Annual Report and Financial Statements
For the Year Ended 30 June 2020
SkinBioTherapeutics plc
Company Registration Number: 09632164
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SkinBio
THERAPEUTICS
15 Silk House, Park Green, Macclesfield, SK11 7QJ
SkinBio
THERAPEUTICS
Contents
Statutory and Other Information
Chairman’s Statement
Strategic and Financial Review
Directors’ Report
Corporate Governance Report
Independent Auditor’s Report to the
Members of SkinBioTherapeutics plc
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Notice of Annual General Meeting
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Notes to the Annual General Meeting Notice
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 1
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Statutory and Other Information
Directors
Martin Hunt
Stuart J. Ashman
Doug Quinn
Dr Cathy Prescott
Secretary
Doug Quinn
Registered office
15 Silk House
Park Green
Macclesfield
SK11 7QJ
Auditor
Registrars
Nominated adviser
and broker
Bankers
Public relations
Jeffreys Henry LLP
Finsgate 5-7 Cranwood Street
London
EC1V 9EE
Share Registrars Limited
The Courtyard
17 West Street
Farnham
GU9 7DR
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Barclays Bank PLC
1 Churchill Place
London
E14 5HP
Instinctif Partners Limited
65 Gresham Street
London
EC2V 7NQ
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2 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Chairman’s Statement
2020 has been another exciting year for SkinBioTherapeutics with significant progress in a number of key areas of the
Company’s commercial and development strategies. The Company has signed its first two commercial deals, accelerated
the project timeline for its food supplement programme and gained commercial interest for its MediBiotixTM and
CleanBiotixTM programmes. Given these achievements have been made in a time of pandemic which has presented
numerous challenges, the team has impressed with its swift action, flexibility and resource to keep the development and
commercial programmes on track.
The Company’s strategy was reviewed at the beginning of the financial year and culminated with a shift from an R&D focus
to a more commercial one. The management team has identified five channels across which the Company is seeking to
harness the microbiome for human health.
The first step of delivery against this strategy was achieved in November 2019 with a commercial agreement with Croda
International Plc (“Croda”). The agreement is for the development and commercialisation of a new active skincare cosmetic
ingredient incorporating the Company’s SkinBiotix® technology.
The scientific team, under the stewardship of Professor Cath O’Neill who transitioned to the role of CSO in July 2019, has
been exploring the relationship between the gut and the skin. There is strong scientific evidence pointing to a link between
gut dysfunction, stress-induced alterations to the gut microbiome and skin inflammation. This research culminated in a
development agreement with Winclove Probiotics B.V. (“Winclove”) for the development of a probiotic blend of ‘good’
bacteria strains to help manage the symptoms associated with the skin condition psoriasis. Since the announcement of this
programme, the Company has received substantial interest from both healthcare and patient communities. Progress on
both these key strands of technology has been significant during the course of the year.
With the food supplement for psoriasis, Winclove confirmed, several months ahead of schedule, that it had been able to
successfully combine and formulate the proprietary blend of ‘good’ bacterial strains as a food supplement, to be known as
AxisBiotix™Ps. This is another important milestone since this blend will form the central pillar of the supplement to be used
in a food supplement study ahead of eventual commercialisation.
For the cosmetic application, Sederma, the French division of Croda that specialises in the manufacture of bioactive
ingredients for the cosmetic industry, updated the Company in July of this year that despite COVID-19 it remains on track
with the original project timeline. It has also been able to replicate the Company’s lysate manufacturing process which is a
critical milestone for the project, and means Sederma can now press ahead with scaling up the manufacturing process at
different volume levels as it prepares for future commercial launch.
The SkinBioTherapeutics project team has been quick to respond to the constraints of COVID-19 that are currently limiting
human studies in a clinical environment and as detailed in the operational review section, the team is pressing ahead with
preparations for a ‘self-managed’ food supplement study. The project team deserves enormous credit for its ability to pivot
so quickly in challenging circumstances and identifying a solution that will shorten the timeframe to commercialisation.
The Company continues to manage its cash and resources well and ended the year with a cash balance of £2.2m
(2019: £3.1m). Post year end, in November 2020, the Company completed a placing to new and existing institutional
shareholders raising a total of £4.45m. The funding enables the Company to expand its technology pipeline with further
work in areas such as hair and oral care and UV protection and to support the transition from a virtual operation to one with
an in-house scientific capability. The funding, aligned with the scientific and operational progress of the last 12 months,
leaves the Company ideally positioned to push forward with its strategy which offers exciting potential over the course of
the next 24 months.
On behalf of the Board, I would like to take the opportunity to thank Stuart, Cath and the rest of the team, together with the
teams at Winclove and Croda for the substantial progress achieved in the current climate.
Martin Hunt
Chairman
03 December 2020
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 3
Strategic and Financial Review
Company background and strategy
SkinBioTherapeutics is a life sciences business focused on harnessing the microbiome, the bacteria that live on and in our
bodies, for human health.
SkinBioTherapeutics’ proprietary technology, SkinBiotix®, is designed to promote skin health by harnessing the beneficial
properties of probiotic bacteria and the active components derived from them. The approach taken is to use a ‘lysate’ of
probiotic bacteria cells as a topical agent. The use of a lysate rather than live bacteria circumvents the possible safety
considerations associated with applying live bacteria to the skin and the potential formulation difficulties of keeping bacteria
alive in a cream.
An emerging area of science is focused on the gut-skin axis and how the constitution of the gut plays a role in various
diseases, such as psoriasis. SkinBioTherapeutics has been exploring the relationship between the gut and the skin and the
potential to introduce probiotic bacteria to the gut and effect a direct improvement to psoriasis-sufferers’ skin.
The Company is pursuing a strategy that addresses five channels as its area of focus, encompassing both new and existing
technology. Each channel offers the potential for multiple applications or sub-channels.
SkinBio
THERAPEUTICS
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Operational review
SkinBiotix®
This is the Company’s core technology and in November 2019 an agreement was signed with Croda Plc, a FTSE 100
company. Croda is a world leader in the field of active skincare ingredients for the cosmetic industry and sells ingredients
for skin and hair care products to major cosmetic brands across the world.
Under the terms of the agreement, SkinBioTherapeutics’ proprietary SkinBiotix® platform will be paired with Croda’s
expertise in the development and commercialisation of unique and sustainable, cosmetic ingredients, focusing specifically
on the growing skincare actives market. Sederma, part of Croda, is a specialist manufacturer of bioactive ingredients for
the cosmetic industry, and will be responsible for the development, manufacturing and commercialisation of the SkinBiotix®
technology.
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4 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Strategic and Financial Review (continued)
Croda will be creating a separate manufacturing line for the technology and as design and manufacture of the active
ingredient is carried out, there will be concurrent testing in focused ingredient application areas which will be detailed in
further, additional agreements.
Any licensed products resulting from these agreements will be sold to Croda’s global portfolio of Personal Care customers,
which amount to >12,000 companies and/or brands, some of which are leaders in their respective markets.
SkinBioTherapeutics will be paid tiered royalties based on global sales revenues on any licensed products subsequently
derived from the successful development of the partnership.
In July 2020 Sederma updated the Company on the progress of key milestones in the collaboration:
l Successful replication of the lysate manufacturing process and achievement of the same performance from the
SkinBiotix® technology as had been achieved by the Company – an essential first step in the process of formulation;
l Commencement of activities to validate scale up of the manufacturing process at different volume levels – another
essential step in order to achieve commercial quantities.
The project is progressing in line with the original plan and has not been adversely impacted by COVID-19. On the basis of
continued progress, the Company anticipates licensed royalty revenue generation to commence in 2022.
Sales and distribution rights are for the cosmetic sector alone, leaving SkinBioTherapeutics to focus on further applications
of its technology in other sectors. A key component of the Croda agreement is to provide access to a reliable supply of
material to SkinBioTherapeutics. Croda will supply SkinBiotix® for the Company to be able to use in other sectors outside
of those covered by this agreement.
AxisBiotixTM
Research focused on the gut-skin axis has found that one disease that may be directly influenced is psoriasis. This is a chronic
relapsing inflammatory condition of the skin with a prevalence of c.2-3% in the western world. The worldwide market for
psoriasis treatments was valued at approximately $30bn in 2018 and is expected to grow to $47bn in 2022 with a CAGR of
11.5%.
Current treatments include moisturising treatments or emollients to soothe and hydrate the skin for relatively mild disease,
through to the biologic therapies in severe cases. For the group with mild-to-moderate psoriasis, the mainstay therapies
tend to be steroid-based, which cannot be used long term and have side effects. In the management’s opinion, there is a
clear unmet clinical need for new, safer ways of treating patients with mild to moderate psoriasis. In addition, anecdotal
evidence from patients suggests that as a result of preferring more ‘natural’ treatments, many have turned to oral probiotics
as an ‘alternative’ therapy and have reported success in control of their disease. To date, scientific evidence is scarce; the
effects of probiotics on psoriasis have been investigated in only two studies which did not make the choice of probiotic
organisms based on known disease pathways.
In February 2020, the Company signed a development agreement with Winclove, a specialist in the research, development
and manufacture of probiotic food formulations and supplements. The agreement is targeting the development of a
probiotic blend of ‘good’ bacterial strains based on the modifying properties of specific bacterial species on known psoriasis
disease pathways. In July 2020 Winclove reported that it had been able to successfully combine and formulate the blend
as a probiotic food supplement, to be known as AxisBiotixTMPs. This is a major step forward for the development process.
Unable to pursue its originally proposed human study because of COVID-19, the management adapted quickly to the
situation and established a protocol for, and is proceeding with, a ‘self-managed’ food supplement study. Participants
suffering from mild to moderate psoriasis will be invited to participate in a human study in which they will be provided with
samples of AxisBiotixTMPs to self-administer over an eight-week period. They will be asked to track the impact of the food
supplement on their skin condition themselves. Participants will submit their findings on a periodic basis through a bespoke
mobile device app, thus avoiding the need for clinical attendance. This will accelerate the timing of readout compared to
the previously envisaged conventional study. As a result, if the findings are positive, this will allow for a significantly earlier
commercial launch than originally planned. The Company anticipates the trial commencing in Q1 2021.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 5
MediBiotixTM
The MediBiotix channel will focus on medical device applications incorporating the SkinBiotix® technology. The initial target
is eczema and, following review of the submitted data pack by the MHRA (Medicines and Healthcare products Regulatory
Agency), the Company is progressing further research work in the lab to support the required characteristics of a medical
device application. This work was halted by the temporary closure of the lab facilities at the University of Manchester however
recommenced in September.
Management also believes there is utility for the technology in the treatment of various classes of skin wounds and is in
discussion with a number of global advanced woundcare companies in this regard. The Company is targeting a commercial
agreement to develop and test the SkinBiotix® technology in these indications.
CleanBiotixTM
The area of healthcare acquired infections (HAI) remains an area of critical concern for healthcare providers and the ongoing
pandemic has brought contact infection into sharp focus. The growing resistance of certain infection strains and the lack of
new antibiotics is driving the need to discover and develop new methods of controlling bacterial growth and infection.
Staphylococcus aureus (SA) is the most common skin pathogen and one of the major causes of HAI. The Company’s
SkinBiotix® technology has been shown to have capabilities in preventing SA from adhering to and growing on the skin
and thus offers a potential route of protection from SA-induced healthcare acquired infections.
The Company is investigating whether SkinBiotix® offers utility to protect other non-human surfaces and interfaces from SA
induced healthcare acquired infections and is in early stage commercial discussions with a number of interested parties.
PharmaBiotixTM
As an extension to medical device and Axis applications, the Company has the potential to pursue medicinal prescription
registration routes for current and future technologies. This is a time-consuming and expensive pathway with significantly
higher barriers to entry, but subject to positive clinical outcomes, has the potential for significantly higher financial returns.
Whilst SkinBioTherapeutics is not currently targeting this channel, it is a future potential pathway for both the eczema and
psoriasis opportunities and a natural progression from both MediBiotixTM and AxisBiotixTM.
Financial review
Operating expenditure increased during the course of FY2020, in line with management forecasts. Research and
development expenditure was £635k (2019: £708k) comprised predominantly of development work with the University of
Manchester and internal employment costs. Expenditure was lower than anticipated in the final quarter of the year with the
temporary closure of the laboratory facilities at the University of Manchester.
Ongoing operating costs were £985k (2019: £652k) covering employment, consultancy, PLC support costs and marketing.
Overall, the Company made a loss before tax of £1,620k (2019: £1,360k).
The Company held £2.2m of cash at year-end (2019: £3.1m), a position that benefited from the suspended activity at the
University of Manchester and receipt of £211k in June 2020 from the Company’s R&D tax credit reclaim. In November 2020,
the Company completed a placing and open offering, raising £4.45m in gross proceeds.
Key performance indicators
The Board recognises the importance of KPIs and their appropriateness to the stage of development of the business. The
Company is focused on the development of its technology programmes all of which are cash consuming. The KPIs are
therefore chosen to monitor the progress of the individual programmes, the external market environment and the cash
requirements of the Company.
Financial
The cash position of the Company is monitored on a continual basis with reference to both the ongoing operational costs
of the business and more particularly the cash requirements to support its scientific development programmes. The
Company maintains a low operating cost base such that the majority of its funding is deployed on its development
programmes.
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Strategic and Financial Review (continued)
Non-financial
The Company actively monitors the progress of its development programmes. Timelines exist for each programme with
key milestones detailed and these are regularly reviewed and updated accordingly.
In addition, the Company monitors the life science market for; competitive products and technologies, licensing deals within
the cosmetic industry, scientific research related to the microbiome and regulatory and policy matters in the major markets.
Principal risks and uncertainties
Ultimate responsibility for the process by which risk in the business is managed rests with the Board. The principal risks and
uncertainties facing the Company, as well as mitigating actions, are set out below. While the list is not exhaustive, it is derived
from the Company’s detailed risk register. These risks are reviewed by the Audit Committee at least biannually, which reports
its findings to the Board.
The Company’s internal risk identification and management process is as follows:
l The Executive Team prepares and reviews on a periodic basis, by function, the risk register for the Company. The risk
register details specific risks to the Company, the quantification of those risks in terms of probability and impact, and
mitigating actions required to manage these risks.
l The risk register assigns responsibility for each risk and mitigation plan to one or more members of the Executive Team.
l The risk register is circulated to the Board in advance of each board meeting and specific risk items may be discussed
at board meetings or otherwise as appropriate.
l The risk register is reported to the Audit Committee at least biannually.
COVID-19
To date the Company has been able to progress its core development programmes with its partners with no material impact
caused by COVID-19. Both Croda and Winclove have been able to continue operating throughout the pandemic.
Development work at the University of Manchester was temporarily suspended because of the closure of the lab facilities,
with work recommencing in September 2020. Further restrictions imposed in response to COVID-19 could impact the
commencement of the human study for AxisBiotixTM and the ongoing cosmetic development work with Croda and
consequently could delay the Company’s timeline for commercialisation. In addition, further temporary closure of the lab
facilities at the University of Manchester would delay the existing research programmes.
Brexit
Following the United Kingdom’s exit from the EU on 31 January 2020 (“Brexit”) and entrance into the transition period, the
likelihood of a no deal Brexit has increased, which could have significant negative impact on the Company. The extent of
the impact will depend in part on the nature of the arrangements if any that are put in place between the UK and the EU at
the end of the transition period and, the extent to which the UK continues to apply laws that are based on EU legislation
from 1 January 2021. In addition, the macroeconomic effect of Brexit on the Company’s business is unknown. As such, it is
not possible to state the impact that Brexit would have on the Company. It could also potentially make it more difficult for
the Company to operate its business in the EU as a result of any increase in tariffs and/or more burdensome regulations
being imposed on UK companies (such as changes in applicable legislation affecting the regulatory pathway of the
Company’s products, both in Europe and in the UK). This could restrict the Company’s future prospects and adversely impact
its financial condition.
Notwithstanding the above, two of the Company’s key development partners are based in Europe; Sederma, the speciality
cosmetic division of Croda, and Winclove. Winclove will provide the food supplement for the human study and the supply
of this may be impacted by the arrangements in place from 1 January 2021 if not received before this date. The Company
may incur delays and additional costs depending on the outcome of the Brexit negotiations and the transition of regulatory
approvals.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 7
Stage of operations
SkinBioTherapeutics is at an early stage of development, yet to generate revenues and has a limited history to date. The
ability of the business to generate revenue depends on the successful completion of the technical and commercial
development of its SkinBiotix® platform and the progression of its AxisBiotixTM technology through a human study. The
business will incur losses for the immediate future and has not yet demonstrated an ability to obtain regulatory approval or
commercialise its technologies successfully.
Clinical development risk
The commercialisation of the Company’s intellectual property and the potential applications of its technologies requires
ongoing preclinical development, formulation, process development and human consumer/clinical studies that exemplify
platform claims. There is a risk that one or more of the business’s technologies does not perform as expected and fails to
perform in the applications identified by the Company.
Furthermore, clinical development and human studies can result in unexpected costs. Agreeing study designs, study
endpoints and study recruitment timelines without unforeseen delays with regulatory agencies is key. Regulatory body
guidelines leading to market authorisation may be subject to alteration and are divergent in different jurisdictions.
Product development timelines
Development programme delays, inconclusive results, identification of safety issues, manufacture and formulation failures
or regulatory challenges may require additional follow-up studies that are not currently envisaged with a consequential
impact on development timelines and cash resources.
Dependence of key personnel
The Company’s operates with a small team and success is highly dependent on the expertise and experience of its board,
management and employees. Retention and incentivisation of these individuals is critical to the Company.
Formulation
Whilst the Company has developed formulations for its initial indications, further work is required to ensure the formulations
remain effective for an extended period. There are risks associated with the means and timeline in establishing the long-
term stability of formulations. In addition, the Company will need to develop formulations appropriate for its other
indications. It may require a number of iterations before suitable formulations are able to be produced.
Human studies
SkinBioTherapeutics has invested effort and resources in the development of its technologies. Success in human studies in
part hinges on this continuing development activity. It is however possible that the results of these studies may not be
predictive of those obtained in more advanced, later-stage, expensive, time consuming and difficult to design human
studies.
Intellectual property and proprietary technology
SkinBioTherapeutics is focused on maintaining and expanding its intellectual property portfolio. The portfolio includes
patent applications, trademarks and know-how.
Success of the Company will depend in part on its ability to obtain and maintain effective patent rights. These rights need
to be sufficiently broad to protect SkinBioTherapeutics’ technology in its chosen markets. The application process is
expensive and time-consuming and SkinBioTherapeutics may not be able to file all its patent applications in all jurisdictions.
Some of the Company’s patent applications remain pending and have not been given notice of allowance. National patent
offices may raise objections in relation to the on-going patent applications. These may result in revised applications or
prevent patent applications from being granted.
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Strategic and Financial Review (continued)
Competitive risk
The Directors believe the skin microbiome to be an innovative area of development and scientific focus. As such this area
is subject to significant and rapid technological and consumer change. It is an area of interest to academic institutions,
government agencies and private and public companies. Competition from existing companies and new entrants has
emerged and maintaining an IP and technology advantage over the competition will require a sustained development
focus.
The need for safe and supportive skin health and well-being products is acknowledged by consumers and healthcare
providers around the globe. Large multinationals have divisions dedicated to the sector and many have established brands
or approved products on the market. These brand owners have greater financial and human resources which can be
deployed to build and maintain a brand position. Many also have dedicated R&D units and could therefore choose to
develop technologies that compete with the Company’s SkinBiotix® technology platform.
Regulatory environment
The Company operates in a regulated environment that varies dependent upon the jurisdiction. These regulations are
subject to change at short notice and differ according to any proposed product claims, intended use or marketing route.
While the Company will take every effort to ensure that it and its partners comply with all applicable regulations, there can
be no guarantee of this. Failure to comply with applicable regulations could result in the Company being unable to
successfully commercialise its technology or any products that incorporates it and/or result in legal action being taken
against the Company which could have a material adverse effect.
S172 Statement
The Directors acknowledge their duty under s.172 of the Companies Act 2006 and consider that they have, both individually
and together, acted in the way that, in good faith, would be most likely to promote the success of the Company for the
benefit of its members as a whole. In doing so, they have had regard (amongst other matters) to:
l The likely consequences of any decision in the long term
The Company’s strategic objectives and the progress made against these during the year, together with the principal risks,
are detailed in the Strategic and Financial review on pages 3-9.
l The interests of the Company’s employees
SkinBioTherapeutics is a very small company in terms of its number of employees and recognises these employees are key
to its business success. Members of the Board maintain frequent contact with employees and the executive team engage
with employees with regards current performance and future plans and ambitions for the Company.
l The need to foster the Company’s business relationships with suppliers, customers and others
A consideration of our relationship with wider stakeholders and their impact on our long-term strategic objectives is
disclosed in Principle 3 of the Corporate Governance Report on page 15.
l The impact of the Company’s operations on the community and the environment
The Company is committed to operating with a high level of corporate social responsibility and environmental sustainability.
Principle 8 of the Corporate Governance Report provides further disclosure on how we promote a corporate culture that is
based on ethical values and behaviour.
l The desirability of the Company maintaining a reputation for high standards of business conduct
Our intention is to behave in a responsible manner, operating with a high standard of business conduct and corporate
governance, as detailed in the Corporate Governance Report.
l The need to act fairly as between members of the Company
The Board is fully committed to open and transparent dialogues with all shareholders. A supportive base of investors
interested in a long-term holding in the Company provides the stability to allow us to execute our strategy and deliver long
term value for all shareholders. We strive to engage with our investor base with meetings and updates to institutional and
retail investors through a variety of channels.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 9
Outlook
The Company has made significant progress through the course of the year with commercial deals signed in two of its five
core areas and key scientific milestones achieved with its partners in both these areas. This is especially pleasing, given the
difficult operational environment arising due to the COVID-19 pandemic. The Company’s financial position was further
strengthened with the successful placing and open offer. The funding enables the Company to expand its technology
pipeline with further work in areas such as hair and oral care and UV protection and support the transition from a virtual
operation to one with an in-house scientific capability.
Looking forward to the new financial year, as Croda continues to progress the pathway of the SkinBiotix® technology as a
cosmetic ingredient, a key focus for the Company will be the AxisBiotix™ programme targeting psoriasis. Here the Company
is seeking to initiate and complete a ‘self-managed’ human study in Q1 2021 and, subject to a positive readout, commence
commercialisation. This is an accelerated timeframe to that originally anticipated but equally presents an opportunity for a
more rapid route to revenue generation.
Stuart J. Ashman
Chief Executive Officer
03 December 2020
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10 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Directors’ Report
The Directors present their report and the audited financial statements of the Company for the year ended 30 June 2020.
Principal activity
The principal activity of the Company is that of research and development focused on harnessing the microbiome for human
health.
Directors
The directors who served the Company during the year were:
Stuart J. Ashman
Prof Catherine O’Neill (Resigned 4 July 2019)
Doug Quinn
Martin Hunt
Dr Cathy Prescott
Stephen O’Hara (Resigned 4 July 2019)
The Directors of the Company held the following beneficial interests in the share and share options of SkinBioTherapeutics
plc at the date of this report:
Issued share capital
Share options
Ordinary shares Percentage
Martin Hunt
Stuart J. Ashman
Doug Quinn
Dr Cathy Prescott
of £0.01 each
466,667
125,000
444,444
118,612
Ordinary Options
shares of exercise
held £0.01 each price
0.3%
3,892,082 £0.09
0.1%
5,189,444 £0.09
& £0.18
0.3%
2,594,721 £0.09
0.1%
Martin Hunt’s shareholding is held through Invictus Management Limited, a company controlled by Mr Hunt. Of the 466,667 shares held by Invictus
Management Limited 11,112 are held in trust for Louise Hunt and 11,111 are held in trust for Oliver Hunt.
Substantial shareholdings
As at 30 November 2020, the following interests in 3% or more of the issued share capital appear in the register:
Percentage of
issued share capital
OptiBiotix Health Plc 24.5%
Seneca Partners Limited 15.9%
University of Manchester 5.1%
Prof Catherine O’Neill 3.4%
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 11
Directors remuneration
The Directors received the following remuneration during the year:
Executive Salaries
Share based Pension Total
Fees payments contributions remuneration
Stuart Ashman £234,177
– £39,564 £2,553 £276,294
Doug Quinn £12,716
£101,652 £16,414 £204 £130,986
Non-executive
Martin Hunt £9,575
£38,342 £24,620 – £72,537
Dr Cathy Prescott £5,250
£22,400 – – £27,650
£261,718
£162,394 £80,598 £2,757 £507,467
Financial instruments
The Company’s exposure to financial risk is set out in note 2n of the financial statements.
Research and development
The Strategic and Financial Review on pages 3-9 gives information of the Company’s research and development activities.
Events after the reporting date
Refer to note 18 to the financial statements for further details.
Going concern
The financial statements have been prepared on the assumption that the Company is a going concern. When assessing the
foreseeable future, the Directors have considered the budget for the next 12 months from the date of this report and the
cash at bank available as at the date of approval of this report and are satisfied that the Company should be able to meet
its financial obligations.
After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue
in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing
the annual report and financial statements.
Statement of directors’ responsibilities
The Directors are responsible for preparing the Strategic Report and Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted by 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 and profit or loss of the Company for that period. In
preparing these financial statements, the Directors are required to:
l select suitable accounting policies and then apply them consistently
l make judgements and accounting estimates that are reasonable and prudent
l state whether applicable IFRSs have been followed subject to any material departures disclosed and explained in the
financial statements
l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business
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Directors’ Report (continued)
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’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 Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities. The Directors confirm that:
l so far as each director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
l the Directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of
any relevant audit information and to establish that the Company’s auditor is aware of that information
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Auditors
Jeffreys Henry LLP has expressed their willingness to continue in office and a resolution to re-appoint them will be proposed
at the forthcoming Annual General Meeting.
This report was approved by the Board of Directors on 3 December 2020 and signed on its behalf by:
Stuart J. Ashman
Chief Executive Officer
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 13
Corporate Governance Report
As Chairman of SkinBioTherapeutics I have overall responsibility for corporate governance and in promoting high standards
throughout the Company. As well as leading and chairing the Board my responsibilities are to ensure;
l Committees are properly structured and operate with appropriate terms of reference
l The performance of individual directors, the Board and its committees are reviewed on a regular basis
l The Company has a coherent strategy and sets objectives against this
l There is effective communication between the Company and its shareholders
All the directors of SkinBioTherapeutics believe strongly in the importance of good corporate governance for the creation
of shareholder value over the medium to long-term and to engender trust and support amongst the Company’s wider
stakeholders. The Board adopted the QCA code in September 2018 and considers that it does not depart from any of the
principles of the QCA code.
The QCA code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it considers
to be appropriate arrangements for growing companies and asks companies to provide an explanation about how they
are meeting the principles through the prescribed disclosures. The Directors have considered how they apply each principle
to the extent the Board judges these to be appropriate in the circumstances and below we provide an explanation of the
approach taken in relation to each. There were no key governance related matters that occurred during the year.
Martin Hunt, Chairman.
Principle
Application
Establish a strategy and business model which
promotes long-term value for shareholders
SkinBioTherapeutics seeks to harness the microbiome for human
health and has a particular focus on skin. The Company’s proprietary
technologies are targeted at a number of health indications and the
Company is progressing applications of both its SkinBiotix® and
AxisBiotixTM technologies as a route to initial value creation. The
Company’s programme of research and development is intended to
build long-term shareholder value through a reliance on proven,
rigorous science and the Company utilises its public listing as a means
to source capital to support its R&D programme.
The Company has an ongoing research agreement with the University
of Manchester to identify and develop technologies. In doing so the
Company intends to avoid a reliance on a single technology and
ensure that it has an ongoing pipeline of technologies, all related to
the human microbiome, at different stages of development. The
Company will seek to license technologies to large corporates once
human proof of principle has been established and intends to
generate licence revenue through this route. Where it considers it
appropriate, the Company will also look to develop and market
products. The Company is looking to transition from a virtual
organisation to one with a physical presence and the ability to engage
in its own technology development activities.
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Corporate Governance Report (continued)
Principle
Application
Seek to understand and meet shareholder needs
and expectations
The Board is committed to communicating openly with shareholders
to ensure that its strategy and performance are clearly understood.
Between the Chairman and the executive directors an open and
the Company’s major
regular dialogue
shareholders which comprise;
is maintained with
Shareholder Holding 30 November 2020
OptiBiotix Health Plc 24.5%
Seneca Partners Limited 15.9%
University of Manchester 5.1%
Prof Catherine O’Neill 3.4%
During the course of the year OptiBiotix sold 7.8m shares and Seneca
Partners Limited sold 8.6m shares. In November 2020 Seneca
acquired a further 3.1m shares through the placing and open offer.
The Company maintains an active and positive dialogue with both
these shareholders.
More generally the Board communicates with shareholders through
the Annual Report and the Interim Statement, trading and other
announcements made on RNS and at the Annual General Meeting
where the Board encourages investors to participate. The Company
also maintains a website, www.skinbiotherapeutics.com, which
contains information on the Company’s business and corporate
information. Following the announcement of the Company’s half year
and full year results the Chief Executive & CFO, make presentations
to institutional shareholders, private client brokers and investment
analysts. Existing and prospective shareholders are able to separately
contact the Chairman and Chief Executive via email as detailed on
the Company’s website. Periodic meetings are held with existing and
prospective institutional and other investors and the Company
presents at private investor investment events during the course of
the year. The Company’s broker also produces periodic research
notes on the Company.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 15
Principle
Application
Take into account wider stakeholder and social
responsibilities and their implications for long-
term success
As a small company engaged in the early stages of technology
development the Company has a limited but important number of
stakeholders. Robust science is at the core of the Company’s strategy
and the Company has a number of key stakeholders, including its
employees, involved in the different stages from research, through
manufacture, formulation and testing. The Company assesses each of
the companies it works with to ensure the requisite standards and
values are in place. Ultimately the Company’s technology will be used
by consumers and ensuring
the appropriate development,
manufacture and marketing of products will be key to the long-term
success of the Company. Throughout the various stages from initial
technology identification to eventual product sales the Company is
engaged in a continual process of feedback and improvement with
its stakeholders, including eventual end users. In addition, the
eventual licensees of aspects of its technology will be important
stakeholders in the interface with consumers and the longer-term
success of the Company.
Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
Ultimate responsibility for the process by which risk in the business is
managed rests with the Board. The Company’s internal risk
identification and management process is as follows:
l The Executive Team prepares and reviews on a periodic basis the
risk register for the Company. The risk register details specific risks
to the Company, the quantification of those risks in terms of
probability and impact, mitigating actions required to manage
these risks and the control mechanisms that are in place to
monitor the risks.
l The risk register assigns responsibility for each risk and the
mitigation plan to one or more members of the Executive Team.
l The risk register is circulated to the Board in advance of each
board meeting and specific risk items may be discussed at board
meetings or otherwise as appropriate.
l The risk register is reported to the Audit Committee at least
biannually.
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Corporate Governance Report (continued)
Principle
Application
Maintain the Board as a well-functioning, balanced
team led by the chair
The Board’s primary role is to enhance shareholders’ long-term
interests by:
l determining the Company’s overall strategy and direction
l establishing and maintaining controls, audit processes and risk
management policies to ensure they counter identified risks and
that the Company operates efficiently
l ensuring effective corporate governance
l approving budgets and reviewing performance relative to those
budgets
l approving financial statements
l approving material agreements and non-recurring projects, and
l approving senior and Board appointments
Martin Hunt and Dr Cathy Prescott, both non-executive directors, are
considered to be independent of the management and are free to
exercise independence of judgement.
The Non-Executive Directors are required to commit sufficient time
as is necessary, approximately two days per month, to fulfil their
obligations. Routine commitments include preparation for and
attendance at board and committee meetings. In addition, the Non-
Executive Directors engage in ad-hoc dialogues with members of the
Executive Team, shareholders and other stakeholders as required.
All directors are subject to reappointment by shareholders at the first
Annual General Meeting following their appointment and at each
AGM thereafter.
The table on page 22 details the attendance record of each director
at board and committee meetings during the course of the year.
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Principle
Application
Ensure that between them the Directors have the
necessary up-to-date experience, skills and
capabilities
As at 1 November 2020 the Board comprised an independent non-
executive chairman, the chief executive officer, the chief financial
officer and an independent non-executive director. One director is
female and three are male.
Martin Hunt, Independent Non-Executive Chairman
Appointed as a director & Chairman in October 2016; Chair of the
remuneration Committee and member of the Audit and Insider
Committees.
Martin has had a long executive career in the medtech and life
science sectors including sales and general management roles with
large corporations in Europe and the US. He was previously CEO of
biomaterials company Tissue Science Laboratories plc taking it from
start-up through an AIM listing and eventual sale to Covidien. More
recently he has held a number of non-executive roles with both
private and public companies. Martin is well versed in the early and
growth stages of companies in the life science sector as well as
bringing experience of corporate governance and shareholder
communications.
Martin is the Programme Director of the NIHR translational funding
programme Invention for Innovation (i4i) and a member of the NIHR
strategy board. Martin is currently Non-Executive Chairman of
Videregen Limited.
Time commitment of at least two days per month.
Stuart Ashman, CEO
Appointed as a director in April 2019 and CEO in July 2019.
is an experienced commercial chief executive with
Stuart
considerable experience in the medtech and life science sectors.
Prior to joining the Company, Stuart served as CEO of Onbone Oy
(“Onbone”), a Finnish private equity-backed medical device company.
In this role, he successfully established a global sales force and
distribution network and led the growth of a multi-million pound
business.
Prior to Onbone, Stuart was President/CEO of Andover Healthcare
Inc., a US-based wound management manufacturer, and before then,
was President/CEO of TI Group, a UK-based medical/engineering
company. Stuart also served as Senior VP, Global Sales & Strategic
Marketing, BSN Medical (Biersdorf, Smith and Nephew) and was
Director of Sales & Marketing at Smith & Nephew Plc, in its
Woundcare, Casting & Bandaging division. In these roles, Stuart
gained extensive experience of both direct sales management across
multiple geographies, and of business to business selling. He has also
been involved in M&A transactions and has achieved considerable
commercial success in both small and large companies.
Stuart is a full-time employee of the Company.
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Corporate Governance Report (continued)
Principle
Application
Doug Quinn, CFO
Appointed as a director and CFO in December 2016 and Company
Secretary in January 2017; Member of the Audit Committee and
Chair of the Insider Committee.
Doug has been involved in early stage companies through a
combination of investor, executive and non-executive director and
CFO roles for over 18 years. He was CFO of Arthro Kinetics Limited,
an early stage tissue engineering company and part of the team that
floated the Company on AIM in 2006. A chartered management
accountant, with a number of years of experience in the life science
sector, he brings financial expertise gained through executive roles
and corporate finance transactions.
Doug is a director and part-time CFO with the life science company
Videregen Limited.
Time commitment of approximately 3 days per week.
Dr Catherine Prescott, Independent Non-Executive Director
Appointed as a director in March 2017; Chair of the Audit Committee
and member of the Remuneration Committee.
Cathy has over two decades of experience in research and
management in the biotech, pharmaceutical and venture capital
sectors. Cathy is a visiting professor at Kings College London,
teaching on the MSc programme ‘Cellular Therapies from bench to
market’. Cathy brings a broad range of scientific and strategic sector
expertise and experience.
Cathy is a non-executive director of Videregen Limited.
Time commitment of two days per month.
The Board has not, at this stage in its development, established a
Nominations Committee. The Board as a whole continues to review
its structure in order to provide what it considers to be an appropriate
balance of executive and non-executive experience and skills.
The Board believes that its blend of relevant experience, skills,
personal qualities and capabilities is sufficient to enable it to
successfully execute its strategy. The Board is additionally cognisant
that with the recent changes to the Board and as the Company seeks
to commercialise its technology, this may require additions to the
Executive Team and wider board.
Directors attend seminars and other trade events to ensure that their
knowledge remains current.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 19
Principle
Application
Evaluate board performance based on clear and
relevant
continuous
improvement
objectives,
seeking
Promote a corporate culture that is based on
ethical values and behaviours
On the formation of the Board, the Directors considered the
composition of the Audit Committee. Doug Quinn is an executive
director and CFO but a member of the Committee due to his
experience in this area. Both independent directors have direct
access to the auditors with the exclusion of Doug and vice versa and
he is excused from any discussions where there is a potential conflict
of interest.
From time to time the Board may require third party advice on various
matters pertaining to its business, for example in relation to the
competitive landscape. Appropriate relationships to source such
advice have been established.
The Directors also receive regular briefings from the Company’s
NOMAD in respect of continuing compliance with the AIM Rules.
The Board designed and implemented an internal board evaluation
exercise during 2020. The exercise was led by the Chairman and
topics covered included the balance of skills, experience and
independence, understanding of the business and its strategy
together with engagement with shareholders. Each director
completed a questionnaire, and this formed the basis for a
subsequent discussion by the Board as a whole.
Having completed its first evaluation exercise, it is the Board’s
intention to repeat this process annually, acting on its findings as
appropriate.
The Board’s approach to succession planning is based upon
identifying the medium to long term objectives of the Company and
matching these against the competence of directors and senior
managers. The Board will seek to identify potential gaps and recruit
to fill these allowing a sufficient lead time.
The Board believes that the promotion of a corporate culture based
on sound ethical values and behaviours is essential to maximise
shareholder value. The Board considers this particularly relevant to
the Company in light of the partners with which it works, for example
the University of Manchester, Croda Plc and Winclove Probiotics B.V.,
and recognising the intended end use of its technology in products
to be marketed to and purchased by consumers. The Executive team
engenders open and positive interactions with a key focus on;
scientific rigour,
innovation, creative solutions and collective
responsibility. As the Company expands its human capability it will
look to formalise its culture through an agreed set of values and
standards.
The Company’s policies set out its zero-tolerance approach towards
any form of modern slavery, discrimination or unethical behaviour
relating to bribery, corruption or business conduct.
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Corporate Governance Report (continued)
Principle
Application
Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
Alongside setting the vision and strategy for the Company the Board
is responsible to ensure that the business is managed for the long-
term benefit of all shareholders whilst having regard for internal and
external stakeholders, including employees, customers and suppliers.
The Board defines a series of matters reserved for its decision and
has approved terms of reference for its Audit, Remuneration and
Insiders Committees to which certain responsibilities are delegated.
The chair of each committee reports to the Board on the activities of
that committee.
The Audit Committee is responsible for:
l reviewing the annual financial statements and interim reports prior
to approval
l reviewing and considering reports on internal financial controls,
including reports from the auditors
l considering the appointment of and reviewing the relationship
with the auditors, including reviewing and monitoring of
independence and objectivity
l reviewing the consistency of accounting policies
l considering any proposed related party transaction
The Audit Committee can call for information from the Executive Team
and consults with the external auditors directly when appropriate or
when they are required to do so.
The Remuneration Committee reviews and determines on behalf of
the Board the pay, benefits and other terms of service of the Executive
Directors of the Company. In addition, the Committee oversees the
creation and implementation of all employee share plans.
The Insider Committee is responsible for:
l monitoring and ensuring compliance with the Company’s MAR
dealing policy
l reviewing the classification of employees, directors and key
consultants as regards clearance requirements
l reviewing and approving or rejecting as appropriate all requests
for dealings in shares in the Company
Matters reserved for the Board are;
l determining the Company’s overall strategy and direction
l establishing and maintaining controls, audit processes and risk
management policies to ensure they counter identified risks and
that the Company operates efficiently
l ensuring effective corporate governance
l approving budgets and reviewing performance relative to those
budgets
l approving financial statements
l approving material agreements and non-recurring projects, and
l approving senior and board appointments
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 21
Principle
Application
The Chairman has overall responsibility for corporate governance and
in promoting high standards throughout the Company. As well as
leading and chairing the Board, the Chairman’s responsibilities are to
ensure;
l committees are properly structured and operate with appropriate
terms of reference
l the performance of individual directors, the Board and its
committees are reviewed on a regular basis
l the Company has a coherent strategy and sets objectives against
this
l there is effective communication between the Company and its
shareholders
The CEO provides coherent leadership and management of the
Company, leads the development of objectives, strategies and
performance standards as agreed by the Board, ensures that the
assets of the Company are maintained and safeguarded, leads on
investor relations activities to ensure communications and the
Company’s standing with shareholders and financial institutions is
maintained.
The Non-Executive Directors contribute independent thinking and
judgement through the application of their external experience and
knowledge, scrutinise the performance of management, provide
constructive challenge to the executive directors and ensure that the
Company is operating within the governance and risk framework
approved by the Board.
The Company Secretary is responsible for providing clear and timely
information flow to the Board and its committees and supports the
Board on matters of corporate governance and risk. This role is
currently filled by the Company’s CFO. The Board acknowledges the
QCA guidelines on this matter and consider the joint roles
appropriate for the Company’s size. The Company Secretary has
direct access to the Chairman on matters of corporate governance.
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Principle
Application
Communicate how the Company is governed and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
In addition to the investor relations activities described above the
following committee reports are provided;
The Audit Committee, which comprises Dr Cathy Prescott (Chair),
Martin Hunt and Doug Quinn, met three times during the course of
the year. The Committee met with the external auditors prior to the
approval of the annual accounts. Consideration was given to the
auditors’ pre and post audit reports and these provided opportunities
to review the accounting policies, internal controls and the financial
information contained within both the annual and interim reports. The
Committee engaged the external auditors for a review of the interim
statement prior to its release.
The Remuneration Committee, which comprises Martin Hunt (Chair)
and Dr Cathy Prescott met five times during the course of the year.
Remuneration packages for the executive directors comprise a basic
salary and performance related bonus. There is a defined pension
contribution scheme in place for all directors and employees. In
addition, executive directors and senior employees participate in a
share option long term incentive plan.
The Committee reviewed the structure of remuneration packages for
the executive directors and agreed they remained appropriate.
In setting remuneration, the committee took into consideration the
compensation packages of comparable AIM listed companies. Share
options were granted to Stuart Ashman and Professor Cath O’Neill in
the year.
The Insiders Committee, comprised of Doug Quinn (Chair) and Martin
Hunt, met twice during the course of the year to review the
Company’s insider lists and review and approve requests for dealing
in shares in the Company.
For information regarding the voting of shareholders at general
meetings of the Company please see the Shareholder Information
section of the website.
PLC board meetings Committee meetings
Audit Remuneration Insider
Eligible to Attended Eligible to Attended Eligible to Attended Eligible to Attended
Director attend attend attend attend
Stuart Ashman 11 11 – – – – – –
Martin Hunt 11 11 3 3 5 5 2 2
Dr Cathy Prescott 11 11 3 3 5 5 – –
Doug Quinn 11 11 3 3 – – 2 2
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 23
Independent Auditors’ Report to the Members of
SkinBioTherapeutics Plc
Opinion
We have audited the financial statements of SkinBioTherapeutics Plc for the year ended 30 June 2020 which comprise the
statement of comprehensive income, the statement of financial position, the statement of cash flows, the statement of
changes in equity 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 financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
l the financial statements give a true and fair view of the state of the Company’s affairs as at 30 June 2020 and of the
Company’s loss for the year then ended;
l the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
l 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, 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
l the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
l the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Company’s ability to continue to adopt the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are authorised for issue.
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.
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Independent Auditors’ Report to the Members of
SkinBioTherapeutics Plc (continued)
Key audit matter
Intangible assets
The Company had capitalised intellectual property costs
amounting to £346,870 at 01 July 2019. During the year, the
Company capitalised a further £73,668 (2019: £59,198)
relating to intellectual property costs. These capitalised costs
are not yet being amortised as the products are in
development stage.
The Directors have assessed whether the costs meet the
criteria for capitalisation and whether there are any
indicators of impairment.
The risk is that the costs may not qualify for capitalisation or
technological advancements may render the market value
of the capitalised costs below its carrying value.
Profit after tax, which is considered by management to be a
key metric, is directly impacted by the amount of costs
capitalised.
How our audit addressed the key audit matter
We have performed the following audit procedures:
l considered whether the nature of the costs met the
necessary criteria under IAS 38 for the costs to be
allowed for capitalisation;
l vouched a sample of the costs capitalised to invoices, to
confirm that they relate to intellectual property and have
been accurately recorded;
l considered whether the Directors’ policy for the
treatment of such costs was reasonable and assessed
whether the costs included in the reconciliation were in
line with the Directors’ policy;
l confirmed the directors’ assessment that no amortisation
is necessary is accurate;
l reviewed cash flow forecasts for the foreseeable future
to assess the potential future economic benefit from
ownership of the intangible assets.
Based on the audit work performed we are satisfied, that
although there are inherent uncertainties associated with the
forecast and estimation of useful economic life of intangible
assets, the directors have made reasonable assumptions
about the valuation and useful economic life of intangible
assets, based on past experience and expected future
revenues. We are also satisfied that all necessary disclosures
have been made in the financial statements.
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:
Overall materiality
How we determined it
Rationale for
benchmark applied
Financial statements
£75,000 (2019: £57,000).
Based on 5% of loss after tax
We believe that loss after tax is the primary measure used
by the shareholders in assessing the performance of the
Company. Results after tax are generally accepted auditing
benchmarks.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £3,750
(2019: £2,850) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 25
An overview of the scope of our 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 accounting processes and controls, and the industry in which they operate.
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:
l 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
l the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit,
we have not identified material misstatements in 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:
l adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
l the financial statements are not in agreement with the accounting records and returns; or
l certain disclosures of Directors’ remuneration specified by law are not made; or
l 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 10, 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.
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26 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Independent Auditors’ Report to the Members of
SkinBioTherapeutics Plc (continued)
In preparing the financial statements, the Directors are responsible for assessing the 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 Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
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.
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.
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.
Sanjay Parmar (Senior Statutory Auditor)
For and on behalf of
Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
03 December 2020
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 27
Statement of Comprehensive Income
For the Year Ended 30 June 2020
Continuing operations
Research and development
Operating expenses
Loss from operations
Finance costs
Loss before taxation
Taxation
Loss for the year
Other comprehensive income
Notes
2020
£
2019
£
3
5
(635,226)
(984,816)
(1,620,042)
–
(1,620,042)
119,956
(1,500,086)
–
(708,081)
(652,400)
(1,360,481)
–
(1,360,481)
212,388
(1,148,093)
–
Total comprehensive loss for the year
(1,500,086)
(1,148,093)
Basic and diluted loss per share (pence)
15
(1.17)
(0.94)
The notes on pages 31 to 45 form part of these financial statements.
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28 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Statement of Financial Position
As at 30 June 2020
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Total non-current assets
Current assets
Other receivables
Corporation tax receivable
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Capital and reserves
Called up share capital
Share premium
Other reserves
Accumulated deficit
Total equity
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2020
£
2019
£
6
7
8
9
5, 9
1,700
420,538
5
422,243
6,800
346,870
–
353,670
70,622
118,763
2,159,054
242,580
210,351
3,124,864
2,348,439
3,577,795
2,770,682
3,931,465
12
12
14
14
1,280,835
4,923,890
403,483
(4,142,352)
1,280,835
4,923,890
247,672
(2,642,266)
2,465,856
3,810,131
10
304,826
121,334
304,826
304,826
121,334
121,334
2,770,682
3,931,465
These financial statements were approved and authorised for issue by the Board of Directors on 3 December 2020 and
were signed on its behalf by:
Doug Quinn
Director
Company Registration No. 09632164
The notes on pages 31 to 45 form part of these financial statements.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 29
Statement of Cash Flows
For the Year Ended 30 June 2020
Cash flows from operating activities
Loss before tax for the period
Depreciation of property, plant and equipment
Share option expenses
Changes in working capital
(lncrease)/decrease in trade and other receivables
lncrease/(decrease) in trade and other payables
Cash generated by/(used in) operations
Taxation received
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Investment in subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issue of shares
Net cash generated by financing activities
2020
£
2019
£
(1,620,042)
5,100
155,811
(1,360,481)
3,400
77,254
(1,459,131)
(1,279,827)
171,958
183,492
(146,159)
(90,959)
355,450
(237,118)
211,544
88,309
(892,137)
(1,428,636)
–
(73,668)
(5)
(10,200)
(59,198)
–
(73,673)
(69,398)
–
–
1,440,000
1,440,000
Net (decrease) in cash and cash equivalents
(965,810)
(58,034)
Cash and cash equivalents at the beginning of the period
3,124,864
3,182,898
Cash and cash equivalents at the end of the period
2,159,054
3,124,864
The notes on pages 31 to 45 form part of these financial statements.
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30 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Statement of Changes in Equity
For the Year Ended 30 June 2020
As at 1 July 2018
Loss for the period
Issue of shares
Costs of share issue
Share-based payments
As at 30 June 2019
Loss for the period
Issue of shares
Costs of share issue
Share-based payments
As at 30 June 2020
Share
capital
£
Share
premium
£
Other
reserves
£
Retained
earnings
£
1,187,085
–
93,750
–
–
1,280,835
–
–
–
–
3,577,640
–
1,406,250
(60,000)
–
4,923,890
–
–
–
–
170,418
–
–
–
77,254
247,672
–
–
–
155,811
(1,494,173)
(1,148,093)
–
–
–
(2,642,266)
(1,500,086)
–
–
–
Total
£
3,440,970
(1,148,093)
1,500,000
(60,000)
77,254
3,810,131
(1,500,086)
–
–
155,811
1,280,835
4,923,890
403,483 (4,142,352) 2,465,856
Share capital is the amount subscribed for shares at nominal value.
Share premium is the amount subscribed for share capital in excess of nominal value.
Other reserves arise from the equity element of a convertible loan issued and converted in the period to 30 June 2017, and
from share options granted.
Retained earnings represents accumulated profit or losses to date.
The notes on pages 31 to 45 form part of these financial statements.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 31
Notes to the Financial Statements
For the Year Ended 30 June 2020
1 General information
SkinBioTherapeutics plc is a public limited company incorporated in England under the Companies Act and quoted on the
AIM market of the London Stock Exchange (AIM: SBTX). The address of its registered office is given on page 1.
The principal activity of the Company is the identification and development of technology that harnesses the human
microbiome to improve health.
Significant accounting policies and basis of preparation
2
a) Statement of compliance
The Financial statements of SkinBioTherapeutics plc have been prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union, IFRS Interpretations Committee (IFRIC) and the Companies
Act 2006 applicable to companies reporting under IFRS.
b) Basis of preparation
The financial statements have been prepared under the historical cost convention modified by the revaluation of certain
financial instruments. The accounting policies have been applied consistently in all material respects.
The financial statements have been presented in Pounds Sterling ('Sterling') as this is the currency of the primary economic
environment in which the Company operates.
c) Going concern
These financial statements have been prepared on a going concern basis. In considering the appropriateness of this
assumption, the Board has considered the Company's projections for the twelve months from the date of approval of this
financial information, including cash flow forecasts, and taking account of the cash raised on 2 November 2020 by way of
a fundraise. The directors believe that the Company has adequate resources to continue in operational existence for the
foreseeable future and therefore adopt the going concern basis of accounting in preparing these financial statements.
d) Estimates and judgements
The preparation of financial statements requires the Board to make judgements, estimates and assumptions that may affect
the application of accounting policies and reported amounts of assets and liabilities as at each balance sheet date and the
reported amounts of revenues and expenses during each reporting period. Any estimates and assumptions are based on
experience and any other factors that are believed to be relevant under the circumstances and which the Board considers
to be reasonable. Actual outcomes may differ from these estimates. Any revisions to accounting estimates will be recognised
in the period in which the estimate is revised if the revision affects only that period. If the revision affects both current and
future periods, the change will be recognised over those periods.
Certain accounting policies which have a significant bearing on the reported financial condition and results of the Company
require subjective or complex judgements. Examples of such areas of judgement is the estimation of the lifetime of
intangible assets, the capitalisation of development costs and share based payments.
Estimation of the lifetime of intangible assets
Intangible assets recognised are reviewed against the criteria for capitalisation with useful life determined by reference to
the underlying product being developed. Management believes that the assigned values and useful lives, as well as the
underlying assumptions, are reasonable, though different assumptions and assigned lives could have a significant impact
on the reported amounts.
Capitalisation of development costs
During the year £73,667 (2019: £59,198) of development costs were capitalised, bringing the total amount of development
costs capitalised, as intangible assets, as at 30 June 2020, to £420,538 (2019: £346,870), net of amortisation. Management
has reviewed the balances by project, compared the carrying amount to expected future revenues and is satisfied that no
impairment exists and that the costs capitalised will be fully recovered as the products are launched to market. New product
projects are monitored regularly and should the technical or market feasibility of a new product be in question, the project
would be cancelled and capitalised costs to date will be removed from the balance sheet and charged to the statement of
comprehensive income.
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Notes to the Financial Statements (continued)
For the Year Ended 30 June 2020
Significant accounting policies and basis of preparation continued
2
d) Estimates and judgements continued
Share based payments
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking
into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may impact profit or loss and equity. The judgments made and the model used
are further specified in note 13.
e) Application of new and revised International Financial Reporting Standards (IFRSs)
No new standards or interpretations issued by the International Accounting Standards Board ('IASB') or the IFRS
Interpretations Committee ('IFRIC') have led to any material changes in the Company's accounting policies or disclosures
during each reporting period.
New and revised IFRSs in issue but not yet effective
There are a number of new and revised IFRSs that have been issued but are not yet effective that the Company has decided
not to adopt early. The most significant of these are as follows:
Reference Title Summary
IFRS3 Business Combinations Amendments to clarify the definition
of a business
Amendments updating a reference
to the Conceptual Framework
IFRS16 Leases Amendment to provide lessees with an
exemption from assessing whether a
COVID-19-related rent concession is a
lease modification
IFRS17 Insurance contracts Principles for the recognition, measurement,
presentation and disclosure of insurance
contracts
Amendments to address concerns and
implementation challenges that were
identified after IFRS 17 was published
IAS1 Presentation of Amendments regarding the definition of
Financial Statements material
Amendments regarding the classification
of liabilities
Amendment to defer the effective date of the
January 2020 amendments
IAS 8 Accounting Policies, Amendments regarding the definition
Changes in Accounting of material
Estimates and Errors
Application date of
standard (Periods
commencing on or after)
1 January 2020
1 January 2022
1 January 2020
1 January 2023
1 January 2023
1 January 2020
1 January 2023
1 January 2023
1 January 2020
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 33
Significant accounting policies and basis of preparation continued
2
e) Application of new and revised International Financial Reporting Standards (IFRSs) continued
The adoption of these Standards and Interpretations is not expected to have a material impact on the financial
information of the Company in the period of initial application when they come into effect.
f) Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rate
ruling at that date. Foreign exchange differences on translation are recognised in the income statement. Non-monetary
assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated
at fair value are translated at foreign exchange rates ruling at the dates the fair value was determined.
g) Research and development
Research expenditure is written off to the statement of comprehensive income in the year in which it is incurred.
Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial
and financial viability of individual projects. In this situation, the expenditure is deferred and amortised over the period
during which the Company is expected to benefit.
h) 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 Company and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period
in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight-line method to write off their cost over
their estimated useful lives at the following annual rates:
Plant & machinery 50%
Useful lives and depreciation method are reviewed and adjusted if appropriate, at the end of each reporting period.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of
the relevant asset, and is recognised in profit or loss in the year in which the asset is derecognised.
Impairment testing of intangible assets
i)
At the end of each reporting period, the Company reviews the carrying amounts of its intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any).
Intangible assets with indefinite useful lives are tested for impairment at least annually, and whenever there is an
indication that the assets may be impaired.
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Notes to the Financial Statements (continued)
For the Year Ended 30 June 2020
Significant accounting policies and basis of preparation continued
2
j) Tax
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from ‘profit before tax’ as
reported in the income statement because of items of income or expense that are taxable or deductible in other periods
and items that are never taxable or deductible. The Company’s current tax is calculated using rates that have been
enacted during the reporting period.
Deferred tax
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The
amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only if it can be regarded as more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying temporary differences can be deducted.
k) Payroll expense and related contributions
Wages, salaries, payroll tax, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the
period in which the associated services are rendered.
l) Share-based compensation
The Company issues share based payments to certain directors and others providing similar services. The fair value of the
employee and suppliers services received in exchange for the grant of the options is recognised as an expense. The total
amount to be expensed over the vesting year is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets).
Nonmarket vesting conditions are included in assumptions about the number of options that are expected to vest. At
each statement of financial position date, the entity revises its estimates of the number of options that are expected to
vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding
adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
The fair value of share-based payments recognised in the income statement is measured by use of the Black Scholes
model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected
life used in the model is adjusted; based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based
on management’s best estimate of future share price behaviour and is selected based on past experience, future
expectations and benchmarked against peer companies in the industry.
m) Financial assets and liabilities
Financial assets and liabilities are recognised when the Company unconditionally becomes a party to the contractual
terms of the instrument. Unless otherwise indicated, the carrying amounts of financial assets and liabilities are considered
by the directors to be a reasonable estimate of their fair values at each balance sheet date.
Financial assets include trade and other receivable; these are classified as loans and receivables. Financial liabilities
include trade and other payables, convertible loan notes and borrowings; these are classified as other financial liabilities
carried at amortised cost.
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance
with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
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Significant accounting policies and basis of preparation continued
2
m) Financial assets and liabilities continued
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are recognised as the proceeds received, net of direct issue costs.
Compound instruments
The component parts of compound instruments (convertible notes) issued by the Company are classified separately as
financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for
similar non-convertible instruments. The amount is recorded as a liability on an amortised cost basis using the effective
interest method until extinguished upon conversion or at the instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair
value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is
not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the
conversion option is exercised, in which case, the balance recognised in equity will be transferred to share premium.
When the conversion option remains unexercised at the maturity date of the convertible notes, the balance recognised in
equity will be transferred directly to retained earnings. No gain or loss is recognised in profit or loss upon conversion or
expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in
proportion to the allocation of gross proceeds. Transaction costs relating to the equity component are recognised directly
in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability
component and are amortised over the lives of the convertible notes using the effective interest method
Derecognition
Financial assets are derecognised when rights to receive cash flows from the assets expire or, the financial assets are
transferred and the Company has transferred substantially all the risks and rewards of ownership of the financial assets.
On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive
income and accumulated in equity is recognised in profit or loss.
Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or
expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid
and payable is recognised in profit or loss.
When the terms of a financial liability are renegotiated and result in the Company issuing equity instruments to a creditor
of the Company to extinguish all or part of the financial liability, the Company recognises the issue of equity instruments
at their fair values. Any difference between the fair value of the equity instruments and the carrying amount of the
financial liability to be extinguished is recognised in the income statement.
Trade and other receivables
Trade and other receivables are recognised initially at their fair value and subsequently at their amortised cost using the
effective interest method, less provision for impairment. If there is objective evidence that the recoverability of the asset is
at risk, appropriate allowances for any estimated irrecoverably amounts are recognised in the income statement.
Trade and other payables
Trade and other payables are recognised initially at their fair value, net of transaction costs, and subsequently at their
amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand.
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Notes to the Financial Statements (continued)
For the Year Ended 30 June 2020
Significant accounting policies and basis of preparation continued
2
m) Financial assets and liabilities continued
Borrowing and finance charges
Bank borrowings are initially recognised at their fair value, net of any transaction cost directly attributable to their issue.
Subsequently bank borrowings are carried at their amortised carrying value using the effective interest method.
n) Financial risk management
Risk management objectives
Management identify and evaluate financial risks on an on-going basis. The principal risks to which the Company is
exposed are market risk (including interest rate risk, and cash flow risk), credit risk, and liquidity risk.
Market risk
Market risk is defined as the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices. The Company's market risks arise from open positions in (a) interest-bearing assets and
liabilities, and (b) foreign currencies; to the extent that these are exposed to general and specific market movements (see
details below).
Interest rate risk
The Company's interest-bearing assets comprise of only cash and cash equivalents. As the Company's interest-bearing
assets do not generate significant amounts of interest; changes in market interest rates do not have any significant direct
effect on the Company's income.
Currency risk
The Company is exposed to movement in foreign currency exchange rates arising from normal trading transactions that
are denominated in currencies other than the respective functional currencies of the Company. The Company does not
have a policy to hedge its exposure to foreign currency exchange risk as currently overseas transactions are only a small
percentage of total transactions and fluctuations in foreign currencies are not expected to significantly affect the
Company’s total transactions. In future the Company may consider hedging its exposure to foreign currency exchange risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. Credit risk arises from cash balances (including bank deposits, cash and cash equivalents) and credit
exposures to trade receivables. The Company's maximum exposure to credit risk is represented by the carrying value of
cash and cash equivalents and trade receivables. Credit risk is managed by monitoring clients and performing credit
checks before accepting any customers.
Liquidity risk
Liquidity risk is the risk that the Company may encounter difficulty in meeting its obligations associated with financial
liabilities that are settled by delivering cash or other financial assets.
The Company seeks to manage its liquidity risk by ensuring that sufficient liquidity is available to meet its foreseeable needs.
o) Capital management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the
return to stakeholders. The Company's overall strategy remained unchanged during the period.
The capital structure of the Company consists of cash and cash equivalents, issued capital, the share premium account,
the share-based compensation reserve resulting from the grant of equity-settled share options to selected directors and
others providing similar services, and retained earnings.
The Company is not subject to any externally imposed capital requirements.
As part of the Company's management of capital structure, consideration is given to the cost of capital.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 37
3 Operating loss
2020
£
2019
£
An analysis of the Company’s operating loss has been arrived at after charging/(crediting):
Other income
Research and development
Directors remuneration (including share-based compensation)
Auditors remuneration
– audit fees
– other services
Foreign exchange differences
Other operating costs
(52)
635,226
507,467
11,100
1,850
(3)
464,455
(42)
708,081
294,412
9,500
1,750
1,745
345,035
Total operating expenses
1,620,042
1,360,481
The Company has one reportable segment, namely that of identifying and developing formulations that harness the human
microbiome, all within the United Kingdom.
Employees and Directors
4
The average monthly number of employees and senior management was:
Executive directors
Non-executive directors
Employees
Average total persons employed
As at 30 June 2020 the Company had 7 employees (2019 : 8).
Staff costs in respect of these employees were:
Wages and salaries
Social security costs
Defined contribution pensions
Share-based payments (see note 13)
Total remuneration
2020
Number
2019
Number
2
2
3
7
2
3
2
7
2020
£
450,863
52,250
6,140
155,811
665,064
2019
£
190,613
15,022
2,286
77,254
285,175
Some of these staff costs are included within research and development.
All the directors above can be considered to be key management and have the responsibility for planning, directing and
controlling, directly or indirectly, the activities of the Company.
The remuneration of directors and key executives is determined by the remuneration committee having regard to the
performance of individuals and market trends.
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Notes to the Financial Statements (continued)
For the Year Ended 30 June 2020
Employees and Directors (continued)
4
The Company operates a defined contribution pension scheme for employees and directors. The assets of the scheme are
held separately from those of the Company in independently administered funds. The amounts outstanding at 30 June
2020 are £3,559 (2019: £1,359).
Directors remuneration:
Stuart J. Ashman
Doug Quinn
Martin Hunt
Dr Cathy Prescott
Prof Catherine O'Neill (*)
Stephen O'Hara (*)
Total remuneration
2020
£
276,294
130,986
72,537
27,650
–
–
507,467
2019
£
60,154
103,775
55,620
21,000
66,415
21,000
327,964
The highest paid director received total emoluments of £276,294 during the year.
(*) Prof Catherine O'Neill and Stephen O'Hara resigned as directors on 4 July 2019. Prof Catherine O'Neill remains an
employee of the Company.
Taxation
5
Income taxes recognised in profit or loss
Current tax
Current period – UK corporation tax
R&D tax credit
R&D tax credit – prior year
Tax credit for the year
2020
£
–
118,763
1,193
119,956
2019
£
–
210,350
2,038
212,388
The tax charge for each period can be reconciled to the loss per the statement of comprehensive income as follows:
Loss on ordinary activities before tax
Normal applicable rate of tax
Loss on ordinary activities multiplied by normal rate of tax
Effects of:
Disallowables
Capital allowances
R&D enhanced deductions
R&D tax credit
Losses surrendered
Unused tax losses carried forward
UK tax charge/(credit)
(1,620,042)
19.00%
(307,807)
(1,360,481)
19.00%
(258,491)
30,231
–
(87,959)
(119,956)
155,621
209,915
14,846
(1,938)
(155,793)
(212,388)
275,633
125,743
(119,956)
(212,388)
The Company has an unrecognised deferred tax asset of £507,162 at the period end, which has not been recognised in the
financial statements due to uncertainty of future profits. The Company has an estimated tax loss of £2,669,276 available to
be carried forward against future profits.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 39
6
Property, plant and equipment
Cost
At 1 July 2018
Additions
At 30 June 2019
Additions
At 30 June 2020
Accumulated amortisation
At 1 July 2018
Charge for the period
At 30 June 2019
Charge for the period
At 30 June 2020
Net book value
At 1 July 2018
At 30 June 2019
At 30 June 2020
7
Intangible assets
Cost
At 1 July 2018
Additions
At 30 June 2019
Additions
At 30 June 2020
Accumulated amortisation
At 1 July 2018
Charge for the period
At 30 June 2019
Charge for the period
At 30 June 2020
Net book value
At 1 July 2018
At 30 June 2019
At 30 June 2020
Plant &
Machinery
£
–
10,200
10,200
–
10,200
–
3,400
3,400
5,100
8,500
–
6,800
1,700
Intellectual
property
£
287,672
59,198
346,870
73,668
Total
£
–
10,200
10,200
–
10,200
–
3,400
3,400
5,100
8,500
–
6,800
1,700
Total
£
287,672
59,198
346,870
73,668
420,538
420,538
–
–
–
–
–
–
–
–
–
–
287,672
346,870
287,672
346,870
420,538
420,538
Intellectual property is to be amortised over the expected period that the asset generates income.
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40 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2020
8
Investments
Cost
At 1 July 2018
At 30 June 2019
Additions
At 30 June 2020
Subsidiary
undertakings
£
–
–
5
5
Total
£
–
–
5
5
As at 30 June 2020, the Company directly owned the following subsidiaries:
Name of company Country of incorporation Proportion of equity interest
SkinBiotix Limited United Kingdom 100% of ordinary shares
AxisBiotix Limited United Kingdom 100% of ordinary shares
CleanBiotix Limited United Kingdom 100% of ordinary shares
MediBiotix Limited United Kingdom 100% of ordinary shares
PharmaBiotix Limited United Kingdom 100% of ordinary shares
All subsidiary companies were dormant as at 30 June 2020 and consequently consolidated statements have not
been prepared.
9
Trade and other receivables
Corporation tax
VAT recoverable
Other receivables
Prepayments
2020
£
118,763
22,462
150
48,010
189,385
2019
£
210,351
72,359
3,149
167,072
452,931
The fair values of the Company's trade and other receivables are considered to equate to their carrying amounts. The maximum
exposure to credit risk for trade receivables is represented by their carrying amount. There are no financial assets which are
past due but not impaired. No financial assets are impaired.
10 Trade and other payables
Current
Trade creditors
Accruals
Other taxes
Intercompany
Other payables
2020
£
2019
£
138,571
147,019
15,548
5
3,683
304,826
59,279
45,217
15,479
-
1,359
121,334
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 41
10 Trade and other payables continued
Trade and other payables principally consist of amounts outstanding for trade purchases and ongoing costs. They are non-
interest bearing and are normally settled on 30-day terms. The directors consider that the carrying value of trade and other
payables approximates to their fair value. All trade and other payables are denominated in Sterling. The Company has financial
risk management policies in place to ensure that all payables are paid within the credit timeframe and no interest has been
charged by any suppliers as a result of late payment of invoices during the period.
The fair value of trade and other payables approximates their current book values.
11 Financial instruments
Maturity analysis
A summary table with maturity of financial assets and liabilities presented below is used by management to manage liquidity
risks. The amounts disclosed in the following tables are the contractual undiscounted cash flows. Undiscounted cash flows
in respect of balances due within 12 months generally equal their carrying amounts in the statement of financial position,
as the impact of discounting is not material.
The maturity analysis of financial instruments at 30 June 2020 is as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Liabilities
Trade and other payables
Borrowings
On demand
Carrying and less than
3 months
amount
£
£
2,159,054
189,385
2,159,054
189,385
2,348,439
2,348,439
304,826
–
304,826
–
304,826
304,826
3 to 12
months 1 to 2 years
£
£
2 to 5 years
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The maturity analysis of financial instruments at 30 June 2019 is as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Liabilities
Trade and other payables
Borrowings
On demand
Carrying and less than
3 months
amount
£
£
3,124,864
452,931
3,124,864
452,931
3,577,795
3,577,795
121,334
–
121,334
–
121,334
121,334
3 to 12
months 1 to 2 years
£
£
2 to 5 years
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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42 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2020
12 Share capital
Issued and fully paid
As at 30 June 2018
Ordinary shares of 1p each issued at 16p per share
Costs related to shares issued
As at 30 June 2019
As at 30 June 2020
Number
Share capital Share premium
£
£
118,708,494
9,375,000
–
1,187,085
93,750
–
3,577,640
1,406,250
(60,000)
128,083,494
1,280,835
4,923,890
128,083,494
1,280,835
4,923,890
On 21st February 2019 the Company issued 9,375,000 ordinary shares at 16 pence each by way of a placing of ordinary
shares to raise finance.
Share capital is the amount subscribed for shares at nominal value, issued and fully paid.
Share premium is the amount subscribed for share capital in excess of nominal value.
The issued ordinary shares carry one voting right per share and do not carry any rights to fixed income.
13 Share-based payments
Share Options
The Company operates share-based payment arrangements to remunerate directors and others providing similar services
in the form of a share option scheme. The exercise price of the option is normally equal to the market price of an ordinary
share in the Company at the date of grant. 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. The options carry neither rights to dividends nor
voting rights.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
2020
2019
Outstanding at 1 July
Granted during the year
Forfeited/cancelled during the year
Number of
options
14,919,648
1,809,695
–
Weighted
average
exercise Number of
options
price
£
Weighted
average
exercise
price
£
0.11 11,027,565
3,892,083
0.09
–
–
0.09
0.18
–
0.11
Outstanding at 30 June
16,729,343
0.11 14,919,648
On 18 April 2019, 3,892,083 options were granted at an exercise price of £0.18 per share and are exercisable based upon
achieving three performance conditions, with a third of the options being granted for each condition. The performance
conditions are based on the achievement of an 40p share price for more than a 30-day continuous period, the achievement
of an 80p share price for more than a 30-day continuous period, and on the commercial viability of developed products, or
the entering into of joint ventures, partnerships, collaborations or agreements for the sale or licensing of products.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 43
13 Share-based payments continued
On 3 March 2020, 512,334 options were granted at an exercise price of £0.095 per share and are exercisable based upon
achieving either of two market conditions. These market conditions are based on the signing of a joint development
agreement between the Company and Winclove Probiotics B.V. or a qualifying exit with a share price of not less than 18p.
The first condition has been met so the share options are exercisable immediately, although none have yet been exercised.
The fair value of these share options have been estimated at cost as the share options are available immediately. The total
charge recognised for the year ended 30 June 2020 for these share options is the entire fair value of £48,672 (2019: nil).
On 8 April 2020, 1,297,361 options were granted at an exercise price of £0.09 per share and are exercisable based upon
achieving one of three performance conditions. The performance conditions are based on the commercial viability of
developed products, or the entering into of joint ventures, partnerships, collaborations or agreements for the sale or
licensing of products. The total charge recognised for the year ended 30 June 2020 for these share options is the entire fair
value of £1,296 (2019: nil).
The fair values of the share options issued in the year were derived using the Black Scholes model. The total charge
recognised for the year ended 30 June 2020 for share options is £155,811 (2019: £77,254). The following assumptions
were used in the calculations:
Deed pool
Grant date
Exercise price
Share price at grant date
Risk-free rate
Volatility
Expected life
Fair value
Deed pool
Grant date
Exercise price
Share price at grant date
Risk-free rate
Volatility
Expected life
Fair value
1
05/04/17
9p
9p
0.24%
60%
3.5 years
2.58p
4
18/04/19
18p
18p
0.75%
60%
3.5 years
2.85p
2
05/04/17
9p
9p
0.24%
60%
3.5 years
1.85p
5
18/04/19
18p
18p
0.75%
60%
3.5 years
3.99p
3a
05/04/17
9p
9p
0.16%
60%
2.75 years
2.30p
6
18/04/19
18p
18p
0.75%
60%
3.5 years
3.48p
3b
05/04/17
9p
9p
0.16%
60%
2.75 years
2.30p
7
03/03/20
9.5p
9.5p
0.29%
80%
0 years
9.50p
3c
05/04/17
9p
9p
0.16%
60%
2.75 years
2.30p
8
08/04/20
9p
7p
0.12%
80%
2 years
0.87p
The closing share price per share at 30 June 2020 was 17.13p (30 June 2019: 20.00p).
Expected volatility is based on a conservative estimate for an AIM listed entity. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
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44 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2020
14 Reserves
As at 1 July 2018
Issue of share options
Loss for the period
As at 30 June 2019
Issue of share options
Loss for the period
As at 30 June 2020
Other
reserves
£
170,418
77,254
–
247,672
155,811
–
Retained
earnings
£
(1,494,173)
–
(1,148,093)
(2,642,266)
–
(1,500,086)
Total
£
(1,323,755)
77,254
(1,148,093)
(2,394,594)
155,811
(1,500,086)
403,483
(4,142,352)
(3,738,869)
Other reserves arise from the equity element of a convertible loan that was both issued and converted in the year ended
30 June 2016, and share-based payments (see note 13).
Retained earnings represents accumulated profit or losses to date.
15 Loss per share
Basic and diluted loss per share
Loss after tax (£)
Weighted average number of shares
Basic and diluted loss per share (pence)
2020
£
2019
£
(1,500,086)
128,083,494
(1.17)
(1,148,093)
122,047,535
(0.94)
As the Company is reporting a loss from continuing operations for the year then, in accordance with IAS 33, the share
options are not considered dilutive because the exercise of the share options would have an anti-dilutive effect. The basic
and diluted earnings per share as presented on the face of the income statement are therefore identical.
16 Related party transactions
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
2020
£
375,263
4,072
153,890
533,225
2019
£
127,728
1,240
73,412
202,380
Detailed remuneration disclosures are provided in the employees and directors note on pages 34 and 35, and in the
Directors Report.
Transactions with other related parties
During the period ended 30 June 2020, the Company was charged fees of £101,652 (2019: £76,940) by Quinn Corporate
Services Ltd, a company in which Doug Quinn, a director of the Company, is also a director. These fees relate to Doug
Quinn’s consultancy services to the Company. As at 30 June 2020 £8,265 (2019: £26,764) was outstanding.
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 45
16 Related party transactions continued
During the period ended 30 June 2020, the Company was charged fees of £38,342 (2019: £25,277) by Invictus Management
Ltd, a company in which Martin Hunt, a director of the Company, is also a director. These fees relate to Martin Hunt’s
consultancy services to the Company. As at 30 June 2020 £4,800 (2019: £2,703) was outstanding.
During the period ended 30 June 2020, the Company was charged fees of £22,400 (2019: £17,426) by Biolatris Ltd, a
company in which Dr Cathy Prescott, a director of the Company, is also a director. These fees relate to Dr Cathy Prescott’s
consultancy services to the Company. As at 30 June 2020 nil (2019: nil) was outstanding.
17 Ultimate controlling party
No one shareholder has control of the Company.
18 Events after the reporting date
The Company has evaluated all events and transactions that occurred after 30 June 2020 up to the date of signing of the
financial statements.
On 2 November 2020 the Company completed a placing and open offer to new and existing shareholders raising a total
of £4.45m.
No other material subsequent events have occurred that would require adjustment to or disclosure in the financial
statements.
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46 | SkinBioTherapeutics plc Annual Report & Accounts 2020
Notice of Annual General Meeting
SKINBIOTHERAPEUTICS PLC (the “Company”)
(Registered in England and Wales with company number 09632164)
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the above named Company will be held at the offices of
Penningtons Manches Cooper LLP, 125 Wood Street, London, EC2V 7AW on 29 December 2020 at 11:00 AM for the
transaction of the following business:
Ordinary Resolutions
To consider, and if thought fit, to pass the following resolutions 1 to 7 as ordinary resolutions:
1. THAT the Directors’ and Auditors’ reports and the financial statements for the financial year ended 30 June 2020 be
received and adopted.
2. THAT Jeffreys Henry be re-appointed as the auditors of the Company until the next Annual General Meeting and the
Directors be authorised to fix their remuneration.
3. THAT Stuart Ashman, be re-elected as a Director of the Company.
4. THAT Martin Hunt, be re-elected as a Director of the Company.
5. THAT Dr Cathy Prescott, be re-elected as a Director of the Company.
6. THAT Doug Quinn, be re-elected as a Director of the Company.
7. THAT in substitution for all existing authorities the Directors be given power under Section 551 of the Companies Act
2006 (“the Act”) to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe
for, or to convert any security into, shares in the Company (“Rights”):
(i)
(ii)
up to an aggregate nominal amount of £519,633.07 being equivalent to one-third of the Company’s issued share
capital; and,
up to a further aggregate nominal amount of £519,633.07 provided that (a) they are equity securities (within the
meaning of section 560(1) of the Act) and (b) they are offered by way of a rights issue to holders of ordinary shares
in the Company at such record dates as the directors may determine where the equity securities attributable to
the interests of the ordinary shareholders are proportionate (as nearly as may be practicable) to the respective
numbers of ordinary shares held by them on any such record date, subject to such exclusions or other
arrangements as the directors may deem necessary or expedient to deal with fractional entitlements or legal or
practical problems arising under the laws of any overseas territory or the requirements of any regulatory body or
stock exchange or any other matter whatsoever, provided that this authority shall, unless renewed, varied or revoked
by the Company, expire twelve months after the date of passing of this Resolution or, if earlier, the date of the next
AGM of the Company unless any offer or agreement is made before the end of that period in which case the
Directors may allot shares and grant Rights pursuant to such offer or agreement as if the power granted by this
resolution had not expired.
Special Resolutions
8. THAT, subject to the passing of Resolution 7 and in accordance with Sections 570 and 573 of the Act, the Directors be
and are hereby authorised to allot equity securities (as defined in section 560 of the Act) for cash under the authority
conferred by Resolution 7and/or to sell ordinary shares held by the Company as treasury shares as if section 561 of the
Act did not apply to any such allotment or sale, provided that such authority shall be limited to:
(i)
the allotment of equity securities in connection with rights issues, open offers or other pre-emptive offers in favour
of holders of equity securities in proportion (as nearly as may be practicable) to their respective holdings or in
accordance with the rights attaching thereto (but with such exclusions or other arrangements as the Directors may
deem necessary or expedient to deal with fractional entitlements, record dates or other legal or practical problems
in or under the laws of, or any requirements of, any recognised regulatory body or stock exchange, in any territory
or as regards shares held by an approved depositary or in issue in uncertified form or otherwise however); and
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 47
(ii)
the allotment of equity securities or sale of treasury shares (otherwise than pursuant to sub-paragraph (i) above)
to a maximum aggregate nominal value of £77,944.96; such power shall expire at the end of the next Annual
General Meeting of the Company or 30 December 2021 (whichever is the sooner) unless any offer or agreement
is made which would, or might require equity securities to be allotted (and treasury shares sold) before expiry of
this power in which case the Directors may allot securities pursuant to such offer or agreement as if the power
granted by this resolution had not expired.
9. THAT, subject to the passing of Resolution 7, and in addition to the power contained in Resolution 8 above, the Directors
be and are hereby authorised, pursuant to sections 570 and 573 of the Act to allot equity securities (as defined in section
560 of the Act) for cash, either under the authority conferred by Resolution 7 and/or to sell ordinary shares held by the
Company as treasury shares as if section 561(1) of the Act did not apply to any such allotment or sale, provided that
such authority shall be limited to:
(i)
the allotment of equity securities or sale of treasury shares, up to a maximum aggregate of £77,944.96; and
(ii)
used only for the purposes of financing (or refinancing, if the power is to be exercised within six months after the
date of the original transaction) a transaction which the Directors determine to be an acquisition or other capital
investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently
published by the Pre-Emption Group prior to the date of this Notice of Annual General Meeting, such power shall
expire at the end of the next Annual General Meeting of the Company or 30 December 2021 (whichever is the
sooner) unless any offer or agreement is made which would, or might require equity securities to be allotted (and
treasury shares sold) before expiry of this power in which case the Directors may allot securities pursuant to such
offer or agreement as if the power granted by this resolution had not expired.
By Order of the Board
Doug Quinn
Company Secretary
Dated 04 December 2020
Registered Office
15 Silk House
Park Green Macclesfield
England
SK11 7QJ
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Notes to the AGM notice
In light of the COVID-19 pandemic Shareholders are urged to exercise their votes by submitting their Form of Proxy and
appointing the Chairman of the Annual General Meeting as their proxy. Shareholders and their proxies will not be allowed
to attend the meeting in person, as to do so would be inconsistent with current government guidelines relating to COVID-19
(as published as at the date of this document), in particular the advice for people to avoid public gatherings, all non-essential
travel and social contact. Any Shareholder seeking to attend the AGM in person will be refused entry. The Company is
actively following developments and will issue further information through a Regulatory Information Service and/or on its
website if it becomes necessary or appropriate to make any alternative arrangements for the AGM. The AGM will be purely
functional in format to comply with the relevant legal requirements.
Should Shareholders wish to ask any questions which they may have asked at the meeting had they been in attendance,
they are encouraged to contact the Company prior to the meeting by email to investorrelations@skinbiotherapeutics.com.
Where relevant, the answers to questions received will also be made available on the Company’s website
https://www.skinbiotherapeutics.com.
Resolution 1 – To receive the Annual Report and Financial Statements
The Directors are required to present the financial statements, Directors’ Report and Auditor’s Report to the meeting. These
are contained in the Company’s Annual Report for the year ended 30 June 2020 (the “Annual Report”). A resolution to
receive the Annual Report is proposed as an ordinary resolution.
Resolution 2 – Re-appointment and remuneration of Auditor
At each meeting at which the Company’s financial statements are presented to its shareholders, the Company is required
to appoint an auditor to serve until the next such meeting. The Board, on the recommendation of the Audit Committee,
recommends the re-appointment of Jeffreys Henry. The Resolution also authorises the directors to fix the auditor’s
remuneration.
Resolutions 3-6 – Re-election of Directors
The Company’s Articles of Association require that any director that has not been re-elected at either of the preceding three
annual general meetings shall retire and offer themselves for re-election by shareholders. Notwithstanding this requirement,
the Directors have determined that each of them will stand for re-election on an annual basis in accordance with
recommended best practice and in line with the principles of the UK Corporate Governance Code.
Resolution 7 – Authority to allot shares
The authority sought by this resolution is for the Directors to be authorised to allot Ordinary Shares up to two-thirds of the
Company’s current issued share capital at the date of this notice. Paragraph (i) of the resolution will give the Directors a
general authority to allot up to an aggregate nominal value of £519,633.07 being the equivalent of one-third of the
Company’s issued ordinary share capital at the date of this notice. This is in accordance with the Investment Association
Share Capital Management Guidelines. In addition, the guidelines permit the authority to extend to a further third of the
issued share capital, where any such shares allotted using this additional authority are in connection with a rights issue.
Paragraph (ii) of the resolution proposes this additional authority be granted to the Directors.
The Directors are seeking the annual renewal of this authority in accordance with best practice and to ensure the Company
has maximum flexibility in managing its capital resources. The authorities in this Resolution will lapse at the conclusion of
the next AGM or twelve months after the passing of the Resolution if earlier save for conditions set out in the Resolution.
Resolutions 8 and 9 – Authority to disapply pre-emption rights
Resolutions 8 and 9 are special resolutions which, if passed, will enable the Directors to allot shares in the Company, or to
sell any shares out of treasury, for cash, without first offering those shares to existing shareholders in proportion to their
existing shareholdings. In March 2015, the Pre-Emption Group published a revision of its Statement of Principles. In addition
to restating the customary 5% limit on the issuance of shares for cash on a non-pre-emptive basis, the 2015 Statement of
Principles introduced greater flexibility for companies to undertake non pre-emptive issues for cash in connection with
acquisitions and specified capital investments. This relaxation allows companies the opportunity to finance expansion
opportunities as and when they arise. The 2015 Statement of Principles provides that a company may now seek power to
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SkinBioTherapeutics plc Annual Report & Accounts 2020 | 49
issue on a non-pre-emptive basis for cash equity securities representing: (i) no more than 5% of the Company’s issued
ordinary share capital in any one year; and (ii) no more than an additional 5% of the Company’s issued ordinary share capital
provided that such additional power is only used in connection with an acquisition of specified capital investment. In line
with best practice, the Company has structured its pre-emption disapplication request as two separate resolutions.
If Resolution 8 is passed, it will permit Directors to allot ordinary shares on a non-pre-emptive basis and for cash (otherwise
than in connection with a rights issue or similar pre-emptive issue) up to a maximum nominal amount of £77,944.96. This
amount represents 5% of the Company’s issued ordinary share capital as at 03 December 2020 (being the latest practicable
date prior to publication of this document). This resolution will permit the Directors to allot any such shares for cash in any
circumstances (whether or not in connection with an acquisition or specified capital investment).
If Resolution 9 is passed, it will allow the Directors an additional power to allot ordinary shares on a non-pre-emptive basis
and for cash up to a further maximum nominal amount of £77,944.96. This amount represents 5% of the Company’s issued
ordinary share capital as at 03 December 2020 (being the latest practicable date prior to publication of this document).
The Directors shall use any power conferred by Resolution 9 only in connection with an acquisition or specified capital
investment which is announced contemporaneously with the issue, (or which has taken place in the preceding six-month
period and is disclosed in the announcement at the time).
1. As stated above, members will not be entitled to attend the meeting. A member may not appoint a person other than the Chairman of the meeting as his
proxy to attend and vote at the meeting.
2. In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001 and by paragraph 18(c) of The Companies Act (Consequential
Amendments) (Uncertificated Securities) Order 2009, only those members entered on the Company’s register of members not later than 11:00am on 23
December 2020, or if the meeting is adjourned, Shareholders entered on the Company’s register of members not later than 2 days before the time fixed
for the adjourned meeting (excluding non-business days) shall be entitled to vote at the meeting.
3. To be effective, the Form of Proxy must be deposited at the office of the Company’s registrars, Share Registrars Limited, The Courtyard, 17 West Street,
Farnham, GU9 7DR so as to be received not later than 11:00am on 23 December 2020, or if the meeting is adjourned, not later than 48 hours (excluding
non-business days) before the time fixed for the adjourned meeting.
4. CREST members who wish to appoint the Chairman as their proxy by utilising the CREST electronic proxy appointment service may do so for the meeting
and any adjournment(s) thereof by utilising the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members,
and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will
be able to take the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST
message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain
the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it relates to the appointment of a
proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by our
agent Share Registrars Limited (ID 7RA36) no later than 11:00am on 23 December 2020 or, if the meeting is adjourned, 48 hours before the time fixed for
the adjourned meeting (excluding any part of a day that is not a working day). For this purpose, the time of receipt will be taken to be the time (as
determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent, Share Registrars Limited, is able to
retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through
CREST should be communicated to the appointee through other means. The Company may treat as invalid a CREST Proxy Instruction in the circumstances
set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. CREST members and, where applicable, their CREST sponsors or voting
service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure
that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the
CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
260018 SkinBio Therapeutics plc pp27-imp.qxp 03/12/2020 15:36 Page 50
Perivan 260018
Contents
Statutory and Other Information
Chairman’s Statement
Strategic and Financial Review
Directors’ Report
Corporate Governance Report
Independent Auditor’s Report to the
Members of SkinBioTherapeutics plc
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Notice of Annual General Meeting
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3
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27
28
29
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31
46
Notes to the Annual General Meeting Notice
48
Annual Report and Financial Statements
For the Year Ended 30 June 2020
SkinBioTherapeutics plc
Company Registration Number: 09632164
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SkinBio
THERAPEUTICS
15 Silk House, Park Green, Macclesfield, SK11 7QJ
SkinBio
THERAPEUTICS