TIDMOPTI
RNS Number : 1406O
OptiBiotix Health PLC
28 May 2020
28 May 2020
OptiBiotix Health plc
("OptiBiotix" or the "Company")
Final Results for 13 months to 31 December 2019
OptiBiotix Health plc (AIM: OPTI), a life sciences business
developing compounds to tackle obesity, high cholesterol and
diabetes, announces its audited results for the period ended 31
December 2019. During the period, the Company has met a significant
number of important objectives that continue to build value for
shareholders.
Operational highlights
-- The award of a CE mark and registration of SlimBiome (R) as a medical device
-- The recognition of OptiBiotix's cholesterol and blood
pressure reducing Lactobacillus plantarum LP(LDL) (R) probiotic
strain determined as Generally Recognized As Safe (GRAS). GRAS is a
United States Food and Drug Administration (FDA) designation and
extends the potential applications of LP(LDL) (R) to use as a
functional ingredient in food, dairy, and beverage products across
the USA
-- Pharmaceutical GMP manufacturer approval of LP(LDL) (R).
Pharmaceutical GMP proves that a drug substance (LP(LDL) (R)) is
produced consistently with pharmaceutical grade quality. GMP
process validation is required by customers and health authorities
around the globe to commercialise active ingredients as drugs. The
validation of LP(LDL) (R) pharmaceutical GMP manufacture is a
significant step in the development of LP(LDL) (R) as a
pharmaceutical drug product
-- The award of a licence from the Food Standards and Safety
Authority India (FSSAI) to OptiBiotix's manufacturing partner, Zeon
Life Sciences, to manufacture SlimBiome (R) and SlimBiome(R)
containing products in India
-- The appointment of EIWA Trading Company to import, market and
distribute OptiBiotix's cholesterol and blood pressure-reducing
probiotic strain Lactobacillus plantarum LP(LDL) (R) in Japan
-- The launch of LP(LDL) (R) in pharmacies of El Corte Inglés,
Spain's biggest department store in all of Spain's major cities,
with IENP under the "39ytú" brand
-- A license agreement with Kappa Bioscience AS ("Kappa") for
the use of Lactobacillus plantarum LP(LDL) (R) in a new application
area within cardiovascular health in 27 countries
-- Raising GBP1.025 million through the issue of convertible
loan notes for OptiBiotix to provide funding for a potential
initial public offering of wholly owned subsidiary ProBiotix
Health, of which OptiBiotix subscribed for GBP250,000
-- The appointment of Extensor and subsequent territory
extension to import, market and distribute GoFigure(R) products in
Poland, Ukraine, Estonia, Lithuania, Latvia, Kazakhstan,
Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Armenia,
Azerbaijan, Georgia, Belarus, Moldova and Russia. This is the start
of a strategy to take OptiBiotix's own label GoFigure(R) products
to international markets to build brand recognition, and create
demand for SlimBiome (R), the functional ingredient within
Gofigure(R) products
-- An agreement with Nutrilinea Srl to develop a food supplement
containing LP(LDL) (R) for the reduction of high blood pressure
(hypertension). Nutrilinea will cover the cost of all product
development, manufacturing and human studies in return for 12
months exclusivity for the European market. ProBiotix has
exclusivity for the UK and all other markets outside Europe
-- An agreement with Agropur to manufacture, supply and
distribute OptiBiotix's SlimBiome(R) weight management technology
in the USA, Canada and Mexico
-- An agreement with Maxum Foods Pty Ltd to manufacture, supply
and distribute OptiBiotix's SlimBiome(R) weight management
technology in Australia and New Zealand
-- The launch of two products formulated with SlimBiome(R) in
India: Metalite - a supplement to aid with effective weight
management and Metalite Pro - a high protein meal replacement (
www.metalitepro.com )
-- Winning the award for Weight Management Ingredient of the
Year: Asia, for SlimBiome(R), at the Vitafoods Asia trade
exhibition tradeshow in Singapore. The award is given to the
product identified by a panel of scientific, regulatory and
industry experts demonstrating leading edge research and innovation
in the weight management market
Post-period end highlights
-- The launch of a product range containing OptiBiotix's
SlimBiome(R) proprietary weight management technology under the
SlimBiome(R) brand with Holland & Barrett
-- The launch of a food supplement containing LP(LDL) (R) by
ALFASIGMA, the first of its kind nutraceutical probiotic in Italy
for cholesterol reduction
-- An agreement with Granja Pocha S.A. ("Granja Pocha") for the
inclusion of LP(LDL) (R) into a functional yogurt product in
Uruguay, South America
-- Successful completion of a three month study of 40 patients
for a new food supplement containing LP(LDL) (R) (CholBiome BP)
carried out by the University of Pavia, Italy and showed
statistically significant reductions in both systolic, diastolic
blood pressure levels, and cholesterol levels
-- An agreement with OptiPharm, whose flagship brand , Optislim
, is Australia's leading weight management brand, for the use
OptiBiome(R) weight management ingredient in over 20 countries
including Australia, parts of Asia, New Zealand, Middle East, Gulf
States and North America
-- The listing of SlimBiome (R) containing products in Walmart and Costco in the USA and Canada
-- The signing of a deal with Pierce Asia taking OptiBiotix products to China
Stephen O'Hara, CEO of OptiBiotix, commented: "OptiBiotix has
made significant progress in the last 12 months growing sales
across all divisions, signing 24 new agreements and extending our
reach into 46 countries. OptiBiotix's products are now being
commercialised as food ingredients, medical devices, drug
biotherapeutics and supplements in more and more countries across
the world helping to build brand presence.
"The progress made in 2019 has continued into the first three
months of 2020 with sales of LP(LDL) (R) and SlimBiome(R) as
ingredient or final product increasing by 928% when compared to the
same period last year and extending geographic reach and brand
presence into 119 countries.
"Despite challenges facing the global economy caused by the
Covid-19 pandemic, we remain focused on the next phase of our
strategy, driving our divisions to profitability in the current
year. This is not just about continuing to grow sales, but also
about managing costs, renegotiating contracts as volumes increase,
reducing the cost of goods to OptiBiotix, and focusing on higher
margin products.
"As part of our focus on managing costs we intend to transition
our agreement with our financial adviser Goetz from a fixed monthly
payment to an ad hoc project by project basis at the end of May
2020. This is an important part of building a profitable and
sustainable business for our shareholders in a market forecast to
become one of the world's fastest growth areas .
"Outside the OptiBiotix Board, Stephen Prescott, CEO of
ProBiotix Health Ltd will leave the Company by mutual consent at
the end of May 2020. On behalf of the Board, I would like to thank
Steve for all his work and wish him all the best in the
future."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For enquires:
OptiBiotix Health plc www.optibiotix.com
Stephen O'Hara, Chief Executive Contact via Walbrook
below
Cairn Financial Advisers LLP (NOMAD)
Liam Murray / Jo Turner / Ludo Lazzaretti Tel: 020 7213 0880
finnCap (Broker)
Geoff Nash/ Kate Bannatyne (Corporate Finance)
Camille Gochez (Corporate Broking) Tel: 020 7220 0500
Walbrook PR Ltd Tel: 020 7933 8780 or optibiotix@walbrookpr.com
Anna Dunphy Mob: 07876 741 001
About OptiBiotix - www.optibiotix.com
OptiBiotix Health plc (AIM: OPTI), which was formed in March
2012, brings science to the development of compounds which modify
the human microbiome - the collective genome of the microbes in the
body - in order to prevent and manage human disease and promote
wellness.
OptiBiotix has an extensive R&D program working with leading
academics in the development of microbial strains, compounds, and
formulations which are used as active ingredients and supplements.
More than twenty international food and healthcare supplement
companies have signed agreements with OptiBiotix to incorporate
their human microbiome modulators into a wide range of food
products and drinks.
OptiBiotix is also developing its own range of consumer
supplements and health products. The Company's current areas of
focus include obesity, cardiovascular health, and diabetes.
Chairman's Report
I am pleased to report a period of very significant progress,
during which OptiBiotix has achieved a real step change in its
planned transition from a research and development specialist into
a market-leading and profitable commercial operation. The business
is now growing revenues and achieving global reach and recognition
for its unique technologies and products. We have grown sales
across all divisions, signed 24 new agreements extending our reach
into 46 countries, and significantly strengthened our management
team, all while maintaining cost control and a strong balance
sheet.
Strategy
Optibiotix Health is a life sciences business founded on the
development of compounds to tackle obesity, cardiovascular disease
and diabetes: all conditions that are affecting growing numbers of
people in all parts of the world.
Our growth strategy is to secure multiple deals with multiple
partners - manufacturers, formulators and distributors - so that we
have control of the complete value chain for all the compounds we
develop, and can extract value for our shareholders at each
stage.
We also seek to reduce risk by reaching agreements with
manufacturers in a range of different countries: hence our
SlimBiome(R) compound is produced by separate companies in the UK,
Continental Europe, USA, Australia and India, to which we will soon
add a manufacturer in China.
Formulators apply our compounds to a range of different uses;
the common factor is that our patented and trademarked products
such as LP(LDL) (R) and SlimBiome (R) act as the 'Intel' inside a
wide and growing range of food, beverage, supplement, and medical
products around the world.
This careful, low-risk approach is delivering on exactly the
schedule envisaged when the Company began the process of
commercialisation in 2017. This saw initial deals being secured
that year, a broadening of reach in 2018, and the build-up of
revenues from contracts in 2019. We now have a secure platform to
deliver strong sales growth and with the aim of achieving
profitability in 2020.
Business development
Among the many positive developments during the period, which
the Chief Executive discusses more fully in his report, I would
particularly like to highlight the achievement of US Food &
Drug Administration GRAS status for LP(LDL) (R), and its
pharmaceutical Good Manufacturing Practice designation. Together
these achievements open the way for LP(LDL) (R) to be used as a
functional ingredient in a range of food, dairy and beverage
products across the USA, and pave the way for its use as an active
ingredient in pharmaceutical products. Similarly, significant
potential should be unlocked by the award in Europe of a CE mark
for SlimBiome(R) and its registration as a medical device.
I am also pleased that the effectiveness of our products
continues to gain recognition through the achievement of major
industry awards, with the naming of SlimBiome(R) as Weight
Management Ingredient of the Year: Asia at Vitafoods in Singapore
constituting a particular highlight of the year.
Board and management
This has been my second year as Chairman and it has been a real
pleasure to see the business growing and maturing in line with all
my expectations when I joined the Board at the beginning of
2018.
As announced in the last annual report, Dr Fred Narbel joined
the Company on 1 March 2019 as Managing Director of our integrated
Prebiotics division containing our SweetBiotix(R), OptiBiotic(R)
and microbiome modulating technology platforms. I believe we now
have an excellent mix of executive talent with the scientific and
commercial expertise of our founder and CEO Stephen O'Hara, the
proven management skills and extensive industry contacts of Dr Fred
Narbel; and the scientific leadership of our Research &
Development Director Dr Sofia Kolyda. These are complemented by the
expertise of my non-executive colleagues Peter Wennström and Sean
Christie, with Peter bringing us more than 25 years of experience
in international brand management and specialist consultancy, and
Sean possessing extensive experience of finance, corporate
governance, mergers and acquisitions.
Outside the main Board, Stephen Prescott joined us as CEO of our
wholly-owned subsidiary ProBiotix Health Ltd in May 2019, while
Steve Riley continues as head of our Consumer Health division, with
responsibility for our Online store that makes our unique products
available direct to consumers.
During the period Fred Narbel, Steve Prescott and Steve Riley
were given full P&L responsibility for their respective
divisions, charged with growing sales while managing costs.
Outlook
As shown in the recent trading update (RNS: 18 May 2020) we
continue to grow our top line with strong commercial progress in
the first three months of 2020 increasing sales of LPLDL(R) and
SlimBiome(R) as ingredient or final product by 928% when compared
to the same period last year and extending geographic reach and
brand presence into 119 countries. As we benefit from increasing
revenues from established deals, and new agreements begin to
deliver sales we anticipate further revenue growth in 2020.
Encouraging developments in our new financial year include the
launch of SlimBiome(R) with Holland & Barrett in the UK, the
launch of products with Walmart in the US, and a deal to enter the
Chinese market. AlfaSigma in Italy and Akum in India are also both
commercialising products in their home markets that will contribute
to our sales growth during the year.
The renegotiation of our contract with Sacco S.r.l. in March
2020, extending this until 2023 and changing it from a profit
sharing to a manufacturing and supply basis, is illustrative of the
increasing leverage we can exercise as sales volumes increase, and
will capture a greater share of value for our investors. This is an
important precedent that we expect to follow in other contract
renegotiations during the year.
We continue to explore the potential for a dual NASDAQ listing
in the USA to capitalise on growing North American consumer and
investor interest in the microbiome, broaden our investor base and
reduce the share price volatility caused by the low liquidity
associated with our current AIM listing in the UK.
Despite the pressures on the global economy caused by the
Covid-19 pandemic, we continue to look to achieve revenue growth
and profitability in all three of our divisions in the current
year, and remain confident in our ability to deliver growing value
for our shareholders in the longer term.
N Davidson
Chairman
27 May 2020
Chief Executive Officer's Report
OptiBiotix offers investors a unique opportunity to participate
in the growth potential afforded by one the most progressive and
exciting areas of biotechnological research: the modulation of the
human microbiome. Everything we do involves the application of
science to improve human health, developing pharmaceutical grade
solutions to deliver food and dietary supplements of proven
effectiveness; these are protected by our extensive international
portfolio of patents and trademarks. Our low risk business model
involves working with a range of local partners who are recognised
and respected leaders in their fields to gain access to
fast-growing markets around the world, developing a truly global
reach that is delivering strong sales growth.
Strategic development
As the Chairman has noted, our strategy is designed to maximise
the income potential of each of our products while limiting
investment risk, and managing costs. We focus on large markets,
valued at GBP100m or more, that are growing rapidly, showing a
compound annual growth rate (CAGR) of 10 per cent or more, and
where there is a large unmet demand. We aim to satisfy this demand
by developing food ingredients, supplements and pharmaceutical
products with a range of appropriate partners in a wide and growing
range of territories. Our partners vary in size from $1bn turnover
corporations to small, fast-growing companies, but all share an
established industry reputation and an effective distribution
network within their target market.
Our commercial strategy involves completing deals across
multiple levels of the value chain, starting with manufacturing
agreements such as that signed with Sacco S.r.l. in Italy in 2017
to manufacture LP(LDL) (R); this was then complemented by royalty
bearing licence deals with formulation and distribution partners
such as Nutrilinea, and final distribution partners like
AlfaSigma.
While this strategy takes longer to develop than concluding a
single licence deal, and requires close collaboration with
partners, the multi-channel approach enables OptiBiotix to maximise
the income potential of each product, whilst limiting the risk
related to any individual deal.
This allows OptiBiotix to operate on a very asset-light
infrastructure with manufacturing, product regulatory approvals,
and sales and marketing infrastructure all funded by our partners
so that licence and royalty fees are largely cost-free and flow
straight to our bottom line. This is a low risk, low cost approach
to accessing multiple consumer healthcare and pharmaceutical
markets around the world and has the potential to cumulatively
generate substantial revenues and profitability in the years
ahead.
Key to this strategy is working with the right commercial
partners and ensuring that their sales and marketing teams are
provided with the supporting science and training to highlight the
benefits of our technology in order to maximise sales growth. As we
extend our reach into new application areas, create new products,
and expand into new territories, the scale of our opportunity
enlarges.
The next phase of our strategy, on which we have now embarked,
is to drive the business to profitability. This is not just about
continuing to grow sales, but also about managing costs,
renegotiating contracts as volumes increase, reducing the cost of
goods to OptiBiotix, and focusing on higher margin products. This
will be an important part of building a profitable and sustainable
business.
The renegotiation of our terms of trade in an extended contract
with Sacco S.r.l., announced in March 2020, provides an excellent
illustration of this approach. Our original agreement with them in
2017 was a profit-sharing deal which encouraged and rewarded the
manufacturer to use their industry network to promote and sell our
products. This is a very cost-effective approach in the early days
of building a business, since the manufacturer effectively becomes
our global sales team without any cost to us, as they carry out
marketing activities, promotion at exhibitions, application
development and so forth.
However, as our sales volumes increase our leverage improves,
allowing us to renegotiate our contract from profit share to
manufacture and supply - where we buy the product and then sell on
to our other partners. The advantages of this are two-fold: we can
reduce our cost of goods from the manufacturer as volumes increase,
and we can also exert increased leverage on our formulation and
distribution partners as we become the direct sales link to them.
Whist this may initially increase operating costs whilst we build
stock levels, particularly to support retail partners who deliver
large volume sales and require a responsive supply chain, this
should ultimately deliver greater profitability.
Our contracts are typically of one to three years' duration and
we expect to renegotiate a number of current agreements from a
profit sharing to a manufacturing and supply basis during the
current year, allowing us to capture more of the value chain for
our shareholders by increasing control and profitability.
The historic uneven weighting of revenue towards the second half
of our financial year will be smoothed out as more contracts are
renewed on these terms.
A further benefit expected to flow through to the bottom line is
that our research and development costs are set to fall as a
proportion of sales now that clinical studies to confirm the
efficacy of SlimBiome(R) and LP(LDL) (R) are essentially complete.
Intellectual property expenditure will also reduce now that patent
and trademark registration in most key territories has been
completed, and core patents have been granted. As part of this
process whilst we will continue to register core patents in all
major territories (typically US, Europe, Canada, Japan, Australia,
India) we will limit supporting patents to Europe and the USA. This
should reduce IP costs whilst continuing to protect our commercial
interests.
Finally, we announced the appointment of Goetz Partner
Securities ("Goetz") in June 2019 as financial advisers to the
Company with the aim of improving institutional and family funds
buy side access from within Europe. As part of our focus on
managing costs we intend to transition our agreement with Goetz
from a fixed monthly payment to an ad hoc project by project basis
at the end of May 2020.
Operational highlights
During the period we have met a significant number of important
objectives that continue to build value for our shareholders. Key
achievements of the period include:
-- The award of a CE mark and registration of SlimBiome (R) as a medical device
-- The recognition of OptiBiotix's cholesterol and blood
pressure reducing Lactobacillus plantarum LP(LDL) (R) probiotic
strain determined as Generally Recognized As Safe (GRAS). GRAS is a
United States Food and Drug Administration (FDA) designation and
extends the potential applications of LP(LDL) (R) to use as a
functional ingredient in food, dairy, and beverage products across
the USA
-- Pharmaceutical GMP manufacturer approval of LP(LDL) (R).
Pharmaceutical GMP proves that a drug substance (LP(LDL) (R)) is
produced consistently with pharmaceutical grade quality. GMP
process validation is required by customers and health authorities
around the globe to commercialise active ingredients as drugs. The
validation of LP(LDL) (R) pharmaceutical GMP manufacture is a
significant step in the development of LP(LDL) (R) as a
pharmaceutical drug product
-- The award of a licence from the Food Standards and Safety
Authority India (FSSAI) to OptiBiotix's manufacturing partner, Zeon
Life Sciences, to manufacture SlimBiome (R) and SlimBiome(R)
containing products in India
-- The appointment of EIWA Trading Company to import, market and
distribute OptiBiotix's cholesterol and blood pressure-reducing
probiotic strain Lactobacillus plantarum LP(LDL) (R) in Japan
-- The launch of LP(LDL) (R) in pharmacies of El Corte Inglés,
Spain's biggest department store in all of Spain's major cities,
with IENP under the "39ytú" brand
-- A license agreement with Kappa Bioscience AS ("Kappa") for
the use of Lactobacillus plantarum LP(LDL) (R) in a new application
area within cardiovascular health in 27 countries
-- The raise of GBP1.025 million through the issue of
convertible loan notes for OptiBiotix to provide funding for a
potential initial public offering of wholly owned subsidiary
ProBiotix Health, of which OptiBiotix subscribed for GBP250,000
-- The appointment of Extensor and subsequent territory
extension to import, market and distribute GoFigure(R) products in
Poland, Ukraine, Estonia, Lithuania, Latvia, Kazakhstan,
Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Armenia,
Azerbaijan, Georgia, Belarus, Moldova and Russia. This is the start
of a strategy to take OptiBiotix's own label GoFigure(R) products
to international markets to build brand recognition, and create
demand for SlimBiome (R), the functional ingredient within
Gofigure(R) products
-- An agreement with Nutrilinea Srl to develop a food supplement
containing LP(LDL) (R) for the reduction of high blood pressure
(hypertension). Nutrilinea will cover the cost of all product
development, manufacturing and human studies in return for 12
months exclusivity for the European market. ProBiotix has
exclusivity for the UK and all other markets outside Europe
-- An agreement with Agropur to manufacture, supply and
distribute OptiBiotix's SlimBiome(R) weight management technology
in the USA, Canada and Mexico
-- An agreement with Maxum Foods Pty Ltd to manufacture, supply
and distribute OptiBiotix's SlimBiome(R) weight management
technology in Australia and New Zealand
-- The launch of two products formulated with SlimBiome(R) in
India: Metalite - a supplement to aid with effective weight
management and Metalite Pro - a high protein meal replacement (
www.metalitepro.com )
-- Winning the award for Weight Management Ingredient of the
Year: Asia, for SlimBiome(R), at the Vitafoods Asia trade
exhibition tradeshow in Singapore. The award is given to the
product identified by a panel of scientific, regulatory and
industry experts demonstrating leading edge research and innovation
in the weight management market
Post-period end highlights
-- The launch of a product range containing OptiBiotix's
SlimBiome(R) proprietary weight management technology under the
SlimBiome(R) brand with Holland & Barrett
-- The launch of a food supplement containing LP(LDL) (R) by
ALFASIGMA, the first of its kind nutraceutical probiotic in Italy
for cholesterol reduction
-- An agreement with Granja Pocha S.A. ("Granja Pocha") for the
inclusion of LP(LDL) (R) into a functional yogurt product in
Uruguay, South America
-- Successful completion of a three month study of 40 patients
for a new food supplement containing LP(LDL) (R) (CholBiome BP)
carried out by the University of Pavia, Italy and showed
statistically significant reductions in both systolic, diastolic
blood pressure levels, and cholesterol levels
-- An agreement with OptiPharm, whose flagship brand , Optislim
, is Australia's leading weight management brand, for the use
OptiBiome(R) weight management ingredient in over 20 countries
including Australia, parts of Asia, New Zealand, Middle East, Gulf
States and North America
-- The listing of SlimBiome (R) containing products in Walmart and Costco in the USA and Canada
-- The signing of a deal with Pierce Asia taking OptiBiotix products to China
Regulatory approvals
In December 2019 we were delighted to achieve a CE mark and
registration of SlimBiome(R) as a medical device by the European
regulatory authorities. This was supported by independent human
studies at a number of universities which demonstrated that, when
compared to a control group, people who took SlimBiome(R) feel
fuller and are less hungry; experience fewer food cravings; and
change their food choice to eat fewer sweet and fatty foods. This
registration unlocks significant further potential for the
application of SlimBiome(R) beyond its current use as a functional
food ingredient with the formulation and sachet presentation the
basis for Holland and Barrett's launch of products in 2020.
Previously, in April 2019, our partner Zeon Life Sciences was
awarded a licence by the Food Standards and Safety Authority India
(FSSAI) to manufacture SlimBiome(R) and SlimBiome(R) containing
products in India.
We have also made very important strides in the official
recognition of our cholesterol and blood pressure reducing
Lactobacillus plantarum LP(LDL) (R) probiotic strain. This was
Generally Recognized As Safe (GRAS) by the United States Food and
Drug Administration (FDA) in February 2019. Securing this GRAS
designation extended the potential applications of LP(LDL) (R) to
its use as a functional ingredient in food, dairy, and beverage
products across the USA.
In October 2019 we also secured from the FDA Pharmaceutical Good
Manufacturing Practice (GMP) approval of LP(LDL) (R), which is
important in proving that LP(LDL) (R) is produced consistently to
pharmaceutical grade quality. GMP process validation is required by
customers and health authorities around the world to commercialise
active ingredients as drugs. The validation of LP(LDL) (R)
pharmaceutical GMP manufacture is a significant step in the
development of LP(LDL) (R) as a pharmaceutical drug product.
New partnerships and product launches
In February 2019 we appointed EIWA Trading Company to import,
market and distribute OptiBiotix's cholesterol and blood
pressure-reducing probiotic strain Lactobacillus plantarum LP(LDL)
(R) in Japan.
In May 2019 we reached an agreement with the Italy-based
Nutrilinea Srl to develop a food supplement containing LP(LDL) (R)
for the reduction of high blood pressure (hypertension). Nutrilinea
covered the cost of all product development, manufacturing and
human studies in return for 12 months exclusivity within the
Continental European market. ProBiotix retains exclusivity for the
UK and all other markets outside Europe. Following successful human
studies, OptiBiotix intends to launch a blood pressure product
CholBiomeBP in 2020.
In the same month we signed an agreement with Instituto Español
de Nutrición Personalizada, S.A. (IENP) for the use of LP(LDL) (R)
in personalised food supplements in Spain. IENP has already
launched LP(LDL) (R) under the '39ytú' brand in pharmacies of El
Corte Inglés, Spain's largest department store chain with outlets
in all the country's major cities.
In June 2019 we signed an agreement with the dairy co-operative
Agropur to manufacture, supply and distribute OptiBiotix's
SlimBiome(R) weight management technology in the USA, Canada and
Mexico.
In the same month we appointed the well-known Polish brand
Extensor to import, market and distribute GoFigure(R) weight
management products directly to consumers in Poland, and
subsequently agreed a territory extension that also covers Ukraine,
Estonia, Lithuania, Latvia, Kazakhstan, Kyrgyzstan, Tajikistan,
Uzbekistan, Turkmenistan, Armenia, Azerbaijan, Georgia, Belarus,
Moldova and Russia. This is the start of a strategy to take
OptiBiotix's own label GoFigure(R) products to international
markets, build brand recognition, and create demand for
SlimBiome(R), the functional ingredient within Gofigure(R)
products.
In July 2019 we signed a licence agreement with Kappa Bioscience
AS for the use of Lactobacillus plantarum LP(LDL) (R) in a new
application area within cardiovascular health in 27 countries.
In August 2019 we concluded an agreement with the Australian
dairy ingredients company Maxum Foods Pty Ltd to manufacture,
supply and distribute OptiBiotix's SlimBiome(R) weight management
technology in Australia and New Zealand.
In December 2019 we launched two new products formulated with
SlimBiome(R) to the Indian market in partnership with Anthem
BioPharma and Zeon Life Sciences: Metalite, a supplement to aid
with effective weight management, and Metalite Pro, a high protein
meal replacement ( www.metalitepro.com ).
Awards
We were delighted to win the award for Weight Management
Ingredient of the Year: Asia for SlimBiome(R) at the Vitafoods Asia
trade exhibition tradeshow in Singapore in September 2019. The
award is given to the product identified by a panel of scientific,
regulatory and industry experts demonstrating leading edge research
and innovation in the weight management market. This follows on
from our Weight Management Ingredient of the Year awards for
SlimBiome(R) in Europe (2018) and 2017 (UK), demonstrating a high
level of industry recognition across global markets. The Company
also received The Grocer New Product Award 2019, in the breakfast
category, for its GoFigure Matcha Tea & Pistachio Muesli. This
is a major food industry award and shows how SlimBiome(R) can
effectively be incorporated into everyday breakfast products to
support healthy weight management.
Results
As announced on 23 March, we changed our financial year-end to
31 December to align our reporting with that of similar companies
on other international exchanges. We are therefore reporting
results for the 13 months to 31 December 2019 (prior year: 12
months to 30 November 2018).
Total sales for the year were GBP744,883 (2018: GBP541,614) with
other income of GBP617,000, including, inter alia, income resulting
from the partial disposal of SkinBioTherapeutics plc shares as
previously reported. The sales figure is less than the GBP808k
reported in the unaudited figures (RNS: January 17 2020), as it no
longer includes approximately GBP60,000 worth of LPLDL(R) which was
invoiced and part paid in 2019 which under IFRS 15, the new
international reporting standard, will now be accounted for in the
2020 accounts as delivery did not take place until 2020.
In line with previous years, the majority of income was
generated in the second half of the year (H1 2019: GBP148,818). We
expect this trend to continue in 2020 with a gradual smoothing in
this second half as income from ingredient, white label and own
label products sold through retailers or direct to consumers
online, provide more evenly distributed income throughout the
year.
Administrative expenses for the 13 months to end of December
2019 were GBP2,559,440 an increase of GBP709,037 from the
GBP1,850,403 in the 12 months to November 2018. A large part of
this increase (GBP261,904) arises from the combination of one-off
regulatory costs (GBP185,447) and the increase in consultancy costs
(GBP76,457) from achieving GRAS and GMP manufacture for LPLDL(R).
We calculate approximately GBP154,200 of expenses arises from the
change in accounting period creating an additional month in this
year's accounts. The appointment of Dr Fred Narbel and Steve
Prescott contributed to an increase in Directors fees of
GBP290,665. Director costs include the remuneration costs of
Christina Wood who left in August 2019 but was remunerated to the
end of November as part of her contractual 3 month notice period.
Within 2019 administration expenses there were GBP355,304 of
non-cash expenses representing depreciation, amortisation and share
based payment devaluations, an increase of GBP85,174 on 2018
(GBP270,130).
The share of loss from OptiBiotix's associate,
SkinBiotherapeutics plc (SBTX), was GBP296,344. This is an
accounting adjustment and has no impact on the Group's cash.
At 31 December 2019, the Group had GBP455,608 cash in the bank.
Once R&D tax credits (GBP 190,435), and recoverable VAT
(GBP59,345) are added back, the balance was GBP705,388. On 17 April
2020, post accounting period, the Group raised GBP1.0 million
through the issue of 2,500,000 new ordinary shares. With this
funding and growing revenues, t he cash position remains strong and
sufficient to cover the delivery of existing commercial plans.
Management
We significantly strengthened our management team during the
year with the appointment in March 2019 of Dr Fred Narbel as
Managing Director of our Prebiotics division . Fred Narbel was
formerly Vice President of Sales for Nutrition Solutions at
Agropur, a major North American dairy company with sales of $6.7
billion in 2018. He has brought us extensive experience of selling
speciality food ingredients in international markets, a wide
network of contacts in the high value speciality food ingredients
industry, and a strong track record of rapidly growing sales.
Outside the main Board, Stephen Prescott joined as Chief
Executive Officer of OptiBiotix's wholly owned subsidiary,
ProBiotix Health Ltd in May 2019. Steve will step down from the
Board of ProBiotix Health Ltd and leave the Company by mutual
consent at the end of May 2020. Mikkel Hvid-Hansen, who joined
ProBiotix as European Sales Director in February 2020 will take on
an extended role as Commercial Director with Stephen O'Hara acting
as CEO of ProBiotix Health Ltd.
We anticipate further additions and changes to the management
team and the Board of both OptiBiotix and ProBiotix Health in line
with the growth aspirations of both companies and the aim of
transitioning to a profitable and sustainable business.
Prospects
Despite the global challenges with Coronavirus we have continued
to extend our global reach in 2020 signing 14 agreements for the
period to date. These include 10 for SlimBiome(R) and four for
LPLDL(R). These agreements aim to extend the Company's geographic
reach into 119 countries.
Significant developments in the year to date include t he launch
of a product range containing OptiBiotix's SlimBiome(R) proprietary
weight management technology under the SlimBiome(R) brand with
Holland & Barrett in the UK. Sales of the first products
launched have exceeded our expectations and we are working with our
partners to extend the product range.
In Italy, our partner AlfaSigma has launched a food supplement
containing LP(LDL) (R) which is the first nutraceutical probiotic
for cholesterol reduction to reach the market there.
Also in Italy, the University of Pavia has successfully
completed a three month study of 40 patients for a new food
supplement containing LP(LDL) (R) (CholBiome BP) which showed
statistically significant reductions in both systolic and diastolic
blood pressure levels, and in cholesterol levels, for the
participants.
In March 2020 we announced a new global manufacturing and supply
agreement for LP(LDL) (R) with Italy-based Sacco S.r.l., extending
our deal with them until 2023 and changing our original
profit-sharing terms to allow us to benefit from lower prices for
LP(LDL) (R) as sales increase, and to receive commission from Sacco
following successful sales of LP(LDL) (R) to dairy customers.
We have signed a new agreement with Granja Pocha S.A. for the
inclusion of LP(LDL) (R) in a functional yogurt product in Uruguay.
The use of LP(LDL) (R) in functional foods is an important
precedent which has the potential for replication in other
territories.
Having achieved FDA GRAS and GMP manufacture standards, we hope
to build on this proof of concept by Granja Pocha to further extend
the application of LP(LDL) (R) from its use as a supplement into
use as a food and dairy ingredient in 2020.
We have concluded an agreement with OptiPharm (whose flagship
brand, Optislim, is Australia's leading weight management brand)
for the use of our OptiBiome(R) weight management ingredient in
over 20 countries including Australia, New Zealand, North America,
parts of Asia, Gulf states and the wider Middle East.
In May 2020 OptiBiotix Health PLC announced that it had entered
into a three-year distribution agreement with the Asian focused B2B
product developer and distributor Pierce Group, granting it
exclusive rights to import and commercialise OptiBiotix's
SlimBiome(R) weight management ingredient and LP(LDL) (R), our
cholesterol-lowering probiotic, in China and Hong Kong.
We also announced in May 2020 a non-exclusive licence agreement
for our SlimBiome(R) trademark with Smart For Life, Inc. and the
related launch of cookies containing OptiBiotix's SlimBiome(R)
proprietary weight management technology in the USA and Canada; the
cookies will be sold through Walmart in the USA, Costco in Canada,
and online.
Our commercial plans for 2020 are centred on extending our reach
into new application areas, including hypertension, immune and
cognitive health, continuing to enter new territories, and
supporting established partners like Agropur in the USA, AlfaSigma
in Italy, and Akums in India, in the commercialisation of products
in their territories.
Our own Online store - https://optibiotix.online - is offering a
growing range of meal replacements, snacks and supplements
including porridge, muesli, flapjacks and gummies containing
SlimBiome (R) to aid weight management and CholBiome(R) probiotic
supplements containing LP(LDL) (R) to reduce cholesterol. These
products act as a shop window for partners and to test new products
before expanding into other territories and presenting to
retailers. This approach has led to successful product launches in
Holland and Barrett, and paved the way for product acceptance in
Walmart, and Costco. We cannot predict the future in these
difficult times but hope this approach will lead to more products
being launched online, and partners looking to extend their product
ranges in the year ahead.
The recent trading update (RNS: 18 May 2020) shows strong
commercial progress in the three months of this year with
OptiBiotix extending its geographic reach and brand presence into
119 countries. With more agreements generating revenues, and a
greater number of deals generating income in the first year of
agreement, we have seen a large increase in revenues (928%) when
compared to the same period last year. We anticipate further
revenue growth in 2020 as existing deals contribute to full year
revenues, we extend the application of our products into new areas,
and continue to execute deals with new partners.
Investor and consumer interest in the human microbiome is
growing steadily, presenting us with a market opportunity that is
large and expanding. We will continue to devote our efforts to
increasing our range of applications, products and territories in
order to capitalise on this opportunity. Our strategy of developing
microbiome products with a strong scientific and clinical evidence
base with key opinion leader support has provided clear product
differentiation and stimulated high commercial interest. We look
forward to converting this interest into agreements in new
territories and application areas in the months ahead to continue
to grow revenues in this new and exciting area of science which has
the potential to revolutionise the future of healthcare.
Stephen O'Hara
Chief Executive
27 May 2020
Consolidated Statement of Comprehensive Income
Notes Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Revenue from contracts with
customers 744,883 514,289
Cost of sales (352,080) (162,782)
-------------- --------------
Gross Profit 392,803 351,507
Share based payments 137,320 128,222
Depreciation and amortisation 217,904 141,908
Other administrative costs 2,204,216 1,580,273
Total administrative expenses 6 (2,559,440) (1,850,403)
-------------- --------------
Operating loss (2,166,637) (1,498,896)
Finance cost 5 (44,467) -
Finance income 5 111 169
-------------- --------------
(2,210,993) 169
Share of loss from associate 12 (296,344) (448,223)
Profit on disposal of investments 12 265,481 -
-------------- --------------
Loss before tax (2,241,856) (1,946,950)
Corporation tax 7 123,468 54,371
-------------- --------------
Loss for the period (2,118,388) (1,892,579)
Other comprehensive income - -
-------------- --------------
Total comprehensive income
for the period (2,118,388) (1,892,579)
Total comprehensive income
attributable to:
Owners of the company (2,117,273) (1,919,276)
Non-controlling interests (1,115) 26,697
-------------- --------------
(2,118,388) (1,892,579)
Earnings per share from continued
operations
Basic profit/(loss) per share
- pence 8 (2.49)p (2.30)p
Diluted profit/(loss) per
share - pence (2.49)p (2.30)p
Consolidated Statement of Financial Position
Notes As at As at
31 December 30 November
2019 2018
ASSETS GBP GBP
Non-current assets
Intangibles 10 2,632,778 2,253,089
Property, plant & equipment 11 393 3,143
Investments 12 3,092,807 3,740,799
-------------- --------------
5,725,978 5,997,031
-------------- --------------
CURRENT ASSETS
Inventories 13 62,761 30,433
Trade and other receivables 14 607,308 373,803
Current tax asset 7 190,435 303,952
Cash and cash equivalents 15 455,608 1,324,307
-------------- --------------
1,316,112 2,032,495
-------------- --------------
TOTAL ASSETS 7,042,090 8,029,526
EQUITY
Shareholders' Equity
Called up share capital 16 1,708,811 1,694,488
Share premium 17 1,646,873 1,603,904
Share based payment reserve 17 740,059 602,739
Merger relief reserve 17 1,500,000 1,500,000
Convertible debt - reserve 17 92,712 -
Retained Earnings 17 (492,925) 1,624,348
Non-controlling interest 17 35,782 36,897
-------------- --------------
Total Equity 5,231,312 7,062,376
-------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 18 561,623 520,989
-------------- --------------
561,623 520,989
-------------- --------------
Non - current liabilities
Deferred tax liability 19 522,350 446,161
Convertible loan notes 20 726,805 -
-------------- --------------
1,249,155 446,161
-------------- --------------
TOTAL LIABILITIES 1,810,778 967,150
-------------- --------------
TOTAL EQUITY AND LIABILITIES 7,042,090 8,029,526
Consolidated Statement of Changes in Equity
Share-based
Called Convertible Merger Payment
up Retained Share Debt Relief reserve Total
Share Earnings Premium Non-Controlling Reserve Reserve equity
capital interest
GBP GBP GBP GBP GBP GBP GBP GBP
Balance at
30 November
2017 1,586,628 (2,805,347) 6,279,718 10,200 - 1,500,000 474,517 7,045,716
Loss for
the year - (1,919,276) - 26,697 - - - (1,892,579)
Issues of
shares
during
the year 107,860 - 1,673,157 - - - - 1,781,017
Share options
and warrants - - - - - - 128,222 128,222
Cancellation
of share
premium
account - 6,348,971 (6,348,971) - - - - -
------------ -------------- ------------ ------------ ---------- ------------ ------------ --------------
Balance at
30 November
2018 1,694,488 1,624,348 1,603,904 36,897 - 1,500,000 602,739 7,062,376
Loss for
the period - (2,117,273) (1,115) - - - (2,118,388)
Issues of
shares
during
the period 14,323 - 42,969 - - - - 57,292
Share options
and warrants - - - - - 137,320 137,320
Value of
conversion
rights on
convertible
loan notes - - - - 92,712 - - 92,712
------------ -------------- ------------ ------------ ---------- ------------ ------------ --------------
Balance at
31 December
2019 1,708,811 (492,925) 1,646,873 35,782 92,712 1,500,000 740,059 5,231,312
Consolidated Statement of Cash Flows
Notes Year ended
30 November
2018
Period ended
31 December
2019
GBP GBP
Cash flows from operating activities
Cash utilised by operations 1 (2,036,532) (1,233,717)
Tax received 313,173 -
Interest paid (57) -
Interest received 168 169
------------ ------------
Net cash outflow from operating
activities (1,723,248) (1,233,548)
Cash flows from investing activities
Purchases of property, plant
and equipment - (2,954)
Purchase of intangible assets (594,923) (467,639)
------------ ------------
Net cash outflow from investing
activities (594,923) (470,593)
------------ ------------
Cash flows from financing activities
Share issues 57,292 1,781,017
Issue of loan notes 775,050 -
Disposal of investments 617,130 -
------------ ------------
Net cash inflow from financing
activities 1,449,472 1,781,017
------------ ------------
Increase/(decrease) in cash
and equivalents (868,699) 76,876
Cash and cash equivalents at
beginning of period 1,324,307 1,247,431
------------ ------------
Cash and cash equivalents at
end of period 15 455,608 1,324,307
Notes to the Consolidated Statement of Cash Flows
1. Reconciliation of loss before income tax to cash outflow from operations
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Operating loss (2,166,637) (1,498,896)
(Increase)/Decrease in inventories (32,328) (21,543)
Increase in trade and other receivables (233,505) (267,681)
Increase in trade and other payables 40,634 281,594
Depreciation charge 2,750 2,187
Share Option expense 137,320 128,222
Amortisation of patents and development
costs 215,234 139,721
Loss on disposal of tangible
and intangible assets - 2,679
------------ ------------
Net cash outflow from operations (2,036,532) (1,233,717)
2. Cash and Cash Equivalents
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Cash and cash equivalents 455,608 1,324,307
Company Statement on Financial Position
Notes As at As at
31 December 30 November
2019 2018
ASSETS GBP GBP
Non-current assets
Investments 12 6,212,556 6,534,300
Other receivables 14 5,941,360 4,242,286
-------------- --------------
12,153,917 10,776,586
-------------- --------------
CURRENT ASSETS
Trade and other receivables 14 24,707 9,242
Cash and cash equivalents 15 139,243 1,167,437
-------------- --------------
163,950 1,176,679
-------------- --------------
TOTAL ASSETS 12,317,866 11,953,265
EQUITY
Shareholders' Equity
Called up share capital 16 1,708,811 1,694,488
Share premium 17 1,646,873 1,603,904
Merger relief reserve 17 1,500,000 1,500,000
Share based payment reserve 17 740,059 602,739
Accumulated profit 17 6,436,938 6,323,134
-------------- --------------
Total Equity 12,032,681 11,724,265
-------------- --------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 18 285,185 229,000
-------------- --------------
TOTAL LIABILITIES 285,185 229,000
-------------- --------------
TOTAL EQUITY AND LIABILITIES 12,317,866 11,953,265
Company Statement on Changes in Equity
Share-based
Called Merger Payment
up Retained Share Relief reserve Total
Share Earnings Premium Reserve equity
capital
GBP GBP GBP GBP GBP GBP
Balance at 30
November
2017 1,586,628 470,658 6,279,718 1,500,000 474,517 10,311,521
Loss for the
period - (496,495) - - - (496,495)
Issues of
shares
during the
year 107,860 - 1,673,157 - - 1,781,017
Share options
and
warrants - - - - 128,222 128,222
Cancellation
of
share
premium
account - 6,348,971 (6,348,971) - - -
------------ -------------- -------------- ------------ ------------ --------------
Balance at 30
November
2018 1,694,488 6,323,134 1,603,904 1,500,000 602,739 11,724,265
Profit for
the
period - 113,804 - - - 113,804
Issues of
shares
during the
period 14,323 - 42,969 - - 57,292
Share options
and
warrants - - - - 137,320 137,320
------------ -------------- -------------- ------------ ------------ --------------
Balance at 31
December
2019 1,708,811 6,436,938 1,646,873 1,500,000 740,059 12,032,681
Company Statement on Cash Flows
Notes
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Cash flows from operating activities
Cash utilised by operations 1 (1,702,719) (1,620,434)
Interest received 104 85
-------------- --------------
Net cash outflow from operating
activities (1,702,615) (1,620,349)
Cash flows from investing activities
Investment in subsidiaries - (1,000)
-------------- --------------
Net cash outflow from investing
activities - (1,000)
-------------- --------------
Cash flows from financing activities
Share issues 57,292 1,781,017
Proceeds from disposal of investments 617,129 -
-------------- --------------
Net cash inflow from financing
activities 674,421 1,781,017
-------------- --------------
Increase/(decrease) in cash
and equivalents (1,028,194) 159,668
Cash and cash equivalents at
beginning of period 1,167,437 1,007,769
-------------- --------------
Cash and cash equivalents at
end of period 15 139,243 1,167,437
Notes on Company Statement of Cash Flows
1. Reconciliation of loss before income tax to cash generated from operations
Period ended
31 December Year ended
2019 30 November 2018
GBP GBP
Operating loss (457,816) (496,495)
Increase in trade
and other receivables (1,438,409) (1,327,028)
Increase in trade
and other payables 56,186 172,593
Share Option expense 137,320 128,222
Interest received - (197,725)
Impairment losses - 99,999
------------ ------------
Net cash outflow
from operations (1,702,719) (1,620,434)
2. Cash and Cash Equivalents
As at As at
30 December 30 November
2019 2018
GBP GBP
Cash and cash equivalents 139,243 1,167,437
Printed copies of the Annual accounts will be posted to
shareholders in the next few days.
Notes on financial statements
1. General Information
OptiBiotix Health plc is a Public Limited Com pany incorp orated
and d omiciled in England and Wales. Details of the re gistered
office, the officers and ad visers to the Com pany are prese nted
on the com pany information page at the start of this re p ort. The
Com pan y 's offices are at Innovation centre, Innovation Way,
Heslington, York. The Com pany is listed on the AIM market of the
Lo nd on Stock Exchange (ticker: OPTI).
The principal activity is that of identifying and developing
microbial strains, compounds, and formulations for use in food
ingredients, supplements and active compounds that can impact on
human physiology, deriving potential health benefits.
2. Accounting Policies
Statement of compliance
The consolidated financial statements of OptiBiotix Health plc
have been prepared in accordance with International Financial
Reporting Standards (IFRS), International Accounting Standards
(IASs) and International Financial Reporting Interpretations
Committee (IFRIC) interpretations (collectively 'IFRS') as adopted
for use in the European Union and as issued by the International
Accounting Standards Board and with those parts of the Companies
Act 2006 applicable to companies reporting under IFRS.
Basis of preparation
The financial statements have been prepared under the historical
cost convention.
The principal accounting policies are summarised below. They
have all been applied consistently throughout the period under
review.
Going concern
The financial statements have been prepared on the assumption
that the Group is a going concern. When assessing the foreseeable
future, the Directors have looked at the budget for the next 12
months from the date of this report, the cash at bank available as
at the date of approval of this report and are satisfied that the
group should be able to cover its quoted maintenance costs, other
administrative expenses and its ongoing research and development
expenditure.
Management have considered its forecast of the group's cash
requirements reflecting contracted and anticipated future revenue
and the resulting net cash outflows. Management have not yet seen a
material disruption to the business as a result of the COVID-19
outbreak, however events are rapidly evolving and at this stage, it
is difficult to assess reliably whether there will be any material
disruption in the future which could adversely impact the group's
forecast.
Subsequent to the period end, the group announced the successful
completion of an equity fundraise of GBP1.0 million on 17 April
2020 to fund the growth of the business and delivery of existing
commercial plans.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt a going concern basis in preparing the annual
report and financial statements
New and amended standards adopted by the group
There are no IFRS or IFRIC interpretations that are effective
for the first time in this financial period that would be expected
to have a material impact on the Group.
2. Accounting Policies (continued)
The following new standards, amendments to standards, and
interpretations have been issued, but are not effective for the
financial period beginning 1 December 2018 and have not been early
adopted:
New Standards, amendments and interpretations issued but not
effective
Reference Title Summary Application date Application
of standard date of
Company
----------- ---------------- --------------------------------- -------------------- -------------
IFRS 16 Lease IFRS 16 Leases published Periods commencing 1 January
on or after 1 2020
January 2019
----------- ---------------- --------------------------------- -------------------- -------------
IFRS 9 Financial Amendments to IFRS 9, Periods commencing 1 January
instruments 'Financial on or after 1 2020
instruments' - Prepayment January 2019
features
with negative compensation
----------- ---------------- --------------------------------- -------------------- -------------
IAS 28 Investments Amendments to IAS 28, Periods commencing 1 January
in associates 'Investments on or after 1 2020
in associates' Long-term January 2019
interests in associates
and joint ventures
----------- ---------------- --------------------------------- -------------------- -------------
IAS 19 Employee Amendments to IAS 19, Periods commencing 1 January
benefits 'Employee on or after 1 2020
benefits' - Plan amendment, January 2019
curtailment or settlement
----------- ---------------- --------------------------------- -------------------- -------------
IFRS 3 Business Amendments to IFRS 3, Periods commencing 1 January
combinations 'Business on or after 1 2020
combinations', definition January 2020
of a business
----------- ---------------- --------------------------------- -------------------- -------------
IAS 1 Presentation Amendments to IAS 1, Periods commencing 1 January
of financial 'Presentation on or after 1 2020
statements' of financial statements', January 2020
and IAS 8,
'Accounting policies,
changes in
accounting estimates
and errors'
definition of material
----------- ---------------- --------------------------------- -------------------- -------------
IFRS 17 Insurance Principles for the recognition, Periods commencing 1 January
contracts measurement, presentation on or after 1 2021
an disclosure of insurance January 2021
contracts
----------- ---------------- --------------------------------- -------------------- -------------
The Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the financial statements of the Group.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year, previously 30
November. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee entity
so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Changes in the Group's ownership interests in subsidiaries that
do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the
Group's interests and the non-controlling interests are adjusted to
reflect the changes in their
2. Accounting Policies (continued)
relative interests in the subsidiaries. Any difference between
the amount by which the non-controlling interests are adjusted and
the fair value of the consideration paid or received is recognised
directly in equity and attributed to owners of the Company.
Basis of consolidation (continued)
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. Where certain assets
of the subsidiary are measured at revalued amounts or fair values
and the related cumulative gain or loss has been recognised in
other comprehensive income and accumulated in equity, the amounts
previously recognised in other comprehensive income and accumulated
in equity are accounted for as if the Company had directly disposed
of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings).
The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IAS 39
"Financial Instruments: Recognition and Measurement" or, when
applicable, the cost on initial recognition of an investment in an
associate or a jointly controlled entity.
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition-date fair values of the assets transferred
by the Group, liabilities incurred by the group to the former
owners of the acquiree and the equity interests issued by the group
in exchange for control of the acquiree. Acquisition-related costs
are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
- liabilities or equity instruments related to share-based
payment transactions of the acquiree or the replacement of an
acquiree's share-based payment transactions with share-based
payment transactions of the group are measured in accordance with
IFRS 2 Share-based Payment at the acquisition date; and
- assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
standard.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after assessment, the net
of the acquisition-date amounts of the identifiable assets acquired
and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
2. Accounting Policies (continued)
Revenue recognition
In the current year, the Group has applied IFRS 15 Revenue from
Contracts with Customers (as amended in April 2016) which is
effective for an annual period that begins on or after 1 January
2018. IFRS 15 introduced a 5 step approach to revenue recognition.
Far more prescriptive guidance has been added in IFRS 15 to deal
with specific scenarios.
The application of IFRS 15 has not had a significant impact on
the current financial position and/or financial performance of the
Group and so no transition adjustment has been made. The Standard
has not had a material impact on the accounting policy adopted in
respect to revenue as previously disclosed in the 2018 financial
statements
Investments in associates
Associates are those entities in which the Group has significant
influence, but not control or joint control over the financial and
operating policies. Significant influence is presumed to exist when
the Group holds between 20 and 50 percent of the voting power of
another entity. Investments in associates are accounted for under
the equity method and are recognised initially at cost. The cost of
the investment includes transaction costs.
The consolidated financial statements include the Group's share
of profit or loss and other comprehensive income of
equity-accounted investees, after adjustments to align the
accounting policies with those of the Group, from the date that
significant influence commences until the date that significant
influence ceases.
When the Group's share of losses exceeds its interest in an
equity-accounted investee, the carrying amount of the investment,
including any long-term interests that form part thereof, is
reduced to zero, and the recognition of further losses is
discontinued except to the extent that the Group has an obligation
or has made payments on behalf of the investee.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
(i) Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules using
tax rates enacted or substantially enacted by the statement of
financial position date.
Income tax is recognised in the income statement or in equity if
it relates to items that are recognised in the same or a different
period, directly in equity.
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the taxation authorities.
(ii) Deferred tax
Deferred tax is provided, using the liability method, on
temporary differences at the statement of financial position date
between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences.
Deferred tax assets are recognised for all deductible temporary
differences, carry forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differenced and
the carrying forward or unused tax assets and unused tax losses can
be utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax assets to be utilised. Conversely,
previously unrecognised deferred tax assets are recognised to the
extent that it is probable that sufficient taxable profit that
sufficient taxable profit will be available to allow all or part of
the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on the tax rates and
tax laws that have been enacted or substantively enacted at the
balance sheet date.
Investments
Investments are held at cost less any impairment.
Financial instruments
Financial assets and financial liabilities are recognised when
the group becomes a party to the contractual provisions of the
instrument.
Inventory
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out (FIFO)
method. Net realisable value is the estimated selling price in the
ordinary course of business, less applicable variable selling
expenses.
Trade and other receivables
Trade and other receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. Subsequent to the initial recognition, trade and
receivables and measured at amortised cost less impairment losses
for bad and doubtful debts, except where the receivables are
interest-free loans made to related parties without any fixed
repayment terms or the effect of discounting would be immaterial.
In such cases, the receivables are stated at cost less impairment
losses for bad and doubtful debts.
Impairment losses for bad and doubtful debts are measured as the
difference between the carrying amount of financial asset and the
estimated future cash flows, discounted where the effect of
discounting is material.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
on call, together with other short term highly liquid investments
which are not subject to significant changes in value and have
original maturities of less than three months.
Fair values
The carrying amounts of the financial assets and liabilities
such as cash and cash equivalents, receivables and payables of the
Company at the statement of financial position date approximated
their fair values, due to relatively short term nature of these
financial instruments
2. Accounting Policies (continued)
Trade and other payables
Trade and other payables are initially recognised at fair value
and thereafter stated in amortised cost, except where the payables
are interest free loans made by related parties without any fixed
repayment terms or the effect of discounting would be immaterial,
in which case they are stated at cost.
Impairment of non-financial assets
At each statement of financial position date, the Group reviews
the carrying amounts of its investments to determine whether there
is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the group estimates
the recoverable amount of the cash-generating unit to which the
asset belongs. An intangible asset with an indefinite useful life
is tested for impairment annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. If
the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a re-valued amount, in
which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Capital management
Capital is made up of stated capital, premium, other reserves
and retained earnings. The objective of the Group's capital
management is to ensure that it maintains strong credit ratings and
capital ratios. This will ensure that the business is correctly
supported and shareholder value is maximised.
The Group manages its capital structure through adjustments that
are dependent on economic conditions. In order to maintain or
adjust the capital structure, the Company may choose to change or
amend dividend payments to shareholders or issue new share capital
to shareholders. There were no changes to the objectives, policies
or processes during the period ended 31 December 2019.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received. Incremental
costs directly attributable to the issuance of new ordinary
shares are deducted against share capital.
2. Accounting Policies (continued)
Convertible Loans
Compound financial instruments issued by the Group comprise
convertible notes that can be converted to share capital at the
option of the holder, and the number of shares to be issued does
not vary with changes in their fair value.
The liability component of a compound financial instrument is
recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
recognised initially at the difference between the fair value of
the compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in
proportion to their initial carrying amount
Share-based compensation
The fair value of the employee and suppliers services received
in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed over the vesting year is
determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market
vesting conditions are included in assumptions about the number of
options that are expected to vest. At each statement of financial
position date, the entity revises its estimates of the number of
options that are expected to vest. It recognises the impact of the
revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
The fair value of share-based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit
or loss during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated
using the straight-line method to write off their cost over their
estimated useful lives at the following annual rates:
Computer equipment 30%
Useful lives and depreciation method are reviewed and adjusted
if appropriate, at the end of each reporting period.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset and is
recognised in profit or loss in the year in which the asset is
derecognised.
2. Accounting Policies (continued)
Intangibles - Patents
Separately acquired patents are shown at historical cost.
Patents have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the
straight line method to allocate the cost of the patents over their
estimated useful life of twenty years once the patents have been
granted.
Research and Development
Research expenditure is written off to the statement of
comprehensive income in the year in which it is incurred.
Development expenditure is written off in the same way unless the
Directors are satisfied as to the technical, commercial and
financial viability of individual projects. In this situation, the
expenditure is deferred and amortised over the 10 years during
which the Company is expected to benefit.
Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured, regardless of when the payment is made. Revenue
is measured at the fair value of the consideration received or
receivable, excluding discounts, rebates and sales taxes or
duty.
Merger relief reserve
The merger relief reserve arises from the 100% acquisition of
OptiBiotix Limited whereby the excess of the fair value of the
issued ordinary share capital issued over the nominal value of
these shares is transferred to this reserve in accordance with
section 612 of the Companies Act 2006.
Convertible debt reserve
The convertible debt reserve is the equity component of the
convertible loan notes that have been issued.
2. Accounting Policies (continued)
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the financial statements requires management
to make estimates and assumptions concerning the future that affect
the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during
the reporting periods.
The resulting accounting estimates will, by definition, differ
from the related actual results.
-- Share based payments
The fair value of share based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
-- Amortisation
Management have estimated that the useful life of the fair value
of the patents acquired on the acquisition to be 20 years. Research
and developments that have been capitalised in line with the
recognition criteria of IAS38 have been estimated to have a useful
economic life of 10 years. These estimates will be reviewed
annually and revised if the useful life is deemed to be lower based
on the trading business or any changes to patent law.
-- Impairment reviews
IFRS requires management to undertake an annual test for
impairment of indefinite lived assets and, for finite lived assets
to test for impairment if events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. Impairment testing is an area involving management
judgement, requiring assessment as to whether the carrying value of
assets can be supported by the net present value of future cash
flows derived from such assets using cash flow projections which
have been discounted at an appropriate rate. In calculating the net
present value of the future cash flows, certain assumptions are
required to be made in respect of highly uncertain matters.
3. Segmental Reporting
In the opinion of the directors, the Group has one class of
business, being that of identifying and developing microbial
strains, compounds and formulations for use in the nutraceutical
industry. The Group's primary reporting format is determined by the
geographical segment according to the location of its
establishments. There is currently only one geographic reporting
segment, which is the UK. The Directors believe that income, costs,
assets and liabilities are interconnected and as there is only one
location all income and costs are derived from the single segment.
Subsequent to the year end the business is developing into new
territories and the directors will assess the need for segmental
reporting for the year ended 31 December 2020.
4. Employees and Directors
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Wages and salaries 53,037 23,274
Directors' remuneration* 647,421 576,228
Directors' fees* 310,832 41,083
Social security costs 76,508 79,319
Pension costs 26,459 54,385
------------ ------------
1,114,257 774,289
*Total Directors' remuneration GBP958,253 see Directors'
remuneration note below
Period ended Year ended
31 December 30 November
2019 2018
No. No.
The average monthly number of employees
during the period was as follows:
Directors 8 8
Research and development 2 2
------------ ------------
10 10
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Directors' remuneration* 873,253 572,311
Directors' share based payments 123,362 120,793
Bonus* 85,000 45,000
Pension 28,618 53,834
------------ ------------
Total emoluments 1,110,233 791,938
Emoluments paid to the highest paid
director 248,000 212,897
*Total Directors' remuneration GBP958,253 see Directors'
remuneration note below
Included in total emoluments paid to Directors are capitalised
wages of GBP248,707 (2018: GBP221,703)
Directors' remuneration
Details of emoluments received by Directors of the Group for the
period ended 31 December 2019 are as follows:
Remuneration Share based Total
and fees payments
--------------- -------------- ------------- -----------
GBP GBP GBP
--------------- -------------- ------------- -----------
A Reynolds* 29,165 29,165
S P O'Hara 248,000 - 248,000
F Narbel 139,105 37,910 177,015
G Barker* 6,048 - 6,048
S Christie 27,083 13,343 40,426
R Davidson 59,583 34,893 94,476
S Kolyda 106,666 14,954 121,620
P Wenstromm* 19,548 - 19,548
P Rehne 56,268 3,180 59,448
C Wood 149,820 19,082 168,902
S Prescott* 116,966 116,966
Total 958,253 123,362 1,081,615
--------------- -------------- ------------- -----------
*For disclosure in relation to directors' fees please refer to
Note 21.
5. Net Finance Income / (Costs)
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Finance Income:
Bank Interest 111 169
Finance Cost :
Loan note interest (44,467) -
------------ ------------
Net Finance Income / (Costs) (44,356) 169
6. Expenses - analysis by nature
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Research and development 167,869 160,673
Regulatory Costs 185,447 -
Directors' fees & remuneration
(Note 4)* 709,546 418,881
Auditor remuneration - audit fees
(Consolidated accounts GBP17,500,
2018:GBP17,000) 42,220 47,293
Auditor remuneration - non audit
fees (tax compliance) 6,200 6,000
Brokers & Advisors 113,036 86,414
Advertising & marketing 66,556 48,201
Share based payments charge 137,320 128,222
Depreciation on property, plant
and equipment 2,750 2,187
Amortisation of patents and development
costs 215,234 139,721
Patent and IP costs 55,483 88,003
Consultancy fees 223,016 146,559
Legal and professional fees 24,399 26,563
Public Relations costs 101,795 152,082
Travel costs 171,448 120,541
Other expenses 337,121 279,063
------------ ------------
Total administrative expenses 2,559,440 1,850,403
*GBP709,546 is net of GBP248,707, capitalised in the year, total
remuneration GBP958,253 as per note 4.
7. Corporation Tax
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Corporation tax credit (190,435) (120,000)
Under provision prior year (9,221) -
Deferred tax movement 76,188 62,069
Overseas tax suffered - 3,560
------------ ------------
Total taxation (123,468 (54,371)
7. Corporation Tax (continued)
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities
for the period ended 31 December 2019 nor for the year ended 30
November 2018.
Period ended Year ended
31 December 30 November
2019 2018
GBP GBP
Loss on ordinary activities before
income tax (2,241,856) (1,946,950)
Loss on ordinary activities multiplied
by the standard rate of corporation
tax in UK of 19% (2018 - 19.33%) (425,953) (376,345)
Effects of:
Disallowables 56,787 62,017
Income not taxable (50,441) -
Accelerated capital allowances - (571)
Accelerated depreciation 52 -
R&D enhanced deductions (141,042) (122,086)
R&D tax credit claimed (199,656) (120,000)
Capital allowances (571)
Amortisation 40,895 27,008
Revenue items capitalised (65,072) (90,395)
Other timing differences 76,188 62,069
Overseas tax suffered 3,560
Unused tax losses carried forward 584,303 500,372
------------ ------------
Tax credit (123,468) (54,371)
The Group has estimated losses of GBP3,253,189 (2018:
GBP1,646,423) and estimated excess management expenses of
GBP2,248,357 (2018: GBP2,093,197).
The tax losses have resulted in a deferred tax asset at 19% of
approximately GBP1,045,294 (2018: GBP710,528) which has not been
recognized as it is uncertain whether future taxable profits will
be sufficient to utilise the losses.
2019 2018
Current tax asset - Group GBP GBP
Balance brought forward 303,952 183,952
Received during the year (313,170) -
Prior year adjustment 9,217 -
Research & development tax credit
claimed 190,435 120,000
------------ ------------
190,435 303,952
8. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable shareholders by the weighted average number of
ordinary shares outstanding during the period.
Reconciliations are set out below:
2019
Weighted average
Basic and diluted EPS Earnings Number of shares Loss per-share
GBP No. Pence
Basic EPS (2,118,388) 85,262,488 (2.49)
Diluted EPS (2,118,388) 85,262,488 (2.49)
2018
Weighted average
Earnings Number of shares Loss per-share
GBP GBP Pence
Basic EPS (1,892,579) 82,233,690 (2.30)
Diluted EPS (1,892,579) 82,233,690 (2.30)
As at 31 December 2019 there were 7,765,907 (2018: 8,272,907)
outstanding share options and 324,019 (2018 1,045,524) outstanding
share warrants. As the Group was loss making in the year, the
options and warrants are considered anti-dilutive.
9. Company's result for the period
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent Company income
statement account.
The profit for the parent Company for the period was GBP113,804
(2018: Loss GBP496,495).
10. Intangible assets
Group Development Costs
and Patents
GBP
Cost
At 1 December 2017 2,266,130
Additions 467,639
Disposals (6,763)
--------------
At 30 November 2018 2,727,006
Additions 594,924
Disposals -
--------------
At 31 December 2019 3,321,930
Amortisation
At 1 December 2017 338,904
Amortisation charge for the period 139,721
Eliminated on disposal (4,708)
--------------
At 30 November 2018 473,917
Amortisation charge for the period
Eliminated on disposal 215,234
--------------
At 31 December 2019 689,152
Carrying amount
At 31 December 2019 2,632,778
At 30 November 2018 2,253,089
The company had no intangible assets.
11. Property, plant and equipment
Group
GBP
Cost
At 30 November 2017 15,419
Additions 2,954
Disposals (9,912)
--------------
At 30 November 2018 8,461
Additions -
Disposals -
--------------
At 31 December 2019 8,461
Depreciation
At 30 November 2017 8,858
Charge for the year 2,187
Eliminated on disposal (5,727)
--------------
At 30 November 2018 5,318
Charge for the period 2,750
--------------
At 31 December 2019 8,068
Carrying amount
At 31 December 2019 393
At 30 November 2018 3,143
The company had no property plant and equipment.
12. Investments
Set out below is the associate of the Group as at 31 December
2019 which is material to the Group. The entity listed below have
share capital consisting solely of ordinary shares, which are held
by the Group. The country of incorporation is also the principal
place of business and the proportion of ownership interest is the
same as the proportion of voting rights held.
Group: Investments
GBP
Cost
At 30 November 2018 3,740,799
Share of loss to 4 July 2019 (296,344)
Disposal of shares during the period (351,648)
--------------
At 31 December 2019 3,092,807
Carrying amount
At 31 December 2019 3,092,807
At 30 November 2018 3,740,799
S O'Hara resigned as a Director of SkinBioTherapeutics PLC on 4
July 2019. Following his resignation the shares held in
SkinBioTherapeutics PLC are treated as an investment rather than an
associate company.
Company: Investments in subsidiary
undertakings
GBP
Cost
At 30 November 2017 2,149,999
Additions 1,000
Impairment (99,999)
--------------
At 30 November 2018 2,051,000
Addition: Equity element of convertible
loan notes 29,905
--------------
Carrying amount
At 31 December 2019 2,080,905
At 30 November 2018 2,051,000
12. Investments (continued)
As at 31 December 2019 the Company directly held the following
subsidiaries:
Name of company Principal Country of incorporation Proportion of
activities and place of business equity interest
2018
OptiBiotix Limited Research & Development United Kingdom 100% of ordinary
shares
The Healthy Weight Health foods United Kingdom 68% of ordinary
Loss Company Limited shares
ProBiotix Health Health foods United Kingdom 100% of ordinary
Ltd shares
Investments
GBP
Cost
At 30 November 2017 and 2018 4,483,300
Disposals (351,649)
--------------
At 31 December 2019 4.131,651
Carrying amount
At 31 December 2019 4,131,651
At 30 November 2018 4,483,300
--------------
Total investment
At 31 December 2019 6,212,556
At 30 November 2018 6,534,300
--------------
13. Inventories
Group Company
2019 2018 2019 2018
GBP GBP GBP GBP
Finished goods 62,761 30,433 - -
During the period GBP352,080 has been expensed to the income
statement.
14. Trade and other Receivables
Group Company
2019 2018 2019 2018
Non- current GBP GBP
Amounts owed by group
undertakings - - 5,941,360 4,242,286
---------- ---------- ---------- ----------
- - 5,941,360 4,242,286
Current
Accounts receivable 511,833 228,825 - -
Other receivables 59,346 52,190 19,857 969
Prepayments and accrued
income 36,129 92,788 4,850 8,273
---------- ---------- ---------- ----------
607,308 373,803 24,707 9,242
15. Cash and Cash Equivalents
Group Company
2019 2018 2019 2018
GBP GBP
Cash and bank balances 455,608 1,324,307 139,243 1,167,437
16. Called Up Share Capital
2019 2018
Issued share capital comprises: GBP GBP
Ordinary shares of 2p each - 85,440,551
(2018: 84,724,413) 1,708,811 1,694,488
------------ ------------
1,708,811 1,694,488
During the period the Company issued the ordinary shares of
GBP0.02 each listed below, exercised at a price of GBP0.08 per
share in the capital of the Company following the exercise of
warrants:
Date issued Number
18/01/2019 7,813
13/03/2019 708,325
------------
Total warrants exercised in the period 716,138
17. Reserves
Share capital is the amount subscribed for shares at nominal
value. Share premium represents amounts subscribed for share
capital in excess of nominal value, net of expenses.
The convertible debt reserve is the equity component of the
convertible loan notes that have been issued.
Merger relief reserve arises from the 100% acquisition of
OptiBiotix Limited on 5 August 2014 whereby the excess of the fair
value of the issued ordinary share capital issued over the nominal
value of these shares is transferred to this reserve in accordance
with section 612 of the Companies Act 2006.
Retained earnings represents the cumulative profits and losses
of the group attributable to the owners of the company.
Share based payment reserve represents the cumulative amounts
charged in respect of unsettled warrants and options issued.
18. Trade and other payables
Current:
Group Company
2019 2018 2019 2018
GBP GBP GBP GBP
Accounts Payable 347,822 115,697 2,685 -
* Accrued expenses 186,329 207,103 32,500 30,000
* Amount due to director 189 189 - -
* Other payables 27,283 198,000 - -
* Amounts due to group undertakings - - 250,000 199,000
- -------------- -------------- -------------- --------------
Total trade and other
payables 561,623 520,989 285,185 229,000
-------------- -------------- -------------- --------------
19. Deferred Tax
Deferred tax is provided, using the liability method, on
temporary differences at the statement of financial position date
between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 19% (2018: 19%).
The movement on the deferred tax account is as shown below:
2019 2018
GBP GBP
At 30 November 446,161 384,092
Movement in the period 76,189 62,069
------------ ------------
At 31 December 2019 522,350 446,161
Deferred tax assets have not been recognised in respect of tax
losses and other temporary differences giving rise to deferred tax
assets as the directors believe there is uncertainty whether the
assets are recoverable.
20. Convertible Loan Notes
ProBiotix Health Limited issued 1,025,000 floating rate
convertible loan notes (CLN) for GBP1,025,000 on 11 December 2018.
The notes are convertible into ordinary shares of the Company and
converted into shares immediately prior to the occurrence of a
listing of the company, or repayable on December 2023. The
conversion rate is 1 share for each note held at an amount which is
equal to 50% of the listing price.
OptiBiotix Health Plc has subscribed 250,000 of the CLN for
GBP250,000
The convertible notes are presented in the Group balance sheet
as follows:
2019 2018
GBP GBP
------------ --------
Face value of the convertible loan 775,050 -
notes in issue as at the period end
------------ --------
Equity element (92,712) -
------------ --------
Liability component on initial recognition 682,338
------------ --------
Interest charged at effective interest
rate 44,467
------------ --------
Non-current liability 726,805
------------ --------
Interest expense is calculated by applying the effective
interest rate of 6% to the liability component.
21. Related Party Disclosures
During the period to 31 December 2019 GBP19,548 (2018:
GBP18,000) was paid to P Wennstrom in respect of Director's
services provided.
During the period to 31 December 2019 GBP139,105 (2018: GBPnil)
was paid to F Narbel in respect of Director's services
provided.
During the period to 31 December 2019 GBP116,966 (2018: GBPnil)
was paid to Stephen Prescott in respect of Director's services
provided.
During the period to 31 December 2019 GBP29,165 (2018: GBP5,083)
was paid to Reyco Limited for the services of Adam Reynolds as
Director of ProBiotix Health Limited
During the period to 31 December 2019 the Group was charged
GBP45,500 (2018: GBP36,167) for services provided by Morrison
Kingsley Consultants Limited, a company controlled by Mark
Collingbourne, Chief Financial Officer.
22. Ultimate Controlling Party
No one shareholder has control of the company.
23. Share Based payment Transactions
(i) Share options
The Company had introduced a share option programme to grant
share options as an incentive for employees of the former
subsidiaries.
Each share option converts into one ordinary share of the
Company on exercise. No amounts are paid or payable by the
recipient on receipt of the option and the Company has no legal
obligation to repurchase or settle the options in cash. The options
carry neither rights to dividends nor voting rights prior to the
date on which the options are exercised. Options may be exercised
at any time from the date of vesting to the date of expiry.
Movements in the number of share options outstanding and their
related weighted average exercise prices are as follows:
Number of options Average exercise price
2019 2018 2019 2018
No. No. GBP GBP
Outstanding at the beginning
of the period 8,272,907 10,077,087 0.23 0.17
* Granted during the year 500,000 815,000 0.78 0.76
* Forfeited/cancelled during the year 1,007,000 - 0.70 -
* Exercised for shares - (2,619,180) 0.10
- -------------- -------------- ------------ ------------
Outstanding at the end
of the period 7,765,907 8.272,907 0.20 0.17
-------------- -------------- ------------ ------------
For the share options issued in 2014 vesting conditions dictate
that half will vest if the middle market quotation of an existing
Ordinary share is 16p or more on each day during any period of at
least 30 consecutive Dealing days and half will vest when a
commercial contract is signed. The two conditions are not dependent
on each other and will vest separately.
For the share options issued in 2015 year vesting conditions
dictate that some of the options will vest if the middle market
quotation of an existing Ordinary share is 40p or more on each day
during any period of at least 30 consecutive Dealing days and some
will vest if certain revenue targets are met or if certain
scientific studies are completed. The conditions are not dependent
on each other and will vest separately.
For the share options issues in 2017 vesting conditions dictate
that the options will vest if certain revenue conditions are
met.
For the share options issues in 2018 vesting conditions dictate
that the options will vest if certain revenue conditions are
met.
For the share options issues in 2019 vesting conditions dictate
that the options will vest if certain revenue conditions are
met.
The share options outstanding at the period end had a weighted
average remaining contractual life of 1,977 days (2018: 2,146 days)
and the maximum term is 10 years.
The share price per share at 31/12/19 was GBP0.66 (30/11/2018:
GBP0.92)
23. Share Based payment Transactions (continued...)
(i) Share options
Expected volatility is based on a best estimate for an AIM
listed entity. The expected life used in the model has been
adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
The fair values of the share options issued in the year were
derived using the Black Scholes model. The following assumptions
were used in the calculations:
Grant date 27/03/2019
Exercise price 78.50p
Share price at
grant date 78.50p
Risk-free rate 0.25%
Volatility 35%
Expected life 10 years
Fair value 26.83p
(i) Warrants
On 20 February 2014, an open offer was made to the potential
investors to subscribe for 203,380,942 new ordinary shares of
GBP0.0001 each at GBP0.0001 each. On a 1:1 basis, warrants attach
to any shares issued under the open offer convertible at any time
to 30 November 2018 at GBP0.0004 per shares.
On 4 August 2014, the warrants in issue were consolidated in the
ratio of 200:1 as part of the share reorganisation.
At a meeting of warrant holders on 24 January 2017 it was agreed
to extend the exercise period for all remaining warrants to 28
January 2022 and 19 February 2022
Movements in the number of share warrants outstanding and their
related weighted average exercise prices are as follows:
Number of warrants Average exercise price
2019 2018 2019 2018
No. No. GBP GBP
Outstanding at the beginning
of the period 1,045,524 1,399,925 0.08 0.08
* Exercised for shares (716,138) (354,401) 0.08 0.08
- -------------- -------------- -------------- --------------
Outstanding at the end
of the period 329,386 1,045,524 0.08 0.08
-------------- -------------- -------------- --------------
A charge of GBP137,320 (2018: GBP128,222) has been recognised
during the year for the share based payments over the vesting
period.
24. Financial Risk Management Objectives and Policies
The Group's financial instruments comprise cash balances and
receivables and payables that arise directly from its
operations.
The main risks the Group faces are liquidity risk and capital
risk.
The Board regularly reviews and agrees policies for managing
each of these risks. The Group's policies for managing these risks
are summarised below and have been applied throughout the period.
The numerical disclosures exclude short-term debtors and their
carrying amount is considered to be a reasonable approximation of
their fair value.
Interest risk
The Group is not exposed to significant interest rate risk as it
has limited interest bearing liabilities at the year end.
Credit risk
The Group is not exposed to significant credit risk as it did
not make any credit sales during the year.
Liquidity risk
Liquidity risk is the risk that Group will encounter difficulty
in meeting these obligations associated with financial
liabilities.
The responsibility for liquidity risks management rest with the
Board of Directors, which has established appropriate liquidity
risk management framework for the management of the Group's short
term and long-term funding risks management requirements.
During the period under review, the Group has not utilised any
borrowing facilities.
The Group manages liquidity risks by maintaining adequate
reserves and reserve borrowing facilities by continuously
monitoring forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liabilities.
Capital risk
The Group's objectives when managing capital are to safeguard
the ability to continue as a going concern in order to provide
returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
25. Post Balance Sheet Events
On 27 March 2020 the company sold 3,250,000 shares in
SkinBioTherapeutics plc at a price of 5 pence per share.
On 19 April 2020 the Company issued and allotted 2,500,000
ordinary shares of 2 pence each exercised at a price of 40 pence
per share in the capital of the Company by way of a placing.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR ARMLTMTMTBBM
(END) Dow Jones Newswires
May 28, 2020 02:00 ET (06:00 GMT)
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