TIDMOPTI
RNS Number : 1504C
OptiBiotix Health PLC
17 June 2021
OptiBiotix Health plc
("OptiBiotix" or the "Company" or the "Group")
Final Results for 12 months to 31 December 2020
Notice of AGM
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 2020.
Highlights
Financial
-- Full year revenue of GBP1,523,247, a 104% increase in revenue
from the 13 month reporting period in 2019 (2019: GBP744,883)
-- A 124% increase in gross profit from GBP392,803 (2019) to
GBP879,819 (2020) as increased sales volumes enabled us to
renegotiate contract terms with commercial partners and increase
margins
-- A 27% reduction in other administration costs expenses from
GBP2,204,216 in 2019 to GBP1,616,069 in 2020
-- The Functional Fibres and Probiotic divisions achieving
profitability at the EBITDA level after losses in the prior 13
month period
-- A substantial increase in the value of our holding in
SkinBioTherapeutics plc ('SBTX') during the year with an investment
of approximately GBP700,000 in 2016, for a 51% pre-IPO holding,
delivering an asset now worth circa GBP25m as of June 2021
-- A 49% reduction in operating loss from GBP2,166,638 in 2019
to GBP1,111,393 in 2020. The increase in the value of the SBTX
holding during the year resulting in a Group net profit for the
year of GBP5,801,866 (2019: net loss GBP2,368,362)
-- Total cash on the balance sheet at the year-end increasing by
90% to GBP864,680 (2019: GBP456,608). Post period, the Company sold
GBP900,936 worth of SBTX shares in March 2021
Commercial
-- Launch of three SlimBiome(R) products with Holland &
Barrett (H&B) in H1 2020 followed by product line extension in
2021 to eight H&B own brand SlimExpert products
-- The launch of a products containing OptiBiome(R) under the
Optislim(R) brand with Woolworths, ChemistWarehouse and on
OptiPharm Pty Ltd's online store in Australia and New Zealand in
October 2020. The terms of this agreement were subsequently e
xtended to include Europe in addition to Australia, parts of Asia,
New Zealand, Middle East, Gulf States and North America allowing
potential for future sales growth
-- The launch in Italy by ALFASIGMA S.p.A. of a food supplement
containing our proprietary cholesterol reducing LP(LDL) (R)
probiotic strain, providing an entry into the largest and fastest
growing probiotic market in Europe
-- A non-exclusive distribution agreement with Actial
Farmaceutica Srl for the distribution of CholBiome(R) and
CholBiome(R)(X3) in Australia, New Zealand, Indonesia and Thailand,
under the VSL(#) 3(R) range
-- An exclusive agreement in late 2020 with a US company for the large-scale manufacture and commercialisation of a number of SweetBiotix(R) products in return for upfront, milestone, launch and royalty payments. We are pleased to see this partner making strong progress in 2021 scaling up these innovative products to industrial scale
Regulatory and Scientific
-- USA FDA authorisation of an Investigational New Drug ('IND')
trial by our partner Seed Health of a probiotic containing LP(LDL)
(R), to investigate the role of the gut microbiome in patients with
Irritable Bowel Syndrome
-- Completion of two new human studies by ProBiotix Health on
LP(LDL) (R). The first in partnership with Nutrilinea S.r.l.,
demonstrating that a new food supplement formulation containing can
reduce high blood pressure (hypertension). The second, a
placebo-controlled human studies on LP(LDL) (R) in high cholesterol
patients showing LP(LDL) (R) when used alone can achieve similar
reductions in total cholesterol and LDL (bad cholesterol) to
statins, without side effects (submitted for publication)
-- The Company has made significant progress in H1 2021 with its
microbiome modulators with early data suggesting we have developed
an approach to facilitate industrial scale production
Stephen O'Hara, CEO of OptiBiotix, commented: "This has been a
pivotal year for OptiBiotix with doubling sales and a large
reduction in costs enabling our Probiotic and Functional Fibre
divisions to achieve profitability. This is a substantive change
from divisional losses of GBP467,704 for ProBiotix and GBP451,572
for the functional fibre division reported in 2019. This was
particularly pleasing given the impact of the COVID-19 pandemic and
global recession in key markets, with weight management markets
experiencing a 9% decline in growth. The Company has also benefited
from an increase in the value of OptiBiotix's holding in SBTX which
is making strong progress on its path to commercialising
products.
"The Company is now in a position of having established the
scientific, clinical and commercial viability of its
first-generation products (LP(LDL) (R) and SlimBiome(R)) with a
network of internationally recognised partners who are extending
product ranges and territories providing a solid basis for future
growth. We are also pleased to report commercial progress with our
pipeline of exciting second-generation products with the industrial
scale up of a range of our innovative SweetBiotix products and a
number of large corporates signing Material Transfer Agreements as
they develop applications containing SweetBiotix.
"We have continued to make progress since the beginning of the
current financial year with strong sales growth and larger orders
as existing partners extend their product range and territories.
Our focus remains on growing sales of first generation products
with larger partners in key strategic markets like India, the USA,
and China, and commercialising our pipeline of second generation
products in the year ahead.
"With interest in the microbiome increasing, growing sales,
increasing margins, reducing costs, and an exciting pipeline of
industry disruptive second-generation products, the Company is in a
strong position for future growth in this exciting area of
healthcare."
This announcement contains information which, prior to its
disclosure, was considered inside information for the purposes of
the UK Market Abuse Regulation and the Directors of the Company are
responsible for the release of this announcement.
For further information, please contact:
OptiBiotix Health plc www.optibiotix.com
Neil Davidson, Chairman Contact via Walbrook
below
Stephen O'Hara, Chief Executive
Cairn Financial Advisers LLP (NOMAD) Tel: 020 7213 0880
Liam Murray / Jo Turner / Ludovico Lazzaretti
Cenkos Securities plc (Broker) Tel: 020 7397 8900
Callum Davidson / Neil McDonald
Michael Johnson / Russell Kerr (Sales)
Walbrook PR Ltd Mob: 07876 741 001
Anna Dunphy
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"potentially", "expect", "will" or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward looking statements are not based on
historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward looking statements re ect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
Chairman's Report
I am pleased to report a further year of solid strategic,
commercial and financial progress. The Group has achieved strong
sales growth while reducing its already low-cost base, enabling
both its Probiotic and Functional Fibre divisions to achieve
profitability as planned. The successful commercialisation of our
first-generation products with a range of internationally
recognised partners confirms the effectiveness and scalability of
our innovative, low risk business model, while our pipeline of
exciting second-generation products gives us a strong base to
deliver continuing growth in shareholder value.
Results
Group sales for the 12 months ended 31 December 2020 (prior
period: 13 months ended 31 December 2019) grew by 104% to
GBP1,523,247 (2019: GBP744,883) while other administrative expenses
reduced by 27% to GBP1,616,069 (2019: GBP2,204,217). Despite the
challenges presented by the global COVID-19 pandemic, both the
Functional Fibres and Probiotic divisions achieved profitability at
the EBITDA level, after losses in the prior 13 month period.
The Company received an additional GBP746,751 during the year
from the partial disposal of its holding in SkinBioTherapeutics plc
('SBTX'), which is not included in the Group revenue figures. As a
result of the change in the Company's shareholding in SBTX, it is
now treated as an investment rather than an associate and the
change in the value in the Company's shareholding during the
financial year will in future be reflected in the Group accounts.
The increase in the value of the SBTX holding of GBP7,120,962
during the year results in a Group net profit for the year of
GBP5,801,867 (2019: net loss GBP2,368,362).
The Group's financial position remains strong, with total cash
on the balance sheet at the year-end increasing by 90% to
GBP864,680 (2019: GBP455,608). Post period, the Company sold
GBP900,936 SBTX shares in March 2021 to further strengthen its
balance sheet.
Strategy
Optibiotix Health is a life sciences business founded on the
development of prebiotic and probiotic compounds to tackle obesity,
cardiovascular disease and diabetes: all conditions that are
affecting growing numbers of people in all parts of the world.
Our proven, low risk growth strategy is to secure deals with
multiple partners - manufacturers, formulators and distributors -
in multiple territories around the world, ensuring that we retain
control of the complete value chain for all the compounds we
develop, and can extract value for our shareholders at each
stage.
We have now established the scientific, clinical and commercial
viability of our first-generation products (LP(LDL) (R) and
SlimBiome(R) / WellBiome(R)) achieving strong sales growth with
internationally recognised retail and pharmaceutical partners. As
we anticipated, this growth in volumes has enabled us to
renegotiate contracts with our partners so as to reduce the cost of
goods and deliver improved divisional margins, as noted in the
financial report.
The next stage of our strategy will focus on the development and
commercialisation of our second-generation platforms, which include
SweetBiotix (R) , microbiome modulators to tackle a range of human
health conditions, and drug biotherapeutics. All of these offer
significant potential for long term growth.
Business development
Among the many positive developments during the year, which the
Chief Executive discusses more fully in his report, I would
particularly like to highlight:
-- Our agreement in August 2020 with Optipharm and product
launch in October 2020 for the exclusive use of our OptiBiome(R)
weight management ingredient in over 20 countries in its flagship
Optislim brand, the leading weight management brand in
Australia.
-- The agreement with a US partner for the large-scale
manufacture and commercialisation of a number of SweetBiotix(R)
products announced on 15 September 2020.
-- The USA FDA authorisation in October 2020 of an
Investigational New Drug ('IND') trial by our partner Seed Health
of a probiotic containing LP(LDL) (R).
Since the year-end, we have also achieved an important extension
of our product range with Holland & Barrett, which has
increased from three to eight the number of lines in its own
SlimExpert range containing SlimBiome(R) as announced on 17 March
2021.
The Board
We continue to evolve the Board to ensure that we have the right
mix of skills to lead the Group through the next stage of its
strategic development, and to this end we have announced the
appointment of two non-executive directors since the beginning of
the new financial year.
Christopher Brinsmead CBE joined the Board as a non-executive
director on 1 January 2021, bringing to us more than 30 years of
experience in the pharmaceutical and healthcare sectors as a senior
executive and adviser, FTSE 350 company director and chairman.
Stephen Hammond MP joined the Board as a non-executive director
on 2 March 2021, further complementing our skillset through his
experience during a successful career in fund management and
investment banking prior to entering Parliament in 2005, and his
subsequent senior roles in government.
Peter Wennström retired as a non-executive director on 1 January
2021, with our thanks for his contribution to the development of
the Company and particularly for his valuable advice on brand
strategy and the positioning of our first-generation products in
international markets; I am pleased that his expertise remains
available to us as an adviser.
René Kamminga joined as Chief Executive Officer ("CEO") of
OptiBiotix Ltd, a wholly owned subsidiary of OptiBiotix Health plc,
on 6 April 2021. We are confident that his experience and track
record of growing sales, and his network of new industry contacts
within the pharmaceutical and nutraceutical industries, will help
OptiBiotix in its next phase of development as we look to extend
the range of applications for our award-winning SlimBiome(R) and
LP(LDL) (R) ingredients, and to commercialise our second generation
SweetBiotix(R), microbiome modulating, and LP(LDL) (R) drug
products.
Following René's appointment Dr Fred Narbel, has moved to a more
strategic role within the business as a non-executive director of
OptiBiotix Ltd. We are grateful to Fred for his contribution over
the previous two years in building the sales of our
first-generation products, expanding our network of production
partners around the world, securing commercial launches of products
containing SlimBiome(R) with retailers in numerous countries, and
in setting up the Functional Fibres division's quality system, and
we look forward to his continued support in his new role.
We have also strengthened our senior executive team below the
main Board, as the Chief Executive reports below.
Outlook
We have made a strong start to the current year, continuing to
expand sales of our proven first-generation products whilst
building the scientific and clinical evidence base needed to
de-risk our highly innovative second-generation products and
maximise their commercial potential in the future. Our new products
open up significantly larger market opportunities, which we are
well placed to exploit through an established, low overhead,
sustainable business model that has demonstrated its ability to
deliver a rapid increase in scale.
Already this year we have been able to report agreements and
product launches that secure increased SlimBiome(R) sales in the
UK, USA, Africa, India and wider Asia; the extension to two new
territories in our agreement with Actial Farmaceutical for the
distribution of CholBiome(R) and CholBiome(R)(x3) ; and success in
long term stability studies that assure the shelf life of
SlimBiome(R) Medical, CholBiome(R) and CholBiome(R)(x3) , which
will allow OptiBiotix and its partners to place larger orders for
these products, so reducing the cost of goods and increasing
margins. Our manufacturing partner is making strong progress with
the first industrial scale production of SweetBiotix(R), and we
have begun to explore the full potential of LP(LDL) (R) as a drug
biotherapeutic.
Although the COVID-19 pandemic has presented some significant
challenges over the last year in diverting commercial, medical and
governmental attention away from the markets we address and
delaying decision-making by some partners, we are confident that
the issues of obesity, high cholesterol and diabetes will remain
key areas of concern worldwide in the years ahead, and that the
pandemic experience will drive increased interest in science-based
products to address these challenges.
The strengthening of our Board and senior management since the
beginning of the year give me confidence in our ability to continue
to grow the business, and to deliver growing value for our
shareholders in the longer term.
N Davidson
Chairman
16 June 2021
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. The Company develops unique, innovative products
protected by an extensive and growing international portfolio of
patents and trademarks. Our two-stage strategy and low-cost
business model are designed to maximise the earning potential of
each of our products while limiting our investors' risk, achieving
global access to fast-growing markets by working with a range of
local partners who are recognised and respected as leaders in their
fields.
STRATEGIC DEVELOPMENT
We are successfully progressing a two-stage strategy that is
delivering as planned, with our first-generation products, LP(LDL)
(R) and SlimBiome(R), generating rapid revenue growth against a low
and decreasing cost base enabling us to achieve profitability in
our two principal Probiotic and Functional Fibre divisions. This
was a substantive change from divisional losses of GBP467,704 for
ProBiotix and GBP451,572 for the functional fibres division
reported in 2019. The second stage of our strategy is delivering on
the huge potential of our second-generation products: the
SweetBiotix(R) family of functional fibres that act as low calorie,
prebiotic sweeteners; microbiome modulators; and drug
biotherapeutics. These products carry higher development risks than
our first-generation products but address much larger market
opportunities, affording very substantial potential for future
growth in revenues and profits and shareholder value.
During 2020 we reached a turning point with our first-generation
products gaining a commercial position and brand recognition in
over 120 countries. These products were designed with a low
development risk with the aim of establishing the Company's
industry credibility, and testing our business model in the market.
This has been achieved with the conclusion of multiple deals with
large retail and pharmaceutical partners including Alfasigma,
Agropur, Holland & Barret, and Optipharm, with OptiBiotix
increasingly being identified as a key player in the microbiome
space in industry reports. Holland and Barrett and AlfaSigma
launched products in the first quarter of 2020 and Optipharm in the
last quarter. Whilst retail agreements typically have lower
margins, they enhance the credibility and consumer awareness of our
products, and with it, confidence in our brand.
The fact that our products are now increasingly becoming
associated with internationally recognised retail and
pharmaceutical partners and established brands creates a virtuous
circle of further interest from other potential partners and
markets.
FINANCIAL RESULTS
As the Chairman has noted, Group sales for the 12 months ended
31 December 2020 (prior period: 13 months ended 31 December 2019)
more than doubled to GBP1,523,247 (2019: GBP744,883). This 104%
increase in revenues would have +placed OptiBiotix Health among the
top ten growth companies in the UK during 2020 ( The UK's Top Ten
Fastest Growing Companies Revealed, Forbes August 2020).
Both our principal divisions contributed to this strong sales
performance and transitioned to profitability during the year.
The Functional Fibres division (SlimBiome(R), OptiBiome(R) and
WellBiome(R)) grew sales by 151% to GBP557,539 (2019: GBP222,235)
despite the challenging trading environment created by COVID-19,
which limited our partners' ability to innovate, formulate and
launch new products during the year. The division delivered
positive EBITDA of GBP67,271, compared with an EBITDA loss of
GBP451,572 in the previous period.
The Probiotic division, our wholly owned subsidiary Probiotix
Health Ltd (LP(LDL) (R)), increased sales by 107% to GBP821,126
(2019: GBP397,831), despite a number of customers postponing
product launches or temporarily shifting their focus to immune
health products in response to the Coronavirus pandemic. The
division generated positive EBITDA of GBP88,762, compared with an
EBITDA loss of GBP467,704 in 2019.
Our smaller Consumer Health division, operating our own online
store, grew sales by 17% to GBP137,024 (2019: GBP117,560). This
business continues to serve as a valuable shop window for testing
new products with consumers, and has helped us to achieve
successful product launches with partners including Holland &
Barrett and Alfa Sigma.
Group administrative expenses, excluding non-cash items such as
share-based payments and amortisation, reduced by 27% to
GBP1,616,069 (2019: GBP2,204,217) as increased sales volumes
enabled us to renegotiate contract terms with our commercial
partners to deliver improved margins.
As the Chairman has noted, the Group's net profit includes the
benefit of a substantial increase in the value of our holding in
SkinBio Therapeutics plc ('SBTX") during the year. SBTX is making
strong progress towards commercialising its products and we believe
that it will prove to an appreciating asset for our shareholders in
the future. It is worth noting that our initial investment of
approximately GBP700,000 in this business in 2016 has delivered an
investment asset now worth circa GBP25m as at 1 June 2021. We are
pleased that our strategy of developing divisions as separate legal
entities with the potential for a trade sale or separate public
listing has helped create such a valuable asset to OptiBiotix
shareholders.
We will continue to consider other opportunities which
capitalise on growing investor interest investment in the
microbiome space in both the UK and international markets where
they provide scope for enhancing shareholder value.
COMMERCIAL UPDATE
We signed a total of 27 new commercial agreements during the
year ended 31 December 2020: 18 for SlimBiome(R) and related
products in the Functional Fibres division, and 9 for LP(LDL) (R)
in ProBiotix Health.
Of note were deals with Holland and Barrett, Optipharm, and US
partners that open up retail opportunities in the UK, Australia,
parts of Asia, the Middle East, and North America. Announcing such
deals increases industry awareness of OptiBiotix's brands within
the industry, and changes the nature of partner discussions as the
commercial benefits are established in more territories. Growing
brand awareness increases the value of a product, and ultimately
shareholder value, and is particularly important and valued by
large corporates. This is in line with our strategic aim of growing
the awareness of our ingredient and finished product brands around
the world. Deals with Genuine Health (Canada/USA), Granja Pocha
(Dairy: Uruguay) and Ayalla (Brazil), and at the end of the year,
UITC (Singapore) support this approach and open up markets of
strategic importance in the USA, South America, and Asia. Having
products and brand presence in multiple territories is really
important for corporate partners or potential corporate acquirers
as it shows our products have international reach and appeal to
customers around the world, and are not restricted to national
markets. This is a major value enhancer as not all products are
able to cross international boundaries.
LP(LDL) (R)
Sales of LP(LDL) (R) as an ingredient or final product grew by
107% during the year. We have developed the science, carried out
human studies to confirm product safety and efficacy, protected our
commercial interests with a broad IP portfolio comprising some 30
patents, and built a supply chain of licensed partners to
manufacture, formulate, and distribute this product around the
world. We now have partners commercialising LP(LDL) (R) in over 60
countries including the world's largest probiotic market (USA: Seed
Health) and second largest (Italy: AlfaSigma). The next stage of
our strategy is to grow sales with existing partners, extend
territories and applications, and continue to sign up new partners.
In addition to growing sales, the Company is renegotiating
contracts as volumes increase to reduce the cost of goods. The
renegotiation of our contract with Sacco Srl from a profit sharing
to a manufacture supply agreement where we buy from Sacco and then
sell product to partners ourselves has significantly improved
margins.
Particularly noteworthy developments during the year were the
successful launch of AlfaSigma's Ezimega 3 product and the
commercial growth of Seed Health's Daily Synbiotic. These achieved
strong early growth despite the emerging COVID-19 pandemic which
impacted on sales in the second half of the year. The signing of an
agreement with Actial Farmaceutica Srl for the distribution of
CholBiome(R) products was a significant commercial achievement and
brought further credibility to the LP(LDL) (R) brand. Actial is the
developer of one of the world's best-known probiotic brands -
VSL(#) 3(R) - and their products have a reputation for their strong
science and clinical studies amongst hospital clinicians, GPs and
pharmacists.
The Company has now published six studies on LP(LDL) (R) in peer
reviewed journals or as abstracts at international scientific
conferences. These cover the safety and performance of LP(LDL) (R)
in human studies, the three mechanisms of action by which LP(LDL)
(R) reduces blood lipids, and LP(LDL) (R)'s antimicrobial activity
against a wide range of clinically important human and/or animal
pathogens including Campylobacter, Shigella, Salmonella, E.coli
O157, and Clostridium difficile. The results of two published
independent human studies in different countries show significant
reductions in both blood pressure and cholesterol and the product
to be safe and well tolerated.
Publications and presentations help to differentiate LP(LDL) (R)
from products which are sold solely on marketing and reduce the
risk of commoditisation and price erosion.
LP(LDL) (R) has been determined as Generally Recognized As Safe ("GRAS") by the US Food and Drug Administration (FDA) and has pharmaceutical GMP manufacture designation. This, together with the presence of a scientific and clinical evidence base, gives it major points of differentiation from other probiotics. These designations increase the market attractiveness of LP(LDL) (R) to pharmaceutical partners either used by itself, or as combination treatment to help lower the dose and potential side effects of statins. This extends its potential beyond the traditional supplement market into broader therapeutic opportunities within pharmaceutical consumer health businesses or as a drug biotherapeutic with pharmaceutical partners.
SlimBiome(R)
Sales of SlimBiome(R) as an ingredient or final product grew by
151% during the year. This was largely driven by partners in the
UK, Australia and the USA launching new retail products, or
building stock levels for the launch of products. Of particular
note is the extension of SlimBiome(R) into everyday foods like
muesli and porridge and the development of healthy snacks like
fruit and fibre gummies under the SnackSmart(R) brand. The launch
of WellBiome(R) during the year reflects the growing interest from
partners in a science backed Health and Wellbeing microbiome
product which taps into a global trend for Health & Wellness, a
market estimated to be worth US$4.2 trillion in 2019 with the
digestive health segment accounting for US$60 billion.
SweetBiotix(R)
SweetBiotix(R) is a family of products based on the concept of
creating a low calorie sweet fibre that has a low glycaemic index,
which enhances the microbiome. The concept uses new science, new
manufacturing processes, and represents a step change from existing
products on the market or known to be under development. Our aim is
to build a broad range of products suitable for a wide range of
application areas which can meet the needs of multiple partners on
applications as diverse as dairy, cereals, and hot and cold
beverages. Each of these has to be assessed in terms of flavour
optimisation, stability, dosage, safety, tolerance, health
benefits, and the final product cost profile.
The agreement signed with a US partner in the second half of
2020 represented a significant milestone in the commercialisation
of SweetBiotix(R) products. The agreement, for one part of the
SweetBiotix(R) portfolio, grants an exclusive licence in return for
our partner making a significant investment to cover all the
manufacturing, marketing and commercialisation costs. In return, we
will receive upfront, annual and product launch royalties from our
US partner, plus royalties on all future product sales. We have
also negotiated enhanced royalty payments on sales of
SweetBiotix(R) products by our partner to 11 application /
innovation partners.
INTELLECTUAL PROPERTY
There has been a rapid increase in the number of patents filed
in the microbiome space in the last 10 years, and OptiBiotix and
Probiotix Health have together filed numerous patents to protect
their commercial interests and create first mover advantage in this
evolving field. This is being supported by a large investment -
typically of over GBP250,000 per year - in patents and trademarks
to broaden protection in international markets
Our Intellectual Property ('IP') strategy has been based on
building a portfolio of overlapping patents to protect our
commercial interests and reduce the risk of any particular patents
failing to grant or being opposed by a competitor. This means that
we have multiple composition, application, and process patents to
protect each area of our business. Whilst this approach is more
costly, it reduces our future commercial risk. As patents are
granted in key territories (typically the US, Europe, Canada,
Japan, Australia, India) the Group has been able to refine its
patent portfolio to reduce IP costs whilst continuing to protect
its commercial interests.
Our strategy and investment have enabled the Group to build an
extensive and valuable intellectual property portfolio of some 70
patents worldwide. In addition to these patents, we have registered
over 68 trademarks to provide what is called 'double IP' - a
combination of patents and supporting trademarks which allows
OptiBiotix to build its trademarked brands supported by its
patents. This approach further reduces risk and in combination
creates a valuable IP portfolio in the microbiome field.
KEY ACHIEVEMENTS
During the period to date we have signed new agreements,
launched new products, extended our agreements with existing
partners and completed successful human studies on the
effectiveness of our products, and the highlights of the year were
as follows:
New agreements
-- Concluding an agreement with Optipharm, whose flagship brand
Optislim is Australia's leading weight management brand, for the
exclusive use of our OptiBiome(R) weight management ingredient in
over 20 countries including Australia, parts of Asia, New Zealand,
Middle East, Gulf States and North America
-- Signing a three-year distribution agreement with a subsidiary
of Pierce Group Asia granting it exclusive rights to import and
commercialise OptiBiotix's SlimBiome(R) and LP(LDL) (R) and to
manufacture, develop, and sell a wide range of finished products to
China and Hong Kong
-- Granting MAXCARE Inc exclusive rights to commercialise
OptiBiotix's SlimBiome(R) proprietary weight management technology
in Taiwan
-- The signature of a licensing agreement with Granja Pocha S.A.
for the inclusion of ProBiotix's patented probiotic strain LP(LDL)
(R) into a functional yogurt product in Uruguay, South America
-- Conclusion of a new licensing agreement with Velinoff Pharma
Ltd for the distribution of ProBiotix's products CholBiome(R) and
CholBiome(R)(X3) , which contain OptiBiotix's patented probiotic
strain LP(LDL) (R), in Bulgaria
-- Reaching a one year exclusive distribution agreement with
Prosperous Pharma, based in Lebanon, to distribute and
commercialise OptiBiotix's SlimBiome(R) Medical to the Gulf
Cooperation Council States and the Levant region
-- A non-exclusive distribution agreement with Actial
Farmaceutica Srl for the distribution of CholBiome(R) and
CholBiome(R)(X3) in Australia, New Zealand, Indonesia and Thailand,
under the VSL(#) 3(R) range
-- An exclusive agreement with a US company for the large-scale
manufacture and commercialisation of a number of SweetBiotix(R)
products in return for upfront, milestone, launch and royalty
payments
-- An exclusive distribution agreement granting United Italian
Trading Corporation (Pte) Ltd exclusive rights to distribute
SlimBiome(R) Medical, CholBiome(R) and CholBiome(R)(X3) in
Singapore
-- The grant of a non-exclusive LP (LDL) (R) license to Genuine
Health Inc for a cardiovascular health product in Canada and the
USA
Product launches
-- The launch of a branded SlimBiome(R) product range with
Holland & Barrett, the first agreement with a major retailer to
market our proprietary weight management technology
-- The launch in Italy by ALFASIGMA S.p.A. of a food supplement
containing our proprietary cholesterol reducing LP(LDL) (R)
probiotic strain, providing an entry into the largest and fastest
growing probiotic market in Europe
-- The launch of SlimBiome(R) in the North American market by
Agropur, following our grant to them in 2019 of an exclusive
licence to manufacture, supply and distribute our SlimBiome(R)
weight management technology in the USA, Canada and Mexico
-- The launch of SlimBiome(R) containing products in Walmart and
Costco in the USA and Canada through US partners Smart For Life and
Evolution 18
-- The launch of WellBiome(R), a patented supplement to improve
gut health; this is a proprietary blend of prebiotic functional
fibres, functional dietary fibres and minerals optimised to promote
the diversity of the gut microbiome, and is an evolution of our
proven SlimBiome(R) functional ingredient formulated to support
weight loss and weight management
-- The launch of a range of meal replacement shakes and bars
containing our OptiBiome(R) proprietary weight management
technology under the Optislim(R) brand with Woolworths,
ChemistWarehouse and on OptiPharm Pty Ltd's online store in
Australia and New Zealand in October 2020
Extensions of product range or territories with existing
partners
-- Signing a new global manufacturing and supply agreement for
LP(LDL) (R) with Sacco S.r.l., extending our existing agreement
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
-- Extension of the existing terms and territories for our
partners CTC Group and Cambridge Commodities for the distribution
of SlimBiome(R), SlimBiome(R) Medical and GoFigure(R)
-- Extension of the territories with Extensor to distribute our
GoFigure(R) consumer weight management products in Ukraine,
Estonia, Lithuania, Latvia, Kazakhstan, Kyrgyzstan, Tajikistan,
Uzbekistan, Turkmenistan, Armenia, Azerbaijan, Georgia, Belarus,
Moldova and Russia
-- Extension of our existing terms to include WellBiome(R) with
Draco Ingredients GmbH in Germany; Agropur MSI LLC in the USA,
Canada and Mexico; Maxum Foods in Australia and New Zealand; and
CTC Holdings BV in the Philippines, Vietnam, Indonesia, Colombia,
the Dominican Republic and Guatemala
-- Extension of the terms, territories, and products covered by
our existing distribution with CTC Holding BV for the sale of
CholBiome(X3) to include LP(LDL) (R) as a bulk ingredient and three
additional products: CholBiome, CholBiome(BP) and CholBiome(VH,,)
and to extend coverage from the Philippines to include
non-exclusive distribution rights for Vietnam, Indonesia, Colombia,
the Dominican Republic and Guatemala
-- Extending the terms of our original exclusive licence
agreement for OptiBiome(R) with OptiPharm Pty Ltd. ("OptiPharm") to
include Europe in addition to Australia, parts of Asia, New
Zealand, Middle East, Gulf States and North America
New human studies
-- Completion of a successful human study by ProBiotix Health,
in partnership with Nutrilinea S.r.l., demonstrating that a new
food supplement formulation containing LP(LDL) (R) can reduce high
blood pressure (hypertension)
New drug trial authorisation
-- USA FDA authorisation of an Investigational New Drug ('IND')
trial by our partner Seed Health of a probiotic containing LP(LDL)
(R), to investigate the role of the gut microbiome in patients with
Irritable Bowel Syndrome
MANAGEMENT
There were no changes to the Group Board during the year, though
as the Chairman has reported we have made a number of important new
executive and non-executive appointments since the beginning of the
new financial year.
We have also made a number of senior appointments below the
level of the main Board. In January 2021 Aneta Zlotokowska joined
us from Tesco as Head of Quality & Operations, with a remit to
ensure that we meet the quality and regulatory requirements of our
growing network of corporate and retail partners around the world.
Dr Taru Jain joined us in March 2021 to focus on business
development and sales growth in the strategically important Indian
and Asian markets, and Christopher Nother joined us in January 2021
on a 6 month part-time consultancy basis to explore the potential
for LP(LDL) (R) in pharmaceutical markets as a live biotherapeutic
or consumer health product. The Company now has more opportunities,
with an increasing number of larger partners, than it is able to
meet within its existing capacity and will continue to evolve the
team to fully exploit the opportunity within the window of
opportunity.
As noted in the interim report, Steve Prescott left his position
as CEO of ProBiotix Health Ltd by mutual agreement at the end of
May 2020, since when I have acted as CEO of the division with the
support of Mikkel Hvid-Hansen in the expanded role of Commercial
Director.
OUTLOOK
Our two-stage strategy is delivering as planned, with our
first-generation products, LP(LDL) (R) and SlimBiome(R), generating
revenue growth and profitability in our two principal divisions.
The company is now in the strongest position it has ever been in
with an exciting technology pipeline, broad intellectual property
portfolio in the microbiome, a number of clinical studies showing
product safety and efficacy, growing international brand presence,
strong sales, forward orders, and balance sheet. This provides the
base of a sustainable business on which to grow the business.
The second stage of our strategy is delivering on the huge
potential of our second-generation products: the SweetBiotix(R)
family of functional fibres that act as low calorie, prebiotic
sweeteners; microbiome modulators; and drug biotherapeutics.
We have continued to make strong progress since the beginning of
the current financial year with strong sales growth and larger
order sizes as existing partners extend their product range.
Significant developments in the year to date include:
-- The extension of Holland & Barrett ("H&B")'s range of
their own brand SlimExpert products containing SlimBiome(R) from
three to eight, including meal replacement and porridge lines, as
direct result of H&B tasting and testing our own finished
product applications sold through our online store
-- The launch of SlimBiome(R) and OptiBiome(R) products in Asia,
through partners in Thailand, Taiwan and Singapore expected to
contribute revenues in the current financial year and act as a
stepping stone to the larger China market
-- ProBiotix Health Ltd, entered a deal for LP LDL(R) with
Compson Biotechnology Inc. in Taiwan, one of the largest
distribution platforms in South East Asia
-- The signing of a new agreements with Dipromed for the sale of
SlimBiome(R) Medical and CholBiome(R) products in Morocco and
Algeria
-- Expansion of SlimBiome(R) sales in India through extension of
Anthem Biosciences' Metalite Pro product range and the launch of
the ZeoSlim range of meal replacements by Zeon Lifesciences. This
is a country of strategic importance to our growth plans and we
anticipate reporting further news in this region
-- The launch of Dietworks Appetite control gummies containing
SlimBiome(R) in the USA through online and retail channels across
the USA opening up another point of access to the large US
market
-- Extension of territories with Actial Farmaceutica Srl to
distribute CholBiome(R) and CholBiome(R)(X3) under the
VSL#Cardio(R) range to France and Malaysia in addition to their
existing territories of Australia, New Zealand, Indonesia and
Thailand, with further territory extensions and product launches
expected in the course of the current year
-- Good progress by our SweetBiotix(R) manufacturing partner in
the production of products on an industrial scale, paralleled by
the release of a number of independent peer-reviewed publications
(R)
-- Exploration of the potential to use LP(LDL) (R) in the
pharmaceutical sector as either an 'over the counter' product or a
drug biotherapeutic in markets outside the USA. We hope to be
shortly publishing placebo-controlled human studies which
demonstrate show that LP(LDL) (R) can achieve similar reductions in
total cholesterol and LDL (bad cholesterol) to statins, without any
side effects
Investor and consumer interest in the human microbiome continues
to grow, presenting us with a market opportunity that is large and
expanding. OptiBiotix is ideally placed to exploit this
opportunity, with the Company having first generation products
which have won multiple awards, published studies in peer reviewed
journals, granted patents, doubling sales, and a number of partners
increasing both their product range and territorial reach. We are
seeing a growing number of deals in Asia as we build brand
awareness and product reputation in countries like Taiwan and
Singapore to help open up opportunities for the larger Asia
markets. We believe that each of these first generation products
have the potential for GBP10-20m sales per annum which on a 10X
multiple would value each of these businesses at GBP100m to GBP200m
each.
Our exciting second-generation SweetBiotix (R) products offer
huge potential as healthy alternatives to sugar and sweeteners
whilst our microbiome modulators create the potential to precision
engineer the microbiome to positively impact specific human health
conditions. We are pleased to see our SweetBiotix(R) manufacturing
partner making strong progress scaling up these exciting products
to industrial scale. Our partner agreed to make a six-figure
payment on signing the agreement and at 12 monthly intervals until
product launch when they will pay royalties on sales. This is
unusual in the food and beverage industry and highlights the value
our partner places on this product. We are also pleased to note
that Seed Health, has received FDA Investigational New Drug (IND)
approval to undertake a human clinical trial with its multi-species
probiotic product containing OptiBiotix's LPLDL in patients with
irritable bowel syndrome. This has the potential to be a
significant value enhancing step if this study is successful and
the product is approved as a drug. OptiBiotix has also made
significant progress with its microbiome modulators with early data
suggesting we have an approach which allows us to manufacture these
at scale. If confirmed, this is a major step forward in the
commercialisation process and when reported should enhance the
commercial appeal of these products to corporate partners.
The strong growth in our revenues, the achievement of divisional
profitability, the continuing flow of new agreements and product
launches, the strength of our development pipeline, and the
strengthening of our Board and senior executive team allow me to
look forward with confidence to the further progress of the Company
in the current year and beyond.
Stephen O'Hara
Chief Executive
16 June 2021
Consolidated statement of comprehensive income
Restated
Notes Year ended Period ended
31 December 31 December
2020 2019
GBP GBP*
Revenue from contracts with
customers 1,523,247 744,883
Cost of sales (643,428) (352,080)
-------------- --------------
Gross Profit 879,819 392,803
Share based payments (127,248) (137,320)
Depreciation and amortisation (247,895) (217,904)
Other administrative costs (1,616,069) (2,204,217)
Total administrative expenses 6 (1,991,212) (2,559,441)
-------------- --------------
Operating loss (1,111,393) (2,166,638)
Finance cost 5 (44,954) (44,467)
Finance income 5 98 110
-------------- --------------
(44,856) (44,357)
Share of loss from associate 12 (303,448) (546,316)
Gain on disposal of an associate 12 4,165,223 -
Gain on investments 12 2,955,739 -
Profit on disposal of investments 12 48,967 265,481
-------------- --------------
Profit/(Loss) before tax 5,710,232 (2,491,830)
Corporation tax 8 91,635 123,468
-------------- --------------
Profit/(Loss)for the period 5,801,867 (2,368,362)
Other comprehensive income - -
-------------- --------------
Total comprehensive income
for the period 5,801,867 (2,368,362)
Total comprehensive income
attributable to:
Owners of the company 5,801,867 (2,367,247)
Non-controlling interests - (1,115)
-------------- --------------
5,801,867 (2,368,362)
Earnings per share from continued
operations
Basic profit/(loss) per share
- pence 9 6.65p (2.78)p
Diluted profit/(loss) per
share - pence 6.07p (2.78)p
Consolidated Statement of Financial Position
Restated
Notes As at As at
31 December 31 December
2020 2019
ASSETS GBP GBP*
Non-current assets
Intangibles 10 2,735,621 2,632,778
Property, plant & equipment 11 - 393
Investments 12 8,962,564 2,842,834
-------------- --------------
11,698,185 5,476,005
-------------- --------------
CURRENT ASSETS
Inventories 13 184,236 62,761
Trade and other receivables 14 645,823 607,308
Current tax asset 8 310,435 190,435
Cash and cash equivalents 15 864,680 455,608
-------------- --------------
2,005,174 1,316,112
-------------- --------------
TOTAL ASSETS 13,703,359 6,792,117
EQUITY
Shareholders' Equity
Called up share capital 16 1,758,812 1,708,811
Share premium 17 2,537,501 1,646,873
Share based payment reserve 17 867,307 740,059
Merger relief reserve 17 1,500,000 1,500,000
Convertible debt - reserve 17 92,712 92,712
Retained Earnings 17 5,058,968 (742,899)
Non-controlling interest 17 35,782 35,782
-------------- --------------
Total Equity 11,851,082 4,981,338
-------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 18 518,995 561,624
-------------- --------------
518,995 561,624
-------------- --------------
Non - current liabilities
Deferred tax liability 19 561,523 522,350
Convertible loan notes 20 771,759 726,805
-------------- --------------
1,333,282 1,249,155
-------------- --------------
TOTAL LIABILITIES 1,852,277 1,810,779
-------------- --------------
TOTAL EQUITY AND LIABILITIES 13,703,359 6,792,117
* The prior years figures have been restated, refer to notes 7
and 12
These financial statements were approved and authorised for
issue by the Board of Directors on 16 June 2021 and were signed on
its behalf by:
S P O'Hara
Director
Company Registration no. 05880755
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
2018 1,694,488 1,624,348 1,603,904 36,897 - 1,500,000 602,739 7,062,376
Loss for
the period
(restated*) - (2,367,247) - (1,115) - - - (2,368,362)
Issues of
shares
during
the period 14,323 - 42,969 - - - - 57,292
Share
options
and
warrants - - - - - - 137,320 137,320
- - - - 92,712 - - 92,712
------------ -------------- ------------ ------------ ---------- ------------ ------------ --------------
Restated
Balance at
31 December
2019 1,708,811 (742,899) 1,646,873 35,782 92,712 1,500,000 740,059 4,981,338
Profit for
the year - 5,801,867 - - - - - 5,801,867
Issues of
shares
during
the year 50,001 - 950,003 - - - - 1,000,004
Share issue
costs - - (59,375) - - - - (59,375)
Share
options
and
warrants - - - - - - 127,248 127,248
------------ -------------- ------------ ------------ ---------- ------------ ------------ --------------
Balance at
31 December
2020 1,758,812 5,058,968 2,537,501 35,782 92,712 1,500,000 867,307 11,851,082
* The prior year's figures have been restated, refer to notes 7
and 12
Consolidated Statement of Cash Flows
Notes Period ended
31 December
2019
Year ended
31 December
2020
GBP GBP
Cash flows from operating activities
Cash utilised by operations 1 (928,061) (2,036,532)
Tax received - 313,173
Interest paid - (57)
Interest received 98 168
------------ ------------
Net cash outflow from operating
activities (927,963) (1,723,248)
Cash flows from investing activities
Purchase of intangible assets (350,345) (594,923)
------------ ------------
Net cash outflow from investing
activities (350,345) (594,923)
------------ ------------
Cash flows from financing activities
Share issues 940,629 57,292
Issue of loan notes - 775,050
Disposal of investments 746,751 617,130
------------ ------------
Net cash inflow from financing
activities 1,687,380 1,449,472
------------ ------------
Increase/(decrease) in cash
and equivalents 409,072 (868,699)
Cash and cash equivalents at
beginning of period 455,608 1,324,307
------------ ------------
Cash and cash equivalents at
end of period 15 864,680 455,608
Notes to the Consolidated Statement of Cash Flows
1. Reconciliation of loss before income tax to cash outflow from operations
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Operating loss (1,111,393) (2,166,638)
(Increase) in inventories (121,475) (32,328)
(Increase) in trade and other
receivables (37,190) (233,504)
(Decrease)/Increase in trade
and other payables (42,630) 40,634
Depreciation charge 393 2,750
Share Option expense 127,248 137,320
Amortisation of patents and development
costs 247,502 215,234
Net forexdifferences 9,484 -
------------ ------------
Net cash outflow from operations (928,061) (2,036,532)
2. Cash and Cash Equivalents
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Cash and cash equivalents 864,680 455,608
Company Statement on Financial Position
Notes As at As at
31 December 31 December
2020 2019
ASSETS GBP GBP
Non-current assets
Investments 12 11,043,469 6,212,556
Other receivables 14 329,057 5,941,360
-------------- --------------
11,372,526 12,153,916
-------------- --------------
CURRENT ASSETS
Trade and other receivables 14 89,420 24,707
Cash and cash equivalents 15 532,769 139,243
-------------- --------------
622,189 163,950
-------------- --------------
TOTAL ASSETS 11,994,715 12,317,866
EQUITY
Shareholders' Equity
Called up share capital 16 1,758,812 1,708,811
Share premium 17 2,537,501 1,646,873
Merger relief reserve 17 1,500,000 1,500,000
Share based payment reserve 17 867,307 740,059
Accumulated profit 17 5,268,171 6,436,938
-------------- --------------
Total Equity 11,931,791 12,032,681
-------------- --------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 18 62,924 285,185
-------------- --------------
TOTAL LIABILITIES 62,924 285,185
-------------- --------------
TOTAL EQUITY AND LIABILITIES 11,994,715 12,317,866
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 loss for the parent Company for the year was GBP1,168,767
(2019: Profit GBP113,804).
These financial statements were approved and authorised for
issue by the Board of Directors on 16 June 2021 and were signed on
its behalf by:
S P O'Hara
Director
Company Registration no. 05880755
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
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
year 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
Loss for the
year - (1,168,767) - - - (1,168,767)
Issues of
shares
during the
year 50,001 - 950,003 - - 1,000,004
Financing
Costs - - (59,375) - - (59,375)
Share options
and
warrants - - - - 127,248 127,248
------------ -------------- -------------- ------------ ------------ --------------
Balance at 31
December
2020 1,758,812 5,268,171 2,537,501 1,500,000 867,307 11,931,791
Company Statement on Cash Flows
Notes
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Cash flows from operating activities
Cash utilised by operations 1 (369,036) (1,702,719)
Interest received 46 104
-------------- --------------
Net cash outflow from operating
activities (368,990) (1,702,615)
Cash flows from financing activities
Net amounts to subsidiaries (924,864) -
Share issues 940,629 57,292
Proceeds from disposal of investments 746,751 617,129
-------------- --------------
Net cash inflow from financing
activities 762,516 674,421
-------------- --------------
Increase/(decrease) in cash
and equivalents 393,526 (1,028,194)
Cash and cash equivalents at
beginning of period 139,243 1,167,437
-------------- --------------
Cash and cash equivalents at
end of period 15 532,769 139,243
Notes to Company Statement on Cash Flows
1. Reconciliation of loss before income tax to cash generated from operations
Year ended
31 December Period ended
2020 31 December 2019
GBP GBP
Operating loss (6,760,976) (457,816)
(Decrease) in trade
and other receivables (64,713) (1,438,409)
Loan Write off 6,301,667 -
Increase in trade
and other payables 27,738 56,186
Share Option expense 127,248 137,320
------------ ------------
Net cash outflow
from operations (369,036) (1,702,719)
2. Cash and Cash Equivalents
As at As at
31 December 31 December
2020 2019
GBP GBP
Cash and cash equivalents 532,769 139,243
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 functional currency is GBP.
The principal accounting policies are summarised below. They
have all been applied consistently throughout the period under
review.
Going concern
The financial statements have been prepared on the assumption
that the Group is a going concern. When assessing the foreseeable
future, the Directors have looked at the budget for the next 12
months from the date of this report, the cash at bank available as
at the date of approval of these financial statements and are
satisfied that the group should be able to cover its quoted
maintenance costs, other administrative expenses and its ongoing
research and development expenditure.
Management have considered its forecast of the group's cash
requirements reflecting contracted and anticipated future revenue
and the resulting net cash outflows. Management have not yet seen a
material disruption to the business as a result of the COVID-19
outbreak 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 year end the Group successfully sold 2,000,000
Skinbiotherapeutics PLC shares which raised GBP900,936 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 January 2020 and have not been early
adopted:
New Standards, amendments and interpretations issued but not
effective
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial period beginning 1 January 2020 and have not been early
adopted:
Amendment to IFRS 16, 'Leases' 1 June 2020
- Covid-19 related rent concessions
Amendments to IFRS 9, IAS 39, 1 January 2021
IFRS 7, IFRS 4 and IFRS 16 Interest
Rate Benchmark Reform - Phase
2
Amendments to IAS 1, Presentation 1 January 2022
of financial statements' on classification
of liabilities
A number of narrow-scope amendments 1 January 2022
to IFRS 3, IAS 16, IAS 17 and
some annual improvements on IFRS
1, IFRS 9, IAS 41 and IFRS 16
The Directors anticipate that the adoption of these standard and
the interpretations in future period will have no material impact
on the financial statements of the company.
2. Accounting Policies (continued)
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Changes in the Group's ownership interests in subsidiaries that
do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the
Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and
attributed to owners of the Company.
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. Where certain assets
of the subsidiary are measured at revalued amounts or fair values
and the related cumulative gain or loss has been recognised in
other comprehensive income and accumulated in equity, the amounts
previously recognised in other comprehensive income and accumulated
in equity are accounted for as if the Company had directly disposed
of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings).
The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IFRS 9
governance "Financial Instruments: Recognition and Measurement" or,
when applicable, the cost on initial recognition of an investment
in an associate or a jointly controlled entity.
2. Accounting Policies (continued)
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition-date fair values of the assets transferred
by the Group, liabilities incurred by the group to the former
owners of the acquiree and the equity interests issued by the group
in exchange for control of the acquiree. Acquisition-related costs
are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
- liabilities or equity instruments related to share-based
payment transactions of the acquiree or the replacement of an
acquiree's share-based payment transactions with share-based
payment transactions of the group are measured in accordance with
IFRS 2 Share-based Payment at the acquisition date; and
- assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
standard.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after assessment, the net
of the acquisition-date amounts of the identifiable assets acquired
and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
Revenue recognition
Revenue is measured at the fair value of sales of goods and
services less returns and sales taxes. The Group has analysed its
business activities and applied the five-step model prescribed by
IFRS 15 to each material line of business, as outlined below:
Sale of products
The contract to provide a product is established when the
customer places a purchase order. The performance obligation is to
provide the product requested by an agreed date, and the
transaction price is the value of the product as stated in our
order acknowledgement. The performance obligation is typically met
when the product is dispatched and so revenue is primarily
recognised for each product when dispatching takes place. In some
limited situations when the product is complete but the customer is
unable to take delivery the performance obligation is met when the
customer formally accepts transfer of risk and control even though
the product has not been dispatched.
License arrangements
Revenue is recognised when the customer obtains control of the
rights to use the IP. The performance obligations are considered to
be distinct from any ongoing distribution arrangements which are
treated in line with sales of products.
2. Accounting Policies (continued)
Milestone payments
Where the transaction price includes consideration that is
contingent upon a future event or circumstance, the contingent
amount is allocated entirely to that performance obligation if
certain criteria are met. Revenue is recognised at the point of
time of the performance obligation being satisfied.
Investments in associates
Associates are those entities in which the Group has significant
influence, but not control or joint control over the financial and
operating policies. Significant influence is presumed to exist when
the Group holds between 20 and 50 percent of the voting power of
another entity. Investments in associates are accounted for under
the equity method and are recognised initially at cost. The cost of
the investment includes transaction costs.
The consolidated financial statements include the Group's share
of profit or loss and other comprehensive income of
equity-accounted investees, after adjustments to align the
accounting policies with those of the Group, from the date that
significant influence commences until the date that significant
influence ceases.
When the Group's share of losses exceeds its interest in an
equity-accounted investee, the carrying amount of the investment,
including any long-term interests that form part thereof, is
reduced to zero, and the recognition of further losses is
discontinued except to the extent that the Group has an obligation
or has made payments on behalf of the investee.
Investments at fair value
Equity investments are held at fair value at the balance sheet
date with any profit or loss for the year being taken to the Income
statement. The value of listed investments being calculated at the
closing price on the balance sheet date.
Employee Benefits
The Group operates a defined contribution pension scheme.
Contributions payable by the Group's pension scheme are charged to
the income statement in the period in which they relate.
2. Accounting Policies (continued)
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
(i) Current tax
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules using
tax rates enacted or substantially enacted by the statement of
financial position date.
Income tax is recognised in the income statement or in equity if
it relates to items that are recognised in the same or a different
period, directly in equity.
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the taxation authorities.
(ii) Deferred tax
Deferred tax is provided, using the liability method, on
temporary differences at the statement of financial position date
between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences.
Deferred tax assets are recognised for all deductible temporary
differences, carry forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit
will
be available against which the deductible temporary differenced
and the carrying forward or unused tax assets and unused tax losses
can be utilised.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax assets to be utilised. Conversely,
previously unrecognised deferred tax assets are recognised to the
extent that it is probable that sufficient taxable profit that
sufficient taxable profit will be available to allow all or part of
the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on the tax rates and
tax laws that have been enacted or substantively enacted at the
balance sheet date.
Financial instruments and Risk Management
Financial assets and financial liabilities are recognised when
the group becomes a party to the contractual provisions of the
instrument.
Loans and receivables are initially measured at fair value and
are subsequently measured at amortised cost, plus accrued interest,
and are reduced by appropriate provisions for estimated
irrecoverable amounts. Such provisions are recognised in the
statement of income.
Equity investments comprise investments which do have a fixed
maturity and are classified as non current assets if they are
intended to be held for the medium to long term. They are measured
at fair value through profit or loss.
2. Accounting Policies (continued)
Trade receivables are initially measured at fair value and are
subsequently measured at amortised cost less appropriate provisions
for estimated irrecoverable amounts. Such provisions are recognised
in the statement of income.
Cash and cash equivalents comprise cash in hand and demand
deposits and other short-term highly liquid investments with
maturities of three months or less at inception that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Trade payables are not interest-bearing and are initially valued
at their fair value and are subsequently measured at amortised
cost.
Equity instruments are recorded at fair value, being the
proceeds received, net of direct issue costs.
Share Capital - Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of taxation,
from the proceeds.
Financial instruments require classification of fair value as
determined by reference to the source of inputs used to derive the
fair value. This classification uses the following three-level
hierarchy:
Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 - inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices);
Level 3 - inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Inventory
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out (FIFO)
method. Net realisable value is the estimated selling price in the
ordinary course of business, less applicable variable selling
expenses.
2. Accounting Policies (continued)
Impairment of non-financial assets
At each statement of financial position date, the Group reviews
the carrying amounts of its investments to determine whether there
is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the group estimates
the recoverable amount of the cash-generating unit to which the
asset belongs. An intangible asset with an indefinite useful life
is tested for impairment annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. If
the
recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately,
unless the relevant asset is carried at a re-valued amount, in
which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Capital management
Capital is made up of stated capital, premium, other reserves
and retained earnings. The objective of the Group's capital
management is to ensure that it maintains strong credit ratings and
capital ratios. This will ensure that the business is correctly
supported and shareholder value is maximised.
The Group manages its capital structure through adjustments that
are dependent on economic conditions. In order to maintain or
adjust the capital structure, the Company may choose to change or
amend dividend payments to shareholders or issue new share capital
to shareholders. There were no changes to the objectives, policies
or processes during the period ended 31 December 2020.
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.
2. Accounting Policies (continued)
Convertible debt reserve
The convertible debt reserve is the equity component of the
convertible loan notes that have been issued.
Share-based compensation
The fair value of the employee and suppliers services received
in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed over the vesting year is
determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market
vesting conditions are included in assumptions about the number of
options that are expected to vest. At each statement of financial
position date, the entity revises its estimates of the number of
options that are expected to vest. It recognises the impact of the
revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
The fair value of share-based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit
or loss during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated
using the straight-line method to write off their cost over their
estimated useful lives at the following annual rates:
Computer equipment 30%
Useful lives and depreciation method are reviewed and adjusted
if appropriate, at the end of each reporting period.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset and is
recognised in profit or loss in the year in which the asset is
derecognised.
Intangibles - Patents
Separately acquired patents are shown at historical cost.
Patents have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the
straight line method to allocate the cost of the patents over their
estimated useful life of twenty years once the patents have been
granted.
2. Accounting Policies (continued)
Research and Development
Research expenditure is written off to the statement of
comprehensive income in the year in which it is incurred.
Development expenditure is written off in the same way unless the
Directors are satisfied as to the technical, commercial and
financial viability of individual projects. In this situation, the
expenditure is deferred and amortised over the 10 years during
which the Company is expected to benefit.
Merger relief reserve
The merger relief reserve arises from the 100% acquisition of
OptiBiotix Limited whereby the excess of the fair value of the
issued ordinary share capital issued over the nominal value of
these shares is transferred to this reserve in accordance with
section 612 of the Companies Act 2006.
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the financial statements requires management
to make estimates and assumptions concerning the future that affect
the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during
the reporting periods.
The resulting accounting estimates will, by definition, differ
from the related actual results.
-- Share based payments
The fair value of share based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
-- Amortisation
Management have estimated that the useful life of the fair value
of the patents acquired on the acquisition to be 20 years. Research
and developments that have been capitalised in line with the
recognition criteria of IAS38 have been estimated to have a useful
economic life of 10 years. These estimates will be reviewed
annually and revised if the useful life is deemed to be lower based
on the trading business or any changes to patent law.
-- Impairment reviews
IFRS requires management to undertake an annual test for
impairment of indefinite lived assets and, for finite lived assets
to test for impairment if events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. Impairment testing is an area involving management
judgement, requiring assessment as to whether the carrying value of
assets can be supported by the net present value of future cash
flows derived from such assets using cash flow projections which
have been discounted at an appropriate rate. In calculating the net
present value of the future cash flows, certain assumptions are
required to be made in respect of highly uncertain matters.
-- Derecognition of an associate
Management have reviewed the existing relationship with
Skinbiotherapeutics Plc in light of changes in the Group's power to
participate in the financial and operating decisions of the entity,
in line with the requirements of IAS28. Following a significant
dilution in shareholding and a change to the board structure of the
entity, it was determined that the significant influence had been
lost and the associate would be de-recognised.
3. Segmental Reporting
In the opinion of the directors, the Group has one class of
business, in three geographical areas being that of identifying and
developing microbial strains, compounds and formulations for use in
the nutraceutical industry. The Group sells into three highly
interconnected markets, all costs assets and liabilities are
derived from the UK location.
Revenue analysed by market
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Probiotics 821,126 397,831
Functional Fibres* 702,121 347,052
------------ ------------
1,523,247 744,883
* Includes Consumer Health
Revenue analysed by geographical market
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
UK 369,892 197,969
US 654,524 172,352
International 498,831 374,562
------------ ------------
1,523,247 744,883
During the reporting period one customer represented GBP497,416
(32.6%) of Group revenues. (2019: one customer generated GBP172,351
representing 23.1% of Group revenues)
4. Employees and Directors
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Wages and salaries 82,448 53,037
Directors' remuneration* 404,500 647,421
Directors' fees* 406,399 310,832
Social security costs 52,231 74,349
Pension costs 33,518 28,618
------------ ------------
979,096 1,114,257
*Total Directors' remuneration GBP810,899 (2019: GBP958,253) see
Directors' remuneration note below
Year ended Period ended
31 December 31 December
2020 2019
No. No.
The average monthly number of employees
during the period was as follows:
Directors 6 8
Research and development 2 2
------------ ------------
8 10
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Directors' remuneration 763,399 873,253
Directors' share based payments 102,533 123,362
Bonus* 47,500 85,000
Pension 33,518 28,618
------------ ------------
Total emoluments 946,950 1,110,233
Emoluments paid to the highest paid
director 218,000 248,000
*Total Directors' remuneration GBP810,899 see Directors'
remuneration note below
Included in total emoluments paid to Directors are capitalised
wages of GBP187,241 (2019: GBP248,707)
4. Employees and Directors (continued)
Directors' remuneration
Details of emoluments received by Directors of the Group for the
period ended 31 December 2020 are as follows:
Share based Pension Total
Remuneration Costs
and fees payments
---------------- -------------- ------------- --------- ---------
GBP GBP GBP GBP
---------------- -------------- ------------- --------- ---------
A Reynolds* 24,996 - - 24,996
S P O'Hara 218,000 - 10,650 228,650
F Narbel 175,762 44,720 8,370 228,852
S Christie 25,000 11,394 - 36,394
R Davidson 55,000 32,212 - 87,212
S Kolyda 106,500 14,207 5,325 126,032
P Wenstromm* 18,000 - - 18,000
S Prescott* 99,695 - 4,985 104,680
M Hvid-Hansen 87,946 - 4,188 92,134
Total 810,899 102,533 33,518 946,950
---------------- -------------- ------------- --------- ---------
*For disclosure in relation to directors' fees please refer to
Note 21.
5. Net Finance Income / (Costs)
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Finance Income:
Bank Interest 98 110
Finance Cost :
Loan note interest (44,954) (44,467)
------------ ------------
Net Finance Income / (Costs) (44,856) (44,357)
6. Expenses - analysis by nature
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Research and development 85,703 167,869
Regulatory Costs - 185,447
Directors' fees & remuneration
(Note 4)* 623,658 709,546
Auditor remuneration - audit fees
(Consolidated accounts GBP18,250
(2019: GBP17,500) 42,720 42,220
Auditor remuneration - non audit
fees (tax compliance) 11,400 6,200
Brokers & Advisors 123,531 113,036
Advertising & marketing 86,673 66,556
Share based payments charge 127,248 137,320
Depreciation on property, plant
and equipment 393 2,750
Amortisation of patents and development
costs 247,502 215,235
Patent and IP costs 136,762 55,483
Consultancy fees 76,704 223,016
Legal and professional fees 42,625 24,399
Public Relations costs 82,394 101,795
Travel costs 31,434 171,448
Other expenses 272,465 337,121
------------ ------------
Total administrative expenses 1,991,212 2,559,441
*GBP623,658 is net of GBP187,241 capitalised in the year, total
remuneration GBP810,899 as per note 4.
7. Prior period adjustment
During the 2020 financial year, the group discovered that there
were prior period errors relating to the areas listed below in 7.1
and 7.2. As a consequence, these amounts have been misstated in the
prior year annual financial report. The errors have been corrected
by restating each of the financial statement line items for the
prior periods. The following tables summarise the impacts on the
Group's and Company's financial statements.
The prior period correction has resulted from an error in the
accounting treatment of the investment held in Skinbiotherapeutics
PLC in the prior period. Having reviewed the ownership of
Skinbiotherapeutics Plc, it was decided that the threshold for
de-recognition as an associate was not achieved in the prior year.
As a result, the share of loss for the associate for the period
between 4 July 2019 and 31 December 2019 should be recognised
within the Group.
See note 12 for details of the disposal which has been
recognised in the current year.
7.1 Consolidated statement of consolidated income
Impact of correction of error
As previously Adjustments As restated
reported
2019 2019 2019
GBP GBP GBP
Share of loss from associate (296,344) (249,972) (546,316)
------------ ------------ ------------
Loss before tax (2,241,858) (249,972) (2,491,830)
------------ ------------ ------------
Total Comprehensive Loss (2,118,390) (249,972) (2,368,362)
------------ ------------ ------------
Loss per share (pence), basic
and diluted (2.49)p (0.29)p (2.78)p
7.2 Consolidated statement of financial position
Impact of correction of error
As previously Adjustments As restated
reported
2019 2019 2019
GBP GBP GBP
Assets
Other assets 2,633,171 - 2,633,171
Investments 3,092,806 (249,972) 2,842,834
------------ ------------ ------------
5,725,977 (249,972) 5,476,005
------------ ------------ ------------
Equity
Retained earnings (492,927) (249,972) (742,899)
Other equity 5,724,237 - 5,724,237
------------ ------------ ------------
Total Equity 5,231,310 (249,972) 4,981,338
------------ ------------ ------------
8. Corporation Tax
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Corporation tax credit (120,000) (190,435)
Under provision prior year - (9,221)
Deferred tax movement 28,185 76,188
Overseas tax suffered 180 -
------------ ------------
Total taxation (91,635) (123,468)
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2020 nor for the period ended 31
December 2019.
Year ended Period ended
31 December 31 December
2020 2019
GBP GBP
Profit (Loss) on ordinary activities
before income tax 5,710,232 (2,491,830)
Loss on ordinary activities multiplied
by the standard rate of corporation
tax in UK of 19% (2019 - 19%) 1,084,944 (473,477)
Effects of:
Disallowables 89,931 104,311
Income not taxable (1,362,287) (50,441)
Accelerated depreciation 75 523
R&D enhanced deductions - (141,042)
R&D tax credit claimed (120,000) (199,656)
Amortisation 27,851 40,895
Revenue items capitalised (66,566) (65,072)
Other timing differences 28,185 76,188
Overseas tax suffered 180 -
Unused tax losses carried forward 226,052 584,303
------------ ------------
Tax credit (91,635) (123,468)
The Group has estimated losses of GBP4,704,000 (2019:
GBP3,253,189) and estimated excess management expenses of
GBP2,591,000 (2019: GBP2,248,357).
The tax losses have resulted in a deferred tax asset at 19% of
approximately GBP1,386,050 (2019: GBP1,045,294) which has not been
recognized as it is uncertain whether future taxable profits will
be sufficient to utilise the losses.
8. Corporation Tax (continued)
2020 2019
Current tax asset - Group GBP GBP
Balance brought forward 190,435 303,952
Received during the year - (313,170)
Prior year adjustment - 9,218
Research & development tax credit
claimed 120,000 190,435
------------ ------------
310,435 190,435
9. 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:
2020
Weighted average
Basic and diluted EPS Earnings Number of shares Profit per-share
GBP No. Pence
Basic EPS 5,801,867 87,207,703 6.65
Diluted EPS 5,801,867 95,569,946 6.07
2019 Restated
Weighted average
Earnings Number of shares Loss per-share
GBP GBP Pence
Basic EPS (2,368,362) 85,262,488 (2.78)
Diluted EPS (2,368,362) 85,262,488 (2.78)
2019 Previously
reported
Earnings Weighted average Loss per-share
Number of shares
GBP GBP Pence
Basic EPS (2,118,388) 85,262,488 (2.49)
Diluted EPS (2,118,388) 85,262,488 (2.49)
As at 31 December 2020 there were 8,032,907 (2019: 7,765,907)
outstanding share options and 323,969 (2019: 324,019) outstanding
share warrants.
10. Intangible assets
Group Development Costs
and Patents
GBP
Cost
At 30 November 2018 2,727,006
Additions 594,924
Disposals -
--------------
At 31 December 2019 3,321,930
Additions 350,345
Disposals -
--------------
At 31 December 2020 3,672,275
Amortisation
At 30 November 2018 473,917
Amortisation charge for the period 215,235
--------------
At 31 December 2019 689,152
Amortisation charge for the period 247,502
--------------
At 31 December 2020 936,654
Carrying amount
At 31 December 2020 2,735,621
At 31 December 2019 2,632,778
The company had no intangible assets
11. Property, plant and equipment
Group
GBP
Cost
At 30 November 2018 8,461
Additions -
Disposals -
--------------
At 31 December 2019 8,461
Additions -
Disposals -
--------------
At 31 December 2020 8,461
Depreciation
At 30 November 2018 5,318
Charge for the year 2,750
--------------
At 31 December 2019 8,068
Charge for the period 393
--------------
At 31 December 2020 8,461
Carrying amount
At 31 December 2020 -
At 31 December 2019 393
The company had no property plant and equipment.
12. Investments
Group Investments
Set out below is the investment in Skinbiotherapeutics PLC which
is material to the Group. The investment treated as an associate of
the group until 2 November 2020, after which time the shareholding
dropped to 24.65% and has been recalculated as an equity
investment. The entity listed below have share capital consisting
solely of ordinary shares, which are held by the Group. The country
of incorporation is also the principal place of business and the
proportion of ownership interest is the same as the proportion of
voting rights held.
2020 2019
GBP GBP
Available for sale investments
At the beginning of the period 2,842,834 3,740,799
Additions
Revaluations 7,120,962 -
Disposals
Share of loss (303,449) (296,344)
Disposal of shares during period (697,783) (351,649)
Prior year adjustment - (249,972)
At 31 December 8,962,564 2,842,834
----------------------------------- ----------- -----------
Company Investments
2020 2019
GBP GBP
Available for sale investments
At the beginning of the period 4,131,651 4,483,300
Additions
Revaluations 5,528,696 -
Disposal of shares during period (697,783) (351,649)
---------- ----------
8,962,564 4,131,651
Investments in subsidiary undertakings
At the beginning of the period 2,080,905 2,051,000
Addition: Equity element of convertible
loan notes - 29,905
---------- ----------
2,080,905 2,080,905
At 31 December 11,043,469 6,212,556
-------------------------------------------------- ------------ ------------
12. Investments (continued)
As at 31 December 2020 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
13. Inventories
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
Finished goods 184,236 62,761 - -
During the period GBP643,428 (2019: GBP352,080) has been
expensed to the income statement.
14. Trade and other Receivables
Group Company
2020 2019 2020 2019
Non- current GBP GBP GBP GBP
Amounts owed by group
undertakings - - 329,057 5,941,360
---------- ---------- ---------- ----------
- - 329,057 5,941,360
Current
Accounts receivable 512,437 511,833 - -
Other receivables 110,634 59,346 71,278 19,857
Prepayments and accrued
income 22,752 36,129 18,142 4,850
---------- ---------- ---------- ----------
645,823 607,308 89,420 24,707
15. Cash and Cash Equivalents
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
Cash and bank balances 864,680 455,608 532,769 139,243
16. Called Up Share Capital
2020 2019
Issued share capital comprises: GBP GBP
Ordinary shares of 2p each - 87,940,601
(2019: 85,440,551) 1,758,812 1,708,811
------------ ------------
1,758,812 1,708,811
During the year 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
03/06/2020 50
------------
Total warrants exercised in the period 50
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
2020 2019 2020 2019
GBP GBP GBP GBP
Accounts Payable 359,321 347,822 40,174 2,685
* Accrued expenses 157,039 186,329 22,750 32,500
- 189 - -
* Amount due to director
* Other payables 2,635 27,284 - -
* Amounts due to group undertakings - - - 250,000
- -------------- -------------- -------------- --------------
Total trade and other
payables 518,995 561,624 62,924 285,185
-------------- -------------- -------------- --------------
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% (2019: 19%).
The movement on the deferred tax account is as shown below:
2020 2019
GBP GBP
At 31 December 2019 522,350 446,162
Movement in the period 39,173 76,188
------------ ------------
At 31 December 2020 561,523 522,350
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:
2020 2019
GBP GBP
----------- ------------
Balance brought forward 726,805 -
----------- ------------
Additions - 775,050
----------- ------------
Equity element - (92,712)
----------- ------------
Liability component 726,805 682,338
----------- ------------
Interest charged at effective interest
rate 44,954 44,467
----------- ------------
Non-current liability 771,759 726,805
----------- ------------
Interest expense is calculated by applying the effective
interest rate of 6% to the liability component.
21. Related Party Disclosures
During the year to 31 December 2020 GBP18,000 (2019: GBP19,548)
was paid to P Wennstrom in respect of Director's services
provided.
During the year to 31 December 2020 GBP184,132 (2019:
GBP139,105) was paid to F Narbel in respect of Director's services
provided.
During the year to 31 December 2020 GBP104,680 (2019:
GBP116,966) was paid to Stephen Prescott in respect of Director's
services provided.
During the year to 31 December 2020 GBP24,996 (2019: GBP29,165)
was paid to Reyco Limited for the services of Adam Reynolds as
Director of ProBiotix Health Limited
During the year to 31 December 2020 the Group was charged
GBP42,000 (2019: GBP45,500) for services provided by Morrison
Kingsley Consultants Limited, a company controlled by Mark
Collingbourne, Chief Financial Officer.
During the year Optibiotix Health PLC loaned Probiotix Health
limited GBP125,000. The balance owing at the 31 December 2020 was
GBP80,119 (2019, GBPNIL). There was no interest charged during the
year
At the year end Probiotix Health owed Optibiotix Health Plc
GBP248,938 (2019, GBP234,438) for convertible loan notes issued on
11 December 2018 (see note 20). Interest at 6% was charged during
the year.
During the year Optibiotix Health PLC loaned Optibiotix Limited
GBP1,003,905, of which GBP159,161 was repaid. The balance at the
year end of GBP6,301,666(2019, GBP5,456,922 was cancelled. This
does not impact on the consolidated Group accounts.
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
2020 2019 2020 2019
No. No. GBP GBP
Outstanding at the beginning
of the period 7,765,907 8,272,907 0.20 0.23
* Granted during the period 300,000 500,000 0.57 0.78
* Forfeited/cancelled during the year (33,000) (1,007,000) 0.695 0.70
-
* Exercised during the period
- -------------- -------------- ------------ ------------
Outstanding at the end
of the period 8,032,907 7,765,907 0.21 0.20
-------------- -------------- ------------ ------------
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.
For the share options issues in 2020 vesting conditions dictate
that the options will vest if certain revenue conditions are
met.
23. Share Based payment Transactions (continued...)
The share options outstanding at the period end had a weighted
average remaining contractual life of 1,639 days (2019: 1,977 days)
and the maximum term is 10 years.
The share price per share at 31/12/20 was GBP0.55 (31/12/2019:
GBP0.66)
(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 02/06/2020
Exercise price 57p
Share price at grant
date 57p
Risk-free rate 0.25%
Volatility 35%
Expected life 10 years
Fair value 24p
(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
2020 2019 2020 2019
No. No. GBP GBP
Outstanding at the beginning
of the period 329,386 1,045,524 0.08 0.08
* Exercised during the period (50) (716,138) 0.08 0.08
- -------------- -------------- -------------- --------------
Outstanding at the end
of the period 329,336 329,386 0.08 0.08
-------------- -------------- -------------- --------------
A charge of GBP127,248 (2019: GBP137,320) 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 16 March 2021 the company sold 1,300,000 shares in
Skinbiotherapeutics plc at a price of 44.91 pence per share.
On 17 March 2021 the company sold 700,000 shares in
Skinbiotherapeutics plc at a price of 45.43 pence per share.
On 15 April 2021 Mr Stephen Hammond, a recently appointed
Non-Executive Director of the Company (RNS 2nd February 2021),
acquired 25,000 ordinary shares in the Company , representing 0.03%
of the Company's issued share capital, at an average price of 51.8
pence per share.
On 20 April 2021, Stephen O'Hara (Director and CEO of OptiBiotix
Health plc) acquired 47,857 shares at an average price of 53pence
per share. Following this purchase Stephen Ohara owns 10,165,129
shares representing 11.61% of the issued share capital.
On 20 April 2021, René Kamminga (PDMR and CEO of OptiBiotix
Limited) acquired 35,000 ordinary shares in the company
representing 0.04% of the company's issued share capital at an
average price of 52.4 pence per share.
Availability of Report and Accounts and Notice of the Annual
General Meeting
Copies of the Company's Report and Accounts together with the
Notice of the Annual General Meeting, to be held at 10.30 am on 9
July 2021, will be posted to shareholders shortly and will be made
available on the Company's website.
The Board takes its responsibility to safeguard the health of
its shareholders, stakeholders and employees seriously. As a result
of the current measures implemented by the UK Government therefore,
attendance at its AGM will be limited to two persons. Shareholders
may not attend in person. If the UK Government changes the measures
before the date of the AGM, the Company will provide a further
update by way of regulatory news service announcements.
Shareholders wishing to vote on matters of business are urged to
do so via the completion of a proxy form. In line with corporate
governance best practice, and in order that any proxy votes of
those shareholders who are not allowed to attend, and to vote in
person, are fully reflected in the voting on the resolutions, the
Chairman of the meeting will direct that voting on all resolutions
set out in the notice of meeting will take place by way of a poll.
The final poll vote on each resolution will be published after the
AGM on the Company's website. The Company will accept electronic
copies or photographs of the form of proxy by email to
voting@shareregistrars.uk.com.
As shareholders will not be able to attend this year's AGM, the
Company is proposing to allow shareholders the opportunity to raise
any questions arising from the business proposed, to be conducted
at the meeting. Appropriate questions must be submitted via the
"Contact" page of the Company website http://optibiotix.com/contact
before 10:30am on 7 July 2021. The Company will endeavour to post
responses on the Company's website on the day of the AGM.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
FR FFMATMTTBBAB
(END) Dow Jones Newswires
June 17, 2021 02:00 ET (06:00 GMT)
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