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Highlights
Financial
· Full year revenue of £2.2m a 45.3% increase on 2020 (£1.5m)
· A 27.7% increase in gross profit from £879K (2020) to £1.1m (2021)
· The Probiotic business increased sales by 34.0% to £1.1m (2020: £0.8m) with underlying year-on-year product sales (excluding a £250K milestone) increasing by 92.6%
· The Prebiotic business increased sales by 59.3% to £1.1m (2020: £0.6m), with underlying sales (excluding milestone fees) growing by 122%
· Both Probiotic and Prebiotic trading businesses profitable at EBITDA level, generating EBITDAs of £179K and £13K respectively
· A substantial increase in the value of the Group's holding in SkinBioTherapeutics plc ('SBTX') from £8.9m (2020) to £13.7m as of 31 December 2021. The increase in the value of this investment resulting in a Group net profit for the year of £6.3m (2020: £5.8m)
· Total cash on the balance sheet at the year-end increased by 122% to £2m (2020: £0.9m)
Looks pretty impressive to me…
And an operating loss of £1.36m, up from 1.11m in 2020, I wonder why they didn’t put that in the highlights? Why not just be honest and straightforward about it and then say what the trajectory is for 2022?
I guess they alluded to it indirectly by saying a fair proportion of the admin expenses were one-off senior recruitment costs. But yes, they could have been more transparent. And you can only pull off that trick once of course.
Is this a concern?
Receivables up from £650k to £1.5m
Payables up from £500k to £600k
A couple of notes accompanying tables caught my eye. I really don't know if they matter or not. Any ideas?
Anyone know what "excess management expenses" are? Is it a regular footnote? Table 7 Corporation tax.
Also,this note!
"The tax losses have resulted in a deferred tax asset at 25% (2020: 19%) of approximately £1,156,000 (2020: £810,000) which has not been recognized as it is uncertain whether future taxable profits will be sufficient to utilise the losses."
I may be wrong, but I think that last note just means they currently have accrued losses which they'd be able to offset for tax purposes against any future profits. However because they haven't made those future profits yet (and it can't be certain they will), these tax losses haven't been recognised as at 31 12 21.
Lords of lolly
Your exactly right on the deferred tax asset point
As last year we await filing of Ltd company accounts in companies office for a further breakdown of turnover but a reminder
that one customer last year provided £482,963 in probiotic segment and this year one customer provided £727,135, which whilst not attributed to either segment, can only be seed - a 50% increase - but of course this segment has now been separately listed and though that trend is encouraging we obviously need to grow the balance of £372,997 in not only quantum but number of new and recurring customers.
mol
The debtor figure is of some concern but perhaps some comfort can be taken from the auditor report
Key Audit matter
Recoverability of trade receivables
The group had trade receivables amounting to £1,413,882 as receivable as at the year end.
There is a risk that these are not fully recoverable and require impairment.
How our audit addressed the key audit matter
We reviewed post year end receipts to ensure debtors were recovered satisfactorily.
Where amounts were not recovered we reviewed other support and correspondence to ensure the existence of the debtor and to assess the likelihood of recovery.
We further challenged management and sought corroborative evidence where amounts were considered due and not fully
recovered.
And no impairment was made in the finacial statements as far as I can determine.
Plus Optibiotix Health India is a 100% owned sub - my previous musings wondered if Dr T Jain had any shares from outset - seemingly not
mol
Talking of PBX
29/06/22 | 14:35 GB00BLNBFR86 7500 21.869
28/06/22 | 09:41 GB00BLNBFR86 3500 21.9
21/06/22 | 16:19 GB00BLNBFR86 1664 21.97
08/06/22 | 12:22 GB00BLNBFR86 1664 21
25/05/22 | 08:01 GB00BLNBFR86 1008 21.97
16/05/22 | 10:50 GB00BLNBFR86 1046 21.97
13/05/22 | 12:07 GB00BLNBFR86 1325 21.97
05/05/22 | 14:39 GB00BLNBFR86 3596 21.97
26/04/22 | 13:24 GB00BLNBFR86 7563 21.97
06/04/22 | 14:42 GB00BLNBFR86 100 21.45
04/04/22 | 14:13 GB00BLNBFR86 9100 21.8
01/04/22 | 15:54 GB00BLNBFR86 2309 21.3
01/04/22 | 11:59 GB00BLNBFR86 2075 21.2
01/04/22 | 09:15 GB00BLNBFR86 28 21.2
11000 shares bought in the last two days - jees that's some volume - albeit vast majority locked in
mol
Thanks for posting the interview mol. One new bit was the announcement that the reformatted wellbiome launches next month. Regarding the probiotic side of the business, there is more of a move towards selling D2C to increase margins and profits, remember the promotional radio podcasts earlier this year for cholbiome, and on the prebiotic side of the business, marketing staff have been hired in the US to also sell products D2C
Here's a HMRC toolkit re amongst other things management expenses
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/642497/Company-Losses-Toolkit-2016-to-2017-Company-Tax-Returns.pdf
and deals with excess management charges
basically plc has investments (subs) and therefore inter-company charges etc need looked at re tax allowable deduction
but in its simplest form - we haven't made a taxable profit yet - so therefore losses and excess management expenses to carry forward ( i'd be surprised if excess management expenses ever allowable - which explains why note doesn't include them in deferred tax calculation)
bring on the day - oops year lol - for taxable profits
btw anon the deferred tax asset doesn't need written off as it hasn't been recognised
bw all
mol
Nice wedge of share options for Rene, at one tenth of the current price. Thought for a sec he'd actually put in his hard earned like the rest of us mortals and purchased at full price.
Know years back share options became due when the company share price reached new highs and certain trigger points. Seems this was unpopular and have we now time served milestones.
I am disconcerted by the fact that I own a lot more stock than Remi. I'm not sure if that's because it shows how little faith he has in the company or because I'm stupid enough to have accumulated so much over the years. I suspect it's a bit of both.
On the topic of the options. Having had time to think about it, if he gets the share price to £2 over the 10 years than the million he earns on the options will be a good investment.
Stephen is on record a few times bemoaning the fact that he's lost good people due to significantly higher wages being paid elsewhere. Wages that OPTI cannot afford to pay.
An attractive option package is the only sensible way he can offer a good reward to these people without taking hundreds of thousands out of the bank. It was an inevitable but pragmatic deal imo.
That's a fair point. The company needs to have a way to attract talent. It is probably part time though for that talent to be attracted through the good wages we'd be able to pay if we were generating significantly higher sales.
I am interested in option packages as I was at Dell Computers at completely the wrong time, they really are a bit hit and miss.
My views on this one
- Not a clue on what the performance targets are, but expect these to be at the lower / mid end.
-The strike price is far too low
- As these are for ten years there should be further annual awards, these should be on a 4/5 year cycle
Most importantly as a shareholder I expect with these options for the team to really deliver, at the moment they really are middling which is simply not good enough.
It's a simple case of giving him easily attainable options with a decent reward, or losing him. If you're not happy with the options maybe Stephen should have just paid him an extra £150,000 and had done with it.
Larus.
It's really interesting seeing a really well written remuneration report in an annual report, explaining how board remuneration between base / bonus / options are calculated / compared to market etc.
I am happy with options provided they are well focused, fair and force the right management behaviours.
As usual easy to look back in five years time to see if they are correct - these needs to be with a company in the 10s of millions throwing off cash.
The market seems to like the appointment of René as a Director of the company. Previously, OPTI will have lost him so we are going in the right direction.
René has brought experience of developing a business from selling bulk ingredients to finished product and a wealth of industry contacts in both the pharmaceutical and nutraceutical industries. He has a strong track record of rapidly growing sales and has been involved in a number of acquisitions in support of accelerating business growth. His experience of speciality food ingredients and high value final product solutions will help drive the business expansion of OptiBiotix' growing pipeline of microbiome modulation products and technologies.
Regarding the shares option, SOH needed to find a way to keep him and I think this is the way forward.