Annual Report and Financial Statements
For the Year Ended 30 June 2022
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
Consolidated Statement of Comprehensive
Income
1
2
3
10
13
22
28
Consolidated Statement of Financial Position
29
Consolidated Statement of Cash Flows
30
Consolidated Statement of Changes in Equity
31
Company Statement of Financial Position
Company Statement of Cash Flows
Company Statement of Changes in Equity
Notes to the Financial Statements
32
33
34
35
Perivan 264744
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 1
Statutory and Other Information
Directors
Martin Hunt
Stuart J. Ashman
Manprit Singh Randhawa
Dr Cathy Prescott
Danielle Bekker
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Non-Executive Director
Non-Executive Director
Secretary
Manprit Singh Randhawa
Registered office
Auditor
Registrars
Nominated adviser
and broker
Bankers
Public relations
The Core Bath Lane
Newcastle Helix
Newcastle Upon Tyne
NE4 5TF
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
6-8 Tokenhouse Yard
London
EC2R 7AS
Barclays Bank PLC
1 Churchill Place
London
E14 5HP
Instinctif Partners Limited
65 Gresham Street
London
EC2V 7NQ
2 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Chairman’s Statement
Financial year 2022 saw a significant milestone in the Group’s commercial development with the successful launch of
AxisBiotix-Ps™. Following the BRIGHT Study in early 2021, there were very encouraging signs that AxisBiotix-Ps™ could
become a truly remarkable treatment of psoriasis symptoms. As such, we ran a soft sales launch of the product in October
2021 from which we have seen sales growth and very high retention rates from subscribers of the product.
The rate of sales growth has been significantly lower than the Group originally anticipated which was disappointing to all
stakeholders. The Directors believe that growth could have been accelerated faster if distribution had been handed over
to third party distributors, however, the terms discussed with regional providers were deemed by the Directors as not
beneficial to the Group in the longer term.
Post year end, sales have continued to increase albeit still at a slow pace, however, the retention rate of approximately 80%
on a monthly basis supports management’s belief of the long-term potential for the AxisBiotix-Ps™ product. The Board
believes it is in the interests of the Company and a better way to generate long term value to its shareholders to seek to
secure an exclusive deal with a global multinational for AxisBiotix-Ps™, rather than signing multiple distribution deals across
different markets.
The Company’s strategy also involves the evaluation of inorganic opportunities that would provide synergies and accelerated
routes to market. The Group continues to review acquisition opportunities. More information is provided below on the
current acquisition strategy.
Over the year, the Group has also been pushing forward other strategic pillars, including the cosmetic active ingredient
programme with Croda, the oral programme, and the formulation of the acne programme. The Group has generated
positive progress across these three areas post year end and the Directors anticipate further progress in the new
financial year.
The make-up of the Company changed significantly during 2022, with the addition of several new members to the team.
Doug Quinn, who has left the Company with the best wishes of the Board, was replaced by a full-time CFO, Manprit
Randhawa, whose previous experience in growth companies will be invaluable to the Company as we move from R&D to
commercialisation across several pillars over the coming years. In addition, staff numbers have increased from 3 full time
members of staff to 8 during 2022, highlighting the investments into the commercial delivery of AxisBiotix-Ps™, as well as
the build-out of the internal formulation and scientific capabilities the Company has at its disposal.
On behalf of the Board, I would like to take the opportunity to thank everyone at SkinBioTherapeutics for the considerable
progress achieved by the Group over the course of the year.
Martin Hunt
Chairman
22 December 2022
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 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.
The Group has two core areas of technology that form five strategic pillars addressing opportunities in cosmetics, food
supplements, medical devices and longer term, the potential for therapeutics
− SkinBiotix®, the Group’s proprietary technology, is designed to promote skin health by harnessing the beneficial
properties of probiotic bacteria and the active components derived from them. SkinBioTherapeutics’ approach 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. This form also stabilises the desirable properties of the bacteria, making it easier to
handle and store.
− AxisBiotix™ technology is based on the rapidly emerging area of science that is focused on the gut-skin axis and how
the constitution of the gut microbiome 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 into the gut
and effect a direct improvement on human skin. AxisBiotix-Ps™ is the first product developed by the Group that
leverages the gut-skin relationship and is designed to alleviate the symptoms associated with psoriasis.
SkinBioTherapeutics is primarily a B2B business focused on skin health, with the aim to license its technology to industry
partners. However, in response to market pressures caused by COVID-19, the Group repositioned one of its five pillars,
AxisBiotixTM, into a consumer-led business for the sale of a probiotic food supplement development to alleviate the
symptoms associated with psoriasis, called AxisBiotix-Ps™. The product was soft launched in October 2021 via an
ecommerce platform which has provided considerable real-world insight.
Operational review
SkinBiotix® Pillar (skincare/cosmetics)
This is the first pillar for the Group, based on its proprietary discovery platform. In November 2019, SkinBiotix® signed a
deal with Sederma, the specialist cosmetic division of Croda Plc, to develop, manufacture and commercialise the SkinBiotix®
platform. The aim was to develop an active ingredient which would be incorporated in consumer skincare indications.
During the financial year, Sederma has been scaling-up the manufacturing process, identifying additional potential scientific
and marketing claims for the end ingredient, and has started to engage with its 12,000+ strong customer base. Post year
end, the Company continues to engage with Croda Plc on the launch plan of SkinBiotix®. The product development timing
is controlled by Croda, however the Directors believe that the product launch will occur in 2023 and thus the Directors
expect some initial royalties revenues from Croda to commence in 2023.
As part of the agreement with Croda/Sederma, SkinBioTherapeutics is able to develop its own line of cosmetic-related
SkinBiotix® products. The formulation is based on the one from Sederma.
AxisBiotix™ Pillar (gut/skin axis)
The first product to be commercially launched by SkinBioTherapeutics is Axis-Biotix Ps™, a probiotic food supplement
developed to help alleviate the symptoms associated with psoriasis. Following a soft launch on 29 October 2021, an active
marketing initiative began running from February 2022.
Although the primary focus of the Group is to partner its products and technologies with industry players, the global
pandemic forced a change in strategy with this pillar, to sell direct to consumers. The restrictions of COVID-19 resulted in a
consumer participant study rather than a hospital-based study. However, the results of the study were still compelling and
have played a significant part in the ongoing marketing of the product to the psoriatic community.
The soft launch for the UK and US markets took place in October 2021 and was followed by a more concerted marketing
push in February 2022. AxisBiotix-Ps™ is sold in boxes of 28 sachets with sufferers taking one sachet per day. Results from
the consumer study indicated it can take 3-4 weeks for the benefits of AxisBiotix-Ps™ to be achieved and so during the
launch period, customers received an additional box for free. The product can be bought as a single purchase (box of 28
sachets) or subscribed for on a 28-day or 56-day cycle. The website can be found at www.axisbiotix.com.
4 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Strategic and Financial Review (continued)
The marketing push was focused around influencers who were themselves sufferers of psoriasis. The Group commissioned
10 of these influencers to engage with their followers via social media, telling the story from receipt of the box and taking
the supplement to talking about its effects. These posts and the profile of AxisBiotix-Ps™ were amplified further through
online advertising and video testimonials. The ultimate aim is to educate the psoriatic community about the AxisBiotix-Ps™
brand and the potential for probiotic supplements in managing and supporting their condition. The influencer campaign
has now concluded.
Geographically, the main focus was consumers in the UK and US. While it enters discussions with potential parties around
out-licensing, Management continues to look at developing new markets and refining its operations to build a stronger
validation case around the AxisBiotix-PS™ product. The Group is about to launch in Europe, starting with Spain and Italy,
following regulatory approval. European sales can be managed directly via the Group’s ecommerce platform with
distribution from warehouses in the UK (for UK customers) and the Netherlands (for European customers).
Many people who suffer from psoriasis are highly engaged when it comes to talking about the condition and different
treatments; we have seen this in real time about AxisBiotix-Ps™ during the consumer study and post launch. As a result of
this engagement and also with the US and UK Psoriasis patient associations, internal expectations for sales growth were
high. However, even though retention rates have risen to an impressive level (80%+), sales have grown significantly slower
than expected, as disclosed to shareholders in the HY results. Sales at year end were £75k (2021: £Nil).
The sales rate of growth up to and post year end might have accelerated more steeply with a greater marketing spend
and/or by using third party distributors. Firstly, the Group was not set up to be a B2C business with the associated sales
spend; management has always managed resources in a careful manner and was not prepared to redirect resources to the
detriment of the other products and pillars being developed. Also, the Board decided it was not in the best interests of the
Group to pursue third party distribution deals which might jeopardise future potential strategic tie-ups with industry partners.
Acne
The next product in development in the AxisBiotixTM pillar is targeting acne. Early signs of efficacy were seen in the participant
study with benefits reported by people suffering from other conditions, from acne, rosacea and eczema.
During the year, the Group has been developing a new bacterial blend. Management is pleased to report that the pilot
formulation is stable, and it is looking to design a consumer study in the same form as the BRIGHT study for Axis-Biotix-Ps™.
This study is anticipated to commence during 2023 and will be carried out by an independent 3rd party organisation. In the
meantime, the team is assessing the options for the most appropriate commercialisation strategy, on the basis of a positive
outcome.
MediBiotix™ Pillar (medtech applications e.g. woundcare)
The MediBiotixTM Pillar is focusing on applying SkinBiotix® technology in medical device applications, looking at targeting
eczema in the first instance. The aim would be to alleviate eczema symptoms using the gut-skin axis in the same way that
AxisBiotixTM acts to alleviate symptoms in psoriasis. This development route is still being explored by management.
Other areas for application include various classes of skin wounds. Due to the complexity but significant opportunity of the
woundcare area, Management believes a joint development agreement with an industry partner is the best way forward.
Discussions with potential global partners in the medtech sector are ongoing.
CleanBiotix™ Pillar (anti-infection)
With the impact of the pandemic coupled with the increasing incidence of healthcare acquired infections, such as MRSA,
preventing infection is of paramount concern to healthcare practitioners. From early studies of SkinBiotix®, there is data
demonstrating its effectiveness in preventing the most common skin pathogen, Staphylococcus aureus (SA), from sticking
to and growing on skin surfaces. The potential for SkinBiotix® technology in this area is exciting, but is also challenging,
therefore, this would be another area where outlicensing the programme would be the obvious option. Management
continues to have positive discussions with potential industry partners.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 5
Other Research Programmes
During the year, the Group has been running two research programmes with the University of Manchester; an oral
programme and an inflammation study.
The first phase of the oral programme was completed in August 2022. The study was conducted by Professor Andrew
McBain of the University of Manchester, and results strongly supported the use of specific bacterial lysates in the prevention
of periodontal (gum) disease. Application of a mixture of bacteria and lysates to oral cells showed protection against the
pathogen associated with periodontal disease and also a dampening effect on inflammation. Different bacteria/lysates
showed different properties, therefore further work is required to identify the optimal mix to take forward into human studies.
Management is encouraged by the strong foundation this data provides for the Group’s continued research into the benefits
of probiotics on oral health and enables the team to commence early licensing talks.
The second programme is looking at how the microbiome can influence and rebalance the body’s response to inflammation
in skin health and skin disease. This study is progressing as expected and is due to read-out at the end of 2023.
Board and management appointments
In April 2022, the Group appointed its first full time Chief Financial Officer, Manprit Randhawa. Manprit was previously CFO
at the leading educational technology firm, Juniper Education Group, and before then, he was CFO at Smoothwall and also
at Onbone Oy, a medical technology business. He took over from Doug Quinn after an orderly handover during Q2 2022.
The Group also strengthened the Board with the appointment of Danielle Bekker as a non-executive Director. She has
considerable experience in direct-to-consumer marketing, including a focus on the use of influencers and digital media in
the FMCG space, which has been helpful with the campaigns run to promote AxisBiotix-Ps™.
Financial review
In the year to 30 June 2022, the Group reported sales of £75k (2021: £nil). Cost of sales, including the initial introductory
offer and shipping, were £29k (2021: £nil), and gross profits were £45k (2021: £nil). As stated at the interims, as shipping
volumes increase, the operating margin should improve due to economies of scale (bulk shipping) and onward local
distribution.
Overall expenses were £3,027k (2021: £1,497k). This included research and development expenditure of £861k
(2021: £506k), which covered the consumer study for AxisBiotix-PsTM and the oral research programme. In addition, ongoing
operating expenses of £2,122k (2021: £991k) reflected the adaption of the business infrastructure to conduct direct sales
to consumers and ongoing marketing costs.
The operating loss was £2,982k (2021: £1,497k).
The cash balance as at 30 June 2022 was £1,805k (2021: £4,610k) reflecting the increased cost base and initial stocking
prior to the AxisBiotix-PsTM launch.
Current trading and outlook
Post year end, revenues of AxisBiotix-Ps™ have continued to increase gradually from the sales run rate as at 30 June 2022,
as consumers adopt the product. Marketing spend on the AxisBiotix-Ps™ product has been significantly reduced from earlier
in 2022 including the halting of the influencer campaign. Retention rates for subscribers are currently at least 80% with
retention rates being measured as the number of subscribers who are remaining as a subscriber at the end of each month,
compared to the same cohort that were in existence at the start of the previous month.
Acquisition strategy
The Group is in ongoing discussions to acquire a private company that provides a variety of branded topical products for
common dermatological conditions such as psoriasis and eczema to NHS hospitals, dispensing practices and retail
pharmacies. The proposed target is profitable and the Group sees a number of synergies to improve this. However, there
is no certainty of timing or execution as the Company would need to agree additional funding using debt and/or equity
and any acquisition would be conditional on satisfactory diligence.
6 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Strategic and Financial Review (continued)
Key performance indicators
The Board recognises the importance of KPIs and their appropriateness to the stage of development of the business. The
Group 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 Group.
Financial
The cash position of the Group 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 and IPR
strategy. The Group aims to operate a low cost base such that the majority of its funding is deployed on its development
programmes.
Non-financial
The Group 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 Group 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 Group, as well as mitigating actions, are set out below. While the list is not exhaustive, it is derived
from the Group’s detailed risk register. These risks are reviewed by the Audit Committee at least biannually, which reports
its findings to the Board.
The Group’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 Group. The risk register
details specific risks to the Group, 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 are discussed at
board meetings or otherwise as appropriate.
l The risk register is reported to the Audit Committee at least biannually.
Stage of operations
SkinBioTherapeutics is at an early stage of development, however during the year entered into its first phase of revenue
generation through sales of AxisBiotix-PSTM. The extent to which it can generate material revenue in the near term will be
dependent on the market penetration of AxisBiotix-PsTM and the successful completion of the technical and commercial
development of its SkinBiotix® platform. The business will incur losses for the immediate future.
Clinical development risk
The commercialisation of the Group’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 Group.
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.
In addition, the need to manufacture clinical grade materials for medical device products may result in further
unexpected costs.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 7
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 Group 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 Group.
Formulation
The Group has developed formulations for its initial indications and will need to repeat this process for other indications.
There are risks associated with the means and timeline in developing formulations and establishing their long-term stability.
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 Group 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 Group’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.
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 those of the Group.
Regulatory environment
The Group operates in a regulated environment that varies dependent upon the jurisdiction and technology. These
regulations are subject to change at short notice and differ according to any proposed product claims, intended use or
marketing route. While the Group 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 Group being unable to
successfully commercialise its technology or any products that incorporates it and/or result in legal action being taken
against the Group which could have a material adverse effect.
8 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Strategic and Financial Review (continued)
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 Group’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 Group’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 Group.
l The need to foster the Group’s business relationships with suppliers, customers and others
A consideration of the relationship with wider stakeholders and their impact on our long-term strategic objectives is
disclosed in Principle 3 of the Corporate Governance Report on pages 13-21.
l The impact of the Company’s operations on the community and the environment
The Group 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.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 9
Outlook
This year has been a mixed one for the Group. The team has experienced the rush of launching its very first direct to
consumer product, and the flow of very positive feedback from customers, who have found relief for their conditions – for
some, for the first time in decades. The testimonials taken from these patients and the ongoing high retention rates of 80%+
reinforce the high level of confidence that management has in the product and its long-term market potential. Progress
made and positive updates from the other pillars illustrate the additional commercial opportunities within the Group and
supports the many discussions ongoing with potential industry partners.
At the same time, Management made the difficult decision to switch from a complex distribution model to allow the
opportunity of a multinational deal with a single player for the entire AxisBiotixTM column. As a direct result, the much slower
sales generation that this decision created belies the positive reaction encountered by customers and study participants. In
different circumstances, were there more to spend on marketing, a larger sales infrastructure and the use of the intended
third parties, faster take-up would have been achieved. However, in the ongoing talks being held, the Board believes the
strategy being pursued is the right one to provide a clear runway for a potential deal that in the long run will generate
greater value for shareholders.
SkinBioTherapeutics has a small team which has achieved a significant amount in 12 months. The pace of development
continues apace in the post year period and another busy, exciting year is anticipated in 2023.
Stuart J. Ashman
Chief Executive Officer
22 December 2022
10 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Directors’ Report
The Directors present their report and the audited financial statements of the Group for the year ended 30 June 2022.
Principal activity
The principal activity of the Group 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
Doug Quinn (resigned 29 May 2022)
Martin Hunt
Dr Cathy Prescott
Danielle Bekker (appointed 27 April 2022)
Manprit Randhawa (appointed 1 June 2022)
The Directors of the Company held the following beneficial interests in the share and share options of SkinBioTherapeutics
plc at 30 November 2022:
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
439,474
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 2022, the following interests in 3% or more of the issued share capital appear in the register:
Percentage of
issued share capital
OptiBiotix Health Plc 20.7%
Tyndall Investment Management 8.0%
Seneca Partners Limited 6.9%
University of Manchester 5.1%
Prof Catherine O’Neill 3.3%
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 11
Directors’ remuneration
The Directors received the following remuneration during the year
Executive Salaries
Share-based Pension Total
Fees payments contributions remuneration
Stuart Ashman £318,903
– £42,603 £6,943 £368,449
Doug Quinn* £12,068
£125,609 – £2,737 £140,414
Manprit Randhawa** £14,821
– – £130 £14,951
Non-executive
Martin Hunt £12,600
£50,400 – – £63,000
Dr Cathy Prescott £6,300
£25,200 – – £31,500
Danielle Bekker £6,250
– – – £6,250
£370,942
£201,209 £42,603 £9,810 £624,564
*Doug Quinn retired from the Board on 29 May 2022
**Manprit Randhawa joined the Board on 1 June 2022
Financial instruments
The Group’s exposure to financial risk and how the Group mitigates such risk is set out in note 2r) of the financial statements.
Research and development
The Strategic and Financial Review on pages 3-9 gives information of the Group’s research and development activities and
its future developments.
Events after the reporting date
No material subsequent events have occurred that would require adjustment to or disclosure in the financial statements.
Refer to note 23 to the financial statements for further details.
Going concern
The financial statements have been prepared on the assumption that the Group is a going concern. When assessing the
foreseeable future, the Directors have 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 Group should be able to meet its financial
obligations.
The cash flow forecast includes £2.5 million of additional finance raised through a placing, with up to a further £1 million
raised in an open offer. Due to the fund raise being subject to shareholder approval, the Directors highlight that this
uncertainty which indicates the existence of a material uncertainty may cast significant doubt about the Group’s ability to
continue as a going concern.
Refer to note 2d) of the financial statements for further details.
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 United Kingdom.
12 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Directors’ Report (continued)
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 Group 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 the Group and Parent Company financial statements have been prepared in accordance with applicable
IFRSs as adopted by the United Kingdom subject to any material departures disclosed and explained in the financial
statements; and
l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and 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 Group’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 Group’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 indicated that it will not seek re-appointment as the Company’s Auditor at the Annual General Meeting
as, following a business reorganisation, the firm will provide audit services to clients from another company in the Group,
Gravita Audit Limited. A resolution to appoint Gravita Audit Limited as the Company’s Auditor will be proposed at the Annual
General Meeting.
This report was approved by the Board of Directors on 22 December 2022 and signed on its behalf by
Stuart J. Ashman
Chief Executive Officer
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 13
Corporate Governance Report
As Chairman of SkinBioTherapeutics I have overall responsibility for corporate governance and in promoting high standards
throughout the Group. 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 Group’s proprietary
technologies are targeted at a number of health indications and the
Company is progressing applications of both its SkinBiotix® and
AxisBiotix™ technologies as a route to initial value creation. The
Group’s programme of research and development is intended to
build long-term shareholder value through a reliance on proven,
rigorous science and the Group utilises its public listing as a means
to source capital to support its R&D programme.
The Group has an ongoing research agreement with the University of
Manchester to identify and develop technologies. The Group has also
leased laboratory space at the Biosphere in Newcastle upon Tyne to
develop its own in-house scientific capability. In doing so the Group
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 Group will seek
to licence technologies to large corporates once proof of principle in
humans has been established and intends to generate licence
revenue through this route. Where it considers it appropriate, the
Group will also look to develop and market products. This is the case
with AxisBiotix-PsTM where the Directors believe the market
opportunities in the UK, US and Europe are best developed by selling
to consumers directly.
Further information on the Group’s strategy and business is set out in
the annual accounts.
14 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Corporate Governance Report (continued)
Principle
Application
Seek to understand and meet shareholder
needs and expectations
Take into account wider stakeholder and social
responsibilities and their implications for long-
term success
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 2022
OptiBiotix Health Plc 20.7%
Tyndall Investment Management 8.0%
Seneca Partners Limited 6.9%
University of Manchester 5.1%
Prof Catherine O’Neill 3.3%
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 Group’s business and corporate
information. Following the announcement of the Group’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 Group.
As a small company engaged in the early stages of technology
development the Group has a limited but important number of
stakeholders. Robust science is at the core of the Group’s strategy and
the Group has a number of key stakeholders, including its employees,
involved in the different stages from research, through manufacture,
formulation and testing. The Group assesses each of the companies
it works with to ensure the requisite standards and values are in place.
Ultimately the Group’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 Group.
Throughout the various stages from initial technology identification
to eventual product sales the Group 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 Group.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 15
Principle
Application
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 Group’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 Group, 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.
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 Group’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 Group 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
l approving senior and board appointments
Martin Hunt, Dr Cathy Prescott and Danielle Bekker, all 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 21 details the attendance record of each director
at board and committee meetings during the course of the year.
16 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Corporate Governance Report (continued)
Principle
Application
Ensure that between them the Directors have
the necessary up-to-date experience, skills and
capabilities
As at 1 November 2022 the board comprised an independent
non-executive chairman, two executive directors and two independent
non-executive directors. Two directors are 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 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.
Stuart is an experienced commercial chief executive with 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.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 17
Principle
Application
Manprit Randhawa, CFO
Appointed as Company Secretary, director and CFO in June 2022;
Member of the Audit Committee and Chair of the Insider Committees.
Manprit has been involved in early-stage companies as CFO for over
10 years. Manprit joined SkinBioTherapeutics plc from PE-backed
SaaS business Juniper Education where he was CFO and instrumental
in executing a successful buy-and-build strategy as well as
refinancing.
Prior to this Manprit was CFO of Finnish med-tech growth stage
business Onbone Oy, helping to scale and lead significant
international growth of the business. Manprit was Group Financial
Controller of AIM-listed technology business Kromek Group plc,
where he played a key role in its successful IPO in 2013.
Manprit is a qualified chartered accountant (ICAEW) and began his
career in audit in London with Deloitte before moving to UNW in
Newcastle upon Tyne.
Manprit is a full-time employee of the Company.
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.
Time commitment of two days per month.
Danielle Bekker, Independent Non-Executive Director
Appointed as a director in April 2022.
Danielle Bekker is a Senior Executive with international experience in
FMCG Innovation and Supply Chain. She held Global Innovation
Director roles in two FTSE 10 organisations. She brings strong direct
to consumer, supply chain management and governance skills having
worked with big corporates and having launched her own business
in the drinks industry. She advises medium-sized businesses on their
innovation and commercialisation strategy.
18 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Corporate Governance Report (continued)
Principle
Application
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.
On the formation of the Board, the Directors considered the
composition of the Audit Committee. Manprit Randhawa is an
executive director and CFO but a member of the Committee due to
his experience in this area. All independent directors have direct
access to the auditors with the exclusion of Manprit 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.
included
The Board designed and implemented an internal board evaluation
exercise in 2020. The exercise was led by the Chairman and topics
covered
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 repeated the process in 2021 and 2022, the Board considers
an internal evaluation appropriate and intends 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 Group 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.
Evaluate board performance based on clear and
relevant objectives,
continuous
improvement
seeking
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 19
Principle
Application
Promote a corporate culture that is based on
ethical values and behaviours
Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
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 Group 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 Group expands its human capability it will look
to formalise its culture through an agreed set of values and standards.
The Group’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.
Alongside setting the vision and strategy for the Group 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.
20 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Corporate Governance Report (continued)
Principle
Application
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 Group’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 Group 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
l approving senior and board appointments
The Chairman has overall responsibility for corporate governance
and in promoting high standards throughout the Group. 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
Group,
leads the development of objectives, strategies and
performance standards as agreed by the Board, ensures that the
assets of the Group 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
Group is operating within the governance and risk framework
approved by the Board.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 21
Principle
Application
Communicate how the Company is governed
and is performing by maintaining a dialogue
with
relevant
stakeholders
shareholders
and other
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 Group’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.
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 Manprit Randhawa and “(formerly 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 comprises Martin Hunt (Chair) and
Dr Cathy Prescott. 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.
The Insiders Committee, comprised of Manprit Randhawa (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
attend attend attend attend
Stuart Ashman 10 10 – – – – – –
Martin Hunt 10 10 3 3 3 3 2 2
Dr Cathy Prescott 10 10 3 3 3 3 – –
Doug Quinn 10 10 3 3 – – 2 2
Danielle Bekker 3 3 – – – – – –
Manprit Randhawa 1 1 – – – – – –
22 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Independent Auditor’s Report to the Members of
SkinBioTherapeutics Plc
Opinion
We have audited the financial statements of SkinBioTherapeutics Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 30 June 2022 which comprise the consolidated statement of comprehensive income, the consolidated
statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity,
the company statement of financial position, the company statement of cash flows and the company 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
UK adopted international accounting standards (IFRSs).
In our opinion:
l the financial statements give a true and fair view of the state of the Group’s and Parent Company’s affairs as at 30 June
2022 and of the Group’s loss for the year then ended;
l the financial statements have been properly prepared in accordance with UK adopted international accounting standards
(IFRSs);
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.
Material uncertainty related to going concern
We draw your attention to the primary statements within these financial statements, which indicates that the group incurred
a loss of £2.8m and had net cash outflows from operating activities of £2.7m for the year ended 30 June 2022.
We further draw your attention to page 11 of the financial statements which indicates that the Group's ability to continue
as a going concern is reliant on raising £2.5 million additional finance. As stated in page 11, these conditions, along with
other matters set out in note 2 indicate a material uncertainty exists that may cast significant doubt on the Group and the
parent company’s ability to continue as a going concern. If the fundraise does not occur for any reason, then that may cast
significant doubt on the Group and Company's ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
We identified going concern as a key audit matter based on our assessment of the significance of the risk and effect on our
audit strategy.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and
the Parent Company's ability to continue to adopt the following going concern basis of accounting and our audit procedures
in response to this key audit matter included the following:
l we assessed the Director's base case cash flow forecasts against our understanding of the business, including
considering potential risks and uncertainties associated with the current and future trading at the Group’s cash
generating unit in the UK;
l assessment of the reliability of forecasts to date by agreeing historical actuals to budgets, and challenging the current
forecasts;
l tested the clerical accuracy of management’s forecast;
l challenged management’s forecast assumptions, and inputs including reviewing the forecast revenue and corroborated
the assumptions over the conversion of new contracts and the levels of costs that are forecast;
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 23
l we reviewed the latest management accounts to gauge the financial position;
l we performed sensitivity analysis on the cash flow forecasts prepared by the directors;we compared recent expenses in
the management accounts to the Directors' forecast to assess the reasonableness of the expected cash burn;
l considered the Group’s historic ability to raise funds;
l we assessed the conditions of the fundraise, which was subject to shareholder approval; and
l considered the appropriateness of the Company’s disclosures in relation to going concern in the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
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.
The going concern assumption key audit matter and our response has been disclosed in the 'Material uncertainty relating
to going concern' section of our report and is not repeated here.
Key audit matter
Carrying value of inventories
The Group have inventories as at the year end, with a total
carrying value of £122,571 (2021: £nil) after provisions made
in the year.
Inventory is held at the lower of cost and net realisable value.
There is a risk that inventory held remains unsold and the
carrying value is not considered appropriate.
How our audit addressed the key audit matter
We have performed the following audit procedures:
l attended an inventory check at the year end to assess the
existence of the inventory;
l assessed management’s
impairment
resulting provision against inventory; and
review and
l a sample of inventory items have been vouched to post
year end sales to ensure they were being held at the
lower of cost and net realisable value.
Investment in subsidiaries and carrying value of inter-
company receivables – parent company financial
statements only
We have performed the following audit procedures:
l reviewed management’s assessment of future operating
cashflows and indicators of impairment;
We identified a risk that the investments and inter-company
receivables of the parent company (Skinbiotherapeutics Plc)
in its subsidiary (AxisBiotix Limited) may be impaired.
l compared the carrying value of the investment at the
year end to the net assets and expected future profits of
the subsidiary;
At the end of each reporting period, the directors are
required to assess whether there is any indication that the
investment
in subsidiary undertakings and amounts
receivable from subsidiary undertakings as shown in the
parent company may be impaired.
Management’s assessment of the recoverable amount of
investments/inter-company receivables in/with subsidiaries
requires estimation and judgement around assumptions
used, including the cash flows to be generated from
continuing operations. Changes to assumptions could lead
to material changes in the estimated recoverable amount,
impacting the value of investment in the subsidiaries/
amounts receivable from subsidiaries and impairment
charges.
l assessed the methodology used by management to
estimate the future profitability of its subsidiary and
recoverable value of the investment, in conjunction with
any intra-group balances, to ensure that the method used
is appropriate;
l assessed the reasonableness of the key assumptions
used in management’s estimates of recoverable value, in
line with the economic and industry statistics relevant to
the business;
l challenged cash inflows from revenue generating activities
and the key assumptions applied in arriving at these;
l assessed the reasonability of cash outflows; and
l considered the appropriateness of the Parent Company’s
disclosures in relation to any impairment in the Company
only financial statements.
24 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Independent Auditor’s Report to the Members of
SkinBioTherapeutics Plc (continued)
Key audit matter
Intangible assets
The Group had capitalised intellectual property costs
amounting to £625,504 (2021: £528,941). During the year,
the Group and Company capitalised a further £96,813
(2021: £108,403) 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; and
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
£62,000 (2021: £87,000)
£61,000 (2021: £86,000)
Group Financial Statements
Company Financial Statements
How we determined it
Based on 2% of gross assets (2021: 1.5%
gross assets)
Based on 1.5% of gross assets
Rationale for
benchmark applied
We believe that gross assets is the primary
measure used by the shareholders in
assessing the performance of the Company
as revenue is yet to be generated.
We believe that gross assets is the primary
measure used by the shareholders in
assessing the performance of the Company
as revenue is yet to be generated. The
Company materiality is capped to ensure it is
below Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit for the Group
£3,650 (2021: £4,350) and for the Company above £3,100 (2021: £4,300) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 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 structure of the Group and the Company, the accounting processes and
controls, and the industry in which they operate.
The Group financial statements are a consolidation of 2 reporting units, comprising the Group’s operating businesses and
holding companies.
We performed audits of the complete financial information of SkinbioTherapeutics Plc and AxisBiotix Limited reporting
units, which were individually financially significant and accounted for 100% of the Group’s absolute loss before tax (i.e. the
sum of the numerical values without regard to whether they were profits or losses for the relevant reporting units) and 100%
of the Group’s assets and liabilities. We also performed specified audit procedures over certain account balances and
transaction classes that we regarded as material to the Group at the 2 reporting units.
We have audited all components within the Group, and no unaudited components remain.
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 Strategic report nor 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
26 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Independent Auditor’s Report to the Members of
SkinBioTherapeutics Plc (continued)
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.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit, in respect to fraud are; to identify and assess the risks of material misstatement of the financial
statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatements due to fraud, through designing and implementing appropriate responses; and to respond appropriately
to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection
of fraud rests with both those charged with governance of the entity and management.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud
and non-compliance with laws and regulations, was as follows:
l the senior statutory auditor ensured the engagement team collectively had the appropriate competence, capabilities
and skills to identify or recognise non-compliance with applicable laws and regulations;
l we identified the laws and regulations applicable to the company through discussions with directors and other
management, and from our knowledge and experience of the entity's activities;
l we focused on specific laws and regulations which we considered may have a direct material effect on the financial
statements or the operations of the company, including Companies Act 2006, taxation legislation, data protection,
employment and health and safety legislation;
l we assessed the extent of compliance with the laws and regulations identified above through making enquiries of
management and reviewing legal expenditure; and
l identified laws and regulations were communicated within the audit team regularly and the team remained alert to
instances of non-compliance throughout the audit.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 27
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
l making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of
actual, suspected and alleged fraud; and
l considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
l performed analytical procedures to identify any unusual or unexpected relationships;
l tested journal entries to identify unusual transactions;
l assessed whether judgements and assumptions made in determining the accounting estimates were indicative of
potential bias; and
l investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which
included, but were not limited to:
l agreeing financial statement disclosures to underlying supporting documentation;
l reading the minutes of meetings of those charged with governance; and
l enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are
from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit
the audit procedures required to identify noncompliance with laws and regulations to enquiry of the directors and other
management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
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.
Sudhir Rawal (Senior Statutory Auditor)
For and on behalf of
Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
22 December 2022
28 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2022
Continuing operations
Revenue
Cost of sales
Gross profit
Selling and distribution costs
Research and development
Operating expenses
Total administrative expenses
Loss from operations
Finance costs
Loss before taxation
Taxation
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Basic and diluted loss per share (pence)
The notes on pages 35 to 55 form part of these financial statements.
Notes
2022
£
2021
£
3
4
5
7
8
74,761
(29,424)
45,337
(43,804)
(861,383)
(2,122,238)
–
–
–
–
(505,627)
(991,481)
(3,027,425)
(1,497,108)
(2,982,088)
(10,135)
(2,992,223)
199,622
(2,792,601)
–
(1,497,108)
(926)
(1,498,034)
65,065
(1,432,969)
–
(2,792,601)
(1,432,969)
(1.78)
(0.98)
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 29
Consolidated Statement of Financial Position
As at 30 June 2022
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Total non-current assets
Current assets
Inventories
Trade and 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
Non-current liabilities
Lease liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Lease liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2022
£
2021
£
10
11
12
14
15
15
19
19
–
126,903
625,504
752,407
–
143,328
528,941
672,269
122,571
138,150
266,916
1,804,923
–
268,946
183,828
4,609,889
2,332,560
5,062,663
3,084,967
5,734,932
1,567,802
8,758,037
437,316
(8,287,794)
1,567,802
8,758,037
384,612
(5,495,193)
2,475,361
5,215,258
17
100,647
114,780
100,647
114,780
16
17
481,742
27,217
508,959
609,606
379,820
25,074
404,894
519,674
3,084,967
5,734,932
These financial statements were approved and authorised for issue by the Board of Directors on 22 December 2022 and
were signed on its behalf by:
Manprit Singh Randhawa
Director
Company Registration No. 09632164
The notes on pages 35 to 55 form part of these financial statements.
30 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022
Cash flows from operating activities
Loss before tax for the period
Net interest
Depreciation of property, plant and equipment
Right-of-use assets depreciation and interest
Amortisation of IP
Share based payments charge
Changes in working capital
lncrease in inventories
(lncrease)/decrease in trade and other receivables
Increase in trade and other payables
Cash used in operations
Taxation received
Net cash used in operating activities
Investing activities
Purchase of IP
Purchase of right-of-use assets
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issue of shares
Lease payments made
Net cash generated by/(used in) financing activities
2022
£
2021
£
(2,992,223)
(1,498,034)
–
39,557
250
52,704
1,700
3,355
–
61,257
(2,899,712)
(1,431,722)
(122,571)
130,796
101,922
–
(198,324)
74,999
110,147
(123,325)
116,534
–
(2,673,031)
(1,555,047)
(96,813)
–
(108,403)
(3,902)
(96,813)
(112,305)
–
(35,122)
4,121,114
(2,927)
(35,122)
4,118,187
Net (decrease)/increase in cash and cash equivalents
(2,804,966)
2,450,835
Cash and cash equivalents at the beginning of the period
4,609,889
2,159,054
Cash and cash equivalents at the end of the period
1,804,923
4,609,889
The notes on pages 35 to 55 form part of these financial statements.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 31
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2022
As at 1 July 2020
Loss for the period
Issue of shares
Costs of share issue
Exercise of share warrants
Share-based payments
As at 30 June 2021
Loss for the period
Intercompany loan
Share-based payments
As at 30 June 2022
Share
capital
£
Share
premium
£
1,280,835
–
286,967
–
–
–
1,567,802
–
–
–
4,923,890
–
4,242,189
(408,042)
–
–
8,758,037
–
–
–
Other
reserves
£
403,483
–
–
–
(80,128)
61,257
384,612
–
–
52,704
Retained
earnings
£
(4,142,352)
(1,432,969)
–
–
80,128
–
(5,495,193)
(2,792,601)
–
–
Total
£
2,465,856
(1,432,969)
4,529,156
(408,042)
–
61,257
5,215,258
(2,792,601)
–
52,704
1,567,802
8,758,037
437,316 (8,287,794) 2,475,361
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 35 to 55 form part of these financial statements.
32 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Company Statement of Financial Position
As at 30 June 2022
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments
Other receivables
Total non-current assets
Current assets
Trade and 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
Non-current liabilities
Lease liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Lease liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2022
£
2021
£
10
11
12
13
15
15
15
19
19
17
16
17
–
126,903
624,255
423,072
1,142,891
–
143,328
528,941
113,733
623,688
2,317,121
1,409,690
91,427
230,391
1,561,402
59,888
183,828
4,264,690
1,883,220
4,508,406
4,200,341
5,918,096
1,567,802
8,758,037
437,316
(7,151,781)
1,567,802
8,758,037
384,612
(5,284,889)
3,611,374
5,425,562
100,647
100,647
461,103
27,217
488,320
588,967
114,780
114,780
352,680
25,074
377,754
492,534
4,200,341
5,918,096
No Statement of Comprehensive Income is presented in these financial statements for the Parent Company as provided by
Section 408 of the Companies Act 2006. The loss for the financial year dealt with in the financial statements of the Parent
Company was £1,866,892 (2021: £1,222,665)
These financial statements were approved and authorised for issue by the Board of Directors on 22 December 2022 and
were signed on its behalf by:
Manprit Singh Randhawa
Director
Company Registration No. 09632164
The notes on pages 35 to 55 form part of these financial statements.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 33
Company Statement of Cash Flows
For the Year Ended 30 June 2022
Cash flows from operating activities
Loss before tax for the period
Depreciation of property, plant and equipment
Right-of-use assets depreciation and interest
Impairment of financial assets
Share based payments charge
Changes in working capital
(lncrease)/decrease in trade and other receivables
Increase in trade and other payables
Cash generated by operations
Taxation received
Net cash used in operating activities
Investing activities
Purchase of IP
Investment in subsidiaries
Purchase of Right-of-Use Assets
Net cash used in investing activities
Financing activities
Net proceeds from issue of shares
Lease payments made
Net cash generated by/(used in) financing activities
2022
£
2021
£
(2,029,989)
–
39,557
28,407
52,704
(1,287,730)
1,700
3,355
34,124
61,257
(1,909,321)
(1,187,294)
(31,539)
108,423
76,884
116,534
10,734
47,859
58,593
–
(1,715,903)
(1,128,701)
(95,314)
(856,949)
–
(108,403)
(771,545)
(3,902)
(952,263)
(883,850)
–
(35,122)
4,121,114
(2,927)
(35,122)
4,118,187
Net (decrease)/increase in cash and cash equivalents
(2,703,288)
2,105,636
Cash and cash equivalents at the beginning of the period
4,264,690
2,159,054
Cash and cash equivalents at the end of the period
1,561,402
4,264,690
The notes on pages 35 to 55 form part of these financial statements.
34 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Company Statement of Changes in Equity
For the Year Ended 30 June 2022
As at 1 July 2020
Loss for the period
Issue of shares
Costs of share issue
Exercise of share warrants
Share-based payments
As at 30 June 2021
Loss for the period
Share-based payments
As at 30 June 2022
Share
capital
£
Share
premium
£
1,280,835
–
286,967
–
–
–
1,567,802
–
–
4,923,890
–
4,242,189
(408,042)
–
–
8,758,037
–
–
Other
reserves
£
403,483
–
–
–
(80,128)
61,257
384,612
–
52,704
Retained
earnings
£
Total
£
(4,142,352)
(1,222,665)
–
–
80,128
–
2,465,856
(1,222,665)
4,529,156
(408,042)
–
61,257
(5,284,889)
(1,866,892)
–
5,425,562
(1,866,892)
52,704
1,567,802
8,758,037
437,316 (7,151,781) 3,611,374
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 35 to 55 form part of these financial statements.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 35
Notes to the Financial Statements
For the Year Ended 30 June 2022
1 General information
SkinBioTherapeutics plc (‘the Company’) 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 Group 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 consolidated and company financial statements of SkinBioTherapeutics plc have been prepared in accordance with
UK adopted International Accounting Standards (IFRSs) and the Companies Act 2006 applicable to companies reporting
under IFRS.
These are the first financial statements prepared under UK adopted International Accounting Standards. On
31 December 2020, IFRS adopted by the European Union, at that date, was brought into UK law and became UK adopted
International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board.
SkinBioTherapeutics plc transitioned to UK adopted International Accounting Standards in its financial statements on
1 July 2021. This change constitutes a change in the accounting framework. However, there is no change in recognition,
measurement or disclosure in the financial year reported as a result of the change in framework.
b) Basis of preparation
The consolidated and company 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 consolidated and company financial statements are presented in Sterling (£) as this is the predominant functional
currency of the Group and Company, and is the currency of the primary economic environment in which it operates. Foreign
transactions are accounted in accordance with the policies set out below.
c) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 30 June each year. Control is achieved where the Company has the power to govern
the financial and operating policies of an investee entity so as to obtain benefits from its activities.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
d) 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 Group’s projections for the twelve months from the date of approval of this
financial information, including cash flow forecasts. Based on the Group’s latest trading expectations and associated cash
flow forecasts, the directors have considered the cash requirements of the Group. The directors are confident that based
on the Group’s forecasts and the recently announced capital raise of approximately £2.5 million (before costs) the Group
will have enough funds to continue in operation for at least 12 months from the date of signing these financial statements.
Furthermore, the directors note that the Group has legally binding orders from each of the investors totalling the £2.5 million
which is already confirmed as part of the fundraise. These funds will be settled and new shares will be admitted early January
2023, subject to shareholder approval.
Given the capital raise and combined with the continued progress of the underlying positive development of the general
business activities, the board believes the Group will have sufficient cash flows for operations for the coming 12 month
period and therefore adopt the going concern basis of accounting in preparing these financial statements.
Due to the fund raise being subject to shareholder approval, the Directors highlight that this uncertainty which indicates
the existence of a material uncertainty may cast significant doubt about the Group’s ability to continue as a going concern
and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial
statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
36 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
Significant accounting policies and basis of preparation (continued)
2
e) 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.
The following are the critical judgements that the Directors have made in the process of applying the Group’s accounting
policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.
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 £96,813 (2021: £108,403) of development costs were capitalised, bringing the total amount of development
costs capitalised, as intangible assets, as at 30 June 2022, to £625,504 (2021: £528,941), 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.
Inventory valuation
Inventory is carried at the lower of cost and net realisable value, using the first in first out method. Appropriate provisions
for estimated irrecoverable amounts due to slow-moving or obsolete inventory are recognised in the income statement
where there is objective evidence that the assets are impaired.
The provision is £265,966 at 30 June 2022 (2021: £nil).
Refund accruals
Accruals for sales returns are estimated on the basis of historical returns and are recorded so as to allocate them to the
same period in which the original revenue is recorded. These accruals are reviewed regularly and updated to reflect the
Board’s latest best estimates. The Board does not believe that the difference between the accrual estimate and actual returns
will be material.
The accrual for net refunds totalled £267 at 30 June 2022 (2021: £nil). The expected returns rate would need to differ to
actual returns by 10% to have an impact of+/- £1,379 on reported revenue and on operating profit. The choice of a
10% change for the determination of sensitivity represents an extreme variation in the return rate.
Share based payments
The Group 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 20.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 37
Estimate of incremental borrowing rate in accounting for leases under IFRS16
In recognising a lease liability and right-of-use asset under IFRS 16 the Group has used an estimated incremental borrowing
rate of 8%. The Group does not have any borrowings, so in order to apply IFRS 16 it was necessary to estimate the
incremental borrowing rate that would be faced by the Group. The rate of 8% was determined by looking at a range of
loans available on the market. If the interest rate used in the calculation were higher, this would have the effect of reducing
the size of both the lease liability and right-of-use asset, reducing the depreciation charge and increasing the interest charge
in the consolidated income statement. The overall change to the Company Income Statement and the Company Statement
of Financial Position would be immaterial. There would be no change to operating cash flows or lease payments as a result
of a change in the estimate of the incremental interest rate.
f) Application of new and revised International Financial Reporting Standards (IFRSs))
The Group has adopted all of the new or amended Accounting Standards and interpretations issued by the International
Accounting Standards Board (‘IASB’) or the IFRS Interpretations Committee (‘IFRIC’) that are mandatory and relevant to The
Group’s activities for the current reporting period.
f) Application of new and revised International Financial Reporting Standards (IFRSs) (continued)
No new standards or interpretations issued by the IASB or the IFRIC have led to any material changes in the Group’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 Group has decided
not to adopt early. The most significant of these are as follows:
Reference Title Summary
IFRS1 First Time Adoption of Amendments regarding first time adoption
International Financial of International Financial Reporting Standards
Reporting Standards
IFRS3 Business Combinations Amendments updating a reference to the
Conceptual Framework
IFRS9 Financial Instruments Amendments with annual improvements to
IFRS Standards 2018-2020 (fees in the 10 per cent
test for derecognition of financial liabilities)
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 Financial Amendments regarding the classification of
Statements liabilities as current or non-current
IAS8 Accounting Policies, Amendments regarding the definition of
Changes in Accounting accounting estimates
Estimates and Errors
Application date of
standard (Periods
commencing on or after)
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
1 January 2023
IAS16 Property, Plant and Amendments regarding the treatment of
Equipment proceeds before intended use
1 January 2022
38 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
2
Significant accounting policies and basis of preparation (continued)
Reference Title Summary
IAS37 Provisions, Contingent Amendments regarding the recognition of
Liabilities and Contingent cost of fulfilling a contract
Assets
Annual improvements Improvements to IFRS1, IFRS9, IAS41 and
2018 – 2020 Cycle IFRS16
Amendments to IAS 1 and Amendments regarding disclosure of material
IFRS Practice Statement 2 accounting policies
Application date of
standard (Periods
commencing on or after)
1 January 2022
1 January 2022
(except for IFRS16
which has no date)
1 January 2023
The adoption of these Standards and Interpretations is not expected to have a material impact on the financial information
of the Group in the period of initial application when they come into effect.
g) 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.
h) Revenue recognition
Revenue consists exclusively of internet sales, in addition to postage receipts, with the Group acting as the Principal in all
arrangements. Revenues are recorded net of an appropriate deduction for actual and expected returns, sales discounts
and sales taxes.
Revenues for goods are recognised on dispatch to the customer instead of delivery to the customer for practical reasons.
The impact of this is assessed and is immaterial to Group revenue and profits. The amount of revenue arising from the sale
of goods has been disclosed in note 3 to the financial statements.
i) 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 Group is expected to benefit.
Inventories
j)
Inventory is carried at the lower of cost and net realisable value. Cost is determined using the first in, first out method and
represents the purchase cost, including transport, handling costs and duties.
Appropriate provisions for estimated irrecoverable amounts due to slow-moving or obsolete inventory are recognised in
the income statement where there is objective evidence that the assets are impaired.
k) Property, plant and equipment
Property, plant and equipment are stated at historical cost less subsequent accumulated depreciation and accumulated
impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they
are incurred.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 39
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
l)
At the end of each reporting period, the Group 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.
m) Leasing
A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a
period of time in exchange for consideration’. To apply this definition the Group assesses whether each of the following
criteria apply:
l the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the Group;
l the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout
the period of use, considering its rights within the defined scope of the contract; and
l the Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses
whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use.
Measurement and recognition of leases as a lessee
At the commencement date of a lease, the Group recognises a right-of-use asset and a lease liability on the balance sheet.
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct
costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any
lease payments made in advance of the lease commencement date, net of any incentives received.
The Group depreciates right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset
for impairment when indicators of impairment exist.
At the commencement date of a lease, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available, or the Group’s
incremental borrowing rate. Details of this borrowing rate are given in note 2e).
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts expected to be payable under any residual value guarantees
and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability is reduced for payments made and increased for interest. It is remeasured
to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. If a lease liability is
remeasured, a corresponding adjustment is reflected in the value of the right-of-use asset, or, if the carrying value of the
right-of-use asset is already reduced to zero, the income statement.
40 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
Significant accounting policies and basis of preparation (continued)
2
The Group has elected to account for short-term leases (with a term of up to 12 months) and leases of low-value assets
using the practical expedients available in IFRS 16. Instead of recognising a right-of-use asset and lease liability, the
payments in relation to such leases are recognised as an expense in the income statement on a straight-line basis over the
lease term.
n) 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 Group’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.
o) 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.
p) Share-based compensation
The Group 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.
q) Financial assets and liabilities
Financial assets and liabilities are recognised when the Group 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.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 41
Classification as debt or equity
Debt and equity instruments issued by the Group 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.
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 Group are recognised as the proceeds received, net of direct issue costs.
q) Financial assets and liabilities (continued)
Derecognition
Financial assets are derecognised when rights to receive cash flows from the assets expire or, the financial assets are
transferred and the Group 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 Group issuing equity instruments to a creditor of
the Group to extinguish all or part of the financial liability, the Group 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.
Intercompany receivables
Amounts owed by subsidiary undertaking represent loans made to the Company’s main subsidiary on an interest-free basis.
No repayment terms have been mandated.
IFRS 9’s impairment requirements use forward-looking information to recognise expected credit losses – the ‘expected
credit loss (ECL) model’.
The Group considers a broad range of information when assessing credit risk and measuring expected credit losses,
including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of
the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
l financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low
credit risk (‘Stage 1’);
l financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk
is not low (‘Stage 2’); and
l financial assets that have objective evidence of impairment at the reporting date (‘Stage 3’).
‘12-month expected credit losses’ are recognised for ‘Stage 1’ financial instruments, while ‘lifetime expected credit losses’
are recognised for ‘Stage 2’ financial instruments. Measurement of the expected credit losses is determined by a probability
weighted estimate of credit losses over the expected life of the financial instrument.
The Group considers that the current intercompany loan should be recognised as Stage 1, and 12- month expected credit
losses have been calculated.
42 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
Significant accounting policies and basis of preparation (continued)
2
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits and other short-term highly liquid investments
with maturities of three months or less at inception that are readily convertible to a known amount of cash and are subject
to an insignificant risk of changes in value.
Trade 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.
r) Financial risk management
Risk management objectives
Management identify and evaluate financial risks on an on-going basis. The principal risks to which the Group is exposed
are market risk (including interest rate risk, and cash flow risk), currency 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 Group’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 Group’s interest-bearing assets comprise of only cash and cash equivalents. As the Group’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 Group’s income.
Currency risk
The Group 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 Group. The Group 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 Group’s total transactions.
In future the Group 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
Group. Credit risk arises from cash balances (including bank deposits, cash and cash equivalents) and credit exposures to
trade receivables. The Group’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 Group may encounter difficulty in meeting its obligations associated with financial liabilities
that are settled by delivering cash or other financial assets.
The Group seeks to manage its liquidity risk by ensuring that sufficient liquidity is available to meet its foreseeable needs.
s) Capital management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
stakeholders. The Group’s overall strategy remained unchanged during the period.
The capital structure of the Group 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 Group is not subject to any externally imposed capital requirements.
As part of the Group’s management of capital structure, consideration is given to the cost of capital.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 43
Segmental information
3
IFRS 8 ‘Operating Segments’ requires operating segments to be determined based on The Group’s internal reporting to
the Chief Operating Decision Maker. The Chief Operating Decision Maker has been determined to be The Board of Directors
which receives information on the basis of the Group’s operations in key geographical territories, based on the Group’s
management and internal reporting structure. Based on this assessment the Group consider there to be 2 operating
segments.
Administrative expenses are not segmented for accounting purposes.
Retail sales
Cost of sales
Gross profit
Year Ended 30 June 2022
UK
£
57,687
(23,264)
34,423
US
£
17,074
(6,160)
10,914
Total
£
74,761
(29,424)
45,337
Due to the nature of its activities The Group is not reliant on any individual major customers.
4
Expenses - analysis by nature
Other income
Selling and distribution costs
Depreciation of right-of-use asset
Depreciation of plant and equipment
Research and development
Directors remuneration (including share-based compensation)
Staff costs
Foreign exchange differences
Auditor’s remuneration
– audit fees
– other services
Inventory write down
Other operating costs
Total operating expenses
5
Finance costs
Interest payable
Interest payable represents amounts arising on leases accounted for under IFRS 16.
2022
£
(1,032)
43,804
29,422
–
861,383
624,563
142,342
1,127
26,250
2,260
265,966
1,031,340
Group
2021
£
(137)
–
2,429
1,700
505,627
577,216
36,224
2,755
17,000
3,200
–
351,094
3,027,425
1,497,108
Group
2022
£
10,135
10,135
2021
£
926
926
44 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
Employees and Directors
6
Group and company
The average monthly number of employees and senior management was:
Executive directors
Non-executive directors
Employees
Average total persons employed
As at 30 June 2022 the Company had 12 employees (2021: 7).
Group and company
Staff costs in respect of these employees were:
Wages and salaries
Social security costs
Defined contribution pensions
Share-based payments (see note 20)
Total remuneration
2022
Number
2021
Number
2
2
4
8
2
2
3
7
2022
£
631,789
68,816
16,883
52,704
770,192
2021
£
561,762
65,408
12,218
61,257
700,645
All staff were directly employed by SkinBioTherapeutics Plc.
Some of these staff costs are included within research and development and some in share issue costs.
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.
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
2022 are £2,633 (2021: £1,650).
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 45
Group and company
Directors’ remuneration:
Stuart J. Ashman
Manprit Randhawa
Doug Quinn
Martin Hunt
Dr Cathy Prescott
Danielle Bekker
Total remuneration
Which is made up of:
Remuneration
Amounts receivable under long term incentive schemes
Company contributions to pension schemes
Total remuneration
2022
£
368,449
14,951
140,414
63,000
31,500
6,250
624,564
572,151
42,603
9,810
624,564
2021
£
372,718
–
136,989
76,509
35,000
–
621,216
557,747
54,748
8,721
621,216
The number of directors to whom retirement benefits are accruing in respect of qualifying services under defined
contribution pension schemes is 2 (2021: 2). The highest paid director received total emoluments of £368,449 (2021:
£372,718) during the year.
Taxation
7
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
Group
2022
£
2021
£
–
173,729
25,893
199,622
–
67,294
(2,229)
65,065
46 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
Taxation (continued)
7
The tax charge for each period can be reconciled to the loss per the statement of comprehensive income as follows:
Normal applicable rate of tax
Loss on ordinary activities multiplied by normal rate of tax
Effects of:
Depreciation
Disallowables
R&D enhanced deductions
R&D tax credit
Losses surrendered
Unused tax losses carried forward
UK tax charge/(credit)
Group
2022
£
2021
£
(2,726,257)
19.00%
(517,989)
(1,498,034)
19.00%
(284,626)
–
12,525
(128,668)
(199,622)
227,644
406,488
323
12,015
(67,899)
(65,065)
88,179
252,008
(199,622)
(65,065)
The Group has an unrecognised deferred tax asset of £1,132,844 (2021: £759,472) at the period end, which has not been
recognised in the financial statements due to uncertainty of future profits. The Group has an estimated tax loss of £5,962,339
(2021: £3,997,223) available to be carried forward against future profits.
8
Loss per share
Basic and diluted loss per share
Weighted average number of shares
Basic and diluted loss per share (pence)
Group
2022
£
2021
£
(2,792,601)
156,780,236
(1,432,969)
146,697,033
(1.78)
(0.98)
As the Group and Company are 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.
Company’s result for the period
9
The Group has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent
Company income statement account.
The loss for the Parent Company for the period was £1,866,892 (2021: £1,222,665)
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 47
Group
£
Company
£
10,200
–
10,200
–
10,200
8,500
1,700
10,200
–
10,200
10,200
–
10,200
–
10,200
8,500
1,700
10,200
–
10,200
1,700
1,700
–
–
–
–
Group
£
Company
£
–
145,757
145,757
12,997
–
145,757
145,757
12,997
158,754
158,754
–
2,429
2,429
29,422
31,851
–
2,429
2,429
29,422
31,851
–
–
143,328
143,328
126,903
126,903
10 Property, plant and equipment
Cost
At 1 July 2020
Additions
At 30 June 2021
Additions
At 30 June 2022
Accumulated amortisation
At 1 July 2020
Charge for the period
At 30 June 2021
Charge for the period
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
11 Right-of-use assets
Cost
At 1 July 2020
Additions
At 30 June 2021
Additions
At 30 June 2022
Accumulated amortisation
At 1 July 2020
Charge for the period
At 30 June 2021
Charge for the period
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
48 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
12 Intangible assets
Cost
At 1 July 2020
Additions
At 30 June 2021
Additions
At 30 June 2022
Accumulated amortisation
At 1 July 2020
Charge for the period
At 30 June 2021
Charge for the period
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
Group
£
Company
£
420,538
108,403
528,941
96,813
420,538
108,403
528,941
95,314
625,754
624,255
–
–
–
250
250
–
–
–
–
–
420,538
528,941
420,538
528,941
625,504
624,255
Intellectual property is to be amortised over the expected period that the asset generates income. A small part of the
IP belonging to the active subsidiary, AxisBiotix Limited, commenced amortisation in the year ending 30 June 2022. Other IP
amortisation is expected to commence in the year ending 30 June 2023.
13 Investments
Company: Investments in subsidiary undertakings
Cost
At 1 July 2020
Additions
At 30 June 2021
Additions
At 30 June 2022
£
5
113,728
113,733
309,339
423,072
As at 30 June 2022, 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
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 49
14 Inventories
Inventories
Group
2022
£
122,571
122,571
2021
£
–
–
The cost of inventories recognised as an expense during the year was £295,390.
An amount of £265,966 has been written down during the year in respect of provisions against inventory to reflect its net
realisable value
15 Trade and other receivables
Current
Trade debtors
Corporation tax
Sales taxes recoverable
Other receivables
Prepayments
Non-current
Amounts due from Group undertakings
Group
2022
£
Company
2021
£
2022
£
2021
£
1,800
266,916
48,669
11,101
76,580
–
183,828
19,597
10,000
239,349
–
230,391
13,560
11,101
66,766
–
183,828
7,793
10,000
42,095
405,066
452,774
321,818
243,716
–
–
–
–
1,142,891
623,688
1,142,891
623,688
The fair values of the Company’s current 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 current financial assets are impaired.
The amounts owed by subsidiary undertakings include a loan to AxisBiotix Limited for £1,531,177 (2021: £771,544) which
was discounted to £1,205,425 and then impaired by £28,410, in addition to earlier years impairment of £34,124 to give a
current value of £1,142,891 (2021: £623,688) under IFRS 9, as set out in note 2. There is no interest payable on this loan
which is assumed to be payable 3 years from the date of these statements. The Company has confirmed that it has extended
the original repayment date from 30th June 2023 to 30th June 2025.
50 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
16 Trade and other payables
Current
Trade creditors
Accruals
Sales taxes payable
Other taxes
Other payables
Group
2022
£
Company
2021
£
2022
£
2021
£
72,610
366,784
85
31,812
10,451
78,842
279,922
–
17,726
3,330
66,277
353,534
–
31,059
10,233
71,352
260,272
–
17,726
3,330
481,742
379,820
461,103
352,680
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.
17 Lease liabilities
Group and company
Maturity analysis
Year 1
Year 2
Year 3
Year 4
Year 5
Less future interest charges
Analysed as
Current
Non-current
2022
£
36,102
37,770
39,029
35,778
–
2021
£
35,122
32,195
33,989
35,122
32,195
148,679
(20,815)
168,623
(28,769)
127,864
139,854
27,217
100,647
127,864
25,074
114,780
139,854
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 51
18 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 2022 is as follows:
Group
Assets
Cash and cash equivalents
Trade and other receivables
Liabilities
Trade and other payables
Lease Liabilities
Company
Assets
Cash and cash equivalents
Trade and other receivables
Liabilities
Trade and other payables
Lease Liabilities
On demand
Carrying and less than
3 months
amount
£
£
3 to 12
months 1 to 2 years
£
£
2 to 5 years
£
1,804,923
12,901
1,804,923
12,901
1,817,824
1,817,824
–
–
–
–
–
–
–
–
–
449,930
133,501
449,930
5,854
583,431
455,784
–
26,341
26,341
–
33,989
33,989
–
67,317
67,317
On demand
Carrying and less than
3 months
amount
£
£
3 to 12
months 1 to 2 years
£
£
2 to 5 years
£
1,561,402
1,542,278
1,561,402
11,101
3,103,680
1,572,503
–
–
–
–
–
–
–
1,531,177
1,531,177
430,044
133,501
430,044
5,854
563,545
435,898
–
26,341
26,341
–
33,989
33,989
–
67,317
67,317
52 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
18 Financial instruments (continued)
The maturity analysis of financial instruments at 30 June 2021 is as follows:
Group
Assets
Cash and cash equivalents
Trade and other receivables
Liabilities
Trade and other payables
Lease Liabilities
Company
Assets
Cash and cash equivalents
Trade and other receivables
Liabilities
Trade and other payables
Lease Liabilities
On demand
Carrying and less than
3 months
amount
£
£
3 to 12
months 1 to 2 years
£
£
2 to 5 years
£
4,609,889
213,425
4,609,889
213,425
4,823,314
4,823,314
–
–
–
–
–
–
–
–
–
362,094
168,623
362,094
8,781
530,717
370,875
–
26,341
26,341
–
32,195
–
101,306
32,195
101,306
On demand
Carrying and less than
3 months
amount
£
£
3 to 12
months 1 to 2 years
£
£
2 to 5 years
£
4,264,690
973,165
4,264,690
201,621
5,237,855
4,466,311
–
–
–
–
771,544
771,544
–
–
–
334,954
168,623
334,954
8,781
503,577
343,735
–
26,341
26,341
–
32,195
–
101,306
32,195
101,306
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 53
19 Share capital
Company – Issued and fully paid
As at 30 June 2020
Ordinary shares issued at 16p per share
Costs related to shares issued
Warrants issued at 9p per share
As at 30 June 2021
As at 30 June 2022
Number of
shares
Share capital Share premium
£
£
128,083,494
1,280,835
4,923,890
27,806,428
278,064
890,314
8,903
4,170,964
(408,042)
71,225
156,780,236
1,567,802
8,758,037
156,780,236
1,567,802
8,758,037
On 2 November 2020 27,806,428 ordinary shares were issued by way of a placing at a price of 16p per share to raise finance.
On 19 March 2021 890,314 ordinary shares were issued in connection with the exercise of share warrants at an exercise
price of 9p per share payable in cash.
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.
20 Share-based payments
Share Options
The Group 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 Group at the date of grant. Each share option converts into one ordinary share of the Group 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:
2022
2021
Group and company
Outstanding at 1 July
Granted during the year
Forfeited/cancelled during the year
Number of
options
16,729,343
650,000
–
Weighted
average
exercise Number of
options
price
£
Weighted
average
exercise
price
£
0.11 16,729,343
–
0.38
–
–
0.11
–
–
0.11
Outstanding at 30 June
17,379,343
0.12 16,729,343
On 11 January 2022, 650,000 options were granted at an exercise price of £0.376 per share, split into 2 deed pools with an
equal number of share option in each pool. Deep pool 9 is exercisable based upon the achievement of an 80p share price
for more than a 30-day continuous period. Deep pool 10 is exercisable based upon the achievement of an 150p share price
for more than a 30-day continuous period. The total charge recognised for the year ended 30 June 2022 for these share
options is £10,101 (2021: £nil).
54 | SkinBioTherapeutics plc Annual Report & Accounts 2022
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2022
20 Share-based payments (continued)
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 2022 for share options is £52,704 (2021: £61,257). 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
Deed pool
Grant date
Exercise price
Share price at grant date
Risk-free rate
Volatility
Expected life
Fair value
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
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
9
11/01/22
37.6p
37.6p
0.758%
75%
2 years
7.35p
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
10
11/01/22
37.6p
37.6p
0.856%
75%
3 years
8.87pp
The closing share price per share at 30 June 2022 was 20.25p (30 June 2021: 63.50p).
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.
21 Related party transactions
Key management personnel compensation
Group and company
Short-term employee benefits including social security costs
Post-employment benefits
Share-based payments
2022
£
2021
£
694,844
11,239
42,603
748,686
679,046
10,036
61,257
750,339
Compensation figures above include directors and key management personnel. Detailed remuneration disclosures for
directors are provided in the employees and directors note on page 44, and in the Directors Report.
SkinBioTherapeutics plc Annual Report & Accounts 2022 | 55
Transactions with other related parties
During the period ended 30 June 2022, the Company was charged fees of £125,609 (2021: £116,600) by Quinn Corporate
Services Ltd, a company in which Doug Quinn, a former director of the Company, is also a director. These fees relate to
Doug Quinn’s consultancy services to the Company. As at 30 June 2022 £nil (2021: £9,500) was outstanding.
During the period ended 30 June 2022, the Company was charged fees of £50,400 (2021: £58,000) 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 2022 £5,040 (2021: £4,800) was outstanding.
During the period ended 30 June 2022, the Company was charged fees of £25,200 (2021: £29,000) 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 2022 £nil (2021: £nil) was outstanding.
22 Ultimate controlling party
No one shareholder has control of the Company.
23 Events after the reporting date
The Company has evaluated all events and transactions that occurred after 30 June 2022 up to the date of signing of the
financial statements.
No material subsequent events have occurred that would require adjustment to or disclosure in the financial statements.
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
Consolidated Statement of Comprehensive
Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
1
2
3
10
13
22
28
29
30
Consolidated Statement of Changes in Equity
31
Company Statement of Financial Position
Company Statement of Cash Flows
Company Statement of Changes in Equity
Notes to the Financial Statements
32
33
34
35
Annual Report and Financial Statements
For the Year Ended 30 June 2022
SkinBioTherapeutics plc
Company Registration Number: 09632164
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SkinBio
THERAPEUTICS
The Core, Bath Lane, Newcastle Helix, Newcastle upon Tyne, NE4 5TF.
SkinBio
THERAPEUTICS