Final Results

RNS Number : 8954J

SkinBioTherapeutics PLC

15 December 2022

 

15 December 2022

SkinBioTherapeutics plc

Unaudited full year results

Newcastle upon Tyne, UK - SkinBioTherapeutics plc (AIM: SBTX or the "Group"), a life sciences company focused on skin health, announces its unaudited full year consolidated results for the 12 months to 30 June 2022.

Operational and financial highlights

· Commercial progress of probiotic food supplement, AxisBiotix-Ps™

o  Influencer marketing programme initiated February 2022

o  Retention rates of subscribers at 80%+; steady but slow sales growth

· Partnership with Croda plc is in the product development stage, with timing controlled by Croda. Product launch expected to occur in 2023 which would trigger initial royalties revenues from Croda later in the calendar year

· Continued progress on formulation of acne food supplement with consumer study to start in 2023

· Oral research programme and skin health and disease programme at the University of Manchester

· Appointments of full time Chief Financial Officer and non-executive director

· Cash as of 30 June 2022, £1.8m (2021: £4.6m)

Stuart Ashman, CEO of SkinBioTherapeutics, said:

"This financial year has been a mixed one for the Group. The team experienced the excitement of launching its first direct to consumer product, and the flow of 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%+ on a monthly basis reinforce the high level of confidence that management has in the product and its long-term market potential. Progress from the other pillars illustrate the additional commercial opportunities within the Group and support the early discussions ongoing with potential industry partners.

"Post initial launch of 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.  While the Company looks to undertake out-licensing discussions, it will continue to roll out the AxisBiotix-Ps ™ product into Europe and the Rest of World.

"SkinBioTherapeutics has a small team which has achieved a significant amount in 12 months. Development continues apace in the post year period and another busy, exciting year is anticipated in 2023."

The Company's audited report and accounts for the year ended 30 June 2022, including all notes to the financial statements, are expected to be published and sent to shareholders by 23 December 2022.

-Ends-

For more information, please contact:

SkinBioTherapeutics plc Stuart J . Ashman, CEO Manprit Randhawa, CFO	Tel: [phone]
Cenkos Securities Plc (Nominated Adviser & Broker) Giles Balleny, Max Gould (Corporate Finance) Dale Bellis / Michael Johnson (Sales)	Tel: [phone]
Instinctif Partners Melanie Toyne-Sewell / Tim Field / Jonjo Cordey	Tel: [phone] [e-mail]

About SkinBioTherapeutics plc

SkinBioTherapeutics is a life science company focused on skin health. The Group's proprietary platform technology, SkinBiotix®, is based upon discoveries made by Professor Catherine O'Neill and Professor Andrew McBain.

The Group is targeting a number of skin healthcare sectors, the most advanced of which are cosmetic skincare and food supplements to modulate the immune system by harnessing the gut-skin axis. In each area SkinBioTherapeutics plans to exemplify its technology through human studies. The Group's first product, AxisBiotix-Ps™, a food supplement to address the symptoms of mild to moderate psoriasis was launched on 29 October - World Psoriasis Day.

The Group listed on AIM in April 2017 and is based in Newcastle upon Tyne, UK. For more information, visit: www.skinbiotherapeutics.com .

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Group's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

Chairman and Chief Executive'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 commercialization 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.

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 £46k (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 £2,761k (2021: £1,497k). This included research and development expenditure of £861k (2021: £506k), which covered the consumer study for AxisBiotix-Ps™ and the oral research programme. In addition, ongoing operating expenses of £1,856k (2021: £991k) reflected the adaption of the business infrastructure to conduct direct sales to consumers and ongoing marketing costs.

The operating loss was £2,716k (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-Ps™ 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.

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 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)

-  AxisBiotix-Ps™ (Psoriasis)

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 psoriasis 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.  Axis-Biotix-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- or 56-day cycle.  The website can be found here .

The marketing push was focused around social media "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 there are early 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. Since financial year end, the Group has been preparing to launch in Europe, starting with Spain and Italy, following regulatory approval.  European sales can be managed directly via the Group's e-commerce 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 management are happy with the retention rates levels, 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. The Group was not set up to be a B2C business with the associated sales spend, with this initial B2C strategy coming about as a result of adaptation from COVID-19; 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. As a result, 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 under the AsixBiotix pillar is one 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. 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 MediBiotix 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 AxisBiotix 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.  Early discussions with potential global partners in the medtech sector have commenced.

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.

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 (probiotic) strains or 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 abilities, 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 positions 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 and non-executive director, 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™.

Martin Hunt (Non-executive Chairman)

Stuart J. Ashman (Chief Executive Officer)

 

Consolidated Statement of Comprehensive Income

For the Year Ended 30 June 2022

Continuing operations Revenue	Notes 3	2022 £ 74,761		2021 £ -
Cost of sales		(29,424)		-
Gross profit		45,337		-
Selling and distribution costs		(43,804)		-
Research and development		(861,383)		(505,627)
Operating expenses		(1,856,272)		(991,481)
Total administrative expenses		(2,761,459)		(1,497,108)
Loss from operations	4	(2,716,122)		(1,497,108)
Finance costs	5	(10,135)		(926)
Loss before taxation		(2,726,257)		(1,498,034)
Taxation	7	199,622		65,065
Loss for the year		(2,526,635)		(1,432,969)
Other comprehensive income		-		-
Total comprehensive loss for the year		(2,526,635)		(1,432,969)
Basic and diluted loss per share (pence)	8	(1.61)		(0.98)

 

 

Consolidated Statement of Financial Position

As at 30 June 2022

	Notes	2022 £		2021 £
Assets Non-current assets Property, plant and equipment	10	-		-
Right-of-use assets	11	126,903		143,328
Intangible assets	12	625,504		528,941
Total non-current assets		752,407		672,269
Current assets Inventories	14	388,537		-
Trade and other receivables	15	138,150		268,946
Corporation tax receivable	15	266,916		183,828
Cash and cash equivalents		1,804,923		4,609,889
Total current assets		2,598,526		5,062,663
Total assets		3,350,933		5,734,932
Equity and liabilities Equity Capital and reserves Called up share capital	19	1,567,802		1,567,802
Share premium	19	8,758,037		8,758,037
Other reserves		437,316		384,612
Accumulated deficit		(8,021,828)		(5,495,193)
Total equity		2,741,327		5,215,258
Liabilities Non-current liabilities Lease liabilities	17	100,647		114,780
Total non-current liabilities		100,647		114,780
Current liabilities Trade and other payables	16	481,742		379,820
Lease liabilities	17	27,217		25,074
Total current liabilities		508,959		404,894
Total liabilities		609,606		519,674
Total equity and liabilities		3,350,933		5,734,932

Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022
	2022 £		2021 £
Cash flows from operating activities
Loss before tax for the period	(2,726,257)		(1,498,034)
Net interest
Depreciation of property, plant and equipment	-		1,700
Right-of-use assets depreciation and interest	39,557		3,355
Amortisation of IP	250		-
Share based payments charge	52,704		61,257
	(2,633,746)		(1,431,722)
Changes in working capital
lncrease in inventories	(388,537)		-
(lncrease)/decrease in trade and other receivables	130,796		(198,324)
Increase in trade and other payables	101,922		74,999
Cash used in operations	(155,819)		(123,325)
Taxation received	116,534		-
Net cash used in operating activities	(2,673,031)		(1,555,047)
Investing activities
Purchase of IP	(96,813)		(108,403)
Purchase of right-of-use assets	-		(3,902)
Net cash used in investing activities	(96,813)		(112,305)
Cash flows from financing activities
Net proceeds from issue of shares	-		4,121,114
Lease payments made	(35,122)		(2,927)
Net cash generated by/(used in) financing activities	(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 Cash	4,609,889		2,159,054
and cash equivalents at the end of the period	1,804,923		4,609,889

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2022

Share capital £		Share premium £	Other reserves £	Retained earnings £	Total £
As at 1 July 2020	1,280,835	4,923,890	403,483	(4,142,352)	2,465,856
Loss for the period	-	-	-	(1,432,969)	(1,432,969)
Issue of shares	286,967	4,242,189	-	-	4,529,156
Costs of share issue	-	(408,042)	-	-	(408,042)
Exercise of share warrants	-	-	(80,128)	80,128	-
Share-based payments	-	-	61,257	-	61,257
As at 30 June 2021	1,567,802	8,758,037	384,612	(5,495,193)	5,215,258
Loss for the period	-	-	-	(2,526,635)	(2,526,635)
Intercompany loan	-   -  -			-   -
Share-based payments	-   -  52,704			-   52,704
As at 30 June 2022	1,567,802	8,758,037	437,316	(8,021,828)	2,741,327

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.

Company Statement of Financial Position
As at 30 June 2022
	Notes	2022 £		2021 £
Assets
Non-current assets
Property, plant and equipment	10	-		-
Right-of-use assets	11	126,903		143,328
Intangible assets	12	624,255		528,941
Investments	13	325,755		113,733
Other receivables	15	1,142,891		623,688
Total non-current assets		2,219,804		1,409,690
Current assets
Trade and other receivables	15	91,427		59,888
Corporation tax receivable	15	230,391		183,828
Cash and cash equivalents		1,561,402		4,264,690
Total current assets		1,883,220		4,508,406
Total assets		4,103,024		5,918,096
Equity and liabilities
Equity
Capital and reserves
Called up share capital	19	1,567,802		1,567,802
Share premium	19	8,758,037		8,758,037
Other reserves		437,316		384,612
Accumulated deficit		(7,249,098)		(5,284,889)
Total equity		3,514,057		5,425,562
Liabilities
Non-current liabilities
Lease liabilities	17	100,647		114,780
Total non-current liabilities		100,647		114,780
Current liabilities
Trade and other payables	16	461,103		352,680
Lease liabilities	17	27,217		25,074
Total current liabilities		488,320		377,754
Total liabilities		588,967		492,534
Total equity and liabilities		4,103,024		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 £1,964,209 (2020: £1,222,665)

Company Statement of Cash Flows
For the Year Ended 30 June 2022
	2022 £		2021 £
Cash flows from operating activities
Loss before tax for the period	(2,127,306)		(1,287,730)
Depreciation of property, plant and equipment	-		1,700
Right-of-use assets depreciation and interest	39,557		3,355
Impairment of financial assets	28,407		34,124
Share based payments charge	52,704		61,257
	(2,006,638)		(1,187,294)
Changes in working capital
(lncrease)/decrease in trade and other receivables	(31,539)		10,734
Increase in trade and other payables	108,423		47,859
Cash generated by operations	76,884		58,593
Taxation received	116,534		-
Net cash used in operating activities	(1,813,220)		(1,128,701)
Investing activities
Purchase of IP	(95,314)		(108,403)
Investment in subsidiaries	(759,632)		(771,545)
Purchase of Right-of-Use Assets	-		(3,902)
Net cash used in investing activities	(854,946)		(883,850)
Financing activities
Net proceeds from issue of shares	-		4,121,114
Lease payments made	(35,122)		(2,927)
Net cash generated by/(used in) financing activities	(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 Cash	4,264,690		2,159,054
and cash equivalents at the end of the period	1,561,402		4,264,690

Company Statement of Changes in Equity

For the Year Ended 30 June 2022

Share capital £		Share premium £	Other reserves £	Retained earnings £	Total £
As at 1 July 2020	1,280,835	4,923,890	403,483	(4,142,352)	2,465,856
Loss for the period	-	-	-	(1,222,665)	(1,222,665)
Issue of shares	286,967	4,242,189	-	-	4,529,156
Costs of share issue	-	(408,042)	-	-	(408,042)
Exercise of share warrants	-	-	(80,128)	80,128	-
Share-based payments	-	-	61,257	-	61,257
As at 30 June 2021	1,567,802	8,758,037	384,612	(5,284,889)	5,425,562
Loss for the period	-	-	-	(1,964,209)	(1,964,209)
Share-based payments	-	-	52,704	-	52,704
As at 30 June 2022	1,567,802	8,758,037	437,316	(7,249,098)	3,514,057

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.

Notes to the Financial Statements

For the Year Ended 30 June 2021

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.

2  Significant accounting policies and basis of preparation

a)  Statement of compliance

The consolidated and company financial statements of SkinBioTherapeutics plc have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union, IFRS Interpretations Committee (IFRIC) and the Companies Act 2006 applicable to companies reporting under IFRS.

b)  Basis of preparation

The 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)  Application of new and revised International Financial Reporting Standards (IFRSs) (continued)

Reference	Title	Summary	Application date of standard (Periods commencing on or after)
IFRS3	Business Combinations	Amendments updating a reference	1 January 2022
		to the Conceptual Framework
IFRS17	Insurance contracts	Principles for the recognition, measurement, presentation and disclosure of insurance	1 January 2023
		contracts
		Amendments to address concerns and implementation challenges that were identified	1 January 2023
		after IFRS 17 was published
IAS1	Presentation of	Amendments regarding the classification of	1 January 2023
	Financial Statements	liabilities as current or non-current
IAS8	Accounting Policies,	Amendments regarding the definition of	1 January 2023
	Changes in Accounting	accounting estimates
	Estimates and Errors
IAS16	Property, Plant and	Amendments regarding the treatment of	1 January 2022
	Equipment	proceeds before intended use
IAS37	Provisions, Contingent	Amendments regarding the recogniton of	1 January 2022
	Liabilities and	cost of fulfilling a contract
	Contingent Assets
	Annual improvements 2018 - 2020 Cycle	Improvements to to IFRS1, IFRS9, IAS41 and IFRS16	1 January 2022 (except for IFRS16
			which has no date)
	Amendments to IAS 1	Amendments regarding disclosure of	1 January 2023
	and IFRS Practice	material accounting policies
	Statement 2

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.

3  Segmental information

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.

Year Ended 30 June 2022

	UK £		US £		Total £
Retail sales	57,687		17,074		74,761
Cost of sales	(23,264)		(6,160)		(29,424)
Gross profit	34,423		10,914		45,337

Due to the nature of its activities The Group is not reliant on any individual major customers.

4 
Expenses - analysis by nature

Group

2022   2021

£   £

Other income  (1,032)  (137)

Selling and distribution costs  43,804  -

Depreciation of right-of-use asset  29,422  2,429 Depreciation of plant and equipment  -  1,700

Research and development  861,383  505,627

Directors remuneration (including share-based compensation)   624,563  577,216

Staff costs  142,342  36,224

Foreign exchange differences  1,127  2,755

Auditors remuneration

- audit fees  26,250  17,000

- other services  2,260  3,200

Other operating costs  1,031,340  351,094

Total operating expenses  2,761,459  1,497,108

 

5  Finance costs

Group

2022   2021

£   £

Interest payable  10,135  926

10,135   926

Interest payable represents amounts arising on leases accounted for under IFRS 16.

6  Employees and Directors
Group and company The average monthly number of employees and senior management was:	2022 Number		2021 Number
Executive directors	2		2
Non-executive directors	2		2
Employees	4		3
Average total persons employed	8		7
As at 30 June 2022 the Company had 12 employees (2021: 7).
Group and company Staff costs in respect of these employees were:	2022 £		2021 £
Wages and salaries	631,789		561,762
Social security costs	68,816		65,408
Defined contribution pensions	16,883		12,218
Share-based payments (see note 20)	52,704		61,257
Total remuneration	770,192		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).

Group and company Directors' remuneration:	2022 £		2021 £
Stuart J. Ashman	368,449		372,718
Manprit Randhawa	14,951		-
Doug Quinn	140,414		136,989
Martin Hunt	63,000		76,509
Dr Cathy Prescott	31,500		35,000
Danielle Bekker	6,250		-
Total remuneration	624,564		621,216
Which is made up of:
Remuneration	572,151		557,747
Amounts receivable under long term incentive schemes	42,603		54,748
Company contributions to pension schemes	9,810		8,721
Total remuneration	624,564		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.

7  Taxation

Group

Income taxes recognised in profit or loss  2022  2021

£   £

Current tax

Current period - UK corporation tax  -  -

R&D tax credit  173,729  67,294

R&D tax credit - prior year  25,893  (2,229)

Tax credit for the year  199,622  65,065

 

The tax charge for each period can be reconciled to the loss per the statement of comprehensive income as follows:

	(2,726,257)	(1,498,034)
Normal applicable rate of tax	19.00%	19.00%
Loss on ordinary activities multiplied by	(517,989)	(284,626)
normal rate of tax
Effects of: Depreciation	-		323
Disallowables Capital allowances R&D enhanced deductions	12,525 - (128,668)		12,015 - (67,899)
R&D tax credit	(199,622)		(65,065)
Losses surrendered	227,644		88,179
Unused tax losses carried forward	406,488		252,008
UK tax charge/(credit)	(199,622)		(65,065)

The Group has an unrecognised deferred tax asset of £1,132,844 (2021: £765,964) 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: £4,031,388) available to be carried forward against future profits.

8  Loss per share

Group

	2022 £	2021 £
Basic and diluted loss per share	(2,526,635)	(1,432,969)
Weighted average number of shares	156,780,236	146,697,033
Basic and diluted loss per share (pence)	(1.61)	(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.

9  Company's result for the period

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 £1,964,209 (2021: £1,222,665)

10  Property, plant and equipment
	Group		Company
	£		£
Cost
At 1 July 2020	10,200		10,200
Additions	-		-
At 30 June 2021	10,200		10,200
Additions	-		-
At 30 June 2022	10,200		10,200
Accumulated amortisation
At 1 July 2020	8,500		8,500
Charge for the period	1,700		1,700
At 30 June 2021	10,200		10,200
Charge for the period	-		-
At 30 June 2022	10,200		10,200
Net book value At 1 July 2020	1,700		1,700
At 30 June 2021	-		-
At 30 June 2022	-		-
11  Right-of-use assets
	Group		Company
	£		£
Cost
At 1 July 2020	-		-
Additions	145,757		145,757
At 30 June 2021	145,757		145,757
Additions	12,997		12,997
At 30 June 2022	158,754		158,754
Accumulated amortisation
At 1 July 2020	-		-
Charge for the period	2,429		2,429
At 30 June 2021	2,429		2,429
Charge for the period	29,422		29,422
At 30 June 2022	31,851		31,851
Net book value At 1 July 2020	-		-
At 30 June 2021	143,328		143,328
At 30 June 2022	126,903		126,903

12 
Intangible assets

Group   Company

£   £

Cost

At 1 July 2020  420,538  420,538

Additions   108,403  108,403

At 30 June 2021  528,941  528,941

Additions   96,813  95,314

At 30 June 2022  625,754  624,255

 

Accumulated amortisation

At 1 July 2020  -  -

Charge for the period  -  -

At 30 June 2021  -  -

Charge for the period  250  -

At 30 June 2022  250  -

 

Net book value

At 1 July 2020  420,538  420,538

At 30 June 2021  528,941  528,941

 

At 30 June 2022  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 subsiduary undertakings  £

Cost

At 1 July 2020  5

Additions   113,728

At 30 June 2021  113,733

Additions   212,022

At 30 June 2022  325,755

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

14 
Inventories

Group

2022   2021

£   £

Inventories   388,537  -

388,537   -

 

15 
Trade and other receivables

Group   Company

2022		2021	2022		2021
	£	£		£		£
Current Trade debtors	1,800	-		-		-
Corporation tax	266,916	183,828		230,391		183,828
Sales taxes recoverable	48,669	19,597		13,560		7,793
Other receivables	11,101	10,000		11,101		10,000
Prepayments	76,580	239,349		66,766		42,095
	405,066	452,774		321,818		243,716
Non- current Amounts due from group undertakings	-	-		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 £0,000, 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.

16 
Trade and other payables

Group

Company

2022		2021	2022		2021
	£	£		£		£
Current Trade creditors	72,610	78,842		66,277		71,352
Accruals	366,784	279,922		353,534		260,272
Sales taxes payable	85	-		-		-
Other taxes Intercompany Other payables	31,812 - 10,451	17,726 - 3,330		31,059 - 10,233		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	2022 £		2021 £
Maturity analysis Year 1	32,195		35,122
Year 2	33,989		32,195
Year 3	35,122		33,989
Year 4	32,195		35,122
Year 5	-		32,195
	133,501		168,623
Less future interest charges	(18,721)		(28,769)
	114,780		139,854
Analysed as Current	27,217		25,074
Non- current	100,647		114,780
	127,864		139,854
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	Carrying amount	On demand and less than 3 months	3 to 12 months		1 to 2 years		2 to 5 years
	£	£	£		£		£
Assets
Cash and cash equivalents	1,804,923	1,804,923	-		-		-
Trade and other receivables	328,486	328,486	-		-		-
	2,133,409	2,133,409	-		-		-
Liabilities
Trade and other payables	449,930	449,930	-		-		-
Lease Liabilities	133,501	5,854	26,341		33,989		67,317
	583,431	455,784	26,341		33,989		67,317

18 Financial instruments (continued) Company

Carrying amount

On demand and less than

3 to 12 months

1 to 2 years  2 to 5 years

		3 months
Assets	£	£	£		£		£
Cash and cash equivalents	1,561,402	1,561,402	-		-		-
Trade and other receivables	1,786,229	255,052	-		-		1,531,177
	3,347,631	1,816,454	-		-		1,531,177
Liabilities Trade and other payables	430,044	430,044	-		-		-
Lease Liabilities	133,501	5,854	26,341		33,989		67,317
	563,545	435,898	26,341		33,989		67,317

The maturity analysis of financial instruments at 30 June 2021 is as follows:

Group	Carrying amount	On demand and less than 3 months	3 to 12 months		1 to 2 years		2 to 5 years
	£	£	£		£		£
Assets
Cash and cash equivalents	4,609,889	4,609,889	-		-		-
Trade and other receivables	213,425	213,425	-		-		-
	4,823,314	4,823,314	-		-		-
Liabilities
Trade and other payables	362,094	362,094	-		-		-
Lease Liabilities	168,623	8,781	26,341		32,195		101,306
	530,717	370,875	26,341		32,195		101,306
Company
	Carrying amount	On demand and less than 3 months	3 to 12 months		1 to 2 years		2 to 5 years
	£	£	£		£		£
Assets
Cash and cash equivalents	4,264,690	4,264,690	-		-		-
Trade and other receivables	973,165	201,621	-		771,544		-
	5,237,855	4,466,311	-		771,544		-
Liabilities
Trade and other payables	334,954	334,954	-		-		-
Lease Liabilities	168,623	8,781	26,341		32,195		101,306
	503,577	343,735	26,341		32,195		101,306

19  Share capital
Company - Issued and fully paid	Number of		Share capital		Share premium
	Shares		£		£
As at 30 June 2020	128,083,494		1,280,835		4,923,890
Ordinary shares issued at 16p per share	27,806,428		278,064		4,170,964
Costs related to shares issued					(408,042)
Warrants issued at 9p per share	890,314		8,903		71,225
As at 30 June 2021	156,780,236		1,567,802		8,758,037
As at 30 June 2022	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:

Group and company	2022			2021
	Number of options	Weighted average exercise price		Number of  Weighted options   average exercise price
		£		£
Outstanding at 1 July	16,729,343	0.11		16,729,343   0.11
Granted during the year	650,000	0.38		-   -
Forfeited/cancelled during the year	-	-		-   -
Outstanding at 30 June	17,379,343	0.12		16,729,343   0.11

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. Deed pool 9 is exercisable based upon the achievement of an 80p share price for more than a 30-day continuous period. Deed 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).

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	1	2	3a	3b	3c
Grant date	05/04/17	05/04/17	05/04/17	05/04/17	05/04/17
Exercise price	9p	9p	9p	9p	9p
Share price at grant date	9p	9p	9p	9p	9p
Risk-free rate	0.24%	0.24%	0.16%	0.16%	0.16%
Volatility	60%	60%	60%	60%	60%
Expected life	3.5 years	3.5 years	2.75 years	2.75 years	2.75 years
Fair value	2.58p	1.85p	2.30p	2.30p	2.30p
Deed pool	4	5	6	7	8
Grant date	18/04/19	18/04/19	18/04/19	03/03/20	08/04/20
Exercise price	18p	18p	18p	9.5p	9p
Share price at grant date	18p	18p	18p	9.5p	7p
Risk-free rate	0.75%	0.75%	0.75%	0.29%	0.12%
Volatility	60%	60%	60%	80%	80%
Expected life	3.5 years	3.5 years	3.5 years	0 years	2 years
Fair value	2.85p	3.99p	3.48p	9.50p	0.87p
Deed pool	9	10
Grant date Exercise price Share price at grant date Risk-free rate	11/01/22 37.6p 37.6p 0.758%	11/01/22 37.6p 37.6p 0.856%
Volatility Expected life Fair value	75% 2 years 7.35p	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
Group and company	2022		2021
Key management personnel compensation	£		£
Short-term employee benefits including social security costs	694,844		679,046
Post-employment benefits	11,239		10,036
Share-based payments	42,603		61,257
	748,686		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 39, and in the Directors Report.

21 
Related party transactions (continued)

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 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.

 

END

 

 

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