TIDMOPTI
RNS Number : 0841E
OptiBiotix Health PLC
28 June 2023
OptiBiotix Health plc
('OptiBiotix' or the 'Company' or the 'Group')
Final results
Notice of Annual General Meeting
OptiBiotix Health plc (AIM: OPTI), a life sciences business
developing compounds to tackle obesity, high cholesterol, diabetes
and skin care a nnounces its audited results for the 12 months
ended 31 December 2022. The Group's results reflect its new
structure following the listing of ProBiotix Health plc (PBX) on
the AQSE Growth Market on 31 March 2022 with its costs and revenues
not included in the accounts post listing. This makes meaningful
comparisons with previous years difficult.
Highlights
á Admission of ProBiotix Health plc to the AQSE Growth Market on
31 March 2022 raising GBP2.5m for the further development of our
former Probiotic subsidiary and providing OptiBiotix shareholders
with a dividend in specie of over GBP10m
á Launch of LeanBiome (R) in The Hut Groups ('THG') impact lean
product range and product range extension with a breakfast smoothie
with excellent customer reviews
á Launch of GoFigure (R) products in India with Apollo Hospitals
& Pharmacies in September 2022
á Launch of GoFigure (R) products containing SlimBiome(R) in
China on Tmall.com with over 500 million monthly active users
á Regulatory approval by the Saudi Food & Drug Authority
(SFDA) for the sale by our exclusive distributor Nahdi Medical Co
(Nahdi) of GoFigure (R) shakes and bars containing SlimBiome(R) and
subsequent launch in January 2023
á Registration of four new on pack health claims in Australia
and New Zealand for SlimBiome(R) for feelings of fullness,
reduction of hunger, and improvement of the gut microbiome and
improving digestive health
á British Retail Consortium accreditation, confirming our
compliance with the Global Food Safety Initiative ('GFSI')
benchmark
á A joint development agreement with Firmenich, the world's
largest privately owned taste and fragrance company, to develop new
products containing SweetBiotix (R)
á Publication of a peer-reviewed scientific study of one of our
second-generation SweetBiotix(R) products, confirming its
suitability as a healthy replacement for sugar
á Significant scientific and commercial progress in the
development of our microbiome modulators
á No debt with valuable assets in SkinBiotherapeutics and
ProBiotix Health providing a strong balance sheet
Post period
á Strong sales growth of own brand products on e-commerce. The
listing of SlimBiome(R) Medical and Gofigure(R) products on Amazon
UK in February 2023, and Slimbiome(R) Medical on Amazon Germany and
Walmart USA in May 2023. We anticipate further international
listings on Amazon throughout 2023 including Amazon India, the Gulf
States, and Amazon USA. This is all part of the
internationalisation of our own brand products online
á New orders from both The Hut Group (THG) and Holland & Barrett in the UK
á Three new partners in Asia who have all placed initial orders for SlimBiome(R)
á Published the results of a third human study on SlimBiome(R)
demonstrating statistically significant benefits to appetite and
hunger regulation with a single dose (3g) of SlimBiome(R)
á Good progress from both partners in the commercial scale up of
our second-generation SweetBiotix(R) family of products and
microbiome modulators offering exciting potential for future
growth
The Report & Accounts which will be shortly posted to
shareholders contain a Notice of Annual General Meeting ('AGM')
which will be at 11:00am on 26 July 2023 at Walbrook PR Ltd, 75
King William Street, London, EC3V 9HD. Stephen Hammond and Chris
Brinsmead will not put themselves for re-election as directors of
the Company and will therefore cease to be directors following the
conclusion of the AGM.
Stephen O'Hara, CEO of OptiBiotix Health plc said: " 2022 has
been a challenging year with high stock levels accumulated from the
large amount or orders placed in Q4 2021 by two large partners and
low sales in H1 2022 (GBP118K) caused by the global downturn. As
anticipated, sales improved in H2 (GBP339k) but were insufficient
to make up the H1 deficit with full year revenues from customer
contracts of GBP457K. A further ten metric tonnes of SlimBiome,
approximating to GBP300k was taken from stock held by distributors
for our two largest partners, and not included in these accounts.
Once this stock overhang is clear this should have a material
impact on reportable revenue.
"Our focus in 2023 is on looking forward with the aim of each
business unit reaching profitability by the end of the year. We
believe this can be achieved by a reduction in costs, a focus on
existing partners returning to forecast, bringing in new partners
particularly in the USA and Asia, and expanding e-commerce channels
to reduce partner dependency. With our products winning awards in
Europe, Asia, and the USA and an increasing number of large
companies like The Hut Group, Holland and Barrett, Apollo
Hospitals, and Nahdi Medical using our products, we believe we are
in strong position for further growth.
"Despite a challenging 2022 the group has no debt, a strong
balance sheet, products with excellent customer reviews, second
generation products close to commercialisation, and retains
significant exposure to the considerable growth potential of the
microbiome through its shareholdings in ProBiotix Health plc and
SkinBiotherapeutics plc".
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.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the
date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
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
Peterhouse Capital Limited (Broker) Tel: 020 7220 9797
Duncan Vasey / Lucy Williams
Walbrook PR Ltd Mob: 07876 741 001
Anna Dunphy
About OptiBiotix - www.optibiotix.com
OptiBiotix Health plc (AIM: OPTI), which was formed in March
2012, brings science to the development of compounds which modify
the human microbiome - the collective genome of the microbes in the
body - in order to prevent and manage human disease and promote
wellness.
OptiBiotix has an extensive R&D programme working with
leading academics in the development of microbial strains,
compounds, and formulations which are used as active ingredients
and supplements. More than twenty international food and healthcare
supplement companies have signed agreements with OptiBiotix to
incorporate their human microbiome modulators into a wide range of
food products and drinks.
OptiBiotix is also developing its own range of consumer
supplements and health products. The Company's current areas of
focus include obesity, cardiovascular health, and diabetes.
Chairman and CEO report
The Group addresses a very large and fast-growing market with a
unique portfolio of proven ingredients and finished products. The
year has seen progress in both scientific human studies and
regulatory approvals in key international markets demonstrating our
products effectiveness and global acceptability. After strong sales
growth through 2019 (GBP745K), 2020(GBP1.5m) and 2021 (GBP2.2m) the
Company expanded its team in 2021 including the appointment of CEO,
Rene Kamminga to run the prebiotic business, to meet growth demands
post Covid but as with many companies in the industry suffered from
lower sales in 2022 caused by the global economic uncertainty that
followed the Russian invasion of Ukraine.
This was compounded by the large amount of orders placed in Q4
2021 resulting in high stock levels held by customers accompanied
by delays in launching new products and re-ordering due to the
global economic down turn in 2022. The Company are pleased that its
products have begun to be commercialised by a number of large and
well known commercial partners. Agreements with these partners are
time consuming with extensive due diligence and consumer testing
prior to launch. Launch of products with these partners is a
significant endorsement of our products which we believe in the
absence of recent global economic events (COVID and Ukraine) would
have led to strong revenue growth.
Post period the Company has responded to these changes in the
external environment by a reduction in costs, a focus on sales and
partners delivering to forecast, and building up operational
resilience by broadening its partner base and building its
ecommerce channels to reduce partner dependency. The Company
believes subject to no significant change to the external
environment these measures will return the business to the high
levels of growth and EBITDA profitability achieved in 2020 and
2021. The Group remains financially robust with no debt, and
valuable assets in SkinBiotherapeutics and ProBiotix Health
providing a strong balance sheet, with commercialisation of our
second-generation technologies affording potential for future
growth and shareholder value.
Strategic overview
OptiBiotix Health is a life sciences business founded on the
development of prebiotic and probiotic compounds to tackle obesity,
cardiovascular disease, diabetes and skincare: all markets offering
strong growth potential in every part of the world. The Company has
built a broad portfolio of microbiome assets in this field
including prebiotic products like SlimBiome(R), WellBiome(R),
SweetBiotix(R), and Microbiome modulators within its core business
and skincare through SkinBiotherapeutics and probiotics through
ProBiotix Health plc. These create a diverse portfolio of
opportunities in an emerging area of healthcare.
The first phase of the Company's two-stage growth strategy was
to establish the credibility of our science and financial
sustainability of each business through an initial focus on
building sales of our first-generation products (principally
SlimBiome(R) in prebiotics and LP(LDL) (R) in probiotics) though
business-to-business deals with partners in multiple territories
around the world, starting in Europe, while at the same time
pursuing the development of our more innovative second-generation
products that offer potentially larger future returns. This was
achieved in 2020 and 2021 with combined revenues of GBP2.2m and
both the Probiotic (now ProBiotix Health plc) and Prebiotic trading
businesses being EBITDA profitable in both years and the Group
showing a GBP5.8m profit in 2020 and GBP6.2m in 2021, albeit
largely due to the gain in the value of its investments.
With SlimBiome(R) and LP(LDL) (R) winning international awards,
gaining excellent customer reviews, and becoming established
ingredient brands with a number of key national and international
partners in 2019 we started to move towards developing and testing
market acceptance of our own label branded products (e.g GoFigure,
SlimBiome Medical, and CholBiomeX3) on our online store. The aim
was to use the online store as a display window to attract B2B
partners and major retailers and assess the potential of selling
final products direct to consumers. With positive customer feedback
on our own products and more consumers buying online as a result of
the COVID pandemic (Mintel, Vitamins and Supplements: Inc Impact of
COVID-19 - US, August 2020) a decision was made in 2021 to develop
this into a business unit with the appointment of a E-commerce
director. This was one of a number of changes made in 2022 to allow
the Company to respond to changes in the external environment.
These also included:-
á Gradually moving from ingredient sales to the sale of finished
own brand SlimBiome Medical or private label products, both through
larger partners and direct-to-consumer through our own online
store, Amazon, and other outlets such as Tmall.com in Asia. This
increases margins and reduces partner dependency.
á Shifting the focus from Europe to large partners in key
strategic markets, particularly the USA and Asia. This broadens the
partner base and reduces revenue dependency on a small number of
partners whilst accessing larger markets with substantially higher
sales volumes.
á Expanding our first-generation product portfolio of functional
ingredients by extending our technology into new channels such as
sports nutrition with LeanBiome(R) and new product areas such as
WellBiome(R), and
á Progressing the commercialisation of our second-generation
products, SweetBiotix(R) and Microbiome Modulators.
This was accompanied by a number of new appointments throughout
2022 in marketing, business development in the USA, and e-commerce
to support growth of the business. Whilst global economic
conditions temporarily impacted on progress during 2022 we believe
the changes made in 2022 increase the Company's resilience to
volatility in the external environment and are seeing sales slowly
returning to previous forecast levels as market conditions improve.
The other key point is that now we have established the SlimBiome..
brand and OptiBiotix's market credibility customers are starting to
place orders without having to go through a complex negotiation
process.
Commercial and scientific overview
Key developments during the financial year and their impact on
potential sales growth in 2023 include:
á The achievement in January 2022 of British Retail Consortium
accreditation, confirming our compliance with the Global Food
Safety Initiative (GFSI) benchmark. This certification by one of
the leading international food safety standards, accepted by most
large retailers and their suppliers worldwide, is an important
support to our commercial strategy of increasing our sales of final
product solutions to retail partners and will enhance opportunities
in other retail channels both within the UK and international
markets.
á Our entry into the sports nutrition market with the launch of
LeanBiome (R) , a patented blend of dietary and prebiotic fibres
and a trace mineral, developed to support athletes increase lean
muscle mass and to improve metabolism, gut health and satiety. Our
distribution agreement with leading e-commerce retailer The Hut
Group PLC ('THG'), signed in December 2021, saw LeanBiome (R)
launched in January 2022 in a small number of products including
its Impact Diet Lean product as part of its My Protein range in the
UK and at the end of H1 2022 a product extension with a breakfast
smoothie. Both products are receiving excellent customer reviews.
High inflation in 2022 led to consumers becoming more
price-conscious leading to a trading down of high protein products
which reduced the forecast demand for protein powder shakes across
the industry and a lower than forecast sales from THG. With protein
prices slowly returning to previous levels we are seeing a gradual
return to sales growth in this area.
á Prior to ProBiotix's separate listing, publication in January
2022 of a third human volunteer study on the clinical efficacy of
LP(LDL) (R), demonstrating through a placebo-controlled trial that
LP(LDL) (R) delivered large and statistically significant
reductions in total cholesterol, LDL-C (bad) cholesterol and
Apolipoprotein B (widely accepted as the most important causal
agent of atherosclerotic cardiovascular disease), with no
compliance, tolerance or safety issues. The results of this and
other studies suggest efficacy similar to low level statins and
other treatments more typically associated with pharmaceuticals,
suggesting potential in high value pharmaceutical consumer markets
for the use of LP(LDL) (R) in individuals who are unwilling or
unable to tolerate other treatments.
á Admission of ProBiotix Health plc to the AQSE Growth Market on
31 March 2022, raising GBP2.5m for the further development of our
former Probiotic subsidiary through a placing and subscription of
new shares, while giving our own shareholders a dividend in specie
of 0.554673 ProBiotix share for every OptiBiotix Health share held.
The Group retained a 44% shareholding in ProBiotix Health, valued
at circa GBP11.2m at the end of 2022. An impairment provision (see
note 11) has been made to take account of the reduction in PBX
share price from 31(st) March 2022 and the release of these
accounts.
á Good progress in the development of OptiBiotix Health India.
Its formation has allowed us to reduce the administrative and tax
burden of manufacturing and selling ingredients and finished
products in India. We see the lower manufacturing and transport
costs with geographical proximity to the countries in the region a
driver of future growth in the Asia Pacific region.
á Certification in June 2022 of LeanBiome (R) as an Informed
Ingredient for Sports Nutrition: an important industry
certification demonstrating through rigorous independent testing by
an authorised body that it is free from substances that are banned
in sport. This is a significant step in attracting major sports
nutrition companies to incorporate LeanBiome (R) in their
products.
á The appointment in September 2022 of Nutraconnect Pte Ltd, a
nutraceutical business growth acceleration service headquartered in
Singapore, as a new commercialisation partner for SlimBiome(R) and
LeanBiome (R) in the Asia Pacific region. This has led to a number
of new partners signing agreements and placing first orders for
products in 2023
á The launch in September 2022 of our GoFigure range of weight
management products containing SlimBiome.. in several pharmacies
across India owned by Apollo Hospitals & Pharmacies. This
number has doubled in 2023 with the aim of having products in more
than 1000 stores by the end of 2023
á Regulatory approval in October 2022 by the Saudi Food &
Drug Authority (SFDA) for the sale by our exclusive distributor
Nahdi Medical Co (Nahdi) of GoFigure shakes and bars containing
SlimBiome(R). This has allowed the launch in January 2023 of the
GoFigure range of weight management products through Nahdi's
pharmacy network and e-commerce platform. The registration process
also provides approval in the other five countries that are members
of the Gulf Cooperation Council.
á Completion in October 2022 of a systematic review of the
scientific literature relating to SlimBiome(R), in accordance with
the Australia New Zealand Food Standards Code (FSANZ), that enables
us to make four new health claims for SlimBiome(R) on product
packaging and in advertising; these relate to feelings of fullness,
reduction of hunger, and improvement of the gut microbiome and
improving digestive health. These help us to differentiate
SlimBiome(R) from competitors.
á Launch in late November 2022 of an online shop for GoFigure
products containing SlimBiome(R) on a leading e-commerce platform
in China, Tmall.com, allowing us to sell direct to consumers in
this huge and growing market. We are seeing steady sales growth in
this market in 2023, particularly of our fruit gummies.
á Publication of a peer-reviewed study (see Prebiotic Potential of a New Sweetener Based on Galactooligosaccharides and Modified Mogrosides - PubMed (nih.gov) ) of one of our SweetBiotix (R) products confirming its sweetness, bulking and prebiotic fibre properties and concluding it could be an innovative, healthy substitute for sugar in a range of everyday products. Independent scientific confirmation of SweetBiotix (R) by leading scientists in the field is key to creating interest and industry credibility and provides important marketing materials for commercial launches.
á Significant progress by one of our US partners in the
commercial scale production of SweetBiotix (R), with final product
tested and accepted and now awaiting further structural analysis
and formal taste testing to determine the regulatory pathway before
progressing to a launch.
á Conclusion of a new joint development agreement, announced in
July 2022, with Firmenich, the world's largest privately owned
taste and fragrance company, and one of the world's largest
supplier of Stevia, to develop new products containing our second
generation SweetBiotix(R) compound, in return for sales-based
milestone and royalty payments. This agreement with one of the
leaders in the field after years of due diligence is a substantial
validation of the SweetBiotix science. This continues to progress
at pace in 2023. We believe that the recent scientific publication
and the deal with Firmenich, which is merging with DSM, the world's
largest ingredients supplier, to create a NewCo with a US $11.4bn
turnover, are major steps forward in bringing SweetBiotix (R) to
market. Firmenich is now making substantial progress in producing
SweetBiotix (R) and in optimising the manufacturing process, and we
see significant opportunity here in 2023.
á Significant scientific and commercial progress in the
development of our microbiome modulators: a range of
second-generation products which selectively enhance the growth
rate of specific types of bacteria and create the potential for
targeted treatment of a range of human diseases. The manufacturing
scale up process was delayed during COVID but completed in late
2022. Structural and functional analysis has been taking place
during 2023 to determine novelty and the regulatory pathway.
Results
The Group's results reflect its new structure following the
listing of ProBiotix Health ('PBX') on the AQSE Growth Market on 31
March 2022. The timing of the listing means that the accounts
include the results of PBX for the three months to the end of March
2022 when it became a plc, after which PBX has been treated as an
associate for accounting purposes with its revenues and costs
removed and only OptiBiotix's (44%) proportion of its profit and
loss included in the Group's accounts. This makes comparisons with
previous years difficult.
The results show revenue from continuing operations for the year
of GBP457K (2021: combined sales of GBP2.2m), reflecting both the
separate flotation of ProBiotix Health plc and delays in the
placement of orders by our new larger partners, which entered the
year with substantial stocks from orders placed in late 2021, and
then delayed re-ordering because of the global economic uncertainty
created by the Russian invasion of Ukraine.
Administrative expenses (excluding non-cash items such as
share-based payments and amortisation) were GBP2.5m (2021:
GBP2.1m), including ProBiotix costs to the end of March and a
number of one-off pre-listing and recruitment expenses. This
includes a one off bad debt provision of GBP492K reflecting a more
conservative approach to debtors and stock considering the
volatility of the external environment. We continue to pursue
outstanding debtors and believe a proportion of this provision will
be recovered in 2023.
The listing of PBX on AQSE materialised a previously
unrecognised asset allowing the Group to report a profit of
GBP2.59m largely from the gain on this investment offset by a loss
on revaluation of the SkinBioTherapeutics plc ('SBTX') shares. The
Group retains a healthy balance sheet with gross assets of GBP11.6m
(2021: GBP20.1m) and net cash at the year-end of GBP1.1m (2021:
GBP2.0m).
Post period end the Group sold 1,211,567 SBTX shares through
Cenkos, SBTX's broker in February 2023 at an average price of
20.4p, generating gross proceeds of GBP 247K.
The Board senior management and advisers
We have taken decisive action in December 2022 and in 2023 to
reflect the separate listing of PBX and reduce Board, management
and advisory costs in order to ensure each part of the business and
subsequently the Group
return to operational profitability as soon as possible. These actions include:-
á On 28 December 2022 the Company served three months' notice to
terminate the joint brokership of Cenkos Securities plc. Peterhouse
Capital Limited continue as the Company's sole broker.
á Rene Kamminga, who was appointed CEO of OptiBiotix Ltd in
March 2021 left the business on 28 February 2023 and Group CEO
Stephen O'Hara, who led the ProBiotix business in 2022, resumed the
role of CEO of OptiBiotix Ltd.
á All directors volunteered to accept a 20% reduction in their
remuneration from 1 January 2023.
á With the departure of Rene the Company has twice as many
non-executive directors as executive directors. As a result Stephen
Hammond and Chris Brinsmead have agreed to step down at the
Company's upcoming Annual General Meeting in July 2023.
We anticipate further restructuring of the board and management
team of OptiBiotix as ProBiotix Health plc develops its
independence and we reduce the number of senior employees currently
shared with ProBiotix Health plc under shared service
agreements.
Looking ahead, the focus of the Company will be on investing in
areas that offer the highest return. To support that process and
ensure a focus on profitability the Company is developing profit
and loss metrics for each part of the business with the aim of each
area (USA, India, Ecommerce, B2B) reaching operational
profitability, at least on a monthly basis by the end of the
calendar year.
Outlook
Our focus in 2023 is on looking forward and moving the Company
to operational profitability. We believe we will achieve this by a
reduction in central costs and by the promotion of sales, both
direct to consumers via ecommerce channels and through our existing
partners delivering on forecasts and bringing in new customers,
particularly in the USA and Asian markets. There has been progress
in each of these areas as outlined below which highlights some of
the changes made since the beginning of 2023 year and provides a
progress update on each of the business units. In the first part of
2023 we have:-
á Invested significantly in new e-commerce channels, including
Amazon in the UK, and Walmart in the USA, as well Tmall.com in
China. This has led to rapid sales growth (see E-commerce report)
which with continued investment we anticipate will continue
throughout 2023 and beyond.
á Shifted our commercial focus to selling SlimBiome(R) Medical
sachets in Europe and SlimBiome shots in India and the Gulf states.
These are designed to be consumed before meals and help users
manage their weight by making consumers feel fuller for longer and
reducing cravings for sweet and savoury snacks. This is a highly
differentiated product which leverages growing market interest in
injectable appetite control drugs like semaglutide. SlimBiome(R)
Medical can be used with any weight management plan or calorie
restriction plan and complements rather than competes in a crowded
marketplace. The product enjoys high margins and became a
top-selling line on Amazon UK in 2023.
á Re-engaged with major partners that underperformed against our
sales expectations in 2022, leading to:
- A significant new investment in marketing by Optipharm in
Australia, coupled with the launch online of their Optislim and
Optiman ranges containing our OptiBiome prebiotic fibre;
- New orders from both The Hut Group and Holland & Barrett in the UK and
- A substantial increase in the number of Apollo pharmacies and
Holland and Barret shops in India selling GoFigure products
accompanied by a launch of products on Amazon India on 16(th) May
2023.
We anticipate further orders from all these partners in the
second half of the current year.
á Successfully launched new products, including our reformulated
WellBiome(R) functional fibre and mineral blend, which has been
made available via our own online store and on Amazon UK in recent
weeks.
á In the last two months recruited three new partners in Asia
who have all placed initial orders for SlimBiome and a major US
weight management brand, with which we will be launching during the
second half of 2023, initially in Europe and later in the USA.
á Published the results of a third human study on SlimBiome(R)
which demonstrated statistically significant benefits to appetite
and hunger regulation, with no safety, compliance or tolerance
issues reported by the participating volunteers. This study
underlines the effectiveness of a single dose of SlimBiome.. in
delivering hunger-free weight loss by non-invasive means. This
study was timely given the growing consumer, media and
pharmaceutical company interest in this field following NICE's
approval of the injectable drug semaglutide.
North America Sales and Business Development
The Company has received a number of orders from US partners who
are owners of leading weight management or sports nutrition brands
in the USA. This is a major endorsement of the products and is the
result of presentations at conferences and exhibitions and numerous
customer visits by our US Business development Director, Zac
Sniderman. These will show in 2023 H1 accounts if manufactured and
delivered by the end of June or more likely H2 2023.
Discussions are advancing with a number of international
Multilevel Marketing (MLM) companies based in the USA with possible
sales in H2 2023 for Asian markets. Discussions with an e-commerce
brand have continued at a steady pace in 2023 for a possible end of
the year launch. In addition to above we have late-stage discussion
with a number of e-commerce brands in both the US and Canada with
potential sales in H2 2023.
During the first half of 2023 we have seen strong sales growth
of Dietworks Appetite Control gummies in the USA in both e-commerce
channels and traditional retailers and we foresee increased sales
in H2 2023 with the possibility of line extensions.
We are in discussions with two US partners who are interested in
purchasing WellBiome(R) with a potential US launch planned for Q4
2023. The new projects would incorporate WellBiome in a final
product for healthy aging and hydration.
Consumer Health and Ecommerce sales
The OptiBiotix online website has been transitioned from a shop
window used to demonstrate product possibilities to partners to a
commercial website and optimised to improve the customer
experience. The ecommerce business has opened up a number of new
channels to market including Amazon UK and Walmart USA to allow
customers from different locations/sites to have greater
accessibility to our products. Increasing awareness on platforms
such as Amazon UK have allowed brands such as SlimBiome to become a
best seller within their respective categories. Since the end of
2022 through to April 2023 we have focused more on promoting
SlimBiome(R) Medical as a unique product which reduces hunger and
cravings which can be used as part of any calorie restriction
weight management plan. This has led to rapid growth with the
ecommerce business reaching operational profitability in April and
May 2023 with the highest monthly sales on record and a sales
increase of 1,200% (Figure 1). We are seeing good growth on the
e-commerce platform, T-Mall, in China, particularly with sale of
our fruit gummies.
In 2023 we plan to grow our brands presence and securing
listings on various channels including Amazon Europe and Amazon
India whilst pushing hard for sales and customer loyalty. The
addition of WellBiome(R) to the online store in May 2023 is part of
a strategy to enhance the range of different product offerings and
products on the website throughout 2023. Current product line
extensions planned for SlimBiome(R) include a tomato and herb soup,
a chicken soup, a Golden Syrup porridge, high protein chocolate
bars and an indulgent range.
As we add more products, open up channels to new markets, and
bring on new applications we should see continued growth within the
Ecommerce business in 2023 and beyond.
Slimbiome Medical online sales growth
Our medical device registration for SlimBiome(R) Medical runs
out in May 2024. Brexit has added complexity and additional cost in
reregistering a CE mark medical device with a GBP100k cost to renew
the registration and an annual maintenance cost of GBP20-30K per
annum per device (unflavoured and flavoured SlimBiome Medical).
Given the CE mark is only applicable in Europe and we have similar
products non CE marked in India and the Gulf states we are seeing
this as an opportunity to rebrand and broaden the offering with
different flavours to a wider customer group who may be dissuaded
from purchasing a product with a medical connotation.
OptiBiotix Health India
OptiBiotix Health India (OHI) was formed in November 2021 as a
mid to long term strategic investment in the world's most populous
nation and forecast to have the highest population of medium to
high level income customers in the world. Currently most
middle-class consumers live in the European Union (EU) and the
United States, but over the next decade, the majority will shift
heavily toward India, with one in four global middle-class
consumers expected to reside in India by 2035
https://www.asianstudies.org/publications/eaa/archives/the-middle-class-in-india-from-1947-to-the-present-and-beyond/
.
The formation of OHI has helped OptiBiotix avoid high import
taxes and control the purchase and sale of ingredients
(SlimBiome(R)) and final product (GoFigure(R)) manufactured and
sold in India. This has increased profit margins and given us a
manufacturing base to export to other countries in Asia with lower
manufacturing and transport costs than exporting from the UK. This
will support future expansion and sales growth in the region. The
lower costs and the 'created in UK and made in India' tag helps
penetrate the market and makes the product viable commercially.
We had two small customers and a large national player (Apollo
Hospitals) in India in 2022. During 2023 we have had orders from a
number of new customers and the launch of a new product range
called Slim-Pro by Health Bae, an emerging name in the multilevel
marketing channel (see https://health-bae.com ). Whilst these are
small first orders they are part of building the customer base and
product profile across India allowing us to build the business.
After a slow start following the launch of products with
Apollo's in September 2022 we are now seeing momentum increase with
the number of stores selling GoFigure products increase month on
month with sales in April double that of March and continued strong
growth in May 2023, with a high returning customer rate. Apollo
have agreed to extend the product range in H2 2023. We are also
pleased to be developing a product for the Indian Market with a
multinational consumer goods company for launch later in the
year.
The fundamentals of our marketplace remain very exciting, with
modulation of the human microbiome attracting ever-increasing
interest as the potential solution to a wide and growing range of
life-style related health challenges. Unique, innovative products
take time to gain market acceptance and our first-generation
products are no exception. We believe their strong science,
clinical studies, and broad IP portfolio together with the industry
awards and great customer reviews are starting to attract growing
international recognition and with this more sales
opportunities.
After strong sales growth through 2019 (GBP745K), 2020(GBP1.5m)
and 2021 (GBP2.2m) we believe 2022 was an unusual year for the
industry and the Company and that the actions we are taking to
reduce costs and grow sales will move the Group to operational
profitability, while broadening our product and partner base, and
increasing sales of final products direct to consumers. These
actions will reduce the risks of revenues in future periods being
impacted by timing differences in restocking or delays in
individual product launches or regulatory approvals.
Our expansion into USA and Asia, the proven credibility of our
science, the growing number of large partners, and a return on our
investment in 2023 from our sales teams give us continued
confidence in the long-term growth potential of the Group.
Whilst the Board are optimistic about the opportunities for the
business in 2023, we remain alert to the threats posed by the risks
described in the 'principal risks and uncertainties' section of the
Strategic Report and we note that future trading may be affected by
these external factors. The Group's mitigation strategies for these
principal risks are also set out in this section.
We are confident that our strategy will continue to deliver
sales growth in 2023 whilst the approaching commercialisation of
our second-generation SweetBiotix (R) family of products and
microbiome modulators offer exciting potential for future growth.
This is in addition to the Company having a continued exposure to
the considerable growth potential in probiotics and skincare
through the Group's shareholdings in ProBiotix Health plc and
SkinBiotherapeutics plc.
N Davidson Stephen O'Hara
Chairman Chief Executive
23 June 2023 23 June 2023
Consolidated Statement of Comprehensive Income
Notes Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Revenue from contracts with
customers 457 2,213
Cost of sales (213) (1,090)
-------------- --------------
Gross profit 244 1,123
Share based payments (11) (60)
Depreciation and amortisation (224) (288)
Other administrative costs (2,498) (2,140)
Total administrative expenses 6 (2,733) (2,488)
-------------- --------------
Operating loss (2,489) (1,365)
Finance cost 5 - (48)
Finance income 5 - -
-------------- --------------
- (48)
Share of loss from associate 11 (83) -
(Loss)/Gain on investments 11 (8,620) 7,502
Profit on disposal of investments 11 16 88
Profit on disposal of subsidiary 11 21,647 -
Provision against associate
valuation 11 (8,030) -
-------------- --------------
Profit/(Loss) before tax 2,441 6,177
Taxation 7 146 84
-------------- --------------
Total comprehensive income
for the period 2,587 6,261
Total comprehensive income
attributable to:
Owners of the company 2.587 6,261
Non-controlling interests - -
-------------- --------------
2,587 6,261
Earnings per share from continued
operations
Basic profit/(loss) per share 8 2.93p 7.15p
Diluted profit/(loss) per
share 8 2.78p 6.55p
Consolidated Statement of Financial Position
Notes As at As at
31 December 31 December
2022 2021
ASSETS GBP'000 GBP'000
Non-current assets
Intangibles 9 1,540 2,641
Investments 11 5,022 13,651
Investment in associate 11 3,129 -
-------------- --------------
9,691 16,292
-------------- --------------
CURRENT ASSETS
Inventories 12 178 102
Trade and other receivables 13 521 1,553
Current tax asset 7 106 191
Cash and cash equivalents 14 1,052 2,007
-------------- --------------
1,857 3,853
-------------- --------------
TOTAL ASSETS 11,548 20,145
EQUITY
Shareholders' Equity
Called up share capital 15 1,824 1,759
Share premium 16 2,958 2,537
Share based payment reserve 16 939 928
Merger relief reserve 16 1,500 1,500
Convertible debt - reserve 16 - 93
Retained Earnings 16 3,684 11,320
-------------- --------------
10,905 18,137
Non-controlling interest 16 - 35
-------------- --------------
Total Equity 10,905 18,172
-------------- --------------
LIABILITIES
Current liabilities
Trade and other payables 17 278 602
-------------- --------------
278 602
-------------- --------------
Non - current liabilities
Deferred tax liability 18 365 552
Convertible loan notes 19 - 819
-------------- --------------
365 1,371
-------------- --------------
TOTAL LIABILITIES 643 1,973
-------------- --------------
TOTAL EQUITY AND LIABILITIES 11,548 20,145
These financial statements were approved and authorised for
issue by the Board of Directors on 23 June 2023 and were signed on
its behalf by:
S P O'Hara
Director
Company Registration no. 05880755
Consolidated Statement of Changes in Equity
Non-
Called Convertible Merger Controlling
up Retained Share Share-based Debt Relief Interest Total
Share Earnings Premium Payment Reserve Reserve equity
capital reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
31 December
2020 1,759 5,059 2,537 868 93 1,500 35 11,851
Profit for
the year - 6,261 - - - - - 6,261
Share
options
and
warrants - - - 60 - - - 60
------------ -------------- ------------ ------------ ---------- ------------ ------------ --------------
Balance at
31 December
2021 1,759 11,320 2,537 928 93 1,500 35 18,172
Profit for
the year - 2,587 - - - - - 2,588
Dividends - (10,258) - - - - - (10,258)
Transfer
on loss of
control - - - - (93) - - (93)
Transfer
within
reserves - 35 - - - - (35) -
Issue of
shares
during
the year 65 - 445 - - - - 510
Fundraising
commission - - (24) - - - - (24)
Share
Options
and
warrants - - - 11 - - - 11
------------ -------------- ------------ ------------ ---------- ------------ ------------ --------------
Balance at
31 December
2022 1,824 3,684 2,958 939 - 1,500 - 10,905
Notes to the Consolidated Statement of Cash Flows
Notes Year ended
31 December
2021
Year ended
31 December
2022
GBP'000 GBP'000
Opening Cash 2,007 865
Operating activities
Operating loss (2,489) (1,365)
Amortisation 224 288
Share based payments 11 60
Movement on inventory (76) 82
Decrease/(increase) on receivables 1,116 (906)
(Decrease)/increase on payables (19) 82
Tax received 124 194
------------ ------------
Net Proceeds for operating activities (1,109) (1,565)
Investing activities
Additions to intangibles (168) (194)
Cash disposed on loss of subsidiary (188) -
Proceeds on disposal of investments 25 2,901
------------ ------------
Net (331) 2,707
Financing activities
Net proceeds on Share issues 485 -
------------ ------------
Net cash inflow from financing 485 -
activities
------------ ------------
Total movement (955) 1,142
------------ ------------
Cash and cash equivalents at
end of period 2 1,052 2,007
Notes to the Consolidated Statement of Cash Flows
1. Cash and Cash Equivalents
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Cash and cash equivalents 1,052 2,007
Company Statement of Financial Position
Notes As at As at
31 December 31 December
2022 2021
ASSETS GBP'000 GBP'000
Non-current assets
Investments 11 7,008 15,732
Investment in associate 11 3,212 -
Other receivables 13 - 318
-------------- --------------
10,220 16,050
-------------- --------------
CURRENT ASSETS
Trade and other receivables 13 25 66
Cash and cash equivalents 14 865 1,705
-------------- --------------
890 1,771
-------------- --------------
TOTAL ASSETS 11,110 17,821
EQUITY
Shareholders' Equity
Called up share capital 15 1,824 1,759
Share premium 16 2,958 2,537
Merger relief reserve 16 1,500 1,500
Share based payment reserve 16 939 928
Accumulated profit 16 3,806 11,056
-------------- --------------
Total Equity 11,027 17,780
-------------- --------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 17 83 41
-------------- --------------
TOTAL LIABILITIES 83 41
-------------- --------------
TOTAL EQUITY AND LIABILITIES 11,110 17,821
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the Company income
statement .
The profit for the Company for the year was GBP3.008 (2021:
GBP5.788m).
These financial statements were approved and authorised for
issue by the Board of Directors on 23 June 2023 and were signed on
its behalf by:
S P O'Hara
Director
Company Registration no. 05880755
Company Statement of Changes in Equity
Share-based
Called Merger Payment
up Share Relief reserve Retained Total
Share Premium Reserve Earnings equity
capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31
December
2020 1,759 2,537 1,500 868 5,268 11,932
Profit for
the year - - - - 5,788 5,788
Share options
and
warrants - - - 60 - 60
------------ -------------- ------------ ------------ -------------- --------------
Balance at 31
December
2021 1,759 2,537 1,500 928 11,056 17,780
Profit for
the year - - - - 3,008 3,008
Dividends - - - - (10,258) (10,258)
Share options
and
warrants - - - 11 - 11
Fundraising
Commission - (24) (24)
Issue of
shares
during
the year 65 445 - - - 510
------------ -------------- ------------ ------------ -------------- --------------
Balance at 31
December
2022 1,824 2,958 1,500 939 3,806 11,027
Company Statement of Cash Flows
Notes Year ended
31 December
2021
Year ended
31 December
2022
GBP'000 GBP'000
Opening Cash 1.705 533
Operating activities
Operating loss (1,482) (2,749)
Share based payments 11 60
Decrease/(increase) on receivables 416 24
Impairment of investment in 50 -
subsidiary
(Decrease)/increase on payables 42 (22)
Release of loan to subsidiary 756 932
------------ ------------
Net Proceeds for operating activities (207) (1,755)
Investing activities
Net cash advances to subsidiary (1,143) 26
Proceeds on disposal of investments 25 2,901
------------ ------------
Net (1,118) 2,927
Financing activities
Net proceeds on Share issues 485 -
------------ ------------
Net cash inflow from financing 485 -
activities
------------ ------------
Total movement (840) 1,172
------------ ------------
Cash and cash equivalents at
end of period 1 865 1,705
Notes to the Company Statement of Cash Flows
1. Cash and Cash Equivalents
As at As at
31 December 31 December
2022 2021
GBP'000 GBP'000
Cash and cash equivalents 865 1,705
Notes to financial statements
1. General Information
OptiBiotix Health plc is a Public Limited Com pany limited by
shares, 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, YO10 5DG. 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.
These financial statements present the results and balances of
the Company and its subsidiaries (together, the 'Group') for the
year ended 31 December 2022.
2. Accounting Policies
Statement of compliance
The consolidated and parent company financial statements of
Optibiotix Health Plc have been prepared in accordance with UK
adopted international accounting standards (IFRSs), IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS.
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. The results are rounded to the nearest thousand.
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 forecast
maintenance costs, other administrative expenses and its ongoing
research and development expenditure.
As part of the Group going concern assessment the Directors have
also reviewed a range of scenarios including those reflecting
conditions less favourable than the base case scenario. In such
scenarios the Directors have had regard to cash generation and
preservation options including further cost mitigation, further
sale of the Group's investment assets and share issues where market
conditions allow. Through one or a combination of these measures,
the Board are satisfied that the Group can continue as a going
concern in base case and downside
Management have considered its forecast of the group's cash
requirements reflecting contracted and anticipated future revenue
and the resulting net cash outflows. Management have not seen a
material disruption to the business as a result of the current
political crises in Eastern Europe. Management will keep events
under constant review, and remedial action will be taken if the
situation demands it.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt a going concern basis in preparing the annual
report and financial statements.
Standards, amendments and interpretations effective and adopted
in 2022
New Standards and interpretations The following IFRS or IFRIC
interpretations which are effective for the first time in the
Group's accounting period to 31 December 2022 have been
considered by the Directors. Their adoption is not expected to,
and will not, have any material impact on the disclosures or on the
amounts reported in this financial information.
Standards/interpretations Application
Effective for annual
Standard or periods beginning
Interpretation Title on or after
IFRS 3 amendments Business Combinations 1 January 2022
IAS 16 amendments Provisions, Contingent 1 January 2022
Liabilities and Contingent Assets
IFRS 9 amendments Annual Improvements 1 January 2022
to IFRS
Standards 2018Ð2020 (fees
in the 10 percent test for
derecognition of financial liabilities).
IAS 1 amendments Presentation of Financial 1 January 2022
Statements
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
The Directors anticipate that the adoption of these standards
and the interpretations in future period will have no material
impact on the financial statements of the company.
2.1 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. The group
controls an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Changes in the Group's ownership interests in subsidiaries that
do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the
Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and
attributed to owners of the Company.
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. Where certain assets
of the subsidiary are measured at revalued amounts or fair values
and the related cumulative gain or loss has been recognised in
other comprehensive income and accumulated in equity, the amounts
previously recognised in other comprehensive income and accumulated
in equity are accounted for as if the Company had directly disposed
of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings).
The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IFRS 9
'Financial Instruments: Recognition and Measurement' or, when
applicable, the cost on initial recognition of an investment in an
associate or a jointly controlled entity.
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition-date fair values of the assets transferred
by the Group, liabilities incurred by the group to the former
owners of the acquiree and the equity interests issued by the group
in exchange for control of the acquiree. Acquisition-related costs
are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
- liabilities or equity instruments related to share-based
payment transactions of the acquiree or the replacement of an
acquiree's share-based payment transactions with share-based
payment transactions of the group are measured in accordance with
IFRS 2 Share-based Payment at the acquisition date; and
- assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
standard.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after assessment, the net
of the acquisition-date amounts of the identifiable assets acquired
and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
2.2 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:
2.2.1 Sale of products
The contract to provide a product is established when the
customer places a purchase order. The performance obligation is to
provide the product requested by an agreed date, and the
transaction price is the value of the product as stated in our
order acknowledgement. The performance obligation is typically met
when the product is dispatched and so revenue is primarily
recognised for each product when dispatching takes place. In some
limited situations when the product is complete but the customer is
unable to take delivery the performance obligation is met when the
customer formally accepts transfer of risk and control even though
the product has not been dispatched.
2.2.2 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.
2.2.3 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.
2.3 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.
2.4 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.
2.5 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.
2.6 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.
2.7 Financial instruments
Financial assets and financial liabilities are recognised when
the group becomes a party to the contractual provisions of the
instrument.
2.8 Loans and receivables are initially measured at fair value
and are subsequently measured at amortised cost using the effective
interest rate method.
2.9 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.
2.10 Trade receivables are initially measured at fair value and
are subsequently measured at amortised cost less appropriate
provisions for credit losses. Such provisions are recognised in the
income statement.
2.11 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.
2.12 Trade payables are not interest-bearing and are initially
valued at their fair value and are subsequently measured at
amortised cost.
2.13 Equity instruments are recorded at fair value, being the
proceeds received, net of direct issue costs.
2.14 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.
2.15 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).
2.16 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.
2.17 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.
2.18 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 2022.
2.19 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.
2.20 Convertible debt reserve
The convertible debt reserve is the equity component of the
convertible loan notes that have been issued.
2.21 Share-based compensation
The fair value of the employee and suppliers services received
in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed over the vesting year is
determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market
vesting conditions are included in assumptions about the number of
options that are expected to vest. At each statement of financial
position date, the entity revises its estimates of the number of
options that are expected to vest. It recognises the impact of the
revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
The fair value of share-based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
2.22 Property, plant and equipment
Property, plant and equipment are stated at historical cost less
subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit
or loss during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated
using the straight-line method to write off their cost over their
estimated useful lives at the following annual rates:
Computer equipment 30%
Useful lives and depreciation method are reviewed and adjusted
if appropriate, at the end of each reporting period.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset and is
recognised in profit or loss in the year in which the asset is
derecognised.
2.23 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.
2.24 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.
2.25 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.
2.26 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.
á 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.
á Useful life of intangible assets
Management have estimated that the useful life of the fair value
of the patents acquired on the acquisition of Optibiotix Limited in
2013 to be 20 years. Development costs that have been capitalized
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.
The net book value of intangible assets at the year- end was
GBP1.540m (GBP2.641m)
á 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. The
board looked at the current order book going forward, the ongoing
discussions with current customers and the recent new customers and
concluded that an impairment of the intangible assets was not
applicable for the year to 31 December 2022. The net book value of
the intangible assets held at 31 December was GBP1.54m and an
adjustment was made of GBP0.922m to reflect the transfer of 2
patent families to Probiotix Health PLC as per note 9
á Recognition and measurement of the investment in Probiotix Health plc
Management have reviewed the nature of the relationship with
Probiotix Health plc in line of the Group's interest moving from
100% to 44% by 31 March 2022. Management have had regard to the
requirements of IFRS 10 to consider the facts and circumstances of
the relationship between Optibiotix and Probiotix and not just the
shareholding interest. In taking account of a range of factors,
including Optibiotix's minority representation on the Probiotix
board and the terms of a relationship agreement entered into
between the parties, management have concluded that Optibiotix have
significant influence over Probiotix but not control. This remains
under continuing review as facts and circumstances change.
As a result of the recognition of the Group's remaining 44%
interest at 31 March
2022 at fair value the Group and Company balance sheet report
material investment holdings in Probiotix Health plc.
The Directors have had regard to potential impairment of this
asset. After taking account of share price movements subsequent to
the year end, and in particular after the end of the post-IPO
lock-in period, the Directors concluded that an impairment should
be recorded to reflect the movement in share price from 21p at the
time of IPO in March 2022 to 6p which was the traded price on AQSE
Growth after the lock-in period ended.
Whilst the Directors believe the share price of 6p is reflective
of wider economic uncertainties and a difficult equities market
rather than any adverse impact in the group's trading prospects,
the impairment has been recorded on the basis of a prudent approach
reflective of market conditions which the Board believe are short
term in nature. The Board consider that recently depressed share
valuations across various international markets reflect significant
underpricing and are not reflective of asset values.
3. Segmental Reporting
In the opinion of the directors, the Group has one class of
business, in four geographical areas being that of identifying and
developing microbial strains, compounds and formulations for use in
the nutraceutical industry. The Group sells into to four highly
interconnected markets, all costs assets and liabilities are
derived from the UK location.
Revenue analysed by market
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Probiotics 24 1,100
Functional Fibres 433 1,113
------------ ------------
457 2,213
Following the loss of control of Probiotix Health plc on 31
March 2022, all group revenues have been derived from functional
fibres.
Revenue analysed by geographical market
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
UK 136 648
US 100 827
India 61 -
Rest of world 160 738
------------ ------------
457 2,213
During the reporting period one customer represented GBP100k
(21.9%) of Group revenues. (2021: one customer generated GBP727k
representing 32.9% of Group revenues)
4. Employees and Directors
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Wages and salaries 522 636
Directors' remuneration 354 494
Social security costs 66 83
Pension costs 35 44
------------ ------------
977 1,257
Year ended Year ended
31 December 31 December
2022 2021
No. No.
The average monthly number of employees
during the period for was as follows:
Group
Directors 6 6
Research and development 3 3
------------ ------------
9 9
Company
Directors 6 6
---------- ------------
6 6
Directors' remuneration was as follows:
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Directors' remuneration 354 507
Directors' share based payments 12 33
Benefits in kind 5 5
Bonus - 70
Pension 10 17
------------ ------------
Total emoluments 381 632
Emoluments paid to the highest paid
director 151 262
Directors' remuneration
Details of emoluments received by Directors and key management
of the Company for the year ended 31 December 2022 are as
follows:
Directors
Share Pension Benefits Total Total
Remuneration based Costs in Kind
and fees payments 2021
-------------- -------------- ---------- --------- ---------- --------- ---------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------------- ---------- --------- ---------- --------- ---------
S P O'Hara 143 - 4 4 151 262
S Christie 25 - - - 25 33
R Davidson 55 - - - 55 72
S Kolyda 81 - 6 1 88 128
C Brinsmead 25 6 - - 31 25
S Hammond 25 6 - - 31 21
Total 354 12 10 5 381 541
-------------- -------------- ---------- --------- ---------- --------- ---------
Benefits in kind relate to medical insurance. The number of
directors to whom retirement benefits were accruing was 2 (2021:
2).
5. Net Finance Income / (Costs)
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Finance Income:
Bank Interest - -
Finance Cost:
Loan note interest - (48)
------------ ------------
Net Finance Income / (Costs) - (48)
6. Expenses Ð analysis by nature
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Research and development 68 64
Directors' fees & remuneration
(Note 4) 354 469
Salaries, pension and social security 623 599
Auditor remuneration Ð Group
and Company audit fees 25 23
Auditor remuneration-Audit of
subsidiaries 15 22
Auditor remuneration Ð non
audit fees:tax compliance 8 7
Auditor remuneration Ð non
audit fees: other assurance 2 3
Brokers & Advisors 122 209
Advertising & marketing 84 42
Share based payments charge 12 60
Bad debt provision 458
Amortisation of patents and development
costs 224 288
Patent and IP costs 88 115
Consultancy fees 378 262
Legal and professional fees 12 28
Public Relations costs 80 68
Travel costs 102 16
Other expenses 78 213
------------ ------------
Total administrative expenses 2,733 2,488
7. Corporation Tax
Corporation Tax
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Corporation tax credit (38) (75)
Deferred tax movement (108) (9)
------------ ------------
Total taxation (146) (84)
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2022 nor for the year ended 31
December 2021.
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
Profit (Loss) on ordinary activities before
income tax 2,442 6,177
Loss on ordinary activities multiplied by
the standard rate of corporation tax in
UK of 19% (2021 Ð 19%) 466 1,174
Effects of:
Disallowables 166 14
Income not taxable (1,068) (1,546)
Accelerated depreciation - -
R&D tax credit claimed (38) (75)
Amortisation 28 33
Revenue items capitalised - (37)
Other timing differences - 19
Unused tax losses carried forward 408 343
------------ ------------
Tax credit (38) (75)
The group has estimated losses of GBP10.8m (2021: GBP8.41m) in
respect of which a deferred tax asset of GBP2.7m (2021: GBP2.1m)
has not been recognised due to the uncertainty of future taxable
profits. The unrecognised deferred tax asset has been assessed by
reference to a rate of 25% which is the UK headline corporation tax
rate from 1 April 2023.
The Group submits claims for R&D tax credits in respect of
its research and development activities in respect of microbiome
modulators and similar products relating to the exploitation of its
patent portfolio and potential new patents arising from scientific
research performed by group employees and its partners. Whilst the
Board are confident of recovery of the estimated R&D tax
credit, there is no certainty that the receivable will be
recoverable until HMRC have approved the claim and the enquiry
window is closed. However, based on the group's history of
successful claims over a number of years, the Board are satisfied
that the tax receivable is recoverable and appropriately
recorded.
2022 2021
Current tax asset - Group GBP GBP
Balance brought forward 191,249 310,435
Received during the year (123,663) (194,663)
Prior year adjustment - 477
Research & development tax
credit claimed 37,500 75,000
------------ ------------
105,086 191,249
8. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable shareholders by the weighted average number of
ordinary shares outstanding during the period.
Reconciliations are set out below:
2022
Weighted average
Basic and diluted EPS Earnings Number of shares Profit per-share
GBP'000 No. Pence
Basic EPS 2,587 88,279,952 2.93
Diluted EPS 2,587 93,213,179 2.78
2021
Weighted average
Earnings Number of shares Profit per-share
GBP'000 GBP Pence
Basic EPS 6,261 87,574,152 7.15
Diluted EPS 6,261 95,536,395 6.55
As at 31 December 2022 there were 7,182,907 (2021: 7,632,907)
outstanding share options and NIL (2021: 329,336) outstanding share
warrants.
9. Intangible assets
Group Development Costs
and Patents
GBP'000
Cost
At 31 December 2020 3,672
Additions 193
Disposals -
--------------
At 31 December 2021 3,865
Additions 46
Disposals (1,370)
--------------
At 31 December 2022 2,541
Amortisation
At 31 December 2020 937
Amortisation charge for the year 288
--------------
At 31 December 2021 1,225
Amortisation charge for the year 224
Disposals (448)
--------------
At 31 December 2022 1,001
Carrying amount
At 31 December 2022 1,540
At 31 December 2021 2,640
The company had no intangible assets during the reporting
period.
Development costs and patents represent cost capitalised in
respect of the Group's intellectual property portfolio and includes
the costs of registering and maintaining patents as well as
capitalised development costs. All intangible assets relate to the
Group's principal activities.
Disposals in the year relate to two patent families relating to
probiotic patents owned by Probiotix Limited and therefore which
were derecognised upon the group's loss of control of Probiotix
Health plc. This disposal has formed part of the gain on loss on
disposal reported in the income statement.
10. Property, plant and equipment
Group
GBP
Cost
At 31 December 2020 8,461
Additions -
Disposals -
--------------
At 31 December 2021 8,461
Additions -
Disposals -
--------------
At 31 December 2022 8,461
Depreciation
At 31 December 2020 8,461
Charge for the year -
--------------
At 31 December 2021 8,461
Charge for the year -
--------------
At 31 December 2022 8,461
Carrying amount
At 31 December 2022 -
At 31 December 2021 -
The company had no fixed assets during the reporting period.
11. Investments
Group
Set out below is the investment in Skinbiotherapeutics PLC. The
investment was treated as an associate of the group until 2
November 2020, after which time the shareholding dropped to 24.65%
and recalculated as an equity investment. The Group records its
investment in Skinbiotheraputics plc at fair value and is
remeasured by reference to its closing price on AIM at each
reporting date. The share price at 31 December 2022 was 15.5p.
During the year, a small holding of shares was disposed to
generate proceeds of GBP25k with original cost of GBP9k.
2022 2021
GBP'000 GBP'000
Investments
At the beginning of the period 13,651 8,962
Revaluations (8,620) 7,501
Disposal of shares during year (9) (2,812)
At 31 December 5,022 13,651
--------------------------------- --------- ---------
Investment in Associate
On 31 March 2022, ProBiotix Health Plc ( 'PBX') the parent
company of ProBiotix Limited listed on the AQSE Growth Market. The
listing of PBX on AQSE, together with the issue of a dividend in
specie and issue of new shares, means that PBX is now considered an
associate for accounting purposes with its revenues and costs
removed post listing and only OptiBiotix's (44%) proportion of its
profit and loss included in the Group's accounts under the equity
method of accounting. The step-down from being a subsidiary to an
associate resulted in the revaluation of the remaining interest
held in PBX at the listing price and a gain on disposal of a
subsidiary recognised in the income statement. A gain of GBP21.647m
was recorded in the income statement.
An assessment was undertaken to assess whether the Company had
defacto control over PBX during the period considering Board
representation, financing arrangements, the Relationship agreement
and the other shareholdings in PBX. Based on the assessment it was
concluded that the Company only had significant influence and that
PBX was an associate in the period. The Relationship agreement sets
out costs that are being incurred by the Group that are being
recharged to PBX.
At 31 March 2022 the Group held 53,533,333 shares in Probiotix
Health plc, valued at the IPO price of 21p resulting in a deemed
cost of investment in associate of GBP11.24m. As an associate, the
Group's investment is equity accounted and the Group's 44% share of
loss was deducted from this carrying value.
Investment in Associate
2022 2021
GBP'000 GBP'000
Investments
At the beginning of the period - -
Additions
Deemed cost on reclassification from 11,242 -
subsidiary
Impairment in the period (8,030) -
Share of result for the period (see (83) -
below)
At 31 December 3,129 -
--------------------------------------- --------- ---------
PBX is registered in United Kingdom and is in the Health food
sector.
Set out below is financial information on PBX set out in its
IFRS financial statements for the period from incorporation on 4
November 2021 to 31 December 2022.
2022
GBP'000
Revenue 1,308
Loss from continuing operations (237)
Total comprehensive loss (189)
Current assets 2,311
Current Liabilities (307)
Non-current liabilities (89)
44% share of total comprehensive
loss (83)
Company Investments
2022 2021
GBP'000 GBP'000
Listed Investments
At the beginning of the period 13,651 8,962
Additions - -
Revaluations (8,620) 7,501
Disposal of shares during year (9) (2,812)
---------- ----------
5,022 13,651
Investment in subsidiaries
At the beginning of the period 2,081 2,081
Additions 16 -
Impairment (50) -
Disposals (61) -
---------- ----------
1,986 2,081
At 31 December 7,008 15,732
------------------------------------- ---------------- ----------------
Company Investment in Associate
2022 2021
GBP'000 GBP'000
At the beginning of the period 60 -
Reclassification to associate 11,182 -
Provision against value of associate (8,030) -
At 31 December 3,212 -
------------------------------------------ ---------- ------------
The Company holds listed investments at fair value, and
investments in subsidiaries and associates at cost less impairment.
The fair value of the Company's investment in Probiotix Health plc
upon losing control was set as deemed cost.
The Directors have had regard to potential impairment of this
group's investment in Probiotix. After taking account of share
price movements subsequent to the year end, and in particular after
the end of the post-IPO lock-in period, the Directors concluded
that an impairment should be recorded to reflect the movement in
share price from 21p at the time of IPO in March 2022 to 6p which
is an approximation to the traded price on AQSE Growth after the
lock-in period ended.
Whilst the Directors believe the share price of 6p is reflective
of wider economic uncertainties and a difficult equities market
rather than any adverse impact in the group's trading prospects,
the impairment has been recorded on the basis of a prudent approach
reflective of market conditions which the Board believe are short
term in nature. The Board consider that recently depressed share
valuations across various international markets reflect significant
under pricing and are not reflective of asset values.
An impairment charge of GBP8.03m has been recorded in the income
statement as a separate line item. The impairment assessment was
made by reference to fair values using Level 1 inputs on the Fair
Value Hierarchy, being observable traded prices on the AQSE Growth
exchange.
During the period an impairment of GBP50,000 was raised against
the Company's investment in The Healthy Weight Loss Company Limited
as the board intend to wind up this company which has minimal
assets and no trading activity.
The entities 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.
As at 31 December 2022 the Company directly held the following
subsidiaries:
Name and Principal Country of incorporation Proportion of
Registered office activities and place of equity interest
address of company business
OptiBiotix Limited Research & Development United Kingdom 100% of ordinary
shares
Innovation Centre Innovation Way, Heslington, York, YO10 5DG
Optibiotix Health Health foods India 100% of ordinary
India Private Limited shares
House NO.243, Mcd Colony, Vivekanand Puri Sarai
Rohilla City, Delhi CITY, DELHI, North Delhi, Delhi, India, 110007
The Healthy Weight Health foods United Kingdom 68% of ordinary
Loss Company Limited shares
Office 7 35/37ludgate Hill, London, England, EC4M 7JN
12. Inventories
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Finished goods 178 102 - -
During the period GBP213k (2021: GBP1,090k) has been expensed to
the income statement.
13. Trade and other Receivables
Group Company
2022 2021 2022 2021
Non- current GBP'000 GBP'000 GBP'000 GBP'000
Amounts owed by group
undertakings - - - 318
---------- ---------- ---------- ----------
- - - 318
Current
Accounts receivable 379 1,415 - -
Other receivables 131 82 17 40
Prepayments and accrued
income 11 56 8 26
---------- ---------- ---------- ----------
521 1,553 25 66
During the period 1 January 2022 to 31 March 2022 Optibiotix
Health PLC loaned Probiotix Limited GBP150,000, to finance working
capital costs in the period up to the listing of Probiotix Health
Group plc. During the year GBP203,835 was repaid. The balance due
to Probiotix Limited at 31 December 2022 of GBP10,137 (2021 owing:
GBP53,835) was repaid post year end. There was no interest charged
during the year.
During the year Optibiotix Health PLC loaned Optibiotix Limited
GBP1,220,000 to finance working capital costs. Optibiotix Limited
recharged Optibiotix Health PLC GBP373,426 for salary costs. The
balance at the yearend of GBP846,574 (2021, GBP931,903) was
cancelled. There was no interest charged during the year. This does
not impact on the consolidated Group accounts.
During the year Optibiotix Limited recharged Probiotix Health
PLC GBP23,139 for directors' fees. Optibiotix Limited received a a
recharge from Probiotix Health PLc for admin costs of GBP148. The
balance at the year end of GBP22,991 was received after the year
end. There was no interest charged during the year.
During the year Optibiotix Limited transactions with Probiotix
Limited were as follows:-
Yen GBP440,663 for salaries and administration costs;
Yen GBP60,676 income received on behalf of Probiotix limited; and
Yen GBP544,177 repayments received.
There was no interest charged during the year. The remaining
balance of GBP30,146 was received after the year end.
14. Cash and Cash Equivalents
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Cash and bank balances 1,052 2,007 865 1,705
All cash is held in demand deposits with large UK banks.
15. Called Up Share Capital
2022 2021
Issued share capital comprises: GBP'000 GBP'000
Ordinary shares of 2p each
Ð 91,190,661 (2021:
87,940,601) 1,824 1,759
------------ ------------
1,824 1,759
------------ ------------
During the period the Company issued ordinary shares of GBP0.02
each listed below:-
Date Number
Exercise of warrants at exercise
price of GBP0.08 27/01/2022 125,000
Exercise of warrants at exercise
price of GBP0.08 09/03/2022 60
Issue of equity via subscription
at a price of GBP0.16 05/12/2022 3,125,000
------------
3,250,060
------------
16. Reserves
Share capital is the amount subscribed for shares at nominal
value. Share premium represents amounts subscribed for share
capital in excess of nominal value, net of expenses.
The convertible debt reserve is the equity component of the
convertible loan notes that have been issued.
Merger relief reserve arises from the 100% acquisition of
OptiBiotix Limited on 5 August 2014 whereby the excess of the fair
value of the issued ordinary share capital issued over the nominal
value of these shares is transferred to this reserve in accordance
with section 612 of the Companies Act 2006.
Retained earnings represents the cumulative profits and losses
of the group attributable to the owners of the company net of
distributions paid.
Share based payment reserve represents the cumulative amounts
charged in respect of unsettled warrants and options issued.
17. Trade and other payables
Current:
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Accounts Payable 191 424 34 18
* Accrued expenses 70 175 39 23
* Other payables 17 3 10 -
- -------------- -------------- -------------- --------------
Total trade and other
payables 278 602 83 41
-------------- -------------- -------------- --------------
18. Deferred Tax
Deferred tax is provided, using the liability method, on
temporary differences at the statement of financial position date
between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 25% (2021: 25%).
The movement on the deferred tax account is as shown below:
2022 2021
GBP'000 GBP'000
At 31 December 552 561
Movement in the period (187) (9)
------------ ------------
At 31 December 365 552
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 over the
timing of future taxable profits. Further details of available
losses are set out in note 7.
19. Convertible Loan Notes
The Company's former subsidiary Probiotix Health Plc issued
1,025,000 floating rate convertible loan notes (CLN) for
GBP1,025,000 on 11 December 2018. The notes were 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 had subscribed 250,000 of the CLN for
GBP250,000
The loan notes were converted as part of the listing process for
Probiotix Health PLC on 31 March 2022.
20. Related Party Disclosures
Transactions and balances with Probiotix Group are set out in
note 13.
21. Ultimate Controlling Party
The Board consider that there is no overall controlling
party.
22. Share Based payment Transactions
(i) Share options
The Company had introduced a share option programme to grant
share options as an incentive for employees of the
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
2022 2021 2022 2021
No. No. GBP GBP
Outstanding at the beginning
of the period 7,632,907 8,032,907 0.18 0.21
* Granted during the period 500,000 - 0.02 -
* Forfeited/cancelled during the year (950,000) (400,000) 0.70 0.785
- - - -
* Exercised during the period
- -------------- -------------- ------------ ------------
Outstanding at the end
of the period 7,182,907 7,632,907 0.092 0.17
-------------- -------------- ------------ ------------
For the share options issued in 2014 vesting conditions dictate
that half will vest if the middle market quotation of an existing
Ordinary share is 16p or more on each day during any period of at
least 30 consecutive Dealing days and half will vest when a
commercial contract is signed. The two conditions are not dependent
on each other and will vest separately.
For the share options issued in 2015 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 2020 vesting conditions dictate
that the options will vest if certain revenue conditions are
met.
For share options issued in 2022 The Company has agreed with a
number of option holders to surrender their existing options in
return for Nominal Value Options over half the number of shares of
their existing options, which will be subject to a combination of
performance and time-based vesting criteria. This ensures a
continued focus on commercial revenues and shareholder value
creation. New options will be granted on a similar basis going
forward. Options granted to non-executive directors will be subject
to time-based vesting.
The share options outstanding at the period end had a weighted
average remaining contractual life of 830 days (2021: 1,241 days)
and the maximum term is 10 years.
The share price per share at 31/12/22 was GBP0.13 (31/12/2021:
GBP0.46)
Where share options were cancelled in the period and replaced
with share options with revised terms, the Board have considered
this set of transactions as a modification of share based payment
arrangements and have therefore considered whether any incremental
value arises as a result of the grant of modified awards. Having
performed an assessment the Board have concluded that no
incremental value fair is required and therefore no charge has been
recognised. In respect of replacement options which include market
based vesting conditions in respect of revenue targets, the Board
have determined that the value of this proportion of shares have
immaterial value in light of the Group's results for the 2022
accounting period in which they were granted.
(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
2022 2021 2022 2021
No. No. GBP GBP
Outstanding at the beginning
of the period 329,336 329,386 0.08 0.08
* Exercised (125,060) - 0.08 0.08
204,276 - -
* Cancelled
- -------------- -------------- -------------- --------------
Outstanding at the end
of the period - 329,336 - 0.08
-------------- -------------- -------------- --------------
There were no warrants in issue at 31 December 2022.
A charge of GBPNil (2021: GBP60,288) has been recognised during
the year for the share based payments over the vesting period.
23. Financial Risk Management Objectives and Policies
The Group's financial instruments comprise cash balances and
receivables and payables that arise directly from its
operations.
The main risks the Group faces in respect of its financial
statements are liquidity risk and credit 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.
Interest risk
The Group is not exposed to significant interest rate risk as it
has limited interest bearing liabilities at the year end.
The group's financial assets do not bear interest.
Credit Risk
The Group try to limit the credit risk by dealing with larger
companies and also asking new smaller customers to provide a
deposit with the purchase order.
Management have regard to credit exposures when entering into
new contracts and seek to agree settlement terms on all contracts.
Credit exposure is regularly monitored by management and any
overdue debts are followed up as part of the group's credit control
procedures. Where a debt becomes significantly overdue, management
have regard to credit loss provisions to reflect the existence of
expected credit losses, taking account of forward looking
information as well as the pattern of cash collections for that
category of customer.
At 31 December 2022 one material debt is overdue, however
management have negotiated revised terms and expect to resolve the
outstanding amount within 2023.
Having taken account of the nature of the relationship with the
customer and the pattern of repayments since the receivable was
raised, the Directors expect the amount to be recovered in full,
however a credit loss provision of GBP60,000 has been created to
reflect the impact of wider economic uncertainties over the
projected collection period.
The Board consider a default to have occurred when a receivable
passes 60 days beyond agreed credit terms, at which point regard is
had to the specific characteristics of the debtor in assessing
exposure to material credit risk and therefore the requirement to
create a loss provision.
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 by continuously monitoring forecast and actual cash flows,
and by matching the maturity profiles of financial assets and
liabilities.
Capital risk
The Group's objectives when managing capital are to safeguard
the ability to continue as a going concern in order to provide
returns for shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
24. Post Balance Sheet Events
Subsequent to the period end, the share price of the group's
associate Probiotix Health plc was trading in the region of 5-7p,
representing a material reduction since the IPO price of 21p at 31
March 2022. The Directors have had regard to the financial
reporting impacts and further detail is given in Note 11.
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END
FR FRMBTMTATBLJ
(END) Dow Jones Newswires
June 28, 2023 02:00 ET (06:00 GMT)
OptiBiotix Health (AQSE:OPTI.GB)
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