April 2025). Management is fully confident in Croda's deep
experience in launching new products.
Most recently (post year end), the Group announced that commercial terms had
been finalised following the completion of the extended studies. The terms are
based on the original agreement with SkinBioTherapeutics i.e. paid tiered
royalties based on global sales revenues on any licensed products derived from
the partnership.
Under the terms of the agreement, all details about formulation, functionality
and Croda's financial expectations remain completely confidential due to the
competitiveness of the cosmetics market. Any royalty revenues arising from
future sales will be reported to the market at the appropriate time, and the
Directors will draw shareholders' attention to any relevant public
announcements from the Croda team.
Sales and distribution rights are for the cosmetic sector alone, leaving
SkinBioTherapeutics to focus on further applications of its technology in
other sectors.
· AxisBiotix™ (gut/skin axis)
AxisBiotix is being commercialised as a food supplement to alleviate the
symptoms of psoriasis and is in development as a product for acne.
AxisBiotix-Ps, the psoriasis food supplement, is being sold in the UK and
Europe. The primary focus for FY24 has been to continue to grow sales in the
UK whilst maintaining high customer retention, and expanding the sales
operation into Europe.
Sales in FY24 reached £25k per month (FY23: £12k) and the monthly retention
rate has stayed high at similar levels to FY23, achieving over 80% during the
period. The retention rate is measured as the number of subscribers who remain
a subscriber at the end of each monthly period, compared to the same cohort
that were in existence at the start of a month period.
The first European channel opened in Spain last year, and new territories in
Italy and France commenced trading in FY 24. The Group also started trading on
Amazon's UK and French platforms during the year, and the intention is to
broaden this into Amazon's Spanish and Italian platforms. Discussions are also
underway with two UK national high street retail chains.
During the financial year, the Group made good progress in preparing for and
running a consumer study to look at AxisBiotix in acne. The benefit of
undertaking another consumer study is the relatively short time and cost
compared to a clinical trial. The product is also classified as a food
supplement rather than a heavily regulated medical device.
The study involved 98 UK-based participants with acne-prone skin and the
results were published post year end in June 2024. In summary, 84% of
participants reporting that the appearance of their spots had improved, 77%
that the pain caused by their spots had eased, and 62% that the anxiety they
felt due to their spots had improved.
The next step is establishing the best formulation for commercial launch e.g.
in gel or gum form. The aim is to commercialise once the optimal version has
been created.
The overall result is two very positive consumer studies for the AxisBiotix
pillar that validates it as a platform technology from which multiple products
can be derived; important evidence for potential partnerships.
· Research & Development
MediBiotix is developing SkinBiotix for accelerated wound closure, a medical
device application. During the year, Project Epiderm was started with the aim
of developing a technology that promoted wound healing. This work is being
undertaken by Professors Cruikshank and McBain at the University of Manchester
and is being joint funded by SBTX and grant funding. Due to the complexity,
size and level of regulation around medical devices, an experienced
multinational partner will be sought for this technology.
SkinBioTherapeutics also has two other programmes ongoing with the University
of Manchester in oral health and inflammation.
The first extended phase of developing a new lysate for the oral programme is
complete and the Group is in discussions with the University to establish next
steps, since it will require further funding.
The inflammation study is looking at how the microbiome can influence and
balance the body's response to inflammation specifically related to harmful
UVR (sunlight) light. The programme will run until June 2025.
In light of the recent acquisitions, the Board is planning to review its whole
R&D portfolio to determine which programmes have the greatest potential
for future commercialisation.
Dermatonics
In January 2024, SkinBioTherapeutics acquired Dermatonics Limited, a
specialist in innovative topical and dermatological products in the
skincare/woundcare space, using natural ingredients wherever possible.
The initial consideration was £1.75m plus £1.25m earn-out over three years,
in a cash-free and debt-free acquisition. Completion took place on 25 January
2024.The acquisition was funded by a £1.6m draw down of a £5.0m convertible
bond facility which has subsequently been closed.
This acquisition aligned directly with our previously stated strategy to seek
accretive inorganic opportunities that provided immediate synergies and
accelerated routes to market. It has expanded the Group's product range and
customer base, provided a sales platform with senior regulatory and sales
expertise, and new sales channels for our in-house strategic pillars.
In addition, the acquisition has provided significant financial benefits;
Dermatonics was revenue generating, profitable and cash flow positive. For the
12 months ended 31 January 2024, Dermatonics reported revenues of £1.86m
(2023: £1.82m) assisted by the increased sale of products into the NHS and
podiatry clinics, at higher price points negotiated in February 2023, as well
as growth in key distributor relationships outside of the UK.
EBITDA for the 12 months to 31 January 2024, increased by 77% to £422k (31
January 2023: adjusted EBITDA £230k). The adjustments were for one-off items:
£150k stock write off and £123k bad debt in FY2023. The cash balance as at
31 January 2024 was £149k (2023: £213k).
Shortly after the acquisition, in March 2024, Dermatonics signed a
manufacturing and distribution agreement with the Umesh Modi Group which
focused on Dermatonics Once Heel Balm. The product is being sold by Umesh
Modi's 1,200 salespeople across six countries in Asia, the Middle East and
Africa. The total addressable market in these regions for dermatology and
diabetes management is in excess of £5bn. Discussions are underway regarding
other product opportunities, which underlines the benefits of bringing in
inorganic acquisitions like Dermatonics to the Group.
Bio-Tech Solutions
Post year end, in October 2024, the Group completed its second acquisition of
Bio-Tech Solutions Ltd ("BTS") for a total enterprise consideration of £1.25m
payable in cash on closing. BTS is a well-established manufacturer and
supplier of health, hygiene and personal care products and brings the
capabilities of manufacturing and packaging to the Group, as well as a future
development platform for advanced topical creams. The manufacturing facilities
are to GMP standards and ISO certified, and the company has quality control
(QC) facilities, including HPLC (high-performance liquid chromatography)
analysis service and can also deal with flammables.
The acquisition was funded by a loan of £950,000 with an existing
shareholder, David Brierwood, and a subscription for 2,349,624 new Ordinary
Shares at 10.64p raising £250,000, as well as utilisation of Group cash
reserves. The rationale behind the use of the loan and equity element was to
preserve the Group's cash runway, and allows time for integration and
realisation of synergies, such as manufacturing products from Dermatonics'
pipeline in-house.
For the financial year ended 30 June 2024, BTS reported unaudited revenues of
£2.1m and EBITDA of £0.5m. Over the last four financial years, BTS has grown
both revenue and EBITDA. Post year end, the business has performed well, and
financially, it is expected to reach £3.0m in proforma revenues and £0.9m in
proforma EBITDA pre-synergies.
* Based on unaudited management accounts
Conclusion
FY2024 has been a year of extraordinary highs in an extremely challenging
economic environment for a small growth company with big ambitions requiring
funding.
The strategy to grow the business through acquisition at the same time as
driving the underlying business has been a deliberate one in order to provide
additional products and capabilities, and increasingly importantly, scale-up
for negotiations with present partners as well as future ones. Dermatonics and
in time, Bio-Tech solutions have completely changed the Group's shape and
positioning, and have created additional products, operational and
manufacturing infrastructure to complement the SkinBiotix platform.
The ambition is to build a Group that is a leader in the skincare sector,
creating significant value for its shareholders and is an exciting place to
work for current and future employees.
Thank you to the internal team for all their hard work, and to our
shareholders for their long-standing support.
Stuart Ashman
CEO
Financial review
Prior to the acquisitions, management projected FY24 turnover of c.£240k, but
with the acquisition of Dermatonics, that financial picture has changed
significantly.
In the year to 30 June 2024, the Group reported sales of £1.2m (2023:
£0.1m), reflecting continuing increase in AxisBiotix-Ps™ sales and the
addition of Dermatonics revenues. Revenues from AxisBiotix-Ps were £0.2m
(2023: £0.1m) following an increase in subscriber numbers and launch into new
territories during 2024. Dermatonics contributed £1.0m from January to 30
June 2024, but for its full year, reached c.£1.9m which was pleasing.
Cost of sales were £0.53m (2023: £0.01m), reflecting the impact of the
Dermatonics acquisition and financials on the Group.
Gross profits were £0.7m (2023: £0.1m) and resulted in a gross margin of 57%
(2023: 65%). The decline in overall gross margin was due to the blended mix of
AxisBiotix-Ps™ and Dermatonics revenues.
Overall expenses were £3.6m (2023: £3.1m). Research and development
expenditure of £0.6m (2023: £0.9m) for the ongoing oral and inflammation
research programmes ongoing and the new EpiDerm programme. Operating expenses
were £2.9m (2023: £2.1m) reflecting the impact of Dermatonics into the
Group's financials.
The operating loss was in line with prior year at £2.9m (2023: £3.0m).
The cash balance as at 30 June 2024 was £0.8m (2023: £1.3m) which factored
in the £0.5m earn-out payment in May 2024 on the Dermatonics acquisition. As
stated in the trading update on 29 July 2024, Management has no short term
concerns over cash on the basis that the acquisition of Dermatonics reduced
monthly cash burn by 32% and the post period end acquisition of Bio-Tech
Solutions further boosted cash balances. In addition, following the completion
of the Croda commercial agreement, Management has been able to update
expectations further to be cash positive from FY2025 and not to require any
further fund raises for working capital in the foreseeable future.
To support the underlying business and future acquisitions, Management
undertook several financings in the year. In November 2023, the team achieved
a successful Placing and Retail offer which raised £3.3m in a very difficult
market. In January 2024, management entered into a £5.0m Convertible Bond
Facility for the purposes of its acquisition strategy, starting with
Dermatonics. Upon review, it was decided to close this facility post year end,
having drawn down £1.6m in total. Existing investors and some new
institutional investors agreed to purchase the remaining shares directly from
the holder, Macquarie Bank.
Following the year end, the Group further raised £1.56m of gross proceeds in
August 2024, having been approached by two new institutional investors. And as
mentioned above, in order to acquire Bio-Tech Solutions, the Directors raised
a loan of £950,000 with an existing shareholder, David Brierwood, and a
subscription for 2,349,624 new Ordinary Shares at 10.64p raising £250,000, to
enable a cash acquisition.
Current trading and outlook
The profile of the Group has changed completely this year, and next year's
FY25 results will better reflect this with bolstered sales from the in-house
strategic pillars with revenues from AxisBiotix-PS sales and the introduction
of Croda royalties, and also 12 months of Dermatonics' and nine months of
Bio-Tech Solutions' contributions.
Now that commercialisation by Croda of SkinBiotix has begun, revenues are
expected to start gradually. Croda is currently estimating future sales, but
due to the highly confidential nature of its business and market, shareholders
will only see the impact of these upon the Group's financial results at
interims and full year, however, the Directors believe the potential enhanced
commercial opportunities could be considerable.
In FY2023, the majority of the Group's focus was on growing sales of
AxisBiotix-PS™ in the UK and starting to push into new European territories,
beginning with Spain. As stated in the trading update in July 2024, revenues
of AxisBiotix-Ps are forecasted to be £400k (2024: £248k) reflecting the
increase in expansion into Europe, as well as the USA through the partnership
with World Products. The Group may have had limited resources to launch a
product itself, however Management has been pleased with the loyalty and the
very positive testimonials it continues to receive. The team also looks
forward to expanding the AxisBiotix product portfolio with the launch of an
acne product, following the positive consumer study.
For the two new additions to the SBTX Group, Dermatonics revenue forecast is
expected to be £2.91m (2024: £1.90m), and EBITDA at £0.7m (2024: £420k),
with growth across all revenue streams in the business, as well as the uplift
following the Umesh Modi partnership announced earlier in 2024.
The Group will also have revenues from Bio-Tech Solutions of £2m for the
period October 2024 to June 2025. On an annualised basis, this reflects
revenue of £3m for the 12 months to June 2025. EBITDA is expected to come in
at £0.45m.
In summary, with a firmer financial footing with respect to cash, a scaled up
Group infrastructure, SkinBioTherapeutics is in a much stronger position for
making new consolidating acquisitions and for negotiations with potential
industry partners.
Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2024
Notes 2024 2023
Continuing Operations £ £
Revenue 3 1,208,669 132,057
Cost of Sales (525,631) (46,867)
Gross Profit 683,038 85,190
Selling and distribution costs (170,597) (81,294)
Research and development (562,911) (930,636)
Operating expenses (2,854,662) (2,072,612)
Total administrative expenses 4 (3,588,170) (3,084,542)
Loss from operations (2,905,132) (2,999,352)
Finance costs 5 (43,760) (8,886)
Loss before taxation (2,948,892) (3,008,238)
Taxation 7 72,902 173,089
Loss for the year (2,875,990) (2,835,149)
Other comprehensive income - -
Total comprehensive loss for the year (2,875,990) (2,835,149)
Basis and diluted loss per share (pence) 8 (1.54) (1.72)
Consolidated Statement of Financial Position
As at 30 June 2024
Notes 2024 2023
Assets £ £
Non-current assets
Property, plant and equipment 10 44,357 78,658
Right-of-use assets 11 72,012 94,502
Goodwill 12 2,038,325 -
Intangible assets 13 1,388,959 700,331
Total non-current assets 3,543,653 873,491
Current assets
Inventories 15 472,419 33,497
Trade and other receivables 16 398,088 192,885
Corporation tax receivable 16 - 182,545
Cash and cash equivalents 800,904 1,311,834
Total current assets 1,671,411 1,720,761
Total assets 5,215,064 2,594,252
Equity and liabilities
Equity
Capital and reserves
Called up share capital 22 2,022,552 1,731,390
Share premium 22 14,507,673 10,947,874
Share based payment reserves 23 438,589 438,589
Accumulated deficit (13,998,933) (11,122,943)
Total equity 2,969,881 1,994,910
Liabilities
Non-current liabilities
Lease liabilities 18 39,861 69,601
Deferred consideration 20 250,000 -
Deferred tax 20 150,624 -
Total non-current liabilities 440,485 69,601
Current liabilities
Trade and other payables 17 498,560 498,696
Corporation tax payable 17 27,257
Lease liabilities 18 38,881 31,045
Convertible loan 19 740,000 -
Deferred consideration 20 500,000 -
Total current liabilities 1,804,698 529,741
Total liabilities 2,245,183 599,342
Total equity and liabilities 5,215,064 2,594,252
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2024
2024 2023
£ £
Cash flows from operating activities
Loss before tax for the period (2,948,892) (3,008,238)
Net interest 36,816 -
Depreciation of property, plant and equipment 49,260 11,136
Right-of-use assets depreciation and interest 43,345 41,287
Amortisation of IP 83,368 656
Share-based payments charge - 1,273
(2,736,103) (2,953,886)
Changes in working capital
Decrease/(increase) in inventories 96,419 89,074
(lncrease)/decrease in trade and other receivables 166,842 (54,735)
(Decrease)/increase in trade and other payables (436,019) 16,954
Cash generated by operations (172,758) 51,293
Taxation received 182,545 257,458
Net cash used in operating activities (2,726,316) (2,645,135)
Investing activities
Purchase of property, plant and equipment (14,959) (89,794)
Purchase of IP (169,996) (75,483)
Purchase of right-of-use assets (13,214) -
Cash consideration (1,598,423) -
Deferred consideration (500,000) -
Net cash used in investing activities (2,296,592) (165,277)
Cash flows from financing activities
Net proceeds from issue of shares 3,119,553 2,353,425
Net amounts raised from convertible loan 1,472,000 -
Interest paid (36,816) -
Lease payments made (42,759) (36,102)
Net cash generated by financing activities 4,511,978 2,317,322
Net decrease in cash and cash equivalents (510,930) (493,089)
Cash and cash equivalents at the beginning of the period 1,311,834 1,804,923
Cash and cash equivalents at the end of the period 800,904 1,311,834
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2024
Share Share Premium Other reserves Retained earnings
Capital Total
£ £ £ £ £
As at 1 July 2022 1,567,802 8,758,037 437,316 (8,287,794) 2,475,361
Loss for the period - - - (2,835,149) (2,835,149)
Issue of shares 163,588 2,453,793 - - 2,617,381
Cost of share issue - (263,956) - - (263,956)
Share-based payments - - 1,273 - 1,273
As at 30 June 2023 1,731,390 10,947,874 438,589 (11,122,943) 1,994,910
Loss for the period - - - (2,875,990) (2,875,990)
Issue of shares 291,162 3,841,413 - - 4,132,575
Cost of share issue - (281,614) - - (281,614)
As at 30 June 2024 2,022,552 14,507,673 438,589 (13,998,933) 2,969,881
Share capital is the amount subscribed for shares at nominal value.
Share premium is the amount subscribed for share capital in excess of nominal
value.
Other reserves arise from the equity element of a convertible loan issued and
converted in the period to 30 June 2017, and from share options granted.
Retained earnings represents accumulated profit or losses to date.
Company Statement of Financial Position
As at 30 June 2024
Notes 2024 2023
Assets £ £
Non-current assets
Property, plant and equipment 10 44,357 78,658
Right-of-use assets 11 72,012 94,502
Intangible assets 13 801,850 694,402
Investments 14 3,642,860 482,434
Other receivables 16 1,593,553 1,445,801
Total non-current assets 6,154,632 2,795,797
Current assets
Trade and other receivables 16 89,054 149,157
Corporation tax receivable 16 68,425 182,545
Cash and cash equivalents 524,854 1,124,961
Total current assets 682,333 1,456,663
Total assets 6,836,965 4,252,460
Equity and liabilities
Equity
Capital and reserves
Called up share capital 22 2,022,552 1,731,390
Share premium 22 14,507,673 10,947,874
Share based payments 23 438,589 438,589
Accumulated deficit (11,943,918) (9,441,596)
Total equity 5,024,796 3,676,257
Liabilities
Non-current liabilities
Lease liabilities 18 39,861 69,601
Deferred consideration 20 250,000 -
Total non-current liabilities 289,861 69,601
Current liabilities
Trade and other payables 17 243,327 475,557
Lease liabilities 18 38,881 31,045
Convertible loan 19 740,000 -
Deferred consideration 20 500,000 -
Total current liabilities 1,522,208 506,602
Total liabilities 1,812,069 576,203
Total equity and liabilities 6,836,965 4,252,460
No Statement of Comprehensive Income is presented in these financial
statements for the Parent Company as provided by Section 408 of the Companies
Act 2006. The loss for the financial year dealt with in the financial
statements of the Parent Company was £2,502,322 (2023: £2,289,815).
Company Statement of Cash Flows
For the Year Ended 30 June 2024
2024 2023
£ £
Cash flows from operating activities
Loss before tax for the period (2,570,747) (2,471,551)
Depreciation of property, plant and equipment 49,260 11,136
Right-of-use assets depreciation and interest 43,345 41,287
Impairment of financial assets 7,608 16,573
Share-based payments charge - 1,273
(2,470,534) (2,401,281)
Changes in working capital
(lncrease)/decrease in trade and other receivables (95,256) (57,731)
(Decrease)/increase in trade and other payables (232,232) 14,456
Cash (used)/generated by operations (327,488) (43,275)
Taxation received 182,545 229,581
Net cash used in operating activities (2,615,477) (2,214,975)
Investing activities
Purchase of property, plant and equipment (14,959) (89,794)
Purchase of IP (107,448) (70,147)
Investment in subsidiaries (312,003) (378,847)
Cash consideration (1,598,423) -
Deferred consideration (500,000) -
Net cash used in investing activities (2,532,833) (538,788)
Cash flows from financing activities
Net proceeds from issue of shares 3,118,962 2,353,425
Net amounts raised from convertible loan 1,472,000 -
Lease payments made (42,759) (36,101)
Net cash generated by/(used in) financing activities 4,548,203 2,317,323
Net decrease in cash and cash equivalents (600,107) (436,441)
Cash and cash equivalents at the beginning of the period 1,124,961 1,561,402
Cash and cash equivalents at the end of the period 524,854 1,124,961
Company Statement of Changes in Equity
For the Year Ended 30 June 2024
Share Share Premium Other reserves Retained earnings
Capital Total
£ £ £ £ £
As at 1 July 2022 1,567,802 8,758,037 437,316 (7,151,781) 3,611,374
Loss for the period - - - (2,289,815) (2,289,815)
Issue of shares 163,588 2,453,793 - - 2,617,381
Cost of share issue - (263,956) - - (263,956)
Share-based payments - - 1,273 - 1,273
As at 30 June 2023 1,731,390 10,947,874 438,589 (9,441,596) 3,676,257
Loss for the period - - - (2,502,322) (2,502,322)
Issue of shares 291,162 3,841,413 - - 4,132,575
Cost of share issue - (281,614) - - (281,614)
As at 30 June 2024 2,022,552 14,507,673 438,589 (11,943,918) 5,024,896
Share capital is the amount subscribed for shares at nominal value.
Share premium is the amount subscribed for share capital in excess of nominal
value.
Other reserves arise from the equity element of a convertible loan issued and
converted in the period to 30 June 2017, and from share options granted.
Retained earnings represents accumulated profit or losses to date.
Notes to the Financial Statements
For the Year Ended 30 June 2024
1. General information
SkinBioTherapeutics plc ('the Company') is a public company limited by shares
incorporated in England under the Companies Act and quoted on the AIM market
of the London Stock Exchange (AIM: SBTX).
The principal activity of the Group is that of research and development
focused on harnessing the microbiome for human health, and commercialisation
of these technologies, as well as the manufacture and sales of dermatological
products through acquired entities.
2. Significant accounting policies and basis of preparation
a) Statement of compliance
The consolidated and company financial statements of SkinBioTherapeutics plc
have been prepared in accordance with UK-adopted International Accounting
Standards ('IFRS') and the Companies Act 2006 applicable to companies
reporting under IFRS.
b) Basis of preparation
The consolidated and company financial statements have been prepared under the
historical cost convention modified by the revaluation of certain financial
instruments. The accounting policies have been applied consistently in all
material respects.
The consolidated and company financial statements are presented in Sterling
(£) as this is the predominant functional currency of the Group and Company,
and is the currency of the primary economic environment in which it operates.
Foreign transactions are accounted in accordance with the policies set out
below.
c) 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 30 June 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. All intra-group transactions, balances,
income and expenses are eliminated on consolidation. Subsidiaries are included
in the consolidated financial statements from the date that control commences
until the date that control ceases. A list of all the Company's subsidiary
undertakings is provided in note 14 and for the business combination refer to
note 20.
d) Going concern
These financial statements have been prepared on a going concern basis. In
considering the appropriateness of this assumption, the Board has considered
the Group's projections for the twelve months from the date of approval of
this financial information, including cash flow forecasts. The directors are
confident that based on the Group's forecasts and the recently completed
capital raise of approximately £1.56 million (before costs) the Group will
have enough funds to continue in operation for at least 12 months from the
date of signing these financial statements. The Directors believe that the
Group has adequate resources to continue in operational existence for the
foreseeable future and therefore adopt the going concern basis of accounting
in preparing these financial statements.
e) Estimates and judgements
The preparation of financial statements requires the Board to make judgements,
estimates and assumptions that may affect the application of accounting
policies and reported amounts of assets and liabilities as at each balance
sheet date and the reported amounts of revenues and expenses during each
reporting period. Any estimates and assumptions are based on experience and
any other factors that are believed to be relevant under the circumstances and
which the Board considers to be reasonable. Actual outcomes may differ from
these estimates. Any revisions to accounting estimates will be recognised in
the period in which the estimate is revised if the revision affects only that
period. If the revision affects both current and future periods, the change
will be recognised over those periods.
The following are the critical judgements that the Directors have made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the consolidated financial
statements.
Estimation of the lifetime of intangible assets
Intangible assets acquired separately from a business are recognised at cost
and are subsequently measured at cost less accumulated amortization and
accumulated impairment losses.
Intangible assets recognised are reviewed against the criteria for
capitalisation with useful life determined by reference to the underlying
product being developed. Management believes that the assigned values and
useful lives, as well as the underlying assumptions, are reasonable, though
different assumptions and assigned lives could have a significant impact on
the reported amounts.
Useful lives are also examined on an annual basis and adjustments, where
applicable are made on a prospective basis. The Group does not have any
intangible assets with indefinite lives.
Amortisation is calculated so as to write off the cost of an asset, less its
estimated residual value, over the useful life of that asset as follows:
Intellectual property 20% straight line
Patents & Trademarks 10% straight line
Trade Name 10% straight line
Customer Relationships 25% straight line
Capitalisation of development costs
During the year £169,996 (2023: £75,483) of development costs were
capitalised, bringing the total amount of development costs capitalised, as
intangible assets, as at 30 June 2024, to £860,391 (2023: £700,331), net of
amortisation. Management has reviewed the balances by project, compared the
carrying amount to expected future revenues and is satisfied that no
impairment exists and that the costs capitalised will be fully recovered as
the products are launched to market. New product projects are monitored
regularly and should the technical or market feasibility of a new product be
in question, the project would be cancelled and capitalised costs to date will
be removed from the balance sheet and charged to the statement of
comprehensive income.
Inventory valuation
Inventory is carried at the lower of cost and net realisable value, using the
first in first out method. Appropriate provisions for estimated irrecoverable
amounts due to slow-moving or obsolete inventory are recognised in the income
statement where there is objective evidence that the assets are impaired.
The provision is £0 at 30 June 2024 (2023: £35,386).
Recoverability of goodwill, customer relationships and trade name intangible
assets
As noted above, part of the Company's strategy is to grow through acquisitions
which has led to material goodwill, customer relationships and trade name
intangible assets being recognised on the balance sheet. Goodwill, which is
allocated across CGUs, is tested annually to determine if there is any
indication of impairment by comparing the carrying amount of the goodwill to
the recoverable amount of the CGU to which it has been allocated. Assumptions
and estimates are used to determine the recoverable amount of each CGU,
principally based on the present value of estimated future cash flows. Actual
performance may differ from management's expectations. The estimates and
assumptions used in performing impairment testing are described in note 12.
Customer relationships and trade name intangible assets are also reviewed
annually for indicators of impairment and if an indicator of impairment exists
then similar recoverability testing, involving the use of estimates and
assumptions, is performed for the business to which the customer relationships
and trade name intangible assets relate. The useful economic lives of customer
relationships and trade name intangible assets are also reviewed at least
annually, with any revisions to the original estimated useful economic lives
accounted for prospectively.
Refund accruals
Accruals for sales returns are estimated on the basis of historical returns
and are recorded so as to allocate them to the same period in which the
original revenue is recorded. These accruals are reviewed regularly and
updated to reflect The Board's latest best estimates. The Board do not believe
that the difference between the accrual estimate and actual returns will be
material.
The accrual for net refunds totalled £255 at 30 June 2024 (2023: £82). The
expected returns rate would need to differ to actual returns by 10% to have an
impact of +/- £1,945 on reported revenue and on operating profit. The choice
of a 10% change for the determination of sensitivity represents an extreme
variation in the return rate.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by using the Black-Scholes
model taking into account the terms and conditions upon which the instruments
were granted. The accounting estimates and assumptions relating to
equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual reporting period but
may impact profit or loss and equity. The judgments made and the model used
are further specified in note 23.
Estimation of incremental borrowing rate in accounting for leases under IFRS16
In recognising a lease liability and right-of-use asset under IFRS 16 the
Group has used an estimated incremental borrowing rate of 8%. The Group does
not have any borrowings, so in order to apply IFRS 16 it was necessary to
estimate the incremental borrowing rate that would be faced by the Group. The
rate of 8% was determined by looking at a range of loans available on the
market. If the interest rate used in the calculation were higher, this would
have the effect of reducing the size of both the lease liability and
right-of-use asset, reducing the depreciation charge and increasing the
interest charge in the consolidated income statement. The overall change to
the Company Income Statement and the Company Statement of Financial Position
would be immaterial. There would be no change to operating cash flows or lease
payments as a result of a change in the estimate of the incremental interest
rate.
f) Application of new and re vised International Financial Reporting
Standards (IFRSs)
The Group has adopted all of the new or amended Accounting Standards and
interpretations issued by the International Accounting Standards Board
('IASB') or the IFRS Interpretations Committee ('IFRIC') that are mandatory
and relevant to The Group's activities for the current reporting period.
The following standards, amendments and interpretations are new and effective
for the year ended 30 June 2024 and have been adopted. None of the
pronouncements had a material impact on the Group's consolidated results,
assets and liabilities.
Reference Title Summary Application date of standard (Periods commencing on or after)
IAS 1 Disclosure of Accounting Policies Amendments require that an entity discloses its material accounting policies, 1 January 2023
instead of its significant accounting policies.
IAS 8 Definition of Accounting Estimates Amendments replace the definition of a change in accounting estimates with a 1 January 2023
definition of accounting estimates.
New and revised IFRSs in issue but not yet effective
There are a number of new and revised IFRSs that have been issued but are not
yet effective that the Group has decided not to adopt early. The most
significant of these are as follows:
Reference Title Summary Application date of standard (Periods commencing on or after)
IAS1 Presentation of Financial Statements Amendments regarding the classification of liabilities as current or 1 January 2024
non-current
Amendments regarding non-current liabilities with Covenants
The adoption of these Standards and Interpretations is not expected to have a
material impact on the financial information of the Group in the period of
initial application when they come into effect.
g) Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are translated at the exchange
rate ruling at that date. Foreign exchange differences on translation are
recognised in the income statement. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair
value are translated at foreign exchange rates ruling at the dates the fair
value was determined.
h) Revenue recognition
Revenue consists of internet sales, in addition to postage receipts, as well
as sales to a range of distributors, national pharmacy chains and wholesalers,
with the Group acting as the Principal in all arrangements. Revenues are
recorded net of an appropriate deduction for actual and expected returns,
sales discounts and sales taxes.
Revenue is recognised on the satisfaction of performance obligations and an
assessment of when control is transferred to the customer. This is on dispatch
of goods to the customer.
i) 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 period during which the Group is expected to benefit.
j) Inventories
Inventory is carried at the lower of cost and net realisable value. Cost is
determined using the first in, first out method and represents the purchase
cost, including transport, handling costs and duties.
Appropriate provisions for estimated irrecoverable amounts due to slow-moving
or obsolete inventory are recognised in the income statement where there is
objective evidence that the assets are impaired.
k) 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:
- Plant & machinery 50%
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.
l) Impairment testing of intangible assets
At the end of each reporting period, the Group reviews the carrying amounts of
its intangible assets 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 to determine the extent of the
impairment loss (if any). Intangible assets with indefinite useful lives are
tested for impairment at least annually, and whenever there is an indication
that the assets may be impaired.
m) Business combinations and goodwill
Business combinations are accounted for under IFRS 3 Business Combinations
(Revised) using the acquisition method. The cost of an acquisition is measured
as the aggregate of the consideration transferred, measured at
acquisition-date fair value. Acquisition costs incurred are expensed and
included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and
liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be
recognised at fair value at the acquisition date. Subsequent changes to the
fair value of the contingent consideration which is deemed to be an asset or
liability will be recognised in accordance with IFRS 9 in the income
statement.
Goodwill is initially measured at cost, being the excess of the aggregate of
the acquisition-date fair value of the consideration transferred over the net
identifiable amounts of the assets acquired and the liabilities assumed in
exchange for the business combination. Assets acquired and liabilities assumed
in transactions separate from the business combinations, such as the
settlement of pre-existing relationships or post-acquisition remuneration
arrangements, are accounted for separately from the business combination in
accordance with their nature and applicable IFRSs. Identifiable intangible
assets, meeting either the contractual-legal or separability criterion, are
recognised separately from goodwill. Contingent liabilities representing a
present obligation are recognised if the acquisition-date fair value can be
measured reliably.
Brands and customer relationships arising on the acquisition of business
combinations, are measured at cost less accumulated amortisation and
accumulated impairment losses. The acquired brand is a well-know brand which
is registered, has a good track record and has a finite useful life. Customer
relationships are measured at the time of the business combination and have
finite useful lives.
n) Leasing
A lease is defined as 'a contract, or part of a contract, that conveys the
right to use an asset (the underlying asset) for a period of time in exchange
for consideration'. To apply this definition the Group assesses whether each
of the following criteria apply:
· the contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group;
· the Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the period of
use, considering its rights within the defined scope of the contract; and
· the Group has the right to direct the use of the identified asset
throughout the period of use. The Group assesses whether it has the right to
direct 'how and for what purpose' the asset is used throughout the period of
use.
Measurement and recognition of leases as a lessee
At the commencement date of a lease, the Group recognises a right-of-use asset
and a lease liability on the balance sheet. The right-of-use asset is measured
at cost, which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Group, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any lease payments
made in advance of the lease commencement date, net of any incentives
received.
The Group depreciates right-of-use assets on a straight-line basis from the
lease commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The Group also assesses the
right-of-use asset for impairment when indicators of impairment exist.
At the commencement date of a lease, the Group measures the lease liability at
the present value of the lease payments unpaid at that date, discounted using
the interest rate implicit in the lease if that rate is readily available, or
the Group's incremental borrowing rate. Details of this borrowing rate are
given in note 2e.
Lease payments included in the measurement of the lease liability are made up
of fixed payments (including in substance fixed), variable payments based on
an index or rate, amounts expected to be payable under any residual value
guarantees and payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability is reduced for payments made
and increased for interest. It is remeasured to reflect any reassessment or
modification, or if there are changes in in-substance fixed payments. If a
lease liability is remeasured, a corresponding adjustment is reflected in the
value of the right-of-use asset, or, if the carrying value of the right-of-use
asset is already reduced to zero, the income statement.
The Group has elected to account for short-term leases (with a term of up to
12 months) and leases of low-value assets using the practical expedients
available in IFRS 16. Instead of recognising a right-of- use asset and lease
liability, the payments in relation to such leases are recognised as an
expense in the income statement on a straight-line basis over the lease term.
o) Tax
Current tax
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from 'profit before tax' as reported in the income statement
because of items of income or expense that are taxable or deductible in other
periods and items that are never taxable or deductible. The Group's current
tax is calculated using rates that have been enacted during the reporting
period.
Deferred tax
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for tax
purposes. The amount of deferred tax provided is based on the expected manner
of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only if it can be regarded as more likely
than not that there will be suitable taxable profits from which the future
reversal of the underlying temporary differences can be deducted.
p) Payroll expense and related contributions
Wages, salaries, payroll tax, paid annual leave and sick leave, bonuses, and
non-monetary benefits are accrued in the period in which the associated
services are rendered.
q) Share-based compensation
The Group issues share based payments to certain directors and others
providing similar services. 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). Nonmarket 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.
r) Financial assets and liabilities
Financial assets and liabilities are recognised when the Group unconditionally
becomes a party to the contractual terms of the instrument. Unless otherwise
indicated, the carrying amounts of financial assets and liabilities are
considered by the directors to be a reasonable estimate of their fair values
at each balance sheet date.
Financial assets include trade and other receivable; these are classified as
loans and receivables. Financial liabilities include trade and other payables,
convertible loan notes and borrowings; these are classified as other financial
liabilities carried at amortised cost.
Classification as debt or equity
Debt and equity instruments issued by the Group are classified as either
financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an
equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Group are recognised as the proceeds received, net of direct
issue costs.
Derecognition
Financial assets are derecognised when rights to receive cash flows from the
assets expire or, the financial assets are transferred and the Group has
transferred substantially all the risks and rewards of ownership of the
financial assets. On derecognition of a financial asset, the difference
between the asset's carrying amount and the sum of the consideration received
and receivable and the cumulative gain or loss that had been recognised in
other comprehensive income and accumulated in equity is recognised in profit
or loss.
Financial liabilities are derecognised when the obligation specified in the
relevant contract is discharged, cancelled or expires. The difference between
the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
When the terms of a financial liability are renegotiated and result in the
Group issuing equity instruments to a creditor of the Group to extinguish all
or part of the financial liability, the Group recognises the issue of equity
instruments at their fair values. Any difference between the fair value of the
equity instruments and the carrying amount of the financial liability to be
extinguished is recognised in the income statement.
Trade and other receivables
Trade and other receivables are recognised initially at their fair value and
subsequently at their amortised cost using the effective interest method, less
provision for impairment. If there is objective evidence that the
recoverability of the asset is at risk, appropriate allowances for any
estimated irrecoverably amounts are recognised in the income statement.
Intercompany receivables
Amounts owed by subsidiary undertaking represent loans made to the Company's
main subsidiary on an interest-free basis. No repayment terms have been
mandated.
IFRS 9's impairment requirements use forward-looking information to recognise
expected credit losses - the 'expected credit loss (ECL) model'.
The Group considers a broad range of information when assessing credit risk
and measuring expected credit losses, including past events, current
conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
· financial instruments that have not deteriorated significantly in
credit quality since initial recognition or that have low credit risk ('Stage
1');
· financial instruments that have deteriorated significantly in credit
quality since initial recognition and whose credit risk is not low ('Stage
2'); and
· financial assets that have objective evidence of impairment at
the reporting date ('Stage 3').
'12-month expected credit losses' are recognised for 'Stage 1' financial
instruments, while 'lifetime expected credit losses' are recognised for 'Stage
2' financial instruments. Measurement of the expected credit losses is
determined by a probability weighted estimate of credit losses over the
expected life of the financial instrument.
The Group considers that the current intercompany loan should be recognised as
Stage 1, and 12- month expected credit losses have been calculated.
Cash and cash equivalents
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 and other payables
Trade and other payables are recognised initially at their fair value, net of
transaction costs, and subsequently at their amortised cost using the
effective interest method.
Financial risk management
Risk management objectives
Management identify and evaluate financial risks on an on-going basis. The
principal risks to which the Group is exposed are market risk (including
interest rate risk, and cash flow risk), credit risk, and liquidity risk.
Market risk
Market risk is defined as the risk that the fair value of future cash flows of
a financial instrument will fluctuate because of changes in market prices. The
Group's market risks arise from open positions in (a) interest-bearing assets
and liabilities, and (b) foreign currencies; to the extent that these are
exposed to general and specific market movements (see details below).
Interest rate risk
The Group's interest-bearing assets comprise of only cash and cash
equivalents. As the Group's interest- bearing assets do not generate
significant amounts of interest; changes in market interest rates do not have
any significant direct effect on the Group's income.
Currency risk
The Group is exposed to movement in foreign currency exchange rates arising
from normal trading transactions that are denominated in currencies other than
the respective functional currencies of the Group. The Group does not have a
policy to hedge its exposure to foreign currency exchange risk as currently
overseas transactions are only a small percentage of total transactions and
fluctuations in foreign currencies are not expected to significantly affect
the Group's total transactions. In future the Group may consider hedging its
exposure to foreign currency exchange risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. Credit risk
arises from cash balances (including bank deposits, cash and cash equivalents)
and credit exposures to trade receivables. The Group's maximum exposure to
credit risk is represented by the carrying value of cash and cash equivalents
and trade receivables. Credit risk is managed by monitoring clients and
performing credit checks before accepting any customers.
Liquidity risk
Liquidity risk is the risk that the Group may encounter difficulty in meeting
its obligations associated with financial liabilities that are settled by
delivering cash or other financial assets.
The Group seeks to manage its liquidity risk by ensuring that sufficient
liquidity is available to meet its foreseeable needs.
s) Capital management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximising the return to stakeholders. The Group's overall
strategy remained unchanged during the period.
The capital structure of the Group consists of cash and cash equivalents,
issued capital, the share premium account, the share-based compensation
reserve resulting from the grant of equity-settled share options to selected
directors and others providing similar services, and retained earnings.
The Group is not subject to any externally imposed capital requirements.
As part of the Group's management of capital structure, consideration is given
to the cost of capital.
3. Segmental information
IFRS 8 'Operating Segments' requires operating segments to be determined based
on The Group's internal reporting to the Chief Operating Decision Maker. The
Chief Operating Decision Maker has been determined to be The Board of
Directors which receives information on the basis of the Group's operations in
key geographical territories, based on the Group's management and internal
reporting structure. Based on this assessment the Group consider there to be 4
operating segments. Despite there being 4 operating segments, it is not
currently feasible to allocate assets and liabilities to the operating
segments. As these operating segments grow, we expect that allocation of
assets and liabilities will be possible. Administrative expenses are not
segmented for accounting purposes as the Board do not review these by segment
currently.
Year ended 30 June 2024
UK US EU RoW Total
£ £ £ £ £
Sales of products 990,350 35,363 102,676 80,280 1,208,669
Cost of sales (444,616) (8,238) (39,862) (32,915) (525,631)
Gross profit 545,734 27,125 62,814 47,365 683,038
Year ended 30 June 2023
UK US EU RoW Total
£ £ £ £ £
Sales of products 118,921 9,275 3,861 - 132,057
Cost of sales (42,205) (3,292) (1,370) - (46,867)
Gross profit 76,716 5,983 2,491 - 85,190
Due to the nature of its activities, the Group is not reliant on any
individual major customers.
4. Expenses - analysis by nature
Group
2024 2023
£ £
Other income (15,726) (3,292)
Selling and distribution costs 170,597 81,294
Depreciation of right-of-use asset 35,704 32,401
Depreciation of plant and equipment 49,260 11,136
Research and development 562,911 930,636
Directors remuneration (including share-based compensation) 685,994 778,639
Staff costs 341,425 214,606
Foreign exchange differences 1,041 (51)
Auditors remuneration
- audit fees 66,400 34,450
- other services 4,025 3,000
Inventory write down - 35,386
Lease interest on ROU 7,641 8,886
Other operating costs 1,678,898 957,451
Total operating expenses 3,588,170 3,084,542
5. Finance costs
Group
2024 2023
£ £
Interest payable 6,944 8,886
Other interest charges 7,762 -
Convertible loan interest 29,054 -
43,760 8,886
Interest payable represents amounts arising on leases accounted for under IFRS
16.
6. Employees and Directors
Group and company 2024 2023
The average monthly number of employees and senior management was: Number Number
Executive directors 2 2
Non-executive directors 3 3
Employees 9 7
Average total persons employed 14 12
As at 30 June 2024 the Company had 15 employees (2023: 11).
Group and company 2024 2023
Staff costs in respect of these employees were: £ £
Wages and salaries 922,275 873,637
Social security costs 108,419 118,510
Defined contribution pensions 18,867 17,124
Share-based payments (see note 23) - 1,274
Total remuneration 1,049,561 1,171,447
Some of these staff costs are included within research and development and
some in share issue costs.
All the directors above can be considered to be key management and have the
responsibility for planning, directing and controlling, directly or
indirectly, the activities of the Company.
The remuneration of directors and key executives is determined by the
remuneration committee having regard to the performance of individuals and
market trends.
The Company operates a defined contribution pension scheme for employees and
directors. The assets of the scheme are held separately from those of the
Company in independently administered funds. The amounts outstanding at 30
June 2024 are £2,911 (2023: £3,326).
Group and company 2024 2023
Directors remuneration: £ £
Stuart J. Ashman 324,642 382,478
Manprit Randhawa 227,988 261,480
Martin Hunt 71,015 68,670
Dr Cathy Prescott 36,099 41,011
Danielle Bekker 26,250 25,000
Total remuneration 685,994 778,639
Which is made up of:
Remuneration 673,884 755,258
Amounts receivable under long term incentive schemes - 11,375
Company contributions to pension schemes 12,110 12,006
Total remuneration 685,994 778,639
The number of directors to whom retirement benefits are accruing in respect of
qualifying services under defined contribution pension schemes is 2 (2023: 2).
The highest paid director received total emoluments of £324,642 (2023:
£382,478) during the year.
7. Taxation
Group
Income taxes recognised in profit or loss 2024 2023
£ £
Current tax
Current period - UK corporation tax (4,476) -
R&D tax credit (68,426) 182,547
R&D tax credit - prior year - (9,458)
Tax credit for the year 72,902 173,089
The tax charge for each period can be reconciled to the loss per the statement
of comprehensive income as follows:
Taxable losses (2,948,892) (3,008,238)
Normal applicable rate of tax 25.00% 19.00%
Loss on ordinary activities multiplied by normal rate of tax (737,223) (571,565)
Effects of:
Depreciation 31,015 2,116
Disallowables 85,165 3,752
Capital allowances (3,740) (17,061)
R&D enhanced deductions (78,927) (137,215)
R&D tax credit (68,426) (173,089)
Losses surrendered 201,594 248,189
Unused tax losses carried forward 497,640 471,784
UK tax charge/(credit) (72,902) (173,089)
The Group has an unrecognised deferred tax asset of £2,648,809 (2023:
£1,637,470) at the period end, which has not been recognised in the financial
statements due to uncertainty of future profits. The Group has an estimated
tax loss of £10,595,235 (2023: £8,618,261) available to be carried forward
against future profits.
8. Loss per share
Group
2024 2023
£ £
Basic and diluted loss per share
Total comprehensive loss for the year (2,875,990) (2,835,149)
Weighted average number of shares 186,287,360 164,713,045
Basic and diluted loss per share (pence) (1.54) (1.72)
As the Group and Company are reporting a loss from continuing operations for
the year then, in accordance with IAS 33, the share options are not considered
dilutive because the exercise of the share options would have an anti-dilutive
effect. The basic and diluted earnings per share as presented on the face of
the income statement are therefore identical.
9. Company's result for the period
The Group has elected to take the exemption under section 408 of the Companies
Act 2006 not to present the Parent Company income statement account.
The loss for the Parent Company for the period was £2,502,322 (2023:
£2,289,815).
10. Property, plant and equipment
Group Company
£ £
Cost
At 1 July 2022 10,200 10,200
Additions 89,794 89,794
At 30 June 2023 99,994 99,994
Additions 14,959 14,959
At 30 June 2024 114,953 114,953
Accumulated depreciation
At 1 July 2022 10,200 10,200
Charge for the year 11,136 11,136
At 30 June 2023 21,336 21,336
Charge for the year 49,260 49,260
At 30 June 2024 70,596 70,596
Net book value
At 1 July 2022 - -
At 30 June 2023 78,658 78,658
At 30 June 2024 44,357 44,357
11. Right-of-use assets
Group Company
£ £
Cost
At 1 July 2022 158,754 158,754
Additions - -
At 30 June 2023 158,754 158,754
Additions 13,214 13,214
At 30 June 2024 171,968 171,968
Accumulated amortisation
At 1 July 2022 31,851 31,851
Charge for the year 32,401 32,401
At 30 June 2023 64,252 64,252
Charge for the year 35,704 35,704
At 30 June 2024 99,956 99,956
Net book value
At 1 July 2022 126,903 126,903
At 30 June 2023 94,502 94,502
At 30 June 2024 72,012 72,012
12. Goodwill
Net Book Value £
Cost
At 1 July 2023 -
Acquired through business combinations 2,038,325
At 30 June 2024 2,038,325
During the year an amount of £2.0m (2023: nil) has been acquired through
business combinations (see note 20).
Goodwill represents the excess of consideration over the fair value of the
Group's share of the net identifiable assets of the acquired subsidiary at the
date of acquisition.
Impairment testing
The carrying amount of goodwill is allocated across CGUs and is tested
annually for impairment by comparing the recoverable amount of each CGU with
its carrying value.
The identification of CGUs reflects the way the business is managed and
monitored on a business by business basis, taking into account the generation
of cash flows and the sharing of synergies. Given the similar nature of the
activities of each CGU, a consistent methodology is applied across the Group
in assessing CGU recoverable amounts.
The recoverable amount is the higher of the value in use and the fair value
less the costs of disposal. The value in use is the present value of the cash
flows expected to be generated by the CGU over a projection period together
with a terminal value. The projection period is the time period over which
future cash flows are predicted. The Group's methodology is to use a
projection period of four years consisting of detailed cash flow forecasts for
the first two years and CGU specific growth assumptions for years three and
four. For periods after this four year period, the methodology applies a long
term growth rate specific to the CGU to derive a terminal value.
The value in use calculations are principally sensitive to revenue growth,
including any significant changes to the customer base, achievability of
future profit margins and the discount rates used in the present value
calculation. The information used for valuation purposes takes into
consideration past experience and the current economic environment with regard
to customer attrition rates and additions to the customer base, the ability to
introduce price increases and new products and experience in controlling the
underlying cost base. This information is used to determine a long term growth
rate which is consistent with the geographic segments in which the Group
operates and management's assessment of future operating performance and
market share movements. The discount rates used are determined with assistance
provided by external valuation specialists.
The weighted average long term growth rate used in 2024 was in the range of
8%-15% (2023: nil) reflecting the anticipated revenue and profit growth. A
pre-tax discount rate of 40% (2023: nil) has been applied to the value in use
calculations reflecting market assessments of the time value of money at the
balance sheet date.
Based on our impairment testing, no impairments were identified to the
carrying value of goodwill within the Group. As for the impairment testing for
the Group's CGUs noted above, value in use calculations were prepared based on
management's latest expectations of the performance of the relevant business
over a five year projection period and appropriate long term growth and
discount rates.
13. Intangible assets
Group
Patents & trademarks Customer relationships Brands Total
£ £ £ £
Cost
At 1 July 2022 625,754 - - 625,754
Additions 75,483 - - 75,483
At 30 June 2023 701,237 - - 701,237
Additions 169,996 577,000 25,000 771,996
At 30 June 2024 871,233 577,000 25,000 1,473,233
Accumulated amortisation
At 1 July 2022 250 - - 250
Charge for the year 656 - - 656
At 30 June 2023 906 - - 906
Charge for the year 9,936 72,179 1,253 83,368
At 30 June 2024 10,842 72,179 1,253 84,274
Net book value
At 1 July 2022 625,504 - - 625,504
At 30 June 2023 700,331 - - 700,331
At 30 June 2024 860,391 504,821 23,747 1,388,959
Company
Patents & trademarks Customer relationships Brands Total
£ £ £ £
Cost
At 1 July 2022 624,255 - - 624,255
Additions 70,147 - - 70,147
At 30 June 2023 694,402 - - 694,402
Additions 107,448 - - 107,448
At 30 June 2024 801,850 - - 801,850
Accumulated amortisation
At 1 July 2022 - - - -
Charge for the year - - - -
At 30 June 2023 - - - -
Charge for the year - -
At 30 June 2024 - -
Net book value
At 1 July 2022 624,255 - - 624,255
At 30 June 2023 694,402 - - 694,402
At 30 June 2024 801,850 801,850
Intellectual property is to be amortised over the expected period that the
asset generates income. A small part of the IP belonging to the active
subsidiary, AxisBiotix Limited, commenced amortisation in the year ending 30
June 2023.
14. Investments
Company: Investments in subsidiary undertakings £
Cost
At 1 July 2022 423,072
Additions 59,362
At 30 June 2023 482,434
Additions 3,160,426
At 30 June 2023 3,642,860
As at 30 June 2024, the Company directly owned the following subsidiaries:
Name of company Country of incorporation Proportion of equity interest
SkinBiotix Limited United Kingdom 100% of ordinary shares
AxisBiotix Limited United Kingdom 100% of ordinary shares
MediBiotix Limited United Kingdom 100% of ordinary shares
CleanBiotix Limited United Kingdom 100% of ordinary shares
PharmaBiotix Limited United Kingdom 100% of ordinary shares
Dermatonics Limited United Kingdom 100% of ordinary shares
(acquired 25 January 2024)
15. Inventories
Group
2024 2023
£ £
Inventories 472,419 33,497
472,419 33,497
The cost of inventories recognised as an expense during the year was £525,631
(2023: £82,252).
The cost of inventories recognised as an expense includes £nil (2023:
£35,386) in respect of write-downs of inventory to net realisable value.
16. Trade and other receivables
Group Company
2024 2023 2024 2023
£ £ £ £
Current
Trade debtors 279,806 816 - -
Corporation tax - 182,545 68,425 182,545
Sales taxes recoverable - 108,720 24,348 96,240
Other receivables 61,348 12,693 11,589 12,891
Prepayments 56,934 70,656 53,117 40,026
398,088 375,430 157,479 331,702
Non-current
Amounts due from group undertakings - - 1,593,553 1,445,801
- - 1,593,553 1,445,801
The fair values of the Company's current trade and other receivables are
considered to equate to their carrying amounts. The maximum exposure to credit
risk for trade receivables is represented by their carrying amount. There are
no financial assets which are past due but not impaired. No current financial
assets are impaired.
The amounts owed by subsidiary undertakings include loans to AxisBiotix
Limited and Dermatonics for £1,976,870 (2023: £1,788,549) which was
discounted to £1,687,877 and then impaired by £7,608, in addition to earlier
years impairment of £86,716 to give a current value of £1,593,553 (2023:
£1,445,801) under IFRS 9, as set out in note 2. Although the loan has no
repayment terms, it is anticipated to be repaid in 2 years from the date of
these financial statements.
17. Trade and other payables
Group Company
2024 2023 2024 2023
£ £ £ £
Current
Trade creditors 281,062 194,274 119,116 176,176
Corporation Tax 27,257 - - -
Accruals 175,712 236,837 115,812 233,839
Sales taxes payable 23,943 505 - -
Other taxes 14,103 62,815 6,095 61,636
Other payables 3,740 4,265 2,304 3,906
525,817 498,696 243,327 475,557
Trade and other payables principally consist of amounts outstanding for trade
purchases and ongoing costs. They are non-interest bearing and are normally
settled on 30-day terms. The directors consider that the carrying value of
trade and other payables approximates to their fair value. All trade and other
payables are denominated in Sterling. The Company has financial risk
management policies in place to ensure that all payables are paid within the
credit timeframe and no interest has been charged by any suppliers as a result
of late payment of invoices during the period.
The fair value of trade and other payables approximates their current book
values.
18. Lease liabilities
Group and Company
2024 2023
£ £
Maturity analysis
Year 1 43,485 37,770
Year 2 41,254 39,029
Year 3 - 35,777
Year 4 - -
Year 5 - -
84,739 112,576
Less future interest charges (5,997) (11,930)
78,742 100,646
Analysed as
Current 38,881 31,045
Non-current 39,861 69,601
78,742 100,646
19. Convertible Loan Note
On 25(th) January 2024, the Company entered into a £5m convertible bond
facility with Macquarie Bank Limited and CLG Capital LLC, from which a tranche
of £1.6m was drawn down on that date in order to finance the upfront cash
consideration for the acquisition of Dermatonics Limited.
The issue price of each bond was 92% of the principal amount (£10,000 per
bond), with the conversion price set a the higher of (i) 93% of the 5-day
Volume Weighted Average Price of the Shares on one trading day selected by the
holder in its sole discretion out of the 5 trading days immediately preceding
the date of the conversion notice, and (ii) the minimum conversion price
(£0.0475 for the first tranche). The convertible bonds shall have a maturity
of two years from issuance.
In addition, under the first tranche 2,349,244 warrants were issued with an
exercise price of £0.204321 per share; the warrants expire 3 years after
issuance.
Group and Company
2024 2023
£ £
Proceeds of issue of convertible loan notes 1,600,000 -
Transaction costs (128,000) -
Net proceeds from issue of convertible loan notes 1,472,000 -
2024 2023
£ £
As at 1 July 2023 - -
Drawdown 1,600,000 -
Conversions into equity during the year (860,000)
Liability at 30 June 2024 740,000 -
The interest expensed for the year is calculated by applying an effective
interest rate of 1% per annum over the 3-month term SONIA rate and payable
quarterly in cash. The interest expense during the year was £29,054 (2023:
£0).
20. Business combinations
This note details acquisition transactions carried out in the current period.
For accounting policies see 'Business combinations and goodwill' in note 2.
The Group has developed a process to assist with the identification of the
fair values of the assets acquired and liabilities assumed, including the
separate identification of intangible assets in accordance with IFRS 3
'Business Combinations' as revised. This formal process is applied to each
acquisition and involves an assessment of the assets acquired and liabilities
assumed.
The consideration paid or payable in respect of acquisitions comprises amounts
paid on completion and deferred consideration. All consideration has been
allocated against the identified net assets, with the balance recorded as
goodwill. Transaction costs and expenses such as professional fees are charged
to the income statement. The acquisitions provide opportunities for further
development of the Group's activities and to create enhanced returns.
On 25 January 2024, SkinBioTherapeutics Plc acquired 100% of Dermatonics Ltd
for an initial sum of £1.75m plus £1.25m earn out over three years. £0.5m
earn out was paid on 20 May 2024, £0.5m is due within 1 year and £0.25m is
due after 1 year. This gives a total consideration £2.99m. The deferred
consideration is based on Dermatonics Ltd achieving an EBITDA target in the 12
months to 31 January 2025 and again in the 12 months to 31 January 2026.
Aggregate net assets at the date of acquisition:
£
Property, plant and equipment 9,367
Intangible assets 35,354
Cash and cash equivalent 147,222
Trade and other receivables 191,047
Inventories 535,341
Trade and other payables (411,577
Net assets 506,754
Deferred tax liability (150,624)
Fair Value of Assets at acquisition:
Trade Name 25,000
Customers 577,000
Goodwill 2,038,325
Total consideration 2,996,455
Goodwill of £2.04m (2023: nil) reflects certain intangibles that cannot be
individually separated and reliably measured due to their nature. These items
include value of expected synergies arising from business combination and the
experience and skill of the acquired workforce. The fair value of the acquired
trademark, brand and customer base was identified and included in intangible
assets detailed in note 13.
Acquisition costs of £318k (2023: nil) have been expensed through operating
costs, £226k of these relate to the acquisition with further expenses
relating to the convertible loan raise of £92k.
The acquisition of Dermatonics contributed £960k to the Group's revenue and
£124k to the Group's operating loss.
The estimated contribution from the Dermatonics acquisition to the results of
the Group for the year ended 30 June 2024 if such an acquisition had been made
at the start of the financial year are £1.9m to revenue and £202k to
operating losses.
21. Financial instruments
Maturity analysis
A summary table with maturity of financial assets and liabilities presented
below is used by management to manage liquidity risks. The amounts disclosed
in the following tables are the contractual undiscounted cash flows.
Undiscounted cash flows in respect of balances due within 12 months generally
equal their carrying amounts in the statement of financial position, as the
impact of discounting is not material.
The maturity analysis of financial instruments at 30 June 2024 is as follows:
Group
Carrying amount On demand and less than 3 months 3 to 12 months 1 to 2 years 2 to 5 years
Assets
Cash and cash equivalents 800,904 800,904 - - -
Trade and other receivables 341,155 341,155 - - -
1,142,059 1,142,059 - - -
Liabilities
Trade and other payables 460,743 460,743 - - -
Lease liabilities 84,739 10,871 32,614 41,254 -
Convertible loan note 740,000 - - 740,000 -
Deferred consideration 750,000 - 500,000 250,000 -
Deferred tax 150,624 - 150,624
2,186,106 471,614 532,614 1,031,254 150,624
Company
Carrying On demand and less than 3 months 3 to 12 months 1 to 2 years 2 to 5 years
amount
Assets
Cash and cash equivalents 524,854 524,854 - - -
Trade and other receivables 11,588 11,588 - - -
Intercompany debtors 1,593,553 1,539,553
2,129,995 2,129,995 - - -
Liabilities
Trade and other payables 237,231 237,231 - - -
Lease liabilities 84,739 10,871 32,614 41,254 -
Convertible loan note 740,000 - - 740,000 -
Deferred consideration 750,000 - 500,000 250,000 -
1,811,970 248,102 532,614 1,031,254 -
The maturity analysis of financial instruments at 30 June 2023 was as follows:
Group
Carrying amount On demand and less than 3 months 3 to 12 months 1 to 2 years 2 to 5 years
Assets
Cash and cash equivalents 1,311,834 1,311,834 - - -
Trade and other receivables 13,509 13,509 - - -
1,325,343 1,325,343 - - -
Liabilities
Trade and other payables 435,881 435,881 - - -
Lease liabilities 112,576 8,498 29,272 39,029 35,777
548,457 444,379 29,272 39,029 35,777
Company
Carrying amount On demand and less than 3 months 3 to 12 months 1 to 2 years 2 to 5 years
Assets
Cash and cash equivalents 1,124,961 1,124,961 - - -
Trade and other receivables 12,892 12,892 - - -
Intercompany debtors 1,445,801 1,445,801
2,583,654 2,583,654 - - -
Liabilities
Trade and other payables 413,923 413,923 - - -
Lease liabilities 112,576 8,498 29,272 39,029 35,777
526,499 422,421 29,272 39,029 35,777
22. Share capital
Company - Issued and fully paid
Number of shares Share Share
capital premium
As at 1 July 2022 156,780,236 1,567,802 8,758,037
As at 30 June 2023 173,138,854 1,731,389 10,947,874
Ordinary share issued at 1p per share 17,224,087 172,240 3,100,336
Costs related to shares issued - - (281,614)
Shares issued from convertible loan 11,892,282 118,923 741,077
As at 30 June 2024 202,255,223 2,022,552 14,507,673
On 22 November 2023 17,224,087 ordinary shares were issued by way of a placing
at a price of 19p per share to raise finance.
On 13 February 2024 487,659 ordinary shares were issued by way of conversion
at a price of 10.25p per share.
On 29 February 2024 836,825 ordinary shares were issued by way of conversion
at a price of 9.559935p per share.
On 14 March 2024 1,108,524 ordinary shares were issued by way of conversion at
a price of 7.2168p per share.
On 8 April 2024 7,583,958 ordinary shares were issued by way of conversion at
a price of 6.592863p per share.
On 30 May 2024 1,875,316 ordinary shares were issued by way of conversion at a
price of 7.998651p per share.
Share capital is the amount subscribed for shares at nominal value, issued and
fully paid.
Share premium is the amount subscribed for share capital in excess of nominal
value.
23. Share-based payments
Share options
The Group operates share-based payment arrangements to remunerate directors
and others providing similar services in the form of a share option scheme.
The exercise price of the option is normally equal to the market price of an
ordinary share in the Group at the date of grant. Each share option converts
into one ordinary share of the Group on exercise. No amounts are paid or
payable by the recipient on receipt of the option. The options carry neither
rights to dividends nor voting rights.
Movements in the number of share options outstanding and their related
weighted average exercise prices are as follows:
Group and company 2024 2023
Number of options Weighted average exercise price Number of options Weighted average exercise price
£ £
Outstanding at 1 July 16,729,343 0.11 17,379,343 0.12
Granted during the year - - - -
Forfeited/cancelled during the year - - (650,000) 0.38
Outstanding at 30 June 16,729,343 0.11 16,729,343 0.11
No share options were issued in the year. The charge recognised for the year
ended 30 June 2024 for share options is £0 (2023: £1,274). The following
assumptions were used in the calculations:
Deed pool 1 2 3a 3b 3c
Grant date 05/04/17 05/04/17 05/04/17 05/04/17 05/04/17
Exercise price 9p 9p 9p 9p 9p
Share price at grant date 9p 9p 9p 9p 9p
Risk-free rate 0.24% 0.24% 0.16% 0.16% 0.16%
Volatility 60% 60% 60% 60% 60%
Expected life 3.5 years 3.5 years 2.75 years 2.75 years 2.75 years
Fair value 2.58p 1.85p 2.30p 2.30p 2.30p
Deed pool 4 5 6 7 8
Grant date 18/04/19 18/04/19 18/04/19 03/03/20 08/04/20
Exercise price 18p 18p 18p 9.5p 9p
Share price at grant date 18p 18p 18p 9.5p 7p
Risk-free rate 0.75% 0.75% 0.75% 0.29% 0.12%
Volatility 60% 60% 60% 80% 80%
Expected life 3.5 years 3.5 years 3.5 years 0 years 2 years
Fair value 2.85p 3.99p 3.48p 9.50p 0.87p
The closing share price per share at 30 June 2024 was 8.75p (30 June 2023:
12.5p).
Expected volatility is based on a conservative 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.
24. Related party transactions
Group and company
Key management personnel compensation 2024 2023
£ £
Short-term employee benefits including social security costs 749,202 934,467
Post-employment benefits 12,110 13,218
Share-based payments - 11,375
761,312 959,060
Compensation figures above include directors and key management personnel.
Transactions with other related parties
During the period ended 30 June 2024, the Company was charged fees of £57,123
(2023: £55,440) by Invictus Management Ltd, a company in which Martin Hunt, a
director of the Company, is also a director. These fees relate to Martin
Hunt's consultancy services to the Company. As at 30 June 2024 £5,557 (2023:
£5,292) was outstanding.
During the period ended 30 June 2024, the Company was charged fees of £28,550
(2023: £28,096) by Biolatris Ltd, a company in which Dr Cathy Prescott, a
director of the Company, is also a director. These fees relate to Dr Cathy
Prescott's consultancy services to the Company. As at 30 June 2024 £nil
(2023: £nil) was outstanding.
25. Ultimate controlling party
No one shareholder has control of the Company.
26. Events after the reporting date
The Company has evaluated all events and transactions that occurred after 30
June 2024 up to the date of signing of the financial statements.
On 7 August 2024 the Company completed a fundraise through a placing raising
£1.56m of gross proceeds.
On 10 October 2024 SkinBioTherapeutics signed an agreement to acquire 100% of
Bio-Tech Solutions Limited for an enterprise value consideration of £1.25m.
The purchase price was settled in cash and financing of the transaction was
arranged through a combination of debt and equity with an existing long-term
shareholder in SkinBioTherapeutics plc.
No other material subsequent events have occurred that would require
adjustment to or disclosure in the financial statements.
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