optibiotix.com
ANNUAL REPORT AND ACCOUNTS
FOR THE PERIOD ENDED 31 DECEMBER 2020
Contents
Company Information
Chairman’s Report
Chief Executive’s Report
Strategic Report
Directors’ Report
Report of the Independent Auditors
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flows
Notes to the Consolidated
Statements of Cash Flows
2
3
5
11
16
19
25
26
27
28
29
Company Statement of
Financial Position
Company Statement of
Changes in Equity
Company Statement of Cash Flows
Notes to the Company
Statements of Cash Flows
Notes to the Financial Statements
Notice of Annual General Meeting
30
31
32
33
34
57
1
OptiBiotix Health Plc
Company Information
Directors: S P O’Hara
R Davidson
M Christie
C Brinsmead
S Hammond
S Kolyda
Secretary: International Registrars Limited
Registered number: 05880755 (England & Wales)
Registered office: Innovation Centre
Innovation Way
York
YO10 5DG
Auditors: Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Nominated adviser: Cairn Financial Advisers LLP
Cheyne House
Crown Court
62-63 Cheapside
London
EC2V 6AX
Brokers: Cenkos Securities plc
6-7-8 Tokenhouse Yard
London
EC2R 7AS
Website Address: www.optibiotix.com
Annual Report and Accounts 2020 2
Chairman’s Report
For the year ended 31 December 2020
I am pleased to report a further year
of solid strategic, commercial and
financial progress. The Group has
achieved strong sales growth while
reducing its already low-cost base,
enabling both its Probiotic and
Functional Fibre divisions to achieve
as planned. The
profitability
successful commercialisation of our
first-generation products with a
range of internationally recognised
partners confirms the effectiveness and scalability of our
innovative, low risk business model, while our pipeline of exciting
second-generation products gives us a strong base to deliver
continuing growth in shareholder value.
Results
Group sales for the 12 months ended 31 December 2020 (prior period:
13 months ended 31 December 2019) grew by 104% to £1,523,247
(2019: £744,883) while other administrative expenses reduced by 27%
to £1,616,069 (2019: £2,204,217). Despite the challenges presented by
the global COVID-19 pandemic, both the Functional Fibres and Probiotic
divisions achieved profitability at the EBITDA level, after losses in the
prior 13 month period.
The Company received an additional £746,751 during the year from the
partial disposal of its holding in SkinBioTherapeutics plc (‘SBTX’), which
is not included in the Group revenue figures. As a result of the change
in the Company’s shareholding in SBTX, it is now treated as an
investment rather than an associate and the change in the value in the
Company’s shareholding during the financial year will in future be
reflected in the Group accounts. The increase in the value of the SBTX
holding of £7,120,962 during the year results in a Group net profit for
the year of £5,801,867 (2019: net loss £2,368,362).
The Group’s financial position remains strong, with total cash on the
balance sheet at the year-end increasing by 90% to £864,680 (2019:
£455,608). Post period, the Company sold £900,936 SBTX shares in
March 2021 to further strengthen its balance sheet.
Strategy
is a
Optibiotix Health
life sciences business founded on the
development of prebiotic and probiotic compounds to tackle obesity,
cardiovascular disease and diabetes: all conditions that are affecting
growing numbers of people in all parts of the world.
Our proven, low risk growth strategy is to secure deals with multiple
partners – manufacturers, formulators and distributors – in multiple
territories around the world, ensuring that we retain control of the
complete value chain for all the compounds we develop, and can
extract value for our shareholders at each stage.
We have now established the scientific, clinical and commercial viability
of our first-generation products (LPLDL® and SlimBiome® / WellBiome®)
achieving strong sales growth with internationally recognised retail and
pharmaceutical partners. As we anticipated, this growth in volumes has
enabled us to renegotiate contracts with our partners so as to reduce
the cost of goods and deliver improved divisional margins, as noted in
the financial report.
The next stage of our strategy will focus on the development and
commercialisation of our second-generation platforms, which include
SweetBiotix®, microbiome modulators to tackle a range of human
health conditions, and drug biotherapeutics. All of these offer significant
potential for long term growth.
Business development
Among the many positive developments during the year, which the
Chief Executive discusses more fully in his report, I would particularly
like to highlight:
•
•
•
Our agreement in August 2020 with Optipharm and product
launch in October 2020 for the exclusive use of our OptiBiome®
weight management ingredient in over 20 countries in its flagship
Optislim brand, the leading weight management brand in
Australia.
The agreement with a US partner for the large-scale manufacture
and commercialisation of a number of SweetBiotix® products
announced on 15 September 2020.
The USA FDA authorisation in October 2020 of an Investigational
New Drug (‘IND’) trial by our partner Seed Health of a probiotic
containing LPLDL®.
Since the year-end, we have also achieved an important extension of
our product range with Holland & Barrett, which has increased from
three to eight the number of lines in its own SlimExpert range
containing SlimBiome® as announced on 17 March 2021.
333
OptiBiotix Health Plc
Chairman’s Report (continued)
The Board
Outlook
We continue to evolve the Board to ensure that we have the right mix
of skills to lead the Group through the next stage of its strategic
development, and to this end we have announced the appointment of
two non-executive directors since the beginning of the new financial
year.
Christopher Brinsmead CBE joined the Board as a non-executive director
on 1 January 2021, bringing to us more than 30 years of experience in
the pharmaceutical and healthcare sectors as a senior executive and
adviser, FTSE 350 company director and chairman.
Stephen Hammond MP joined the Board as a non-executive director
on 2 March 2021, further complementing our skillset through his
experience during a successful career in fund management and
investment banking prior to entering Parliament in 2005, and his
subsequent senior roles in government.
Peter Wennström retired as a non-executive director on 1 January 2021,
with our thanks for his contribution to the development of the
Company and particularly for his valuable advice on brand strategy and
the positioning of our first-generation products in international markets;
I am pleased that his expertise remains available to us as an adviser.
René Kamminga joined as Chief Executive Officer (“CEO”) of OptiBiotix
Ltd, a wholly owned subsidiary of OptiBiotix Health plc, on 6 April 2021.
We are confident that his experience and track record of growing sales,
and his network of new industry contacts within the pharmaceutical
and nutraceutical industries, will help OptiBiotix in its next phase of
development as we look to extend the range of applications for our
award-winning SlimBiome® and LPLDL®
to
commercialise our second generation SweetBiotix®, microbiome
modulating, and LPLDL® drug products.
ingredients, and
Following René’s appointment, Dr Fred Narbel has moved to a more
strategic role within the business as a non-executive director of
OptiBiotix Ltd. We are grateful to Fred for his contribution over the
previous two years in building the sales of our first-generation products,
expanding our network of production partners around the world,
securing commercial launches of products containing SlimBiome® with
retailers in numerous countries, and in setting up the Functional Fibres
division’s quality system, and we look forward to his continued support
in his new role.
We have also strengthened our senior executive team below the main
Board, as the Chief Executive reports below.
We have made a strong start to the current year, continuing to expand
sales of our proven first-generation products whilst building the
scientific and clinical evidence base needed to de-risk our highly
innovative second-generation products and maximise their commercial
potential in the future. Our new products open up significantly larger
market opportunities, which we are well placed to exploit through an
established, low overhead, sustainable business model that has
demonstrated its ability to deliver a rapid increase in scale.
Already this year we have been able to report agreements and product
launches that secure increased SlimBiome® sales in the UK, USA, Africa,
India and wider Asia; the extension to two new territories in our
agreement with Actial Farmaceutical for the distribution of CholBiome®
and CholBiome®x3; and success in long term stability studies that assure
the shelf life of SlimBiome® Medical, CholBiome® and CholBiome®x3,
which will allow OptiBiotix and its partners to place larger orders for
these products, so reducing the cost of goods and increasing margins.
Our manufacturing partner is making strong progress with the first
industrial scale production of SweetBiotix®, and we have begun to
explore the full potential of LPLDL® as a drug biotherapeutic.
Although the COVID-19 pandemic has presented some significant
challenges over the last year in diverting commercial, medical and
governmental attention away from the markets we address and
delaying decision-making by some partners, we are confident that the
issues of obesity, high cholesterol and diabetes will remain key areas of
concern worldwide in the years ahead, and that the pandemic
experience will drive increased interest in science-based products to
address these challenges.
The strengthening of our Board and senior management since the
beginning of the year give me confidence in our ability to continue to
grow the business, and to deliver growing value for our shareholders in
the longer term.
N Davidson
Chairman
16 June 2021
Annual Report and Accounts 2019 4
Chief Executive’s Report
For the year ended 31 December 2020
of
OptiBiotix offers investors a unique
opportunity to participate in the
growth potential afforded by one the
most progressive and exciting areas
of biotechnological research: the
modulation
human
microbiome. The Company develops
products
innovative
unique,
protected by an extensive and
growing international portfolio of
patents and trademarks. Our two-
stage strategy and low-cost business model are designed to
maximise the earning potential of each of our products while
limiting our investors’ risk, achieving global access to fast-growing
markets by working with a range of local partners who are
recognised and respected as leaders in their fields.
the
STRATEGIC DEVELOPMENT
We are successfully progressing a two-stage strategy that is delivering
as planned, with our first-generation products, LPLDL® and SlimBiome®,
generating rapid revenue growth against a low and decreasing cost
base enabling us to achieve profitability in our two principal Probiotic
and Functional Fibre divisions. This was a substantive change from
divisional losses of £467,704 for ProBiotix and £451,572 for the functional
fibres division reported in 2019. The second stage of our strategy is
delivering on the huge potential of our second-generation products:
the SweetBiotix® family of functional fibres that act as low calorie,
and drug
prebiotic
biotherapeutics. These products carry higher development risks than
our first-generation products but address much larger market
opportunities, affording very substantial potential for future growth in
revenues and profits and shareholder value.
sweeteners; microbiome modulators;
During 2020 we reached a turning point with our first-generation
products gaining a commercial position and brand recognition in over
120 countries. These products were designed with a low development
risk with the aim of establishing the Company’s industry credibility, and
testing our business model in the market. This has been achieved with
the conclusion of multiple deals with large retail and pharmaceutical
partners including Alfasigma, Agropur, Holland & Barret, and Optipharm,
with OptiBiotix increasingly being identified as a key player in the
microbiome space in industry reports. Holland and Barrett and
AlfaSigma launched products in the first quarter of 2020 and Optipharm
in the last quarter. Whilst retail agreements typically have lower margins,
they enhance the credibility and consumer awareness of our products,
and with it, confidence in our brand.
The fact that our products are now increasingly becoming associated
with internationally recognised retail and pharmaceutical partners and
555
OptiBiotix Health Plc
established brands creates a virtuous circle of further interest from other
potential partners and markets.
FINANCIAL RESULTS
As the Chairman has noted, Group sales for the 12 months ended
31 December 2020 (prior period: 13 months ended 31 December 2019)
more than doubled to £1,523,247 (2019: £744,883). This 104% increase
in revenues would have placed OptiBiotix Health among the top ten
growth companies in the UK during 2020 (The UK’s Top Ten Fastest
Growing Companies Revealed, Forbes August 2020).
Both our principal divisions contributed to this strong sales performance
and transitioned to profitability during the year.
The Functional Fibres division (SlimBiome®, OptiBiome® and WellBiome®)
grew sales by 151% to £557,539 (2019: £222,235) despite the
challenging trading environment created by COVID-19, which limited
our partners’ ability to innovate, formulate and launch new products
during the year. The division delivered positive EBITDA of £67,271,
compared with an EBITDA loss of £451,572 in the previous period.
The Probiotic division, our wholly owned subsidiary Probiotix Health Ltd
(LPLDL®), increased sales by 107% to £821,126 (2019: £397,831), despite a
number of customers postponing product launches or temporarily
shifting their focus to immune health products in response to the
Coronavirus pandemic. The division generated positive EBITDA of
£88,762, compared with an EBITDA loss of £467,704 in 2019.
Our smaller Consumer Health division, operating our own online store,
grew sales by 17% to £137,024 (2019: £117,560 ) This business continues
to serve as a valuable shop window for testing new products with
consumers, and has helped us to achieve successful product launches
with partners including Holland & Barrett and Alfa Sigma.
Group administrative expenses, excluding non-cash items such as share-
based payments and amortisation, reduced by 27% to £1,616,069 (2019:
£2,204,217) as increased sales volumes enabled us to renegotiate
contract terms with our commercial partners to deliver improved
margins.
As the Chairman has noted, the Group’s net profit includes the benefit
of a substantial increase in the value of our holding in SkinBio
Therapeutics plc (‘SBTX”) during the year. SBTX is making strong progress
towards commercialising its products and we believe that it will prove
to an appreciating asset for our shareholders in the future. It is worth
noting that our initial investment of approximately £700,000 in this
business in 2016 has delivered an investment asset now worth circa
£25m as at 1 June 2021. We are pleased that our strategy of developing
divisions as separate legal entities with the potential for a trade sale or
separate public listing has helped create such a valuable asset to
OptiBiotix shareholders.
Chief Executive’s Report (continued)
We will continue to consider other opportunities which capitalise on
growing investor interest investment in the microbiome space in both
the UK and international markets where they provide scope for
enhancing shareholder value.
COMMERCIAL UPDATE
We signed a total of 27 new commercial agreements during the year
ended 31 December 2020: 18 for SlimBiome® and related products in
the Functional Fibres division, and 9 for LPLDL® in ProBiotix Health.
Of note were deals with Holland and Barrett, Optipharm, and US
partners that open up retail opportunities in the UK, Australia, parts of
Asia, the Middle East, and North America. Announcing such deals
increases industry awareness of OptiBiotix’s brands within the industry,
and changes the nature of partner discussions as the commercial
benefits are established in more territories. Growing brand awareness
increases the value of a product, and ultimately shareholder value, and
is particularly important and valued by large corporates. This is in line
with our strategic aim of growing the awareness of our ingredient and
finished product brands around the world. Deals with Genuine Health
(Canada/USA), Granja Pocha (Dairy: Uruguay) and Ayalla (Brazil), and at
the end of the year, UITC (Singapore) support this approach and open
up markets of strategic importance in the USA, South America, and Asia.
Having products and brand presence in multiple territories is really
important for corporate partners or potential corporate acquirers as it
shows our products have international reach and appeal to customers
around the world, and are not restricted to national markets. This is a
major value enhancer as not all products are able to cross international
boundaries.
LPLDL®
Sales of LPLDL® as an ingredient or final product grew by 107% during
the year. We have developed the science, carried out human studies to
confirm product safety and efficacy, protected our commercial interests
with a broad IP portfolio comprising some 30 patents, and built a supply
chain of licensed partners to manufacture, formulate, and distribute this
product around the world. We now have partners commercialising
LPLDL® in over 60 countries including the world’s largest probiotic market
(USA: Seed Health) and second largest (Italy: AlfaSigma). The next stage
of our strategy is to grow sales with existing partners, extend territories
and applications, and continue to sign up new partners. In addition to
growing sales, the Company is renegotiating contracts as volumes
increase to reduce the cost of goods. The renegotiation of our contract
with Sacco Srl from a profit sharing to a manufacture supply agreement
where we buy from Sacco and then sell product to partners ourselves
has significantly improved margins.
Particularly noteworthy developments during the year were the
successful launch of AlfaSigma’s Ezimega 3 product and the commercial
growth of Seed Health’s Daily Synbiotic. These achieved strong early
growth despite the emerging COVID-19 pandemic which impacted on
sales in the second half of the year. The signing of an agreement with
Actial Farmaceutica Srl for the distribution of CholBiome® products was
a significant commercial achievement and brought further credibility
to the LPLDL® brand. Actial is the developer of one of the world’s best-
known probiotic brands - VSL#3® - and their products have a reputation
for their strong science and clinical studies amongst hospital clinicians,
GPs and pharmacists.
The Company has now published six studies on LPLDL® in peer reviewed
journals or as abstracts at international scientific conferences. These
cover the safety and performance of LPLDL® in human studies, the three
mechanisms of action by which LPLDL® reduces blood lipids, and LPLDL®’s
antimicrobial activity against a wide range of clinically important human
and/or animal pathogens
including Campylobacter, Shigella,
Salmonella, E.coli O157, and Clostridium difficile. The results of two
published independent human studies in different countries show
significant reductions in both blood pressure and cholesterol and the
product to be safe and well tolerated.
Publications and presentations help to differentiate LPLDL® from products
which are sold solely on marketing and reduce the risk of
commoditisation and price erosion.
LPLDL® has been determined as Generally Recognized As Safe (“GRAS”)
by the US Food and Drug Administration (FDA) and has pharmaceutical
GMP manufacture designation. This, together with the presence of a
scientific and clinical evidence base, gives it major points of
differentiation from other probiotics. These designations increase the
market attractiveness of LPLDL® to pharmaceutical partners either used
by itself, or as combination treatment to help lower the dose and
potential side effects of statins. This extends its potential beyond the
traditional supplement market into broader therapeutic opportunities
within pharmaceutical consumer health businesses or as a drug
biotherapeutic with pharmaceutical partners.
SlimBiome®
Sales of SlimBiome® as an ingredient or final product grew by 151%
during the year. This was largely driven by partners in the UK, Australia
and the USA launching new retail products, or building stock levels for
the launch of products. Of particular note is the extension of SlimBiome®
into everyday foods like muesli and porridge and the development of
healthy snacks like fruit and fibre gummies under the SnackSmart®
brand. The launch of WellBiome® during the year reflects the growing
interest from partners in a science backed Health and Wellbeing
microbiome product which taps into a global trend for Health &
Wellness, a market estimated to be worth US$4.2 trillion in 2019 with
the digestive health segment accounting for US$60 billion.
Annual Report and Accounts 2019 6
Chief Executive’s Report (continued)
SweetBiotix®
SweetBiotix® is a family of products based on the concept of creating a
low calorie sweet fibre that has a low glycaemic index, which enhances
the microbiome. The concept uses new science, new manufacturing
processes, and represents a step change from existing products on the
market or known to be under development. Our aim is to build a broad
range of products suitable for a wide range of application areas which
can meet the needs of multiple partners on applications as diverse as
dairy, cereals, and hot and cold beverages. Each of these has to be
assessed in terms of flavour optimisation, stability, dosage, safety,
tolerance, health benefits, and the final product cost profile.
The agreement signed with a US partner in the second half of 2020
represented a significant milestone in the commercialisation of
SweetBiotix® products. The agreement, for one part of the SweetBiotix®
portfolio, grants an exclusive licence in return for our partner making a
significant investment to cover all the manufacturing, marketing and
commercialisation costs. In return, we will receive upfront, annual and
product launch royalties from our US partner, plus royalties on all future
product sales. We have also negotiated enhanced royalty payments on
sales of SweetBiotix® products by our partner to 11 application /
innovation partners.
INTELLECTUAL PROPERTY
There has been a rapid increase in the number of patents filed in the
microbiome space in the last 10 years, and OptiBiotix and Probiotix
Health have together filed numerous patents to protect their
commercial interests and create first mover advantage in this evolving
field. This is being supported by a large investment – typically of over
£250,000 per year - in patents and trademarks to broaden protection in
international markets
Our Intellectual Property (‘IP’) strategy has been based on building a
portfolio of overlapping patents to protect our commercial interests and
reduce the risk of any particular patents failing to grant or being
opposed by a competitor. This means that we have multiple
composition, application, and process patents to protect each area of
our business. Whilst this approach is more costly, it reduces our future
commercial risk. As patents are granted in key territories (typically the
US, Europe, Canada, Japan, Australia, India) the Group has been able to
refine its patent portfolio to reduce IP costs whilst continuing to protect
its commercial interests.
Our strategy and investment have enabled the Group to build an
extensive and valuable intellectual property portfolio of some 70 patents
worldwide. In addition to these patents, we have registered over 68
trademarks to provide what is called ‘double IP’ – a combination of
patents and supporting trademarks which allows OptiBiotix to build its
trademarked brands supported by its patents. This approach further
reduces risk and in combination creates a valuable IP portfolio in the
microbiome field.
KEY ACHIEVEMENTS
During the period to date we have signed new agreements, launched
new products, extended our agreements with existing partners and
completed successful human studies on the effectiveness of our
products, and the highlights of the year were as follows:
New agreements
•
•
•
•
•
•
•
•
•
Concluding an agreement with Optipharm, whose flagship brand
Optislim is Australia’s leading weight management brand, for the
exclusive use of our OptiBiome® weight management ingredient
in over 20 countries including Australia, parts of Asia, New Zealand,
Middle East, Gulf States and North America
Signing a three-year distribution agreement with a subsidiary of
Pierce Group Asia granting it exclusive rights to import and
commercialise OptiBiotix’s SlimBiome® and LPLDL® and to
manufacture, develop, and sell a wide range of finished products
to China and Hong Kong
Granting MAXCARE
Inc exclusive rights to commercialise
OptiBiotix’s SlimBiome® proprietary weight management
technology in Taiwan
The signature of a licensing agreement with Granja Pocha S.A. for
the inclusion of ProBiotix’s patented probiotic strain LPLDL® into a
functional yogurt product in Uruguay, South America
Conclusion of a new licensing agreement with Velinoff Pharma Ltd
for the distribution of ProBiotix’s products CholBiome® and
CholBiome®X3, which contain OptiBiotix’s patented probiotic
strain LPLDL®, in Bulgaria
Reaching a one year exclusive distribution agreement with
Prosperous Pharma, based in Lebanon, to distribute and
commercialise OptiBiotix’s SlimBiome® Medical to the Gulf
Cooperation Council States and the Levant region
A non-exclusive distribution agreement with Actial Farmaceutica
Srl for the distribution of CholBiome® and CholBiome®X3 in
Australia, New Zealand, Indonesia and Thailand, under the VSL#3®
range
An exclusive agreement with a US company for the large-scale
manufacture and commercialisation of a number of SweetBiotix®
products in return for upfront, milestone, launch and royalty
payments
An exclusive distribution agreement granting United Italian
Trading Corporation (Pte) Ltd exclusive rights to distribute
SlimBiome® Medical, CholBiome® and CholBiome®X3 in Singapore
7
OptiBiotix Health Plc
Chief Executive’s Report (continued)
•
The grant of a non-exclusive LPLDL® license to Genuine Health Inc
for a cardiovascular health product in Canada and the USA
Product launches
•
•
•
•
•
•
The launch of a branded SlimBiome® product range with Holland
& Barrett, the first agreement with a major retailer to market our
proprietary weight management technology
The launch in Italy by ALFASIGMA S.p.A. of a food supplement
containing our proprietary cholesterol reducing LPLDL® probiotic
strain, providing an entry into the largest and fastest growing
probiotic market in Europe
The launch of SlimBiome® in the North American market by
Agropur, following our grant to them in 2019 of an exclusive
licence to manufacture, supply and distribute our SlimBiome®
weight management technology in the USA, Canada and Mexico
The launch of SlimBiome® containing products in Walmart and
Costco in the USA and Canada through US partners Smart For Life
and Evolution 18
The launch of WellBiome®, a patented supplement to improve gut
health; this is a proprietary blend of prebiotic functional fibres,
functional dietary fibres and minerals optimised to promote the
diversity of the gut microbiome, and is an evolution of our proven
SlimBiome® functional ingredient formulated to support weight
loss and weight management
The launch of a range of meal replacement shakes and bars
containing our OptiBiome® proprietary weight management
technology under the Optislim® brand with Woolworths,
ChemistWarehouse and on OptiPharm Pty Ltd’s online store in
Australia and New Zealand in October 2020
Extensions of product range or
territories with existing partners
•
•
•
Signing a new global manufacturing and supply agreement for
LPLDL® with Sacco S.r.l., extending our existing agreement with
them until 2023 and changing our original profit-sharing terms to
allow us to benefit from lower prices for LPLDL® as sales increase
Extension of the existing terms and territories for our partners CTC
Group and Cambridge Commodities for the distribution of
SlimBiome®, SlimBiome® Medical and GoFigure®
Extension of the territories with Extensor to distribute our
GoFigure® consumer weight management products in Ukraine,
Estonia, Lithuania, Latvia, Kazakhstan, Kyrgyzstan, Tajikistan,
Uzbekistan, Turkmenistan, Armenia, Azerbaijan, Georgia, Belarus,
Moldova and Russia
•
•
•
Extension of our existing terms to include WellBiome® with Draco
Ingredients GmbH in Germany; Agropur MSI LLC in the USA,
Canada and Mexico; Maxum Foods in Australia and New Zealand;
and CTC Holdings BV in the Philippines, Vietnam, Indonesia,
Colombia, the Dominican Republic and Guatemala
Extension of the terms, territories, and products covered by our
existing distribution with CTC Holding BV for the sale of
CholBiomeX3 to include LPLDL® as a bulk ingredient and three
additional products: CholBiome, CholBiomeBP and CholBiomeVH,,
and to extend coverage from the Philippines to include non-
exclusive distribution rights for Vietnam, Indonesia, Colombia, the
Dominican Republic and Guatemala
Extending the terms of our original exclusive licence agreement
for OptiBiome® with OptiPharm Pty Ltd. (“OptiPharm”) to include
Europe in addition to Australia, parts of Asia, New Zealand, Middle
East, Gulf States and North America
New human studies
•
Completion of a successful human study by ProBiotix Health, in
partnership with Nutrilinea S.r.l., demonstrating that a new food
supplement formulation containing LPLDL® can reduce high blood
pressure (hypertension)
New drug trial authorisation
•
USA FDA authorisation of an Investigational New Drug (‘IND’) trial
by our partner Seed Health of a probiotic containing LPLDL®, to
investigate the role of the gut microbiome in patients with Irritable
Bowel Syndrome
MANAGEMENT
There were no changes to the Group Board during the year, though as
the Chairman has reported we have made a number of important new
executive and non-executive appointments since the beginning of the
new financial year.
We have also made a number of senior appointments below the level
of the main Board. In January 2021 Aneta Zlotokowska joined us from
Tesco as Head of Quality & Operations, with a remit to ensure that we
meet the quality and regulatory requirements of our growing network
of corporate and retail partners around the world. Dr Taru Jain joined us
in March 2021 to focus on business development and sales growth in
the strategically important Indian and Asian markets, and Christopher
Nother joined us in January 2021 on a 6 month part-time consultancy
basis to explore the potential for LPLDL®, in pharmaceutical markets as a
live biotherapeutic or consumer health product. The Company now has
more opportunities, with an increasing number of larger partners, than
it is able to meet within its existing capacity and will continue to evolve
Annual Report and Accounts 2020 8
Chief Executive’s Report (continued)
the team to fully exploit the opportunity within the window of
opportunity.
As noted in the interim report, Steve Prescott left his position as CEO of
ProBiotix Health Ltd by mutual agreement at the end of May 2020, since
when I have acted as CEO of the division with the support of Mikkel
Hvid-Hansen in the expanded role of Commercial Director.
OUTLOOK
Our two-stage strategy is delivering as planned, with our first-generation
products, LPLDL® and SlimBiome®, generating revenue growth and
profitability in our two principal divisions. The company is now in the
strongest position it has ever been in with an exciting technology
pipeline, broad intellectual property portfolio in the microbiome, a
number of clinical studies showing product safety and efficacy, growing
international brand presence, strong sales, forward orders, and balance
sheet. This provides the base of a sustainable business on which to grow
the business.
The second stage of our strategy is delivering on the huge potential of
our second-generation products: the SweetBiotix® family of functional
fibres that act as low calorie, prebiotic sweeteners; microbiome
modulators; and drug biotherapeutics.
We have continued to make strong progress since the beginning of the
current financial year with strong sales growth and with larger order
sizes as existing partners extend their product range. Significant
developments in the year to date include:
•
•
•
•
•
The extension of Holland & Barrett (“H&B”)’s range of their own
brand SlimExpert products containing SlimBiome® from three to
eight, including meal replacement and porridge lines, as direct
result of H&B tasting and testing our own finished product
applications sold through our online store
The launch of SlimBiome® and OptiBiome® products in Asia,
through partners in Thailand, Taiwan and Singapore expected to
contribute revenues in the current financial year and act as a
stepping stone to the larger China market
ProBiotix Health Ltd, entered a deal for LPLDL® with Compson
Biotechnology Inc. in Taiwan, one of the largest distribution
platforms in South East Asia
The signing of a new agreements with Dipromed for the sale of
SlimBiome® Medical and CholBiome® products in Morocco and
Algeria
Expansion of SlimBiome® sales in India through extension of
Anthem Biosciences’ Metalite Pro product range and the launch
of the ZeoSlim range of meal replacements by Zeon Lifesciences.
This is a country of strategic importance to our growth plans and
we anticipate reporting further news in this region
•
•
•
•
The launch of Dietworks Appetite control gummies containing
SlimBiome® in the USA through online and retail channels across
the USA opening up another point of access to the large US
market
Extension of territories with Actial Farmaceutica Srl to distribute
CholBiome® and CholBiome®X3 under the VSL#Cardio® range to
France and Malaysia in addition to their existing territories of
Australia, New Zealand, Indonesia and Thailand, with further
territory extensions and product launches expected in the course
of the current year
Good progress by our SweetBiotix® manufacturing partner in the
production of products on an industrial scale, paralleled by the
release of a number of independent peer-reviewed publications
Exploration of the potential to use LPLDL® in the pharmaceutical
sector as either an ‘over the counter’ product or a drug
biotherapeutic in markets outside the USA. We hope to be shortly
publishing placebo-controlled human studies which demonstrate
show that LPLDL® can achieve similar reductions in total cholesterol
and LDL (bad cholesterol) to statins, without any side effects
Investor and consumer interest in the human microbiome continues to
grow, presenting us with a market opportunity that is large and
expanding. OptiBiotix is ideally placed to exploit this opportunity, with
the Company having first generation products which have won multiple
awards, published studies in peer reviewed journals, granted patents,
doubling sales, and a number of partners increasing both their product
range and territorial reach. We are seeing a growing number of deals in
Asia as we build brand awareness and product reputation in countries
like Taiwan and Singapore to help open up opportunities for the larger
Asia markets. We believe that each of these first generation products
have the potential for £10-20m sales per annum which on a 10X
multiple would value each of these businesses at £100m to £200m each.
Our exciting second-generation SweetBiotix® products offer huge
potential as healthy alternatives to sugar and sweeteners whilst our
microbiome modulators create the potential to precision engineer the
microbiome to positively impact specific human health conditions. We
are pleased to see our SweetBiotix® manufacturing partner making
strong progress scaling up these exciting products to industrial scale.
Our partner agreed to make a six-figure payment on signing the
agreement and at 12 monthly intervals until product launch when they
will pay royalties on sales. This is unusual in the food and beverage
industry and highlights the value our partner places on this product. We
are also pleased to note that Seed Health, has received FDA
Investigational New Drug (IND) approval to undertake a human clinical
trial with its multi-species probiotic product containing OptiBiotix’s LPLDL
in patients with irritable bowel syndrome. This has the potential to be a
significant value enhancing step if this study is successful and the
product is approved as a drug. OptiBiotix has also made significant
9
OptiBiotix Health Plc
Chief Executive’s Report (continued)
progress with its microbiome modulators with early data suggesting we
have an approach which allows us to manufacture these at scale. If
confirmed, this is a major step forward in the commercialisation process
and when reported should enhance the commercial appeal of these
products to corporate partners.
The strong growth in our revenues, the achievement of divisional
profitability, the continuing flow of new agreements and product
launches, the strength of our development pipeline, and the
strengthening of our Board and senior executive team allow me to look
forward with confidence to the further progress of the Company in the
current year and beyond.
Stephen O’Hara
Chief Executive
16 June 2021
Annual Report and Accounts 2020 10
Strategic Report
For the year ended 31 December 2020
Review Of Business
Financial And Capital Risk Management
The directors constantly monitor the financial risks and uncertainties
facing the Group with particular reference to the exposure of credit risk
and liquidity risk. They are confident that suitable policies are in place
and that all material financial risks have been considered. The financial
risk management objectives and policies can be found within note 24
of the financial statements.
The Board’s objective is to maintain a balance sheet that is both efficient
and delivers long term shareholder value. The Group had cash balances
of £864,680 as at 31 December 2020 and had no short-term borrowings.
The Board continues to monitor the balance sheet to ensure it has an
adequate capital structure.
A review of the business of the Group, together with comments on
future developments is given in the Chairman’s and Chief Executive’s
Statements on pages 3 to 10.
Principal Risks And Uncertainties Facing
The Group
Technology and products
The Group is involved in the discovery and development of microbiome
modulation products. The development and commercialisation of its
intellectual property and future products will require human nutritional
studies and there is a risk that products may not perform as expected.
This
for
human consumption.
to all new products developed
is common
risk
Technologies used within the food, beverage and healthcare
marketplace are constantly evolving and improving. There is a risk that
the Group’s products may become outdated or their commercial value
decrease as improvements in technology are made and competitors
launch competing products. To mitigate this risk the Group is working
with industry key opinion leaders, will attend international conferences
and intends to develop a research and development department which
will keep up with the latest developments in the industry.
Intellectual Property
The Group is focused on protecting its IP and seeking to avoid infringing
on third parties’ IP. To protect its products, the Group is building and
securing patents to protect its key products. However, there remains the
risk that the Group may face opposition from third parties to patents
that it seeks to have granted and that the outstanding patent
applications are not granted. The Group engages legal advisers to
mitigate the risk of patent infringement and to assist with the protection
of the Group’s IP.
11
OptiBiotix Health Plc
Strategic Report (continued)
Principal Risks And Uncertainties
Market Risks
Impact
Mitigation
Brexit
New regulations could add complexity and delays
to operations.
The current consensus is that Brexit will not affect the
regulations that are relevant to our business.
Currency fluctuations could increase costs and
affect profitability.
Currency fluctuations will impact both sales and costs. Our
initial product offering is not price-sensitive. Substantial cost
increases will be passed on.
COVID-19
The global implications of the economic impact
of COVID-19 could affect sales and profitability.
Although COVID-19 has affected some parts of the
consumer business. The majority of sales are in the business
to business sector across many countries so the impact is
very limited.
Technology
The Group’s platform is currently unique. Rapid
technological advances could see competitor
products being launched.
The Group has product development plans in place for
improved technology as well as for a wider product portfolio
that includes additional innovative solutions for the targeted
consumer groups.
Operational Risks
Impact
Mitigation
Loss of key personnel
Material adverse impact on the Group’s financial
condition and prospects.
Competitive remuneration packages, nil cost options to
reduce market volatility.
Technology
The Group is launching products that are not
already available in the consumer market.
The Group has responded to consumer demand.
Commercialisation
The Group is making the transition from a
research-based organisation to a full commercial
organisation. Manufacturing set-up and learning
curve could delay sales or could impact our rate
of growth.
The Group recruited experienced management and
consultants to manage the process and negotiate contracts.
Cyber attacks
Cyber-attacks could delay or impair operations as
which would have financial implications.
Training, anti-virus software, all users have
multifactor authorisation for accounts, weekly
review of attempts.
Financial Risks
Impact
Mitigation
Future funding
requirements
Our current funding covers current requirements.
Potential as yet unidentified opportunities may
not be pursued with the existing funding.
Management will analyse major opportunities
and present them in additional business cases
when warranted.
Legal Risks
Intellectual
Property
litigation
Impact
Mitigation
Any claim brought against us would detract the
Company from its business.
The Group engages with IP specialists to ensure
we have a strong position. To our knowledge we
do not infringe on any patents.
Annual Report and Accounts 2020 12
Strategic Report (continued)
Key Performance Indicators
Financial
Year to
31 December
2020
£’000
Restated
Period to
30 November
2019
£’000
Financial
Revenue
Operating Loss
Profit/(Loss) for the period
Cash as at 31 December 2020
1,523
745
(1,111) (2,167)
5,802 (2,368)
456
865
During the period to 31 December 2020 the company has achieved a
number of key objectives to build shareholder value, these are laid out
in the CEO report on pages 5 to 10.
Non-financial
The Board recognises the importance of KPI’s in driving appropriate
behaviour and enabling of Group performance. For the year to 31
December 2020 the primary KPI’s were the completion of commercial
agreements and the expansion of the Optibiotic® platform. The Group
intends to review the following non-financial KPI’s going forward:
1. Customer relationships
2.
IP and trademark registrations
3. Service quality and brand awareness
Corporate Responsibility
The Board takes regular account of the significance of social,
environmental and ethical matters affecting the Group wherever it
operates. It has developed a specific set of policies on corporate social
responsibility, which seek to protect the interests of all of its stakeholders
through ethical and transparent actions and include an anti-corruption
policy and code of conduct.
Corporate Governance:
The Group is committed to high standards of corporate governance and
seeks to continually evaluate its policies, procedures and structures to
ensure that they are fit for purpose.
In order to protect the interests of its shareholders and other
stakeholders the Board has chosen to adopt the Quoted Companies
Alliance (QCA) Corporate Governance Code for Small and mid-size
Quoted Companies (the “QCA Code”), and the Directors are always
prepared, where practicable, to enter into dialogue with all such parties
to promote a mutual understanding of objectives.
By complying with this code the Company ensured compliance with
the new AIM Rules regarding Corporate Governance introduced
April 2018.
Full details of the Company's policy on Corporate Governance can be
found on the website under:
https://www.optibiotix-ir.com/content/investors/corporate-governance
4. Attraction, motivation and retention of employees
Composition of the Board of Directors
The Board of Directors is currently comprised of the Chairman, Chief
Executive Officer, the Managing Director Prebiotix division, the Research
and development Director, CEO Probiotix Health Limited an and the
three Non-Executive Directors.
Role of the Board:
The role of the Board is to agree the Group’s long-term strategy and
direction and to monitor achievement of its business objectives. The
Board meets several times per annum, either by teleconference or in
person. Furthermore, it holds additional meetings as are necessary to
transact ongoing business.
Dividends
No dividends can be distributed for the year to 31 December 2020.
Future Developments
The Chairman’s and Chief Executive Statement on pages 3 to 10 gives
information on the future outlook of the Group.
Corporate Governance
Executive Management:
The Group’s current executive team comprises:
S O’Hara Executive Director and CEO; with overall
responsibility for all Group activities.
Dr S Kolyda Executive Director – Research and Development
Director
M Havid-Hansen Executive Director – Probiotix Health Limited
13
OptiBiotix Health Plc
Strategic Report (continued)
Board Committees:
Remuneration Committee
The Remuneration Committee is made up of Chris Brinsmead, as
Chairman with Neil Davidson and Sean Christie and has access to
external expertise should that be required. This committee is responsible
for the scale and structure of the remuneration of the Chief Executive,
the Executive Directors and reports to the Chief Executive. The
recommendations of the committee must be approved by the Board
of Directors. No director or manager shall be involved in decisions
relating to his/her own remuneration.
AIM Rules Compliance Committee
The AIM Rules Compliance Committee is chaired by Neil Davidson. This
committee is charged with ensuring that the Group has sufficient
procedures, resources and controls in place to ensure compliance with
the AIM rules for companies. Among other things, the committee shall
ensure that an Executive Director is at all times able to respond to
requests for information from the Nominated Adviser and that all
Directors and employees are aware of their obligations with regards to
the disclosure of any trading in the Group’s shares.
Audit Committee
The Audit Committee, is chaired by Sean Christie with Neil Davidson and
Chris Brinsmead. This committee is required to monitor the integrity of
the financial statements of the Group, including the interim and annual
reports. The committee also reviews financial returns to regulators and
any financial information contained in announcements of a price
sensitive nature. The committee shall also consider and make
recommendations to the Board regarding resolutions to be put to
shareholders for approval at the Annual General Meeting, with respect
to the appointment or re-appointment of the Group’s external auditors.
The Audit Committee, together with the external auditors, are
responsible for determining the scope of the annual audit.
Nomination Committee
The Company does not currently have a nomination committee as the
Board does not consider it appropriate to establish such a committee
at this stage of the Company's development. Decisions which would
usually be taken by the nomination committee will be taken by the
Board as a whole.
Employees
The Group engages its employees in all aspects of the business and
seeks to remunerate them fairly. The Group gives full and fair
consideration to applications for employment regardless of age, gender,
colour, ethnicity, disability, nationality, religious beliefs or sexual
orientation. The Board takes employees’ interest into account when
making decisions. Any suggestions from employees aimed at improving
the Group’s performance are welcomed.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors, consultants
and suppliers is crucial to the success of its business, and seeks to build
and maintain this goodwill through fair and transparent business
practices. The Group aims to settle genuine liabilities in accordance with
contractual obligations.
Health and Safety
The Board recognises that it has a responsibility to provide strategic
leadership and direction in the development and maintenance of the
Group’s health and safety strategy, in order to protect all of its stakeholders.
Section 172 Statement
Under s172 of the Companies Act 2006 the Directors have a duty to act
in good faith in a way that is most likely to promote the success of the
Company for the benefit of its members as a whole, having regard to
the likely consequences of decisions for the long term, the interests of
the Company’s employees, the need to foster relationships with other
key stakeholders, the impact on the community and the environment,
maintaining a reputation for high standards of business conduct, and
the need to act fairly as between members of the Company.
Key decisions made by the Board during 2020 were related primarily
to establishing the Groups first generation products commercially
around the world as well as ensuring the Group had sufficient cash
runway to meet any slowdown associated with the pandemic. At the
year end the Group is now selling products in 120 countries and have
established several agreements with large retail and pharmaceutical
companies as outlined in the CEO’s report. During the year, the Group
augmented the cash balance by raising £746,751 via the partial disposal
of it’s holdings in SkinBioTherapeutics plc.
Employee engagement
As a very small company in terms of staff, Board members have multiple
points of contact with staff; through Board meeting feedback,
participation in regular management meetings involving all staff, and
ad hoc interactions in relation to specific matters. These forums provide
staff with an opportunity to give their views which can then be taken
into account in making decisions likely to affect their interests. Specific
matters of concern to them as employees are dealt with in management
meetings and by email. Corporate developments and Company
performance are discussed in regular management meetings. All staff
are eligible for the Group’s share option scheme and this encourages
involvement in the Company’s performance.
Annual Report and Accounts 2020 14
Strategic Report (continued)
Stakeholder Engagement
The Group has a small number of major suppliers and distributors that
support its delivery of strategy and corporate goals. The selection of,
relationships with, and execution of, contracted work by these parties
is considered regularly by the Executive Directors and at each Board
meeting by all Directors.
Shareholder Engagement
Due to the COVID-19 pandemic, face-to-face engagement with
shareholders during the year was strictly limited. However, the Directors
continued to engage with shareholders via regular regulatory news
announcements as well as interactive investor meetings in order to keep
them up to date on progress.
Environmental and Community Impact
There was no adverse impact on the community or environment from
the decisions made by the Board during the year.
On Behalf Of The Board
S P O’Hara
16 June 2021
15
OptiBiotix Health Plc
Directors’ Report
For the year ended 31 December 2020
The Directors present their report and the audited financial statements
of the group for the year to 31 December 2020.
Principal Activity
The principal activity of the group 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.
Directors
The directors who served the company during the year and up to the
date of this report were as follows:
Non-executive Directors
P Wennstrom (Resigned 1 January 2021)
R Davidson (Independent Director)
M Christie(Independent Director)
C Brinsmead (Independent Director, Appointed 1 January 2021)
S Hammond (Independent Director, Appointed 2 March 2021)
Directors’ Remuneration
The directors are entitled to receive relevant fees, as detailed in the
directors’ remuneration in Note 4.
Directors and their interests
The directors of the Group held the following beneficial interests in the
shares and share options of Optibiotix at the date of this report:
Executive Directors
S P O’Hara
S Kolyda
F Narbel (Resigned 26 May 2021)
Issued Share Capital
Share Warrants
Share Options
Ordinary
shares of
£0.02 each
10,103,031
503,000
150,000
–
–
–
–
Percentage
Held
Ordinary
shares of
£0.02 each
Warrant
exercise
price
Ordinary
shares of
£0.02 each
Option
exercise
price
11.61%
0.54%
0.14%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,099,135
385,000
100,000
165,000
358,722
–
–
£0.08
£0.73
£0.95
£0.73
£0.20
–
–
S P O’Hara
R Davidson
M Christie
S Kolyda
S Kolyda
C Brinsmead
S Hammond
The share options held by S P O’Hara were granted on 17 September 2016 and are exercisable at £0.08 at any time up 16 September 2024, subject
to vesting conditions.
The share options held by R Davidson were granted on 13 July 2018 and are exercisable at £0.73 at any time up 13 July 2024, subject to
vesting conditions.
The share options held by M Christie were granted on 21 September 2018 and are exercisable at £0.95 at any time up 21 September 2028, subject
to vesting conditions.
The 358,772 share options held by S Kolyda were granted on 10 March 2015 and are exercisable at £0.20 at any time up 10 March 2025, subject to
vesting conditions.
The 165,000 share options held by S Kolyda were granted on 13 September 2018 and are exercisable at £0.73 at any time up 13 September 2019,
subject to vesting conditions.
Annual Report and Accounts 2020 16
Directors’ Report (continued)
Substantial Shareholdings
Substantial shareholdings include directors as at 11 June 2021 were as
follows:
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.
Statement Of Directors’ Responsibilities
The Directors are responsible for preparing the Directors’ Report and the
financial statements in accordance with applicable laws and regulations.
Company law requires the directors to prepare financial statements for
each financial period. Under that law the directors have, as required by
the AIM Rules for Companies of the London Stock Exchange, elected to
prepare financial statements in accordance with International Financial
Reporting Standards (IFRS) as adopted for use in the European Union.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and of the profit or loss of the Group
for that period. In preparing these financial statements, the Directors are
required to:
• select
suitable
them consistently.
accounting policies
and
then
apply
• make judgements and estimates that are reasonable and prudent.
• state whether the Group and parent company financial statements
have been prepared in accordance with IFRS as adopted by the
European Union, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis, unless
it is inappropriate to presume that the Company will continue
in business.
The Directors confirm that the financial statements comply with the
above requirements.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Stephen O’Hara
Finance Yorkshire Seedcorn LP
% of shares issued
11.6%
10.7%
The share price per share at 31/12/2020 was £0.58 (31/12/2019:
£0.66)
Financial Instruments
The Group’s exposure to financial risk is set out in note 24 to the financial
statements.
Research And Development
The Chairman’s and Chief Executive Statement on pages 3-11 gives
information on the Group’s research and development activities.
Events After The Reporting Period
Refer to Note 25 to the financial statements for further details.
Publication Of Accounts On Group
Website
Financial statements are published on the Group’s website. The
maintenance and integrity of the website is the responsibility of the
Directors. The Directors’ responsibilities also extend to the financial
statements contained therein.
Going Concern
The financial statements have been prepared on the assumption that
the Group is a going concern. When assessing the foreseeable future,
the Directors have looked at the budget for the next 12 months from
the date of this report, the cash at bank available as at the date of
approval of this report and are satisfied that the Group should be able
to cover its quoted maintenance cost, other administrative expenses, as
well as its ongoing research and development expenditure.
Management have considered its forecast of the group’s cash
requirements reflecting contracted and anticipated future revenue and
the resulting net cash outflows. Management have not seen a material
disruption to the business as a result of the COVID-19 outbreak, however
events are being kept under constant review, and remedial action will
be taken if the situation demands it.
17
17 OptiBiotix Health Plc
OptiBiotix Health Plc
Directors’ Report (continued)
Statement As To Disclosure Of
Information To Auditors
So far as the Directors are aware, there is no relevant audit information
(as defined by Section 418 of the Companies Act 2006) of which the
Group’s auditor is unaware, and each Director has taken all the steps that
he ought to have taken as a Director in order to make himself aware of
any relevant audit information and to establish that the Group’s auditor
is aware of the information.
Auditor
Jeffreys Henry LLP will be proposed for re-appointment as auditors at
the forthcoming Annual General Meeting.
Strategic Report
In accordance with section 414C(11) of the Companies Act 2006 the
Group chooses to report the future outlook and the risks and
uncertainties faced by the Group in the Strategic Report on page 11.
On Behalf Of The Board
S P O’Hara
16 June 2021
Annual Report and Accounts 2020 18
Independent Auditor’s Report to the Members of
OptiBiotix Health Plc
For the year ended 31 December 2020
Opinion
We have audited the financial statements of OptiBiotix Health Plc (the
‘parent company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2020 which comprise the consolidated statement of
comprehensive income, consolidated statement of financial position,
consolidated statement of changes in equity, consolidated statement
of cash flows, company statement of financial position, company
statement of changes in equity, company statement of cash flows and
notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been
applied in the preparation of the Group financial statements is
applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The financial reporting framework
that has been applied in the preparation of the parent company
financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union as
applied in accordance with the provision of the Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the state of the
Group’s and of the parent company’s affairs as at 31 December 2020
and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly
prepared in accordance with IFRS’s as adopted by the European
Union as applied in accordance with the provisions of the
Companies Act 2006; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for
the audit of the financial statements section of our report. We are
independent of the company in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of
the directors’ assessment of the entity’s ability to continue to adopt the
going concern basis of accounting included reviews of expected cash
flows for a period of 12 months, to determine expected cash burn,
which was compared to the liquid assets held in the entity.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group's ability to
continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
Our approach to the audit
As part of designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements. In
particular, we looked at where the directors made subjective
judgments, for example in respect of significant accounting estimates
that involved making assumptions and considering future events that
are inherently uncertain. As in all of our audits we also addressed the
risk of management override of internal controls, including evaluating
whether there was evidence of bias by the directors that represented
a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group
and the Company, the accounting processes and controls, and the
industry in which they operate.
The Group financial statements are a consolidation of 4 reporting units,
comprising the Group’s operating businesses and holding companies.
We performed audits of the complete financial information of
OptiBiotix Health plc, OptiBiotix Limited, Probiotix Health Limited, and
The Healthy Weight Loss Company Limited reporting units, which
were individually financially significant and accounted for 100% of
the Group’s revenue and 100% of the Group’s absolute profit before
tax (i.e. the sum of the numerical values without regard to whether
they were profits or losses for the relevant reporting units). The Group
engagement team performed all audit procedures.
19
OptiBiotix Health Plc
Independent Auditor’s Report to the Members
of OptiBiotix Health Plc (continued)
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. This is not a complete list of all
risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Carrying value of investments and recoverability of group
receivables – Company Risk
The amount owed to the Company at the period end by the
subsidiary OptiBiotix Limited was written off in the year (£6.30m).
The amount owed by Probiotix Health Limited was £329,057.
The carrying values of investments in group companies was as
follows:
OptiBiotix Limited : £2,000,000
ProBiotix Health Limited : £235,438
The Healthy Weight Loss Company Limited : £50,000
Carrying value of investments – Group Risk
At the period end the group had investments of £8.96m made up
of the investment in SkinBiotherapeutics plc.
There is a risk that the investment in Skinbiotherapeutics PLC
requires impairment.
Carrying value of intangible assets and capitalisation of
development costs
The Group had intangible assets of £2.74m at the period ended 31
December 2020, of which £350,346 were development costs
capitalised in the period.
Intangible assets comprise of development costs and fair value of
patents acquired on the acquisition of OptiBiotix Limited.
The patents are amortised in a straight line over 20 years, the period
in which the directors believe the assets will generate revenue.
The development costs are amortised in a straight line over 10 years,
a period the directors believe to be in line with industry standard.
We carried out a review of the investments held in the subsidiaries.
Management’s
underlying assumptions audited.
impairment workings were reviewed and the
We reviewed management’s basis for impairment across the Company
and agree with their approach.
As part of the review of management’s forecasts, consideration was
given to the capability of the subsidiary to repay the amount within a
12-month period.
The estimation of the residual value held in The Healthy Weight Loss
Company Limited has been assessed.
Following derecognition as an associate the investment was revalued
to market value. This was agreed to open market information.
Intangible assets in the accounts have been allocated useful lives and
therefore an annual impairment test is not required. However, as
OptiBiotix Limited is loss making we considered if there were indicators
of impairment and reviewed the discounted cash flow forecasts.
The development costs capitalised in the period were evaluated
against the recognition criteria of IAS38. The estimated useful
economic life assigned to the costs was reviewed.
Annual Report and Accounts 2020 20
Independent Auditor’s Report to the Members
of OptiBiotix Health Plc (continued)
Key audit matter
Going Concern
Management judgement is required in assessing whether the group
is a going concern as it has historically incurred losses and does not
have borrowing facilities.
The Directors have considered the cash requirements of the business
for the following 12 months. As part of this process, they have taken
into account existing liabilities, along with detailed operating cashflow
requirements. The projections prepared include ongoing running
costs of the group and committed expenditure at the date of
approving the financial statements.
The key assumptions that impact the conclusions are the levels of
future revenue, and the ability to control the operating costs.
There are therefore inherent risks that the forecasts may overstate
future revenue due to the timing of closure of future contracts, or
understate future costs, and that the group will not be able to operate
within its cash resources and continue to operate as a going concern.
Revenue recognition
The Group has multiple revenue streams comprising sales of goods,
licensing agreements and royalty arrangements, including ongoing
and milestone payments.
The recognition of revenue of these items is determined by the terms
of agreement with customers and as such is widely varied.
We identified a risk of inaccurate or incomplete recognition of revenue
due to the incorrect allocation of milestones to service contracts, and
an inappropriate recognition of revenue on sales of goods for which
revenue is recognised over time.
The assumptions and judgements made in estimating the percentage
of completion require a significant degree of management
judgement and are susceptible to management override and
represent a fraud risk.
21
OptiBiotix Health Plc
How our audit addressed the key audit matter
We have performed the following audit procedures:
• obtained management’s forecasts and cash flow analysis, and their
going concern assessment;
• assessed the reliability of forecasts to date by agreeing historical
actuals to budgets, and challenging the current forecasts;
• tested the clerical accuracy of management’s forecast;
• challenged management’s
including
reviewing the forecast revenue and corroborated the assumptions;
and
forecast assumptions,
• considered the appropriateness of the group’s disclosures in relation
to going concern in the financial statements.
As detailed above, we note that there are inherent risks over the
group’s forecasts and the potential timing of the conversion of the
group’s contract pipeline. We further note that the group has
historically been loss making given the level of research and
development expenditure.
Based on the audit work performed we are satisfied that although
there are inherent uncertainties associated with the forecast, the group
appears to have sufficient funds for at least 12 months following the
signing of this audit report. We are also satisfied that all necessary
disclosures have been made in the consolidated financial statements.
We have performed the following audit procedures:
• assessed the appropriateness of the Group’s revenue recognition
accounting policies;
• reviewed key contracts with customers and tested that the Group
has correctly accounted for the revenue arising from these contracts
in accordance with the accounting policies;
• performed detailed testing on individually significant contracts,
including substantiating a sample of transactions with underlying
documents;
• evaluated whether revenue has been appropriately presented and
disclosed in the financial statements.
Based on the audit work performed, we are satisfied that management
have appropriately accounted for revenue in line with their accounting
policy and in accordance with the requirements of IFRS 15. We are also
satisfied that all necessary disclosure have been made in the
consolidated financial statements.
Independent Auditor’s Report to the Members
of OptiBiotix Health Plc (continued)
Our Application Of Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£206,000 (2019: £109,000)
£120,000 (2019: £109,000)
How we determined it
1.5% of gross assets
(2019: 1.5% gross assets)
1% of gross assets
(2019: 1% gross assets)
Rationale for
benchmark applied
We believe that gross assets is a primary measure
the
used by
performance of the Group, whilst the subsidiaries
are in varied states of development and trading.
in assessing
shareholders
shareholders
We believe that gross assets is a primary measure
the
used by
performance of the Company, given that it is
largely a holding company for the trading
subsidiaries.
in assessing
For each component in the scope of our Group audit, we allocated a
materiality that is less than our overall Group materiality. The range of
materiality allocated across components was between £18,000
and £120,000.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above £10,300 for the Group
(2019: £5,450) and £6,000 for the Parent (2019: £5,450) as well as
misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual report,
other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether
there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by
the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
Annual Report and Accounts 2020 22
Independent Auditor’s Report to the Members
of OptiBiotix Health Plc (continued)
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the directors’ report.
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent company financial statements are not in agreement with
the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set
out on page 17, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group’s and parent company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or
to cease operations, or have no realistic alternative but to do so.
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below.
The extent to which the audit was
considered capable of detecting
irregularities including fraud
Our approach to identifying and assessing the risks of material
including fraud and
misstatement
non-compliance with laws and regulations, was as follows:
in respect of
irregularities,
• the senior statutory auditor ensured the engagement team
collectively had the appropriate competence, capabilities and skills
to identify or recognise non-compliance with applicable laws
and regulations;
• we focused on specific laws and regulations which we considered
may have a direct material effect on the financial statements or the
operations of the company.
• we assessed the extent of compliance with the laws and regulations
identified above through making enquiries of management and
inspecting legal correspondence; and
• identified laws and regulations were communicated within the audit
team regularly and the team remained alert to instances of
non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to
material misstatement, including obtaining an understanding of how
fraud might occur, by:
• making enquiries of management as to where they considered there
was susceptibility to fraud, their knowledge of actual, suspected and
alleged fraud;
• considering the internal controls in place to mitigate risks of fraud
and non-compliance with laws and regulations.
Auditor’s responsibilities for the audit of
the financial statements
To address the risk of fraud through management bias and override of
controls, we:
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these
financial statements.
23
OptiBiotix Health Plc
• performed analytical procedures to identify any unusual or
unexpected relationships;
• tested journal entries to identify unusual transactions;
• assessed whether
in
determining the accounting estimates set out in Note 1 were
indicative of potential bias;
judgements and assumptions made
• investigated the rationale behind significant or unusual transactions.
Independent Auditor’s Report to the Members
of OptiBiotix Health Plc (continued)
In response to the risk of irregularities and non-compliance with laws
and regulations, we designed procedures which included, but were not
limited to:
• agreeing financial statement disclosures to underlying supporting
documentation;
• reading the minutes of meetings of those charged with governance;
• enquiring of management as to actual and potential litigation
and claims;
• Obtaining confirmation of compliance from the company’s
legal advisors.
There are inherent limitations in our audit procedures described above.
The more removed that laws and regulations are from financial
transactions, the less likely it is that we would become aware of
non-compliance. Auditing standards also limit the audit procedures
required to identify non-compliance with laws and regulations to
enquiry of the directors and other management and the inspection of
regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect
than those that arise from error as they may involve deliberate
concealment or collusion.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
Other matters which we are required to
address
We were reappointed as auditors by the company at the Annual General
Meeting on 9 July 2020 to audit the financial statements for the period
ending 31 December 2020. Our total uninterrupted period of
engagement is 7 years, covering the periods ending 30 November 2014
to 31 December 2020.
The non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting
our audit.
In addition to the audit, the firm provides tax compliance services to
OptiBiotix Health Plc and its subsidiaries.
Our audit opinion is consistent with the additional report to the
audit committee.
Use of this report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Sachin Ramaiya
(Senior Statutory Auditor)
For and on behalf of
Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
16 June 2021
Annual Report and Accounts 2020 24
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
Notes
Year ended
31 December 2020
£
Restated
Period ended
31 December 2019
£*
1,523,247 744,883
(643,428)
(352,080)
879,819 392,803
(127,248) (137,320)
(247,895) (217,904)
(1,616,069) (2,204,217)
(1,991,212)
(2,559,441)
(1,111,393) (2,116,638)
(44,954) (44,467)
110
98
(44,856) (44,357)
(303,448) (546,316)
4,165,223 –
2,955,739 –
265,481
48,967
5,710,232 (2,491,830)
123,468
91,635
5,801,867 (2,368,362)
–
–
5,801,867
(2,368,362)
5,801,867 (2,367,247)
(1,115)
–
5,801,866
(2,368,362)
6.65p (2.78)p
6.07p (2.78)p
6
5
5
12
12
12
12
8
9
Revenue from contracts with customers
Cost of sales
Gross Profit
Share based payments
Depreciation and amortisation
Other administrative costs
Total administrative expenses
Operating loss
Finance cost
Finance income
Share of loss from associate
Gain on disposal of an associate
Gain on investments
Profit on disposal of investments
Profit/(Loss) before tax
Corporation tax
Profit/(Loss)for the period
Other comprehensive income
Total comprehensive income for the period
Total comprehensive income attributable to:
Owners of the company
Non-controlling interests
Earnings per share from continued operations
Basic profit/(loss) per share – pence
Diluted profit/(loss) per share – pence
*
The prior years figures have been restated, refer to notes 7 and 12
All activities relate to continuing operations
The notes on pages 34 to 56 form part of these financial statements
25
OptiBiotix Health Plc
Consolidated Statement of Financial Position
As at 31 December 2020
ASSETS
Non-current assets
Intangibles
Property, plant & equipment
Investments
CURRENT ASSETS
Inventories
Trade and other receivables
Current tax asset
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Shareholders’ Equity
Called up share capital
Share premium
Share based payment reserve
Merger relief reserve
Convertible debt – reserve
Retained Earnings
Non-controlling interest
Total Equity
LIABILITIES
Current liabilities
Trade and other payables
Non-current liabilities
Deferred tax liability
Convertible loan notes
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
As at
31 December 2020
£
Restated
As at
31 December 2019
£*
10
11
12
13
14
8
15
16
17
17
17
17
17
17
18
19
20
2,735,621
–
8,962,564
11,698,185
184,236
645,823
310,435
864,680
2,005,174
13,703,359
1,758,812
2,537,501
867,307
1,500,000
92,712
5,058,968
35,782
11,851,082
518,995
518,995
561,523
771,759
1,333,282
1,852,277
13,703,359
2,632,778
393
2,842,834
5,476,005
62,761
607,308
190,435
455,608
1,316,112
6,792,117
1,708,811
1,646,873
740,059
1,500,000
92,712
(742,899)
35,782
4,981,338
561,624
561,624
522,350
726,805
1,249,155
1,810,779
6,792,117
The prior years figures have been restated, refer to notes 7 and 12
*
These financial statements were approved and authorised for issue by the Board of Directors on 16 June 2021 and were signed on
its behalf by:
S P O’Hara
Director
Company Registration no. 05880755
The notes on pages 34 to 56 form part of these financial statement
Annual Report and Accounts 2020 26
Consolidated Statement of Changes in Equity
For the period ended 31 December 2020
Share-
Non- Convertible Merger based
Called up Retained Share Controlling Debt Relief Payment
Share capital Earnings Premium interest Reserve Reserve reserve
£ £ £ £ £ £ £
Balance at 30 November 2018 1,694,488 1,624,348 1,603,904 36,897 – 1,500,000 602,739
Loss for the period (restated*) – (2,367,247) – (1,115) – – –
Issues of shares during the period 14,323 – 42,969 – – – –
Share options and warrants – – – – – – 137,320
– – – – 92,712 – –
Restated Balance at 31 December 2019 1,708,811 (742,899) 1,646,873 35,782 92,712 1,500,000 740,059
Profit for the year – 5,801,867 – – – – –
Issues of shares during the year 50,001 – 950,003 – – – –
Share issue costs – – (59,375) – – – –
Share options and warrants – – – – – – 127,248
Total
equity
£
7,062,376
(2,368,362)
57,292
137,320
92,712
4,981,338
5,801,867
1,000,004
(59,375)
127,248
Balance at 31 December 2020 1,758,812 5,058,968 2,537,501 35,782 92,712 1,500,000 867,307 11,851,082
*
The prior year’s figures have been restated, refer to notes 7 and 12
The notes on pages 34 to 56 form part of these financial statements
27
OptiBiotix Health Plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
Notes
1
Cash flows from operating activities
Cash utilised by operations
Tax received
Interest paid
Interest received
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Share issues
Issue of loan notes
Disposal of investments
Net cash inflow from financing activities
Increase/(decrease) in cash and equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
15
The notes on pages 34 to 56 form part of these financial statements
Year ended
31 December 2020
£
Period ended
31 December 2019
£
(928,061)
–
–
98
(927,963)
(350,345)
(350,345)
940,629
–
746,751
1,687,380
409,072
455,608
864,680
(2,036,532)
313,173
(54)
168
(1,723,248)
(594,923)
(594,923)
57,292
775,050
617,130
1,449,472
(868,699)
1,324,307
455,608
Annual Report and Accounts 2020 28
Notes to the Consolidated Statement of Cash Flows
For the year ended 31 December 2020
1. Reconciliation of loss before income tax to cash outflow from operations
Year ended
31 December
2020
£
Period ended
31 December
2019
£
Operating loss (1,111,393)
(Increase) in inventories (121,475)
(Increase) in trade and other receivables (37,190)
(Decrease)/Increase in trade and other payables (42,630)
Depreciation charge 393
Share Option expense 127,248
Amortisation of patents and development costs 247,502
Net fx differences 9,484
Net cash outflow from operations (928,061)
(2,166,638)
(32,328)
(233,504)
40,634
2,750
137,320
215,234
–
(2,036,532)
2. Cash and Cash Equivalents
Cash and cash equivalents
The notes on pages 34 to 56 form part of these financial statements
Year ended
31 December
2020
£
Period ended
31 December
2019
£
864,680
455,608
29
OptiBiotix Health Plc
Company Statement of Financial Position
As at 31 December 2020
ASSETS
Non-current assets
Investments
Other receivables
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Shareholders’ Equity
Called up share capital
Share premium
Merger relief reserve
Share based payment reserve
Accumulated profit
Total Equity
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
As at
31 December 2020
£
As at
31 December 2019
£
Notes
12
14
14
15
16
17
17
17
17
18
11,043,469
329,057
11,372,526
89,420
532,769
622,189
6,212,556
5,941,360
12,153,916
24,707
139,243
163,950
11,994,715
12,317,866
1,758,812
2,537,501
1,500,000
867,307
5,268,171
1,708,811
1,646,873
1,500,000
740,059
6,436,938
11,931,791
12,032,681
62,924
62,924
285,185
285,185
11,994,715
12,317,866
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent Company
income statement account.
The loss for the parent Company for the year was £1,168,767 (2019: Profit £113,804).
These financial statements were approved and authorised for issue by the Board of Directors on 16 June 2021 and were signed on
its behalf by:
S P O’Hara
Director
Company Registration no. 05880755
The notes on pages 34 to 56 form part of these financial statements
Annual Report and Accounts 2020 30
Company Statement of Changes in Equity
For the year ended 31 December 2020
Called up
Share
capital
£
Retained
Earnings
£
Share
Premium
£
Merger Share-based
Payment
reserve
£
Relief
Reserve
£
Total
equity
£
Balance at 30 November 2018
1,694,488
6,323,134
1,603,904
1,500,000
602,739 11,724,265
Profit for the period
Issues of shares during the period
Share options and warrants
–
113,804
14,323
–
–
–
–
42,969
–
–
–
–
–
–
113,804
57,292
137,320
137,320
Balance at 31 December 2019
1,708,811
6,436,938
1,646,873
1,500,000
740,059 12,032,681
Loss for the year
Issues of shares during the year
Financing Costs
Share options and warrants
–
(1,168,767)
–
50,001
–
–
–
–
–
950,003
(59,375)
–
–
–
–
–
– (1,168,767)
–
–
1,000,004
(59,375)
127,248
127,248
Balance at 31 December 2020
1,758,812
5,268,171
2,537,501
1,500,000
867,307 11,931,791
The notes on pages 34 to 56 form part of these financial statements
31
OptiBiotix Health Plc
Company Statement of Cash Flows
For the year ended 31 December 2020
Notes
1
Cash flows from operating activities
Cash utilised by operations
Interest received
Net cash outflow from operating activities
Cash flows from financing activities
Net amounts to subsidiaries
Share issues
Proceeds from disposal of investments
Net cash inflow from financing activities
Increase/(decrease) in cash and equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
15
The notes on pages 34 to 56 form part of these financial statements
Year ended
31 December 2020
£
Period ended
31 December 2019
£
(369,036)
46
(368,990)
(924,864)
940,629
746,751
762,516
393,526
139,243
532,769
(1,702,719)
104
(1,702,615)
–
57,292
617,129
674,421
(1,028,194)
1,167,437
139,243
Annual Report and Accounts 2020 32
Notes to the Company Statement of Cash Flows
For the year ended 31 December 2020
1. Reconciliation of loss before income tax to cash generated from operations
Operating loss
(Decrease) in trade and other receivables
Loan Write off
Increase in trade and other payables
Share Option expense
Net cash outflow from operations
2. Cash and Cash Equivalents
Cash and cash equivalents
The notes on pages 34 to 56 form part of these financial statements
Year ended
31 December 2020
£
Period ended
31 December 2019
£
(6,760,976) (457,816)
(64,713) (1,438,409)
6,301,667 –
27,738 56,186
127,248
(369,036)
137,320
(1,702,719)
As at
31 December 2020
£
532,769
As at
31 December 2019
£
139,243
33
OptiBiotix Health Plc
Notes to the Financial Statements
For the year ended 31 December 2020
1. General Information
OptiBiotix Health plc is a Public Limited Company incorporated and domiciled in England and Wales. Details of the registered office,
the officers and advisers to the Company are presented on the company information page at the start of this report. The Company’s
offices are at Innovation centre, Innovation Way, Heslington, York. The Company is listed on the AIM market of the London Stock
Exchange (ticker: OPTI).
The principal activity is that of identifying and developing microbial strains, compounds, and formulations for use in food ingredients,
supplements and active compounds that can impact on human physiology, deriving potential health benefits.
2. Accounting Policies
Statement of compliance
The consolidated financial statements of OptiBiotix Health plc have been prepared in accordance with International Financial
Reporting Standards (IFRS), International Accounting Standards (IASs) and International Financial Reporting Interpretations
Committee (IFRIC) interpretations (collectively ‘IFRS’) as adopted for use in the European Union and as issued by the International
Accounting Standards Board and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Basis of preparation
The financial statements have been prepared under the historical cost convention. The functional currency is GBP.
The principal accounting policies are summarised below. They have all been applied consistently throughout the period under review.
Going concern
The financial statements have been prepared on the assumption that the Group is a going concern. When assessing the foreseeable
future, the Directors have looked at the budget for the next 12 months from the date of this report, the cash at bank available as at
the date of approval of these financial statements and are satisfied that the group should be able to cover its quoted maintenance
costs, other administrative expenses and its ongoing research and development expenditure.
Management have considered its forecast of the group’s cash requirements reflecting contracted and anticipated future revenue
and the resulting net cash outflows. Management have not yet seen a material disruption to the business as a result of the COVID-19
outbreak. It is difficult to assess reliably whether there will be any material disruption in the future which could adversely impact the
group’s forecast.
Subsequent to the year end, the Group successfully sold 2,000,000 Skinbiotherapeutics PLC shares which raised £900,936 to fund
the growth of the business and delivery of existing commercial plans.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt a going concern basis in preparing the annual report and
financial statements
New and amended standards adopted by the group
There are no IFRS or IFRIC interpretations that are effective for the first time in this financial period that would be expected to have
a material impact on the Group.
The following new standards, amendments to standards, and interpretations have been issued, but are not effective for the financial
period beginning 1 January 2020 and have not been early adopted:
Annual Report and Accounts 2020 34
Notes to the Financial Statements (continued)
2. Accounting Policies (continued)
New Standards, amendments and interpretations issued but not effective
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial
period beginning 1 January 2020 and have not been early adopted:
Amendment to IFRS 16 COVID-19 related rent concessions 1 June 2020
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 1 January 2021
Amendments to IAS 1, Presentation of financial statements’ on classification of liabilities 1 January 2022
A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 17 and some annual improvements 1 January 2022
on IFRS 1, IFRS 9, IAS 41 and IFRS 16
The Directors anticipate that the adoption of these standard and the interpretations in future period will have no material impact
on the financial statements of the company.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with
those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted
to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners
of the Company.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Where certain assets of the subsidiary
are measured at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive
income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity
are accounted for as if the Company had directly disposed of the related assets (i.e. reclassified to profit or loss or transferred directly
to retained earnings).
The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on
initial recognition for subsequent accounting under IFRS 9 governance “Financial Instruments: Recognition and Measurement” or,
when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.
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.
35
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
2. Accounting Policies (continued)
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition
date, except that:
–
–
–
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured
in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement of an
acquiree’s share-based payment transactions with share-based payment transactions of the group are measured in
accordance with IFRS 2 Share-based Payment at the acquisition date; and
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed. If, after assessment, the net of the acquisition-date amounts
of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess
is recognised immediately in profit or loss as a bargain purchase gain.
Revenue recognition
Revenue is measured at the fair value of sales of goods and services less returns and sales taxes. The Group has analysed its business
activities and applied the five-step model prescribed by IFRS 15 to each material line of business, as outlined below:
Sale of products
The contract to provide a product is established when the customer places a purchase order. The performance obligation is to
provide the product requested by an agreed date, and the transaction price is the value of the product as stated in our order
acknowledgement. The performance obligation is typically met when the product is dispatched and so revenue is primarily
recognised for each product when dispatching takes place. In some limited situations when the product is complete but the
customer is unable to take delivery the performance obligation is met when the customer formally accepts transfer of risk and
control even though the product has not been dispatched.
License arrangements
Revenue is recognised when the customer obtains control of the rights to use the IP. The performance obligations are considered
to be distinct from any ongoing distribution arrangements which are treated in line with sales of products.
Milestone payments
Where the transaction price includes consideration that is contingent upon a future event or circumstance, the contingent amount
is allocated entirely to that performance obligation if certain criteria are met. Revenue is recognised at the point of time of the
performance obligation being satisfied.
Investments in associates
Associates are those entities in which the Group has significant influence, but not control or joint control over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power
of another entity. Investments in associates are accounted for under the equity method and are recognised initially at cost. The cost
of the investment includes transaction costs.
Annual Report and Accounts 2020 36
Notes to the Financial Statements (continued)
2. Accounting Policies (continued)
The consolidated financial statements include the Group’s share of profit or loss and other comprehensive income of
equity-accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant
influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment,
including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued
except to the extent that the Group has an obligation or has made payments on behalf of the investee.
Investments at fair value
Equity investments are held at fair value at the balance sheet date with any profit or loss for the year being taken to the Income
statement . The value of listed investments being calculated at the closing price on the balance sheet date.
Employee Benefits
The Group operates a defined contribution pension scheme. Contributions payable by the Group’s pension scheme are charged to
the income statement in the period in which they relate.
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.
37
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
2. Accounting Policies (continued)
Financial instruments and Risk Management
Financial assets and financial liabilities are recognised when the group becomes a party to the contractual provisions of the
instrument.
Loans and receivables are initially measured at fair value and are subsequently measured at amortised cost, plus accrued interest,
and are reduced by appropriate provisions for estimated irrecoverable amounts. Such provisions are recognised in the statement of
income.
Equity investments comprise investments which do have a fixed maturity and are classified as non current assets if they are intended
to be held for the medium to long term. They are measured at fair value through profit or loss.
Trade receivables are initially measured at fair value and are subsequently measured at amortised cost less appropriate provisions
for estimated irrecoverable amounts. Such provisions are recognised in the statement of income.
Cash and cash equivalents comprise cash in hand and demand deposits and other short-term highly liquid investments with
maturities of three months or less at inception that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Trade payables are not interest-bearing and are initially valued at their fair value and are subsequently measured at amortised cost.
Equity instruments are recorded at fair value, being the proceeds received, net of direct issue costs.
Share Capital – Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of taxation, from the proceeds.
Financial instruments require classification of fair value as determined by reference to the source of inputs used to derive the fair
value. This classification uses the following three-level hierarchy:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as
prices) or indirectly (i.e., derived from prices);
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
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.
Annual Report and Accounts 2020 38
Notes to the Financial Statements (continued)
2. Accounting Policies (continued)
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
Capital management
Capital is made up of stated capital, premium, other reserves and retained earnings. The objective of the Group’s capital management
is to ensure that it maintains strong credit ratings and capital ratios. This will ensure that the business is correctly supported and
shareholder value is maximised.
The Group manages its capital structure through adjustments that are dependent on economic conditions. In order to maintain or
adjust the capital structure, the Company may choose to change or amend dividend payments to shareholders or issue new share
capital to shareholders. There were no changes to the objectives, policies or processes during the period ended 31 December 2020.
Convertible Loans
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the
option of the holder, and the number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not
have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the
compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs
are allocated to the liability and equity components in proportion to their initial carrying amount.
Convertible debt reserve
The convertible debt reserve is the equity component of the convertible loan notes that have been issued.
Share-based compensation
The fair value of the employee and suppliers services received in exchange for the grant of the options is recognised as an expense.
The total amount to be expensed over the vesting year is determined by reference to the fair value of the options granted, excluding
the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions
are included in assumptions about the number of options that are expected to vest. At each statement of financial position date,
the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share
premium when the options are exercised.
The fair value of share-based payments recognised in the income statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model
is adjusted; based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used in the calculation is based on management’s best estimate of
future share price behaviour and is selected based on past experience, future expectations and benchmarked against peer
companies in the industry.
39
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
2. Accounting Policies (continued)
Property, plant and equipment
Property, plant and equipment are stated at historical cost less subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight-line method to write off their cost over their estimated
useful lives at the following annual rates:
Computer equipment
30%
Useful lives and depreciation method are reviewed and adjusted if appropriate, at the end of each reporting period.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying amount of the relevant asset and is
recognised in profit or loss in the year in which the asset is derecognised.
Intangibles – Patents
Separately acquired patents are shown at historical cost. Patents have a finite useful life and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight line method to allocate the cost of the patents over their estimated useful
life of twenty years once the patents have been granted.
Research and Development
Research expenditure is written off to the statement of comprehensive income in the year in which it is incurred. Development
expenditure is written off in the same way unless the Directors are satisfied as to the technical, commercial and financial viability of
individual projects. In this situation, the expenditure is deferred and amortised over the 10 years during which the Company is
expected to benefit.
Merger relief reserve
The merger relief reserve arises from the 100% acquisition of OptiBiotix Limited whereby the excess of the fair value of the issued
ordinary share capital issued over the nominal value of these shares is transferred to this reserve in accordance with section 612 of
the Companies Act 2006.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of the financial statements requires management to make estimates and assumptions concerning the future that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the reporting periods.
The resulting accounting estimates will, by definition, differ from the related actual results.
•
Share based payments
The fair value of share based payments recognised in the income statement is measured by use of the Black Scholes model,
which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used
in the model is adjusted; based on management’s best estimate, for the effects of non-transferability, exercise restrictions
and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management’s
best estimate of future share price behaviour and is selected based on past experience, future expectations and benchmarked
against peer companies in the industry.
Annual Report and Accounts 2020 40
Notes to the Financial Statements (continued)
2. Accounting Policies (continued)
•
•
•
Amortisation
Management have estimated that the useful life of the fair value of the patents acquired on the acquisition to be 20 years.
Research and developments that have been capitalised in line with the recognition criteria of IAS38 have been estimated to
have a useful economic life of 10 years. These estimates will be reviewed annually and revised if the useful life is deemed to
be lower based on the trading business or any changes to patent law.
Impairment reviews
IFRS requires management to undertake an annual test for impairment of indefinite lived assets and, for finite lived assets to
test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Impairment testing is an area involving management judgement, requiring assessment as to whether the
carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash
flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash
flows, certain assumptions are required to be made in respect of highly uncertain matters.
Derecognition of an associate
Management have reviewed the existing relationship with Skinbiotherapeutics Plc in light of changes in the Group’s power
to participate in the financial and operating decisions of the entity, in line with the requirements of IAS28. Following a
significant dilution in shareholding and a change to the board structure of the entity, it was determined that the significant
influence had been lost and the associate would be de-recognised.
3. Segmental Reporting
In the opinion of the directors, the Group has one class of business, in three geographical areas being that of identifying and
developing microbial strains, compounds and formulations for use in the nutraceutical industry. The Group sells into three highly
interconnected markets, all costs assets and liabilities are derived from the UK location.
Revenue analysed by market
Probiotics
Functional Fibres*
*Includes Consumer Health
Revenue analysed by geographical market
UK
US
International
Year ended
31 December 2020
£
Period ended
31 December 2019
£
821,126
702,121
1,523,247
397,831
347,052
744,883
Year ended
31 December 2020
£
Period ended
31 December 2019
£
369,892
654,524
498,831
1,523,247
197,969
172,352
374,562
744,883
During the reporting period one customer represented £497,416 (32.6%) of Group revenues. (2019: one customer generated £172,351
representing 23.1% of Group revenues)
41
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
4. Employees and Directors
Wages and salaries
Directors’ remuneration*
Directors’ fees*
Social security costs
Pension costs
Year ended
31 December 2020
£
Period ended
31 December 2019
£
82,448
404,500
406,399
52,231
33,518
979,096
53,037
647,421
310,832
74,396
28,618
1,114,257
*Total Directors’ remuneration £810,899 (2019: £958,253) see Directors’ remuneration note below
The average monthly number of employees during the period was as follows:
Directors
Research and development
Directors’ remuneration*
Directors’ share based payments
Bonus*
Pension
Total emoluments
Emoluments paid to the highest paid director
*Total Directors’ remuneration £810,899 see Directors’ remuneration note below
Year ended
31 December 2020
No.
Period ended
31 December 2019
No.
6
2
8
8
2
10
Year ended
31 December 2020
£
Period ended
31 December 2019
£
763,399
102,533
47,500
33,518
946,950
218,000
873,253
123,362
85,000
28,618
1,110,233
248,000
Included in total emoluments paid to Directors are capitalised wages of £187,241 (2019: £248,707)
Annual Report and Accounts 2020 42
Notes to the Financial Statements (continued)
4. Employees and Directors (continued)
Directors’ remuneration
Details of emoluments received by Directors of the Group for the period ended 31 December 2020 are as follows:
Remuneration Share based Pension
and fees payments Costs
£ £ £
A Reynolds* 24,996 – –
S P O’Hara 218,000 – 10,650
F Narbel 175,762 44,720 8,370
S Christie 25,000 11,394 –
R Davidson 55,000 32,212 –
S Kolyda 106,500 14,207 5,325
P Wenstromm* 18,000 – –
S Prescott* 99,695 – 4,985
M Hvid-Hansen 87,946 – 4,188
Total 810,899 102,533 33,518
Total
£
24,996
228,650
228,852
36,394
87,212
126,032
18,000
104,680
92,134
946,950
*For disclosure in relation to directors’ fees please refer to Note 21.
5. Net Finance Income/(Costs)
Year ended
31 December 2020
£
Period ended
31 December 2019
£
98
110
(44,954)
(44,467)
(44,856) (44,357)
Finance Income:
Bank Interest
Finance Cost :
Loan note interest
Net Finance Income/(Costs)
43
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
6. Expenses – analysis by nature
Year ended
31 December 2020
£
Period ended
31 December 2019
£
Research and development
Regulatory Costs
Directors’ fees & remuneration (Note 4)*
Auditor remuneration – audit fees (Consolidated accounts £18,250, (2019:£17,500)
Auditor remuneration – non audit fees (tax compliance)
Brokers & Advisors
Advertising & marketing
Share based payments charge
Depreciation on property, plant and equipment
Amortisation of patents and development costs
Patent and IP costs
Consultancy fees
Legal and professional fees
Public Relations costs
Travel costs
Other expenses
85,703
–
623,658
42,720
11,400
123,531
86,673
127,248
393
247,502
136,762
76,704
42,625
82,394
31,434
272,465
167,869
185,447
709,546
42,220
6,200
113,036
66,556
137,320
2,750
215,235
55,483
223,016
24,399
101,795
171,448
337,121
Total administrative expenses
1,991,212
2,559,441
*£623,658 is net of £187,241 capitalised in the year, total remuneration £810,899 as per note 4.
7. Prior period adjustment
During the 2020 financial year, the group discovered that there were prior period errors relating to the areas listed below in 7.1 and
7.2. As a consequence, these amounts have been misstated in the prior year annual financial report. The errors have been corrected
by restating each of the financial statement line items for the prior periods. The following tables summarise the impacts on the
Group’s and Company’s financial statements.
The prior period correction has resulted from an error in the accounting treatment of the investment held in Skinbiotherapeutics
PLC in the prior period. Having reviewed the ownership of Skinbiotherapeutics Plc, it was decided that the threshold for
de-recognition as an associate was not achieved in the prior year. As a result, the share of loss for the associate for the period between
4 July 2019 and 31 December 2019 should be recognised within the Group.
See note 12 for details of the disposal which has been recognised in the current year.
Annual Report and Accounts 2020 44
Notes to the Financial Statements (continued)
7. Prior period adjustment (continued)
7.1 Consolidated statement of consolidated income
Impact of correction of error
Share of loss from associate
Loss before tax
Total Comprehensive Loss
As previously
reported
2019
£
(296,344)
(2,241,858)
(2,118,390)
Adjustments
2019
£
(249,972)
(249,972)
(249,972)
As restated
2019
£
(546,316)
(2,491,830)
(2,368,362)
Loss per share (pence), basic and diluted
(2.49)p
(0.29)p
(2.78)p
7.2 Consolidated statement of financial position
Impact of correction of error
As previously
reported
2019
£
2,633,171
3,092,806
5,725,977
(492,927)
5,724,237
5,231,310
Adjustments
2019
£
As restated
2019
£
–
(249,972)
(249,972)
(249,972)
–
(249,972)
2,633,171
2,842,834
5,476,005
(742,899)
5,724,237
4,981,338
Year ended
31 December 2020
£
Period ended
31 December 2019
£
(120,000)
–
28,185
180
(91,635)
(190,435)
(9,221)
76,188
–
(123,468)
Assets
Other assets
Investments
Equity
Retained earnings
Other equity
Total Equity
8. Corporation Tax
Corporation tax credit
Under provision prior year
Deferred tax movement
Overseas tax suffered
Total taxation
45
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
8. Corporation Tax (continued)
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2020 nor for the period ended
31 December 2019.
Profit/(loss) on ordinary activities before income tax
5,710,232
(2,491,830)
Year ended
31 December 2020
£
Period ended
31 December 2019
£
Loss on ordinary activities multiplied by the standard rate of
corporation tax in UK of 19% (2019 – 19%)
Effects of:
Disallowables
Income not taxable
Accelerated depreciation
R&D enhanced deductions
R&D tax credit claimed
Amortisation
Revenue items capitalised
Other timing differences
Overseas tax suffered
Unused tax losses carried forward
Tax credit
1.084,944
(473,447)
89,931
(1,362,287)
75
–
(120,000)
27,851
(66,566)
28,185
180
226,052
(91,635)
104,311
(50,441)
523
(141,042)
(199,656)
40,895
(65,072)
76,188
–
584,303
(123,468)
The Group has estimated losses of £4,704,000 (2019: £3,253,189) and estimated excess management expenses of £2,591,000
(2019: £2,248,357).
The tax losses have resulted in a deferred tax asset at 19% of approximately £1,386,050 (2019: £1,045,294) which has not been
recognized as it is uncertain whether future taxable profits will be sufficient to utilise the losses.
Current tax asset – Group
Balance brought forward
Received during the year
Prior year adjustment
Research & development tax credit claimed
2020
£
190,435
–
–
120,000
310,435
2019
£
303,952
(313,170)
9,218
190,435
190,435
Annual Report and Accounts 2020 46
Notes to the Financial Statements (continued)
9. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable shareholders by the weighted average number of ordinary
shares outstanding during the period.
2020
Basic and diluted EPS
Basic EPS
Diluted EPS
Earnings
£
5,801,867
5,801,867
Weighted average
Number of shares
No.
87,207,703
95,569,946
Profit per-share
Pence
6.65
6.07
2019 Restated
Basic EPS
Diluted EPS
Earnings
£
(2,368,362)
(2,368,362)
Weighted average
Number of shares
£
85,262,488
85,262,488
2019 Previously
Basic EPS
Diluted EPS
Earnings
£
(2,118,390)
(2,118,390)
Weighted average
Number of shares
£
85,262,488
85,262,488
Loss per-share
Pence
(2.78)
(2.78)
Loss per-share
Pence
(2.49)
(2.49)
As at 31 December 2020 there were 8,032,907 (2019: 7,765,907) outstanding share options and 323,969 (2019: 324,019) outstanding
share warrants.
47
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
10. Intangible assets
Group
Cost
At 30 November 2018
Additions
Disposals
At 31 December 2019
Additions
Disposals
At 31 December 2020
Amortisation
At 30 November 2018
Amortisation charge for the period
At 31 December 2019
Amortisation charge for the period
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
The company had no intangible assets
Development
Costs and
Patents
£
2,727,006
594,924
–
3,321,930
350,345
–
3,672,275
473,917
215,235
689,152
247,502
936,654
2,735,621
2,632,778
Annual Report and Accounts 2020 48
Notes to the Financial Statements (continued)
11. Property, plant and equipment
Cost
At 30 November 2018
Additions
Disposals
At 31 December 2019
Additions
Disposals
At 31 December 2020
Depreciation
At 30 November 2018
Charge for the year
At 31 December 2019
Charge for the period
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
Group
£
8,461
–
–
8,461
–
–
8,461
5,318
2,750
8,068
393
8,461
–
393
The company had no property plant and equipment.
12. Investments
Group Investments
Set out below is the investment in Skinbiotherapeutics PLC which is material to the Group. The investment treated as an associate
of the group until 2 November 2020, after which time the shareholding dropped to 24.65% and has been recalculated as an equity
investment. The entity listed below have share capital consisting solely of ordinary shares, which are held by the Group. The country
of incorporation is also the principal place of business and the proportion of ownership interest is the same as the proportion of
voting rights held.
49
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
12. Investments (continued)
Available for sale investments
At the beginning of the period
Additions
Revaluations
Disposals
Share of loss
Disposal of shares during period
Prior year adjustment
At 31 December
Company Investments
Available for sale investments
At the beginning of the period
Additions
Revaluations
Disposal of shares during period
Investments in subsidiary undertakings
At the beginning of the period
Addition: Equity element of convertible loan notes
At 31 December
2020
£
2019
£
2,842,834
3,740,799
7,120,962
(303,448)
(697,784)
–
8,962,564
2020
£
–
(296,344)
(351,649)
(249,972)
2,842,834
2019
£
4,131,651
4,483,300
5,528,696
(697,783)
8,962,564
2,080,905
–
2,080,905
11,043,469
–
(351,649)
4,131,651
2,051,000
29,905
2,080,905
6,212,556
As at 31 December 2020 the Company directly held the following subsidiaries:
Country of
incorporation
Name of company Principal activities and place of business
Proportion of
equity interest
2018
OptiBiotix Limited Research & Development United Kingdom
100% of ordinary shares
The Healthy Weight Loss Health foods United Kingdom
Company Limited
68% of ordinary shares
ProBiotix Health Ltd Health foods United Kingdom
100% of ordinary shares
Annual Report and Accounts 2020 50
Notes to the Financial Statements (continued)
13. Inventories
Group Company
2020 2019 2020
£ £ £
Finished goods 184,236 62,761 –
2019
£
–
During the period £643,428 (2019: £352,080) has been expensed to the income statement.
14. Trade and other Receivables
Group Company
2020 2019 2020
£ £ £
2019
£
Non-current
Amounts owed by group undertakings – – 329,057
– – 329,057
Current
Accounts receivable 512,437 511,833 –
Other receivables 110,634 59,346 71,278
Prepayments and accrued income 22,752 36,129 18,142
645,823 607,308 89,420
5,941,360
5,941,360
–
19,857
4,850
24,707
15. Cash and Cash Equivalents
Group Company
2020 2019 2020
£ £ £
Cash and bank balances 864,680 455,608 532,769
2019
£
139,243
16. Called Up Share Capital
Issued share capital comprises:
Ordinary shares of 2p each – 87,940,601 (2019: 85,440,551)
2020
£
1,758,812
1,758,812
2019
£
1,708,811
1,708,811
51
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
16. Called Up Share Capital (continued)
During the period the Company issued the ordinary shares of £0.02 each listed below, exercised at a price of £0.08 per share in the
capital of the Company following the exercise of warrants:
Total warrants exercised in the period
17. Reserves
Date issued
03/06/2020
Number
50
50
Share capital is the amount subscribed for shares at nominal value. Share premium represents amounts subscribed for share capital
in excess of nominal value, net of expenses.
The convertible debt reserve is the equity component of the convertible loan notes that have been issued.
Merger relief reserve arises from the 100% acquisition of OptiBiotix Limited on 5 August 2014 whereby the excess of the fair value
of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve in accordance with
section 612 of the Companies Act 2006.
Retained earnings represents the cumulative profits and losses of the group attributable to the owners of the company.
Share based payment reserve represents the cumulative amounts charged in respect of unsettled warrants and options issued.
18. Trade and other payables
Current:
Group Company
2020 2019 2020
£ £ £
Accounts Payable 359,321 347,822 40,174
Accrued expenses 157,039 186,329 22,750
Amount due to director – 189 –
Other payables 2,635 27,284 –
Amounts due to group undertakings – – –
Total trade and other payables 518,995 561,624 62,924
2019
£
2,685
32,500
–
–
250,000
285,185
19. Deferred Tax
Deferred tax is provided, using the liability method, on temporary differences at the statement of financial position date between
the tax base of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19% (2019: 19%).
Annual Report and Accounts 2020 52
Notes to the Financial Statements (continued)
19. Deferred Tax (continued)
The movement on the deferred tax account is as shown below:
At 31 December 2019
Movement in the period
At 31 December 2020
2020
£
522,350
39,173
561,523
2019
£
446,162
76,188
522,350
Deferred tax assets have not been recognised in respect of tax losses and other temporary differences giving rise to deferred tax
assets as the directors believe there is uncertainty whether the assets are recoverable.
20. Convertible Loan Notes
ProBiotix Health Limited issued 1,025,000 floating rate convertible loan notes (CLN) for £1,025,000 on 11 December 2018. The notes
are convertible into ordinary shares of the Company and converted into shares immediately prior to the occurrence of a listing of
the company, or repayable on December 2023. The conversion rate is 1 share for each note held at an amount which is equal to
50% of the listing price.
OptiBiotix Health Plc has subscribed 250,000 of the CLN for £250,000
The convertible notes are presented in the Group balance sheet as follows:
Balance brought forward
Additions
Equity element
Liability component
Interest charged at effective interest rate
Non-current liability
2020
£
726,805
–
–
726,805
44,954
771,759
2019
£
-
775,050
(92,712)
682,338
44,467
726,805
Interest expense is calculated by applying the effective interest rate of 6% to the liability component.
21. Related Party Disclosures
During the year to 31 December 2020 £18,000 (2019: £19,548) was paid to P Wennstrom in respect of Director’s services provided.
During the year to 31 December 2020 £184,132 (2019: £139,105) was paid to F Narbel in respect of Director’s services provided.
During the year to 31 December 2020 £104,680 (2019: £116,966) was paid to Stephen Prescott in respect of Director’s
services provided.
During the year to 31 December 2020 £24,996 (2019: £29,165) was paid to Reyco Limited for the services of Adam Reynolds as
Director of ProBiotix Health Limited.
During the year to 31 December 2020 the Group was charged £42,000 (2019: £45,500) for services provided by Morrison Kingsley
Consultants Limited, a company controlled by Mark Collingbourne, Chief Financial Officer.
During the year Optibiotix Health PLC loaned Probiotix limited £125,000. The balance owing at the 31 December 2020 was £80,119
(2019, £NIL). There was no interest charged during the year.
At the year end Probiotix Health limited owed Optibiotix Health Plc £248,938 (2019, £234,438) for convertible loan notes issued on
11 December 2018 (see note 20). Interest at 6% was charged during the year.
53
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
21. Related Party Disclosures (continued)
During the year Optibiotix Health PLC loaned Optibiotix Limited £1,003,905, of which £159,161 was repaid. The balance at the year
end of £6,301,666 (2019, £5,456,922 was cancelled. This does not impact on the consolidated Group accounts.
22. Ultimate Controlling Party
No one shareholder has control of the company.
23. Share Based payment Transactions
(i) Share options
The Company had introduced a share option programme to grant share options as an incentive for employees of the former
subsidiaries.
Each share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient
on receipt of the option and the Company has no legal obligation to repurchase or settle the options in cash. The options carry
neither rights to dividends nor voting rights prior to the date on which the options are exercised. Options may be exercised at any
time from the date of vesting to the date of expiry.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
Number of options Average exercise price
2020 2019 2020
No. No. £
2019
£
Outstanding at the beginning of the period 7,765,907 8,272,907 0.20
Granted during the period 300,000 500,000 0.57
Forfeited/cancelled during the year (33,000) (1,007,000) 0.695
Exercised during the period –
Outstanding at the end of the period 8,032,907 7,765,907 0.21
0.23
0.78
0.70
0.20
For the share options issued in 2014 vesting conditions dictate that half will vest if the middle market quotation of an existing
Ordinary share is 16p or more on each day during any period.
of at least 30 consecutive Dealing days and half will vest when a commercial contract is signed. The two conditions are not dependent
on each other and will vest separately.
For the share options issued in 2015 year vesting conditions dictate that some of the options will vest if the middle market quotation
of an existing Ordinary share is 40p or more on each day during any period of at least 30 consecutive Dealing days and some will
vest if certain revenue targets are met or if certain scientific studies are completed. The conditions are not dependent on each other
and will vest separately.
For the share options issues in 2017 vesting conditions dictate that the options will vest if certain revenue conditions are met.
For the share options issues in 2018 vesting conditions dictate that the options will vest if certain revenue conditions are met.
For the share options issues in 2019 vesting conditions dictate that the options will vest if certain revenue conditions are met.
For the share options issues in 2020 vesting conditions dictate that the options will vest if certain revenue conditions are met.
The share options outstanding at the period end had a weighted average remaining contractual life of 1,639 days (2019: 1,977 days)
and the maximum term is 10 years.
The share price per share at 31/12/20 was £0.55 (31/12/2019: £0.66)
Annual Report and Accounts 2020 54
Notes to the Financial Statements (continued)
23. Share Based payment Transactions (continued)
(i) Share options
Expected volatility is based on a best estimate for an AIM listed entity. The expected life used in the model has been adjusted, based
on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The fair values of the share options issued in the year were derived using the Black Scholes model. The following assumptions were
used in the calculations:
Grant date
Exercise price
Share price at grant date
Risk-free rate
Volatility
Expected life
Fair value
(ii) Warrants
02/06/2020
57p
57p
0.25%
35%
10 years
24p
On 20 February 2014, an open offer was made to the potential investors to subscribe for 203,380,942 new ordinary shares of £0.0001
each at £0.0001 each. On a 1:1 basis, warrants attach to any shares issued under the open offer convertible at any time to 30 November
2018 at £0.0004 per shares.
On 4 August 2014, the warrants in issue were consolidated in the ratio of 200:1 as part of the share reorganisation.
At a meeting of warrant holders on 24 January 2017 it was agreed to extend the exercise period for all remaining warrants to
28 January 2022 and 19 February 2022
Movements in the number of share warrants outstanding and their related weighted average exercise prices are as follows:
Number of warrants Average exercise price
2020 2019 2020
No. No. £
2019
£
Outstanding at the beginning of the period 329,386 1,045,524 0.08
Exercised during the period (50) (716,138) 0.08
Outstanding at the end of the period 329,336 329,386 0.08
0.08
0.08
0.08
A charge of £127,248 (2019: £137,320) has been recognised during the year for the share based payments over the vesting period.
24. Financial Risk Management Objectives and Policies
The Group’s financial instruments comprise cash balances and receivables and payables that arise directly from its operations.
The main risks the Group faces are liquidity risk and capital risk.
The Board regularly reviews and agrees policies for managing each of these risks. The Group’s policies for managing these risks are
summarised below and have been applied throughout the period. The numerical disclosures exclude short-term debtors and their
carrying amount is considered to be a reasonable approximation of their fair value.
Interest risk
The Group is not exposed to significant interest rate risk as it has limited interest bearing liabilities at the year end.
55
OptiBiotix Health Plc
Notes to the Financial Statements (continued)
24. Financial Risk Management Objectives and Policies (continued)
Credit risk
The Group is not exposed to significant credit risk as it did not make any credit sales during the year.
Liquidity risk
Liquidity risk is the risk that Group will encounter difficulty in meeting these obligations associated with financial liabilities.
The responsibility for liquidity risks management rest with the Board of Directors, which has established appropriate liquidity risk
management framework for the management of the Group’s short term and long-term funding risks management requirements.
During the period under review, the Group has not utilised any borrowing facilities.
The Group manages liquidity risks by maintaining adequate reserves and reserve borrowing facilities by continuously monitoring
forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Capital risk
The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns
for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
25. Post Balance Sheet Events
On 16 March 2021 the company sold 1,300,000 shares in Skinbiotherapeutics plc at a price of 44.91 pence per share.
On 17 March 2021 the company sold 700,000 shares in Skinbiotherapeutics plc at a price of 45.43 pence per share.
On 15 April 2021 Mr Stephen Hammond, a recently appointed Non-Executive Director of the Company (RNS 2nd February 2021),
acquired 25,000 ordinary shares in the Company, representing 0.03% of the Company’s issued share capital, at an average price of
51.8 pence per share.
On 20 April 2021, Stephen O’Hara (Director and CEO of OptiBiotix Health plc) acquired 47,857 shares at an average price of 53 pence
per share. Following this purchase Stephen Ohara owns 10,165,129 shares representing 11.61% of the issued share capital.
On 20 April 2021, René Kamminga (PDMR and CEO of OptiBiotix Limited) acquired 35,000 ordinary shares in the company
representing 0.04% of the company’s issued share capital at an average price of 52.4 pence per share.
Annual Report and Accounts 2020 56
Notice of Annual General Meeting
OPTIBIOTIX HEALTH PLC
Dear Shareholder,
Optibiotix Health plc (AIM: OPTI), is pleased to announce that the Company's Annual General Meeting (“AGM”) will be held at the
offices of Walbrook PR Ltd, 4 Lombard Street, London, EC3V 9HD on 09 July 2021 at 10:30 am. The formal notice of the Annual General
Meeting is appended to this letter.
The Board takes its responsibility to safeguard the health of its shareholders, stakeholders and employees seriously. As a result of the
current measures implemented by the UK Government therefore, attendance at its AGM will be limited to two persons. Shareholders
may not attend in person. If the UK Government changes the measures before the date of the AGM, the Company will provide a
further update.
Shareholders wishing to vote on matters of business are urged to do so via the completion of a proxy form. In line with corporate
governance best practice, and in order that any proxy votes of those shareholders who are not allowed to attend, and to vote in
person, are fully reflected in the voting on the resolutions, the Chairman of the meeting will direct that voting on all resolutions set
out in the notice of meeting will take place by way of a poll. The final poll vote on each resolution will be published after the AGM
on the Company's website. The Company will accept electronic copies or photographs of the form of proxy by email to
voting@shareregistrars.uk.com.
As shareholders will not be able to attend this year's AGM, the Company is proposing to allow shareholders the opportunity to raise
any questions arising from the business proposed, to be conducted at the meeting. Appropriate questions must be submitted via
the “Contact” page of the Company website http://optibiotix.com/contact before 10:30am on 7 July 2021. The company will aim to
post responses on the Company's website on the day of the AGM.
Notice is hereby given that the Annual General Meeting of OptiBiotix Health PLC (the “Company”) will be held at the offices of
Walbrook PR Ltd, 4 Lombard Street, London, EC3V 9HD on 09 July 2021 at 10:30 am for the following purposes:
1.
2.
3.
4.
5.
6.
To receive the Company’s Report and Accounts for the year ended 31 December 2020.
To re-elect Sean Christie, who retires by rotation, as a Director.
To re-elect Sofia Kolyda, who retires by rotation, as a Director
To re-elect Christopher Brinsmead who retires by rotation as a Director
To re-elect Stephen Hammond who retires by rotation as a Director
To re-appoint Jeffrey’s Henry LLP as auditors of the Company and to authorise the Directors to determine their remuneration.
Special Business
To consider and, if thought fit, to pass the following resolutions as to the resolution numbered 7 as an Ordinary Resolution and as
to the resolutions numbered 8 as Special Resolutions:
7.
THAT the Directors be and they are hereby authorised generally and unconditionally for the purposes of Section 551 of the
Companies Act 2006 (the “Act”) to exercise all powers of the Company to allot shares in the Company or to grant rights to
subscribe for, or to convert any security into, shares in the Company (such shares and/or rights being “Relevant Securities”)
up to an aggregate nominal amount of £586,270.67 being one third of the current issued share capital, provided that this
authority shall, unless renewed, varied or revoked by the Company, expire on the date being the earlier of the date 15 months
after the passing of this Resolution and the conclusion of the Annual General Meeting of the Company to be held in 2022,
save that the Company may, before such expiry, make offers or agreements which would or might require Relevant Securities
to be allotted and the Directors may allot Relevant Securities in pursuance of such offer or agreement notwithstanding that
the authority conferred by this Resolution has expired.
This authority shall be in substitution for and shall replace any existing authority pursuant to Section 551 of the Act to the
extent not utilised at the date this resolution is passed.
57
OptiBiotix Health Plc
Notice of Annual General Meeting (continued)
8.
THAT, subject to and conditional upon the passing of resolution 7, the Directors be and they are hereby generally empowered
pursuant to Section 570 of the Act to allot equity securities (as defined in Section 560 of the Act) for cash pursuant to the
authority conferred under Resolution 7 above as if sub-section 561(1) of the Act did not apply to such allotment, provided
that this power shall be limited to:-
(a)
(b)
the allotment of equity securities in connection with a rights issue or any pre-emptive offer in favour of holders
of ordinary shares in the Company where the equity securities attributable to the respective interests of such
holders are proportionate (as nearly as maybe) to the respective numbers of ordinary shares held by them on the
record date for such allotment subject to such exclusions or other arrangements as the Directors may deem
necessary or expedient to deal with fractional entitlements or any legal or practical difficulties under the laws of,
or the requirements of, any regulatory body or stock exchange of any overseas territory or otherwise;
the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate
nominal value of £527,643.60 being 30% of the current issued share capital;
and shall expire on the date being the earlier of the date 15 months after the passing of this Resolution and the conclusion
of the Annual General Meeting of the Company to be held in 2022, provided that the Company may before such expiry
make an offer or agreement which would require equity securities to be allotted in pursuance of such offer or agreement as
if the power conferred hereby had not expired and provided further that this authority shall be in substitution for and
supersede and revoke any earlier power given to directors.
By Order of the Board
Stephen O’Hara
16 June 2021
Registered Office:
Innovation Centre
Innovation Way
Heslington
York
YO10 5DG
Annual Report and Accounts 2020 58
Explanatory Notes to the
Notice of Annual General Meeting
Notes:
1.
2.
3.
4.
A member of the Company is entitled to appoint a proxy or proxies to attend, speak and vote at the meeting in his stead. A
member may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares.
A member may not appoint more than one proxy to exercise rights attached to any one share. A proxy does not need to be
a member of the Company. Given the current Coronavirus (COVID-19) situation, and to ensure adherence to current
Government requirements, attendance in person at the meeting will not be possible this year. Shareholders are requested
to appoint the Chairman of the meeting as his or her proxy as any other person so appointed will not be permitted to attend
the meeting. The below notes are to be read subject to this COVID-19 related proviso.
To be effective Forms of Proxy must be duly completed and returned so as to reach the Share Registrars Ltd, The Courtyard,
17 West Street, Farnham, Surrey, GU9 7DR no later than 10:30am on 7 July 2021
To change your proxy instructions simply submit a new proxy appointment using the methods set out above and in the
notes to the Form of Proxy. Note that the cut-off times for receipt of proxy appointments (see above) also apply in relation
to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.
To be entitled to vote at the meeting (and for the purpose of the determination by Company of the number of votes they
may cast), members must be entered in the Register of members at 10:30am on 7 July 2021 (“the specified time”). If the
meeting is adjourned to a time not more than 48 hours after the specified time applicable to the original meeting, that time
will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose of
determining the number of votes they may cast) at the adjourned meeting. If however the meeting is adjourned for a longer
period then, to be so entitled, members must be entered on the Company’s Register of Members at the time which is not
less than 48 hours before the time fixed for the adjourned meeting or, if the Company gives notice of the adjourned meeting,
at the time specified in that notice.
Resolution 1
The Directors are required by law to present to the meeting the Audited Accounts and Directors’ Report for the period ended
31 December 2020.
Resolutions 2-3
Each of the Company’s Directors listed in this resolution offer themselves up for re-appointment under the terms of the Company’s
articles of association which state that each director must offer himself or herself up for re-appointment every three years.
Resolutions 4-5
Each of the Company’s Directors listed in this resolution was appointed by the Board after the last Annual General Meeting of the
Company. Under the terms of the Company’s articles of association any Director appointed as an additional director after the last
Annual General Meeting must resign at the next Annual General Meeting and may offer himself or herself for re-appointment. Each
of the Directors of the Company listed in these resolutions is offering himself for re-appointment.
Resolution 6
The Auditors are required to be re-appointed at each Annual General Meeting at which the Company’s Audited Accounts
are presented.
59
OptiBiotix Health Plc
Explanatory Notes to the Notice of Annual General Meeting (continued)
Resolution 7
Under the Act, the Directors may only allot shares if authorised to do so. Whilst the current authority has not yet expired, it is customary
to grant a new authority at each Annual General Meeting. Accordingly, this resolution will be proposed as an ordinary resolution to
grant a new authority to allot or grant rights over up to £586,270.67 in nominal value of the Company’s unissued share capital. If
given, this authority will expire at the Company’s next annual general meeting following the date of the resolution. Although the
Directors currently have no present intention of exercising this authority, passing this resolution will allow the Directors flexibility to
act in the best interests of the Company’s shareholders when opportunities arise.
Resolution 8
The Directors require additional authority from the Company’s shareholders to allot shares where they propose to do so for cash
and otherwise than to the Company’s shareholders pro rata to their holdings. This resolution will give the Directors power to issue
new ordinary shares for cash other than to the Company’s shareholders on a pro rata basis
(i)
(ii)
by way of a rights or similar issue or
with a nominal value of up to £527,643.60. This resolution will be proposed as a special resolution.
Annual Report and Accounts 2020 60
optibiotix.com
To find out more please contact OptiBiotix on:
info@optibiotix.com
OptiBiotix Health Plc | Innovation Centre, Innovation Way, Heslington, York, YO10 5DG, UK.
OptiBiotix Health Plc
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All rights reserved.